Toronto Estate Law Blog : Toronto Estate Lawyer : Hull & Hull Law Firm : Trust Mediation and Succession Planning : Serving Ontario, Ottawa, Mississauga, Hamilton

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In my blog yesterday, I introduced the prudent investor rule as the standard of care for trustees when investing assets that are held in a trust. Today, I will address how a trustee’s investment performance may be assessed.

Prior to July 1999, trustees were required to make investments pursuant to the “statutory legal list” provided for in the Trustee Act. This had the effect of holding trustees accountable for each particular investment, rather then the investment portfolio as a whole. The principle was further illuminated by the anti-netting rule, which stated that a trustee, who committed a breach of trust, was not entitled to set off a gain in one transaction against a loss in another. However, through recent amendments to the Trustee Act, the statutory legal list was repealed and replaced with the Prudent Investor Rule.

The Prudent Investor Rule reflects the modern portfolio approach to investments, the emphasis being on the prudence of the portfolio as a whole as opposed to each particular component. This theory is captured in Section 27(5) of the Trustee Act. Section 27(5) requires “a trustee to consider … the role that each investment plays within the overall trust portfolio”. Furthermore, under section 27(6) “a trustee is required to diversify the investments of the trust property. It appears that under the modern portfolio approach, a trustee would not be breaching the standard of care, should he or she invest a substantial amount of trust assets into a single security. As described above, section 27(6) requires that the trustee consider diversifying the portfolio, which is necessary if the Prudent Investor Rule is to be followed. To conclude my topic, tomorrow I will consider the liability of a trustee with respect to the investment of trust assets.

Thanks for reading,

Rick

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Not all Wills provide for an outright distribution to the beneficiaries. In some cases, the assets of an estate are held in trust over a period of time for the benefit of one or more beneficiaries, sometimes in succession.  When a trustee administers a trust, he or she is entrusted to act for the benefit of others. As such, our common law and statutes impose standards that trustees must comply with when dealing with trust property.

With the recent plummet in the stock market, I believe many trustees are considering how the stock market losses have affected the trust investments and what action they should take in the circumstances. 

Section 27 of the Trustee Act addresses the standard of care for trustees when investing assets held in a trust. Section 27(1) states, “in investing trust property, a trustee must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments”. Section 27(2) states that “a trustee may invest trust property in any form of property in which a prudent investor might invest”.

Section 27(1) and (2) outlines the prudent investor rule. When investing trust assets, a trustee must comply with the prudent investor rule to protect himself or herself from liability.   Section 28 of the Trustee Act, emphasizes this point as it states that a Trustee will not be liable for losses arising from investments if the standard of the prudent investor is met. Nevertheless, the issue remains how does a trustee meet the “prudent investor” standard? In keeping with this theme, tomorrow I will address how a trustee’s investment performance may be assessed.

Thanks for reading, and have a great day!

Rick

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Section 131 of the Courts of Justice Act establishes the authority for the Court to award costs. Section 131 states that the Court has absolute discretion in awarding costs, subject to the provisions of an Act or the rules of court. 

Before July 2005, the Rules of Civil Procedure provided some sense of certainty to the Court’s broad discretion in awarding costs as the Rules provided a costs grid. The costs grid suggested that costs were to be determined by an hourly rate multiplied by the time spent. In 2004, the Court of Appeal in Boucher v. Public Accountants Council set forth the general principle as to the fixing of costs pursuant to Rule 57.01 and the costs grid. With respect to costs, the Court stated that the overall “objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant”. Subsequently, in July 2005, the Rules were amended. 

The amendment to the Rules abolished the costs grid and expanded on the list of factors, set out in Rule 57.01, which the Court may consider before making a cost award. Rule 57.01 was now expanded to include the principle of full indemnity and the reasonable expectations of an unsuccessful party to pay a cost award.

The principle of the reasonable expectations of an unsuccessful party to pay a cost award appears to provide the parties with some flexibility in obtaining the maximum cost award by permitting the successful party to establish the reasonable expectations of the unsuccessful party.  

Thanks for reading, and have a great day!

Rick

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to Initial Estate Meetings

This week on Hull on Estate and Succession Planning, Ian and Suzana discuss how important it is to be prepared for an initial meeting with an estate lawyer.

They have also been listening to and reading David Maister's new (audio)book Strategy and the Fat Smoker and continue their conversation on The Tipping Point by Malcolm Gladwell.

Comments? Send us an email at hullandhull@gmail.com, call us on the comment line at 206-457-1985, or leave us a comment on the Hull on Estate and Succession Planning blog.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

As this is the beginning of the week, I would like to take this opportunity to visit two of the rules from the Rules of Civil Procedure, which are frequently used by estate litigators.

Rule 14.05(3)(a) states that "a proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is, the opinion, advice or direction of the court on a question affecting the rights of a person in respect of the administration of the estate of a deceased person or the execution of a trust".  In contrast, Rule 75.06(1) states that "any person who appears to have a financial interest in an estate may apply for directions … as to the procedure for bringing any matter before the court".

It is clear from the language of these rules that an Applicant may use either rule to apply for directions from the court.  The difference between the two rules lies in the relief that the Applicant seeks. 

Rule 14.05(3)(a) is a substantive remedy that addresses the rights of a person with respect to the administration of an estate or the execution of a trust.  Therefore an Applicant who relies on Rule 14.05(3)(a), is asking the court to make a determination of his or her rights in the context of an estate.  For example, whether or not an Applicant has an interest under the deceased's Last  Will and Testament.

Rule 75.06(1) is a procedural remedy.  In essence, Rule 75.06(1) provides the road-map for "any matter before the court".  Therefore an Applicant who utilizes Rule 75.06(1) may seek a court order that permits the disclosure of relevant documents to their matter and establish time-lines for the completion of a specific phase in their court proceeding.  For example, the court may decide that mediation should be completed within 90 days and as such, include a mediation clause in a court order.

In summary, both rules can may be used to apply to the court for direction, however with Rule 14.05 (3)(a), the Applicant is asking the court for a specific answer to a question affecting his or her rights, whereas with Rule 75.06(1), the Applicant is requesting that the court provide them with a guideline to their court proceeding.

Have a Great Day!

Rick Bickhram

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Checklists are wonderful things when it comes to the practice of law (list makers would argue that that is true in life as well). In today’s busy practice, a checklist can ease the troubled legal mind.

I was looking at several estate planning information checklists earlier this week. It is worthwhile to highlight some issues/items that can be easily overlooked but which a thorough solicitor should ensure is on his/her checklist:

·         If you are acting for both spouses/partners, advise the clients that you cannot act for one at a later date without the other’s knowledge;

·         Is the estate trustee to manage funds for minors and distribute monies to the guardian for care, maintenance and education of minor children. Who is the guardian;

·         If they can be transferred, who gets air mile/loyalty points. What about transferable equity in hunting/fishing lodges or sports clubs;

·         Joint Assets and the presumption of a resulting trust – is there a clear intention of ownership;

·         For foreign property, consider the necessity of executing a separate will or appointment of a local estate trustee;

·         Ensure every life interest is coupled with a remainder interest; and

·         Ensure any charitable organization named as beneficiary is still in existence and properly described.

Have a great weekend and for all those skiers out there, let it snow, let it snow, let it snow.

Justin

• Email This
• Print
• Comments
• Trackbacks
• Share Link

As both litigant and counsel know, the cost of litigation is often prohibitive and institutional delays are not uncommon (there never seems to be enough judges to go around). I therefore took some time to read the long-awaited Report of the Ontario Civil Justice Reform Project, which was released in November 2007. Coulter Osborne was appointed in 2006 to lead the Project. Mr. Osborne is a widely respected, retired judge of the Court of Appeal and the Province's Integrity Commissioner. The Report can be found on-line at http://www.attorneygeneral.jus.gov.on.ca/ 

Mr. Osborne reviewed potential areas of reform and made recommendations to make the civil justice system more accessible and affordable. A variety of organizations and individuals made submissions, including the OBA. Some of Mr. Osborne's recommendations are bold and certainly worth considering:

• Additional Superior Court judicial resources in Brampton, Hamilton, Newmarket and Toronto and more judges generally;
• Increase the monetary jurisdiction of the Small Claims Court to $25,000 with no right of appeal from a judgment of less than $1,500;
• Increase the monetary jurisdiction for Simplified Procedural actions to $100,000;
• Amend Rule 20 to allow the court to weigh evidence, evaluate credibility and draw any reasonable inference from the evidence. This power, however, ought not to be exercised where the interests of justice require that the issue be determined at trial;
• Encouraged lawyers to consider new and innovative billing methods that promote access to justice for litigants with civil litigation issues who wouldn't otherwise be able to afford counsel;
• Amend Rule 31 to provide that each party has up to a maximum of one day (7 hours) to examine parties adverse in interest subject to agreement otherwise or a court order;
• Law Commission of Ontario to review of the role of the Divisional Court as a court of intermediate appellant jurisdiction and make recommendations regarding the Court's future role in jurisdiction.

It will be interesting to see how the Report fares and what recommendations are implemented.

Thanks for reading, Justin

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Over the Christmas break, a news story out of Winnipeg captured national headlines. Samuel Golubchuk is 84 years old and on life support in Winnipeg’s Grace Hospital. He apparently suffered a brain-injury from an earlier fall and part of his brain was removed at the time. Tragically, Mr. Golubchuk cannot walk, speak, eat or breathe on his own. His treating physicians say Mr. Golubchuk has no chance of recovery and that his quality of life is negligible. They want the right to remove him from life support. The news stories don’t indicate whether Mr. Golubchuk left a power of attorney or end-of-life instructions.

Mr. Golubchuk's family has gone to court to resist any attempt by the hospital’s doctors to remove him from life support. Mr. Golubchuk’s family claims that removing life support would violate Mr. Golubchuk's orthodox Jewish belief and amount to an assault as it would hasten his death.

In early December, the family was granted a temporary court injunction while a local judge considered the case. In January, the family returned to court and presented two opinions from New York doctors. According to the family’s doctors, Mr. Golubchuk was not beyond hope. 

The family has maintained throughout that it is a matter of self-determination and the right to live in a free and democratic society without an outside party making decisions for you. The hospital, on the other hand, maintains that it is up to the treating physician to make a judgment call as to whether or not life support should be removed.

As far as I can tell, the judge hearing the case has still not decided what will happen to Mr. Golubchuk. However, it is clear that the courts struggle with life and death decisions as much as guardians or family members do. There are simply no easy answers. In the end, I think it is difficult to say how any one of us would act or react when confronted with the ultimate decision.

Keep thinking and thanks for reading.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Mediation is a common occurrence in estate litigation. Mediation is also popular in other areas, including family law and even commercial litigation. When choosing a mediator, I look for the following characteristics:

• Knowledgeable (has to know the law)
• Experienced at mediating (too many “wannabes”)
• Litigation savvy (knows the true costs and challenges of litigation)
• Empathetic (a good, sympathetic listener is a must)
• Diligent (a mediator has to know the issues and subtleties)
• Firm (a mediator has to know when to read the “riot act”)
• Stamina (mediation is often a marathon)
• Adaptable (a mediator wears many hats)

If the other side suggests a mediator you’ve never heard of, ask around. What do your colleagues think and what is the mediator’s reputation like? To be honest, I’m never too quick to agree to a mediator suggested by opposing counsel if I don’t really know their style and reputation. Opposing counsel may have a comfort level with the mediator or know something you don’t that could work against your client. 

By keeping the above characteristics in mind and doing your homework, you and your client will likely have a better chance of satisfactorily settling the dispute.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to The Surviving Spouse

This week on Hull on Estate and Succession Planning, Ian talks about an interview he did this week for a new website called Law is Cool and why he podcasts.

Ian and Suzana discuss the importance of preparing for the death of a spouse or for the welfare of your spouse upon your death. This preparation includes having a good idea of the assets you share and the importance of appointing a guardian for your children.

Comments? Send us an email at hullandhull@gmail.com, call us on the comment line at 206-457-1985, or leave us a comment on the Hull on Estate and Succession Planning blog.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Welcome to my week of blogs.  I hope you enjoy the eclectic mix of topics and issues that I will blog on this week.

I recently came across a case that considered the doctrine of abuse of process. While it was a family law dispute, the case nevertheless caught my attention as abuse of process cuts across all areas of the law, including estate litigation.

The Supreme Court of Canada had this to say about abuse of process:

The doctrine of abuse of process engages the inherent power of the court to prevent the misuse of its procedure in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute. It is a flexible doctrine unencumbered by the specific requirements of concepts such as issue estoppel.

As can be seen from the above passage, the focus of the abuse of process doctrine is on the integrity of the judicial process and not on the motive, however dishonourable, or status of the parties. 

In the context of estate litigation, where emotions are often raw and grievances long held, a party to an action cannot be blinded by perceived motives when considering whether to strike a claim as an abuse of process. 

The best way to approach abuse of process is to consider claims that the court has held to be an abuse of process. A good example is where a party re-litigates a claim, however disguised, solely to achieve a more favourable judicial result or harass the other side.  Such a case is both manifestly unfair to the defendant as well as bringing the administration of justice into disrepute.  

The real attraction of the doctrine of abuse of process is its flexibility and the latitude it provides the court in its application. However, as with all procedural or early motions, it is often a difficult case to meet. The facts must be clear in order to successfully argue that a claim should be struck as an abuse of process. 

Justin

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Yesterday's Breakfast Series was very informative (and the breakfast is always a nice treat!).

Suzana Popovic-Montag started off the seminar with an instructive talk on trust issues in an estates context.  Her discussion of leading and recent case-law examining a trustee's discretion to encroach on capital, including Gisborne v. Gisborne (1877), 2 A.C. 300 (H.L.) and Fox v. Fox Estate, included the following observations:

• the Court will not interfere with the exercise of a trustee's discretion to encroach on capital in the absence of mala fides
• the term mala fides should be interpreted with some flexibility
• mala fides is more than just a category of fraud; it includes any act by an executor which is based on matters/considerations "extraneous" to the purposes of the testator
• the question as to the extent of a beneficiary's personal resources should, at first instance, be irrelevant

Suzana gleaned from her review of the authorities that the Court's overwhelming view seems to allow for the broad exercise of discretion on an unfettered basis (presuming the Will provides for it) and the Court will only reluctantly limit that discretion.

Craig Vander Zee followed with an interesting discussion on the removal and/or replacement of a trustee, and Ian Hull spoke about various estate law remedies applicable to estate administrations.  Their papers contain a thorough consideration of these topics that I unfortunately do not have sufficient space in this blog to touch upon.

Have a great weekend!

Natalia

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In Reviczky v. Meleknia, a house was "sold" (unbeknownst to the true owner) by a person acting under a fictitious power of attorney and posing as the applicant’s relative.  The purchaser, an innocent third party, financed most of the purchase price through a mortgage registered on title.  Although the purchaser conceded that he did not have good title, the bank that financed the transaction nonetheless took the position before the Court that its mortgage was valid.  

The lawyer representing the "vendor" sent a copy of the power of attorney to the lawyer acting for the buyer and the bank.  The power of attorney was dated just one month before the sale closed, the donor was over 88 years old and it was only witnessed by one person.  Both lawyers were unaware the document was forged. 

The solicitor for the buyer and the bank did not take any steps to learn about the form, content or validity of the forged power of attorney.   It was held that because the solicitor took no steps to scrutinize the document the bank’s mortgage was void.

It will be interesting to see how this case is applied.  I wonder if it will impact on a solicitor’s duties to “go behind” a power of attorney i.e. where a power of attorney has been signed recently and/or the donor is elderly, must a solicitor ask about the donor’s whereabouts, mental capacity at the time of signing, mental capacity at the time the power of attorney is being acted on etc.?

Thanks for reading,

Natalia

• Email This
• Print
• Comments
• Trackbacks
• Share Link

An offer to settle made pursuant to Rule 49 of the Rules of Civil Procedure can be an extremely effective mechanism to secure a better costs order (see Rule 49.10).  Most offers made outside the ambit of the Rules can also be very helpful to the offeror from a costs standpoint, particularly if such offers (like Rule 49.10 offers) demonstrate that it would have been better for the recipient of the offer to have accepted it. 

However, a low ball offer made at the last minute may have little or no beneficial impact whatsoever.  In Volchuk Estate (Re), a contested passing of accounts application, where such an offer was made by the respondent, the court held that the offer did not have any influence on the quantum of costs that should be ordered to be paid. 

Several factors in discretion under Rule 57.01 that are to be considered by a court when making costs decisions will also likely impact on the quantum of a cost award.   In this case, for instance, the respondent was found not only to have failed to properly account for his activities as attorney for the deceased, but also to have misappropriated funds of the deceased during his lifetime.   While the principal amount of the Judgment against him was in the amount of approximately $40,000, the costs Order rendered exceeded $100,000. 

Thanks for reading,

Natalia

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to Funeral Considerations

This week on Hull on Estate and Succession Planning, Ian and Suzana discuss the considerations and responsibilities of estate trustees at the time of a funeral.

They also introduce Malcolm Gladwell's book 'The Tipping Point' as a different way of understanding family behaviour at the time of death.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to Karkus v. Cotroneo 2007

This week on Hull on Estates, Paul Trudelle and Diane Vieira discuss the case of Karkus v. Cotroneo 2007. The case addresses many of the issues that estate lawyers face on a daily basis, such as: proving or disproving gifts, slander of title and the importance of corroborative evidence.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In guardianship disputes, unlike other estate litigation, you are dealing with a living person, whose needs and wishes must be kept in mind at all times.   For this reason, thorough contemplation of how to approach the case is important to undertake at the outset.

Felice Kirsh recommended some early considerations to keep in mind at the 10th Annual Estates and Trusts Summit, which include the following:

• Think before you start - A guardianship application is a drastic step. Even a consent application will be scrutinized by a judge and medical evidence will likely be required, as the court is trying to protect a vulnerable person who, in effect, is having his/her independence taken away.
• Representation of the incapable person - The incapable person is deemed to have capacity to retain and instruct counsel (section 3(1)(b) Substitute Decisions Act).  If this is not addressed at the outset by counsel, the court will often order representation for the incapable person prior to dealing with the substantive issues.
•  ADR Options - It may be possible to resolve a guardianship dispute (relating to a person over 18 years of age) by having him/her sign a new Power of Attorney.  Other means for resolving such disputes are for the parties to agree to attend a family meeting or mediation as early in the process as possible.

Given the cost and emotional nature of guardianship litigation, I hope these points provide helpful reminders of the caution that should be exercised in these matters. 

Have a good day,

Natalia

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The administration of an estate encompasses a significant portion of most estate solicitors' practices. Even if the estate is being competently administered, it is still possible that many remedies which would be useful for the beneficiaries could be overlooked in the process. It is for this reason that even the most seasoned estate practitioner may encounter difficulties.

One issue that comes to mind is what remedies are available to the beneficiaries of an estate when a Will is lost? Is a photocopy of the Will sufficient? What if those with a financial interest in the estate object to the granting of a Certificate of Appointment of Estate Trustee With a Will? Is it possible to compel production of the deceased's testamentary documents?

To find out more about these and other related issues, please mark your calendar and register for Hull & Hull LLP's upcoming Estate, Trust and Capacity Law Breakfast Series scheduled for 8:30 a.m. Thursday, January 17, 2008 at the Ontario Bar Association (2nd Floor, 20 Toronto Street, Salon 2 & 3). This program will feature three presentations by our firm's lawyers on the following topics:

Ian Hull will discuss "Estate Law Remedies - What to watch out for when administering an Estate";
Suzana Popovic-Montag will present "Can I encroach and, if so, how? Trust issues in an estates context"; and
Craig Vander Zee will speak on "Considerations in Negotiating the Removal and/or Replacement of a Trustee."

For more information about the upcoming breakfast series and to obtain a copy of the registration form, please click on http://www.hullandhull.com/news_and_events.html.

I look forward to seeing you there.

Allan Socken

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to Estate Administration

This week on Hull on Estate and Succession Planning, Ian and Suzana continue their discussion on what to expect in the early stages of estate administration.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to Proprietary Estoppel

This week on Hull on Estates, David Smith and Rick Bickhram discuss proprietary estoppel.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Each year the Ontario Bar Association (OBA), Trusts and Estates Section, considers candidates for its Award of Excellence. Last year, the Section paid tribute to Brian Schnurr as the recipient.

The Award for Excellence was created to recognize exceptional contributions and achievements by members of the OBA to the area of trusts and estates.

Any Trusts and Estates Section member of the OBA in good standing, as well as former members of the section who have retired or been appointed to the bench, but not including current officers of the Executive of the Trusts and Estates Section or the Executive of the OBA, are eligible to be nominated.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to Consent Orders

This week on Hull on Estates, David Smith and Christopher Graham discuss what to consider as a lawyer seeking an order on consent.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to The Process of Administering an Estate

This week on Hull on Estate and Succession Planning, Ian and Suzana  talk about the first, pre-probate stages of administering an estate.