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Listen to the Health Care Consent Act.

This week on Hull on Estates, Megan Connolly and Sean Graham review the Golubchuk case out of Manitoba and discuss the Health Care Consent Act of Ontario.

Comments? Send us an email at hull.lawyers@gmail.com, call us on the comment line at 206-350-6636, or leave us a comment on the Hull on Estates blog.

The Golubchuk Case and the Health Care Consent Act - Hull on Estates Podcast #123

Posted on August 12^th, 2008 by Hull & Hull LLP

Megan Connolly:  Hello and welcome to Hull on Estates. You’re listening to Episode #123 on Tuesday, August 12^th, 2008.

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

 

Megan Connolly:  Hi and welcome to another episode of Hull on Estates. I’m Megan Connolly.

Sean Graham: And I’m Sean Graham.

Megan Connolly:  If you want to be heard on Hull on Estates, you can participate in our discussion by leaving a comment. Give us a call at 206-350-6636. The number is in the show notes along with our e-mail address which is hull.lawyers@gmail.com or you can visit our blog at estatelaw.hullandhull.com.

Sean Graham: Hi Megan, how are you?

Megan Connolly: I’m fine, how are you?

Sean Graham: Pretty good thanks. Well we thought we’d start off today by speaking about the Golubchuk case out of Manitoba and then segway into discussion of the Health Care Consent Act of Ontario which would have applied in the Golubchuk case had it been an Ontario case, but of course, it was Manitoba. So maybe Megan, if you can just sketch out the Golubchuk case it might be helpful.

Megan Connolly: Sure. The case arose at the end of 2007 in November, where an elderly man was admitted to the hospital and was severely ill. At the time he was admitted he couldn’t breathe on his own, he was on a ventilator, there was a tube down his throat, his brain was functioning but not very well; he couldn’t walk, he couldn’t speak and as a result of a cardiac condition, his heart wouldn’t beat properly.

Sean Graham: And it seems that the doctors, or some of the doctors at least, seem to have been pretty sure that Mr. Golubchuk was not going to recover and that continued life support measures, or extraordinary measures, whatever term you want to use, were not benefitting him and it seems as though the doctors, most of them at least, were of the view that life support should be discontinued. On the other side, it looks as though some of Mr. Golubchuk’s children felt differently and wanted to prolong his life.

Megan Connolly: Right. So what the doctors wanted to do, as you said, was remove the patient from the ventilator which isn’t an unusual thing to do when doctors have decided the person is not going to get better and, of course, when the family agrees. Now in this case, the elderly man’s children said first of all, that the removal of the ventilator or the withdrawal of the life support would require the consent of the children, that the removal of the ventilator or life support by the doctors would constitute assault and would constitute battery, in that it would, at a minimum, hasten the elderly man’s death. Another issue that was raised was the fact that the withdrawal of the life support would seem to contravene the man’s religious beliefs. He was an Orthodox Jew, and the analogy they used was imposing blood transfusion on a Jehovah’s Witness. I guess the religious belief for Jehovah’s Witnesses would preclude the use of a blood transfusion.

Sean Graham: So I understand that it looks as though the hospital was of the view that the family did not understand adequately at least, the seriousness of Mr. Golubchuk’s condition, that the conclusions reached by the doctors were acceptable and conformed to the standards the doctors felt themselves needed to apply, that the withdrawal of the medical treatment could well be in Mr. Golubchuk’s best interest, even if it meant that he would succumb to his illnesses, and that the decision to withdraw medical treatment is that of the physician and not that of the patient or the Courts. And so it was quite an argument that was set up in this case between the family and the medical professionals.

Megan Connolly: Now, in November 2007, the family won a Court injunction preventing the doctors from withdrawing life support and a few weeks later the Court ordered that the matter be set down for trial. Now, while this took a toll on the family, it also took its toll on some of the doctors at the hospital. A number of them resigned, saying that their personal conscience and their professional ethics prevented them from continuing to provide medical interventions that, in their mind, would harm a patient without any prospect for future benefit. 

Sean Graham: Even though the matter was set down for trial, it never made it to trial because Mr Golubchuk died. And so the delays we often encounter in the trial system in this case really meant that there was a tremendous amount of controversy and difficulty and stress, and in fact that the system did not end up giving the parties the chance to argue the matter and find out what the Court would have believed at the end of legal arguments.

Megan Connolly: Now the family had originally brought a law suit against the hospital, although last week I saw an article saying that they’d since abandoned the law suit.  So I guess with respect to this matter, nothing further is going to happen in the Court system.

Sean Graham: Yeah, it looks that way. And I think it’s helpful to turn to the Act in force in Ontario that would cover some of these issues, and that’s called the Health Care Consent Act. And Section 10 of the Health Care Consent Act talks about needing consent before treating a patient.

Megan Connolly: And what that Act says, is that when a doctor, or I guess a health care practitioner, proposes treatment for someone, they can’t administer their treatment unless the person consents to it.

Sean Graham: Now the question, of course, is what’s consent?

 

Megan Connolly: Um hm.

Sean Graham: And so the Act helps us out there also by stating out the elements of the consent, and there’s four elements. I’ll just go through them. The first is that the consent must relate to the treatment, so that’s fairly self-explanatory. The second is that the consent must be informed so the patient must have some understanding of exactly what they’re getting into. Third, and this is kind of obvious I think, but it’s there anyway, the consent must be given voluntarily.  And then finally, which is also obvious, the consent must not be obtained through misrepresentation or fraud.

 

Megan Connolly: And this goes into, I guess, the next aspect of consent, which means it has to be informed consent. Now the issue of informed consent has given rise to enough litigation although it’s probably the purview for today, but I guess, basically put, the patient needs to be provided with sufficient information about the treatment so that they can, in a knowledgeable and informed way, consent to it.

Sean Graham: And the statute goes into a little bit more of a definition stating that the consent is only informed if, before giving it, the person consenting received the following information, and there’s a list in subsection 11(3) of the Health Care Consent Act. There’s six items. The first is that the person needs to know sufficient information about the nature of the treatment; (2) is the expected benefits of the treatment; (3) the material risks of the treatment; (4) the material side effects of the treatment; (5) alternative courses of action; and then (6) the likely consequences of not having the treatment. 

Now in Mr. Golubchuk’s case, I’m not sure that would have ever been possible for Mr. Golubchuk.  It’s not clear to me whether he had any chance really, before he was in the position that led to this case, whether he had any chance to obtain treatment.  But certainly by the time this case came to the forefront, he did not have capacity and so a different section of the Act, which is entitled “Consent on Incapable Person’s Behalf” would have applied, and maybe you can just take us through that, Megan.

 

Megan Connolly: Right, so as you said, I mean it’s great for someone to consent, but it’s not unusual for someone to just not be able to consent, and in this case I think the man was in a coma and couldn’t speak and didn’t really understand what was going on around him.  So you can’t have informed consent, but obviously it doesn’t make sense to say, well we’re just not going to treat someone if they can’t consent. So when somebody is incapable of consenting to treatment, and that doesn’t mean they won’t consent to it because they don’t want to but they’re mentally or physically incapable of providing that consent, the Act provides for a list of people who can give or refuse consent on the person’s behalf. There are eight different people, starting with the person’s guardian of the person or their attorney for personal care, if they have one. They don’t always have one. The next person to be able to give consent is somebody who has been appointed as the incapable person’s representative by the Consent and Capacity Board.  After that it would be the incapable person’s spouse or partner.  Next it would be the children or parents of the incapable person.

 

Sean Graham: And if there is the Children’s Aid Society or it’s a situation where the Children’s Aid Society has lawful authority to give that consent, they can stand in the place of the parent. And it’s noteworthy that this paragraph does not include a parent who has only a right of access.  So this could have family law ramifications as well if spouses are in the course of or have completed matrimonial litigation.

 

Megan Connolly: So the parent who only does have a right of access may have the right to give the consent to treatment on the person’s behalf but not if there’s a parent who, I guess, has custodial rights.  And after that it’s a brother or sister, then any other relative. Now like I said, this is a rank order, so number one is the person’s guardian of the person and then you go down the list if no one else can provide consent.

Sean Graham: Now one aspect I found that was interesting in this is that the meaning of spouse is defined, and it makes a certain amount of sense because it needs to be clear that a spouse making this choice has to be a spouse under an ongoing relationship. Subsection 8 of Section 20 states that “two people are not spouses for the purposes of this section if they are living separate and apart as a result of the breakdown of their relationship”. I think it’s pretty clear why that section is in there.

 

Megan Connolly: Now when it comes to giving or refusing consent, the person just can’t do it arbitrarily. There are certain principles that they have to take into consideration when making a decision.

Sean Graham: Now that’s someone appointed under this section.

 

Megan Connolly: Yeah.

Sean Graham: An individual deciding on their own, my understanding is as long as they are capable, they in fact, could be arbitrary.

 

Megan Connolly: Right.

Sean Graham: But, a substitute decision-maker is a different kettle of fish.

 

Megan Connolly: So the first thing they have to take into account is whether they are aware of any wish the person has made previously that would deal with situations where consent had to be given.  So when capable, had they always been clear that if they were incredibly ill and weren’t going to recover, maybe they’ve stated while capable that they’d want support withdrawn. Alternatively, maybe they’ve said the opposite.

Sean Graham: There’s a list in Section 21 of the Act that sets out the factors to go into this. I think that, for the purpose of wrapping up, I think that maybe one of the best principles to come out of this is to be very careful in choosing an attorney for personal care because that is really the only way that someone can exercise any kind of control in planning for a situation where someone else is going to have to make the decision for them. I guess you can tell your family members but you’re not really sure who’s going to be around and who’s going to be making that decision.  So it seems to me the best way to try to have some control over these types of decisions is to appoint an attorney for personal care to make them on your behalf and then have a long heart-to-heart with that person, maybe more than one, as the years go on, in order that they will have some background in order to help them make that decision.

 

Megan Connolly: Right. So thank you very much. It’s been nice talking to you, as always, Sean.

Sean Graham: Yeah, thanks a lot, Megan. It was certainly a pleasure and I look forward to podcasting with you again soon.

 

Megan Connolly: Well I think that brings us to the end of this week’s discussion. Thank you for listening and thanks for joining me today. And we look forward to hearing from our listeners, so you can send us an e-mail at hull.lawyers@gmail.com or just pick up the phone and leave us a message on our comment line at 206-350-6636. Be sure to visit our blog at estatelaw.hullandhull and the and is a-n-d not ampersand .com where you’ll find even more information and discussion on today’s practice of estates law. We hope you enjoyed the show. I’m Megan Connolly.

Sean Graham: And I’m Sean Graham, until next week, so long.

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

 

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

 

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

 

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Listen to The Question of Compensation and Complaints.

This week on Hull on Estates and Succession Planning, Ian and Suzana discuss the question of compensation and complaints regarding compensation.

Comments? Send us an email at hullandhull@gmail.com, call us on the comment line at 206-457-1985, or leave us a comment on the Hull on Estate and Succession Planning blog.

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Listen to Developments in Will Changes.

This week on Hull on Estates, Ian and Suzana discuss developments in will changes. They reference cases from Key Developments in Estates and Trusts Law in Ontario ed. 2008.

Comments? Send us an email at hull.lawyers@gmail.com, call us on the comment line at 206-350-6636, or leave us a comment on the Hull on Estates blog.

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Listen to Compensation for work done by estate trustees and solicitors.

This week on Hull on Estates, Paul Trudelle and Diane Vieira discuss compensation for work done by estate trustees and estate solicitors.

Case citation:

Rooney Estate v. Stewart Estate 2007 WL3019262 (Ont. S.C.J.), 2007 CarswellOnt 650

Comments? Send us an email at hull.lawyers@gmail.com, call us on the comment line at 206-350-6636, or leave us a comment on the Hull on Estates blog.

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Listen to The Formal Passing of Accounts.

This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the specifics of what happens when you have to go to court to formally pass accounts.

Comments? Send us and email at hullandhull@gmail.com, call us on the comment line at 206-457-1985, or leave us a comment on the Hull on Estate and Succession Planning blog.

The Formal Passing of Accounts - Hull on Estate and Succession Planning Podcast #113

Posted on May 20, 2008 by Hull & Hull LLP

Suzana Popovic-Montag: Hi, and welcome to Hull on Estate and Succession Planning. You’re listening to Episode #113 of our podcast on Tuesday, May 20^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: I am fantastic. Looking forward to lucky 113 on our podcast efforts.  And we finished off last week reminding our listeners to please feel free to contact us.  And the best way is to jump on our webpage at hullandhull.com and we have an easy navigation to our podcasts and our other sources we have on the webpage.

Suzana Popovic-Montag: And we had a couple of comments this week, Ian. People were looking for the article that we had referred to during our last podcast from The New York Times and I just want to remind people that they can actually find that link on our webpage under the News and Links icon at the very bottom of the page. We have started what we call sort of our recommended reading list, and it’s what I kind of call behind the doors, you know “the Oprah’s Book Club”. So there’s actually a link to the article there and so for anyone who’s interested, please feel free to go there.

Ian Hull: That’s great. And we’re going to try to build that link up a little bit. I had a great meeting the other day with one of Canada’s leading social media new members, and a great guy, Bob Berman, who is a lawyer up in Yorkville who does family law.  But he and I were talking about that and developing our own reading lists on our own webpages and he and I were sharing some books. Right now, I know, I’ve just finished “Blink” and “Tipping Point”, which were both excellent books and we’re going to put those on the link page.  And we’re also, I know, Suzana you and I are just starting through “Ground Swell”, which really now seems to be one of the “must reads” in the social media world in terms of getting a handle on marketing and working through the social media network. So that’s another great book.

Alright, we left off last week talking about accounting issues and I was speaking to a great friend of mine up in northern Ontario the other day, about this very topic.  And she’s a lawyer there and she said to me, “You know, Ian, one of the things that amazes me is that I’ve been doing this practice of law for many, many years, and I have never had to formally pass my accounts”. And we talked about yesterday, the last podcast, how we had talked a little bit about the informal expectations and the way you can resolve the question of your ongoing obligations to account as a trustee informally. We’ll give some more ideas on that as we work through, but the point sort of struck me that here’s a lawyer that’s been practicing for 20 years in a busy estates practice.  And most people just don’t force their hand of going to Court and having what is called essentially a Court audit, where the judge essentially has to go through line by line. Now having said that, in our practice, we see a lot of it, and it’s one of those things that this lawyer pointed out to me was that she wished that she had more or had seen a bit more of it because it is becoming more and more prevalent. One is, is that people are expecting this standard of good record keeping and if you don’t have it, they’re pushing you on to Court. And number 2 is, is that we can’t forget that where there are minor children’s interests or interests beyond the scope of able-bodied adults, we have to pass our accounts in any event. 

So we thought, Suzana and I thought it would be a good exercise to go through some of the details and specifics of what happens when one passes their accounts, when they have to actually draw that short straw and go to Court.

Suzana Popovic-Montag: And as we were discussing during our last podcast too, Ian, and I think that with the increasing size of estates that are out there now and this huge transfer of tremendous wealth, we are dealing with bigger estates and more at-risk, so to speak, when you are the executor of an estate, and different kinds of beneficiaries.  And so it’s not surprising that we will probably see more and more of the formal passing when a trustee ultimately says, “Well what’s the downside, why wouldn’t I get the Court, you know, seal of approval on my administration, why would I forego that opportunity if I don’t have to?”

Ian Hull: Well that’s for sure and so let’s talk a little bit about what the process is. Now, we’re going to talk a bit about some of the Ontario centric steps, but I know certainly across Canada and in most of the jurisdictions in the United States, the process is almost identical, in that you go to Court and you file what is called a Notice of Application to pass your accounts. It’s a formal bound copy of a couple of very important things. One are the accounts themselves that you want the Court to audit; the other is a copy of the Will or the trust that is involved, the kind of core document. And number 3 is you file what you hope to be the final Order, the final result you look to achieve.  So you give everybody sort of the information, you give them the basics of the documents that you need to work from and then you say this is where I want to land, I look forward to your comments, so to speak.

Suzana Popovic-Montag: And as part and parcel of that Notice of Application, it’s going to certainly quantify the period of time during which the accounts are being passed and it’s also going to refer to the compensation, specifically that the trustee is looking for, as well as the legal fees to which he or she is seeking, on basically on an unopposed basis. And then there is, certainly in Ontario, there is provision for the costs and what that amount would be for anyone who has actually reviewed the accounts.  It’s usually either half or three-quarters of the amount that the executor would otherwise be entitled to.

Ian Hull: So we have this application and the form of it is basically we’re going to the Court to say, “We want our accounts passed” and we say it in a more legalistic way, but that’s the long and the short of it. The second part of it, though, is in the Application material, is in the Affidavit of Verification. And this Affidavit, you have to, as the executor, swear to the truth and accuracy of the accounts attached.  So that someone, basically the information you’re putting to the Court, sticks to you from an evidentiary standpoint. The form of that Affidavit is, there’s sort of two approaches: One is a very straightforward, one sentence long that says, “I attach the accounts and I swear them to be true and accurate”; and the other is one where, if you’re looking and you’re seeing a fight on any of the issues, you may want to flush out your position a little bit in some of the facts.

Suzana Popovic-Montag: And that’s, I think, more the unusual circumstance but one that we certainly see and I think it ultimately helps a Court who is dealing with the situation know the facts up front and know what’s sort of coming down the pipes before the parties actually show up in Court to argue those issues.

Ian Hull: So this expanded Affidavit of Verification, the form of the first one is obviously simple enough to do.  Obviously you hope that the accounts are accurate and true, prepared typically by a third party, someone who has a specialty in estate format accounts, but the comprehensive Affidavit in support will typically tell the story. So, for example, say you have an estate that has a large amount of assets in it and you are looking for significant compensation. You may want to, in the Affidavit of Verification, set out some of the detail of your work. Sometimes, for example, the Court likes to see copies of your dockets that you kept track of your efforts over the years in administering the estate, so that they have a sense of the time. They also may want to put a sense of the complexity and the background in it. This is just one example of what you can do to expand your Affidavit to help tell a better story to the Court, and also, quite frankly, to sell it to the other side.

Suzana Popovic-Montag: And that’s particularly so, I think, when you’ve got beneficiaries of an estate who are not familial members. So when you have, you know, third parties who wouldn’t know necessarily the extent of the work that the executor is doing, like a charity for instance, or another beneficiary who is far removed from the process, and it can only help to have all that information put to them sooner rather than later.

Ian Hull:  So if you’ve got your package ready, another thing that you want to keep in mind is, I think, I always tell my clients, is that watch your timing. This process takes a lot of time.  In the grand scheme of things, it may not be a lot of time if you’ve administered an estate for many years, but in Ontario and in most other jurisdictions, there is a substantial amount of time that people have to respond. For example, when you send out your Notice of Application in Ontario, and you serve everyone who has an interest in these accounts, what we call a financial interest, they have at least 45 days to respond.  So you’re looking out, you prepare the materials, take some time, then once you serve it you’re still looking at another 45 days minimum to have the accounts audited by the Court.

Suzana Popovic-Montag: And if the beneficiaries actually reside outside of Ontario, you’re looking at 60 days as the minimum service requirement. And that basically gives the parties hopefully enough time to review the accounts, to seek advice if they need to do so, and at the end of the day, ultimately the expectation or the hope being by the trustee, that they will consent to the accounts.

Ian Hull: So we’ve got it out there, we know it’s going to take some time. In our next podcast, we’re really going to flush out what our, I mean, you can never say typical in our world, but what are traditionally the areas of objection. But the procedural step is once you serve the account on those with a financial interest is you will then…they have an opportunity to file what is called a Notice of Objection, so a complaint, formally with the Court. And this is done either typically not in Affidavit form, but it is filed through the form of the Court and there they set out the nature and extent of the objections. So in our next podcast, I think it would be helpful for us to just take a little bit of time drilling down on some of the, what we call the low-hanging fruit issues, the issues that are often criticized in a passing of accounts so that we can help get better prepared for that inevitable day and hopefully have done our work before, to sell the Volkswagen to the beneficiaries.

Suzana Popovic-Montag: Well, thanks very much, Ian.  I look forward to our next podcast, and I remind our listeners who are interested in providing us with some feedback on this or any other podcast, to feel free to visit our webpage at hullandhull.com and leave us a message.

Ian Hull: Thanks very much, Suzana.

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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Listen to Issues in Estate Administration: Tax Filing.

This week on Hull on Estate and Succession Planning, Ian and Suzana discuss tax issues surrounding the administration of an estate.

Comments? Send us an email at hullandhull@gmail.com, call us on the comment line at 206-457-1985, or leave us a comment on the Hull on Estates and Succession Planning blog.

Issues in Estate Administration: Tax Filing - Hull on Estate and Succession Planning Podcast #110

Posted on April 29^th, 2008 by Hull & Hull LLP

 

Suzana Popovic-Montag:  Hi, and welcome to Hull on Estate and Succession Planning.  You’re listening to Episode #110 of our podcast on Tuesday, April 29^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.

 

Suzana Popovic-Montag: Hi it’s Suzana Popovic-Montag.

 

Ian Hull: Ian Hull.

 

Suzana Popovic-Montag: And welcome to our podcast. We would just like to take this opportunity at the very beginning to remind you of the fact that we have a call in number for any of our listeners who have any comments on our podcast. Please feel free to call us at 206-457-1985.

 

Ian Hull: And also I encourage you to send us an e-mail at hullandhull@gmail.com or check out or daily blog which is easily found from our webpage at hullandhull.com.  Well let’s start working through some issues on the estate administration.

 

Suzana Popovic-Montag: That’s great Ian, we shall, but I just wanted to take a quick opportunity to let our listeners know that by the time this podcast is up, you will have done yet another appearance on a great show that’s called “Strictly Legal”, that is hosted by Michael Cochrane and for people who are interested in hearing Ian speak about issues of Estate and Trust matters in a more general all encompassing fashion, I highly recommend you to that show.

 

Ian Hull: Well thanks Suzana, its fun, it’s a great show. I’m looking forward to it. It’s thrown up on a video stream after on Business News Network, BNN Network so, it’s good fun.

 

Suzana Popovic-Montag: Good for you Ian.

 

Ian Hull: Alright, so where we left off in our last podcast was we were still struggling through some tax stuff because it is tax time here in Canada.  So we get a little focused on that and the easiest, I find, with files, the easiest criticism of any executor administering an estate is that they botched the tax filings or did any of the tax related stuff and so let’s talk a little bit about that.  But also let’s talk about the fact that, you know, again, if you’re not the expert in the tax side of things, get help.

 

Suzana Popovic-Montag: That’s for sure.

 

Ian Hull: So we mentioned the T1 terminal income tax return which is due and then we talked a little about how you dovetail in an interim distribution encouraging the party, the executors, I try to encourage my client, the executors. to get the money flowing as quickly as possible, knowing the restrictions that are out there, because there are some, we can’t just simply send it out.  But as soon as is safe, send it out with sufficient holdback. One of the reasons for the holdback is, of course, we have to pay taxes.

 

Suzana Popovic-Montag: And in addition to the T1 terminal return an estate trustee is going to prepare annually a T3 estate tax return.

 

Ian Hull: And that’s on estates that are not immediately distributable, so that if the assets are generating income, or there is a trust that is ongoing, or you just didn’t get it filed, the estate administered in the first year, Revenue Canada still wants their tax money on those, on the interest income or the growth and so forth.  So our annual T3 estate return needs to be filed, and that is approximately, again you can expect a Notice of Assessment  approximately six to nine months after that.

 

Suzana Popovic-Montag: One of the other things that we suggest to our clients to keep in mind after these tax returns have been taken care of, is to consider and to confirm that all CPP death benefits, that’s the Canada Pension Plan death benefits, have in fact been received on behalf of the estate.

 

Ian Hull: And also here in Ontario, we are forced to consider the issue of additional estate administration tax being paid.  And on this point, I was in Court the other day, not a case that I was involved with, but I was watching and I noticed that there was some argument between the government of Ontario and a big, it looked like a big estate, I didn’t follow all the details, but they were arguing over a refund.  The estate had, in fact, filed, and it turned out they had overpaid, they just basically overestimated the value of a big, big property, paid tax on it, the administration tax on it and then were now going back to the Court to work out a mechanism to get a repayment.  So, as is in life, possession is nine- tenths of the law. It reminded me of the adage that, you know, its always better to be conservative when you are making the filings, on the estate administration tax side because it can be more difficult  to get the money back than it can be to pay the money.  But obviously always being honest throughout the process.

 

Suzana Popovic-Montag: That’s good advice, Ian.

 

Ian Hull: I think really at this point, I just want to take a deep breath and look back at what we are doing because, and this is where some clients, we meet some resistance from clients because they sort of see us as trying to cover off too much sometimes. But I really, I often at this point will sit down and prepare a comprehensive reporting letter.  From our standpoint, for sure, we will report throughout.  But this is a good time also for the beneficiaries to receive something in writing directly from the executor.  There is nothing like personal contact, ongoing phone calls is a great idea as well.  Just keeping people up to date, keeping the process personal.  Because this is personal, this isn’t a business transaction, this is a life transaction.  So I always encourage my clients who are executors to pick up the phone or grab a coffee with some of the beneficiaries or even have an informal meeting with them at the local coffee shop.  But most importantly, I also suggest to them that they prepare a reporting letter.

 

Suzana Popovic-Montag: That is really good advice, Ian because it gives people then an opportunity to sort of see in writing all the hard work that you have done as an executor and the benefit of that, of course, being at the end of the day, when you want to seek compensation for your work as an estate trustee, you will have something to point the beneficiaries to in terms of the work and the hard effort that you have put forward in administering the estate.

 

Ian Hull: And it really is, it is not just self-serving, I think it is a natural reaction for people to, who feel that they are in the dark, no matter what you are dealing with, in business or, and in this case what is often a family situation.  Dialogue and communication is so crucial and so the more, the better.

 

Suzana Popovic-Montag: And then just sort of to wrap up the tax discussion that we had we want to turn our minds to the final income tax return and the preparation of that final T3, and then, of course, applying for the final Clearance Certificate in order to give the sort of seal of approval to all the tax filings that have been done to the estate trustee on behalf of the estate.

 

Ian Hull: Okay, so let’s talk this through a little bit because this is really the final bell for the tax filings, and this final T3 return and the final Clearance Certificate application is so important. Again, I typically will tell my clients unless they are the tax experts that I am not, make sure you send everything to the accountant.  This is the last chance to have sent all of the paper that you think might possibly relate to any of the assets of the estate to the accountant, let them decide what needs to be put to the taxing authority, not you.

 

Suzana Popovic-Montag: And then, of course, file the return, pay any taxes owing and just make note of the fact that you want to follow up the actual receipt of the Notice of Assessment for that final T3 return and typically that will come in about six to nine months.

 

Ian Hull: And then, of course, we have the second step and that is, of course, we will be looking for a Clearance Certificate.  But one of the things that people talk about, and without getting overly technical on the tax side, is what do you do when you want to wind up an estate because interest is always going to be accumulating?  And there is an easy answer, again not for my abilities to follow through on the mechanics, but the concept that: say there is a $100,000 left in the bank and you are holding that back to get your Clearance Certificate from CRA.  You filed your final T3 return, everything is really ready to go but there is this one remaining amount of money that is being held back because the accountant said look, you know what, this is a busy account and this individual did a lot of transactions over his lifetime and CRA could always come back and look, and that final look at the Clearance Certificate time, because we have to remember CRA, that’s the last kick they are going to get at it too.  So they typically take a pretty good, careful look at all of the tax activity of the deceased at that time.  But what you can do is, you can allocate the interest income that is being accumulated on the stop date.  So you, say you have some money left, you want to stop the estate, basically stop the clock running, so that you can indeed say it is over to Revenue Canada.  The go forward income accumulation just gets allocated to the beneficiaries.  And as I say, there are certain forms that get filed with the Revenue Canada and so forth to make that happen.  But it is an important step to allow you to bring close to the ongoing treadmill of interest income that is going to be coming in on the money you are holding.

 

Suzana Popovic-Montag: And that is a really good point to address in the letter that you write to the beneficiaries reporting on the administration of the estate and reminding them that at that point, that stop clock date or whatever you want to call it, at that point forward they have an annual obligation to themselves report that income and pay tax on it.

 

Ian Hull: And so now we are looking for that Clearance Certificate.  And even if that, as I say, the final distribution hasn’t been made, so you write a letter to CRA, you wait typically, it’s difficult to guess, it might be six to nine months, it might be more depending on the circumstances.  And once you receive that final Clearance Certificate you can send out your final distribution. 

 

Now one little twist, just as a final comment on the tax side is, is that you want also, I remind my clients to look at whether or not the deceased was a G.S.T. participant or registrant, because there can be special filings that need to be undertaken for that, and make sure that that’s been closed.  So your loop is closed fully on the tax side, you’ve diarized them and then in our next podcast, we are going to talk a little bit about the accounting obligations, not from the standpoint of the government, which we have gone through, it’s going to be hopefully no more tax time once we get in our next podcast, we are going to move into the accounting obligation as between the executor and the beneficiaries.

 

Suzana Popovic-Montag:  Well that is great, Ian.  Thanks very much.  I look forward to our next podcast.  And just a reminder again for anyone who has any comments about our podcast, please feel free to call us at 206-457-1985 or send us an e-mail at hullandhull@gmail.com or, of course, visit our blog and our webpage at estatelaw.hullandhull.com.

 

Ian Hull: Thanks Suzana.

 

Suzana Popovic-Montag: Thanks Ian.

 

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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Once in a blue moon I find myself considering and marveling at the genius and breadth of the Common Law.  I am amazed by the Common Law’s ability to function effectively in what otherwise appear to be remarkably different parts of the world, particularly in the area of Estates and Trusts.

Of course, this phenomenon is a historical after-effect of the size and reach, particularly in the 17th to and 19th Centuries, of the British Empire.  Military history buffs will know this was largely attributable to the Royal Navy’s increasing dominance over the oceans of the world.  During that time (and before), the Common Law spread from the relatively tiny islands of the UK to vast and diverse areas: from India, Hong Kong, parts of Africa and Singapore to tiny island states in the Caribbean such as Barbados, the list goes on and on.

No doubt Estate Law has its local variants in each location, but I am more often than not struck by the similarities.  The attached article about Wills and Probate in Hong Kong would not be much different in Ontario, and I expect most non-lawyers would be hard-pressed to spot the differences.  Here’s a website encouraging people to outsource legal services to India, including trust deeds, although to my mind that may exaggerate the cross-jurisdictional similarities of Estates law. It seems to me it would still be best to retain a local lawyer in whatever jurisdiction you’re dealing. For the truly exotic, review this website talking about how the governing Estate law in Singapore shifted from the Common Law to Islamic law.

With Canada’s direct reliance on British jurisprudence lasting until 1949 when final appeals to the Judicial Committee of the Privy Council were ended, we certainly have played our role in this pattern and continue to do so.

Thanks for reading.

Sean Graham

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In our rapidly aging society, powers of attorney for personal care and property are now widespread and their importance is recognized by the general public. A family member or friend can also apply to the court to be appointed guardian of the person or the person's property if powers of attorney have not been executed. However, family members often find themselves in a situation where a loved one is being legally cared for by a family member, or friend of the incapable person, who they no longer like or trust. 

A common complaint that I hear is from family members or friends who feel excluded from participating in or influencing decisions regarding the incapable person, particularly when it comes to personal care.  

However, under the Substitute Decisions Act, 1992, which generally governs the rights of an incapable person, any person, with leave, can seek directions from the court on any question arising under a power of attorney (the same is true regarding a court appointed guardian). Pursuant to sections 39 and 68 of the Act, the court may give such directions as it considers to be for the benefit of the incapable person and consistent with the Act.

Section 66(1) of the Act sets out the duties of an attorney for personal care (section 32 is the corresponding section for an attorney for property). In general, the attorney is required to exercise his or her duties and powers with diligence and in good faith. 

Section 66(6) also states that an attorney must foster regular personal contact between the incapable person and supportive family members and friends. Moreover, section 66(7) states that the attorney shall consult with supportive family members and friends who are in regular contact with the incapable person, as well as the incapable person’s caregivers. 

The requirements of section 66, coupled with the ability to seek directions from the court, offer family members and friends the means to ensure that they remain involved with their loved ones and are not simply sidelined. Proceeding to court is always expensive. However, where there is genuine concern and frustration that the incapable person is not being properly cared for and/or his or her finances are being squandered, recourse can be had to the courts.

Ciao!

Justin

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There has been some controversy as to whether a Will challenge is subject to a limitation period under the new Limitations Act, 2002, which came into force January 1, 2004. 

In her excellent paper presented at the 10^th Annual Estates and Trusts Summit last week, Anne Werker states that in her view no limitation period applies to Will challenges.  Not even the absolute 15 year limitation period set out in the Limitations Act, 2002 applies. In other words, a Will challenge is not statute-barred for being out of time. Keep in mind that the Limitations Act, 2002 was hailed at the time as bringing under one roof a myriad of limitation periods and imposing an almost universal 2 year limitation period (subject only to reasonable discoverability).

According to Anne, the Limitations Act, 2002 will not bar an application for a judicial declaration regarding the validity of the Will where, for example, there are grounds discovered subsequent to the issuing of a certificate of appointment of estate trustee, such as a later Will, or evidence that brings the Will into question.

However, Anne does acknowledge that the return of an issued certificate of appointment of estate trustee is not automatic when a Will challenge is launched after a certificate of appointment has been issued.  A party may rely on equitable relief such as laches (failure to act) or acquisition (concurrence). As Anne points out in her paper:

“When a Certificate of Appointment of Estate Trustee has already been issued, on notice to the interested parties, and if the grounds to challenge the Will are weak, unexplained delay will be a significant factor in whether the Court exercises discretion to allow a Will challenge to proceed.”

No doubt, the courts will eventually be asked to consider limitation periods and Will challenges, but in the interim Anne’s paper has made a valuable contribution to the debate.

À demain

Justin

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It is often impossible to predict how costs will be decided by the presiding judge at a motion, application, or trial.  The Rules of Civil Procedure encourage a judge to fix the costs of the proceeding before him or her. A judge has wide discretion to award costs - discretion that an appeal court will be reluctant to interfere when faced with the issue. With the demise of the infamous cost grid, costs have tended to come down and the court is now largely motivated by deciding what is reasonable in the circumstances and fair to all parties with an eye to the factors listed in Rule 57.01(1).

An interesting case recently released by the Ontario Superior Court of Justice in Rand Estate v Lenton caught my attention.  In a relatively rare decision, the court awarded costs against the solicitors for the respondents.

According to the court, the conduct of the solicitors for the respondents caused costs to be incurred without reasonable cause or wasted by undue delay, negligence or default. The solicitors for the respondents systematically engaged in a pattern of inappropriate conduct, including: (1) inordinate and unnecessary delays; (2) bringing numerous and unnecessary motions; (3) being inadequately prepared; (3) failing to appear; (3) disregarding the professional obligation to be civil and courteous to others; (4) presenting arguments that had no merit; (5) acting for the respondents despite having a clear conflict of interest; (6) failing to do anything to resolve the litigation; (7) disregarding court orders; and (8) continuing to produce documents in contempt of a court order.  As a result, the court found it appropriate to award costs against the solicitors for the respondents on a substantial indemnity basis to address the costs thrown away by the applicants. 

The case, and the laundry list of improper behaviour, is a good reminder to all counsel to think long and hard about tactics and strategy (no case is really worth sullying your own reputation and credibility). Lawyers also need to keep in mind that they are not just mouth pieces for their clients. Counsel should advise their clients of the minimum standard of behaviour, decorum and professionalism expected by the courts. A good way to control your client is to remind him/her that costs can be awarded against a party who makes frivolous claims, or engages in egregious behaviour. Of course, lawyers are clearly not immune from costs and must govern themselves accordingly. If a client refuses to listen or expects you to take a position that will be frowned upon by the court, it is time to get off the record. 

Justin

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Listen to "Estate Law Case Study"
Read the transcribed version of "Estate Law Case Study"

In this week's episode of Hull on Estates, Justin and Megan discuss a case study.

Click "Continue Reading" to read the transcribed version of this podcast.

Estate Law Case Study - Hull on Estates Podcast #72

Posted on August 14^th, 2007 by Hull & Hull LLP

Justin de Vries: Welcome to Hull on Estates. You’re listening to Episode #72 of our podcast on Tuesday, August 14^th, 2007.

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

Justin de Vries:  I’m Justin de Vries and I’m with Megan Connolly.

Megan Connolly: Hi.

Justin de Vries: And we’re going to discuss a case from our famous Court of Appeal. It’s actually a 2005 decision but I think it recently came into my path and I thought it was worthwhile talking about. Its Simone Estate vs…

Megan Connolly: Cheifetz.

Justin de Vries: Cheifetz, thank you Megan.  I’m not very good at that.  It’s a silent “C”. In any event, the panel was Doherty, LaForme and MacFarland.  So Megan, why don’t you take it away and just give us a little bit of the factual background and then we’ll discuss the meat of the decision.

Megan Connolly: The deceased in this case were Emidio and Laila Simone.  They were killed in a plane crash. Emidio had been an entrepreneur and he owned a tooling company. They had a lawyer who was Stephen Cheifetz and he did all of their legal work for them.  This included drafting both of their Wills.  Now in their Wills, they named him and I’m guessing each other, the estate trustees because they died together and the case says that when they died he was the only existing estate trustee.

Justin de Vries: I think that’s right.

Megan Connolly: Now the Simones’ were survived by two daughters who were eighteen and nineteen at the time.  And I think the two daughters inherited the entire estate.

Justin de Vries: And it would have been a significant estate.  And the case also says, of course, and maybe this is why, there was a decision that the relationship deteriorated between Cheifetz and the two daughters.  And then the two daughters brought an application to remove him as executor and trustee.  And he eventually resigned and then there was a passing of accounts.

Megan Connolly: That’s right.  So he brought an application to pass accounts and the daughters objected and sought through a payment of money that had been paid to him and to his holding company in the way of salary and compensation. At the passing of accounts, the judge ordered Cheifetz to repay about $500,000 in compensation and other fees that he and his holding company had received.

Justin de Vries: And there was some questions raised by Mr. Justice Flinn who was hearing the case that it may be that Mr. Cheifetz was self motivated.  But in the end, he really didn’t make any profound findings on that. And interestingly enough, the kids, the two daughters, had asked for over $900,000 to be repaid.  So they got some but not all. And then what was interesting is the TD Canada Trust Company was appointed executor of the estates of both parents as well as trustee for a family trust.  And then Canada Trust, in its capacity as estate trustee, sued Mr. Cheifetz, his wife Barbara, and two companies of which they were the sole officers and directors, their family trusts.  And as the court said “person unknown” for damages, essentially for breach of trust and breach of fiduciary duty on the part of Mr. Cheifetz while he acted as executor and estate trustee.

Megan Connolly: So Cheifetz then submitted his defence.  And Canada Trust turned around and tried to strike out parts of that defence on the basis that some of issues he’d raised in the defence had been previously decided by the judge on the passing of accounts. And they said that since these matters had already been decided, he couldn’t raise them once again.

Justin de Vries: And just from a procedural point of view, Canada Trust brought a Rule 20 motion which is a Summary Judgment Motion, which was ultimately not allowed or not granted by the judge at first instance.  And they also brought a Rule 21 motion, presumably for failing to show a reasonable cause of action or abuse of process or more likely res judicata and that was granted. And in fact, the court, in first instance, and it wasn’t Flinn ‘cause this is a separate proceeding, but the judge at first instance agreed that Flinn had already considered these matters on the passing of accounts and certain defences were struck from the Cheifetz’s Statement of Defence. That in turn was appealed to the Court of Appeal, which brings us to this decision. 

What the Court of Appeal said, which has caused, I think, some controversy among the estate bar, is that essentially all that a passing of accounts is looking at is compensation and the right amount of compensation, even though the court recognizes that Section 49 of the Estates Act says that on a passing, the court has the discretion, and it’s quite wide discretion, to look into any matters and order damages or that amounts be repaid. So many people in the bar, in the estate bar, felt that if you don’t raise it on an estate, on a passing of accounts, in other words, if you didn’t raise some sort of a claim for damages or a surcharge for money to be paid back, then you were out of luck and doing it in a separate proceeding at a later date. But this case made it clear that the court didn’t believe that to be the case.  They felt, in fact, that a passing was more or less limited as I said to compensation and that a breach of trust or breach of fiduciary duty claim was really separate.  And there was no reason that this could not be brought now. And while some of Mr. Cheifetz’s behaviour would have an impact on the breach of trust and was considered in the passing of accounts, when it was considered in the passing of accounts, it just reduced his compensation.  It didn’t go to whether or not he was negligent.

Megan Connolly: Right and the Court of Appeal said that during the passing of accounts, the judge never specifically decided or even considered whether there had been a breach of trust or breach of fiduciary duty. Now while a breach of trust could be a reason for reducing compensation, the fact that compensation was reduced doesn’t mean the judge decided a breach of trust occurred.

Justin de Vries: And Mr. Cheifetz didn’t argue interestingly enough, to say well hold on, there was a passing of accounts - you should have raised these issues as to damages because of my behaviour and an ordering back of money on the passing and therefore you’re barred because of this order from proceeding. In fact he said listen, I have a right to defend this action for breach of fiduciary duty, breach of trust and I’m doing it. And what is a little bit unclear, at least from the Court of Appeal decision and we would have to look carefully at the lower Court decision, is whether or not Section 49 was relied on to pay back the money. But I don’t think it was.  I think it was all the compensation taken by Mr. Cheifetz and part of that was ordered repaid.

Megan Connolly: Now the other point the Court of Appeal raised was that in the action for damages for the breach of trust and breach of fiduciary duty, the parties for the proceeding were different. In the action, the parties included Cheifetz’s wife, and I guess two holding companies they had an interest in. The wife wasn’t a party to the passing of accounts.  So if on the action the court had said we’ll rely on the findings of the judge in the passing of accounts, the effect would have been they would’ve in effect been binding the wife who wasn’t a party to that passing of accounts to the findings that had been made in it. 

Justin de Vries: Yeah and not surprising, the court said there’s a high onus or a high standard when that is the case. It is possible, but the court wasn’t prepared to find it in this case. What I think is interesting as well is I wonder, just sort of cloud punching, how aware or why the Court of Appeal didn’t consider the fact that on a passing of accounts where Section 49 is relied on and serious damages are asked for, or what some people call a surcharge, in other words, the money to be paid back because of a breach of trust or negligent management of monies or administration, that usually what happens is that there is a trial of an issue that is carved out.  So you can have pleadings ordered by the court, you can have discoveries, and you can have actually a trial. So it seems to me there’s some merit to say listen, on a passing of accounts, if you want to take a run at someone and want damages, you need to raise it then, because there is a procedure to handle that, and that is, trial of an issue. But the Court of Appeal said no, we essentially think that a passing is just for comp and you can always bring a breach of trust and fiduciary claim later. 

So the one cautionary note, I think, is that when people say, well there’s a passing of accounts and you’re essentially…your liability is extinguished or you can’t be sued once the accounts are passed, certainly for a breach of trust case that may not be quite as clear.  And you may be able to argue that you’re entitled to bring it, even though there has been a passing.

Megan Connolly: Right.

Justin de Vries: Alright, that’s our podcast for today.  Hope you enjoyed listening and we’ll speak with you again next time.

Megan Connolly: Bye.

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

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

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