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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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Previously, David Smith has blogged on the dispute between the Beaverbrook Art Gallery in Fredericton, New Brunswick and the Beaverbrook U.K. Foundation with respect to the ownership of the paintings and sculptures owned by the late Lord Beaverbrook. Click here to read about the background to this dispute and here to read about the costs awarded to the gallery.

You may recall that the arbitrator, retired Supreme Court of Justice Peter Cory awarded ownership of 85 out of the 133 paintings to the gallery. Justice Cory found that that artwork conveyed prior to the gallery opening were irrevocable gifts. In his decision Justice Cory referenced, amongst other evidence,  newspaper and media articles commissioned and authorized by the late Lord Beaverbrook as evidence of Lord Beaverbrook’s donative intent.

In a Notice of Appeal, the foundation accuses Cory of being biased against them throughout the hearing. Lawyers for the gallery has called the appeal baseless and state the accusation of bias were only made after the release of Cory’s decisions and have asked for the appeal to be dismissed. You can read the factum of the gallery on their website. .

At the beginning of the arbitration process both sides agreed to an appeal mechanism. Three former judges from three different provinces will hear an appeal of the arbitration decision of Justice Cory. Justice Coulter Osborne of Ontario was chosen by the gallery. Justice Thomas Braidwood of British Columbia was chosen by the foundation. Those two judges chose Edward Bayada, former justice of the Saskatchewan Court of Appeal to chair the panel. The panel will begin to hear arguments beginning in September 22, 2008.

With the foundation already ordered to pay the costs of arbitration, it will be interesting to see how costs are decided this time around.

Thanks for reading,

Diane Vieira

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Applying for Probate - Hull on Estate and Succession Planning Podcast #105

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

Suzana Popovic-Montag: Hi and welcome to Hull on Estate and Succession Planning. You’re listening to Episode #105 of our podcast on Tuesday, March 25^th, 2008.

Welcome to Hull on Estate 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 Estate Mediation in Toronto, Ontario, Canada.  Here are Ian and Suzana.

Ian Hull: Hi Suzana.

Suzana Popovic-Montag: Hi there Ian. How are you today?

Ian Hull: Just great, thanks. Glad to be podcasting again with you. Missed you last week.

Suzana Popovic-Montag: Sorry about that.

Ian Hull: No it’s – these things happen.

Suzana Popovic-Montag: They do.

Ian Hull: Don’t forget to all those who are listening, feel free to call us at 206-457-1985.

Suzana Popovic-Montag: Or if you’d like to drop us an e-mail at hullandhull@gmail.com or, of course, you can visit our blog at estatelaw.hullandhull.com.

Ian Hull: Okay, we’ve been trying to follow through the process of an estate administration per se, and what it takes to get the job. One of the things that we talked a little bit about, not at the last podcast but the one before, was the application for probate itself. And I thought what we could do today is, sort of, talk about some of the things that might come as a surprise to people just how much notice you have to give to the beneficiaries.  And just who needs to be given notice in the application process and some of the other, sort of, what I might consider more mundane steps you have to take in the process. We talked, not in the last podcast but the one before though, about the bonding requirements in Ontario anyway, the probate tax that gets calculated.

Suzana Popovic-Montag: And we didn’t mention the fact though, Ian, that when you don’t necessarily know the exact value of the estate and you can’t necessarily calculate the administration tax that will be payable, you can still file on the basis of an estimated value for the estate, as long as you provide an undertaking that our statute here in Ontario provides for.

Ian Hull: That’s right.  It gives us some flexibility and so it means that you don’t have to know the numbers right down to the dollar.

Alright one of the next things that I think of whenever I’m applying for probate is I think of the Affidavit of Execution.  And that’s because you need it, it is such a vital document. I mean, when you’re dealing with an estate, to administer an estate, you have to have a valid Will and you have to prove that it was properly executed with two witnesses in the room at the same time as the deceased. So the Affidavit of Execution is something you want to track down and sometimes that’s not as easy as it sounds.

Suzana Popovic-Montag: And that Affidavit, for people who aren’t familiar with it, is an Affidavit by those witnesses to the Will saying that they were actually present for the signing of the Will and that all the formalities required by the legislation were abided by.

Ian Hull: And some difficulties can arise because, for example, say the Will was done 20 years ago and you don’t have any real information about the Will and the Affidavit wasn’t signed at the time, you can get into some trouble with the Affidavit of Execution in the sense of trying to track it down. So I always remind my clients whenever they do sign their Will up, make sure that they have asked their lawyer where the Affidavit of Execution is and make sure it’s in a secure place, because it is a vital part of the application itself.

Suzana Popovic-Montag: That’s for sure, Ian. And then once you’ve got all this documentation in place and this information all put together, then what you’ll typically do is actually meet with the lawyer and have the documentation signed up.

Ian Hull: Now in Ontario, and I think it’s a useful exercise to go through because when you do this for the first time, I find people are often surprised at just what needs to be involved in an application for probate. Now let’s talk a little bit about some of the people that get notice of the application itself.

Suzana Popovic-Montag: And that basically is all of the beneficiaries who are named in the Will. And so if you’ve got a beneficiary who’s actually a charity, in that instance, you have to serve not only the charity itself but also possibly the Public Guardian and Trustee as well.

Ian Hull: And people forget that when you have made a gift of a charity, what you’ve done is you’ve created a new layer of bureaucracy in the probate process and in the accounting process, if the gift is part of the residue, and we’ll get into more of that later. But the point is, is that it’s wonderful to give to charities in the Will but I notice in the last 10 years certainly, the taxing authorities in Canada have started to encourage us to gift during your lifetime. You get better tax advantages than you used to for that gifting and, quite frankly, on death, the gift to a charity can be a bit cumbersome. It’s not overwhelming, but it’s just another layer in the process.

Suzana Popovic-Montag: And another government institution that you serve with this notice of application, if you have minors who are beneficiaries of an estate, is the Children’s Lawyer’s office here in Ontario. And that is, again, if you’ve got a minor who’s a beneficiary of an estate, you’ll serve the Children’s Lawyer on their behalf, as well as the parents of the minor.

Ian Hull: So we can’t forget, too, because a lot of these Wills will have what we call is a gift-over provision and they will have a situation where there may be a trust or something of that nature, and so there are minor beneficiaries’ interests that need to be protected. And the governing authority gets a copy of it, opens a file and then is in a position to audit your administration, so to speak. So you put them on notice of the Will and you put them on notice of the financial interests.

Suzana Popovic-Montag: And if you have beneficiaries who are actually not capable, whether if mentally or otherwise, you may have to also, in those circumstances, serve their guardian of property or their attorney for property, if they’ve got one that you are aware of.

Ian Hull: That’s a really good point because sometimes people overlook that aspect of the administration.

Now the final step, of course, is to go up to the Court and file the application itself, and that can be done by your lawyer or it can be done by yourself, it depends in your circumstances. So let’s just take a minute now and we’ve filed for the application, we’ve covered off and maybe been a bit surprised at who all knows about the information.  And I say that because, in Ontario anyway, we’re required to say and provide a copy of the Will to the individual who’s a beneficiary. But we’re not necessarily required to put the amount of the estate. You actually file an Affidavit of Execution with the Court and you also file an Affidavit verifying the amount of the assets when you file in Ontario, so that it’s a public document, but it is not necessarily produced in this first series of disclosure steps. So it’s one of those things that I often will say to my clients “Look, you know what, it’s a public record. Maybe you want to go up to the Court, get a copy of the Affidavit that they file in support because in it will tell you the value of the estate and you might get some answers very quickly as to what’s going on.”

Alright, so we’ve got our Certificate of Appointment and now what do we do? This is the document we’ve all been waiting for, so to speak, and we are in a position now to start to show it to third parties to start to meaningfully administer the estate and get access to certain aspects of the assets that we haven’t been – we’ve been prevented from getting until we got this famous probate document.

Suzana Popovic-Montag: And so one of the first things that my clients will normally want is to have a couple of copies, notarial copies, you know, our Court of approval or seal of approval on that document, indicating that it is a valid probate document that they can then take and use with the authorities who actually require it, in order to help them collect and administer the assets of the estate.

Ian Hull: And that lets you get into various… gets access to various assets. It’s like getting into a safety deposit box, for example.

Suzana Popovic-Montag: And also closing out bank accounts as well.

Ian Hull: And we talked about in other podcasts and the problem is, is that the banks and third parties will not necessarily deal with you as executor without this formal order.  And banks are classics for that and the brokerage companies are classics for that because they want to know that they’re dealing with the right person before they start to release the funds to the estate bank account. Often the bank will also insist on probate before they’ll even open an estate account. So that’s case by case, but that’s something that, you know, as I say, it’s great to have the document now, get lots of notarial copies of it, use them properly and you’re in a position to start to really meaningfully administer the assets.

Suzana Popovic-Montag: And that’s particularly important when you’re trying to collect life insurance policies which typically are in large denominations. And so you’ve now got that Certificate that you can give to the institutions in order to be able to get those funds.

Ian Hull: Another one asset that we sometimes run into glitches on is RRSPs, here in Canada, and again, with our probate documentation, we can usually complete that transfer fairly quickly.

Suzana Popovic-Montag: As part and parcel of that, too, just other kinds of securities where you have to provide the transfer agents with proof of the fact that you’ve got authority to deal with those assets. And again, you’ve now got it in hand and you can give that to them in order to collect those assets as well.

Ian Hull: And, of course, one of the fundamental assets that you have to concern yourself with is the transfer of real estate. And with many different jurisdictions, it is mixed in terms of whether or not you need probate or not. But I would say, sort of, as a good general rule, probate is almost always required. And so now we can start to transfer and sell real estate.

Okay, now one little twist that some people don’t often think of the beauty of probate and before we get into some of this, what I will call some of the other action items that you can take the steps on with the probate document, are things like dealing with personal affects. And for our next podcast, I want to start to…we’ll talk a little bit about not just personal affects but automobiles, talk about other assets that we can now start to administer with the document in hand, that being probate, and with authority that we’ve been waiting for.

So thanks so much Suzana. Good to have you back and we look forward to our next podcast.

Suzana Popovic-Montag: Thanks to you, too, Ian. And just a reminder to our listeners, that we’ve got our comment line set up at 206-457-1985.

You’ve been listening to Hull on Estate and Succession Planning with 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 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 Hull On podcasts, or to leave a question or comment, please visit our website at www.hullestatemediation.com.

Our theme music is UpTempo14 by Gary and is courtesy of the Podsafe Music Network.

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

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

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

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

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

Thanks for reading,

Diane Vieira 

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Listen to Considerations Regarding Testamentary Trusts and Charitable Gifting Issues

This week on Hull on Estates and Succession Planning, Ian and Suzana discuss considerations that must be taken into account while preparing Testamentary Trusts and issues surrounding charitable gifting.

Considerations Regarding Testamentary Trusts and Charitable Gifting Issues - Hull on Estate and Succession Planning Podcast #88

Posted on November 27^th, 2007 by Hull & Hull LLP

Suzana Popovic-Montag:  Hi, and welcome to Hull on Estate and Succession Planning.  You’re listening to Episode #88 of our podcast on Tuesday, November 27^th, 2007.

Welcome to Hull on Estate 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 Estate Mediation in Toronto, Ontario, Canada.  Here are Ian and Suzana.

Suzana Popovic-Montag:  Hi there Ian.

Ian Hull:  Hi Suzana.

Suzana Popovic-Montag:  How are you today?

Ian Hull:  I’m fantastic, how about yourself?

Suzana Popovic-Montag:  Just great, thank you.

Ian Hull: It is a bit of a frustrating week.  We were…both of us actually…ended up being too busy to get over to Terry Fallis’ launch of his book.  Terry Fallis is a well-known podcaster, probably Canada’s…one of Canada’s very best podcasters certainly, but most well known.  He does a podcast called Inside PR and he just launched his own book, which he interestingly first launched on a podcast series and then has it published.  And there was a book launch this week that we ended up getting stuck doing a mediation, so we couldn’t get over to it, with some great frustration.  But I just wanted to give Terry a little plug and tell him again we’re sorry we weren’t there but we hear it was a great event.

Suzana Popovic-Montag:  And Terry, if you are listening, congratulations and all the very best with the book sales.

Ian Hull:  Okay.  So turning from…and his book, sorry, is a political-based book, it’s a fiction book, but he talks about life and politics in this book and it’s really a great…I’ve read part of it and I’ve heard part of it, so it’s a great read, I’m looking forward to reading it. 

But we have to transition to a less exciting aspect of life maybe for some, and that is testamentary trusts.  We were promising that we would kind of wind up our discussion on this today and move into some charitable gifting issues that we want to talk about.  So let’s just finish up the testamentary trusts.  We’ve talked a lot about what they are, the special nature that they are as opposed to an inter vivos trust, or a trust during the lifetime.  The testamentary trust is a creation out of the Will.  And because of that, it has some positives and some negatives.  And we’ve talked a little bit about some of the timing issues that we’ve got to be concerned with.

Suzana Popovic-Montag:  We also mentioned, Ian, a couple of the drafting considerations that people want to keep in mind when they’re creating these kinds of trusts in their Will.  And just in terms of tying up, I’d like to suggest that when people are thinking about these situations, that they consider including a power in the trust to reorganize, in effect, a post-mortem estate freeze.  And that’s a little bit unusual in terms of the planning and the timing of planning an estate freeze, but to have that kind of power to a trustee will help in certain situations where the facts sort of suggest that that would be a natural idea.

Ian Hull:  You know, that’s such a good point.  And if you can put the power into the trust, it certainly makes it a lot easier to exercise that creative planning.  And that’s really…I mean the truth is, is that as much planning as we put into estate planning steps before death, while we’re alive, the rules change every day.  And to allow for something like you’re suggesting, a post-mortem or after death estate freeze, might be appropriate in the circumstances.  And if you’ve got the broad language in the trust, you give yourself some flexibility so that when you hand the Will over to the lawyer or an accountant who are going to administer this estate, you’re giving them a little bit more flexibility and more flexibility means possibly chance of taking advantage of laws that have changed since you did your Will.

Suzana Popovic-Montag:  That’s a good point, Ian.  And you may also want to consider including the power to move the trust to different jurisdictions.  Again, for that exact same reason, if the laws were to change and there were to be a benefit to perhaps moving a trust from one location to another.

Ian Hull:  Gee, that’s a good point, because, you know, in the past…and gosh we’ll see much of the change over the future too…but two classic illustrations of where, if you’ve included that power to move the trust, became advantageous.  One was years ago, not that long ago actually, was Alberta and now the Alberta situation isn’t quite as favorable.  But in Alberta, there was a great move to establishing trusts in Alberta, holding companies in Alberta and the like, to take advantage of the slightly less tax rate that was being charged out there.  It was kind of a…it was a unique situation.  Again, we’re not going to try to drill down too deep on the tax issues but there were significant reasons to move a trust or a corporation to Alberta for some time.  And again, we want to, you know, give some flexibility.  And the other classic scenario is, of course, the fact that we’re moving jurisdictions so much, our clients are, that it may become a situation that I ran into the other day where a client came to see us and they had a trust that really, for a bunch of technical reasons, was better suited to be established in the U.S.  Basically what had happened was since the family had created the trust, the children had all moved down to the U.S..  There was no reason, all of the assets were actually publicly traded U.S. companies and for a group of sort of personal reasons, that was the best move.  And sure enough, we looked at the terms of the trust, we had the power and it created another opportunity.  And now we wouldn’t have given the advice, because we’re not the tax planners.  But we were…I was in the room with someone who had the tax planning expertise and they just said look, I think our best move now is to get this trust into the U.S.  Ian, do we have the jurisdiction?

Suzana Popovic-Montag:  And so the key really is to include these kinds of broad, discretionary powers in the trust document so that trustees can respond to changes in either the circumstances or even the law, or, you know, as you say, the tax consequences of something may be better if they can float the jurisdiction of a trust elsewhere.

So, sort of transitioning, Ian, then into the discussion about the charitable tax credits that arise on death.  I think that it’s important that we keep in mind that charitable gifts that are made in a Will are deemed to have been made in the year of death.  And the Income Tax Act here in Canada speaks to that in Section 118.1(5).

Ian Hull:  You know, that’s a great point because, you know, this is where it’s worth getting a little bit technical about the charitable tax credits, in the sense that identifying that there are some really special circumstances that click in on death.  So the other part of that is, is that you have the within the year of death rule, and then you have the fact that excess of deductions may be carried back one year as well.  That’s the same provision - Section 118, just sub (4).  But…and I guess again, we’re not trying to sort of espouse too much on the tax rules but, you know, before and after death, there are some creative charitable tax credits that can be applied here.

Suzana Popovic-Montag:  And so the point really is that charitable gifts that are made in the year of death can be claimed up to 100% of the income in the year of death, and then at the prior year as you just said.  So that really is the benefit of a charitable gift in a Will.

Ian Hull:  And then the other twist is that the complete capital gains tax relief for charitable donations of certain charities.  And there, you know, again, you have to go to the Act and work through this, because they’re prescribed.  But there’s a certain complete capital gains relief that may be available as well.

Suzana Popovic-Montag:  So just to keep in mind, though, that you have to be able to determine the amount of the gift by actually referring to it in the Will at the time of death.

Ian Hull:  Right.  And again, these are sort of technical rules but rules that can be very important in terms of the timing.

Another, you know, again talking about the charitable tax credits on death.  It’s important that the Will not only fix the amount, but it really identifies with some certainty how you’re going to deal with the charitable gifts.  And really, I think the message here is, is that if we can give the executors lots of discretion to choose one or more charities but maybe not an amount, that’s another creative drafting plan.  But what we’re trying to get at here, for the purpose of today’s podcast, is to maybe ask your estate planner and make sure that when they’re going the charitable gifting, that they’re being very careful on the drafting side to ensure that they’re, you’re going to get full advantage of the tax relief, which, you know, on even modest estates, can prove to be a very significant amount.

Suzana Popovic-Montag:  And if a charitable legacy is actually included in the Will, you also may want to keep in mind that you should provide the executor with a discretion to allocate the assets, either in species, so specifically to allocate the specific assets, to satisfy the legacy, including some of those listed securities you referred to earlier, Ian, in order to be able to claim the enhanced charitable tax credit.

Ian Hull:  So Suzana, I know you’ve written on this and done a lot of work in this area, the charitable gifting side.  What happens, though, when you have a charity that’s name is changed or the charity is, it vanishes.  Is there something we can do at the planning stage to help deal with that?

Suzana Popovic-Montag:  That’s a great suggestion, Ian.  There is something that we should try to do and that is to include some kind of language which, you know, we lawyers call “sipra language” or a “sipra clause” that allows an amendment of a charitable gift in the event that, after the person dies or passes away, the charity is no longer in existence or it’s changed its name or its changed its purposes.  And so it’s sort of alike a catch-all clause that allows you to be able to uphold the charitable intent, to uphold the charitable gift, so that you can get all of the advantages out of the gift that you were hoping to, by creating it in the first place.

Ian Hull:  Gee, that’s good to know.  And that’s sort of a nice outlet pass that’s available to us from the drafting side.  And I guess the lesson…the other lesson is that if we don’t press our advisors on these issues, then what we might end up doing is, and we’ve talked about some of these neat charitable tax credits and benefits of gifting on death and prior to death.  If we don’t, the gift may fail and then there will be no deduction and we’ll have not only lost the intention of our hope to charitably gift but we’re not going to get any financial benefit.

Suzana Popovic-Montag:  Absolutely.  And that really is the key.

Ian Hull:  Okay, great.  Well, you know, I think that’s a good wind up of the question of the charitable tax credits.  We didn’t want to get too deep into this today for a couple of reasons.  One is, we don’t pretend to have the tax expertise but secondly, I think that it’s one of those areas that’s got some unique characteristics.  We may be…well we certainly plan in the future, to deal with some more of the charitable giving issues that are important, not just from a tax standpoint but from an estate standpoint.  And we’re going to be talking about that more in future podcasts.  But at least we’ve touched on the tax credit issue and we have a better understanding of what is available.  And then I think what we should do is spend some time on specifics of what are the payment of taxes on death?  What do we do to make sure that we can attend to this and are there ways to sort of predict what we’re going to have to pay on death?  Because death taxes are a huge issue for people and  let’s spend some time in our next podcast really telling ourselves, reminding us where these taxes are going to have to be paid.  So I look forward to doing that and that’ll be a fun podcast.

Suzana Popovic-Montag:  I look forward to it as well, Ian.  Thanks very much.

You’ve been listening to Hull on Estate and Succession Planning with 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 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 Hull On podcasts, or to leave a question or comment, please visit our website at www.hullestatemediation.com.

Our theme music is UpTempo14 by Gary and is courtesy of the Podsafe Music Network.

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