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

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A Vanity Fair article published late last year writes on the relationship between playwright, Arthur Miller and his son, Daniel Miller who was born with Down Syndrome. Daniel was born in 1966 and institutionalized one week after being born and apparently while other family members kept in touch with Daniel, Miller rarely visited him or spoke of him.

 

When Miller died in February 2005, very few people knew of Daniel’s existence. Only one obituary notice mentioned Daniel and Miller’s own memoirs include no mention of Daniel.

 

Six weeks before his death, Miller made Daniel a full and direct heir equal to his other three children. While Daniel is not mentioned in the Will directly; separate trust documents, created the same day and sealed from public view, make Daniel an equal heir to Miller’s estate.

 

The article speculates that this was likely done contrary to legal advice as Miller’s bequest makes Daniel too wealthy to receive government assistance and a special trust was not created that would allow Daniel to inherit from the estate and continue to receive government assistance. In fact, Connecticut’s Department of Administrative Services issued a reimbursement claim to the estate for Daniel’s care since infancy and the estate is settling the claim.

 

Miller’s relationship with Daniel was complex and only Miller would be able to answer as to why he decided to make Daniel, who he did not publically acknowledge during his lifetime,an equal heir to his estate.

 

Until tomorrow,

Diane Vieira

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I recently came across two entertaining and informative blogs about practice management for lawyers and law firms.

David Bilinsky is a practice management advisor and staff lawyer with the Law Society of British Columbia. He writes and lectures on the subject of legal practice management and his blog,  http://thoughtfullaw.com covers topics such as record management, technology, and law firm strategies.

This month, he wrote a series a blogs on the security of electronic documents that many lawyers will be interested in reading.

Allison Wolf's insightful blog, www.thelawyercoach.com, discusses business development and legal marketing ideas for lawyers. Wolf, the founder of her own company that coaches lawyers on business development, offers her advice and links to the most recent articles on this subject.

Both blogs also comment frequently on personal development of lawyers and what lawyers can do to renew themselves and their legal practices.

Thanks for reading,

Diane Vieira

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The Canadian Centre for Elder Law (CCEL), a division of the British Columbia Law Institute (BCLI), issued a media release on February 28, 2008 advising that it has just released its Study Paper on Predatory Lending Issues in Canada.

In its media release the CCEL noted that while the subprime mortgage crisis in the United States has made the issue of predatory lending a hot topic worldwide, little attention has been paid to the legal aspects of predatory lending in the Canadian mortgage market.

Ron Skolrood, Chair of the BCLI’s board of directors, remarks in the media release, “It appears that there are no specific laws to protect Canadians from a similar crisis occurring here”...“This study paper serves as a starting point for further discussion.”

The Executive Summary of the Study Paper states, “The study paper’s focus is primarily on how predatory lending may affect older homeowners, but similar issues may arise in connection with individuals who are purchasing a home and obtaining a new mortgage.”

Parts of the paper deal with factors in the Canadian mortgage market that may encourage or deter the development of predatory lending as well as existing Canadian legal remedies for abusive lending practices.

The media release notes that while many Canadians think of predatory lending and the mortgage crisis as an American phenomenon from which they are safe, and though the lending atmosphere in Canada has historically been more cautious than in the United States, the extent to which predatory lending occurs in Canada is largely unknown.

For those interested, a full text of the paper is available on the BCLI’s website (www.bcli.org). 

Have a great day.

Craig

 

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Robert Brown claims to be the unacknowledged “love child” of Queen’s Elizabeth’s late sister, Princess Margaret. In his quest to prove his claim, he has sought access to the secret Royal Wills of Princess Margaret and the Queen Mother.

In 2002, shortly before the deaths of Princess Margaret and the Queen Mother, lawyers for the Royal Family, the British Treasury, and the Attorney General met with England’s highest ranking family judge seeking a practice direction to codify the century-long convention that Royal Wills be kept sealed from the public. The Order was passed and the “secret pact” was not made known to the public or Parliament.

Mr. Brown sought to have the Wills unsealed in family court but his case was struck down as vexatious and baseless. Mr. Brown sought leave to appeal and the court of appeal granted Mr. Brown leave and found that he was entitled to a hearing of his claim to have the Wills inspected. Despite calling his claim to be Princess Margaret's son “irrational and scandalous”, Lord Chief Justice Lord Phillips found that the public interest outweighed the Royal family’s right to privacy and called the pact unconstitutional.

News of the “secret pact” resulted in an outcry in the British media and calls for transparency within the Royal family. Mr. Brown’s lawyer submitted that members of the Royal family who receive national assets should have their Wills inspected by the public to ensure those assets are not mixed with personal property.  If Mr. Brown wins, he will overturn the long standing convention that Royal Wills be kept sealed; a convention started in 1911 by Queen Mary to seal the will of her brother, Prince William of Teck and prevent a Royal sandal.

You never know who is going to change the law.

Have a great (long) weekend,

Diane Vieira

 

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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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Once a Certificate of Appointment of Estate Trustee (probate) is issued, an estate trustee is legally able to liquidate and distribute the assets of an estate. It can take anywhere from a few weeks to several months before probate is granted, and the delay can be costly. In fact, I was recently talking to someone upset about the difficulties caused by having to wait almost one year - he understood he couldn't sell his late mother's house until the Certificate was issued, and he had the sole financial burden of maintaining the property until that time. 

And so I wondered, is probate absolutely necessary in all cases? Bob Aaron, a real estate lawyer, addressed this very issue in a recent article in the Toronto Star. His advice was that in most cases obtaining probate is not necessary, and he set out the following steps that can be taken to avoid it:

Land Titles System

- register an application containing a copy of the Will and a death certificate;

-file a declaration that the Will was the last Will and the value of the estate does not exceed $50,000 (in appropriate circumstances, the land registrar waives the $50,000 limit); and

-file a promise, signed by the beneficiaries, to indemnify the Land Titles Assurance Fund in the event a third party claim is made as a result of registration of the application to transfer title to the land.

Registry System

Mr. Aaron notes that it is easier to transfer title to land registered under the old registry system (by simply registering a copy of the Will and, typically, a declaration by a witness to the Will). He also states that land which was previously registered under the registry system and subsequently converted by the government to the electronic land titles system can often be transferred under the old registry rules if there has been no other registration on title since the conversion.

So it seems retaining an estate administration and/or real estate lawyer to explore your options could end up saving you a lot of time and money in the right circumstances. 

Thanks for reading,

Natalia Angelini 

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The Prince Edward Island court recently entertained an Application for directions by the trustees of the estate of Owen Connolly, reported at Connolly Estate (Re) [2006] P.E.I.J. No. 61.

Mr. Connolly died in 1887. He left a will which established a trust “for the purpose of educating or assisting to educate poor children resident in Prince Edward Island who are members of the Roman Catholic Church and who are either Irish or the sons of Irish farmers...".

The trust was said to have paid out over $1 million in bursaries since inception, and had a reserved capital of approximately $1 million.

The trustees stated that with the passage of time, the question of eligibility had become more difficult. The trustees sought direction from the court as to whether eligibility was open only to males, and whether eligibility was open to those who had “significant” Irish ancestry, being at least 50%.

It was noted that the administration of the trust was not affected by the discrimination provisions of the relevant human rights legislation.

The court had little difficulty in concluding that the trust did not benefit males only.

A more difficult question is what was meant by the term "Irish". The court reviewed the history of Ireland and its society and noted that 19th century Ireland was not the product of a pure strain of "Irish", but was a melding of a variety of ethnic strains of immigrants who arrived at different times through history. The court traced the history of Ireland back to 3000 B.C. The court concluded that when he referred to a person being “Irish”, the testator intended to refer to either a person who had emigrated from Ireland, or to a person who was a descendent of a person who had emigrated from Ireland. By making reference to "sons of Irish fathers", the court concluded that the testator had visualized the Irish blending into the larger community in PEI, and thus, felt that having 50% Irish blood was reasonable and sufficient.

The case is an interesting read, as it not only reviews Irish history, but it sets out in some detail the life of the testator in the mid-1800s, including a detailed report of his death in December, 1887.

Thanks for reading,

Paul Trudelle

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The Ontario Supreme Court of Justice recently ruled on the issue of whether a solicitor can assert a solicitor’s lien over an original will.

In Szabo Estate v. Adelson (2007), CanLII 4588, the solicitor acted as estate solicitor, having been retained by the estate trustee named in the will. He rendered an account for legal services in the amount of $3,230.79. This account was not paid, and the solicitor asserted a solicitor’s lien over the documents in his file, including the original will.

Interestingly, the solicitor offered to release the will if the estate trustee agreed to a charge against the estate. The estate trustee would not agree.

The estate trustee brought an Application under s. 9 of the Estates Act for the production of the original will. In considering the Application, the court noted the basic proposition that where a client discharges a solicitor without cause, the solicitor may exercise a lien for his or her fees over the documents in the solicitor’s possession, and may retain them until paid. 

The estate trustee relied upon an article and an excerpt from a text that stated that a solicitor’s lien did not extend to a will. The court found that the article did not cite any authority for that proposition, and that the case referred to in the text, an 1823 decision, did not support the proposition, either. 

This illustrates that one should not blindly rely on articles and texts as setting out black letter law (unless, of course, one is relying on Hull and Hull, Probate Practice).

The court concluded that a solicitor can exercise a lien over a will, just as he or she could over any other important document.

However, the court can and will intervene in order to prevent an injustice to a client resulting from the exercise of the lien. In the case under consideration, the court ordered the solicitor to deliver up the will IF AND WHEN the estate trustee agreed to a charge against the estate in the amount of the solicitor’s account.

Thanks for reading,

Paul Trudelle

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Leona Helmsley’s estate continues to raise eyebrows, and serves as an illustration of what not to do when estate planning.

Following her death, it was revealed that she set up a $12m US trust to care for her dog, Trouble.

Last week, it was reported that the named trustee of the trust, her 80 year old brother (who received over $15m US himself from the estate) does not want to care for Trouble. It is yet to be seen whether the alternate trustee, Leona’s grandson, will take on the responsibility.

In addition, Leona’s will directed that Trouble, following his death, be buried with her at the family mausoleum. However, state laws forbid animal remains from being interred at human graveyards.

To make matters worse, it appears that Trouble bit a housekeeper, and the housekeeper now wants a piece of Trouble’s money.

The present circumstances illustrate the need for open discussion of estate plans. Trustees should be consulted in order to ensure that they actually will agree to take on the role of trustee; special requests should be explored to ensure that they are feasible.

Thank you for reading,

Paul Trudelle

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Unfortunately, the following quote applies to many of the cases that we deal with on a daily basis:

“To say that brother and sister do not get along in this case is an understatement. There is plenty of mistrust, suspicion and bitterness to go around. The applicant blames her brother for high-handed and unilateral conduct. He claims he has acted improperly. On the other hand, [brother] blames his sister for being non-communicative and hard to get along with. He was compelled to take the steps that he did because his sister which not deal with him.”

The quote is from Hill v. McLoughlin, 2007 CanLII 1334 (Ont. S.C.). There, brother and sister were co-estate trustees and residual beneficiaries of their mother’s estate. As a result of the above-noted mistrust, sister brought an application to have brother removed as an estate trustee.

The court found that while there was friction and hostility between brother and sister which hindered the administration of the estate, it was not satisfied that brother committed a breach of trust as alleged, or was in a conflict of interest.

The court stated that where the deceased has expressly appointed trustees, a court should be loath to interfere with the testator’s expressed intention except on the clearest of evidence that there was no other course to follow. The expressed wishes of the testator should be respected and not interfered with lightly. It is only where a court determines that the welfare of the beneficiaries requires removal and replacement of trustees that the court should undertake such action. It is not any mistake or neglect of duty on the part of the trustees which would lead to their removal. It must be shown that the non-removal of the trustee will likely prevent the trust from being properly executed.

While the court did not order removal of the brother, it did not condone his actions. The court required that the brother undertake certain steps, such as provide specific information to the sister.

On the issue of costs, judge ordered that each party should bear their own costs.

It is often hard for siblings or others to get along and cooperate in the administration of an estate. Further, actions taken by trustees, out of spite or otherwise, can serve to exacerbate the mistrust that already exists. Knowing that the courts will not automatically step in and remove an estate trustee in the circumstances should encourage the parties to an estate to act reasonably and simply get the job done.

Thank you.

Paul Trudelle

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The world wide web offers a wealth of information: some useful; some not so. Recently, I came across www.stealanestate.com. The website puffs “Get Rich! On Other People’s Money”, “Displace Rightful Heirs Legally!” and “Never Have to Work Again!”

The web page offers a three step program:

Step One: Assess Opportunities & Establish Yourself
Step Two: Discredit and Displace the Heirs
Step Three: Savour Your Triumph

Tips incude:

• Identify elderly affluent people who are alone;
• Use alcohol;
• Create reasons to see them often;
• Always take their side and fault anyone who disagrees with them;
• Get into a position of trust and authority;
• Act like the perfect son or daughter;
• Keep the rightful heirs ignorant of your relationship;
• Sever all communications between the victim and their heirs;
• Create conflict – lie to the victim about the heirs and their dishonesty and misdeeds.

The site contains many more “tips”.

At first blush, the site is shocking and disturbing. However, deeper into the site there is an explanation. The site claims be operated by individuals “currently in litigation fighting years of undue influence for our mother’s estate”. The tactics and tips set out in the site were apparently used against them. The page is “meant to shock you into action and attention.”

The site should be read as a cautionary tale: a shopping list of things to look out for: both for ourselves and for our loved ones, rather than as a “how-to” list on elder abuse.

Thank you.

Paul Trudelle

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In Thursday’s Globe and Mail, Margaret Wente wrote about “Geezers in Paradise”, and observed that tomorrow’s seniors will be able to enjoy “the most delightful old age of any generation the world has ever known”. Seniors are the fastest growing group in Canada, and by 2017, seniors will outnumber those under 15.

Ms. Wente sees a future where “mature lifestyle residences” replace schools, nannies are imported to care for your mom rather than for your kids, and the most popular diapers will be size XXL. Industries will sprout up to service this aging population, medicines will improve, and the political clout of this older group will ensure their comfort and entitlements.

This optimistic future is contrasted by reports earlier last week that one in three Canadians worry about outliving their savings (Toronto Star, July 16, 2007). The report found that many older Canadians did not foresee such a rosy retirement. 33% of respondents over 60 worked either part-time or full-time, and 19% indicated that their financial situation was worse or much worse than 5 years ago.

The vision of the baby boomer generation, on the cusp of becoming senior citizens, being the most affluent group ever is not universal. “There’s going to be a group of baby boomers for whom all of this image of affluence and consumption isn’t reality,” said professor Doug Owram of the University of British Columbia.

Rich or poor, the articles both highlight the importance of planning for our later years.

Thank you.

Paul Trudelle

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Mr. Bernard Bayer has won the right to receive a salary from his former employer until March 1, 2012. Unfortunately, Bernard died on April 23, 2005.

In this most unusual case, Bernard's estate will be entitled to receive payment equal to Bernard’s salary until 2012, notwithstanding Bernard's death.

The case turns on the peculiar wording of Bernard's employment agreement with his employer, the Blue Button Club. Pursuant to this agreement, which was entered into on March 1, 2002, Bernard was employed as the Executive Manager of the Club. The agreement had a 10 year term. The agreement described Bernard's duties at the Club. It provided that he was to be paid at least $60,000 per year.

An unusual provision of the employment agreement provided that the Club was to maintain insurance on the life of Bernard, naming the Club as beneficiary, so that the Club could comply with the termination provisions of the agreement. The termination provisions provided that the employment agreement could be terminated in the event that Bernard failed repeatedly and demonstrably to perform his duties, and failed to remedy this problem after receiving reasonable notice; for just cause; or upon his death, in which case, the Club was to collect the insurance proceeds and pay these to Bernard's estate.  Apparently, the Club did not take out such a policy of insurance.

In resisting the claim by Bernard’s estate, the Club argued that, prior to his death, Bernard failed to fill his duties. The court rejected this submission, holding that the Club did not provide the required written warning to Bernard.

The Club also submitted that the agreement was not enforceable, and that neither of the parties expected the agreement to be enforceable. The court easily rejected this submission.

As the agreement clearly contemplated Bernard’s death, it was not frustrated by his death.

The court found that Bernard's estate was entitled to the payments due until the end of the agreement. These damages totalled $410,000.

In this case, the employment agreement was drafted by or on behalf of the Club. The court held the Club to its agreement, notwithstanding its unusual provisions, or the fact that it produced, at least at first blush, an unusual result.

Thank you,
Paul Trudelle

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From 1993 to 1996, Daniel Assh, a Pensions Advocate with the Bureau of Pensions Advocates, Veterans Affairs Canada assisted Maria Orn, a veteran and the widow of a veteran in obtaining her pension benefits.

In 2001, Maria prepared her will. In it, she left specific legacies totalling more than $100,000, and divided the residue of her estate amongst various named persons and a charity. Three weeks later, she died.

One of the specific legacies was a $5,000 bequest to Daniel.

Daniel told his superiors about the bequest, and that he intended to accept it as it could not give rise to a conflict of interest. They told him to "hold off" on accepting the bequest until the matter was cleared through the “appropriate department channels”.
Daniel argued that because he did not know of the bequest in advance, and because there could not be the expectation of further services, and no possibility that Daniel could provide special assistance to Maria or her family, there was no conflict. Daniel submitted that he had stopped providing services to Maria long before her death. It was agreed that Daniel had in no way attempted to influence Maria into making the gift.

Did he get to keep the bequest?

No. Veterans Affairs determined that accepting the gift would be in contravention of the federal Conflict of Interest Code.

Daniel grieved the decision through two levels of the internal grievance process, and then applied for judicial review when the decision was upheld at both levels. Judicial review was allowed, and Daniel was allowed to keep the bequest. However, the decision was appealed to the Federal Court of Appeal (“FCA”).

The FCA held that the bequest could give rise to a perception of conflict. The question was whether a reasonable person would think that there was a realistic possibility that acceptance of the legacy could influence the employee’s future performance of official duties. The FCA noted that a pensions advocate is in a position of confidence and influence. The clientele are usually elderly and vulnerable, and often in difficult circumstances, such as the death of a spouse.
The FCA stated that while Daniel could not accept the gift, “the acknowledgment of her gratitude to him for assisting her is effectively communicated to him, and to others.”

Thank you for reading.
Paul Trudelle

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In Ontario, a valid Holograph Will, by definition, is made and signed entirely in the handwriting of the testator. While this sounds simple enough, such documents often invite litigation.

For the person propounding such a Will, the first objective is to prove that the handwriting is that of the alleged testator. Of course, another distinctive feature of a Holograph Will is the absence of witnesses. Proving the identity of the author of a Holograph Will therefore usually requires expert analysis of the handwriting. The expert may encounter difficulties. Rather than writing a Holograph Will in her ordinary handwriting, the testator may have printed the document.

To successfully prove the handwriting of the testator, an expert typically requires several samples of the testator’s signature and writing style. In the absence of such samples (and in the absence of witnesses) it is far from a certainty that the Will can be proved. Further complicating matters is the absence of the original.

While a copy of a Will can be proved in the right circumstances, the absence of witnesses makes it more difficult to prove a copy of a holograph will. On a final note, Holograph Wills frequently give rise to questions of interpretation.

Until next time,

David

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Persons found to be incapable to manage their property may, nonetheless, be capable to marry (for an in depth discussion of this issue see the 1998 decision of Justice Cullity in Banton v. Banton).

This reality gives rise to all kinds of potential legal dilemmas and truly represents the flashpoint between capacity litigation and family law litigation. If a person incapable of managing their property enters into a marriage, there is a near-certain likelihood that friction will develop between the new spouse and the incapable person’s substitute decision maker.

In large part, the making of financial decisions together is one of the defining characteristics of a marriage. In the situation of a marriage between a capable person and an incapable person with a guardian of property, the substitute decision maker inevitably has a role to play. And what if the new spouse brings a child into the marriage?

Clearly, the family law regime imposes support obligations upon spouses in the event of separation. But how is this obligation reconciled with the obligation of the substitute decision maker to act in the financial best interests of the incapable person?

From the perspective of the legal practitioner, expertise in both family and capacity law is required to seek a creative resolution of any disputes that can develop

Have a great day,

David 

 

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In Ontario, an estate becomes liable for probate fees when the estate trustees apply for a Certificate of Appointment. Depending on the value of the estate, these fees can sizeable and cannot by set off by debts owed by the Deceased or estate-related expenses.

The main reason probate is required is because the estate trustees will require proof of authority before they are permitted to deal with certain assets. For example, generally speaking, banks will not release funds to estate trustees unless they have a Certificate of Appointment. Similarly, estate trustees will usually not be able to transfer real property into their names, list it for sale, or enter in to an agreement of purchase and sale without the Certificate of Appointment. Luckily, not all estates require a Certificate of Appointment to be administered. If the estate trustees can avoid applying for probate, then they can avoid paying probate fees.

There are several planning techniques that can be used to avoid the necessity of a Certificate of Appointment and, thus, paying probate fees:

•  Making inter vivos transfers of property - if you give it away prior to death, it won't form part of your estate;
• Making more than one Will - in one Will you deal with assets that will not require probate, while in the other Will you deal with assets that will; 
• Making RRSPs, RRIFs, and insurance policies payable to a named beneficiary, rather than your estate; and Transferring property into joint ownership.

By giving some thought to how you structure your estate, it might be possible to save a significant amount of money on probate fees - or avoid them all together.

Thanks for reading,

Megan F. Connolly

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I am always somewhat bemused when clients involved in Estate litigation tell me they are embarrassed that their family is fighting. Many believe that their family is somehow abnormal because they cannot work out the problem amongst themselves.

My first instinct is generally to tell them there is no such thing as a ‘normal family’. Put another way, the ‘normal happy family’ seems to be a mythical creature viewed only in “Leave it to Beaver” reruns. No one ever has to apologize to me about their family. I’m a lawyer, not a judge. Even a judge will wisely avoid condemning families in turmoil wherever possible.

Every family has its idiosyncracies, some more notable than others. Those oddities are the sum total of decades’ worth of shared experience. A lawyer can probably never fully understand how a family gets to where it is at any point, let alone judging.

Definitely family members can carry grudges long past the time when an outside observer would think healthy, but some grudges are justified. By necessity, estate litigators often end up working along the outskirts of those grievances. Without conscious effort to stay out of it, those arguments can start to impact our advice to the point where we are no longer being the objective, dispassionate advisors that we need to be. Cases where children were (or allege to have been) abused by parents in the past are particularly prone to this dynamic.

It can be hard to get clients past their animosities to focus on the cost-benefit of litigation, but well worth the effort. If they want to continue Estate litigation once they understand the risks, delays and expense of litigation, so be it, so long as we first put them in the position to make that decision.

Thanks for reading.

Sean Graham

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During my talk at Hull & Hull’s recent breakfast held at the Ontario Bar Association offices, I touched on the Pecore v. Pecore, 2007 SCC 17 (“Pecore”) and Madsen Estate v. Saylor, 2007 SCC 18 (“Madsen”) Supreme Court of Canada decisions which essentially did away with the presumption of advancement except as it pertains to minor children. In effect, a child of a deceased who holds assets jointly with the deceased can no longer rely on the presumption that the deceased wanted the child to take the asset at death.

Given that new law, executors not wanting to challenge rights of survivorship by asserting a resulting trust against the surviving account holder should obtain clear and comprehensive releases and indemnities from all beneficiaries. If possible, the beneficiaries should get independent legal advice. Where independent legal advice is feasible the beneficiaries should be encouraged to get it. In any case foregoing a resulting trust claim to joint assets has risks.

The circumstances or even the identities of gift-over beneficiaries can change so much over time that a release or indemnity may not be enforced by the court. New beneficiaries can be born who may be less generously inclined as their predecessors. Family relations can turn to the worst, changing the approach to joint assets.

All in all, a difficult recipe for Executors to be sure.

Thanks for reading.

Sean Graham

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Earlier this year I blogged on the impact of baby boomers on the practice of estate lawyers. I commented in that blog about boomers inheriting the wealth of their parents, who are possibly the richest group in Canada. Below I have summarized some housekeeping tips for these affluent individuals when considering their estate plan, proffered by David Louis in Aging Boomers Up the Estate Planning Ante - Part II, published in the May 2007 edition of The Estate Planner.

• the estate freeze - don't forget about the value accumulated in a family trust when estate planning. Otherwise, you may find yourself making elaborate instructions in your Will without considering that your personal assets are worth only a fraction of your business and investment interests.

 

• personally held assets - you could benefit from transfering buildings and other assets into a corporation or partnership, so that the exposure on the deemed disposition would be treated as a capital gain, rather than be fully taxable.

 

• Pre-Mortem Redemptions - if a corporation is generating refundable tax, it may be advantageous to systematically redeem freeze shares (as the personal tax resulting from deemed dividends on redemption would largely be tax-paid).

 

• family law considerations - keep in mind that if an estate freeze was effected prior to the marriage of a beneficiary, it is not clear that a distribution from the trust after the marriage would be protected from a family law claim (if the marriage ended), which could mean a fight over the post-marriage appreciation.
  Until tomorrow,
  
  
  

Natalia R. Angelini

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By virtue of the Gender Recognition Act 2004 the United Kingdom now recognizes a change of gender as being permanent for all legal purposes. Specifically, the Act provides a framework for a person who is at least 18 years old to acquire a legally-recognized gender by making an application for a Gender Recognition Certificate on the basis of living in the other gender or having changed gender under the law of a country or territory outside the United Kingdom.

In an article by Jo Summers with the above-captioned title, published in the June 2006 edition of the Society of Trust and Estate Practitioners Journal, Ms. Summers outlines the consequences of acquiring a gender under the Act.

In the estates context, the Act does not affect Wills made before it came into force. For example, if a Will states that certain property is to go to "my son alive at the date of my death", and the child had become recognized as a woman under the Act, the child would be treated as a son and allowed to receive the gift if the Will was dated before April 4, 2005 (the date the Act came into force). However, if the Will was dated on or after April 4, 2005, the child would be treated as a daughter and disentitled to the legacy (depending on the wording of the gift).

Although this seems to be an unfair result for the intended beneficiary, the Act attempts to address it by allowing anyone who has been adversely affected as a result of the gender change to commence a court application for relief.

While I know of no similar legislation being contemplated in Ontario, given that Parliament has recently broadened its definition of a spouse, I expect it will not be long before gender change will be similarly acknowledged. Once that time comes, more care will likely be needed in drafting testamentary documents. Sensible solutions proposed by Ms. Summers are to avoid referring to beneficiaries by class and instead referring to them by name, and/or to insert a clause setting out the meaning of references to gender.

Natalia Angelini

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At Hull & Hull LLP, we have litigated many estate cases involving interesting ownership and custody disputes over various items. We have even litigated over custody to family pets.

In a recent headliner pet battle out of Memphis, Tennessee, a bitter custody fight occurred over a testator’s golden retriever. The battle began when the dog’s owner, Ronald Callan Jr., died of a gunshot wound on New Year’s Day, leaving behind no Will, a $2 million estate, and Golden Retriever Alex. In the ensuing estate fight among Callan’s survivors, various issues came into play, such as ownership of a boat and a $200,000.00 wine collection. However, custody over Alex became the focal point of the estate fight. The deceased’s father, mother, former girlfriend and fiancée all wanted custody of beloved Alex. However, the parties used the custody fight over Alex to punish each other for past transgressions. There were even allegations of attempted kidnappings. The battle became so intense that the golden retriever was actually assigned his own litigation guardian.

Apparently, after careful deliberation and based on the litigation guardian’s recommendations, a judge approved a consent order in early May. Custody of Alex is going to be shared by the deceased’s parents. As the parents are divorced, they will trade custody of Alex every two weeks. It is not clear what, if any, input Alex had with respect to the consent Order.

Have a great day!
Bianca La Neve

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Family law issues often make an appearance in estate litigation matters, as illustrated in a recent Ontario case, Yamada v. Zolad [2007] O.J. No. 607 (Ont. S.C.).

In Yamada Estate, a woman suffering from Alzheimer’s was allowed to elect to take her share of net family property under the Family Law Act, rather than take a life interest in the residue of her husband’s estate under his will.

The husband and wife had married in 1982. In 1997, when the couple was living in London, the wife began showing signs of Alzheimer’s and was moved to a medical centre in 2001, when her condition became more severe. The husband visited the wife almost every day until 2003, when the wife was moved to a Toronto facility. By this time, the husband’s mobility was impaired and it became difficult for him to visit his wife in Toronto.

The husband had won a million dollars in 2002. He died in 2005, leaving a Will. Further to the terms of the Will, he left his wife a life interest in the residue of his estate, with power given to his estate trustees to encroach on the capital to ensure his wife’s comfort and welfare. On the death of the wife, the two estate trustees were to receive $10,000.00 each in lieu of compensation, with the balance to be divided equally between two charities.

The wife, through her litigation guardian, brought an application to elect to take her entitlement under the Family Law Act, rather than keep her life interest in the residue of the husband’s estate. The estate trustees opposed the application, claiming that the parties had separated in 2001. They claimed that the husband had a fixed intention to separate from the wife in 2001.

Justice Greer granted the wife’s application. She found that the couple had never made any legal or emotional efforts to separate during their marriage and/or destroy the marriage. There was no Separation Agreement and no divorce petition. The couple simply became physically separated due to the wife’s advancing Alzheimer’s disease. This physical separation was not sufficient to establish legal separation in the circumstances.

Justice Greer also found that the husband’s 2002 lottery win was the motivating factor behind the estate trustees’ opposition to the wife’s equalization claim. She noted that they chose a separation date that pre-dated the lottery win, notwithstanding that the husband had been frequently visiting the wife at this time. She further noted that there was no evidence that either of the charities (as capital beneficiaries of the Estate), were opposing the wife’s equalization claim. Justice Greer appeared to reprimand the estate trustees for their position on the application, stating that as estate trustees and beneficiaries, they should have taken a neutral position on the application. Interestingly, the estate trustees were still awarded their costs to be paid out of the estate.

Have a great day!

Bianca La Neve

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Listen to "Tips for Managing and Controlling Estate Litigation - Conclusion"

Read the transcribed version of "Tips for Managing and Controlling Estate Litigation - Conclusion""

During Hull on Estates Podcast #63, Craig Vander Zee and Bianca La Neve discussed various discretionary measures available to a court when making contempt orders.

Rule 60 of the Rules of Civil Procedure was referenced, as well as the decision in Belanger v. McGrade Estate (2003), 65 O.R. (3d) 829 (Ont. S.C.J.).

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Today, it is quite common for Canadians to own property in the U.S. or other foreign jurisdictions. Having multiple Wills may help protect a testator’s Canadian assets from foreign tax claims, as illustrated in the British Columbia case of Barna Estate (1990), 40 E.T.R. 89 (B.C.S.C.).

In the Barna Estate case, the deceased died owning real property in Europe and substantial personal assets in Canada. The deceased had lived and died in France. She left two Wills. One was a French Will, dealing with her real property in Europe. The second was a Canadian Will, dealing with her cash, bonds and other financial assets in Canada. None of the beneficiaries under either Will were related to the deceased.

Under the applicable French law at the time, beneficiaries not related to the deceased could be liable to pay a 60% tax on the value of the deceased’s worldwide estate.

Canada Trust, the executor named in the Canadian Will, brought an application for the court’s advice as to whether it should pay all debt and succession duties in respect of property passing under both Wills, or whether it should only pay Canadian succession and death duties in respect of property passing under the Canadian Will.

There is a presumption that a testator’s intention is for the law of the jurisdiction in which she resided at the date of execution of a Will shall apply. In this case, the deceased was living in France at the date of execution of the Canadian Will, and according to the presumption, the Will should be interpreted in accordance with French law. However, the presumption is a rebuttable one, and the court ultimately found that the deceased had intended that her Canadian Will be governed by the law of British Columbia.

Once the court decided that the Canadian Will was governed by the law of British Columbia, the court had to interpret the payment of taxes clause in the Canadian Will. Given, among other things, that the deceased’s European property was specifically excluded from the Canadian Will, the court ruled that Canada Trust, as trustee, was only required to pay the death and succession duties in respect of property passing under the Canadian Will.

Have a great day!

Bianca La Neve

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In a recent decision out of Alberta, a court denied one of the litigants leave to present viva voce or oral testimony in the context of an application to have that litigant declared incapable.

In Adria v. M. (E.) [2007] A.J. No. 291 (Q.B.) (Q.L), a father's children brought an application to have their father declared a dependent adult.  The father had previously been admitted to hospital and found incapable of making decisions regarding his personal matters.  The diagnosis had included dementia and significant impairment of judgment.  On the basis of medical opinions, the children believed that their father should permanently live in a locked supported-living facility.  Hence, the need for their application.

The father, in turn, brought an application for a declaration that he was being wrongly and unconstitutionally detained.  As part of his application, the father sought leave to give oral testimony at the hearing.  The court ultimately denied leave.

As part of its reasons, the court held that although it had discretion to allow an individual to give viva voce evidence, that discretion should be exercised sparingly.  The court found that there were no special circumstances present in favour of departing from the usual rule that evidence should be provided by way of affidavit.  Indeed, the father had filed three affidavits, in which his views, evidence and wishes were expressed.  The court found no obvious reason to supplement the father's affidavit evidence with oral testimony. 

The issue before the court was not one of credibility, as no one doubted the father's desire to be free and live in his own home.  The court held that where groundwork has been laid to question capacity, and in this case the various medical opinions provided by the children had laid that groundwork, the issue of capacity became one of expert opinion, and not credibility.

The Adria case is a good illustration of the limitations placed on litigants in presenting evidence on motions and applications.  Unlike trials, presenting oral testimony is not a right, but ultimately an exercise of judicial discretion. 

Have a great day!
Bianca La Neve

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While the Judgment in Webster v. Webster Estate [2006], 25 E.T.R. (3d) 141 (Ont. S.C.J.) was rendered in July 2006, Justice Robertson’s Endorsement regarding the costs award in the matter was released in February 2007 (see [2007] O.J. No. 371).

In Webster, the Applicant, Mrs. Webster, was seeking an Order extending the time in which she may file an election to make an equalization claim under s.5(2) of the Family Law Act, R.S.O. 1990, c. F.3 (the “FLA”) from the Estate of her deceased husband, Mr. Webster. The six month limitation period in s. 7(3)(c) of the FLA prevented the claim from succeeding unless an extension order was granted.

According to the Decision on the motion, Mr. and Mrs. Webster were married for 29 years; it was a second marriage for both parties. During their married life, Mr. and Mrs. Webster gave generously to the community. They lived happily ever after until the death of Mr. Webster on October 11, 2003. Mrs. Webster was a devoted wife. Mr. Webster was 87 years old when he died. Mrs. Webster was then 81 years old. Mrs. Webster developed Alzheimer’s disease, which progressed to the point where she was unable to testify as a witness in the proceeding.

Mr. Webster’s Estate was valued between $22 and $24 million. The bulk of the Estate was left to charity. The named executors of the Estate were Mrs. Webster, Mrs. Webster’s son by her first marriage, Mark Armitage (who was also her legal representative), Mr. Webster’s son by his first marriage, Norman Webster and the long-time trusted financial advisor to the testator, Mr. Ferguson. On consent, Mrs. Webster and Mr. Armitage were removed as executors of the Estate by Court Order dated January 12, 2006.

Mr. Webster’s Will provided Mrs. Webster with use of Ottawa and Florida residences (both owned by a company of which Mr. Webster was the sole shareholder), as well as $250,000.00 per year, net of tax income, for her life from a spousal trust. Subject to Mrs. Webster’s life interest, the Will required that the remainder of the Estate be paid out, within five years of the death of Mrs. Webster, to Mr. Webster’s Foundation and such other charities as the Executors might select. The designated charities were mostly schools and hospitals.

Justice Robertson dismissed the motion finding, among other things, that the case did not meet the criteria set out in s. 2(8)(b) and (c) of the FLA and that it would be unjust and contrary to the objectives of the FLA to use the extension provision in the manner pursued in this case.

The Respondents sought costs on a full recovery basis in the sum of $176,006.89 arising from the proceeding. Mrs. Webster, by her representative, was opposed to an Order granting costs to the Respondents.

Justice Robertson found that the Respondents’ legal costs and disbursements in the amount of $176,006.89 were reasonable and ordered that they be paid by the residue of the Estate of Mr. Webster. Mrs. Webster was responsible for paying her own legal costs.

In his Endorsement, the Judge noted that cost rules are designed for three fundamental purposes: (i) to indemnify successful litigations for the cost of litigation; (ii) to encourage settlements; and (iii) to discourage and sanction inappropriate behaviour by litigants. When success is divided, he noted that costs are apportioned. His Honour also noted that Rule 24 of the Family Law Rules is the primary rule dealing with costs. Although Rule 24(1) presumes that the successful party is entitled to costs, His Honour added that while the emphasis on the outcome is a significant factor, consideration of other factors must be carefully weighed.

His Honour also noted the following, among other things: (i) the nature of the relief sought could result in an Order with only two options: to extend or not to extend; (ii) the legal test was more complex and in that regard the success on individual points was more divided; (iii) the ability to pay a cost order was not an enumerated factor in determining liability or quantum pursuant to the cost rules (here, both parties had the means to satisfy any order made); (iv) the parties had acted in good faith; (v) neither party should be sanctioned for behaviour reasons; and (vi) both lawyers were well prepared and learned.

In addition, apparently, paragraph 19 of the Will specifically discouraged litigation and encouraged alternative dispute resolution. Despite this direction, there were no formal offers of settlement and the parties chose to waive a case conference. Given the experience and cooperation of the counsel, however, the Judge found that waiving the case conference in the face of a defined legal problem may have been practical and saved money.

In exercising discretion, Justice Robertson stated that after having balanced the amount claimed with the necessary considerations, including the complexity and importance of the legal issue, it was not appropriate to award costs against Mrs. Webster.

Have a great day.
Craig

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Last week, Paul Trudelle commented in two of his blogs on the well-deserved awards presented at the Ontario Bar Association, Trusts and Estates Section Year End Dinner that was held on Wednesday, May 30, 2007 at the Royal York Hotel. Specifically, Brian Schnurr was awarded the Award of Excellence, Jordan Atin the Hoffstein Book Prize and Peter Lawson the Widdifield Award.

In addition, Corina Weigl, the Chair of the 2006-2007 Section Executive presented a report on the past year's activities undertaken, and dealt with, by the Section Executive.

Following Ms. Weigl's report, the slate for the 2007-2008 Section Executive was dealt with and confirmed.

The 2007-2008 Section Executive is: Jordan Atin (Chair), Kimberly Whaley (Vice-Chair), Corina Weigl (Past-Chair) and Suzana Popovic-Montag (Secretary), together with the following Members-at-Large: Ann Elise Alexander, Robert Coates, Ed Esposto, Jan Goddard, Susan Heakes, Danielle Joel, Sean Lawler, Mitchell Leitman, Joanna Ringrose, Susan Stamm, Sender Tator, Craig Vander Zee, Mary Wahbi and Melanie Yach.

I thoroughly enjoyed working with this past year's Section Executive and look forward to working with the 2007-2008 Section Executive and Jordan, its new Chair.

Thanks for reading,

Craig 
 

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The Ontario Bar Association’s Trust and Estates Section Year End Dinner was held on Wednesday May 30, 2007. During the well-attended event, the Award for Excellence in Trusts and Estates was presented to Brian Schnurr.

Mr. Schnurr exemplifies the highest standards of an estate practitioner, and many spoke of his dedication to the law, and his remarkable career.

I wrote to the selection committee in support of Mr. Schnurr’s nomination. The following is an excerpt:

I write to support the nomination of Brian Schnurr as the recipient of the Award of Excellence in Trusts and Estates, as nominated by Rodney Hull.
…

Prior to joining the Estates Bar, and though I did not practice in the area, I was aware of Mr. Schnurr’s reputation as a leader in the field of Estate litigation.

Upon joining the Estates Bar, I have come to know Mr. Schnurr professionally, and have had a number of files where Mr. Schnurr was involved as counsel. I have come to know that his reputation for excellence is well deserved. He practices according to the highest standards: his breadth of knowledge is vast: and his professionalism is remarkable.

In addition to knowing him in a professional context, I have learned that he is a selfless individual, dedicating significant hours to professional development.

Mr. Schnurr is clearly a leader in the area of Trusts and Estates, and represents the qualities of excellence that we should all strive to achieve.

The award to Brian Schnurr is well deserved. Congratulations.

Paul Trudelle

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There has been a lot in the press recently regarding the estates of the famous and the near-famous.  Arguably, too much time has been spent by the media covering the estate issues surrounding the passing of Anna Nicole Smith and the estate implications, Similarly, the estate of James Brown has attracted a lot of media attention.

Presumably, the media is just giving their readers what they want.  The public has a prurient interest in the lives (and deaths) of celebrities.

The Internet definitely panders to this interest.  From an estate point of view, those who are interested in this sort of thing are able to find a wealth of information regarding the estates of the rich and famous.

For example, on the Smoking Gun website , one can find the last will and testament of Katherine Hepburn, John F. Kennedy Jr., Bob Hope, and Marilyn Munroe, amongst others.   At  Celebrity Collectables, surfers can purchase the wills of hundreds of celebrities.  Often, other probate-related documents are available, including asset inventories, death certificates and funeral particulars. Links to may wills can be found at Taxprof Blog. It appears that there is no rest for the famous, or respite from the prying eyes of a celebrity-crazed public.

Paul Trudelle

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Section 64 of Ontario's Succession Law Reform Act ("SLRA") allows for interim support to a dependant's relief applicant "in need of and entitled to support". 

The language of the section can cause difficulty to applicants due to the need to prove entitlement.  Entitlement is often in issue based on disputed facts, so the Estate Trustee defending an application can argue that only a trial can resolve that question. 

Often dependant's relief applicants have little or no means to support themselves on an ongoing basis, let alone fund litigation.  Denial of interim support to applicants can have serious repercussions on their day-to-day lives and can give the Estate Trustee considerable economic leverage.

Re Puliver (1982), 39 O.R. (2d) (High Court of Justice) described the problem succinctly:

"I must pay heed to the requirement (under section 64) that the applicant be in need of and entitled to support"…

"Such an interpretation would effectively deprive dependants of any interim relief if any question were raised as to entitlement except as to quantum."

Moving on to a solution, Justice Van Camp decided that:

 "where the applicant has put forward substantial evidence to support her claim as a dependant, and that the testator was domiciled in Ontario, application for interim relief should be heard even if [status as a dependant] are in issue on the final hearing of the substantive application."

Re Puliver provided much needed ammunition when arguing for interim support for alleged dependants where entitlement is not admitted by the Estate Trustee.

Thanks for rea