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

On September 14, 2011 at Practice Gems: The Administration of Estates 2011: Avoiding the Pitfalls, Brian J. Wilson and Gwen A. Benjamin presented a paper on tax planning and liability in the context of estate administration.  A few reminders I picked up from their paper that I thought would be helpful to note are the following:

·                    the general rule is that capital property of a taxpayer is deemed to have been disposed of immediately before death for fair market value;

·                    the most general exception is where property is transferred and vests in a spouse or common law partner;

·                    a terminal return must be filed for the taxpayer;

·                    penalties for late filing will apply if a return is not filed - 5% of tax owing to a maximum of 17% (interest accrues and compounds daily);

·                    estate trustees are jointly and severally liable to pay any taxes, penalties and interest owing to the extent that they are in possession and control of the estate property;

·                    beneficiaries may also be liable to the extent of assets received for the tax liability of the deceased/estate;

·                    tax planning is required when there are ongoing trusts and in respect of the “deemed disposition” rules that arise in respect of trusts in wills; and

·                    an executor is entitled to make a special election to apply capital losses that arise in the first tax year of the estate to the deceased’s terminal return, thereby reducing capital gains arising on death from the loss.

The authors address these and other points in greater detail, which makes it a worthwhile paper to have at the ready.

Thanks for reading,

Natalia R. Angelini - Click here for more information on Natalia Angelini. 

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

Yesterday, I attended at a seminar put on by the Law Society of Upper Canada entitled “Practice Gems: The Administration of Estates 2011: Avoiding the Pitfalls”. (There is a repeat performance scheduled for October 31, 2011: see details here.)

One of the presenters was Clare Burns. She has prepared an excellent checklist for solicitors advising estate trustees. The checklist covers topics such as the first interview with the client, reviewing wills, codicils and affidavits of execution, preparing and delivering initial report to the client, determining the estate assets and liabilities, applying for the Certificate of Appointment, realizing and distributing the estate, and preparing the final report to the client. Under each heading, there are detailed descriptions of matters to be considered.

Ms. Burns has advised that she hopes to have the checklist available on the LSUC website shortly.

Solicitors are encouraged to download the checklist, and personalize it and expand to it according to their needs and experience.

The benefits of using a good checklist cannot be overstated. They are an essential tool in any practice.

Thank you for reading.

Paul E. Trudelle - Click here for more information on Paul Trudelle. 

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

The lack of federal estate tax in the US for those who died in 2010 was the talk of many blogs and news reports for much of last year.   In a recent statement from the IRS, Executors for such estates have been given until November 15, 2011 to make a decision regarding the taxes to be applied to the estate they are administering.

The option allows the Executor to skip paying an estate tax, or to pay tax with a $5 million per-person exemption and a 35 percent top rate, the same as applied in 2011. On its face this may seem like an easy decision, why pay taxes if it’s unnecessary, but the choice to pay tax may bring with it long term benefits for the beneficiaries of the estate.  By incurring the tax, the Executor allows for a transfer of certain assets at a stepped up basis, creating a significant potential benefit to the beneficiaries. If the taxes are not paid by the Estate, significant capital gains could remain owing on certain assets, potentially impacting the beneficiaries negatively.

Complicating this choice are administration issues relating to the forms related to filing. It is anticipated that the required forms will be released in the early fall, still giving the Executors time to file.  Certainly, Executors will be considering their fiduciary obligations and the various financial implications for the estate very closely in the coming months.

Even north of the border, where most of us aren’t directly affected by the choices plaguing American Executors, the fiduciary obligations and issues facing Executors are similar. If the choices made by the American Executors make their way to the courts, we’ll be paying close attention.

Until Tomorrow,

Nadia M. Harasymowycz - Click here for more information on Nadia Harasymowycz. 

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

Further to yesterday’s blog, in the case of McDougall Estate, the beneficiary complained about the trustee’s compensation on the passing of her accounts. In issue was whether the trustee’s compensation should be reduced because she:

1. Made an improper distribution to a charity that was not authorized by the Will.
2. Failed to make an inventory of the contents of the deceased’s house and failed to offer the beneficiary any of the deceased’s personal effects.
3. Pre-took compensation.
4. Paid too much in legal fees out of the estate.

The court found that even though the charitable gift failed because it was not a specified amount or share, the trustee’s interpretation of the Will was not unreasonable and the trustee was not liable for an innocent mistake, made in good faith. She was therefore not required to reimburse the estate and should not have her compensation reduced.

The contents of the house were of little value and had to be cleaned out for sale. The trustee never received any indication from the beneficiary that there was anything of sentimental value that she wished to receive. In the circumstances, the Court found that the compensation should not be reduced for the manner in which the trustee dealt with the personal effects.

The trustee pre-took compensation of 5% of the value of the estate as originally calculated but, after adjustments, she admittedly overpaid herself by $1,163.24. Estate trustees ought not to pre-take compensation unless authorized in the trust document or by approval of the executor’s accounts by the beneficiaries. The proper remedy was payment of interest on the amount pre-taken. Accordingly, the trustee was ordered to repay $1,163.24 plus interest of $360 to the estate.

It was not unreasonable for the trustee to seek legal advice to respond to the inquiries from the beneficiary’s lawyer. While amounts paid to respond to questions about the administration of the estate were not at first instance a proper charge to the estate, such costs were allowed because they were properly incurred by her to respond to the beneficiary’s challenges to her administration of the estate.

The payment of legal fees from the estate that ought to have been paid by the estate trustee is a form of pre-taking of compensation and so the estate trustee was liable for interest on that amount, which was fixed at $70.00.

Sharon Davis - Click here for more information on Sharon Davis. 

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

When applying for a Certificate of Appointment of Estate Trustee with a Will, the applicant must be certain that the Will annexed is the Last Will and Testament of the Deceased. Ideally, the testator will have discussed the location of their Last Will with a trusted family member, friend or professional and it will be easily located at the appropriate time. 

If this is not the case, there are a number of places to begin your search for a Last Will, as discussed by Sean Lawler in his article “Wills Kept by the Law Society of Upper Canada” in the most recent issue of Deadbeat, a publication of the Trusts and Estates Law Section of the Ontario Bar Association.

Some of the places Wills are often kept include the following:

1. The drafting lawyer's Wills vault.
2. Among the Deceased's possessions.
3. In a safety deposit box.
4. With the Executor.
5. With an attorney for property or for personal care.
6. On file with the Superior Court of Justice pursuant to Section 2 of the Estates Act, which establishes a Wills depository administered by local Court offices.

If you are unsuccessful locating a Will as above, you can place an ad with the Ontario Reports or other publication to determine if another lawyer who acted for the Deceased, or any other person, is in possession of a Last Will.

One other place to look is the Law Society of Upper Canada (“LSUC”). The files of many lawyers who die, retire, or are disbarred are transferred to LSUC’s Trustee Services Department. Most files are now stored electronically.

LSUC keeps over 45,000 Wills, a number that increases by approximately 3,000 per year. The Wills register can be searched by the name of the lawyer or by the name of the Testator.

The key takeaway here is that estate planning should not be a secret. Discuss your Will with your family (contents and location) and make it easy on loved ones when the time comes to probate your Will.

Sharon Davis - Click here for more information on Sharon Davis. 

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

Being a trustee is serious business. A trustee, by law, owes a fiduciary duty to the beneficiaries for whom he or she holds property and must keep this in mind and act in the best interest of those beneficiaries at all times. 

The Court does not take the breach of fiduciary duties lightly and will Order trustees to fulfil their obligations. If a trustee doesn’t heed such Orders, they may find themselves in contempt of court, as was the case in a recent Ontario Superior Court of Justice decision, Re Penna Estate. 

In Re Penna Estate, the defendant was found in breach of the following four Court Orders during the course of litigation that had been ongoing for five years:     

1.     A Mareva Injunction.

2.     A Passing of Accounts Order.

3.     An Order to provide the Court with an up-dated Affidavit respecting the values of assets listed in the Mareva Injunction.

4.     An Order of to attend at an Examination in-aid-of execution and to bring all documentation. The Defendant was also ordered to provide an Affidavit respecting the status of his assets, which were frozen under the Mareva Injunction, since it was discovered that he had liquidated all such assets.

Justice Greer found that the Defendant had made no attempt to comply with the Orders and had committed fraud in the administration of the estate.  The Court discussed the possible sanctions for contempt, which include:

1.     Imprisonment for such a period and on such terms as are just.

2.     Imprisonment if the person fails to comply with the term of the Order.

3.     A fine to be paid to the Provincial Treasurer.

4.     A Order to do or refrain from doing an act.

5.     An Order to pay such costs as are just.

6.     An Order to comply with any other order that the Judge considers necessary.

In Re Penna Estate, the Court considered the applicable sentencing principles and found that the appropriate sanction in the circumstances was a term of imprisonment. The Defendant was sentenced to 14 months. Furthermore, because this was a civil contempt, there was no method of parole as there is in criminal matters. 

A sobering lesson for all who are the subject of civil Court Orders, indeed.

Sharon Davis - Click here for more information on Sharon Davis. 

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

We have blogged repeatedly on preparing your affairs for the inevitable, and steps that can be taken to make your estate trustee’s difficult job an easier one.

Recently, the Wall Street Journal published an article on this very topic: “The 25 Documents You Need Before You Die”. The article’s premise is that it is not enough to simply prepare an estate plan, and end-of life instructions: you must also make your heirs aware of them, and leave the documents where they can be found.

The article notes that many insurers are not paying out on unclaimed insurance contracts. In addition, billions of dollars in bank accounts remains unclaimed. In many cases, the estate trustee simply does not know of the existence of a life insurance policy or a bank account.

This, and other potential problems, can be avoided or minimized by simply organizing your relevant documents, and telling your estate trustee where they can be found.

The informative article suggests preparing a “Death Dossier”, consisting of the following:

The Essentials:

Will;
Letter of instruction to estate trustee;
Trust documents:

 Proof of Ownership

Proof of ownership of real property, cemetery plot, vehicles;
Stock certificates, savings bonds and brokerage accounts;
Proof of loans made or debts owed;
Partnership and corporate operating agreements:
Tax returns

 Medical/Health Care

Personal and family medical history;
Power of Attorney for Personal Care

 Marriage/Divorce

Marriage licence;
Divorce documents

Bank Accounts

List of bank accounts, user names, passwords;      
List of safety deposit boxes

Life Insurance and Retirement

Life insurance policies;
Details of RRSPs;
Pension documents;
Annuity contracts
 

The contents will obviously be modified to meet the individual’s situation. The contents will also have to be reviewed and updated regularly, as circumstances change.

Having such documents together in one place, and in a location known by the estate trustee, will go a long way to facilitating the job of the estate trustee.

Thank you for reading.

Paul E. Trudelle - Click here for more information on Paul Trudelle. 

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

Ian Hull writes about what could be a valuable new product for the non-professional executor in the June 10, 2011 issue of The Lawyers Weekly - the new errors and omissions insurance.  
 
Mr. Hull notes the following areas of conflict that generally occur in the administration of an estate:

·                    preferential treatment of certain beneficiaries over others;

·                    timing issues relating to the sale of real property or various types of financial instruments;

·                    allegations of conflict of interest on the part of the estate trustee; and

·                    failure to value the estate assets properly, or at all.

In addition, Mr. Hull addresses factors leading to increased risk for executors, including:

·                    more complex relationships between beneficiaries given the rise of second marriages and blended families;

·                    real estate and financial instruments are more volatile in nature and thus more sensitive to timing than previously;

·                    society is more litigious than in the past; and

·                    people have more information at their fingertips, and therefore may have greater expectations for the estate trustee to manage.

This new insurance product, ERAssure (exclusively available with the counsel of a lawyer) insures executor clients for the costs of defense and indeminty for damages awarded against them that arise out of errors and ommissions made during the estate administration.  It is available for estates with $500,000 to $5,000,000 in assets.  I think this is an important product for estate trustees to consider obtaining if they want to maximize their risk protection. 
 
Thanks for reading,
 
Natalia R. Angelini - Click here for more information on Natalia Angelini. 

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

Some interesting points Clare A. Sullivan of Aird Berlis made on this topic at the 2011 Six-Minute Estates Lawyer are:

·                    Conflicts - Consider whether the Trustee appointed in the Primary Will is the same as the Trustee appointed in the Secondary Will; if not, it may be that the solicitor can not act for both; it may also support the contention that the testator intended the assets under one Will to be dealt with separately from those governed by the other Will;

·                    Assets - Trustees should list the assets of each estate separately and confirm none of the assets of the secondary estate require probate; if such an asset requires probate, probate taxes will be payable on the total value of the secondary estate;

·                    Notification - The beneficiaries under each Will should be provided with formal notification of their interest in the estate and the probate application, and be given a copy of both Wills;

·                    Creditors – it the Trustees of each Will are the same one advertisement should suffice; separate ads or a joint ad should be considered if the Trustees are not the same; and

·                    Debts and Taxes –

·                    When there are different residuary beneficiaries under each Will, it is important for Trustees to ensure their actions cannot be construed as favouring one or over any other;

·                    If the Trustees and residuary beneficiaries are the same in each Will, and there is no doubt that there will be sufficient assets of both estates to pay all debts and taxes, there will be no issues regarding abatement; and

·                    If the residuary beneficiaries are different or there is not certainty that the residue of the two estates are sufficient to cover all debts and taxes, the Trustees will have to consider from which estate debts and taxes will be paid and which gifts will abate in which order. This may involve an interpretation of the Wills based on the testator’s intentions. If unsure or the beneficiaries disagree with the Trustees’ interpretation, it is advisable to seek the direction from the court.

Thanks for reading and have a great weekend!

Natalia R. Angelini - Click here for more information on Natalia Angelini. 

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

In Estate administration there are occasions when it is necessary to sell, lease or mortgage property in which a minor has an interest. The Estates Administration Act grants The Children’s Lawyer the authority to assist Estate Trustees who do not have sufficient power to convey or lease and mortgage real property on behalf of minors. 

The parameters of The Children’s Lawyer’s and the Court’s involvement is dealt with in detail in The Office of the Children’s Lawyer’s Guide to Practice and Procedure With Respect to Sales of Land. One will need approval of such transactions by The Children’s Lawyer and/or the Court in respect of all but the following occasions:

·                    when it is necessary to sell or mortgage the property to pay the legitimate debts of the deceased;

·                    when there is a mortgage on non-vested real property for which the deceased was liable to pay the mortgage debt and it is necessary to sell to discharge this debt;

·                    when the personal representative is exercising a power given under the will to sell, mortgage, lease, or otherwise deal with real property; and

·                    when a Judge has dispensed with the concurrence of a beneficiary, has made an Order, or has directed a distribution within three years of the deceased’s death.

Executors or Attorneys for Property dealing with real property where there are minor beneficiaries should make themselves aware of the legal requirements with respect to the Office of the Children’s Lawyer.

Thanks for reading,

Natalia R. Angelini - Click here for more information on Natalia Angelini. 

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

I don’t know about you, but I love it when the courts consider novel ideas as a practical solution to a legal problem. That is why the decision of Re D’Angelo Estate, 2010 ONSC 7244 (CanLII) caught my attention.

In D’Angelo Estate, Faust D’Angelo, deceased, resided in St. Catharines, Ontario. In his Last Will, he appointed his son, Emidio, and Emidio’s daughter, Denise as co-executors. His estate was divided equally amongst Emidio and his three surviving siblings. The estate, situate in Ontario, was worth approximately $1.5 Million.

Emidio and Denise, because they both lived in the United States, were obliged to obtain a Foreign Executors’ Bond. The insurer would only issue a bond if a lawyer in counsel’s firm was appointed by the Court as a monitor to supervise the administration of the estate.

The Court allowed the co-executors’ motion and appointed the monitor. Here are a few of the interesting findings leading up to its decision:

·        The co-executors both had standing under Rule 74.15(1)(i) as persons who appeared to have a financial interest in the estate. Emidio had a financial interest because he was a beneficiary. The Court found that the financial interest contemplated by the rule may be direct, indirect or contingent and although Denise was not a beneficiary, she had standing due to her entitlement to claim executor’s compensation, which was a contingent financial interest in the estate.

·        The Court noted that monitors had been appointed by courts in other situations to monitor the business and financial affairs of a charity and under the oppression remedies in the Ontario Business Corporation Act, which makes no provision for a monitor. 

·        The monitor would be an officer of the court and the responsibilities of an officer of the Court are: 1) to act fairly, honestly and impartially as a fiduciary on behalf of all persons having a financial interest; 2) to comply with the powers granted in the order of appointment; and 3) to be accountable to the Court and to the persons in 1).

·        The appointment of a monitor did not require approval or input from the beneficiaries (the motion was made without notice).

·        Pursuant to Rule 1.01(6), it was okay to modify the prescribed forms as circumstances required and so the form of Certificate could be varied to a “Certificate of Appointment of Estate Trustees with a Will and Court-Appointed Monitor”.

I certainly think this case is novel and provides an alternative that could be quite a useful solution in some situations.

Sharon Davis - Click here for more information on Sharon Davis.

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

We have blogged previously on section 35 of Ontario's Trustee Act, which relieves a trustee who has committed a technical breach of trust but has otherwise acted honestly and reasonably.  This provision may not be available to a trustee who, confronted with an ambiguous situation, fails to seek the advice and direction of the court, as is the trustee's right under section 60(1) of the Trustee Act.  Section 60(1) states:

60. (1) A trustee, guardian or personal representative may, without the institution of an action, apply to the Superior Court of Justice for the opinion, advice or direction of the court on any question respecting the management or administration of the trust property or the assets of a ward or a testator or intestate.

Justice Cullity describes the applicable principles in Merry Estate v. Plaxton, 2002 CanLII 32496 (ON S.C.) at paragraph 35:

"[35]  On the question of costs, I am satisfied that no criticism can properly be directed at Mr. Meredith for bringing this application. Section 60 of the Act entitles trustees to seek the opinion, advice and direction of the court with respect to the administration of a trust and, in cases where significant doubt exists as to the scope of their powers and responsibilities, they may not be protected under section 35 if they fail to do this. Although such applications must not be made frivolously – and not merely to relieve applicants from making decisions that are part of their responsibilities under the terms of the trust - they are entitled to have their costs paid out of the trust property if, in the opinion of the court, the application was properly brought. I believe this is such a case."

Merry Estate v. Plaxton also contains a discussion of a trustee's right of indemnity with respect to costs properly incurred, and the relationship between this right of indemnity and litigation cost awards for trustees from trusts.  In that application for the court's advice, the trustee Mr. Meredith was awarded full indemnity for his legal expenses in bringing the application.  

Have a great day,

Chris M. Graham - Click here for more information on Chris Graham.
 

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

In Nolan v. Kerry (Canada) Inc., 2009 SCC 39 the Supreme Court of Canada considered, inter alia, when costs can be awarded out of a trust fund in the context of a pension plan dispute regarding the employer’s obligations. The pension plan contained defined benefit (“DB”) and defined contribution (“DC”) components.   The CA Employees Pension Committee (the “Committee”) sought to have funds paid into the pension fund to the benefit of the DB members only.

In considering when costs are payable out of a trust, the Court noted that there were three categories of cases in the wills and estate context: 1) Where trustees apply to a court to construe the terms of the trust deed so that they may determine the proper administration of the trust; 2) similar cases where beneficiaries of the trust apply rather than the trustees; and 3) where a beneficiary makes a claim which is adverse to other beneficiaries of the trust. In the first two cases costs may rightfully be paid from the trust fund. However, costs will not be paid from the fund in cases that fall under the third category.

The key question was whether the litigation was adversarial or whether it was aimed at the due administration of the trust. Adversarial claims did not qualify for a costs award from the trust fund. In Nolan v. Kerry the litigation was adversarial in nature because it was ultimately about the propriety of the employer’s actions and because the Committee sought to have funds paid into the pension fund to the benefit of the DB members only. The employer was successful and there was no reason to penalize it by diminishing the pension fund surplus, thereby reducing its opportunity for contribution holidays.

The Supreme Court of Canada affirmed the decision of the Ontario Court of Appeal in favour of the employer. The Committee was not entitled to its costs out of the pension fund and costs were ordered against it as the unsuccessful party.

Sharon Davis - Click here for more information on Sharon Davis.

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

Estates law often has distinct legal meanings for common terms. Take the term "personal representative". The term is defined in estates statutes, but also appears with and without definition in business corporations statutes and other statutes. 

Adams v. Ontario (1996) provides that when the phrase "personal representative" is used in connection with a deceased and the administration of the deceased’s estate, it can have only one meaning, which is the meaning set out in the definition contained in the Estates Administration Act, the Trustee Act, and in the Succession Law Reform Act:

1(1) “personal representative” means an executor, an administrator, or an administrator
with the will annexed.

The term is therefore very broad: it includes both the executor (who may never receive probate) and the recipient of a Certificate of Appointment of Estate Trustee with a Will.

The same case acknowledges that the term “personal representative” can have other meanings when it is not applied to a deceased or the administration of a deceased’s estate, such as in Ontario's Business Corporations Act.

Thanks for reading,

Christopher M.B. Graham - Click here for more information on Chris Graham.

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

Estates lawyers are particularly good at advising others as to the importance of an air-tight succession plan. But when it comes to our own succession planning, there are special considerations that lawyers, or any professional, should take into account.

Sole practitioners make up 23% of Ontario lawyers.   When you add the number of solos to those working in small firms, you get a whopping 97% of firms in Ontario with 1-10 lawyers.  In such situations, there may not be anyone ready, willing and able to step in for a lawyer who suddenly can not carry on his or her practice.  

Lawyers have ethical and professional obligations to their clients. This includes a duty to safeguard clients’ interests in the event of the lawyer’s untimely death, disability, impairment or incapacity. Not only could a client face significant prejudice or damages, but without proper planning, the obligations may fall to the lawyer’s family, causing additional stress no one would wish on loved ones.  

Here are some practical tips:

1. Make arrangements for an assisting lawyer to continue, close or transfer your practice on your behalf;
2. Store all critical information in a location that is easily accessed;
3. Have the appropriate Powers of Attorney in place that are required to allow the assisting lawyer to step in and run your practice (limited, bank, etc.); and
4. Include in your Will an executor who is a lawyer.

Click here for some guidelines for the lawyer stepping in to take over the practice from the Law Society of Upper Canada's Website.  Also from LSUC is the Succession Planning Tool Kit. See here and here for succession planning resources from the Law Society of British Columbia's website.   

For some variety, you might also want to pick up the materials from the 5^th Annual Solo and Small Firm Conference held May 14, 2010 in Toronto, where you can find tips on succession planning as well as other useful information to assist your practice. 

 Sharon Davis - Click here to learn more about Sharon Davis.

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

The Honourable Justice Brown has in recent months released several Endorsements that appear to be achieving the objective of assisting counsel and the Toronto Region Estates Office by clarifying and streamlining procedural requirements in certain estate matters.

One recent example of this arises out of the Armstrong decision, where after eight months of exchanges with the Toronto Region Estates Office, a non-resident applicant (residing in New Brunswick) had not been granted a Certificate of Appointment of Estate Trustee with a Will. The matter was then sent to a judge for consideration, thereby landing in the lap of Justice Brown. 

After consideration of the facts, including (a) the language of the applicable legislation; (b) that consent of the majority of the persons resident in Ontario had been obtained; and (c) that a bond had been posted in an amount equal to the full value of the estate; His Honour granted the request for a Certificate of Appointment.

While some could view this as a “better late than never” type of situation, as Justice Brown remarks, timely processing of such requests constitutes a critical service provided by the government to the public so they can deal with the assets of a loved one. The goal, therefore, is to achieve a turn-around time of no more than three or four weeks for the issuance of Certificates of Appointment.  

While admittedly this case was not the usual application thereby requiring judicial consideration, it seems we are on our way!

Have a good day,

Natalia Angelini - Click here to learn more about Natalia Angelini.

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

In Re Estate of Michael O’Flynn, 2009 CanLII 57149 (ON S.C.), the Honourable Justice Brown encouraged the development of a culture of common sense in processing applications for certificates of appointment of estate trustee. This approach is further illustrated in the recent decision in Re Estate of Daniel O’Donnell, 2010.

In Re Estate of Daniel O’Donnell, the date of Mr. O’Donnell’s death was mistakenly listed as May 1, 2009 (not May 2) on the application for a certificate of appointment and resulting certificate. This mistake did not stop the administration of the estate. Mr. O’Donnell’s Will named Mr. Wilson as the sole estate trustee and sole beneficiary, and Mr. Wilson distributed virtually all of the estate assets to himself. He died a short time later, in July 2009. The administration of Mr. O’Donnell’s estate was yet to be completed, but the alternate estate trustee in Mr. O’Donnell’s Will had renounced her right to act. 

Accordingly, the named estate trustee for Mr. Wilson’s estate, Ms. Thomas, applied for a certificate of appointment as succeeding estate trustee with a will for Mr. O’Donnell’s estate. The application materials filed by Mr. Wilson’s estate trustee listed May 2, 2009 as Mr. O’Donnell’s date of death. The original error in the date of death went unnoticed for some time.

When the mistake in the date of Mr. O’Donnell’s death was finally identified, the Toronto Estates Office took the position that the applicant should bring an ex parte motion to correct the error made in the original certificate before the second certificate could be issued. Ms. Thomas argued, among other things, that she should not have to bear the cost of correcting a mistake she had not made and that the cost of preparing such a motion was out of proportion to what was at stake in the succeeding application (the succeeding application was only needed to complete tax filings and distribute the remaining assets valued at only $1,000.00.) 

Justice Brown’s solution was as follows. If the Estates Office identifies a discrepancy in the date of death between the original certificate and the application for a succeeding certificate, it should request an affidavit from the applicant that confirms that a mistake was made on the original certificate and attests to the correct date of death. Upon receiving such an affidavit, the Estates Registrar can then process the application for a succeeding certificate using the corrected date of death, and make any required changes to the original certificate and Ontario’s central registry which records information regarding estates. 

Thanks for reading,

Bianca V. La Neve - Click here to learn more about Bianca La Neve.

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

The past two years saw Wall Street virtually melt down.  The global economy coughed and sputtered, trade was disrupted, general panic ensued.  Now it appears that a group of significant countries may default on their respective debts, starting with Greece, then Spain, Italy, Ireland, Portugal.  The risk appears to be that the financial structures of these countries will collapse like dominos: first their creditworthiness ratings get downgraded, one country after the other, raising the cost of borrowing to finance debt payments to the point where they default, and one country's collapse will trigger a similar process in the next. 

This could be spreading though the global financial system like "ebola", causing a deeper crisis.  Britain may be hit.  Asia is already seeing market fluctuations.  Not to be overly dramatic, but the National Post headline "Greek debt crisis sweeps all before it" pretty much describes the news chatter.  Canada has already been affected. 

This may have professional relevance for the estates and trusts bar.  Events like this often seem to involve rapid exchange rate fluctuations.  It may be a good time to ensure that trustee clients, particularly those holding assets denominated in foreign currency, have been advised or reminded of their obligations to invest trust property in accordance with section 27 of the Trustee Act (the Prudent Investor Rule), and that exchange rate fluctuations could be seen by a court as being relevant to their management decisions.  A court might require a trustee to indemnify the beneficiaries to the extent of a loss due to exchange rate fluctuations, if the court finds the standard of care defined in section 27 has not been met.

Of course, mere lawyers can neither advise (or even calculate) the prudent level of exposure, nor can we predict fluctuations.  Anyone who can predict the exchange rate fluctuations would not need to practice law.   But we can point out the Prudent Investor Rule and draw attention to the potential risks that exchange rate fluctuations pose, so clients can decide for themselves.

Regards,

Christopher  M.B Graham - Click here to learn more about Chris Graham.

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

As I was recently researching the duty of trustees, I stumbled upon a term that I might fully have expected to have found in a Dr. Seuss book rather than a legal text. I shall use it in the context in which it appears, as a subject title, although I doubt this will help you figure out what it means:

Dishonourable duty to “gazump” 

I found the whole passage so fascinating that I shall reproduce it for your enjoyment and potential enlightenment:

“Where trustees who have entered into negotiations for the sale of trust property receive a subsequent higher offer from another party they should at least probe the subsequent offer irrespective of questions of commercial morality which might have led a vendor who was not a trustee to close the deal with the original purchaser. Nevertheless, the trustees retain such a discretion as will allow them to act with proper prudence, and may pray in aid the commonsense rule underlying the old proverb “A bird in the hand is worth two in the bush”; so that there may be cases in which they could properly refuse a higher offer and proceed with a lower one.”

Underhill & Hayton, “The Law of Trusts and Trustees” (London: LexisNexis Butterworths, 2007) at page 716

Click here for the Wikipedia definition of gazumping and its opposite, gazundering (just for fun). Here is a link to a gazumping reference in a 2006 judgment, just in case you don’t believe me  - see paragraph 45. 

There are a couple of lessons to be learned here. The first is that not all legal terms need be Latin or pretentious-sounding. The second is that while the law may apparently foist a dishonourable duty upon (poor unsuspecting) trustees, if they happen to be holding a bird in one hand they will probably be okay. 

I’ll bet every Who in Whoville already knew that.

 Sharon Davis

Sharon Davis - Click here for more information on Sharon Davis.

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

The Rules of Civil Procedure are a wonderful resource, and provide guidance as to, among other things, the types of applications that can be brought when someone wants to have an estate trustee appointed in Ontario in unusual circumstances. For instance:

(a)               where there is an estate trustee appointed with or without a Will in the United Kingdom or in a province in Canada (outside of Ontario), an application is to be made for Confirmation by Resealing of Appointment of Estate Trustee;

(b)               where there is a foreign estate trustee and no Will, an application is to be made for a Certificate of Appointment of Foreign Estate Trustee’s Nominee as Estate Trustee Without a Will; and

(c)               where there is a foreign estate trustee with a Will, and the applicant was appointed by a court having jurisdiction outside Ontario, other than a jurisdiction referred to in (a) above, an application is to be made for a Certificate of Ancillary Appointment of Estate Trustee.

What the Rules don’t speak to, however, is when you have a Will and a foreign grant of probate with a Will, but no estate trustee is named in the Will or appointed in the foreign grant.   I would imagine this is a rare occurrence, yet I am currently facing that very situation.  

I have chosen to address this situation by applying for an ancillary grant, as that seems to be the closest applicable Rule to this fact scenario. However, the application is being accompanied by a motion record wherein we explain the circumstances of our case and seek a court order that a person in Ontario (an individual or trust company, as the case may be) be granted a Certificate of Ancillary Appointment of Estate Trustee. 

I hope this will satisfy the court, and will let you know the results!

Have a great day,

Natalia Angelini

Natalia R. Angelini - Click here for more information on Natalia Angelini.