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

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Listen to Procedural decisions that came out of the Ontario Superior Court of Justice

This week on Hull and Estates, Paul Trudelle and Diane Viera, discuss procedural decisions that came out of the Ontario Superior Court of Justice and in particular a few decisions from the honourable Mr. Justice Brown of the estates list in Toronto.

Feel free to send us an email at hull.lawyers@gmail.com or leave us a comment on the Hull on Estates blog.

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I hope everyone is having great holiday season.

With the close of 2008, we turn and look to the promise of 2009. In looking ahead to 2009 many may wonder if they have properly protected and provided for those they intend to protect should something unexpected happen to them. Questions may also arise regarding whether a spouse or parent has taken steps to provide for themselves and/or those they intend to provide for.

While there are no doubt many things to consider for the new year from a family perspective, perhaps this is the year to resolve to consider, or reconsider, whether your family’s legal affairs have been properly planned.

I wish everyone a healthy, happy and prosperous 2009.

Happy New Year! Craig

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Offers to settle and more specifically, Rule 49.10 of the Rules of Civil Procedure, are intended to force the parties in a legal proceeding to consider the settlement of a matter prior to trial failing which, costs consequences will result if an offer is more favourable than the result obtained at the trial.

In the general litigation context, the Ontario Court of Appeal has held that the Court should depart from the prima facie costs consequences in Rule 49.10 only where, after giving proper weight to the policy of the rule and the importance of a reasonable predictability and the even applicability of the rule, the interests of justice require departure.  

The applicability of offers to settle and Rule 49 in a Will challenge context has been considered by Judges with different results. In the often quoted case of Olenchuk Estate, Re.  the Court found, amongst other things, that it would seem somewhat incompatible with the nature of these proceedings to apply rules designed to encourage settlement of adversarial, contentious, proceedings and when there appears to be a reasonable question whether the deceased was mentally capable of making the Will that is propounded; it imposes an obligation on the Court to be satisfied that the Will was the product of a capable testator before putting on it the imprimatur of the Court. In Olenchuk, the Court further held that Rules designed to encourage settlement of contentious litigation can be applied in estate matters, but the difference between certain kinds of estate litigation and other forms of litigation can make it difficult to apply Rules of Civil Procedure to estate proceedings.

The Ontario Court of Appeal discussed the traditional approach and modern approach to awards of costs in estate litigation in its 2005 decision of McDougald Estate v. Gooderham. The Court found that the modern approach to fixing costs in estate litigation is to carefully scrutinize the litigation and, unless the Court finds that one or more of the public policy considerations, set out in its decision applies, to follow the costs rules that apply in civil litigation.

The Court of Appeal noted that “Gone are the days when the costs of all parties are so routinely ordered payable out of the estate that people perceive there is nothing to be lost in pursuing estate litigation.”

In a Will challenge, offers to settle, whether informal or formal can be an important tool in regard to the disposition of costs; perhaps more so in light of the approach for costs set out in McDougald v. Gooderham.

Enjoy the Holidays! Craig

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Facing a frivolous Will challenge can be very frustrating, time consuming and costly.

In a typical Will challenge proceeding, the process can involve an application/motion for directions, documentary discovery from the parties and non parties, examination of the parties and non parties, interlocutory motions, mediation (informal or formal), expert reports, a pre-trial conference and a trial.

In the typical Will challenge, an order for directions can be the best tool a party has, at first instance, to manage a Will challenge. An order for directions allows a party to craft the manner in which a Will challenge may proceed and to seek the assistance of the court with obtaining interim and/or ancillary procedural relief to the Will challenge. The provisions included in an order for directions, may depend on, among other things, the issues and parties involved, the evidence to be marshalled, whether mediation is a requirement and, if not, how the evidence known, and/or to be obtained, might be utilized in the pursuit of settlement and the claim, and other relief in respect of the estate that may be necessary.

In the case, however, where the Will challenge is frivolous and the propounder of the Will wishes to short circuit the typical Will challenge process, consideration can be given to, among other things, a motion for summary judgment and/or security for costs. Such a motion can be a powerful tool in litigation in the appropriate circumstances.

An offer to settle can also be used to try and force an opposing party to resolve a frivolous Will challenge or face potentially substantial costs consequences if the proceeding is continued.

Enjoy the Holidays! Craig

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The Ontario Court of Appeals recently affirmed the decision of Mr. Justice Glithero to refuse a motion to add a solicitor and his law firm as a defendant party to a proceeding for breach of contract, because the claim was discoverable more than two years prior to the motion.

In Hughes v. Kennedy Automation Limited, 2008 ONCA 770, the plaintiffs were suing the defendant for non-payment under a purchase and sale agreement for shares.  The purchase and sale agreement had been drafted by the defendant corporation's solicitor; the plaintiffs had not retained their own lawyer to act for them in the share sale transaction.   The plaintiffs became aware of the original non-payment on July 31, 2005.  However, the plaintiffs waited until November 2006 to retain their own lawyer to sue the defendant. 

In November 2007, the plaintiffs brought a motion to add the defendant's solicitor and his law firm, for breach of fiduciary duty and negligence.  The plaintiffs were alleging that the solicitor acted in a conflict of interest and failed to recommend they seek independant legal advice.  The motions judge ruled that the claim against the solicitor and his law firm were barred by the two-year limitation in section 4 of the Limitations Act, 2002.  On the evidence before him, Glithero J. was satisfied that the identity of the solicitor and his law firm, the facts surrounding his involvement and the fact of non-payment were all known to the plaintiffs by July 31, 2005.  Therefore the presumption in section 5(2) of the Limitations Act, 2002 applied to make the claim discoverable by that time, more than two years before the November 2007 motion to add the solicitor and his law firm.   The Ontario Court of Appeals affirmed this decision.

Enjoy your vacation,

Chris Graham

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The Ontario Court of Appeals recently affirmed the decision of Mr. Justice Glithero to refuse a motion to add a solicitor and his law firm as a defendant party to a proceeding for breach of contract, because the claim was discoverable more than two years prior to the motion.

In Hughes v. Kennedy Automation Limited, 2008 ONCA 770, the plaintiffs were suing the defendant for non-payment under a purchase and sale agreement for shares.  The purchase and sale agreement had been drafted by the defendant corporation's solicitor; the plaintiffs had not retained their own lawyer to act for them in the share sale transaction.   The plaintiffs became aware of the original non-payment on July 31, 2005.  However, the plaintiffs waited until November 2006 to retain their own lawyer to sue the defendant. 

In November 2007, the plaintiffs brought a motion to add the defendant's solicitor and his law firm, for breach of fiduciary duty and negligence.  The plaintiffs were alleging that the solicitor acted in a conflict of interest and failed to recommend they seek independent legal advice.  The motions judge ruled that the claim against the solicitor and his law firm were barred by the two-year limitation in section 4 of the Limitations Act, 2002.  On the evidence before him, Glithero J. was satisfied that the identity of the solicitor and his law firm, the facts surrounding his involvement and the fact of non-payment were all known to the plaintiffs by July 31, 2005.  Therefore the presumption in section 5(2) of the Limitations Act, 2002 applied to make the claim discoverable by that time, more than two years before the November 2007 motion to add the solicitor and his law firm.   The Ontario Court of Appeals affirmed this decision.

Enjoy your vacation,

Chris Graham

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The words "aging population" have graduated from being an overworked cliche to a trite observation.  The implications are intuitively obvious in many contexts.  We've blogged here on this topic before and what it means for lawyers.  Our understanding of the implications continues to evolve, and it helps to keep an eye on other countries with similar levels of economic development, social services and legal cultures (and bigger populations hence more money to study the issue). 

One thing is becoming increasingly clear, and a quick tour over the ocean makes this crystal clear: our bodies seem to be outlasting our minds.

We all know the implications for increased demand for legal guardianship expertise, especially for The Sandwich Generation, and potential litigation later (which is enhanced by our general lack of knowledge of the depth of dementia across the population).  The Alzheimer's Society (see the Canadian website for a local view) states that 1 in 3 British over 65 years of age die from the disease.  The over-65s will constitute 25% of the UK's population by 2032, which means that 8% of all deaths (at least) in the UK will be caused by Alzheimers.  In other patients, the disease may still be present but not the cause of death.

Interestingly, Alzheimers was only the No. 5 cause of death among Americans over 65 years of age in 2004.  However, it turns out that Alzheimers and other forms of dementia often do not get noted on death certificates, at least in Boston.  If a similar trend exists elsewhere in the U.S., that might alter U.S. death statistics by raising the profile of Alzheimer's and dementia generally.    

Fire and brimstone, all is lost?  Not entirely.  Medical research can always help.  Also, see this article which offers a detailed applied statistical analysis on the U.S. demographic bubble (or lack thereof perhaps) in a non-estates context, yet still relevant to any lawyer to whom demographics is relevant.

Have a great day,

Chris Graham

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Listen to Administering Assets that are Personal Property

In this episode, Ian and Suzana discuss how to approach administering assets that are personal property items.  This is particularly relevant in the holiday season when valuable gifts are often exchanged, be they paintings, furniture or jewelry.

If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our

blog

.

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Listen to The formal requirements to make a valid Will in Ontario

This week on Hull and Estates, Christopher Graham and Bianca La Neve review the formal requirements to make a valid Will in Ontario and the consequences of failing to adhere to the formal requirement. The relatively recent English decision of Esterhuizen v. Allied Dubar Plc [1998] 2 FLR 668 is discussed.

Feel free to send us an email at hull.lawyers@gmail.com or leave us a comment on the Hull on Estates blog.

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The Trustee Act can be a responding solicitor's best friend.  Consider section 35, which excuses trustees for technical breaches of trust where the elements are met:

"35. (1)  If in any proceeding affecting a trustee or trust property it appears to the court that a trustee, or that any person who may be held to be fiduciarily responsible as a trustee, is or may be personally liable for any breach of trust whenever the transaction alleged or found to be a breach of trust occurred, but has acted honestly and reasonably, and ought fairly to be excused for the breach of trust, and for omitting to obtain the directions of the court in the matter in which the trustee committed the breach, the court may relieve the trustee either wholly or partly from personal liability for the same."

This helpful section can eliminate Gotcha! claims and provides a ready response to frivolous accusations that often arise in the course of litigation.  By eliminating nuisance claims for minor breaches, section 35 gives solicitors acting for trustees a very quick answer to the minor types of claims that add little substance to already complex litigation.   

However, this provision does not apply to liability for a loss to the trust arising from the investment of trust property (Trustee Act, s.35(2)).

Have a great week, and remember, it's really Wednesday.

Chris Graham

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Listen to The Use and Impact of Trust Companies

This week on Hull on Estate and Succession Planning, Ian and Suzana discuss the use and impact of trust companies in estate planning, the pros and cons, and how they are used in an efficient way in general estate planning and in some of the contentious situations.

If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.

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I received an email from research counsel at LawPro yesterday advising that there have been amendments to the Limitations Act, 2002 that will affect the treatment of demand obligations created after January 1, 2004. 

The amendments have the affect of overturning the Court of Appeal’s decision in Hare v. Hare, which addressed the issue of whether the Limitations Act, 2002 changed the law with respect to demand promissory notes such that refusal to repay a loan triggered the commencement of the limitations period. 

In Hare the court rejected an argument that the effect of the Limitations Act, 2002 was that the limitation period for collecting a demand promissory note began to run on the date that the demand for repayment was made.  Instead, the court found that a demand promissory note becomes payable as soon as it is made (subject to payments on the loan), thus triggering the limitation period. 

The Limitations Act, 2002 has now been amended to provided that, in determining when injury, loss, or damage with respect to a demand obligation occurs, under s. 5(1)(a)(i) of the Act, the relevant moment is the first day on which  there is  a  failure  to  perform the obligation, once a demand for performance is made.

With respect to s. 15 (Ultimate Limitation Periods), the Act has also been amended to provide that, in the case of an act or omission in performing a demand obligation, the triggering date is the  first  day  on  which  there  is a failure to perform the obligation, once a demand  for the performance is made.    

The amendments only apply to demand obligations created on or after January 1, 2004. 

While the amendments were apparently effective on November 27, 2008 they are not yet reflected on any of the e-versions of the Act I checked.

Have a great day!

Megan F. Connolly   

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The recent decision in Ksianzyna Estate v. Pasutszok addresses whether the anti-lapse provision in the Succession Law Reform Act  can be expanded to include people in a “special relationship” with the testator. 

The Deceased had died with a will.  He was survived by a common law spouse, but was not married and had no children. He left the residue of his estate to his common law spouse, with the remainder being left to, amongst others, the common law spouse’s daughters, Donna and Laura, and Donna’s daughter, Christine (who was the deceased’s goddaughter).   

Donna pre-deceased the testator and an issue arose as to whether her gift then failed (as is the general rule, absent a contrary intention in the will).    

Section 31 of the SLRA modifies this rule by providing that where the beneficiary in question is a child, grandchild, or sibling of the testator and leaves a spouse or issue surviving the testator, the gift will not lapse but will be distributed as if the beneficiary died intestate immediately after the testator.  Section 1(1) defines child as including “a child conceived before and born alive after the parent’s death”. 

Christine’s counsel argued that the definition of child should be expanded to include persons who stood in a “special relationship” with the testator and that given the testator’s close relationship with Donna, the court should find that she qualified as a “child” under s. 31 and that, as such, the gift to her would not lapse but would go to Christine as her intestate heir. 

The court rejected this argument finding that there was nothing in the SLRA that provided for such an interpretation. 

The court specifically considered the fact that Part V of the SLRA (dealing with dependant support) contained an extended definition of child which included those who the Deceased showed a settled intention to treat as his own. However, it further found that definition was constrained to Part V and could not be extended to other sections of the act. 

As a result, the court found that the gift to Donna lapsed.  

Have a great day!

Megan F. Connolly 

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The holiday season is generally the time when people give most generously to charity. However, with the souring economy, many charities are seeing their donations dry-up.   

Individual giving has been on the decline, as many people appear either unable to donate as in the past or unwilling to until the economy seems stable again.     

Gift giving by foundations is also on the decline. The Bill & Melinda Gates Foundation recently announced that less will be disbursed in grants over the next year than originally anticipated (in recent years, the annual amount disbursed has been about USD$3 billion of its USD$35.1 billion endowment). 

Corporate donations are also decreasing. Large charities are particularly dependant on corporate philanthropy; however, many large corporations no longer have the financial wherewithal to donate as they have in better times and some of the most generous givers (such as Bear Stearns and Lehman Brothers) do not appear to be in a position to give at all. 

The decrease in charitable giving has had an immediate effect on some charities. The Variety Children's Charity, recently laid-off 21 of 65 employees and has temporarily stopped a phys-ed program for disabled children. There are many shelters and food banks that are seeing donations decline as need for services increases. 

To encourage giving, some charities are making it easier to donate. The Salvation Army has gone electronic and has introduced wireless machines at the donation point at Yonge-Dundas Square in Toronto to allow people to donate by debit or credit card if they do not have change to drop into the kettle. 

Have a great day!

Megan F. Connolly

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Earlier this week I blogged on how estates disputes can take on layers of complexity when principles of Family Law and Contract Law are brought into the process.  The recent decision of the Ontario Court of Appeal in Frye v. Frye Estate demonstrates an instance of complexity arising out of the relationship between a shareholder's agreement and a Will.  At issue was a simple question:  can the terms of a shareholder's agreement restrict the testamentary freedom of a shareholder insofar as the shares are concerned?  The Court found as follows:

• Contractual obligations do not constrain a person's ability to bequeath property by means of a will.  Rather such obligations may give rise to an action for breach of contract but do not affect the validity of the Will itself.
• Legal title to the shares is transmitted by the Will to the estate trustees, who hold them in trust for the beneficiary of the shareholder's Will...However, the estate trustees are bound by the shareholder's agreement and cannot distribute the shares out of the estate without complying with the shareholder's agreement.  The estate trustees' inability to transfer the shares immediately does not, however, render the bequest void.
• A further complication was the fact that the intended beneficiary of the shares and the estate trustee of the deceased shareholder's estate were the same person. 

Frye will no doubt  be the subject of further commentary in the estates bar in the weeks ahead.

David M. Smith

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You've heard the expression, "A little knowledge can be a dangerous thing".

A few weeks ago, my husband (he begged me not to name him) was washing the dishes when he suddenly cried out in pain.  He had, by the strangest of circumstances, somehow managed to drive an uncooked spaghetti noodle under his thumbnail.  Ow, indeed.  Since I couldn't actually see the noodle under the nail, I figured the noodle was now somewhere in the middle of the meat of his thumb, and therefore suggested he go see his doctor the next day and get on a course of prophylactic antibiotics before things got worse.  He ignored my advice, at which point I suggested that maybe he should soak it in hot water.  Say, for 8 to 9 minutes.  Until al dente.

Two nights later, at 3 a.m., I awoke to the glow of his blackberry as he lay there in the dark, frantically googling 'nail bed infection'.  He was in his doctor's office hours later.

There's a name for it.  Cyberchondria.  According to a recent Globe and Mail article, cyberchondria is 'hypochondria on metaphorical steroids, its effects amplified by the staggering number of disastrous outcomes the Web can provide.'  In a Microsoft study released in late November, researchers discovered that after typing 'headache' into a search engine, 'caffeine withdrawal' and 'brain tumour' came up with the same frequency.  As the article suggests, the Internet truly is the hypochondriac's perfect storm.

Needless to say, it is the physician who bears the brunt of this ignorant and undiscerning application of "Dr. Google's" expertise.  You've seen them; the ones in the waiting room with their printouts clutched in their hands, ready to storm their doctor's office with a proclamation of impending death.  They're the real reason your GP is running behind today.

My husband is on antibiotics now, but still has tenderness and numbness in that thumb.  Which should at least slow down his Google searches for a few more days...

Jennifer Hartman, guest blogger

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The impact of Stone v. Stone will clearly have a lasting impact on the practice of family law.  This case stands for the general proposition that a spouse can not deplete their assets with the effect of diminishing their spouse's entitlement under the Family Law Act.  Similarly, the estates bar has recently witnessed a similar effect as a result of the decision in Pecore v. Pecore:  Transfers of assets into joint ownership between persons other than spouses are inevitably now subject to even greater scrutiny than before.

In the context of the estates practitioner, it can be seen that the principles raised in Stone clearly have some bearing on estates litigation.  When a spouse transfers assets into joint ownership with his daughter from a first marriage,  the surviving second spouse will no doubt argue that the presumption of resulting trust applies, having consideration to Pecore.  But Stone may have relevance as well, particularly in circumstances in which the deceased and the second spouse enter into a Marriage Contract which provides for a guaranteed entitlement of the surviving spouse on the death of the other. To what extent is the spouse who promises such entitlement precluded from gifting assets or transferring assets into joint ownership?  A complex overlay of contract,  family, and estates law ensues.  Unless the assets are significant, the costs of litigating such a dispute inevitably militate in favour of settlement.

David M. Smith

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The administration of drug therapy in the elderly is a complex undertaking.  As a person ages, they undergo physiological changes; changes in body composition, gastrointestinal, liver and/or renal function that can alter both the therapeutic and toxic effects of drugs.  Created in 1991, and most recently updated in 2003, the Beers List includes drugs that 'are either ineffective in the elderly or put seniors at an unnecessarily high risk when safer alternatives are available' (CBC News, September 2007).  The list, compiled by a group of American experts led by Dr. Mark Beers, was created to determine which drugs should be used in nursing homes, since seniors are known to be particularly at risk for adverse side effects, including falls (see blog of November 28, 2008), depression, and even death.

Last year, the Canadian Institute for Health Information reported that the Beers List has resulted in a reduction in use of the listed drugs, as well as a reduction in the number of adverse side effects linked to these prescription medications.  It is, however, not all good news across the board.  According to CIHI, 25% of seniors are still receiving at least one drug on the Beers List.  Further, a 2005 CBC investigation found that in spite of making up only 13% of the population, seniors accounted for over 44% of all deaths reported to Health Canada's adverse drug reaction database between 1999 and 2003.

With families gathering this month for various holiday celebrations, it may be an appropriate opportunity to suggest a 'brown bag review' for mum or dad.  Just like the name suggests, a pharmacist or geriatrician can review all of mum's medications (both prescription and non-prescription, including herbal products) and check for correct dosage, frequency, duplication of drug therapy, discontinued products, and potential interactions.  It goes without saying that changes to a drug regimen should only ever take place under the direction of one's physician.

Note:  In 2007, CBC News 'Canadianized' the Beers List to reflect only those drugs available here in Canada, and also took the liberty of adding a number of benzodiazepines (medications that are prescribed for the treatment of anxiety and sleep disorders and have been found to increase the likelihood of a fall four-fold) that are available here, but not in the States.  Click here to access the modified version.

Stay tuned Thursday for a much lighter-hearted healthcare blog.

Jennifer Hartman, guest blogger

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Listen to Managing Estate Issues

This week on Hull on Estates, Ian Hull and Suzana Popovic-Montag talk about how to manage an estate dispute as opposed to preventing it. They use an example of a joint account shared between 'Mom' and 'daughter' to examine the best way to approach posthumous problems and misunderstandings.

Feel free to send us an email at hull.lawyers@gmail.com or leave us a comment on the Hull on Estates blog.

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Listen to Guardianship in Canada

This week on Hull on Estate and Succession Planning, Suzana Popovic-Montag speaks with Rodney Hull about how the law has changed in Canada as it pertains to the appointment of guardians. Rodney suggests that today's laws (post-1994) are clearer than they were in the past.

If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.

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Powers of Appointment may appear in a Will when a testator wishes to entrust the donee with authority to direct who will be the recipients of the testator's property.  A not uncommon scenario is one in which the donee of the power is given a life interest in the testator's estate and a Power of Appointment to determine which of the donee's issue shall be the recipients of the residue of the testator's estate on the death of the donee.

To exercise such Power of Appointment, the donee has to, first of all, survive the testator and, secondly, make a Will which successfully exercises the Power of Appointment. If the donee dies before the testator whose Will grants the Power of Appointment, the power clearly lapses and the Will will presumably provide a gift over to address such eventuality.

Such a decision to effectively delegate testamentary authority is not without its perils and counsel should probably carefully review with the testator the ramifications of granting a Power of Appointment respecting the distribution of residue.  For instance, if the testator has a good relationship with her grandchildren (i.e. the donee's children) the testator ought not to presume how the donee will in fact exercise the Power of Appointment.  In addition, the donee's Will may be vulnerable to a challenge which could conceivably defeat the testator's intention in granting the Power of Appointment

David M. Smith

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You've finalized your draft Will.  Everything appears to be in order - you just need to "sign it up".  You ask your lawyer if he or she can just send you the Will so that you can have it witnessed at home.  This seems to be straightforward enough - what can possibly go wrong?

Centuries of litigation attest to the fact that things can - and do - go wrong when a will is not validly executed.

We've written in great detail on our blog (and spoken on our podcasts) about the strict legal requirements provided for in Ontario's Succession Law Reform Act, R.S.O. 1990 ("the SLRA").  Ian Hull also discusses negligence issues and his suggestions for a proper will signing in an issue of Law Pro magazine here.  In a nutshell, the testator must sign or acknowledge the signature in the presence of two or more witnesses, present at the same time.  Today's blog will consider interesting exceptions and anecdotes to the strict compliance rule governing execution formalities in Ontario.  Unlike other jurisdictions across Canada and the rest of the world, Ontario does not have a "substantial compliance" or "harmless error" rule, meaning that if your Will is not executed in accordance with the requirements it may be invalidated. 

A "soldier's will" does not require strict compliance with execution requirements, provided the person is on active service with the forces, either naval, land or air force, or a sailor when at sea or in the course of a voyage.  The reasons for the exception to the rule in these cases seems obvious. 

Witnesses are required to sign after, not before, the testator.  Also, the testator must be able to actually see the witnesses sign, if he so chooses.  Therefore in the case of a testator who is unwilling to move and who is not facing the witnesses, the will may be invalidated.  Also, in the case of a holograph will in Ontario (which does not need to be witnessed but must be in the testator's handwriting) the legislation does not specify the nature of the writing, only that it be "in writing". This means in can be written in ink, paint, pencil and not only on paper but valid holograph wills have been prepared on a tractor's fender (which the testator prepared as he lay pinned and dying under his tractor), a petticoat, and even on an empty eggshell.

To play it safe, always execute your will under the supervision of your lawyer and ensure that  the formal requirements of Ontario's SLRA are observed.

Sarah Hyndman Fitzpatrick

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So, you now have your Will underway and your lawyer suggests that you also prepare documents for while you're still "above the ground", i.e. powers of attorney.  The law relating to the delegation of decision making power in Ontario is governed by the Substitute Decisions Act, 1992, S.O. 1992.  A power of attorney is a written authorization given by one person (referred to as the "donor") to another person or person(s) or entity (referred to as the "attorney").  This document empowers the attorney to do legal acts on behalf of the donor and may be unlimited to the extent that it authorizes the attorney to do anything in respect of property that the grantor could do if capable, except make a Will.  This does not mean that the power of attorney takes away the donor's right to act on his or her own behalf - rather the named attorney is authorized to share in that power.

In Ontario, powers of attorney for property are commonly drafted to survive the incapacity of the donor.  They are referred to as "continuing" powers of attorney as they "continue" in effect after the incapacity of the donor, if the document so provides.  Failure to use this language will result in an incapacity revoking the document.  Other jurisdictions use the terms "durable" or "enduring" powers of attorney. 

One issue that bears discussing is that such documents are frequently drafted to become effective immediately, i.e. once they are executed.  This often comes as a surprise to many clients, as many underestimate the immense scope of such power (and the potential for abuse, see the issue discussed here and here).  This means that the attorney can act under the power of attorney and (depending on its terms) do anything in respect of property except make a Will, from the moment the donor signs the document.  Although the document can be conditional upon incapacity (for e.g. such as a "springing" power of attorney - which only "springs to life" upon a trigger - such as incapacity), most lawyers will advise making the document effective immediately to reduce the risk of interpretation issues when reliance of the document becomes necessary.  Therefore,  it is advisable to keep possession of your executed powers of attorney and tell your attorney where it is located in the event you wish for them to rely upon it.   

In the case of decisions pertaining to your personal care, a document referred to as a power of attorney for personal care is a key component of your estate plan.  This governs decisions relating to health care, housing, nutrition, shelter, hygiene and safety.  Unlike the power of attorney for property, this document only comes into play when the grantor is incapable of making such decisions for themselves.  You must be 16 years of age or older to appoint an attorney, and the attorney may also be 16 years of age or older (as opposed to 18 years of age for the attorney for property).  Directives for health care, such as a living will, can be incorporated at this stage as well.

Sarah Hyndman Fitzpatrick

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Listen to The Benefits of the Family Meeting

This week on Hull on Estate and Succession Planning, Suzana Popovic-Montag speaks with Rodney Hull about the benefits of holding a family meeting to discuss estate matters while the testator is still alive. They both extend their condolences to the family of Ted Rogers, who passed away today.

If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.

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A quick aside before I consider the effect of making changes to your Will (referred to as a Codicil) or altering your Will, which is Step 3 of my estate planning discussion.  Cable magnate Ted Rogers has passed away at the age of 75 (watch a video link here).  He built his company, Rogers Communications, from one FM radio station into Canada's largest wireless, cable and media company.  I stumbled across an amusing anecdote from his early days as a boarding student at Toronto's Upper Canada College - ostensibly he defied his school rules by rigging up an antenna in his dorm room to present TV shows and charging admission.  From this early start he became a true pioneer of the Canadian communications industry and a prolific philanthropist.  We extend our sympathies to his family, friends, and employees at this sad time.

Today I will briefly consider codicils - a document used to amend a Will's original text.  Ideally the use of codicils should try and be avoided, as current technology should permit making the necessary changes on a computer and simply re-printing the Will.  This also has the advantage of not making it obvious to the beneficiaries (whose gift is being depleted or removed), and also avoids the possibility of transcription errors.  However, in certain cases a formal codicil or even a holograph codicil (i.e. a very ill client) may be advisable.

In any event, avoid making changes to your Will without legal input as doing so may lead to family discord down the road if the proper formalities are not observed.  Alterations on the face of your Will should be avoided (see Paul Trudelle's blog on this issue here)  - as such alterations typically require an application for the opinion, advice and direction of the Court. 

Sarah Hyndman Fitzpatrick

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If you tuned in yesterday to our blog,  you noticed that this entire week is devoted to a discussion of a "5-Step Estate Plan".  Today I will be considering your last Will and Testament - commonly described as the foundation of any estate plan.  Often clients, even after they have made an appointment to draw up a Will, will inquire "Why do I need a Will, and what's wrong with simply using an on-line or DIY will kit?".  

In a nutshell, if you don't have a Will you cannot select who will be the executor of your estate (also known as the estate trustee) and a Court will be required to appoint this person.  Provincial laws will determine who will inherit your estate (and no, your spouse will not always "get it all" as you may expect), children's shares of your estate will be paid into Court and held until they attain the age of 18 (leaving no flexibility for trusts when they are over the age of 18 or for children with special needs), and your estate will undoubtedly be subject to greater tax liability following your death.

One of the most important advantages to drafting your Will is naming your executor and trustee.  If there are trusts established under the terms of your Will, this may affect your decision relating to whom to appoint in this regard.  Alternate trustees should be considered and a discussion with your lawyer should include whether you think such person (or persons) have the proper judgment and business sense.  Where an immediate distribution of your estate is not always in the best interests of your beneficiaries, a properly structured Will can also provide for a testamentary trust or trusts for children and/or a spouse.   

Some of the issues that may arise when a lawyer is not involved include neglecting to make provision for outliving your heirs, partial intestacies, and the possibility that a gift provided for in your Will no longer exists at the time of your death.  When these types of issues are not effectively addressed they can lead to a much greater likelihood of disputes and family strife after your death.  

Other interesting issues to ponder at the Will drafting stage are RESP's for children, loyalty point clauses, and ethical considerations as mentioned by Ian Hull and Suzana Popovic-Montag in a recent Hull and Hull podcast and in another interesting article here. 

Sarah Hyndman Fitzpatrick

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Listen to Rose v. Rose

This week on Hull on Estates, Rodney Hull and Jonathan Morse discuss the case of Rose v. Rose [which can be found at 24ETR(3D)217 or 81OR(3D)349]. The case is valuable and instructive as it  raises questions about rectification, rescission and removal of the trustees.

Feel free to send us an email at hull.lawyers@gmail.com or leave us a comment on the Hull on Estates blog.

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For something a little different on the blogging front, this week I will be providing a 5 part guide to developing your estate plan.  Today's blog will canvas preliminary issues to consider when creating (or revisiting) your estate plan.  What are the essential components of a sound estate plan and have you done everything possible to maximize your wealth preservation strategies, reduce the possibility of disputes and family strife, and avoid legal action pertaining to your estate down the road?  Every day this week I will provide a further glimpse into issues that arise as your estate plan evolves - from the initial conceptualization phase right through to requirements in Ontario for the valid execution of your documents.  Helpful tips and links will be provided along the way.

As a starting point, whether you are pondering your estate plan for the first time or simply re-thinking it (for example in light of the recent economic downturn), understanding the basic documents that govern wealth preservation for you and your heirs is critical.  While your Will is the foundation of your estate plan and provides for the orderly distribution of your assets upon your death, powers of attorney (both for property and personal care), living wills, and insurance all play a vital role in your estate plan as well.  Of course there are also many intangible factors in the planning process, such as underlying family dynamics.  Understanding the nature of sibling relationships and how these may play out after your death is therefore a critical component of your estate plan (see Jordan Atin's interesting blog on this issue here). 

As a first step, therefore, anyone thinking about this issue should understand the documents that comprise an effective plan and think about how their individual family dynamics may play a role.  Your estate planning lawyer can guide you in the proper direction in this regard and recommend how to deal with specific issues relating to your own individual family dynamics (for e.g. perhaps involving your beneficiaries in the creation of your estate plan in the appropriate situations, or suggesting trust arrangements rather than outright gifts to specific individuals).  Considering your choice of executor(s) and guardian of any minor children are also issues which your lawyer should canvas with you. 

Those documents which will be relied upon when you're "above the ground", such as powers of attorney and living wills (as opposed to your Will which comes into play when you're "below the ground") should be prepared and considered as essential components of your estate plan.

Tomorrow's blog examines a well-drafted Will and suggestions for preserving your wealth, reducing the possibility of disputes, and avoiding the potential for family strife upon your death.   

Sarah Hyndman Fitzpatrick