Toronto Estate Law Blog

Step 5: Execution Requirements

Hull & Hull LLP — Fri, 05 Dec 2008 04:15:23 -0500

You've finalized your draft Will. Everything appears to be in order - you just need to "sign it up". You ask your lawyer if he or she can just send you the Will so that you can have it witnessed at home. This seems to be straightforward enough - what can possibly go wrong?

Centuries of litigation attest to the fact that things can - and do - go wrong when a will is not validly executed.

We've written in great detail on our blog (and spoken on our podcasts) about the strict legal requirements provided for in Ontario's Succession Law Reform Act, R.S.O. 1990 ("the SLRA"). Ian Hull also discusses negligence issues and his suggestions for a proper will signing in an issue of Law Pro magazine here. In a nutshell, the testator must sign or acknowledge the signature in the presence of two or more witnesses, present at the same time. Today's blog will consider interesting exceptions and anecdotes to the strict compliance rule governing execution formalities in Ontario. Unlike other jurisdictions across Canada and the rest of the world, Ontario does not have a "substantial compliance" or "harmless error" rule, meaning that if your Will is not executed in accordance with the requirements it may be invalidated.

A "soldier's will" does not require strict compliance with execution requirements, provided the person is on active service with the forces, either naval, land or air force, or a sailor when at sea or in the course of a voyage. The reasons for the exception to the rule in these cases seems obvious.

Witnesses are required to sign after, not before, the testator. Also, the testator must be able to actually see the witnesses sign, if he so chooses. Therefore in the case of a testator who is unwilling to move and who is not facing the witnesses, the will may be invalidated. Also, in the case of a holograph will in Ontario (which does not need to be witnessed but must be in the testator's handwriting) the legislation does not specify the nature of the writing, only that it be "in writing". This means in can be written in ink, paint, pencil and not only on paper but valid holograph wills have been prepared on a tractor's fender (which the testator prepared as he lay pinned and dying under his tractor), a petticoat, and even on an empty eggshell.

To play it safe, always execute your will under the supervision of your lawyer and ensure that the formal requirements of Ontario's SLRA are observed.

Sarah Hyndman Fitzpatrick

Step 4: Powers of Attorney

Hull & Hull LLP — Thu, 04 Dec 2008 04:15:00 -0500

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

The Benefits of the Family Meeting - Hull on Estate and Succession Planning #141

Hull & Hull LLP — Wed, 03 Dec 2008 10:50:00 -0500

Listen to The Benefits of the Family Meeting

This week on Hull on Estate and Succession Planning, Suzana Popovic-Montag speaks with Rodney Hull about the benefits of holding a family meeting to discuss estate matters while the testator is still alive. They both extend their condolences to the family of Ted Rogers, who passed away today.

If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.

Step 3: "On Second Thought..." - Codicils

Hull & Hull LLP — Wed, 03 Dec 2008 04:15:00 -0500

A quick aside before I consider the effect of making changes to your Will (referred to as a Codicil) or altering your Will, which is Step 3 of my estate planning discussion. Cable magnate Ted Rogers has passed away at the age of 75 (watch a video link here). He built his company, Rogers Communications, from one FM radio station into Canada's largest wireless, cable and media company. I stumbled across an amusing anecdote from his early days as a boarding student at Toronto's Upper Canada College - ostensibly he defied his school rules by rigging up an antenna in his dorm room to present TV shows and charging admission. From this early start he became a true pioneer of the Canadian communications industry and a prolific philanthropist. We extend our sympathies to his family, friends, and employees at this sad time.

Today I will briefly consider codicils - a document used to amend a Will's original text. Ideally the use of codicils should try and be avoided, as current technology should permit making the necessary changes on a computer and simply re-printing the Will. This also has the advantage of not making it obvious to the beneficiaries (whose gift is being depleted or removed), and also avoids the possibility of transcription errors. However, in certain cases a formal codicil or even a holograph codicil (i.e. a very ill client) may be advisable.

In any event, avoid making changes to your Will without legal input as doing so may lead to family discord down the road if the proper formalities are not observed. Alterations on the face of your Will should be avoided (see Paul Trudelle's blog on this issue here) - as such alterations typically require an application for the opinion, advice and direction of the Court.

Sarah Hyndman Fitzpatrick

Step 2: Your Will

Hull & Hull LLP — Tue, 02 Dec 2008 04:30:00 -0500

If you tuned in yesterday to our blog, you noticed that this entire week is devoted to a discussion of a "5-Step Estate Plan". Today I will be considering your last Will and Testament - commonly described as the foundation of any estate plan. Often clients, even after they have made an appointment to draw up a Will, will inquire "Why do I need a Will, and what's wrong with simply using an on-line or DIY will kit?".

In a nutshell, if you don't have a Will you cannot select who will be the executor of your estate (also known as the estate trustee) and a Court will be required to appoint this person. Provincial laws will determine who will inherit your estate (and no, your spouse will not always "get it all" as you may expect), children's shares of your estate will be paid into Court and held until they attain the age of 18 (leaving no flexibility for trusts when they are over the age of 18 or for children with special needs), and your estate will undoubtedly be subject to greater tax liability following your death.

One of the most important advantages to drafting your Will is naming your executor and trustee. If there are trusts established under the terms of your Will, this may affect your decision relating to whom to appoint in this regard. Alternate trustees should be considered and a discussion with your lawyer should include whether you think such person (or persons) have the proper judgment and business sense. Where an immediate distribution of your estate is not always in the best interests of your beneficiaries, a properly structured Will can also provide for a testamentary trust or trusts for children and/or a spouse.

Some of the issues that may arise when a lawyer is not involved include neglecting to make provision for outliving your heirs, partial intestacies, and the possibility that a gift provided for in your Will no longer exists at the time of your death. When these types of issues are not effectively addressed they can lead to a much greater likelihood of disputes and family strife after your death.

Other interesting issues to ponder at the Will drafting stage are RESP's for children, loyalty point clauses, and ethical considerations as mentioned by Ian Hull and Suzana Popovic-Montag in a recent Hull and Hull podcast and in another interesting article here.

Sarah Hyndman Fitzpatrick

Rose v. Rose - Hull on Estates #139

Hull & Hull LLP — Tue, 02 Dec 2008 00:00:00 -0500

Listen to Rose v. Rose

This week on Hull on Estates, Rodney Hull and Jonathan Morse discuss the case of Rose v. Rose [which can be found at 24ETR(3D)217 or 81OR(3D)349]. The case is valuable and instructive as it raises questions about rectification, rescission and removal of the trustees.

Feel free to send us an email at hull.lawyers@gmail.com or leave us a comment on the Hull on Estates blog.

Rose v. Rose - Hull on Estates Podcast #139

Posted on December 2^nd, 2008 by Hull & Hull LLP

Jonathan Morse: Hello and welcome to Hull on Estates. You’re listening to episode 139 on Tuesday, December 2^nd, 2008.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada. Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and wills. Now, here are today’s hosts.

Rodney Hull: Hi and welcome to another episode of Hull on Estates. I’d Rodney Hull.

Jonathan Morse: And I’m Jonathan Morse.

Rodney Hull: If you want to be heard on Hull Estates, you can participate by leaving us a comment. E-mail us at hull.lawyers@gmail.com or you can visit our blog at estatelaw.hullandhull.com.

Jonathan Morse: Thank you for that, Rodney. Today I thought, with your agreement, that we would discuss a case which is called Rose and Rose. And it’s a decision of the Ontario Superior Court of Justice. It’s 24 E.T.R. (3d) 217. Also found at 81 O.R. (3d) 349. And I might just spend a moment introducing the facts of this case. The decision was by Justice Lissaman. The decision was made August 2, 2005. Sorry, the judge was June 19, 2006. It was heard August 2, 2005 as well as March 6 and 7, 2006.

And in this case, it deals with a trust that was established. A cottage property was put in a trust in 1992 and at the time, there were two children who were the beneficiaries of the trust. The children were age 7 and 9. And at the time the trust was created, the relationship between the husband and wife was friendly. And unfortunately, as matters progressed, the relationship, the marriage broke down and, of course, the trust issue arose. And we both had a chance to speak about this, and I thought I might ask your thoughts, Rodney, on the value of this case.

Rodney Hull: Well I think this is a very valuable case, from a standpoint of lawyers practising in the trusts and estates field because it deals with the subjects of rectification, rescission, removal of trustees and just some general principles of interpretation. Its descriptive, it’s incisive and it’s well written, this judgment, and very educational, in my view. Written in plain terms and readily understandable.

Jonathan Morse: If you would, Rodney, would you just maybe speak about the rectification aspect of the case to start us off.

Rodney Hull: Well the questions raised by, in rectification, rescission and removal of the trustee are dealt with by the trial judge. And he finds that none of these particular forms of relief are available in the circumstances because the law simply does not go far enough to permit it in this particular case. And where he does linger for the most part is on the question as to whether or not he can use, occupy and enjoy the property during his lifetime or during the period of the trust. And some general principles of interpretation are dealt with. The unfortunate part was that the trust deed did not deal with use, occupation and enjoyment, nor does there appear to be any consideration given to a right to occupy and enjoy. The question, of course, raised is if it had been raised by the estate planner, it seems to me that it would just call on bidden to the lips the response well, don’t worry, the children will let me on the property any time I want, so we don’t have to provide it. And it might as well have had some adverse tax consequences upon a reading of Section 105 of the Income Tax Act of Canada, had it been specifically included as a provision in the agreement, perhaps as a benefit or some other right to enjoy, which had a value.

Jonathan Morse: And just on that point, Rodney, if I may. I understand on the facts that there was a disagreement between the husband and wife as to the purpose of the trust and the husband’s view was that it was motivated for tax reasons.

Rodney Hull: Yes.

Jonathan Morse: But the wife, her view was that the trust was established essentially to give the property to the two children. So I guess the intention of the parties, they had a disagreement as to their intention and that affected, played into whether there could be any rectification, is that right?

Rodney Hull: Well, I think so. And I can say this that the tenor of the relationship between the father and his daughters and the father and the mother were such that the judge held that they simply couldn’t co-exist on the same property and accordingly, he had to meet the question of use and occupation and enjoyment on general principles of interpretation. And he simply wasn’t able to come to the conclusion that there was a use, occupation and enjoyment right in the father who had given the property to the children. I have to say that it’s an extremely difficult decision for the trial judge by reason of the fact that the feelings were so bad that he had to consider that probably as the most important consideration to be dealt with in making the determinations.

Jonathan Morse: And one further question, if I may. Clearly the trust document, the deed of trust, it could have addressed this issue of use, is that correct?

Rodney Hull: Yes it could have.

Jonathan Morse: And because it didn’t, there was no room to interpret that the husband, the settlor had any right to use the property.

Rodney Hull: That is so. I think the judge based his decision on the fact that he could not act on surmise or guesswork. And in this case, he simply had to deal head-on with the general principle of interpretation that I set out earlier in this discussion.

Jonathan Morse: And just one other, a few other issues come up but we are running out of time. On the conflict issue, I think the judge held simply that the husband could not continue to act as a trustee when he had a personal interest in the use of the property but also had a role as a trustee. And therefore had to step down as trustee.

Rodney Hull: Well I think the trial judge was faced with the plain and simple fact that the children and the father were not able to get along together and how can a trust be properly administered by a trustee when such bad feelings arise between them? And there’s lots of authority for that proposition and I think the judge came to the correct conclusion in removing the father as a trustee in the circumstances. However, I note that I had the general feeling that the trial judge really wanted to help the husband in some way but was unable to do so. But I noted that the costs on the highest level were awarded out of the assets of the trust. And I think that would fortify my feeling that the judge felt very uncomfortable in disposing of the matter to the detriment of the husband.

Jonathan Morse: Well I think we’ve discussed a few different aspects of this case and as I understand, it’s quite an important case in this area. I think that brings us to the end of this week’s discussion. Thanks for listening and thanks for joining me and Rodney today. It was a pleasure to be able to work with you, Rodney, on this podcast. And I look forward to podcasting with you again soon.

Rodney Hull: The pleasure is mine. Thank you.

Jonathan Morse: We look forward to hearing from our listeners. You can send us an e-mail at hull.lawyers@gmail.com. Be sure to visit our blog at estatelaw.hullandhull.com where you’ll find even more information and discussion on today’s practise of estate law. We hope that you enjoyed the show. I’m Jonathan Morse.

Rodney Hull: And I’m Rodney Hull. Until next week, so long.

This has been Hull on Estates with the lawyers of Hull & Hull. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

To listen to other podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.

Our theme music is Upper Structure by DJ AKid and is courtesy of the Podsafe Music Network.

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The 5 Step Estate Plan

Hull & Hull LLP — Mon, 01 Dec 2008 04:30:00 -0500

For something a little different on the blogging front, this week I will be providing a 5 part guide to developing your estate plan. Today's blog will canvas preliminary issues to consider when creating (or revisiting) your estate plan. What are the essential components of a sound estate plan and have you done everything possible to maximize your wealth preservation strategies, reduce the possibility of disputes and family strife, and avoid legal action pertaining to your estate down the road? Every day this week I will provide a further glimpse into issues that arise as your estate plan evolves - from the initial conceptualization phase right through to requirements in Ontario for the valid execution of your documents. Helpful tips and links will be provided along the way.

As a starting point, whether you are pondering your estate plan for the first time or simply re-thinking it (for example in light of the recent economic downturn), understanding the basic documents that govern wealth preservation for you and your heirs is critical. While your Will is the foundation of your estate plan and provides for the orderly distribution of your assets upon your death, powers of attorney (both for property and personal care), living wills, and insurance all play a vital role in your estate plan as well. Of course there are also many intangible factors in the planning process, such as underlying family dynamics. Understanding the nature of sibling relationships and how these may play out after your death is therefore a critical component of your estate plan (see Jordan Atin's interesting blog on this issue here).

As a first step, therefore, anyone thinking about this issue should understand the documents that comprise an effective plan and think about how their individual family dynamics may play a role. Your estate planning lawyer can guide you in the proper direction in this regard and recommend how to deal with specific issues relating to your own individual family dynamics (for e.g. perhaps involving your beneficiaries in the creation of your estate plan in the appropriate situations, or suggesting trust arrangements rather than outright gifts to specific individuals). Considering your choice of executor(s) and guardian of any minor children are also issues which your lawyer should canvas with you.

Those documents which will be relied upon when you're "above the ground", such as powers of attorney and living wills (as opposed to your Will which comes into play when you're "below the ground") should be prepared and considered as essential components of your estate plan.

Tomorrow's blog examines a well-drafted Will and suggestions for preserving your wealth, reducing the possibility of disputes, and avoiding the potential for family strife upon your death.

Sarah Hyndman Fitzpatrick

KRISTALLNACHT - 70 years later

Hull & Hull LLP — Fri, 28 Nov 2008 04:00:00 -0500

Retired professor Fred Westfield was 12 years old when he last saw his uncle, Walter Westfeld, a renowned art collector. Two days later came Kristallnacht, or the Night of Broken Glass, on November 9, 1938. Kristallnacht was a coordinated attack on Jewish people and their property during which nearly 30,000 Jews were arrested and deported to concentration camps. Walter was arrested by the Nazis for trying to move his art work to the United States and the Nazis auctioned hundreds of pieces of his art to pay his fine.

Four years ago, while doing a web search, Fred Westfield discovered that the Boston Museum of Fine Arts was looking for Walter's descendants because they had in their possession "Portrait of a Man and a Woman in an Interior" by 17th century Dutch master Eglon van der Neer. The museum suspected that the portrait had once been owned by Walter, and had been illegally sold by the Nazis.

Now 82, Fred Westfield and his family are suing the German government over his uncle's extensive art collection that had been seized by the Nazis and sold at auction during World War II.

According to The Associated Press, the lawsuit is unusual because 'it is seeking damages for lost art rather than the return of items that once belonged to Holocaust victims.' Generally speaking, previous cases have generally sought to have the art returned to the family's estate from current owners. Under the Hague Convention, Germany has 3 months to accept or reject the lawsuit.

Fred Westfield estimates that the 400 or so works of art would be valued at tens of millions of dollars today.

David M Smith

Further Musings on s.35.1 of the S.D.A.

Hull & Hull LLP — Thu, 27 Nov 2008 04:00:00 -0500

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

The Slippery Edge of the Slope

Hull & Hull LLP — Wed, 26 Nov 2008 04:00:00 -0500

As a former manager at an assisted living facility, I was often (too often) witness to the devastating aftermath of falls in the elderly. As an administrator, the direct effects of a fall are obvious and measurable. According to the Centers for Disease Control and Prevention, over 1.8 million Americans over age 65 are injured annually in falls. A recent New York Times article indicated that 433,000 of those will be admitted to hospital and 15,800 will die as a direct result of the fall. In Canada, estimates suggest that 1 in 3 elderly people living in the community will experience at least one fall a year. The Canadian Institute for Health Information (2002) reports that 75% of in-hospital deaths were due to injuries from a fall.

What are far more difficult to track and quantify are the indirect consequences of a fall, from which many elderly also do not survive.

Post-fall, in the hospital environs, an aged person is subject to the complications of the fall. They are immobilized in bed, usually catheterized, and are prone to infection, muscle atrophy and pneumonia, which extends the length of their stay in the hospital (generally 11-14 days according to Health Canada). When they are eventually discharged, whether to their own home or to a care facility, they are terrified of falling again. A downward spiral of loss of confidence, social isolation, nutritional risk, psychological fragility, and a depressing awareness of their vulnerability often ensues. Any underlying co-morbid health conditions (diabetes, respiratory illness or cardiac conditions) will dramatically accelerate this downward spiral.

By the year 2031, one in five Canadians will be over the age of 65, compared with one in eight in 2001, and the number of people over the age of 80 will double over the same time frame (The Demographic Time Bomb). The increasing number of falls in the elderly is an emerging public health crisis and thus fall prevention initiatives and more facilitative access to community-based supports for the elderly must be critical components of provincial and nationwide health care planning.

Jennifer Hartman (Guest blogger)

Direct and Indirect Approaches to Estate Planning - Part 1

Hull & Hull LLP — Tue, 25 Nov 2008 16:45:59 -0500

Listen to Direct and Indirect Approaches to Estate Planning - Part 1

This week on Hull on Estate and Succession Planning, Ian and Suzana start a discussion on their global philosophy toward the estate planning process. There are direct and indirect approaches to capacity and estate planning and in this episode, Ian and Suzana explore these approaches as they pertain to the choice of attorney.

If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.

Direct and Indirect Approaches to Estate Planning - Part 1 - Hull on Estate and Succession Planning - Podcast #140

Posted on November 25, 2008 by Hull & Hull LLP

Welcome to Hull on Estates and Succession Planning, a series of podcasts hosted by Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada. From the offices of Hull & Hull in Toronto.

Suzana Popovic-Montag: Hi and welcome to Hull on Estate and Succession Planning. You’re listening to episode #140 of our podcast on Tuesday, November 25^th, 2008.

Hi there, Ian.

Ian Hull: Hi Suzana.

Suzana Popovic-Montag: How are you today?

Ian Hull: I’m terrific.

Suzana Popovic-Montag: That’s good.

Ian Hull: It’s a big day today. It’s the founder of our firm’s birthday.

Suzana Popovic-Montag: That’s right.

Ian Hull: Rodney Hull turns something significantly more than 70. I’m not sure what. And it’s a big day for him. So…

Suzana Popovic-Montag: Congratulations Rodney.

Ian Hull: The topic that we wanted to cover today and we don’t know if we’ll get it done in one podcast, so we’re happy to do it in two, would interest I think a lot of listeners on a couple of levels. So we do remind you that you’re free to send some input to us. And e-mail us at hullandhull@gmail.com.

Suzana Popovic-Montag: Or of course, feel free to send us an e-mail at estatelaw.hullandhull.com.

Ian Hull: Alright. So one of the topics that has come up in the past six months in our blog and one that we wanted to sort of flesh out a little bit today was some of our sort of global approach to estate planning and how that dove-tails into the different kinds of contentious matters that can arise. And one of the most difficult contentious matters is when you get into a Power of Attorney fight. When you are fighting over the body, so to speak, while it’s alive. And when you have a person who’s in that grey zone of incapacity, who should control what and so on. So let’s, before we get into how that works, let’s talk a little bit about sort of our global philosophy that we kind of break down when we think about how we’re going to manage people’s estate plans. And we’ve sort of broken it down into three categories: one is the direct; one is the indirect approach; and the third is sort of a meshing of the two.

Suzana Popovic-Montag: That’s right.

Ian Hull: So let’s start with defining the estate planning process as we have with the indirect. What do we mean by that?

Suzana Popovic-Montag: Well that, Ian, I think is more or less what people would recognize as the traditional way of planning an estate. So it’s the documents that you create, for instance, in a Power of Attorney situation, the Power of Attorney document. It is a testamentary instrument, a Will perhaps. Those are the things that we have a comfort level with as lawyers, and probably a lot of lay people as well. Those are those documents that we typically identify with an estate plan.

Ian Hull: So we call them indirect because they are people’s efforts to estate plan or capacity plan without actually talking to anyone typically.

Suzana Popovic-Montag: That’s right.

Ian Hull: Because the document does the talking.

Suzana Popovic-Montag: That’s right.

Ian Hull: When you become incapable, the Power of Attorney does the talking. When you pass away, the Will does the talking. And that’s not to say that people don’t talk about those documents with their beneficiaries and their attorneys before they fall into those categories, those gruesome categories. But that’s how we look at indirect.

Alright. So then let’s step back again and if we’ve got sort of two categories, the indirect, what’s the direct estate planning techniques that we have used in the past that are of some help?

Suzana Popovic-Montag: Well those, Ian, are what we sort of call the eyeball effect planning methods. And we talked a little bit during our last podcast about the family meeting, for instance, as a suggestion of a way to do that, where you’re actually sitting around a table or in some informal environment with your family members and telling them what your plan is. What you would like to happen if something were to become of your capacity. What you would like to do with your estate upon your death. So you’re having that conversation with individuals. You’re looking them in the eye as we say, and explaining to them why you’re perhaps treating them differently than they might otherwise have expected.

Ian Hull: Alright. Well for today, we no doubt will talk in some detail about the family meeting. But we want to remind people that the first probably thirty podcasts of Hull on Estates and Succession Planning really particularize the process in extensive detail. So should they be interested, they’ve got a resource there. We always like to remind ourselves that we have done some hopefully useful things in the past.

Suzana Popovic-Montag: That’s right.

Ian Hull: So this indirect approach and the direct approach, these two options, what do we mean by the sort of third, hybrid option? What are we talking about in terms of the general concepts?

Suzana Popovic-Montag: Well both processes, Ian, are so fluid because they really, you can mold them to whatever your particular circumstances are. And so when we say a hybrid, what we’re talking about is the fact that some plans will have these kinds of informal arrangements where there is the meeting, there is the discussion which will then be turned into some kind of document, the traditional kind of estate planning documents that we typically see. And you’ll gear your particular circumstances to your situation. And so you’ll have maybe a written part, verbal part discussion or whatever it is, and you’ll come to something where its not sort of the, you know, cookie-cutter expectation of either the direct with the family meeting, or ADR or we call it Alternative Dispute Resolution mechanisms, or the actual traditional documentation.

Ian Hull: Okay. So a good illustration I’ve seen in the past with the hybrid approach is that an easy one would be someone does a Will, wants to give their gifts to certain individuals in the family and they tell them that. So they tell them who the executor is and who the beneficiaries are. So that (a) there’s no surprises; and (b) that if there’s some time to get feedback, they may as well do it while you’re alive.

Suzana Popovic-Montag: That’s right.

Ian Hull: So that’s our hybrid analysis.

Okay, let’s spend some time talking about how the indirect, direct and sometimes hybrid approaches are used sort of, let’s put some real tangibles to it, alright? And we talked earlier in this podcast about Power of Attorney litigation and those kinds of fights. Because there is really capacity planning which is Power of Attorneys, and then there’s Will planning. So let’s start with capacity planning and how we can use the indirect and direct form of communication to properly and effectively capacity plan. And let’s use one illustration that comes to mind. The first illustration that comes to mind is choice of attorney. So how are we going to deal with choice of attorney in the two different models?

Suzana Popovic-Montag: That’s a great set-up, Ian, for a discussion and I think, you know, we start of course with an individual saying or doing the planning, doing the determination of who he or she would ultimately want to take care of their affairs if something were to happen to their faculties and their own ability to do so. And so they will have an individual or two probably in mind, or, you know, other family members. They’ll call a meeting.

Ian Hull: Okay, so sorry, we’ll stop there. We’ve picked the person, right? So we’ve done our homework and that’s a personal step that we’re going to take, with maybe consultation. So there is some, that’s indirect because it’s ultimately, we’re not talking to anyone yet, but it might become more direct because we might say, geez you know, I’m thinking of x, y and z with our friends or our trusted advisors, not our family yet.

Suzana Popovic-Montag: Okay.

Ian Hull: Okay? So then you’re saying we need to call a meeting of some sort.

Suzana Popovic-Montag: It’s certainly a suggestion in those circumstances. If you do want to steer away from just having it become a surprise at the end of the day, then you’ll set up that kind of arrangement where you can have these discussions. And I think its really important to have them with your proposed attorneys. In particular, you want to make sure that they know how it is that you would ultimately like things to be handled once you can no longer handle them yourself, and also consider anyone else who might be affected by that decision, and perhaps consider bringing them into it.

Ian Hull: Good, alright. So we’re talking now, we’re leaving it from just this indirect; it will pop into the system when I become incapable and we’re bringing in some direct steps.

Suzana Popovic-Montag: That’s right.

Ian Hull: So let’s break down those two direct steps. The first is you say we should talk to our attorney. Alright, first of all, why would we talk to our attorney? And second of all, what are some of the things that we want to talk to them about?

Suzana Popovic-Montag: Well clearly, the fact that you are contemplating them as an attorney would be one of the first things that you’d want to discuss with them, I’d expect. And then beyond that, how you would like them to deal with this. And how you would like them to, for instance, if its your property that you’re dealing with, you’d like your assets managed during your lifetime. If its your personal care, you would want to discuss what kinds of things are important to you so that if these decisions have to be made one day, they’ll have some ideas as to how you would have liked them to have been executed.

Ian Hull: Well look, I think what we’ve done is we’ve started the process of how we’re going to use the two communication models, direct and indirect. We’re starting to put some illustration to that with the choice of attorney. The next podcast, let’s move on to talking a little bit about with some particulars, what are some of the actual things we’re going to talk about to our attorney. Before we’ve come out to them and once we’ve decided it, we’ve done our testing the waters. We come out to them, we’ve chosen the person who we’re going to deal with, and what are some of the issues we’ll want to talk to them about. And we can do that both in indirect ways and direct ways, and we’ll talk a little bit about that in our next podcast.

So please, again, we remind you that we welcome and look forward to any feedback you may have. Easiest way to do it might be at hullandhull@gmail.com if you’re liking the e-mail from that venue.

Suzana Popovic-Montag: Or feel free to visit our blog at estatelaw.hullandhull.com.

Ian Hull: Thanks Suzana.

Suzana Popovic-Montag: Thanks Ian.

You have been listening to Hull on Estates and Succession Planning by Ian Hull and Suzana Popovic-Montag. The podcast you have been listening to has been provided as an information service. It is a summary of current issues in estates and estate planning. It is not legal advice and you are always reminded to talk with a legal professional regarding your specific circumstance.

To listen to other Hull on Estate podcasts, or leave any questions or comments, please visit our website at hullestatemediation.com.

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The Concept of Ethical Wills - Hull on Estates #138

Hull & Hull LLP — Tue, 25 Nov 2008 15:40:00 -0500

Listen to The Concept of Ethical Wills

This week on Hull on Estates, Ian Hull and Suzana Popovic-Montag discuss innovative techniques that add value to doing a will and powers of attorney. Specifically they discuss the concept of ethical wills and how they are different from a traditional will.

Feel free to send us an email at hull.lawyers@gmail.com or leave us a comment on the Hull on Estates blog.

The Concept of Ethical Wills - Hull on Estates Podcast #138

Posted on November 25^th, 2008 by Hull & Hull LLP

Suzana Popovic-Montag: Hi and welcome to Hull on Estates. You’re listening to episode 138 of our podcast on Tuesday, November 25^th, 2008.

Ian Hull: Hi this is Ian Hull.

Suzana Popovic-Montag: And Suzana Popovic-Montag.

Ian Hull: And welcome to another episode of Hull on Estates. If you want to give us some comments, please do so at our e-mail address at hull.lawyers@gmail.com.

Suzana Popovic-Montag: Or, of course, you can visit our blog at estatelaw.hullandhull.com.

How are you today, Ian?

Ian Hull: I’m terrific, Suzana.

Suzana Popovic-Montag: That’s great.

Ian Hull: We have been talking in the past few months about different ways to work with our clients on estate planning. One of the things that we’ve noticed is that there are some really innovative techniques that are out there that really add some value to the process of not just the classic scenario where someone comes in and offers, you know, as a lawyer, you offer your services to do a Will and Powers of Attorney. But we’ve got some other ideas that we wanted to sort of banty around today.

Suzana Popovic-Montag: And one of those in particular that I find quite interesting is the concept of ethical Wills. And what an ethical Will is, as opposed to a traditional Will, is an interesting distinction because traditionally with a Will, what people will do is they’ll say this is what I have and this is who I want it to go to. The idea of an ethical Will, however, is that you are leaving behind a legacy of what you want people to know.

Ian Hull: And, you know, it really seems to us anyway, it adds some value to the whole estate planning process, isn’t a tremendous cost to the clients but helps get us to the point where we like to tell our clients and that is, is that don’t just leave a financial legacy, which of course will be well received by the beneficiaries. But leave an emotional legacy. And the concept of ethical Wills is not new to society generally. In biblical times, there were obviously techniques used in the Bible where different players in the process would leave messages for their families and guideposts of their families in terms of how to live and how to consider their lives. But in terms of a modern approach, one classic example of an ethical Will-like thing to do is to write your memoirs. I noticed recently Ted Rogers, the famous Ted Rogers, has published his own autobiography. And in it, he talks about a lot of things but it’s got to be a wonderful document just alone for his family to have, really his thoughts and his views on life and some of his experiences in life. So that’s one wonderful thing for his family. I know he didn’t write the book just for his family. He’s left his own ethical Will for all of us. I noticed an interesting point where in the book he talks about, you know, he’s asked who his idol in life is and he unhesitatingly says it was his father, who interestingly enough died when Ted Rogers was 5 years of age, his dad died when he was 38 years old. So one of the sort of dying wishes that appears from the book that Ted wanted to pursue was his buying back of CFRB from the family that apparently took it from under Ted’s father.

But the point is, is that it was a neat illustration to me anyway, of what would be a voluminous ethical Will.

Suzana Popovic-Montag: That’s a nice story, actually and it sort of underscores, as you say, a modern approach to this idea of an ethical Will, or I know in other jurisdictions they call it letters of wishes, or letters of intention, something like that. In terms of another example, one that sort of we’re classically faced with a situation where we’ve got a Will that will create a trust arrangement within it for perhaps the minor children. And it will have staggered payouts at let’s say 21 years of age, at 25 years of age and then at 30 years of age, the full capital and any accumulated interest gets paid out. And what people are doing in these situations is including when there’s an encroachment on capital or a payout on the capital, with the money that’s being paid to the beneficiary, trustees are also providing them with letters of wishes or letters of intention that were created by the settlor and passed down at these points in time to send along messages to the beneficiaries that weren’t said perhaps during a lifetime, or were being reinforced after death as well.

Ian Hull: And what’s an example of…so obviously we do our Wills now and we don’t know when we’re going to die. But in situations where we have clients that are unfortunately very gravely ill, how would that ethical Will, sort of letter of wishes, unfold?

Suzana Popovic-Montag: Well it’s something that is typically left with a trustee so that when a Will is provided to the beneficiaries or read to the beneficiaries, it’s something that’s found at the same time perhaps, or it could be somewhere else.

Ian Hull: So an example might be a young professional who may be faced with, your client might be faced with knowing that he or she is going to pass away soon and they want to make sure that these notes trickle out and maybe as you say tie into the distribution stages. They may also want to just have them trickle out at different times. I mean a classic example would be if you had young kids and you knew you had terminal cancer, you might say well look, here’s three sets of notes. One set I want to go to each of my kids when they turn 16; another set when they turn, I don’t know, 21 when the money comes out; and maybe another set of notes that come out when they get married or a significant turning point in their life. So there is a tangible way of doing this, you don’t have to be Ted Rogers to put this proposition to your clients. There’s a really tangible way of adding some wonderful sort of value to your legacy.

Now let’s just spend a minute here now just talking, a minute or two talking about what types of topics we might want to cover in the context of an ethical Will. And you know, maybe in this podcast or another one, we can talk about some specific examples. But we’ve told you some illustrations but what kind of topic headings would one want to consider putting in the ethical Will as opposed to writing a book like Ted Rogers did?

Suzana Popovic-Montag: Well the first one that comes to mind, Ian, is sort of a situation where you want to express love and care for family members or loved ones after the fact. Perhaps you’ve done it during lifetime or you’re doing it differently afterwards. And so that’s one of the examples that quickly comes to mind.

Ian Hull: So another thing that some of the examples that we’ve seen of the ethical Wills have been where someone wants to set out their statement of beliefs.

Suzana Popovic-Montag: And so religious icons or religious thoughts that are important to you are being transferred by way of these kinds of letters perhaps, attitudes towards death, attitudes towards life, values that you might hold dear to you or feelings that you’d like to express. Even something as sort of paternalistic or maternalistic as you know, how life should be lived by that individual could also be encapsulated in these kinds of Wills.

Ian Hull: And these moments of sort of documenting your views, its not just sort of flaky stuff. It can also become an important tool to guide the beneficiaries as they go through life, when they are enjoying maybe benefits from a trust or something like that as well. And, you know, a lot of Wills will deal with gratitude. They’ll say I give a gift of so and so to my caring, attendant caregiver or something like that. But these ethical Wills can also flush out gratitude comments even further and really spell out how the individual feels about someone who has played a special part in their lives.

Suzana Popovic-Montag: And similarly, if heritage is something that’s particularly important to someone, they could take that opportunity to also address that in this ethical Will or letter of intention as well.

Ian Hull: Alright, so why don’t we speak about some questions that you might want to consider to answer in your ethical Will. We’ve talked about the general concepts. Some specific questions we might ask ourselves if we’re going to do an ethical Will. And what we might want to put in it.

Suzana Popovic-Montag: Questions, Ian, I think would help sort of people formulate these kinds of Wills is things like who do you love that you haven’t told during your lifetime?

Ian Hull: And what, if you do take it that next question, like a good illustration was the Ted Rogers’ one, where who is the most influential person in your life?

Suzana Popovic-Montag: How about something like, who has taught you the most in your life?

Ian Hull: And just as a further to that, if we want to talk about who’s taught you the most in life, what was the lesson that they shared?

Suzana Popovic-Montag: Another one that sort of pops into mind is, you know, what would you have done differently in your life?

Ian Hull: That’s a great question. One that comes out of Ted Rogers’ book that I saw was interesting is that there was a real discussion on his part about what was his greatest accomplishment. And in his example, it was accomplishments, plural, but it’s a neat question to ask yourself and maybe put some comment down for your beneficiaries and your family to read later in life.

Suzana Popovic-Montag: From a religious perspective, you know, the question of is there anything that you need to confess before you die? And if so, what is it?

Ian Hull: Alright, so we’ve covered off sort of the gambit of both secular and religious questions you may want to consider. We think that this is an interesting proposition to put to clients. We know, from our practice in the contentious world, that it is a very useful tool, a wonderful legacy to leave for people. Sometimes not so wonderful if its in the negative, but most of the time its positive and well-received.

So as a drafting solicitor, its something else to consider in your arsenal of putting it to your client and allowing them to leave an expression, a little more plain English than the expression that is set out in a boilerplate Will.

Suzana Popovic-Montag: And with that, Ian, I think that brings us to the end of this week’s podcast. Thank you very much to everyone who is listening. And thank you, Ian, for joining me today.

Ian Hull: It’s a pleasure and look forward to doing our next podcast. Again, please feel free to visit our blog at estatelaw.hullandhull.com where you’ll find more information and discussion about the ethical Will and our practice of law.

Suzana Popovic-Montag: Thanks very much, Ian.

To listen to other podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.

Our theme music is Upper Structure by DJ AKid and is courtesy of the Podsafe Music Network.

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One Nexus of Capacity Litigation and Estate Litigation

Hull & Hull LLP — Tue, 25 Nov 2008 04:00:00 -0500

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

After JFK: The Transfer of Power

Hull & Hull LLP — Mon, 24 Nov 2008 04:00:00 -0500

Exactly two hours and eight minutes after then-President John F. Kennedy was shot two cars ahead of him in a motorcade in Dealey Plaza, and exactly ninety-eight minutes after Kennedy was declared dead, Lyndon B. Johnson was sworn in as President aboard Air Force One. This past weekend marked the 45th anniversary of the JFK assassination, which prompted me to scour the internet for some details surrounding that transfer of power.

Twenty-seven people were in the 'living room' of Air Force One at the time of the swearing-in, many of whom were in tears during the ceremony. Federal District Judge Sarah T. Hughes, who had been appointed to the bench by Kennedy two years earlier, became the first woman ever to swear in a President. Johnson stated the following: "I do solemnly swear that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States. So help me God." The plane was not airborne at the time of the swearing-in; instead it was on the ground at Love Field Airport in Dallas. Johnson's first order as President took place minutes later. "Now," he said, "let's get this thing airborne."

Using the aircraft's radio telephone, Johnson made a couple of phone calls; one to Mrs. Rose Kennedy and one to Nellie Connally, wife of wounded Texas Governor John Connally.

The plane headed to Andrew's Air Force Base, where it was met by Robert Kennedy, who met Jackie Kennedy at the door and helped her to the ground. Johnson and Lady Bird then boarded a helicopter for the seven minute flight to the White House where he received phone calls from former Presidents Dwight Eisenhower and Harry Truman who both expressed their confidence in him and pledged their assistance during 'this transitional period'.

David M. Smith

11TH ANNUAL ESTATES AND TRUSTS SUMMIT

Hull & Hull LLP — Fri, 21 Nov 2008 00:21:30 -0500

The 11^th Annual Estates and Trusts Summit was held in Toronto on November 19 and 20, 2008. This excellent program featured a number of experienced practitioners speaking on a broad array of estates and trusts topics.

Topics (and speakers) included:

Family Law Update (Karon Bales)
Shareholder Issues – The Family Business in Succession Planning (Frank Archibald)
Dealing with Insolvent and Bankrupt Estates (Barry Corbin and Robert Klotz)
The Non-Resident Factor in Estate Planning (Mary Anne Bueschkens and M. Elena Hoffstein)
Update on the Trust and Estate Provisions in the Protocol to the Canada/U.S. Income Tax Treaty (Beth Webel and Jim Yager)
New Strategies for Post-Mortem Tax Planning – The Eligible Dividend Rules and More (Heather Evans)
Powers of Attorney and the Duty to Account – An Update (Liza Sheard)
Powers of Appointment (Timothy Youdan)
The Will is Not the Whole Picture - Integrating the Transfer of Wealth both Inside and Outside the Estate (Wendy Templeton)
New Developments in Insurance and Estate Planning (Graham Carter)
Update on Practice Directions for the Estates List (The Honourable Mr. Justice David M. Brown)
Capacity and Other Issues in Power of Attorney and Guardianship Disputes (Jan Goddard)
A Clinician’s Perspective on Assessing Testamentary Capacity and Related Capacities (Dr. Kenneth Shulman)
Capacity Issues – The Perspective of the Hospital, Retirement Home and Group Home (Wendy Griesdorf)
The Vulnerability of Pre-Death Gifts (Eric Hoffstein)
The Scope of the Attorney’s Powers (Sender Tator)
The Incapable Minor Turning 18 (Clare Burns)
Remarks from the New Children’s Lawyer for the Province of Ontario (Debra Stephens)
Marshalling the Evidence For and Against Capacity in a Will Challenge (Hilary Laidlaw)
Short Circuiting the Frivolous Will Challenge (Hull and Hull’s Craig Vander Zee)
Mediation of Capacity Issues – The Mediator’s Perspective (Felice Kirsh and Archie Rabinowitz)

If you were not able to attend, the seminar materials will be available from the Law Society of Upper Canada.

Thank you for reading,

Paul Trudelle

CHALLENGING A WILL: AN ILLUSTRATION Part IV

Hull & Hull LLP — Thu, 20 Nov 2008 00:33:58 -0500

Today is the final instalment of my discussion of Hix v. Ewachniuk Estate, 2008 CarswellBC 1300 (Hinkson J.).

After dismissing the will challenge on the basis of due execution, testamentary capacity and knowledge and approval, the court turned to the issue of undue influence. Despite the presence of suspicious circumstances, the court held that the challengers, not the propounder, had the burden of proving undue influence. However, while the son did not have the burden of disproving coercion, his evidence was to be tested against the preponderance of probabilities that rationally emerge out the all the evidence in the case.

The deceased was found to be vulnerable and dependant upon her son for all aspects of her existence. Conversely, the son was found to have an aggressive and domineering personality, both in general and with respect to his desire for absolute ownership of the family holding company.

The court found that the son was very caring of his mother. However, it did not accept his evidence on the issue of undue influence. The court asked a number of rhetorical questions as to why the mother would make the will that she did, despite the circumstances. The court concluded that that will was procured by the undue influence of the son.

The will was therefore found to be invalid.

Paul Trudelle

CHALLENGING A WILL: AN ILLUSTRATION Part III

Hull & Hull LLP — Wed, 19 Nov 2008 00:29:29 -0500

Yesterday, I discussed Hix v. Ewachniuk Estate, 2008 CarswellBC 1300 (Hinkson J.), and the finding of the judge that suspicious circumstances existed, placing the onus back on the propounder to prove testamentary capacity and knowledge and approval.

As to testamentary capacity, the court referred to the oft – quoted decision of Banks v. Goodfellow, and the test for testamentary capacity.

It noted that the capacity required to direct the distribution of one’s estate by Will is “modest”. To be of a sound and disposing mind and memory, a testator must:

1. be aware that they are making a will that takes effect on their death;

2. understand the nature and extent of the estate to be disposed of by Will;

3. be aware of those having a claim to the estate;

4. have no disorder of the mind.

The court reviewed the evidence of the plaintiffs and the witnesses (other than the son) as to testamentary capacity. The court was satisfied that on the preponderance of the evidence, the testator had the necessary capacity to direct the disposition of her estate by will as of the date of the will.

As to knowledge and approval, the court noted that a suspicious circumstances raised in the case required that the son, as the propounder of the will, prove that the deceased knew of and approved of the contents of the will. The court did not accept the evidence of the son to the effect that the deceased had to carefully read her will and discuss it with him on numerous occasions. Despite this, the court concluded that the deceased knew of the provisions of the will that she signed.

To this point, the will survived most of the challenges to it. Will the will be accepted to probate? Can it withstand the final challenge: undue influence? Tune in tomorrow.

Paul Trudelle