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

Despite the breadth of an attorney’s power under the Substituate Decisions Act, it is subject to significant qualification (subsections 32(7) or 32(8)).  An attorney is not to dispose of specific property that she/he knows is subject to a testamentary gift in the incapable person's Will, unless it is necessary to do so to otherwise comply with the attorney's duties (section 31.1) .

The accountability provisions of the SDA have not been fully tested, leaving uncertainty regarding the parameters of an attorney’s functioning. That said, the decisions being made appear to reveal the courts leaning towards a strict construction of the scope of an attorney’s authority to act.   

For example, in Volchuk v. Kotsis, the Court disallowed a series of purported gifts (cheques and money transfers) effected by an attorney, noting, in addition, that attorneys were precluded from relying solely on their own evidence by section 13 of the Ontario Evidence Act (which provides that evidence must be corroborated by other material evidence). 

Further, in Biamonte Estate v. Ward Estate, a property owned by three deceased persons as tenants in common, and ultimately conveyed by an administrator of one of these estates to benefit her son, was found to be an improper exercise of the power of attorney.   

In addition, in McMullen v. McMullen, an elderly widower commenced an application against two of his three daughters, who held his power of attorney. The daughters transferred a 99% interest in the father’s condominium property to their husbands to preserve their father’s asset (to protect it from being depleted due to a new female acquaintance). The Court declared the condominium transfer null and void. Notably, there was no evidence to show that the father was incapable of managing his financial affairs.

Thanks for reading,

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

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

The much discussed case of Reviczky v. Meleknia; Caplan (Intervenor) shone a light on questions about a solicitor’s duty to look beyond a power of attorney.   The facts are summarized in my earlier blog.

This ruling and other case law was cogently reviewed by Deborah Petch in the LawPRO Practice Pro Magazine (Summer 2008). She comments on how the Reviczky ruling has generated discussion among lawyers, with two divergent lines of thinking coming through: some argue that a new standard of care has been imposed, which requires lawyers to “go behind” a power of attorney and not accept it at its face value; while others assert that the usual practice is sufficient and further inquiries do not need to be made.   

From a review of these and other materials, I gather that we may wish to ensure the following when preparing a power of attorney for property and/or when dealing with a transaction involving a power of attorney:

·                    fully explain the nature of the power of attorney;

·                    make sure the donor is fully aware of the consequences (this is especially important when you have had no prior contact with the person, and are acting on behalf of another client);

·                    when you are acting for another client who will benefit from the power of attorney, insist that the donor obtain independent legal advice;

·                    make the power of attorney time-limited when appropriate;

·                    make the terms of the power of attorney no broader than absolutely necessary;

·                    scrutinize the document for irregularities on its face e.g. How many witnesses have signed? Where was it signed?;

·                    consider other questions in order to be alert to suspicious circumstances, such as: When was it signed? How old is the donor? What kind of transaction is being contemplated?;

·                    confirm the transfer with the donor directly (if possible) if these inquiries do not satisfy; and

·                    confirm the transfer with the donor directly (if possible) when the attorney wants to take the property for him/herself, unless the document expressly allows this.

Thanks for reading,

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

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

Powers of attorney for property are generally accepted in most Common Law jurisdictions and many Civil Law jurisdictions, which is important given that many have family members and assets in various parts of the world. Subsection 85(1) of the Substitute Decisions Act provides that the foreign grant is valid if at the time of execution it complied with the internal law of the place where it was executed, where the donor was domiciled or where the grantor had his or her habitual residence. 

When multiple jurisdictions are involved, it may be helpful to have a power of attorney prepared in accordance with the rules of the jurisdiction where land is located, so that the forms the regulatory and registration bodies are familiar with are in use. However, take care to ensure that the document contains language specifically preventing revocation. Otherwise a new power of attorney, albeit in a foreign jurisdiction, will effectively revoke any earlier power of attorney granted in Ontario (subsection 12(1)(d) of the SDA). Conversely, a later grant under the SDA will serve to revoke all foreign grants (although section 12 of the SDA would be of no effect when presented in a jurisdiction that does not recognize such powers). 

Here is some noteworthy information regarding the recognition of an Ontario power of attorney for property in other provinces:

·                    it will be valid in Saskatchewan and Manitoba as long as it is valid according to the laws of Ontario, and continues despite the mental incompetence of the donor;

·                    it will be valid as a springing or enduring power of attorney in Nunavut if it is valid according to the laws of Ontario, and it provides the appropriate statement as to its commencement or continuation;

·                    it will be recognized in Quebec, but will be subject to approval and will receive the scrutiny of the courts; and

·                    the legislation in all other provinces currently seem to be silent regarding the application of foreign powers, such that if a grantor has property in any of these provinces one should confer and/or retain local counsel to assist.

Have a good day,

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

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

Billionaire and recently deceased American shopping mall developer Melvin Simon's heirs are fighting over his last will.  Mr. Simon's children from his first marriage are challenging a will that changed the distribution of his estate in favour of his second wife.  Aside from the glamour factor, the case is interesting in that an allegation of fraud was recently dismissed on the grounds that "[t]he complaints fail to allege affirmative misrepresentations that can support a claim of actual fraud".

This illustrates an important point in estate and trust litigation.  Ontario's Rules of Civil Procedure similarly requires pleadings that contain allegations of fraud or breach of trust to contain full particulars:

"Rule 25.06(8)  Where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars, but knowledge may be alleged as a fact without pleading the circumstances from which it is to be inferred."

This could theoretically present beneficiaries challenging the actions of a trustee, since the trustee frequently has the particulars and the beneficiaries do not.  In practice, this problem rarely arises because most litigation occurs in the context of a passing of accounts, where it is unnecessary to make allegations against the estate trustee.  Instead, under the procedure in Rule 74, the beneficiaries can simply file and serve a Notice of Objection to Accounts challenging transactions or omissions in the trustee's accounts.

After filing their Notice of Objection to Accounts, the beneficiaries can then bring a motion for an order giving directions (or an order for assistance) that will provide for the disclosure of the particulars they think exist.  After receiving full disclosure, the beneficiaries should in a position to make a better-informed decision on whether to add such allegations to their pleadings. 

Where this process is anticipated, the order should specifically authorize the parties to return to court for further directions.  Of course, it would rarely even be necessary to allege fraud at all, since the facts that support the allegation of fraud can form the basis of an objection to the accounts without using the words "fraud" or "breach of trust", and this can achieve the same practical result without the risks associated with alleging fraud.  Beneficiaries can also avoid the risk of having their pleadings struck at an early stage.  

Have a great day,

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

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

Trustees often run into difficulties when they pay themselves compensation prior to passing their accounts.  They are said to have "pre-taken" compensation, meaning having paid themselves compensation prior to passing their accounts.  Fortunately for guardians of property (and attorneys), section 40 of Ontario's Substitute Decisions Act allows guardians to pay themselves compensation at intervals during the guardianship before passing their accounts:

40.  (1)  A guardian of property or attorney under a continuing power of attorney may take annual compensation from the property in accordance with the prescribed fee scale.

(2)  The compensation may be taken monthly, quarterly or annually.

Amounts taken monthly or quarterly could be divisions of a calculated "annual" amount, but this provision contains no element requiring equal divisions.  Regardless of how the property guardian takes compensation, any payment is subject to court approval.  Clients applying for guardianship should always be advised specifically of this point: if the court later disagrees with the compensation taken, the guardian may have to repay such amounts.  This holds true even where the Management Plan pursuant to which the guardian is managing the incapable person's property authorizes the compensation the guardian has taken.

This raises another important consideration for lawyers in the application for guardianship stage.  Any compensation taken, or claimed later on a passing of accounts, should not be inconsistent with the provisions of the Management Plan.  Because the right to compensation is statutory, as are the prescribed percentages (though subject to discretionary reduction by the court), there is no need to declare an intention to take compensation in the Management Plan.  But if the Management Plan contains a provision disclaiming compensation, for instance, no compensation should be taken during the guardianship.

Have a great day,

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

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

A “Living Will” or “Advance Directive” is a document that indicates the grantor’s preferences with respect to health conditions and treatment, including the level of medical intervention. It is a guide for the person who must communicate with physicians and make health care decisions in the event the patient is not able to do so him or herself. It is different from a Power of Attorney for Personal Care, which is a document naming a specific person to act on your behalf.

An Advance Directive can be very detailed and tailored to the individual’s personal circumstances. For example, on the University of Toronto Centre for Bioethics website you can find information on a Cancer Specific Advance Directive. 

Given the complex medical nature, it may well be that the specifics of such a directive lay more comfortably in the bailiwick of the health care professional rather than the legal professional.  Ideally, the Power of Attorney for Personal Care should include a detailed health care directive. This approach offers the assurance that the grantor’s wishes are taken into account without the wording in the Advance Directive inadvertently voiding his or her Power of Attorney for Personal Care.

A Power of Attorney for Personal Care may also include conditions or restrictions other than Advance Directives such as limiting the attorney's ability to act until a confirmation of incapacity has been obtained, and determining the method of assessing capacity.

If a person becomes incapable of making personal care decisions and has no Guardian of the Person or Power of Attorney conferring the authority to make health care decisions, the Health Care Consent Act of Ontario provides a statutory hierarchy of persons who can provide consent on the incapable person's behalf in descending order of authority as follows:

1. Spouse or partner
2. Child or parent
3. Brother or sister
4. Any other relative

Therefore, it is especially important to prepare a Power of Attorney for Personal Care if you would not want your spouse, child or parent to make health care decisions on your behalf should you become unable to make them yourself.

For further information on this topic, see Q & A on Powers of Attorney and Living Wills by the Office of the Public Guardian and Trustee for Ontario, or this book about Living Wills by M. Dianne Godkin.

Thanks for reading.

Sharon Davis

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

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

For those of you with one eye on the next page of the calendar, Hull & Hull LLP will be posting our third series of medical/health blogs starting on Monday January 4th, 2010. The series will run every Monday thereafter in the month of January, for a total of four blogs. The following subjects will be featured:

• Pseudodementia
• Lewy Body Dementia
• Korsakoff's Syndrome
• Huntington's Disease

We hope this series proves both useful and informative. Please feel free to contact us at nonley@hullandhull.com with your feedback.
 

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

Attorneys for property who receive gifts from grantors tomorrow will have to give them back, unless they have good evidence supporting the fact of the gift.  The rule that fiduciaries (including attorneys for property) must prove purported gifts is stated in Cooke v. Lamotte(1851), 15 Beav. 234 at page 239.

Justice Sheard applied this rule in Kee v. Yip [1995] O.J. No. 2879, disallowing a series of transfers by an attorney to himself, stating with respect to one such transfer, “The burden on Tom Kee to show that his mother gave him the $20,000 is a heavy one. His evidence, simply the assertion that this transaction, one of many that he did under power of attorney, was intended by her as a gift to him falls well short of discharging that burden of proof. Under the principle stated in Cooke v. Lamotte, supra, the $20,000 cannot be allowed as a gift and must be refunded." 

Even more recently, in Volchuk v. Kotsis, 2007 CanLII 28527 (ON S.C.) Justice Langdon disallowed a series of purported gifts (cheques and money transfers) effected by an attorney, noting in addition that attorneys were precluded from relying solely on their own evidence by section 13 of the Ontario Evidence Act, which provides that the claimant “shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.” 

In estates litigation, this rule is very useful in passings of accounts initiated pursuant to section 42 of the Sustitute Decisions Act by disappointed beneficiaries of an estate against the deceased's former attorney for property.  Of course, this rule forms part of the Common Law and is not confined to passing of accounts proceedings.

Merry Christmas to fiduciaries including attorneys, and enjoy your presents.

Chris Graham

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

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

While employed in management in the assisted living field, I was tasked with the facilitation and implementation of the personal care decisions of my residents. Where the resident was capable, they of course directed their own personal care, including scoping out their vision for advance directives, should the future need arise for these to be considered. Some residents, however, were no longer capable of making their own personal care decisions and the legal responsibility for doing so was passed to another party by a previously conceived Power of Attorney for Personal Care (POAPC).

While simple in concept, complications emerged when more than one person had been appointed under the POAPC. As an example, one resident had appointed all five of her children to make personal care decisions in the event of her incapacity. Well-intentioned, no doubt, as I imagined that she had done so in order to ‘keep the peace’ amongst the five adult siblings. In practical terms, however, the children spanned three countries and nine timezones and an equal breadth of opinion regarding how their mother’s care plan was to evolve, especially as her health declined. Attempting to reach consensus about any facets of her personal care was onerous and time-intense, and understandably emotional for the family. Factors such as the sibling’s interpersonal relationships (including where they felt they fell within the family pecking order), their own beliefs and values regarding end-of-life medical intervention, as well as the ‘baggage’ they each carried regarding their relationship with their mother, impacted, if not directed, their decision-making.

If one feels it both necessary and appropriate to appoint multiple Attorneys under a POAPC, prudence dictates that a prior detailed discussion, including written documentation, be undertaken to ensure that one’s wishes have been effectively communicated and understood.

Jennifer Hartman, Guest Blogger

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

To assist real estate lawyers in identifying forged powers of attorney and fraudulent real estate transactions, the Law Society of Upper Canada has provided real estate lawyers with a set of new guidelines and procedures for powers of attorney and real estate transactions.

In order to address the issue of fraudulent transfers of title and mortgages, new registration requirements were implemented last year necessitating law statements by individuals registering real estate documents under the authority of a power of attorney. Paul Trudelle’s previous blog of last year describes the new registration requirements.

The new registration requirement and Law Society guidelines have in part been necessitated by the case of Revickzy v Melekinia. Natalia Angelini’s blog sets out the background of the case and comments on the possible impact on a solicitor’s duties.

The Law Society guidelines include the following suggestions:

• To the extent possible, lawyers avoid the use of  Powers of Attorneys in real estate transactions;
• That when a Power of Attorney is required and a pre-existing Power of Attorney does not exist, the lawyer should prepare the Power of Attorney themselves, meet with the donor and make diligent inquiries to establish that the donor’s identity;
• That lawyers for all parties should review Power of Attorney to determine that it is in compliance with legislation;
• That lawyers should use their best efforts to register the Power of Attorney on title and provide a copy of the registered Power of Attorney to the other side; and
• Lawyers comply with the Law Society client identification and verification requirements.

For more information, read Jonathan Morse’s blogs on mortgage fraud and how British Columbia is dealing with the issue.

Hopefully, in adopting these practices lawyers can assist in recognizing fraudulent real estate transactions.

Thanks for Reading,

Diane Vieira

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

Removing an attorney for property is notoriously difficult. A person should only seek to remove an attorney for property when clear and compelling evidence presents itself. 

Where you feel the circumstances necessitate the commencement of a removal application, I recommend that you consider the following practical and strategic evidence-gathering steps, which may add teeth to your claim:

·                    Compile a detailed list of the attorney’s misdeeds and inactions;

·                    Consider asking The Office of the Public Guardian and Trustee to investigate;

·                    Talk to neighbours and caregivers to gather critical information;

·                    Maintain regular contact with the incapable person and try to ascertain his/her wishes; and

·                    Ask the attorney for regular progress reports.

Finally, it is worth considering applying to the court for directions regarding the conduct of the attorney before embarking on a removal application. The court may implement conditions and/or restrictions on an attorney’s activities and may also provide guidance as to whether a removal application is warranted as a next step.

For more on this topic and power of attorney litigation generally, I suggest you read Ian Hull’s book, Power of Attorney Litigation, 2000, CCH Canadian Limited.

Have a great day,

Natalia Angelini

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

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

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

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

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

Pursuant to section 79 of the Substitute Decisions Act, the court has discretion to order a capacity assessment of an individual if the person’s capacity is an issue in a proceeding under the SDA. The court must also be satisfied that there are reasonable grounds to believe that the person is incapable. 

Where a capacity assessment has already been obtained, the court will be reluctant to order a further capacity assessment of an individual, unless the court has, for example, concerns about the lack of detail or objectivity within the assessment that has already been obtained. 

In Forgione v. Forgione, the court was concerned about the adequacy of the assessment carried out by a medical doctor. The court did not know what background information the doctor had or what, if any, influence anyone other than one family member may have had on the process. The report was very brief and consisted largely of conclusions without analysis. There were a number of facts and conflicting versions of facts which, in the court’s view, warranted further examination because they raised questions about the capacity and vulnerability of the incapable. A second assessment was ordered.

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

The recent decision in McAllister Estate v. Hudgin provides a helpful review of the nature of a trustee’s duty to account.

In McAllister, the Deceased named her daughter as her estate trustee and divided the residue of her estate between her daughter and her son.  The daughter had acted as the Deceased’s attorney for property in the four years prior to the Deceased’s death. 

After the Deceased’s death, the son sought an order compelling the daughter to pass accounts for her actions as attorney. 

The daughter argued that the son was not entitled to an accounting because (1) he had no standing to request it (although she did not seriously pursue this ground) and (2) she was not required to keep accounts because when she was acting as attorney her mother was capable. 

Pattillo J. found that as the mother had been capable, the attorney had no duty under s. 42 of the Substitute Decisions Act to keep accounts, although the court retained the discretion to order an attorney to pass accounts for all or part of the period in which she acted. 

In making this determination, the court considered two main issues: (1) the extent of the attorney’s involvement in the grantor’s affairs; and (2) whether the applicant seeking to compel an accounting has raised significant concerns about the attorney’s management of the grantor’s affairs. 

Ultimately, the court decided that both criteria had been met.  However, the court stopped short of requiring the daughter to produce formal accounts, deciding that the production of bank statements and investment records was sufficient.   

Have a great day,

Megan F. Connolly

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

In order to attempt to combat what is felt to be a growing problem of real estate fraud, the Ontario government has put new registration requirements in place when a real estate document is being registered.

The requirements call for the making of certain “law statements” by an individual registering a real estate document (transfer or mortgage) under the authority of a power of attorney. The individual must make a statement that they are acting within the scope of the power of attorney. Further, the solicitor must discuss the power of attorney with the client and make a “law statement”. For most purposes, the solicitor must complete the following statement:

I, name of solicitor, confirm that I have reviewed the power of attorney with the attorney, and the attorney has confirmed that:

1. The attorney is the lawful party named in the power of attorney,

2. The attorney is acting within the scope of the authority granted under the power of attorney,

3. To the best of the attorney’s knowledge, information and belief, the power of attorney was lawfully given, and

4. The power of attorney has not been revoked.

In addition, the original signed and witnessed power of attorney must be scanned and registered. 

Lawyer and bencher Robert Aaron discussed the new requirements in a recent article in the Law Times, p. 12. Mr. Aaron stated that while the new requirements will allow the party on the other side of the transaction (and their solicitor) to review the power of attorney document, and provides an opportunity for defective powers of attorney to be caught, “I’m not sure that it will frankly do much to stop fraudulent powers of attorney.”

Thank you for reading.

Paul Trudelle

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

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

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