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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It turns out that investing in wine cellars as an estate planning tool is more complex than one would think.  The estates of Brits, for instance, who expected that a wine cellar would be valued at its purchase price as opposed to its market value for the purposes of inheritance tax may be in for a surprise, based on the information in this article. 

Enterprising Brits may have been hoping their estates would pay inheritance tax based on the purchase price of their wine cellars while the appreciation in the wine cellar would be passed on tax-free to the beneficiaries.  Alas, this is apparently not the case in England: Her Majesty's Revenue and Customs ("HMRC" as they call it over there) are aware that wine can appreciate, therefore wine is not a wasting asset valued at its purchase price, and the wine cellar must be valued at its open market value for inheritance tax purposes.   

While wine cellars may not have favourable tax treatment, at least in England, it strikes me as the sort of asset that may pass outside of probate more often than not.

Thanks for reading,

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

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A testator who suffers from "insane delusions" may not have testamentary capacity.  The case law provides numerous definitions and tests for insane delusions, but there is no single dedicated leading case.  Perhaps the best way to grasp this principle is by starting with the classic statement from Banks v. Goodfellow (1870), L.R. 5 Q.B. 549 on testamentary capacity:

"It is essential to the exercise of such a power that a testator shall understand the nature of the act and its effects;  shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and with a view to the latter object no disorder of the mind shall poison his affections, pervert his sense of right or prevent the exercise of his natural faculties;  that no insane delusion shall influence his will on disposing of his property, and bring about a disposal of it which would not have been made otherwise."

An excellent recent examination of various statements of the principle is found in Royal Trust Corporation  of Canada v.  Saunders (2006), 2006 CanLII 19424 (On. S.C.), while Banton v. Banton (1998), 1998 CanLII 14926 (ON S.C.) provides a precise, thoughtful application of the principle. 

My favourite case of a will invalidated by the testator's insane delusions occured in Great Britain in 2007.  The disinherited son of Branislav Kostic successfully challenged Mr. Kostic's will, which gave 8.3 million pounds to the Conservative Party.  Mr. Kostic had become a believer that the redoubtable Prime Minister Thatcher would "save the world from satanic monsters and freaks".  Mr. Kostic had apparently written to Ms. Thatcher, appealing to her that she was the only person who could save the world from bestial creatures.  Mr. Kostic also believed the female members of his family were out to do him in (poison), among other things.    

Enjoy the week,

Chris Graham

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

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David M. Sherman's Basic Tax and GST Guide for Lawyers 2008-2009 (Toronto: Carswell, 2008) is a helpful resource for lawyers not specializing in tax law.  The section on Wills and Estates (chapter 7) is concise, easy to follow, and the annotations are precise.  The style is rule-driven and not overly burdened with qualifications (these appear in the Preface); it is not cluttered with lengthy paragraphs or run-on sentences. 

One criterion I use to rate general texts is how helpful or interesting they are to me in areas outside my field.  This book scores well on that basis.   See, for instance, the section on deductibility of legal fees or health club memberships. 

This text is highly recommended.

And my Friday blogs are always short for you.

Enjoy the weekend,

Chris Graham

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

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Actually, reading this blog really will help you live longer.  One secret to living longer is to have a "higher purpose", according to researchers at the Rush Alzheimer's Disease Center (which is part of the Rush University Medical Center in Chicago).  Patricia Boyle, Ph.D. states in the news release announcing the study:

"The finding that purpose in life is related to longevity in older persons suggests that aspects of human flourishing—particularly the tendency to derive meaning from life's experiences and possess a sense of intentionality and goal-directedness—contribute to successful aging,".    

The study found a correlation between longevity and participant's level of agreement with 3 particular statements in a "Purpose of Life" questionnaire:

1. “I sometimes feel as if I’ve done all there is to do in life;”
2. “I used to set goals for myself, but that now seems like a waste of time;” and
3. “My daily activities often seem trivial and unimportant to me.”

Guess whether the correlation was positive or negative?  Or read the study here, when it becomes published (it's not posted yet, but this at least rates a reminder in Outlook) .  

TGIF and find purpose in your weekend.  You'll live longer.

Chris Graham

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Beauty from sadness: DNA2Diamonds, LLC is a company that creates personal diamonds using the DNA of a loved one.  That can be a spouse, pet, dear friend or even an entire family.  The company takes a hair sample and uses it to grow the diamond from the DNA signature carbon in the hair.  The deceased's cremated remains can also be used.  According to DNA2Diamonds, the laboratory-produced diamonds are optically, physically and chemically identical to Earth-mined diamonds.

One particularly poignant story was reported in a Toronto Star article where a husband and wife, having lost their baby son shortly after his birth, contacted DNA2Diamonds to create an eternal memento to their son's too-short life. 

This being an estates law blog, I must spoil the tranquility by pointing out that for estates planners, there's potential for a new set of issues to grapple with.  Executors have general authority and discretion to deal with the deceased's body, subject to the usual bevy of qualifications and exceptions the Common Law generates.  How would this principle be applied in the case of a Will directing the creation of a precious gem from the testator's remains?     

Enjoy your week,

Chris Graham

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Eighty years ago, at the height of the Great Depression, a wealthy Ohio businessman hid $182,000 in minted $50 bills in a wall in his house.  There it hung peacefully by a wire in a green metal lockbox, disturbed only by inflation.  A contractor discovered the money while tearing down the wall, and he honestly and very admirably informed the home owner. 

Unfortunately, things spiralled out of control.  First, the home owner and the contractor were unable to agree on a division of the money.  She offered the contractor 10%, he asked for 40%.  Then the story made it into Cleveland's local news, and the estate of Patrick Dunne, the guy who hid the money, got involved (Patrick Dunne had 21 descendants).  The dispute went to litigation. 

For various reasons, the home owner dropped her claim.  However, the county court probate magistrate ruled that $157,000 was clearly marked as Patrick Dunne's property and therefore was the property of his estate.  Of the remaining $25,000, the judge recommened the estate receive 83.3% and the contractor receive 13.7% - approximately $3,400. 

CBS News produced an interesting podcast of the legal issues, posted here.  More food for thought: $182,000 in 1930 is the equivalent of $2,384,341.68 according to the Bureau of labor Statistics inflation calculator.  Of course, some of the rare bills are worth up to $500,000 to collectors...

There are a lot of lessons here.

Have a great week,

Chris Graham

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In our ongoing review of the phenomenally successful book, The Long Tail, we both thought long and hard about Anderson's theory in respect of why we personally have decided to blog and podcast. As we see it, consistent with our general philosophy that providing quality content is the best way to demonstrate our own professional abilities, The Long Tail considers our approach to business development with Anderson providing some interesting insight on the topic.

At page 73 of The Long Tail, Anderson asks "Why do they do it?" Why does anyone create something of value without a business plan or even the prospect of a pay cheque? This question is a key to understanding The Long Tail, partly because so much of what populates the curve does not start with commercial aim. In fact, as we have thought for some time, the traditional business model needs to be reworked and we personally avoid the one-hit wonder approach to our business plan. Anderson goes on to explain this idea at page 74 of his book, when he cites Tim Wu, a Columbia law professor, who calls this phenomenon (at page 74 of his book) "exposure culture", pointing to blogging as an example:

The exposure culture reflects the philosophy of the Web, in which getting noticed is everything. Web authors link to each other, quote liberally, and sometimes annotate entire articles. E-mailing links to favourite articles and jokes has become as much a part of American work culture as the water cooler. The big sin in exposure culture is not copying, but instead failure to properly attribute authorship. At the centre of this exposure culture is the almighty search engine. If your site is easy to find on Google, you don't sue - you celebrate.

We have provided at www.hullandhull.com a variety of articles that our firm has written over the years, plus a tremendous amount of resources in respect of articles that have been written by others. Futhermore, Ian and I believe that our new webpage (which will be arriving shortly) and our blogposts and podcasts only further demonstrate our commitment to always providing good content.

All the best, Suzana and Ian.