Negligence Regarding Estates and Wills - Hull on Estates #187
Listen to: Negligence Regarding Estates and Wills - Hull on Estates #187
This week on Hull on Estates, Ian Hull and Suzana Popovic-Montag discuss negligence in the area of solicitors working with estates and Wills.
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Ian M. Hull - Click here for more information on Ian Hull.
Suzana Popovic-Montag - Click here for more information on Suzana Popovic-Montag.
Negligence Regarding Estates and Wills -
Suzana Popovic-Montag: Hi and welcome to
Welcome to
Ian Hull: Hi Suzana. This is Ian Hull and we have Suzana Popovic-Montag. We’re podcasting today in our different forum, the audio forum. We always welcome you to go to our
Suzana Popovic-Montag: And we also welcome any feedback you might have in respect of our podcasts. You can feel free to visit our web page at hullandhull.com.
Ian Hull: Alright Suzana, well in the spirit of…in a few days from now, on Thursday and Friday of this week here in Toronto, the Law Society of Upper Canada is holding their annual Estates and Trusts Summit. And I am privileged to be able to speak at that Summit on Friday on a topic that I have thought of many times in my practice and deal with a fair amount, of course, when we’re dealing with what is a fairly large percentage of our practice, and that is, defence of solicitor’s negligence in the area of Wills and Estates.
So we thought we’d talk today about a new book that has come out and one that really, I think, is going to be seen as the key source when considering questions of negligence with solicitor’s work in Wills and Estates area.
Suzana Popovic-Montag: And that book is called Risk and Negligence in Wills, Estates and Trusts. And it’s a great text that’s been prepared by Martyn Frost, Penelope Reed and Mark Baxter from the
Ian Hull: Alright, so really what we thought we’d try to do today and what is our general format of these podcasts and that is, try to keep them within our 10 minute treadmill time, is talk a little bit about creating a checklist of issues identifying in the context of Estates and Trusts negligence. And the first, of course, really is the fundamental role of a solicitor and where the negligence can crop up, and that is where there is negligence in Will preparation.
Suzana Popovic-Montag: And what we’re doing when we’re looking at that as an overview, of course, is we’re looking to see what it is that the lawyer has actually done, what the duty of care is in terms of to whom any responsibility that was owed was in fact owed, and whether or not that responsibility or that duty was met appropriately based upon what we call the standard of care.
Ian Hull: So we’ve dealt with on many, many cases of how…what the expectations are in Will preparation. And of course there is a very high standard of perfection in terms of any…very short fuse with respect to making mistakes in this area on the drafting side with typos, missed residue clauses and the like.
Alright, so that’s obviously our first area to keep our eye out for and careful drafting is an easy thing to remember. The next is really part and parcel of the drafting process and that is the process of Will preparation itself.
Suzana Popovic-Montag: And when we’re talking about the process, Ian, I guess we’re looking at things like who is our client? What is our client asking us to do? What are our instructions? How do we actually go about executing those instructions?
Ian Hull: Absolutely. So the delineation of the retainer is paramount and vital in the course of the Will preparation because of the negligence that can arise if we are seemingly acting for someone else, i.e. a beneficiary.
Suzana Popovic-Montag: And actually, Ian, just to interject, at our last Hull & Hull Breakfast Seminar, you and I actually spoke on the issue of joint retainers. And anyone who is interested in following up a little bit on that is welcome to visit our web page again. We’ve got our paper on there and the video portion of our presentation as well.
Ian Hull: Alright, turning now to the next area. We’re sort of just trying to lump this together in an effort to create a bit of a checklist. We’ve got the preparation of the Will process, the preparation of the Will, and now the administration of Trusts and Estates where we can find areas of negligence arising.
So in that context, Suzana, what are we looking at when we’re dealing with…what are some of the issues that arise in the administration of Trusts that have, in some respects, created some areas of negligence possibilities?
Suzana Popovic-Montag: Well many times we see an issue of timing, and that is either the work has not been done in a timely fashion or there’s been too much of a delay between the beginning and the end of the whole process of administering the Estate. And that, of course, is going to depend upon the nature of the assets, beneficiaries and where they might be located or how difficult it is to locate them, and also the complexity of the Estate administration itself.
Ian Hull: Absolutely. And really when we’re coming down to that, one of the things that we help to avoid problems in the future is to really focus on the nature of the assets and the expectations that arise out of those assets in terms of timing. For example, a piece of real estate can’t be distributed in 10 days from death. Often things have to be done and title searches have to occur or even it has to be put into the marketplace versus cash, which can often be distributed quickly. It tends to appease the beneficiaries and if there’s sufficient holdback, either with other assets or with other cash, it’s always a good idea to get that stuff flowing. Happy beneficiaries make it less likely to have suing beneficiaries.
Suzana Popovic-Montag: And one of the best ways that we know that we can sort of keep people happy at the end of the day is to keep them informed. So a trustee who is advising the beneficiaries regularly of what it is that they’re doing, if they’re being transparent and regularly, as I say, reporting that certainly helps to appease the whole process at the end of the day.
Ian Hull: Now a vital consideration in any administration or in any Estate plan is, of course, the tax issues. We don’t intend to try to canvass them in any great detail. However, again, as an issue identifier, taxation can be a huge area of negligence and one which can arise massive claims as a result of inattention or lack of knowledge in the area when you’re preparing the Will or when you’re administering the Estate.
Suzana Popovic-Montag: That’s right, Ian. It really is that two-fold exposure, both you know before the process has begun when you’re taking the instructions stage and trying to effect the testator’s intentions. And then thereafter as well, when you’re trying to make sure that, to the extent that you are doing it in as tax-effective a manner possible, as counsel or either as the trustee directly administering the Estate.
Ian Hull: And really when we look at the tax issues here in Canada, the key issues tend to be relating to…well obviously trying to avoid probate tax here in Ontario and other provinces have a probate tax, managing…effectively managing the reality of the deemed disposition tax that will impact on death. And when I say effectively managing, there are certain expectations that taxes will or will not be paid. And an easy illustration is taking advantage of the rollover to a spouse and looking at the gifts and the nature of the gifts, if they appropriately can be simply rolled over to the spouse as opposed to trying to assess the whole Estate plan in the context of just gifting when you’re not considering the most tax effective way to gift as well.
Suzana Popovic-Montag: And the key really there is the managing of the tax as opposed to the avoiding of the tax, which is a fine line of course. And by doing whatever we can to minimize tax, I think that’s a very legitimate and expected tax planning mechanism.
Ian Hull: And then the area of litigation itself - obviously best to avoid at every step you can. One of the…and there are certain topics that sort of cry out with regard to, that arise in the context of litigation.
Suzana Popovic-Montag: I guess one of the first ones that always come to my mind is the limitation period and whether or not the claim that we sort of foresee coming down the pipes can somehow be stopped in its tracks just by virtue of the fact that it’s out of time.
Ian Hull: And the area that I notice from the book at least, in Risk and Negligence which is really well developed is what the authors do to analyze and consider the question of assessment of damages and mitigation. And how those two core issues really are dealt with in the context of negligence because the big question obviously is, if there’s a mistake, does it actually cost any money to anyone? Is there any damage to someone financially that needs to be paid back in the form of a claim against the solicitor? And that assessment of damages and tied into the question of mitigation is something fundamental to any analysis of negligence.
Suzana Popovic-Montag: And of course the quantification of both those issues as well can turn into a feeding frenzy in and of itself when it comes to making sure that we’ve got the right numbers attached to what we say was done improperly.
Ian Hull: Okay, well one of the things this book is, of course, it’s a British textbook. So from our perspective anyway, it is really helpful and vital in terms of the law. The statutes aren’t as directly relevant but they do identify the sort of core statutes that we’ve got to consider in any negligence scenario. And that is, of course, statutes such as the Trustee Act, the Estates Administration Act and those kinds of parameters. And presumably pre-death, any issues relating to the Substitute Decisions Act as well.
So again, we can’t more highly recommend this book. We think it’s a terrific starting point in any analysis and any research you’re going to do in considering the question of solicitor’s negligence, to help either defend or make a claim against a solicitor and more importantly, as a solicitor, to help you become a better solicitor, to know the issues that are out there and that can come and attack you, so to speak.
Suzana Popovic-Montag: Well I think that brings us to the end of this podcast, Ian. It was great being back on
Ian Hull: Thank you Suzana.
This has been
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