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

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Welcome to my week of blogs.

Tax season is once again upon us with all of its attendant trepidation. No doubt, a general panic has set in as people gather together the necessary documentation to fill out and file their tax returns. 

Anybody who has been an estate trustee will know that he/she is responsible to prepare and file a terminal tax return and to ensure that any outstanding taxes are paid on time. To help cut through the confusion, I thought it worthwhile to set out some of the income/deduction tax receipts that an estate trustee may come across when preparing a tax return:

Income

Ø      T4                    Employment Income

Ø      T4A                  Pension/Annuity Benefits, Canada Pension Plan Benefits

Ø      T4A(OAS)       Old Age Security Benefits

Ø      T4RIF              Registered Retirement Income Fund Withdrawals

Ø      T4RSP            Registered Saving Plan Withdrawals

Ø      T4PS               Contributions by a Company to Profit Sharing Plan

Ø      T600                Cash Canada Savings Bonds

Ø      T4E                  Employment Insurance Benefits       

Ø      T5                     Investment Income

Ø      T3                     Trust Income (including mutual funds and income trusts)

Ø      T5008              Statement of Securities Transactions

Ø      T5013              Statement of Partnership Income

Deductions

Ø      T2200              Declaration of Conditions of Employment

Ø      T2201              Disability Tax Credit (completed by a doctor)

Ø      T2202              Tuition/Education Deduction Certificate

Ø      T101                 Statement of Renounced Resource Expense

Ø       T5006              Labour Sponsored Tax Fund Credit, RRSP Contribution, Union and Other  Professional Dues, Medical or Attendant Care Expenses, Charitable Donations, Political Donations, etc.

Thank you for reading, Justin.

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Listen to Applying for Probate

This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the applying for probate. They discuss some of the ways that estate administrators can simplify the process.

Comments? Send us an email at hullandhull@gmail.com, post a comment on our blog at http://estatelaw.hullandhull.com/ or leave us a message on our comment line at 206-457-1985.

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Listen to Getting Probate

This week on Hull on Estate and Succession Planning, Ian and Suzana discuss probate - what it is and when you need it.

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 our blog at www.hullandhull.com.

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It's About the House's Current Market Value, Stupid.

One of the first steps in any estates litigation matter is valuing the estate assets.  Most assets are easy to value: RIFs, bank account, etc.  But for many estates, the major asset is house.  This is particularly true in the GTA (Greater Toronto Region, for our U.S. readers), where baby boomers who bought modest homes decades ago have seen the value of their house skyrocket.

The twist for both estates lawyers and litigants is that house valuations are inherently less precise and more subjective than most assets.  Accurate information on the market value of a house can be crucial. 

The subprime fiasco in the U.S., a potential serious recession and Toronto's new land transfer tax may possibly create the unthinkable horror: a decline in the housing market.  I am far, far away from being an authority on real estate, but it may be prudent to consider attaining current appraisals where there is doubt about a home's value.  That is especially the case for matters that have dragged on for years.  Obtaining an appraisal from a reputable appraiser, for instance one certified by the Appraisal Institute of Canada (see: http://www.aicanada.ca/e/index.cfm), is one option to consider.

The information gleaned may be invaluable in driving a better settlement.

Thanks for reading and have a great week.

Chris Graham

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Listen to Assets and Liabilities

This week on Hull on Estate and Succession planning, Ian and Suzana expand on last week's discussion about determining value. They also discuss taking an inventory of an estate's assets and liabilities.

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 our blog.

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What are some of the "red flags" to be wary of in the course of a retainer to prepare a Will?  Corina Weigl considered this issue in an article she wrote for the 2007 LSUC Six Minutes Estates Lawyer (find it here) titled "How to Bullet-Proof Your Will".  By far the most typical "red flag" arises in the context of third party involvement, such as where a close friend or relative (commonly a child of the testator), contacts the lawyer directly asking for advice in respect of the testator’s estate (i.e. “My Dad needs a will drawn up”). This is a common scenario for most estate planning practitioners. The lawyer should remind the third party who the "real" client is and that best practice demands that he or she deal with the testator (as opposed to the third party) directly.  Lawyers are advised to hold meetings in private with the "real" client; to prepare detailed notes of telephone conversations and meetings with the "real" client, and to scrutinize motivations in cases where there are blatant departures from the provisions of former Wills. Another “red flag” is the unequal treatment of beneficiaries. To avoid the possibility of a dispute down the road, clients should be clear in expressing their wish to exclude an obvious beneficiary (i.e. leaving out 1 of his 3 kids). The lawyer may ask for an explanation of why the person is being treated differently, and the lawyer will likely take notes. Unequal treatment inevitably leads to family friction and may up the chances of a will challenge. Lastly, it is a lawyer’s duty to be satisfied that their client has the requisite mental capacity – once again the lawyer is advised to take notes and when in doubt, consult expert opinion.

Sarah Hyndman Fitzpatrick

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I came across a really interesting blog (find it here)  the other day that considered an article published recently by Kristine S. Knaplund  (Professor of Law, Pepperdine School of Law), entitled The Evolution of Women’s Rights in Inheritance, 19 Hastings Women’s Law Journal 3 (2008).

The article describes how archived probate files in Los Angeles are a valuable source of information on the history of women’s inheritance rights. Issues such as whether women were routinely appointed as the executrix of their husband’s estate, and whether they were left the residue of an estate outright or with a life interest or by way of a trust, are considered.   The following is an excerpt from article:

“The probate files are a rich source of information about the lives of women and men in Los Angeles as it transitioned and grew into a major city. The availability of land and the use of promissory notes allowed the industrious the opportunity to save money and leave an estate to their families and friends. Ten women left estates over $10,000 in 1893 dollars, compared with twenty-two men. Of these, one woman began as a maid from Ireland who ended up being the richest woman dying in Los Angeles in 1893, with an estate of over $285,000.”

The article summarizes that Los Angeles in the 1890s was ahead of other parts of the country in women's rights. For example, men in Los Angeles routinely named their wives as executrix of the estate. Relatively few men tied up legacies to a wife or daughter in a trust or a life estate, choosing instead to give the beneficiary an outright interest in the property.  I would be interested to see how the history compared to women living at the same time in Ontario and the rest of Canada.

Sarah Hyndman Fitzpatrick

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A new study (find it here) suggests that even when a testator (and family members) support organ donation, there is no guarantee that these wishes will be carried out when someone dies. Researchers at the University of Southampton in the UK have concluded that relatives are often reluctant to carry out the deceased’s wishes regarding organ donation, due primarily to conflicting feelings over “protecting the body” of the deceased and “making a gift of life”.

In Ontario, custody of the deceased’s body belongs to the Executor and Trustee, and he or she has the authority to make the necessary arrangements. Testamentary instructions regarding organ donation have no legal effect and depend solely upon the wishes of the next of kin and the trustee for implementation.

Nevertheless you may wish to include such instructions in your Will. Making your views on the subject known to family and your Trustee, and signing your Ontario driver’s license, may also help to ensure your wishes are respected. Various charitable organizations (such as the Kidney Foundation) have sample donation clauses, and Part II of the Trillium Gift of Life Network Act is worth considering.

Sarah Hyndman Fitzpatrick

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Listen to Determining Value

This week on Hull and Estate and Succession Planning, Ian and Suzana talk about values and appraisals. They specifically look at some of the issues related to assigning value to assets such as jewellery, automobiles, antiques and artwork.

Comments? Send us an email at hullandhull@gmail.com, leave us a message on our blog or give us a call at 206-457-1985.

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I recently attended this CLE program of the LSUC chaired by Laura Kerr, Jennifer Pfuetzner and Corina Weigl. The panel used an annotated Will as a framework to consider drafting tips, and highlighted many significant recent developments.

Notable provisions included “Air Miles Designations” (of value if a testator or testatrix has acquired a significant quantum of frequent flyer points), a “Debts, Funeral and Testamentary Expenses” clause which included provision for “reasonable travel expenses” for relatives and/or friends wishing to attend the funeral, and an updated “RESP” clause. Because an RESP is the property of the deceased subscriber (usually the parents or grandparents of the beneficiaries), consideration should be given to whether the testator wants to plan to continue after his death (and, if so, who should become the succeeding subscriber). Alternatively, the testator may prefer that the Trustee collapse the plan and direct the proceeds into the residue of the estate.

Many more issues were canvassed with a focus on emerging concepts in estate planning. Most significantly, the attendees were urged to keep an eye on the definition of “issue” in light of the current reality of more complex family relationships (i.e. common law, step families) as well as potential challenges raised by the more widespread use of reproductive technologies in today’s world.

Sarah Hyndman Fitzpatrick

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I came across an interesting article in The Prairie Star, a Montana-based newspaper, about an incentive being offered to farm and ranch couples, both young and old, who plan their estates early. 

Montana State University is offering a promotion whereby the first 40 couples who work through an estate planning process will receive $100.00 off any follow-up legal fees.    

A reason for the program is to encourage families in the agricultural business to start thinking about how they are going to plan their estates early on.  This is especially important where there is an operational farm which will make up the bulk of the estate.  Complications can arise when, for example, there is no clear plan in place and one beneficiary wants to keep and run the business, while another wants to take his or her inheritance in cash.

The presence of a family farm can affect the estate planning of more than one generation.  For example, members of an older generation may control the farm, while members of a younger generation may be structuring their estates in anticipation of inheriting it.  Or, members of multiple generations might have ownership interests in the farm that will affect the way it can be dealt with in the estate of any one of them. 

Of course, many of the issues that families owning a farm in Montana my face are the same as those faced by families owning any kind of business anywhere.  However, the program does underscore the importance of planning early and planning well. 

You can read more about the program in Montana here.

Thanks for reading,

Megan F. Connolly

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Listen to Valuations and Appraisals

Ian celebrates the 100th episode of Hull on Estate and Succession Planning.

He discusses the question of valuations and appraisals and how these affect estate mediation.

Comments? Drop us a line at 206-457-1985 or send us an email at hullandhull@gmail.com.

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Robert Brown claims to be the unacknowledged “love child” of Queen’s Elizabeth’s late sister, Princess Margaret. In his quest to prove his claim, he has sought access to the secret Royal Wills of Princess Margaret and the Queen Mother.

In 2002, shortly before the deaths of Princess Margaret and the Queen Mother, lawyers for the Royal Family, the British Treasury, and the Attorney General met with England’s highest ranking family judge seeking a practice direction to codify the century-long convention that Royal Wills be kept sealed from the public. The Order was passed and the “secret pact” was not made known to the public or Parliament.

Mr. Brown sought to have the Wills unsealed in family court but his case was struck down as vexatious and baseless. Mr. Brown sought leave to appeal and the court of appeal granted Mr. Brown leave and found that he was entitled to a hearing of his claim to have the Wills inspected. Despite calling his claim to be Princess Margaret's son “irrational and scandalous”, Lord Chief Justice Lord Phillips found that the public interest outweighed the Royal family’s right to privacy and called the pact unconstitutional.

News of the “secret pact” resulted in an outcry in the British media and calls for transparency within the Royal family. Mr. Brown’s lawyer submitted that members of the Royal family who receive national assets should have their Wills inspected by the public to ensure those assets are not mixed with personal property.  If Mr. Brown wins, he will overturn the long standing convention that Royal Wills be kept sealed; a convention started in 1911 by Queen Mary to seal the will of her brother, Prince William of Teck and prevent a Royal sandal.

You never know who is going to change the law.

Have a great (long) weekend,

Diane Vieira

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The Globe and Mail recently interviewed a man living in British Columbia who may be the son of John F. Kennedy.

The article made me reflect on the different ways solicitors deal with persons born outside of marriage when drafting a Will. Since March 1978, persons born inside of marriage and outside of marriage are entitled to share equally in an intestacy estate. In a testate administration, unless a contrary intention is included in the Will, any words identifying a class of persons such as “issue” and “children” includes persons born outside of marriage.

However, a testator may want to exclude persons born outside of marriage from being considered as part of a gift class in order to remove the obligation on an executor to search for members of the gift class who were born outside of marriage.

Given the prevalence of common law relationships, to include a boilerplate clause excluding persons born outside of marriage from inclusion in the gift class may result in the unintentional disinheritance of grandchildren or great-grandchildren.  Any exclusion clause has to be considered carefully.

The upcoming LSUC CLE program, The Annotated Will, being held on February 21, 2008, discusses how to deal with difficult drafting issues. The two hour program is being chaired by Laura Kerr, Jennifer A. Pfuetzner, and Corina S. Weigl and promises to offer valuable advice on avoiding common drafting errors.

Have a nice day,

Diane Vieira

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Listen to Pre-probate Checklist

This week on Hull on Estates, Ian and Suzana discuss last week's Ontario Bar Association Conference (featuring Clare Burns and Jordin Atin as speakers).

They then wrap up their ongoing discussion about some useful steps to remember when administering an estate.

If you'd like to leave a comment, call us on our comment line at 206-457-1985 or leave us an email at hullandhull@gmail.com or you can visit our blog at estatelaw.hullandhull.com/.

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I am currently attending Osgoode Professional Development’s Fifth Annual Intensive Wills and Estates Workshop which has considered, among other things, common drafting errors and how to avoid them.

When it comes to charitable gifts, a solicitor should confirm the information the testator provides to them. A testator may misname a charity or not know that the charity is no longer in existence. The solicitor drafting the clause should ensure that the correct and exact name of the charity is used.

They may want to refer to a directory, such as the Canadian Donor’s Guide or the searchable charities database available on Canada Revenue Agency’s website, http://www.cra-arc.gc.ca/tax/charities/online_listings/canreg_interim-e.html. It is also important to note for tax purposes, the differences between not-for-profit organizations and registered charities.

For lesser known charities, a solicitor may want to include the registry number of the charity or contact the organization directly to determine how the charity should be named in the testamentary gift. 

The solicitor may also want to discuss with the testator what will happen if the named charity is no longer in existence at the time of the testator’s death. Will the charitable gift lapse or will there be a gift-over to an alternate charity? Including these types of instructions in the clause may prevent the need to later on seek directions from the court and attempt to have the gift applied in accordance with the cy-pres doctrine.

Thanks for reading,

Diane Vieira 

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Listen to Asset Particulars

This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the importance of keeping track of asset details.

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.

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Does the Court have jurisdiction to set aside a Family Law Act election, or is such an election irrevocable?

This question was recently considered in the Ontario Superior Court of Justice decision of Iasenza v. Iasenza Estate 2007 CanLII 23351.

As background, Ontario’s Family Law Act (“FLA”) allows a surviving spouse to elect to either receive benefit under the deceased’s will (or on an intestacy if there is no will), or receive an equalization of net family property under the FLA. Normally, the surviving spouse seeks information regarding each of the options, and then elects for the greater benefit.

However, information regarding the values of each option is not always forthcoming in a timely fashion. The election must be filed within 6 months of the date of death, or the surviving spouse is deemed to elect to take under the will or on an intestacy.

The Court held that it did have discretion to set aside an election made in favour of an equalization. However, the Court noted that the discretion will be exercised sparingly and only in “restrictive circumstances where the interests of justice require it and where the balance of the interests of effected parties clearly warrants it.”

In considering whether to exercise its discretion, the Court will consider:

a.                  Was the election filed as a result of a material mistake of fact or law made in good faith?

b.                  Was there any responsibility or culpability on the part of the effected parties in relation to the election?

c.                  Was the notice of intent to seek revocation of the election given in a timely way, and in particular, how long after the 6 month filing period was notice given?

d.                  Has the estate been distributed or would interested