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

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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.

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In today’s blog I will touch upon the rule in Re Hallet’s Estate*.  Tomorrow’s blog will touch upon the rule in Clayton’s Case. The rules stem from situations where a trustee mixes trust funds with their own funds or with a different trust’s funds. The rule in Re Hallett's Estate applies where trustees mix trust funds with their own funds.

The principle was enunciated by the court in the case of Re Hallett's Estate (1879), 13 Ch. D. 696 (CA) and is known as the rule in Re Hallett's Estate. The rule states that where a trustee mixes trust money with his or her own money in a bank account and then withdraws money from that account, it is assumed that the trustee first took out his or her own money rather than money belonging to a trust beneficiary. It may be seen that the rule in Re Hallett's Estate is based on the assumption that trustees are honest and act accordingly. Even if they do mix trust funds with their own money, it is not to be presumed that this mixture was intended to defraud the trusts of those funds.

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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.

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The Leona Hemsley's estate saga continues.

Last month, three animal protection groups filed a petition requesting that the court appeal a previous decision that allowed the trustees of Helmsley’s estate sole discretion to determine how charitable trust funds would be distributed. Rick Bickhram’s previous blog provides a background to this decision.

The animal rights groups allege that Helmsley’s money is not being spent the way she intended and contrary to her expressed intentions to care for the welfare of dogs. The groups object that only $1 million of the $136 million paid out to charitable organizations this year went to organizations that assist with animal welfare. A New York Times article outlines some of the hurdles the animal rights groups face. We will see how this new development plays out.

Of course, Helmsley’s Will caught the media’s attention because she left $12 million to her Maltese, Trouble. Yet, Trouble’s fortune seems small compared to Gunter III, a German Shepherd who was left $80 million by Karlotta Liebenstein, an Austrian countess. If you think that’s unusual, this blog post outlines these two dogs’ fortunes and some additional “interesting” Will bequests. Estate law is almost never boring.

Thanks for reading,

Diane Vieira 

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The recent decision of Pachaluck Estate v. DiFebo provides a useful example of the costs exposure that parties can face on an application to pass accounts.  

In this case, a beneficiary had objected to the compensation the estate trustee had taken.  The court agreed to an extent – it ordered compensation be reduced (by about $9,700), but not by as much as requested by the beneficiary.    

The court then had to decide the issue of costs.  The executor argued that he had been prudent in his administration of the estate and while the beneficiary was successful in a partial reduction in compensation, she was unsuccessful with regard to most of the objections she had raised. The executor sought fully indemnification for his costs from the estate and argued that the beneficiary should receive partial indemnity costs. 

The beneficiary argued that because she was successful in obtaining a reduction in compensation and because she was unable to get a full accounting until the court had ordered one be produced, her costs should be fully paid by the executor.

The court found that there was a mixed result in its determination of the application to pass accounts.  While the court  agreed the executor had acted in good faith, a reduction in compensation was nevertheless ordered and the court was satisfied that a full accounting would not have been provided absent a court order.

The court was critical of the fact that neither party had served an offer to settle and found that to the extent the estate trustee and beneficiary were entitled to receive costs from the estate it should be on a reduced basis.  Ultimately, the court awarded each less than half the costs that were sought.  

This case is a reminder of some of the perils involved in pursuing a contested passing of accounts.  To begin with, both parties were stuck paying more than half the costs each had incurred personally and, as such, were "out of pocket" in the litigation.  Second, the compensation that was repaid to the estate as a result of the litigation was less than the legal fees that ended up coming out of the estate to reimburse the parties, which begs the question of whether the beneficiary was worse off for pursuing the litigation in the first place.  

Have a great day!

Megan F. Connolly

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In Maryland, legislation was recently enacted that allows pet owners to establish trusts for their pets, making it the 40^th state to allow pet trusts.  Previously, people could not leave gifts to pets because, at law, pets were chattels and could not inherit property. 

There are some limitations to the law.  To begin with, people can only leave funds for pets living at death – they are not allowed to provide for “future generations” of animals.

In addition, while the pet owner must name a trustee for a trust, it must also name a caregiver for the pet (the caregiver and trustee can be one and the same).  If, after the pet owner’s death, the pet is not properly cared for or the trust funds are not being administered appropriately, the law will provide that an outside party can apply to the court to get the trustee or the caregiver replaced. 

The pet owner should also specify to whom the remainder of the trust should go when the pet dies (the article suggests that the caregiver or trustee should not be left the remainder, in case it becomes a disincentive to keep the pet alive). 

The law is set up so as to avoid the type of litigation that ensued after Leona Helmlsey’s death (Helmsley, as you might remember, left $12 million in trust to her dog Trouble, while leaving nothing to two of her grandchildren).  While it does not specify a maximum that a pet owner can leave in trust, it does provide the funds should be sufficient to care for the pet.  It also gives the court the discretion to vary the trust if a beneficiary challenges it as being excessive. 

I can’t say the trend towards providing for pets in an estate plan is all that surprising, given how attached people can be to their pets.   

Have a great day!

Megan F. Connolly  

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Ker Estate v. Stevenson, a recent decision from the Ontario Court of Appeal, considered whether an annuity left to a beneficiary under a will could be encroached upon by a judgment creditor. 

In this case, the deceased directed that half the residue of her estate be used to purchase a non-commutable life annuity for her daughter.  On the daughter’s death, what remained in the annuity was to be used to purchase a non-commutable annuity for the deceased’s grandson. 

After the deceased’s death, the daughter had been involved in litigation which resulted in a judgment against her.  Prior to the annuity being purchased, the judgment creditor sent a notice of garnishment to the executors requiring them to satisfy the judgment.

The executors sought the court’s direction as to, in part, whether the share of the deceased’s daughter could be encroached upon to satisfy the judgment. 

The motions judge found that the funds available for the daughter’s benefit vested in her on the deceased’s death and were available to satisfy the judgment. 

The grandson (who had an interest in the remainder of the annuity) appealed the decision on a number of grounds, a major one of which was that the court erred in finding that the annuity vested in the daughter on the deceased’s death. 

The Court of Appeal examined the nature of an annuity and, in its review of the jurisprudence, found that it could best be characterized as a legacy.  The fact that it was “non commutable” was not sufficient to persuade the court it should be characterized otherwise.  Moreover, the Court pointed to case law which suggested that the beneficiary of an annuity under a will had the right to call on the payment of the cash value of the annuity prior to its purchase. 

As a result, it affirmed the motions’ judge’s finding that the right to the annuity vested in the daughter at the deceased’s death and could be encroached upon by the judgment creditor. 

Have a great day!

Megan F. Connolly 

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The recent decision of Pachaluck Estate v. DiFebo is a useful illustration of when the court is willing to reduce compensation awarded to the trustee for the administration of a simple estate. 

The main assets of the estate were the deceased’s condominium and several bank accounts.  Her will provided that the condo would be sold and its proceeds would be divided amongst several grandchildren; cash bequests would be made to several individuals; and the residue of the estate would be divided amongst the deceased’s two daughters. 

When the administration of the estate was near completion, the estate trustee brought an application to pass accounts.  One of the residual beneficiaries objected to the accounts in part on the basis that the compensation claimed was over and above that what was warranted in the circumstances. 

In determining what compensation should be allowable, the court considered the five factors articulated in Re Toronto General Trusts and Central Ontario Railway:

(a)   magnitude of the trust;

(b)  care, responsibility, and risks assumed by the fiduciary;

(c)   time spent by the fiduciary carrying out obligations;

(d)  skill and ability required and displayed by the fiduciary; and

(e)   results obtained and degree of success associated with the efforts. 

The court found that while the five factor were useful guidelines, the analysis should be fact specific and sensitive to the specifics of the estate administration in question.  The court also found that the application of a percentage in determining compensation should not be set in stone but should be fact specific. 

In the end, the court decided to reduce compensation.  In considering the sale of the condo, the court found that the administration of the estate with respect to this asset was uncomplicated and straightforward.  With respect to the cash bequests, the court also found that distributing them was simple.  As a result, it ordered the compensation associated with the sale of the condo and the distribution of the proceeds to be reduced to 1.5% while it ordered compensation related to the balance of the estate reduced to 2.0%. 

Have a great day!   

Megan F. Connolly 

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My blog today is the last in my series this week on protecting a trustee from potential liability.

A trustee may be protected from potential liability based on the conduct of the beneficiaries themselves or by having sought the assistance of the Court. 

If a beneficiary consents to, or concurs in, a breach of trust prior to it being carried out, or he releases the trustee from liability, or in some other way acquiesces in the breach after it has been carried out, he or she may not subsequently claim from the trustee any compensation to the trust for the loss arising. It is the beneficiary’s personal conduct which bars him or her from making such a claim. A beneficiary, who has instigated, requested or consented to a breach, may possibly be required to indemnify the trustee to the extent of the beneficial interest.

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Today’s blog will continue my series this week on protecting trustees from potential liability.

A trustee may incur personal liability arising from his or her administration of the trust. The provision or existence of a release and/or indemnification in favor of the trustee may protect, limit or exonerate the trustee from liability.

With respect to a trustee’s accounts (accounting) for the administration, releases may be sought by the trustee and provided by the beneficiaries in conjunction with a Court order passing the accounts.   Alternatively, the beneficiaries may provide the trustee with a release in lieu of compelling the trustee to pass his or her accounts in Court. Amongst other considerations, when seeking a release from the beneficiary, a copy of the accounts should be provided, either in an informal format or formal format, for the beneficiary’s benefit.  

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A trustee, whether incoming or outgoing, needs to be aware of and consider his or her potential liability as trustee and over the administration of the trust. The trustee’s conduct may be protected, limited or exonerated by the terms of the trust, statute, an Order relieving the trustee of liability, the existence or provision of releases or indemnities, a passing of accounts, the conduct of the beneficiaries, whether indirect or direct, and/or the assistance of the Court. 

My blogs this week will, to some extent, touch upon some of the ways that the potential liability of a trustee can be protected, limited or exonerated.

To begin with, a trustee, whether incoming or outgoing, ought to carefully review the terms of the trust document as the trust document may contain provisions that impact on the potential liability of the trustee.

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What does an executor do?

The first responsibility is to tend to funeral arrangements and then to gather up all the information relevant to the Estate. This information includes the ownership and value of assets, as well as the nature of all Estate liabilities. These responsibilities need to be taken seriously. 

Some other duties include: make provisions for dependants; notify various government agencies of the deceased's death; collect income from assets; decide about investments; seek advice as required.  The executor’s role is similar to that of a trustee: both owe a duty to the beneficiaries. 

When one plans his or her Estate and prepares a Will, it is useful to consider the attributes of a successful executor.  Some questions might be:

• Is the person organized?
• Does the person have financial skills? 
• What is the demeanour of the person who is being considered as an executor?

A recent British article asks more questions. One point, among many, is that “Honesty and conscientiousness are important, but if you are appointing more than one executor - and often that's a good idea - they also need to be team players.” 

Each situation is different but the hard and soft skills of a potential executor are likely useful considerations.

Examples abound to illustrate what might go awry. Take the Estate of the renowned violinist, Isaac Stern. In 2004, the beneficiaries of the Estate were disappointed when the executor failed to include the value of the deceased's  New York apartment in the calculation of the Estate's value. This decision resulted in a shortfall of funds to meet the Estate’s liabilities. Legacy items, including musical instruments, were apparently sold at auction to the beneficiaries' collective dismay.

Choose your executor(s) wisely.

Enjoy your Thursday.

Jonathan Morse

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The British lawyer and author, John Mortimer, died on January 16, 2009. During his 85 years he produced more than 50 novels, biographies and memoirs. Of course he was best known for the creation of Rumpole of the Bailey.

Mr. Mortimer had an active professional life, and by many accounts, an active private life as well. He was first married in 1949: apparently he noticed his first wife while he rode a horse and peered over a hedge.  After divorcing around 1970, he married again in 1972.  Both wives were named Penelope, although he called his second wife Penny.

While the deceased lawyer may have organized his affairs with the requisite estate planning in place, the experience in Canada might suggest that Mr. Mortimer’s Estate will encounter some challenges not least of which may relate to copyright issues.

I refer to Lucy Maud Montgomery who died on April 24, 1942. The creator of Anne of Green Gables left a legacy of work and maybe just a few headaches for her heirs. 

After all the copyright kinks were ironed out, it seems that Anne of Green Gables has a bright future ahead of her.  With luck, and the combined efforts of lawyers and artists, Rumpole will experience similar success and longevity.

Thank you for reading.

Jonathan Morse

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Annuities are often employed when an individual plans his or her estate. We have covered different aspects of annuities on past blogs on Hull on Estates.

A testator, for example, may choose to have one child’s portion of the future estate placed into an annuity that will create a flow of money over time. The child would have access to the cash flow, but not necessarily access to the principal amount. 

In September 2008, Gayle Reid applied to the Superior Court of Justice for an interpretation.  The claimant’s father, Bernard Wiesberg, died and left an annuity to his friend, Avonne Richter (also identified as his common-law spouse). Minimum annual payments of the annuity were directed in the Will to Ms. Richter who received them from 2003 through to 2007. 

The Applicant was to receive the residue of her father’s estate.  A 2005 Order by Dandie  J.  required Ms. Richter to designate Ms. Reid as the beneficiary.  (A provision of the Income Tax Act required the beneficiary to be named, otherwise the retirement income fund would have collapsed, defeating the testator's intent.)

The issue arose when Ms. Richter, who received the previous annual annuity payments in arrears up to 2006, chose to take the $17,015.57 payment in January, in advance for that year. Ms. Richter died on April 17, 2007.

The Applicant sought an interpretation of her father’s Will, specifically regarding the annual payments. As the payments were for the “lifetime” of Ms. Richter, the Estate owed $12,027.44 to the Applicant because the Court reasoned that calculations must be made to the date of Ms. Richter’s death. Therefore a pro-rata calculation was “the only reasonable and fair manner to ensure the two gifts in the Will are honoured.”

If the annuity had been paid in arrears that December, Ms. Richter’s Estate would have been owed a pro-rata amount of the annuity for that year calculated to the date of her death.

Have a good day.

Jonathan

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My mother used to volunteer with Goodwill, where one of the projects was a contents sale. A team from Goodwill would organize a home’s contents for sale – I have a frying pan purchased from one of those sales.

Several organizations exist to assist with different aspects of the moving process. One such example is Marsha’s Helping Hand, which helps when clients, particularly elderly people, want to downsize.   

There are a lot of memories to manage and items to be packed up, distributed or possibly sold. Often the house itself must be sold. Many scenarios are possible – elderly people are downsizing or a home is being sold as part of an estate. 

Estate sales can be slow however.  Recently, the New York Times focused on this issue: delays can occur in transactions because of the dynamics between distant beneficiaries and the estate trustee, or even because of the emotional energy required by heirs who are assisting with the removal of the Deceased’s belongings. 

There are understandable reasons for the delays in the estate sale process. Not least of which is that often the people who want to do the job are themselves busy with multiple responsibilities, be it child care or parent care or the demands of a paying job. Help is available though.  Organizations, which cater to these increasing needs can assist, according to a recent Globe and Mail article.

These practical issues often dovetail with legal duties of the Estate Trustee, a role that may be more manageable when a plan is in place. Costs should always be considered though because ultimately, the Trustee has a duty to account to beneficiaries.

Enjoy your day.

Jonathan

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The recent decision in Mohammed v. Heera involved a dispute over who had the right to be appointed as the estate trustee of the Deceased’s estate. 

The Deceased died intestate and was survived by adult children, a minor grandchild, and an individual who the court determined to be the Deceased’s conjugal partner. 

The conjugal partner took the position that the court should give her priority when determining who should be appointed as executor.  (Interestingly, the partner did not actually intend to apply to be executor as she intended to bring a claim against the estate for support.  Instead she wanted the court to allow her to nominate someone to act in her stead).    

In determining who had first right to be appointed as estate trustee, the court considered s. 29(1) of the Estates Act which provides that when an individual dies intestate, the court can appoint as executor (a) the person to whom the Deceased was married or with whom the Deceased was in a common law relations; (b) the Deceased’s next of kin; or (c) the Deceased’s next of kin and spouse/conjugal partner. 

The court noted that there was little jurisprudence or commentary that indicated that s. 29(1) created a priority system with respect to who should be appointed as an executor in the case of an intestacy. 

It held that while it might well be the usual practice for the court to give a spouse priority when determining who should administer an intestate’s estate, it was not bound to do so.  Moreover, the court referred to s. 29(3) of the Estates Act which provided the court with the ultimate discretion to appoint an executor in the case of an intestacy and decided that finding a priority system existed would unduly constrain the court’s role and detract from its parens patriae jurisdiction. 

Have a great weekend!

Megan F. Connolly 

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

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

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

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

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

Chris Graham

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On Tuesday of this week, I blogged on s.35.1 of the Substitute Decisions Act.  This section of the Act provides that a guardian of property for an incapable person has an obligation to preserve property that is subject to a specific legacy in the incapable person's Will unless that property must be used to fund the needs of the incapable person.  As I noted, litigation can ensue on the death of the incapable person if a disappointed beneficiary is not in receipt of his or her legacy.  The disappointed beneficiary must demonstrate that the guardian knew or ought to have known the contents of the incapable person's Will.  While the Act itself  provides an imperative in this regard, it is not at all clear what other evidence would be admissible.  Specifically, the notes and records of the solicitor who drew the incapable person's Will may shed some light on whether the guardian knew of the contents of the Will.  The question, of course, is whether such solicitor's notes are privileged.

In a conventional will challenge, little thought is given to the potentially sticky issue of privilege.  Indeed, solicitor's notes and records are produced as a matter of course when the validity of a Will is challenged.  But when the notes are sought, not to challenge the Will but, rather, to establish the knowledge of someone other than the testator as to the contents of the Will, it is not at all clear whether privilege would be waived by the Court.  

As a corollary to the entitlement of a beneficiary under a Will to make enquiry under s.35.1, a recent decision which Megan Connolly blogged on supports the obligation of a guardian (who is also an estate trustee) to account to such beneficiaries.

David M. Smith

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Section 35 of the Substitute Decisions Act ("Act") states that "a guardian of property shall not dispose of property that the guardian knows is subject to a specific testamentary gift in the incapable person's will."  And under s 33.1 of the Act, a guardian of property needs to make reasonable efforts to determine "whether the incapable person has a Will" and, if so, "what the provisions of the Will are."

Under the authority of these sections of the Act, a beneficiary of a specific testamentary gift can legitimately make enquiry into the actions of the guardian who, more often than not, is also the estate trustee under the Will.  Take, for instance, a demonstrative legacy of a bank account at a specific financial institution.  If the account is no longer in existence at the date of death, the legacy will usually be subject to ademption: the gift has failed because the account was closed before the date of death.  But what if the account was accessed by the guardian either: (i)  for his own purposes or (ii) for the care of the incapable person when there where other assets available to fund the care of the incapable person?  In such a situation, the beneficiary of the account under the Will may seek redress. 

To prove his or her case, the beneficiary will seek an accounting from the guardian in order to ascertain to what extent his or her beneficial entitlement was wrongfully encroached upon in breach of the Act.  Given the imperative under s. 33.1 of the Act, it questionable whether the guardian/estate trustee could ever  successfully argue ignorance of the terms of the Will as a defence to such claim.

 David M. Smith

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As a WWII pay officer in the Canadian military, my paternal grandfather met a British woman on the beach when he was stationed in the south of England. They married soon after the War and retired in England in the mid-1960s.  My grandfather died in the early 1990s; when my step-grandmother, Tessa, died in 2008, in her Will she left her house to my father and aunt.

If there were no Will, Tessa's estate could have contributed to the British government's coffers.  In that circumstance, a probate research firm could have played a role. 

Title Research is one of the firms highlighted in yesterdays blog about "heir hunters".  Its services include: searches for missing beneficiaries, heirs, and legal documents (such as marriage, birth and death certificates back to the 1800s); asset research to value, verify and find missing or unknown assets; missing beneficiary indemnity insurance; probate valuations; and will searches to determine that the Will is the deceased's last will. 

If Tessa had died intestate, Title Research, and other firms, could have located her heirs around the world.  Alternatively, if the estate trustee had questions about the value of the estate assets, or had the trustee not known the whereabouts of the beneficiaries, it could have enlisted a search firm's services as some anecdotes suggest.

Potentially trustees can protect their personal liability by engaging a firm that has a best practices endorsement of Britain's Law Society.  It seems that an estate need not just have ties to the UK, but the extent of a firm's expertise in a specific jurisdiction would have to be assessed.

Interestingly, some of the detective work can be done by amateur sleuths: www.findmypast.com and www.ancestry.co.uk allow access to census data from the 1800s and a host of other historical information.  If genealogy is in your blood, it's a place to start.  And, as one UK law firm suggests, it might be advisable to do some of your own investigating.

Jonathan Morse

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In Scotland for my honeymoon, I encountered a few different “estates”. Hiking the West Highland Way – averaging about 12 miles a day – we passed Blackmount Lodge, in the Bridge of Orchy. The lodge, owned by the Fleming family (of James Bond fame) sits on the edge of an idyllic loch. It took a day to walk across the estate.

Fellow walkers from Britain were interested to learn that I work in estate litigation. After sorting out differences in our terminology, they asked if “heir hunters” exist in Canada. I was intrigued.

While I still do not know the extent of “heir hunting” here, I learned that Heir Hunters is a BBC series that follows probate detectives who look for distant relatives of people who have died without making a will. I have not heard of a similar program in North America.

Several UK firms track down missing relatives: Fraser and Fraser  and Title Research are two examples. About 545,000 people die in Britain every year and half of them do not have a will. As in Ontario, there are rules in Britain which dictate that when people die intestate, their estate passes to the deceased’s legal next of kin. In Britain, if there is no family, the estate falls to the Crown.  The Guardian claims that £10 million to £20 million falls to the government every year because there is no one to claim the estate. Heir hunters locate the next of kin and alert them to their inheritance; there is a finder’s fee of up to 25% of the amount.

Many people in Canada can trace their roots to the United Kingdom. Estate practitioners, if advising estate trustees, would be well served to keep “heir hunting” firms in mind. 

Thank you for reading.  Enjoy your day.

Jonathan Morse

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 Yesterday I blogged on the decision in McAllister v. Hudgin and the issue of when and how a trustee has a duty to account. 

In its decision, the court also considered the removal of a trustee. 

In McAllister, the applicant had argued that the trustee was in a conflict of interest.  Specifically, prior to the Deceased’s death, the daughter who was named as estate trustee had acted as the Deceased’s attorney for property.  The applicant argued that since the estate trustee was refusing to pass accounts for her actions as attorney for property, it was inappropriate for her to continue to administer the estate. 

The court rejected these submissions for two reasons.  The first reason was that the court determined that the estate trustee had proceeded prudently in her administration of the estate.  Moreover, there had been no accusation that the trustee had acted dishonestly or with mala fides with respect to the estate that would justify her removal. 

The second reason related to her “refusal” to bring an application to pass accounts.  The court found that at this stage, it was only a “supposition” on the part of the applicant with an inadequate evidentiary basis.  It determined that if the applicant wished to pursue a removal on this ground that he could only do so once further evidence had been adduced.

I hope you enjoyed my blogs this week.  Have a great weekend!

Megan F. Connolly 

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The contemporary attitude is that we live in a young country.  True in some respects.  Yet we own the oldest contiguous institutions.  Trusts are one aspect of this venerable inheritance: the trust is as old as the Common Law.  Actually, a little older in some respects: the English trust finds its roots in the 12th century.  

It all started when a few knights returned from their crusades to find that the "friends" to whom they had entrusted management of their feudal lands refused to return said lands.  There was no mechanism at law to force the new untrustworthy owners to return the land so the law courts could do nothing. 

Naturally, the irate knights went to the Lord Chancellor and "asked" for justice.  One can imagine the scene: the silk-gowned Lord Chancellor looking down at the length of his shoe, then up at a selection of battle-worn armored thugs with gauntlets tapping hilts on chipped swords, over at the foppish, yawning new land-holder, then down again at the length of his shoe.  Unsurprisingly, the knights who had nothing else to live for continually won in the Courts of the Chancellory and the concept of trustees and beneficiaries was born.  I wager that trial by ordeal would have reached similar results so this must have been fate at work.

Tomorrow some interesting case law, I promise. 

Chris Graham