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

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In a prior blog by Paul Trudelle, a partner at Hull & Hull LLP, he explained the decision of Rooney Estate v. Stewart Estate (2007). In Rooney Estate v. Stewart Estate, the court highlighted some of the roles the Estate Trustee and the estate solicitor and held responsible for including, among other things, arranging for the funeral and disposition of remains.

Arranging for the funeral and disposition of remains can be burdensome, especially if the estate trustee was related to the Deceased. This task becomes even more daunting when they are dealing with the expenses of a funeral in which case, fewer are in the mood to bargain. Regrettably, this leads many spending more then they have to. 

I recently came across an interesting article, How to Cut Funeral Costs, which was published in The Wall Street Journal. Under this article, the author provides us with a few tips on how to keep costs reasonable when arranging a funeral service:

 

1.                  Learn your Rights: Funeral homes are prohibited from charging certain fees, and there may be a requirement that compels funeral homes to provide a written fee list upon request

2.                  Pre-plan: “Have a conversation with your family about what you want and what’s going to be meaningful to them.”

3.                  Consider pre-owned plots: Purchasing a pre-owned plot has always been a common practice; but the purchaser has moved out of the area where his plot is purchased. 

4.                  Compare Funeral Home Prices: it’s worthwhile to shop around. Prices vary from one home to another

Thank you for reading,

Rick Bickhram - Click here for more information on Rick Bickhram.

 

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In an aging society, our elderly can easily fall prey to predators looking to exploit them. Elder abuse can take many different forms: physical, psychological or financial abuse, or simply neglect.

I read an article yesterday about Huguette Clark, the 104 year old heiress whose wealth is estimated at half a billion dollars. During her lifetime, Clark made generous gifts towards those who cared for her. For instance, it is reported that Clark gifted $10 million dollars to her social secretary. 

It is reported that Clark’s wealth is being managed by her lawyer and her accountant. 

A former paralegal who worked for Clark’s attorney, has now blown the whistle on what she alleges is improper behavior by Clark’s attorney and accountant. According to reports, it is alleged that they “drafted a will that would have left money to [one of them], trying repeatedly to persuade her to sign it — then joked about their client and cursed her behind her back when she would not sign the will.” It is also reported that her lawyer allegedly solicited from Clark $1.5 million dollars to build a security system for a community where his daughters and their families live. In addition he allegedly sold a Stradivarius violin for $6 million dollars and a Renoir painting for $23.5 million. 

A criminal investigation has now been launched by the Manhattan district attorney, who has the Elder Abuse Unit of the New York County District Attorney's Office looking into the handling of Clark's finances.

It bears repeating that the complaints at this stage are unproven allegations. Nonetheless, the mere thought that this could happen provides us with a dreadful reminder of what the elderly face in our society today.

 

Thank you for reading,

 

Rick Bickhram - Click here for more information on Rick Bickhram.

 

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Chinese real-estate tycoon, Yu Pengnian, announced this past April that he was donating the last $500 million of his fortune to his charitable foundation on philanthropy. He was asked by a reporter, whether his children were angry about his donations and responded by stating: “They didn’t oppose this idea, at least not in public.”

|It is not uncommon for billionaires to donate their fortune. For instance, Warren Buffet and Bill Gates started a campaign called "The Giving Pledge." At that time, they had four billionaires pledge to give away half of their fortune upon their death.  Now there are 40. My colleague, Nadia Harasymowycz, recently blogged on this topic, which can be found here: Leaving it all to Charity – A Good Plan or an Estate Litigator’s dream.

The idea of giving away your fortune is a strong shift from the traditional idea of passing down your wealth, from generation to generation. Why this switch in estate planning? Yu stated: “If my children are competent, they don’t need my money. If they’re not, leaving them a lot of money is only doing them harm.”

Yu’s message to wealthy families put simply: “Too many wealthy parents focus on preventing their children from failing. But in doing so, they also deprive their children of the joys of self-made success.”

Thank you for reading,

Rick Bickhram - Click here for more information on Rick Bickhram.

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When I read a recent article about Mr. Butler, an unemployed Ottawa man who had been cashing his father’s government pension cheques for seven years after his death (totaling about $115,000), I couldn’t help but get just a little annoyed.  Reportedly, he spent most of it at strip clubs - another irritating fact!

How this apparently happened was that after his father’s death, his pension cheques continued to be directly deposited into their joint bank account.  The bank was never notified of the death. Mr. Butler asserts that he had assumed the payments were either government child benefits or survivor benefits (interesting twist given that his father was reportedly a longtime accountant for the federal government).  

While Mr. Butler pleaded guilty to the fraud (and was placed under house arrest for a year), he filed for bankruptcy to avoid paying the restitution Order obtained. Unfortunately, the money will never be reimbursed. Ironically, Mr. Butler turned 65 during his house arrest and started collecting a pension himself. 

I fear this type of thing happens much more often then one would expect, although likely on a smaller scale. I wonder if in cases such as this whether the government has ever sought restitution by garnishing pension funds (or getting the Court’s authority to do so, if needed)? I can appreciate at least two sides to this question – I suppose when there is an unwitting recipient of government funds, taking part or all of their pension away could be seen as a harsh result. That said, receiving thousands of dollars in tax-payers hard-earned money with impunity (albeit innocently) is arguably unfair to the public.  If any practitioner in the area knows the answer to this question I would be happy to hear from him/her. 

Have a great weekend! 

Natalia R. Angelini - Click here for more information on Natalia Angelini.

 

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In Laidlaw Estate, Re, a recent decision of the Court of Queen’s Bench of Alberta, the court considered an application for a grant of probate in respect of a Will containing handwritten changes.

The key facts are that the Deceased executed a typewritten Will made with the assistance of a lawyer. Changes were later made to the Will gifting a Bond to certain beneficiaries, consisting of handwritten words and numbers.  The Testator signed the handwritten changes.  There were no witnesses to the handwritten changes made to the Will. 

 

Testimony was given that the signature at end of changes appeared to be testator’s usual signature. Interestingly, the handwritten changes contained er­rors in spelling of the beneficiary names (although this was also the case in the Will as the Testator apparently suffered from dyslexia, which explained the mistakes).

 

The Court granted the probate application, and in so doing, it found that the handwritten changes could be understood independently of the typed text, such that they were found to constitute a valid holograph Codicil to the original Will. In coming to its decision the Court was guided by its stated policy to do everything possible to give effect to testamentary writings in holograph form. 

 

While this is an Alberta case, the applicable legislation is similar to ours, and it makes for an interesting read.  

 

Have a good day,

 

Natalia R. Angelini - Click here for more information on Natalia Angelini.

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For my final blog for the week, I want to discuss an article recently featured in Forbes.com, which considers the importance of having a Will. 

If an individual dies without a Will, he is said to have died intestate. When a person dies intestate, their assets are distributed pursuant to the intestate provisions contained in the Succession Law Reform Act.

If a person dies with a Will, he is said to have died testate. In such circumstances, the deceased’s assets are distributed in accordance with his last wishes as set out under his Last Will and Testament.

Under Glenn Curtis’s article, “Why You Should Draft a Will” he sets out the benefits of having a Will, such as:

1.                  Limiting family disputes;

2.                  Wills can outline personal preferences; and

3.                  Wills make quantifying and distributing assets easier.

By comparison, Curtis argues that not having a Will could place significant burdens on loved ones, such as it could take a very long time to compile an accurate list of an individual's assets; it could also take a prolonged period of time to identify and locate potential beneficiaries. “Unfortunately, until this process is complete, money may not be distributed, even to legitimate and known beneficiaries.”

Curtis concludes his article with some wise words: “Individuals seeking to prevent family infighting, and who want to ensure that their spouses, children and other relatives are properly taken care of after they die would be wise to consider drafting a will.”

Thank you for reading, and I hope you have a great weekend,

Rick Bickhram -  Click here for more information on Rick Bickhram.

 

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Social Media is not a fad and is fundamentally changing the ways we interact and communicate with others.  Two of the more popular social networking websites, Twitter and Facebook, recently implemented policies that set out guidelines regarding a user’s account once they have died.

Under Twitter’s policy, a person can either request that the deceased user’s account be removed entirely or receive an archive of all the deceased user’s tweets offline once they have provided Twitter with the following information:

1.                  Your full name, contact information (including e-mail address), and your relationship to the deceased user; 

 2.                  The username of the Twitter account, or a link to the profile page of the Twitter account.  

 3.                  A link to a public obituary or news article.

By comparison, Facebook provides two options: either removing the deceased’s account, or "memorializing" it.

Memorializing a person’s account “means the account lives on in Facebook's system, and other Facebook members can interact with the deceased member's wall. What’s interesting about what Facebook put into place, compared to Twitter, is that there’s still a great deal of emphasis put on privacy and what can be done with the information that user has posted to the service. For instance, only that user's friends can still visit the profile or find it in Facebook's public search tool. And Facebook goes so far as to remove all status updates and contact information.”

It is hard to imagine that Facebook and Twitter will remain an important part of our lives many years from now, but Facebook has grown from 300 million to 500 million users in less than a year, with few signs of that slowing down. This is an indication that “policies about a user's death can end up being just as important as those you agree to when you first sign up.”

Thank you for reading, and have a great day.
 

Rick Bickhram - Click here for more information on Rick Bickhram.

 

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Bridging the gap between principle and common sense can be tough for parties involved in litigation.  

World renowned pop artist, Michael Jackson, died over one year ago on June 25, 2009.  As with most estate disputes, they tend to be costly both emotionally and financially, and this tends to be the focus of everyone watching, despite all the good deeds that one may have accomplished during his or her lifetime.

Over the past year, we have heard of issues surrounding the Guardianship of Michael's children, his mother Katherine Jackson's fight to be appointed as the executor for Michael's estate, and illegitimate children coming out of the woodwork claiming to be dependants of Michael.

Most recently, in an entertainment column published by TVNZ, Michael's father, Joe Jackson, has decided to appeal a court decision indicating that he had no right to object to the executors of his son's will.  

Joe Jackson initially accused the executors of Michael's estate, John Branca and John McClain, of fraud and embezzlement.  As Joe Jackson was not a beneficiary of Michael's estate, the court held that he was unable to object to the executors of his son's will.

Joe Jackson's lawyers now argue that Joe was financially dependent on Michael and should therefore have a right to object to the appointment of the executors who control the financial decisions of Michael's estate.  These claims of dependency are being refuted by the lawyer for Michael's children.

As I indicated above, bridging the gap between principle and common sense can be tough for parties involved in litigation.  Is this the legacy that Michael Jackson would have wanted to leave when he died?

Thank you for reading,

Rick Bickhram - Click here for more information on Rick Bickhram.

 

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Computers have become a staple in the lives of human beings, such that it is difficult to imagine that there was a point in time when they did not exist. In an effort to remain current with technology, some funeral homes have incorporated the use of technology in how loved ones say their final farewells.

The Toronto Star  recently featured an article about a funeral home that allows distant loved ones to say goodbye by watching the funeral service being streamed over the internet. It sounds eerie, and certainly, there will always be concerns about internet security, but for Brantford trooper Larry Zuidema Rudd, who died when a roadside bomb exploded, having an online funeral service allowed more then 40 of his colleagues in Afghanistan to pay their final respects from their distant base.

The so-called “sympathy casts,” have been growing in popularity. Helen Zuidema, the mother of our fallen solider Zuidema Rudd, says that the sympathy casts have “brought our family together without them having to come here … they’re still talking about it months later.” Zuidema still scans the funeral site, along with its many photos, tributes and messages, about once a week.  “It brings back a lot of memories that you kind of forget when you are grieving,” says Zuidema.

For funeral homes, embracing the advances of technology has created an appreciation amongst loved ones, faraway friends and relatives, who can now be included in saying their final farewell.

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Earlier this week, I came across a funny web page by Marjorie Gottlieb Wolfe. In “Wills, Clauses & Other “Narishkayt”, Ms. Wolfe sets out particulars of certain will clauses of note. (“Narishkayt”, she explains, is the Yiddish word for “foolishness”.)

Ms. Wolfe tells of Mark Gruenwald, a Marvel Comics writer, who in his will directed that his ashes be mixed with ink and used within the pages of a comic book. 4,000 “ink and ashes” issues of Squadron Supreme were produced after his death.

She tells of Portuguese aristocrat Luis Carlos de Noronha Cabral da Camara, who picked 70 random strangers from a Lisbon telephone book as his beneficiaries.

She tells of Onni Nurmi, a Finish businessman who left 780 shares of a rubber boot company to residents of a Finish nursing home. The company went on to become Nokia, and the residents became millionaires. (Another report, here, says that the bequest wasn’t to the residents, but to the town of Pukkila for the “recreation of the people living in the village’s old people’s home”. At one point, the shares were said to be worth $90m.)

In my personal favourite, she tells of Anthony Scott, who wrote in his will: “To my first wife, Sue, whom I always promised to mention in my will. Hello Sue!”

Ms. Wolfe concludes by reciting the saying: “The person who works and saves will someday have enough wealth to divide with those who don’t.”

Visit her web page to see the entire article, and browse other articles by her.

Have a great weekend.

Paul E. Trudelle - Click here for more information on Paul Trudelle.

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I have previously posted on the doctrine of “mutual wills”. See my Breakfast Seminar, here, and my blog of September 24, 2008, here.

The issue of mutual wills was front and centre in the July 26, 2010 decision of Re Hand Estate, 2010 NSSC 297 (CanLII).

There, Dr. Hand and Ms. Hand prepared wills in 1999. In his will, Dr. Hand conveyed a condominium to his son Richard if Ms. Hand was to predecease him (the condo was jointly owned with Ms. Hand). In Ms. Hand’s will, she provides that the condo is to go to Richard. Because of the joint ownership, this gift would fail if Ms. Hand was to predecease Dr. Hand, as the condo would pass to Dr. Hand by right of survivorship.

Ms. Hand predeceased Dr. Hand. The condo passed to Dr. Hand. Dr. Hand then revised his will, leaving most of his property to a daughter. He also transferred the condo into a trust.

Richard cried foul, arguing that the wills were mutual wills and therefore were subject to an agreement against revocation. Accordingly, he argued that he was entitled to a half interest in the condo.

The court disagreed. The court found that the wills were not “mutual”, and further, there was no agreement against revocation.

As to the first point, the court found that the different terms of the two wills meant that they could not meet the definition of “mutual wills”, which required that the wills contain reciprocal provisions.

Further, the different terms of the will suggested that there was no such agreement, and that the “flexible norm of revocability” applied. 

This conclusion was supported by evidence from the drafting solicitor, who advised Dr. Hand and Ms. Hand that upon the death of the first of them, the condo would pass to the other as the sole owner. This, the court held, raised the issue of freedom of the sole owner to do as he wishes with his property.

Subsequent events did not assist Richard. The fact that for a number of years after Ms. Hand’s death, Dr. Hand continued to provide that the condo would pass to Richard suggested, at most, that the intention remained. It did not provide evidence of a mutual agreement against revocation.

While the court is free to find an implied agreement not to revoke a will, the court will not do so except in the clearest of cases. If parties intend to create mutual wills, with the accompanying agreement not to subsequently revoke the wills, they should do so in the clearest of express terms.

Thank you for reading.

Paul E. Trudelle - Click here for more information on Paul Trudelle.

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What happens if a Will gives a life interest in an estate to A, with a gift over to B, C and D, or their issue alive upon A’s death, and A decides to disclaim her interest in the estate?

This issue was considered in Clarke v. Di Bella, 2010 BCSC 505 (CanLII).

There, the testator made a Will that provided that until the death of the survivor of the testator or A, the Estate was to pay the income and capital, as the trustees may decide, to A. Upon A’s death, the residue was to be divided amongst B, C and D. If any of B, C or D was to predecease A leaving children, then that person’s share would go to their children.

A decided to renounce her gift, and have the residue pass to B, C and D immediately. That is, the gift to B, C and D would be accelerated.

The Public Guardian and Trustee opposed, taking the position that acceleration of the gift was contrary to the intentions of the testator, and that acceleration would disentitle the children of B, C and D from a possible inheritance.

The Court disagreed with the PGT’s position, and allowed the acceleration. It held that from a review of the case law, there were four clear principles that applied:

a.                  Acceleration is presumed unless there is an indication to the contrary;

b.                  In assessing whether there is an intention to the contrary, the court must look at both the instrument and the surrounding circumstances;

c.                  The instrument must be examined in its entirety, and clauses must not be examined in isolation; and

d.                  The intentions must be viewed, as nearly as possible, from what would be the views of the testatrix, applying an objective standard.

While many cases have disallowed acceleration, the court did not feel that the present circumstances prevented acceleration.

The court did, however, agree that the intention of the testatrix was that no beneficiary would receive a bequest before the age of 25, and imposed a restriction on distribution before the beneficiaries turned 25.

Thank you for reading.

Paul E. Trudelle - Click here for more information on Paul Trudelle.

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A Nova Scotia judge recently ruled that a lottery prize was not assumed to be mutual asset to be divided upon the breakdown of a common-law relationship.

The National Post recently reported on a man and a woman who had been living together for a number of years and had won $50,000 on a scratch-and-win ticket. The ticket had been purchased by the man. Notwithstanding the fact that the couple had previously shared winnings, the winnings were deposited into a joint account, and part of the winnings were used for a down payment on a property that they both owned, the court found that there was no prior agreement to share the winnings.

(In another recent Ontario case, the judge found that in absence of cogent evidence of a clear intent to share winnings, there will be no requirement to share.)

Had the couple been married, there would have been a presumption that the lottery winnings were joint.

In Ontario, s. 14 of the Family Law Act creates a presumption that in the case of married spouses, the fact that property is held in the names of spouses as joint tenants is proof, in the absence of evidence to the contrary, that the spouses intended to own the property as joint tenants, and money on deposit in the name of both spouses shall be deemed to be in the name of the spouses as joint tenants. The provision does not apply to common-law spouses.

What are the possible lessons from this?

1. If you are buying lottery tickets with someone else, be they a friend or unmarried spouse, have some agreement in place to share the winnings.
2. As Beyonce says, if you liked it, then you should have put a ring on it.

Thank you for reading.

Paul E. Trudelle - Click here for more information on Paul Trudelle.

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Estates law often has distinct legal meanings for common terms. Take the term "personal representative". The term is defined in estates statutes, but also appears with and without definition in business corporations statutes and other statutes. 

 

Adams v. Ontario (1996) provides that when the phrase "personal representative" is used in connection with a deceased and the administration of the deceased’s estate, it can have only one meaning, which is the meaning set out in the definition contained in the Estates Administration Act, the Trustee Act, and in the Succession Law Reform Act:

1(1) “personal representative” means an executor, an administrator, or an administrator
with the will annexed.

The term is therefore very broad: it includes both the executor (who may never receive probate) and the recipient of a Certificate of Appointment of Estate Trustee with a Will.

The same case acknowledges that the term “personal representative” can have other meanings when it is not applied to a deceased or the administration of a deceased’s estate, such as in Ontario's Business Corporations Act.

Thanks for reading,

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

 

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I don’t know about you, but I would be enjoying this heat wave a lot more if I wasn’t smack dab in the centre of the smog advisory zone. Although, I can’t really complain as I wasn’t one of the unlucky people stuck in elevator shafts during the power outage earlier this week without air conditioning. Ugh.

On the opposite end of the spectrum, going through a hot summer confined in a cold air-conditioned office is another form of torture in my view. Interestingly, an article in the July 2, 2010 edition of The Lawyers Weekly on room temperature gathered the following data from a survey of 95 US office buildings:

·                    When the air gets too chilly, productivity declines.

·                    Symptoms were found of, among other things, problems with upper and lower respiratory tracts, eyes, and skin as well as headache, fatigue, and difficulty concentrating.  These symptoms were increased by 50% in buildings kept below 23 degrees (often temperatures are set on the assumption that the building is full - research indicates usually 40 to 50% of employees are there).

·                    When people experience temperatures they feel comfortable with (usually warmer than cooler) they do more work and spend more time at their desks.

Some recommendations offered are setting room temperature in common areas to industry standards, placing thermostats in individual offices, and possibly adding a humidifier. 

 

I hope you all find your own way of beating the heat, and the cold. Have a great weekend!

 

Natalia Angelini - Click here for more information on Natalia Angelini.

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Estate litigators in Ontario know full well that the historical rule that costs are usually paid from the estate assets is no longer the case. They are seeing a trend in the case law that if the Court is of the impression that one of the parties to the dispute has behaved improperly at any stage of the litigation, including advancing a position not supported by the evidence, significant cost awards against that person could be made. 

Moreover, Judges seem to be increasingly exercising their discretion to ensure cost awards are subject to the overriding principle of fairness and reasonableness in light of all the circumstances of each particular case, as well as proportionate to the amount at issue. So even if one is successful and has conducted herself appropriately in the litigation, she may still have to absorb a portion of (and possibly all of) her legal costs.

We are also seeing evidence of this trend beyond our borders, notably in a recent Alberta decision, where the Court dismissed a son’s Will challenge in respect of his deceased father’s estate, and similarly dismissed his dependant’s relief claim. 

 

Notwithstanding his loss, the son sought recovery of his legal costs from the estate. The Court found, however, that he was to personally pay his costs as, (a) the testator did not cause the litigation, (b) the challenge to the testator’s capacity and allegation of undue influence were unreasonable, and (c) the son rejected reasonable offers to settle. Moreover, the son was Ordered to pay “double party-party costs” of his sister, a beneficiary and estate trustee of the estate (as a result of the Rules of Alberta that seem to bear some resemblance to our Rule 49).

 

I suppose this serves as another reminder to us all to keep this issue top of mind throughout the life of a dispute.

 

Thanks for reading and have a good day,

 

Natalia Angelini - Click here for more information on Natalia Angelini.

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My blog posts this week have been inspired by a Globe and Mail article that a summer student handed to me about the late Gail Posner’s trust provisions for her dogs, Conchita, April Maria and Lucia.

In yesterday’s blog I noted that while Wills are an opportunity for individuals to provide for their loved ones, there is no guarantee that our stated wishes for our beloved companion animals will be sacrosanct. For example, the late Leona Helmsley’s $12-million trust for her dog Trouble was reduced to $2-million by a Manhattan Judge on the ground that the deceased lacked capacity with regard to her Will and the Trust Agreement.

In the Globe and Mail article that inspired my posts this week, Barry Seltzer noted that Canadian legislatures may wish to consider “ante-mortem” probate as a way to ensure capacity does not become an issue in these cases. Ante-mortem probate is a technique used in certain states, including Arkansas, North Dakota, and Ohio, to validate a will while the person is still alive so that it cannot be contested once the person passes away.

In some cases, the wishes of a testator regarding his pets are contrary to public policy and, thus, are held to be void. For example, some pet owners have included clauses in their wills directing that their pets be euthanized upon their death (perhaps because they feel that their animals will be distraught without them). 

In one such case a testator (Mr. Clive Wishart) directed that the Royal Canadian Mounted Police (“RCMP”) shoot four of his horses. The RCMP refused and the matter was brought to a New Brunswick Court where it was held that the direction to shoot “four healthy animals” was contrary to public policy because doing so would serve “no useful purpose” and “would be a waste of resources and estate assets even if carried out humanely.” 

For those of you interested in reviewing the case, the citation is: Wishart Estate (Re), [1992] N.B.J. No. 547.

Thank you for reading!

Kathryn Pilkington - Click here for more information on Kathryn Pilkington.

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The Ontario Bar Association (OBA), Trusts and Estates Section, year end dinner was held on June 1, 2010 at Archeo (Distillery District) in Toronto. 

Suzana Popovic-Montag, the Chair of the Section for the past year, brought the past year to a close and the election of the OBA, Trusts and Estates Section Executive for the 2010/2011 year, was confirmed. 

The Section also paid tribute to this year’s recipient of the Award for Excellence in Trusts and Estates, Hilary Laidlaw.

The Award for Excellence was created to recognize exceptional contributions and achievements by members of the OBA to the area of trusts and estates. The criteria for the award is demonstrated leadership in the trusts and estates bar through knowledge, experience, skill, commitment, passion and strength of character, plus all or some of the following:

·         academic excellence through teaching at the Bar Admission Course, lecturing at a law school, participating in Continuing Legal Education and/or academic writing;

·         participation in the OBA Trusts and Estates Section Executive or the Law Society of Upper Canada on wills, trusts and estate matters; and

·         contribution to the development of wills, trusts and estate law.

In addition to the Award for Excellence, Lionel Smith was awarded with the Widdifield Award and Sender Tator was presented with the Hoffstein Book Prize.

Congrats to Hilary, Lionel and Sender.

In addition, there was a tribute to The Honourable Mr. Justice Maurice Cullity, who is retiring this year.

It was a wonderful change of venue for the dinner and a very enjoyable evening.

Thanks for reading.

Craig R. Vander Zee - Click here for more information on Craig Vander Zee.

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If you are working in Ontario by now you should be aware of Bill 168, the new workplace violence and harassment legislation, which came into force last week. 

An interesting article in the June 14, 2010 edition of the Law Times notes that Premier McGuinty’s government introduced the legislation in part in response to the murder of nurse Lori Dupont in 2005 in her workplace by her former boyfriend, an anesthesiologist at the hospital. The hospital had reportedly known of the doctor’s escalating harassment of Lori, but did not discipline him – they were supposed to work together the day he fatally stabbed her.

We should all be pleased with the introduction of the Bill, and I hope it has a positive impact on the health and safety in workplaces. Notably, breaches can attract fines of up to $500,000 for companies and up to $25,000 or 12 months imprisonment for individuals. Not something to take lightly.

Despite its importance, employers have apparently been having real difficulty complying with the new legislation by the June 15, 2010 deadline (just six months after the Bill received Royal assent). It seems many employers have not addressed their obligations in time, perhaps because they underestimated the amount of requirements they need to comply with, or possibly because they didn’t realize that a “wait and see” approach would not do as Bill 168 requires positive steps on the part of employers. Such requirements include:

-          conduct a risk assessment for violence and harassment in the workplace;

-          develop policies addressing the risks identified; and

-          complete staff training.

Are you ready?

Natalia R. Angelini - Click here for more information on Natalia Angelini.

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In our litigation practice, it is not uncommon to obtain orders permitting clients to register a Certificate of Pending Litigation (CPL) against title to property that is, for instance, an estate asset that one party is seeking to preserve until the litigation is concluded. 

If the litigation stagnates, which can happen from time to time, without reminders in place it is possible for the registered CPL to be left unaddressed. A recent decision in Novia v. Saccoia Estate (Trustee of) illustrates the impact of such a delay. 

The facts of the case are interesting and somewhat complicated, so I am drastically simplifying them here. In short, a dispute arose between a couple over the purchase of a property. A claim was commenced in 1988. A CPL was obtained in 1989. The plaintiff took no further steps in the litigation. The CPL remained on title for a while….oh lets say, until 2010! In 2006 the defendant passed away. In 2010 the estate trustee of the defendant’s estate brought a motion seeking to dismiss the action for delay (how the litigation had not previously been dismissed for delay by the Registrar is a surprise to me). 

The Court reviewed the applicable case law and, based on the evidence before the Court, it found that the delay was inordinate, contumelious and intentional. It also found that the prejudice caused was presumed and actual, as the defendant was no longer able to testify. Accordingly, the action was dismissed and the CPL discharged.

While the facts of this case are uniquely interesting, in my view this case generally serves as a good reminder to all of us to keep an eye on any CPL obtained and properly address its treatment over the life of the litigation.

Have a good day,

Natalia R. Angelini - Click here for more information on Natalia Angelini.

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I could not help but do a double-take when I came across an article with the above-captioned title in the Law Times (June 7, 2010 issue).

It was reported that in 2004, a Toronto lawyer was charged by the Law Society of Upper Canada (LSUC) with professional misconduct for conflict of interest while acting as an estate trustee and solicitor without adequate disclosure to the beneficiaries. It was also alleged that he breached his fiduciary duty as trustee by making several imprudent unsecured loans from the estate. It seems that the line between acting as estate trustee versus acting as lawyer for the estate may have been blurred in this case.

In 2008, the lawyer was found guilty, and he received a two-month suspension and a lifetime prohibition from acting for both borrowers and lenders in private mortgage transactions. The lawyer appealed the decision.

The appeal panel, with Larry Banack writing for the majority, granted the appeal. It found that the original proceeding had “compromised the appearance of fairness” and created a “reasonable apprehension of bias”.  This conclusion appears to have been based on the determination that interventions by the original panel during the lawyer’s oral testimony gave the appearance of “descending into the arena and assuming the role of the prosecution”. This is a departure from the proper role of neutral fact-finder.

This seems to be one of the first times, if not the very first time, that the LSUC appeal panel has made a finding of reasonable apprehension of bias. This decision is also noteworthy given that it involves benchers on the appeal panel being called upon to find against fellow benchers comprising the original panel. As noted in this article, this demonstrates that the LSUC can be very fair in its self-regulating function.

Have a good day,

Natalia R. Angelini - Click here for more information on Natalia Angelini.

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I recently read an article named “The Lessons of Famously Bad Estate Planning”, authored by Steven Morelli. This article looks at disasters that have followed celebrities because of the absence of a properly planned Will.

Jimi Hendrix died without a Will which started a family war that would end up in court for more than 30 years.

Sonny Bono, an American record producer, singer, actor, and politician, died without a Will. It is mind blowing that someone so successful would not have a carefully planned Will. Of course, numerous people lined up to advance claims against his estate, which included Cher, and the inevitable love child. Sonny could have saved his widow and everyone else involved a lot of grief and aggravation if he had taken the time to do some simple estate planning.

For those of us who have taken the time to prepare our Wills, Mr. Morelli reminds us of the importance of updating our Will. For instance, Anna Nicole Smith died with a Will; however, her Will contained a provision which specifically excluded “future children” from benefiting from her estate. This clause had the effect of leaving her entire estate to her now deceased son, and disinheriting her five month old daughter. A judge eventually fixed this estate mess, but it came at an unnecessary expense.

Mr. Morelli puts it perfectly: “The essence of estate planning: control. Whether it involves celebrities maintaining their image for all posterity, or wealthy land-owners keeping their families’ holdings intact, estate planning protects clients’ control. Quite often people don’t want to discuss estate planning because it involves their death. But clients should understand that it is essential to maintaining their family’s stability and dignity.”

Thank you for reading,

Rick Bickhram - Click here for more information on Rick Bickhram.
 

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Recently, I was looking over some of the leading cases in life estates. One of the questions that stood out in my mind was whether or not a life estate has a quantifiable value.

Aho v. Kelly, was heard in British Columbia in 1998, but remains a leading Canadian case that is often referred to when the valuation of life estates are being considered.

In Aho v. Kelly the wife and two children of the deceased were each left a 1/3 interest in the matrimonial home of the deceased. The court confirmed that the wife of the Deceased also held a life interest in the same matrimonial home, as per the jurisprudence in British Columbia. The wife commenced an application seeking a court order that the property be sold and the proceeds be unequally divided amongst the three owners of the property.

The wife argued that the proceeds should be unequally divided because she was entitled to further compensation as she had to be paid out for her life interest.

The Court held that a life estate is a property interest that has “some value”. The Honourable Justice Bauman stated that at common law a life estate is alienable, and that upon its transfer to another party it becomes an “estate pur autre vie” (that other life being the original life tenant). The Court concluded that the life interest has a value capable of capitalization, and that this value should be paid out of the proceeds from the sale of the house.

Aho v. Kelly is not binding in Ontario, however it goes a very far way in establishing the framework by which the value of the life interest can be calculated.

Thank you for reading and have a great day,

Rick Bickhram - Click here for more information on Rick Bickhram.
 

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Stieg Larsson’s latest book, The Girl Who Kicked the Hornet’s Nest, came out last week.

Earlier, Diane Vieira blogged here on the estate of the best-selling author, who died in 2004. Diane noted that Larsson’s common-law spouse of over 30 years received nothing from Larsson’s estate. Larsson died without a valid will, and his estate, estimated presently as having a value of $30 million, passed on an intestacy to his father and brother. Under Sweden’s inheritance laws, the common-law spouse received nothing, and did not have a claim against the estate.

In a lengthy New York Times Magazine article entitled “The Afterlife of Stieg Larsson”, Charles McGrath reports in detail on the life and events subsequent to the death of Larsson.

McGrath notes that Larsson died without a valid Will. (Apparently, Larrson did leave a 1977 will, in which he leaves his estate to the Socialist Party in Umea: the will was not witnessed and is said to have no legal validity.) Although his long-time companion, Eva Gabrielsson, received nothing from his estate, she has become an object of intense sympathy in Sweden.

Gabrielsson also has a laptop containing ¾ of a fourth novel by Larrson, and possibly an outline for others. Larsson’s estate offered to give her their half of Larsson’s apartment in exchange for the computer, but Gabriellson refused. Last November, the estate apparently offered her $2.6 million for the computer, but Gabrielsson didn’t respond.

McGrath states that while Gabrielsson has no claim, she has asserted “a kind of moral entitlement”. In a National Post article, Gabrielsson is said to be claiming that she co-authored the books.

As is usual in these types of matters, great animosity has developed between the spouse and the estate.

Thank you for reading.

Paul E. Trudelle - Click here for more information on Paul Trudelle.

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Yesterday, I discussed Fort Sackville Foundation v. Darby Estate, 2010 NSSC 27 (CanLII). Today, I will discuss the matter of the costs of the proceedings, reported at .Fort Sackville Foundation v. Darby Estate, 2010 NSSC 45 (CanLII)

The court had dismissed the application by the charity for a declaration that it was the successor charity, or that it was entitled to the bequest upon the application of the cy-pres doctrine.

The charity requested solicitor and client costs from the estate. The successful residual beneficiaries suggested that the charity should receive no costs at all, or at best, party and party costs. The residual beneficiaries noted that any award of costs would come from their entitlement under the estate, and thus, in effect, the successful parties would be paying the unsuccessful party’s costs.

The court awarded solicitor and client costs to the charity. The court noted that the “dispute” was created less by the parties, and more by the wording used by the testator, which wording “fuelled” the issues. Although the arguments of the charity failed, they were “justified” arguments, and arguments “based on reason”.

In Ontario, the court has made similar costs rulings in circumstances where it can be said that the parties have acted reasonably in bringing the matter before the court. However, a different outcome might result if the court was of the view that one of the parties acted unreasonably.

Thank you for reading.

Paul E. Trudelle - Click here for more information on Paul Trudelle.

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John Darby died in 2008. In his July 2007 Will, he left his residence and contents to the “Heritage Society of Bedford” [Nova Scotia] on specific conditions. The conditions included a requirement that the Society commit to retain his property and contents as a heritage property; a commitment to use the building to house a museum or some other specified uses; to make such commitments within 1 year; and to open the residence for the stipulated purposes within 3 years. If they did not, the property was to fall into the residue.

However, at the time of his death (or at the time of the making of the Will, for that matter), there was no entity known as the “Heritage Society of Bedford”. There was a charity known as the “Bedford Heritage Society”. However, that charity disposed of its assets and surrendered its certificate of incorporation many years earlier.

The Fort Sackville Foundation claimed that it was the successor charity. The court rejected this claim, holding that there was no amalgamation. While the court will take a broad approach to legal successorship in such circumstances, it cannot find a successor where an entity ceased to exist.

The court went on to consider whether the doctrine of cy-pres applied. The doctrine will be applied where:

a.      the gift as it stands is either impossible or impractical to effect; and

b.      the donor expressed a general charitable intent in making the gift.

The court held that neither test had been met. 

As to the first branch of the test, the gift was not impossible or impractical to effect. Because the gift provided for a gift-over, it could readily be given effect.

As to the second branch, the conditions of the gift narrowed the focus of the gift so as to take away a general charitable intent. The purpose of the gift was to preserve the deceased’s property. If that could not be done, the proceeds were to pass to the residual beneficiaries. Thus, it was held that there was no general charitable intent.

As a result, the proceeds of the sale passed to the residual beneficiaries.

See here for the reported decision.

Tomorrow, I will turn to the issue of costs.

Thank you for reading.

Paul E. Trudelle - Click here for more information on Paul Trudelle.

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In honour of Victoria Day, celebrated in Canada on the last Monday of May on or before May 24, and considered the first long weekend of the summer, I thought I would consider the terms of the last Will and Testament of Queen Victoria.

Queen Victoria was born on May 24, 1819, and died on January 22, 1901. She became Queen at the age of 18, and reigned as monarch for over 63 years, being the longest reigning monarch in history. She had 9 children (she was predeceased by 3 of her children), including her successor to the throne, Edward VII.

Unfortunately, very little information can be found online about Queen Victoria’s Will. However, while searching, I discovered that a legacy of sorts was recently sold at auction in Scotland. Queen Victoria’s stockings (circa 1870) were sold earlier this year for 8,000 pounds (about $12,000 CDN).                                                    

The prior owner, Mary Youings, said that her late mother gained possession of the stockings around 1910. She said that she did not know the circumstances of how her mother gained possession of the stockings. The Telegraph reported that upon Queen Victoria’s death, her undergarments and much of her wardrobe were distributed to members of the royal household.

In July, 2008, Youings sold a pair of Queen Victoria’s 50” waist bloomers for 4,500 pounds.

I hope you enjoyed your Victoria Day Weekend, and got a “leg up” on summer.

Paul E. Trudelle - Click here for more information on Paul Trudelle.

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The Sunday Times recently reported that two women were arrested for trying to push a dead relative strapped to a wheelchair onto a flight leaving out of Liverpool John Lennon Airport.  The charge - suspicion of failing to give notification of a death.

Police were apparently called when staff at the check-in desk became suspicious about the elderly man in the wheelchair. He was partially hidden behind sunglasses and did not appear to be moving.  While staff were told he was sleeping, it turns out he had been dead for some time.

It was reported that the ladies were likely attempting to evade the complex and costly process of repatriating human remains abroad - bodies being repatriated by air are required to be contained inside hermetically-sealed zinc-lined coffins and kept in the cargo hold for the duration of the journey. It is also necessary for the proper paperwork to be in place.

It is amazing the lengths these ladies went to to avoid abiding by the rules and regulations one has to adhere to before transporting human remains to a foreign country. Truly a bizarre tale!

Have a great weekend,

Natalia R. Angelini - Click here to learn more about Natalia Angelini.

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The Honourable Justice Brown has in recent months released several Endorsements that appear to be achieving the objective of assisting counsel and the Toronto Region Estates Office by clarifying and streamlining procedural requirements in certain estate matters.

One recent example of this arises out of the Armstrong decision, where after eight months of exchanges with the Toronto Region Estates Office, a non-resident applicant (residing in New Brunswick) had not been granted a Certificate of Appointment of Estate Trustee with a Will. The matter was then sent to a judge for consideration, thereby landing in the lap of Justice Brown. 

After consideration of the facts, including (a) the language of the applicable legislation; (b) that consent of the majority of the persons resident in Ontario had been obtained; and (c) that a bond had been posted in an amount equal to the full value of the estate; His Honour granted the request for a Certificate of Appointment.

While some could view this as a “better late than never” type of situation, as Justice Brown remarks, timely processing of such requests constitutes a critical service provided by the government to the public so they can deal with the assets of a loved one. The goal, therefore, is to achieve a turn-around time of no more than three or four weeks for the issuance of Certificates of Appointment.  

While admittedly this case was not the usual application thereby requiring judicial consideration, it seems we are on our way!

Have a good day,

Natalia Angelini - Click here to learn more about Natalia Angelini.

 

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In Re Estate of Michael O’Flynn, 2009 CanLII 57149 (ON S.C.), the Honourable Justice Brown encouraged the development of a culture of common sense in processing applications for certificates of appointment of estate trustee. This approach is further illustrated in the recent decision in Re Estate of Daniel O’Donnell, 2010.

In Re Estate of Daniel O’Donnell, the date of Mr. O’Donnell’s death was mistakenly listed as May 1, 2009 (not May 2) on the application for a certificate of appointment and resulting certificate. This mistake did not stop the administration of the estate. Mr. O’Donnell’s Will named Mr. Wilson as the sole estate trustee and sole beneficiary, and Mr. Wilson distributed virtually all of the estate assets to himself. He died a short time later, in July 2009. The administration of Mr. O’Donnell’s estate was yet to be completed, but the alternate estate trustee in Mr. O’Donnell’s Will had renounced her right to act. 

Accordingly, the named estate trustee for Mr. Wilson’s estate, Ms. Thomas, applied for a certificate of appointment as succeeding estate trustee with a will for Mr. O’Donnell’s estate. The application materials filed by Mr. Wilson’s estate trustee listed May 2, 2009 as Mr. O’Donnell’s date of death. The original error in the date of death went unnoticed for some time.

When the mistake in the date of Mr. O’Donnell’s death was finally identified, the Toronto Estates Office took the position that the applicant should bring an ex parte motion to correct the error made in the original certificate before the second certificate could be issued. Ms. Thomas argued, among other things, that she should not have to bear the cost of correcting a mistake she had not made and that the cost of preparing such a motion was out of proportion to what was at stake in the succeeding application (the succeeding application was only needed to complete tax filings and distribute the remaining assets valued at only $1,000.00.) 

Justice Brown’s solution was as follows. If the Estates Office identifies a discrepancy in the date of death between the original certificate and the application for a succeeding certificate, it should request an affidavit from the applicant that confirms that a mistake was made on the original certificate and attests to the correct date of death. Upon receiving such an affidavit, the Estates Registrar can then process the application for a succeeding certificate using the corrected date of death, and make any required changes to the original certificate and Ontario’s central registry which records information regarding estates. 

Thanks for reading,

Bianca V. La Neve - Click here to learn more about Bianca La Neve.

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Hull and Hull LLP is the proud sponsor of a corporate team in this years’ Paddle the Don event.

This annual event, put on by Toronto and Region Conservation, allows canoeists to paddle down the Don River, from Eglinton to the mouth of Lake Ontario. 

In addition to allowing us to enjoy a day in nature within the city, the event serves as a fundraiser for Don River regeneration projects. 

The river is making a magnificent recovery, and is not the Don River that it was in the 1970’s. It is becoming more like the Don River as it was in the 1870’s. In my neighbourhood, near a tributary near Finch Avenue, trout have been spotted. Beaver are returning to the area, and deer have been seen on many occasions. 

For more information on the Paddle the Don event, visit Paddle the Don. 

Unfortunately, the event is fully booked for this year. However, it still is possible to contribute. To sponsor our team, visit Paddle the Don - 2010 : Volunteer Page

Thank you.

Paul E. Trudelle - Click here to learn more about Paul Trudelle.

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As an avid sports fan, I enjoy watching the physical nature of most sports. Recently, our media has reported on the severity of head injuries, which are caused by “head shots”, and the need to implement rules in professional sports to prevent catastrophic head injuries from happening.

Alan Schwarz, an author for the New York Times, recently wrote an article about a loophole in the California workers compensation system that allows retired professional athletes to file a claim for injuries sustained decades before, particularly retired N.F.L. players.  

Schwarz states, “Most states require workers’ compensation claims to be filed within one to five years of the injury; California’s statute of limitations does not begin until the employer formally advises the injured worker of his or her right to workers’ compensation.” Also, California’s workers compensation statutes “require a professional athlete to have played only one game of his or her career within state borders to file a full claim for cumulative injuries.” The logical policy reason behind this legislation is to protect outside workers who temporarily pass through the state, like truckers or flight attendants.

As you can imagine, this loophole has opened the flood gates for retired athletes to file their workers compensation claim. In fact Schwarz states that “about 700 former N.F.L. players are pursuing cases in California, according to state records, with most of them in line to receive routine lump-sum settlements of about $100,000 to $200,000.”

What makes Schwarz’s article interesting is the claim filed by Ralph Wenzel. Wenzel has filed a claim arguing that his dementia at 67 years of age is related to his career as an N.F.L. lineman between the years of 1966 to 1973. The theory of Wenzel’s case is that “hitting your head over and over on the football field causes certain conditions.” In fact, researchers at “at the University of North Carolina have recently linked pro football careers and concussions with heightened rates of depression, mental decline and Alzheimer’s disease.” 

As we continue to see a rise in those who are diagnosed with dementia and Alzheimer’s, I think it will be interesting to see how the sporting industry reacts to this disease, particularly, the rules each professional league implements to eliminate “head shots.”

Thank you for reading.

Rick Bickhram-Click here for more information on Rick Bickhram

 

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Shortly after Farrah Fawcett’s death in June 2009, there was some controversy over the terms of her last Will. The bulk of her estate was apparently left in a lifetime trust for the benefit of her 24-year-old son, Redmond. The purpose of the lifetime trust, which Redmond will never personally control, is to provide support to him during his struggle with drug and alcohol addiction. Part of Fawcett's estate was also left to her father, and The Farrah Fawcett Foundation, a private foundation founded by Fawcett in 2007 and dedicated to funding cancer research. Nothing was left to Fawcett's long-time partner and the father of Redmond, Ryan O'Neal. 

There is now renewed controversy involving the late actress’ estate. Fawcett’s estate recently sued the producer who collaborated on a documentary with her, claiming, among other things, that he misused her company's funds. The producer has retaliated, claiming in his responding materials that the estate has withheld money from some of its beneficiaries and that the lawsuit against him is an example of the estate trustee’s misuse of estate funds. 

Surely, Farrah Fawcett did not wish for her estate to be embroiled in controversy but as we who practice estate litigation know all too well, testators can never fully control events surrounding their assets and estate after death.  

Thanks for reading,

Bianca V. La Neve - Click here for more information on Bianca La Neve

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As noted in past blogs and podcasts, the modern rule that “costs follow the event” also now generally applies to estate litigation. However, as demonstrated by a recent case out of Alberta, there are still instances where an unsuccessful party will not be held responsible for the costs of the successful party and will also recover their own costs from an estate. 

In Re Foote Estate, the Deceased’s widow and children had commenced an application for the advice and direction of the Court as to the Deceased’s domicile (i.e. where, legally, the Deceased lived) as well as the validity of a “poison pill” clause in the Deceased’s Will (i.e. a provision disinheriting a beneficiary who challenged the Will). The widow and children wanted to commence support claims against the estate, and were concerned about the poison pill provision. They also realized that the Deceased’s domicile at his death would determine the applicable law with respect to their support claims. The Deceased had been born, raised and ultimately died in Alberta, but he had obtained permanent residency status on Norfolk Island during his life. He also had a significant connection to British Columbia. The widow and children argued that the Deceased had been domiciled in Alberta or British Columbia at the time of his death. The executor and the two residuary beneficiaries (both charities) argued in favour of Norfolk Island. A three-week trial was held and Justice Graesser ruled that the Deceased was domiciled on Norfolk Island, an Australian territory, at the time of his death. 

The respondents, as the successful parties, subsequently sought their costs against the applicants, Deceased’s widow and children. The latter, although unsuccessful in their application, sought their costs from the estate, valued at over $100 million. 

After a thorough review of the law concerning costs in estate litigation and its application to the case at hand, Justice Graesser ultimately held in his costs decision that the matter clearly fell within the exceptions to the modern rule. Accordingly, the executor and the residuary beneficiaries were not entitled to recover any of their costs from the applicants, the widow and children. As for the applicants, Justice Graesser ruled that this was an appropriate case for them to recover their costs from the estate, as, among other factors, the Deceased’s conduct caused the litigation, the applicants prosecuted the litigation in a diligent and efficient manner and there was no basis to criticize their conduct.

Thanks for reading,

Bianca V. La Neve - Click here for more information on Bianca La Neve

 

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Last year, I blogged on the controversy surrounding the estate of the late boxing champion, Arturo Gatti. The Montreal-born boxer and two-time world champion had died July 11, 2009 at a posh Brazilian seaside resort. Controversy surrounded his death, with his young widow initially suspected of killing him. Brazilian officials later ruled Gatti committed suicide by hanging himself with a bag strap.

At issue in this estate fight is the validity of two Wills that distribute the late boxer’s estate in very different ways. Gatti’s young widow, Amanda Rodrigues, has submitted a 2009 Québec Will that leaves Gatti’s entire estate, estimated to be $6 million, to her. An earlier 2007 Will signed in New Jersey leaves the bulk of the estate to Mr. Gatti’s mother. 

In November 2009, Gatti’s young widow was awarded $40,000.00 to cover legal fees and child care costs for their baby son. In that decision, the judge urged the warring parties to settle to avoid a lengthy and costly court battle that could eat away at the estate. It appears that this advice has gone unheeded, as both sides have continued the fight. 

In a recent decision out of Québec, Ms. Rodrigues was awarded a further $100,000.00 from the estate. She received the money as financial compensation for the legal fees she was forced to pay following the former boxing champion's death. She also received $2,000 a month in child support payments for the couple's 18-month-old son. This is in addition to the $2,500 per month already awarded to her by a New Jersey court. The final bell won’t be ringing anytime soon in this estate fight!

Thanks for reading,

Bianca V. La Neve - Click here for more information on Bianca La Neve

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Collaborative Practice is a concept and practice that for some time has been familiar to and used by family law lawyers in Ontario (since about 2000), but to date has not formed part of any estate lawyer’s practice.  This may be changing soon. 

On April 7, 2010 an information session is being offered to estates lawyers, where the nuts and bolts of Collaborative Law will be shown, together with how it might apply in an estates practice - whether as a litigator or an estate planner.

Collaborative Practice Toronto’s website and The Collaborative Family Lawyers of Canada website are helpful places to look if you want to learn more about this unique model being applied in the family law context.  These sites note certain objectives, components and benefits to such an approach, which include:

·         resolve family law disputes without going to court or threatening to go to court (spouses and both collaborative lawyers sign a contract agreeing not to go to court);

·         find and focus on your common interests;

·         remain focused on the best interests of children;

·         understand each other's concerns;

·         ensure full and complete disclosure of all important information;

·         negotiate in a principled, dignified and respectful manner;

·         use informal discussions and conferences to settle all issues;

·         explore as many options for settlement as possible;

·         reach creative resolutions that best meet the goals and priorities of the individual family; and

·         spend less time and money to settle matters (this practice is generally less expensive than litigation).

There are certainly differences between the dynamics and factors at play in estates disputes versus family law matters. It will be interesting to see if this practice will be formally introduced in the estates bar and, if so, whether it will be a workable and beneficial mechanism for all concerned. 

Have a good day,

Natalia R. Angelini - Click here for more information on Natalia Angelini

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In Re Estate of John Mitchell, the Endorsement of The Honourable Justice Brown clarifies expectations of the court in respect of requests for increased costs on unopposed applications to pass accounts, as the Rules of Civil Procedure contain some ambiguity in this regard.

His Honour notes that Rule 74.18 specifies the materials that must be filed initially on an application to pass accounts and where the application will be unopposed and proceed without a hearing. 

However, the Rule does not expressly stipulate the materials that should be filed where the application will proceed unopposed, but with a request for increased costs so that a hearing must be held. His Honour states that the applicant should ensure that the following materials are filed with the court in such situations:      

·                    proper initial application materials: Rule 74.18(1);

·                    a supplementary application record containing materials specified by Rule 74.18(9);

·                    additional evidence (a simple affidavit) that contains:

·                    the request for increased costs in proper form;

·                    proof of service of the request on all affected parties;

·                    a statement explaining the responses of affected parties to the request; and

·                    the details of and the reasons for the request, either through a detailed bill of costs or an easily understandable copy of the relevant dockets.

His Honour also stresses the importance of this last requirement, as a court cannot conduct a review of the request to ensure it is fair and reasonable without evidence describing the work performed, the time spent, the value of the work or the cost of such work.  Adequate evidence is essential.

Have a good day,

Natalia R. Angelini - Click here for more information on Natalia Angelini

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I came across an interesting article by John Archer in the Gazette about real-estate investing in the U.S. Mr. Archer warns that while it has become a buyers' market, real-estate investing in the U.S. can leave Canadian speculators and leisure-property owners exposed to a variety of problems. Notably, this is what the article details as things to consider:

·                    Prices - in spite of the drop in property values, there remains a lot on the market at a wide range of price levels; the slump may last into 2011, so you may not want to buy too early;

·                    Insurance – inquire into home insurance costs when calculating overall affordability (e.g. the frequency of hurricanes attacking the Florida coast has lead to higher insurance premiums for seaside properties);

·                    The dollar – while the Canadian dollar is nearing par with the U.S. dollar, keep in mind the possibility of our currency declining, and the impact of expenses such as condo fees and property taxes etc. no longer being as affordable;

·                    Liquidity – consider whether your prospective new property can be easily sold; if not, your estate may be left with an asset that is difficult to sell, which could delay the administration;

·                    Taxes – as a departure from the norm, there are no U.S. estate taxes in 2010 (legislators are pondering this issue); pay attention to developments in this area;

·                    Probate fees – probate fees in some states also might be applied to the property upon your death; consult with your cross-border tax adviser, and ensure that you have a valid will and power of attorney that address your U.S. property (preferably drafted in the state where it is located); and

·                    Rental cost - if you rent out the property, you will be subject to U.S. income tax on the U.S. rental income; this might mean an additional accounting expense to file dual tax returns.

In spite of all this, Mr. Archer notes one neat tax angle when buying a property in the U.S.  It could still qualify as your principle residence for the purpose of using the principle residence exemption, as long as the usual criteria are met, which could result in a reduction or elimination of capital gain tax.

Have a good day,

Natalia Angelini

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As I have been practising in the area of estate litigation for a few years, I occasionally think that I have seen it all; that every recurring story I hear about a family war tends to lose its originality. Not true. Take for instance a recent story that was posted online in the Telegraph, involving a U.S. estate fight.

Tasha Tudor was from New England and has been described as the “unconventional Martha Stewart.” Ms. Tudor died at the age of 92 following complications from a stroke.  The basis of Ms. Tudor’s estate dispute centers on her decision to leave almost her entire estate to her eldest son, virtually cutting out her three other children. 

The oldest son argues that his late mother intended to cut out his three siblings from her estate because they were estranged from her. One of the siblings, a U.S. Air Force lawyer, who claims he was not estranged from his late mother, has asserted that the 2001 Will is invalid on the basis that his older brother unduly influenced his late mother.

The dispute has gotten so acrimonious between the siblings that they could not even agree what to do with their mother's ashes. On motion to the Court, it was ordered that Ms. Tudor’s ashes be divided in half, with one-half to be given to the oldest son and the other half to his siblings. Lawyers are now fighting over who is responsible for a snow plough bill!

It is reported that some of the last words by Ms. Tudor were “Oh, will there ever be a cat and dogfight when I die. But I don't care. I won't be here to see it.” 

It is often difficult to comprehend the harsh realities of litigation until you step into the shoes of one of the parties. I wonder if Ms. Tudor were alive to witness the severity of this dispute whether she would take back those words?

Thank you for reading

Rick Bickhram

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Sara Crosbie, a writer with the Globe and Mail, recently published an article on the succession planning crisis looming over Canadian family businesses. In her article, Ms. Crosbie refers to a study completed by Deloitte and Touche, which indicates that two-thirds of Canadian families have no written contingency plans to guide them through a disability or death.

To understand the importance of family businesses to the Canadian economy consider the following study which was completed by Deloitte and Touche and found that “family businesses have 4.7 million full-time employees, 1.3 million part-time workers and sales of around $1.3 trillion.”

Ms. Crosbie states that the lack of succession planning could be attributed to the idea that most parents think, “there's nothing here to pass on”, but the children think, “actually, I'm quite interested in taking it on.” 

Dr. Pramodita Sharma attributes the lack of succession planning to the fact that “money and mortality conversations don’t usually take place until the head of a business is gravely ill. By then, it’s too late to start talking.”

Regardless of the cause, the consensus on resolving this looming crisis is rather simple, communication. Dr. Sharma says “Succession planning is either passing to the next generation of your family, passing to employees … selling it, to be merged or acquired by someone or it could be closing the business down.  That needs preparation, too. You want to get the maximum value out of the business so it has to be a pro-active succession plan. You don't want death to be the succession plan.”

Thank you for reading and have a great day.

Rick Bickhram

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Mr. Justice Brown recently considered whether to apply the doctrine of cy-pres in the matter of The Bank of Nova Scotia Trust Company v. Common Ground Women’s Centre, CanLII 2010 ONSC 63.

(The doctrine of cy-pres is discussed in Megan Connolly’s blog, here.)

In Common Ground, the deceased died in 2007, leaving a will dated 1997. The deceased’s will provided that the residue of her estate was to be divided “in equal shares among the following organizations which shall be in existence at my death…”, and went on to list 18 charities, one of which was “Common Ground Women’s Centre, 736 Bathurst Street, Toronto”. 

As it turned out, Common Ground Women’s Centre was in fact a charity, and had not been dissolved as at the date of death. However, it had ceased operations in or about 1997, and it had lost its charitable status.

An application to the court for directions was brought by the Estate Trustee. The following issues were raised in the application:

1. Was Common Ground in existence at the time of death?
2. If not, did the gift lapse, resulting in a partial intestacy, or did the doctrine of cy-pres apply?
3. If the doctrine of cy-pres applied, to whom should the Common Ground share be paid to?

As to the first issue, the court held that although Common Ground continued to have “legal” existence, the deceased’s wording of the Will was such that she intended that the charity be able to apply the gift to charitable purposes. Thus, the intention was that the charity be active and operating at the time of death: Common Ground was not.

As to the second point, the court found that the issue of determining whether there was a lapsed gift or whether the cy-pres doctrine applied did not arise. Rather, the specific language of the will, requiring that the charity “shall be in existence” avoided the problem.   As Common Ground was not in existence, the residue passed to the remaining 17 charities, in equal shares.

Thank you for reading. Have a great weekend.

Paul Trudelle

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Brittany Murphy, the star of many TV shows and movies (and, as I have just discovered, the voice of Luanne on TV’s The King of the Hill) died on December 20, 2009 at the age of 32.

It has just been disclosed that she has left her estate to her mother, Sharon Murphy. Her husband, with whom she was living, is expressly left out of the will. Her will, it is said, read: “I am married to Simon Monjack who I have intentionally left out of this will."

Monjack is reported to have requested that this clause be put in Murphy’s Will, which was made shortly after their marriage in 2007. In a prior handwritten will, Murphy also left her estate to her mother.

In Ontario, a married spouse who does not receive adequate provision under a spouse’s will has several options (should they choose to remedy the insufficient or non-existent bequest). The surviving spouse would have the right to elect for an equalization under the Family Law Act, or for support under the Succession Law Reform Act. The surviving spouse may also have a claim on the basis of a constructive trust, or proprietary estoppel.

Thanks for reading.

Paul Trudelle

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Sometimes confusion arises as to the distinction between commissioners for taking affidavits, and notaries public.

In Ontario, affidavits for use in court must be commissioned by a person authorized to administer oaths or affirmations.   The Commissioners for Taking Affidavits Act, R.S.O. 1990, c. C.17 stipulates how a person becomes authorized as a commissioner for taking affidavits. Any lawyer in Ontario is, by virtue of that office, a commissioner for taking affidavits in Ontario. There are other specific groups (such as judges or MPs) who are commissioners ex officio. Others can be appointed by the Lieutenant Governor as commissioners. Such appointments are limited in duration, and may be limited as to territory or purpose.

In other circumstances, documents or signatures often need to be notarized by a notary public. In our practice, banks and other institutions usually require an original of a document such as a power of attorney, will or Certificate of Appointment, or a notarial copy of it, before they will act on it.

Unlike commissioners for taking affidavits, lawyers are not automatically notaries public. Notaries are appointed pursuant to the Notaries Act, R.S.O. 1990, c.N.6. Notaries are also authorized as commissioners for taking affidavits in Ontario. To become a notary, an application must be made and the appropriate fees paid. The current fee for a lifetime appointment for a lawyer is $145. Lawyers do not need to take an examination to become a notary: anyone other than a lawyer must complete an examination. Applications may be requested from the Ministry of Government and Consumer Services, Official Documents Services, 9th Floor, 77 Grenville Street, Toronto, Ontario, M5S 1B3. The telephone number is 416-325-8416.

Thank you for reading.

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Last week I heard a report on CBC Radio, and read an article in the Globe and Mail about a new website, Please Rob Me, that takes information posted on Twitter from a location-sharing program Foursquare and posts it, showing when people are not home.
 

The point behind the website is to drive home the message that sharing too much information may be harmful, and can be easily misused.
 

However, as noted in the Globe article, break-ins are usually crimes of opportunity, and in most cases are not highly planned.  There are many low-tech ways of determining whether someone is home or not.
 

The story and the website reminded me of what was most likely an urban legend that I heard a long time ago to the effect that robbers  would review obituaries and determine the time of a deceased's funeral. They would then look up the deceased's address old-school style (using a phone book), and rob the deceased's home during the funeral, knowing that no one would likely be home, and that neighbours may also be at the funeral.
 

Same idea, different technology.
 

Thanks for reading,
 

Paul Trudelle

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The Globe and Mail recently featured a new book, Bargaining with the Devil: When to Negotiate, When to Fight, by Robert Mnookin. In reading the article, I was impressed with how relevant the discussion was to estates matters.

In the article, Mnookin says that some of the most difficult conflicts to negotiate are those where the adversary is seen as being untrustworthy - an adversary "who's either harmed you in the past or is out to harm you in the future and whom you may even think is evil." Matters in the estates context often pose these types of challenges. Disputes amongst family members often arise out of a lack of trust, and in many cases, the other family member is labelled as "evil". 

Further, in the estates context, emotions often run high. This, says Mnookin, is usually an impediment to a negotiated settlement. "Strong emotions can get in the way of clear thinking."

Mnookin also points to another impediment to negotiated resolutions that we see in many estates matters. In many cases, parties to a negotiation are wary of settlement because it is believed that what is good for their adversary is bad for them. Mnookin refers to this as "zero-sum thinking".

Taken a step further, even if a settlement is good for a party, it is often not acceptable to that party because the party does not want to let the other side off easily: the party wants to punish the adversary for what they have done, or for what it is believed that they did.

Mnookin concludes by noting that in many cases, emotion wants to fight, even though this may not be in your best long-term interests. However, there are other cases where the fight really is the better alternative.

Thank you for reading.

Paul Trudelle

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The notion of being buried alive has no doubt been the subject of suspense thrillers and horror films past, probably because it generates the reaction movie makers want – fear. 

Well, this fictional terror almost became a reality for a 45 year-old Colombian woman recently declared dead of a heart attack. Luckily for her, she moved one of her arms just as an undertaker was about to embalm her.

The patient has multiple sclerosis, and was admitted to hospital a couple of days earlier after a heart attack.  Reportedly, she survived for several hours on life support, but then seemingly didn't respond to resuscitation efforts following a second attack.  She was declared dead not long after that.

A few hours after the pronouncement, a funeral home employee was about to inject embalming fluid into her body when he saw her move. He stopped the procedure and brought her back to the hospital to be treated.  

The reported medical opinion is that on rare occasions a person's heart rate and breathing can drop to undetectable levels, leading doctors to erroneously declare a patient dead. Pretty scary stuff!

Being buried alive would definitely be ranked up there with one of my worst nightmare scenarios.  Thankfully this woman was spared a similar fate! 

Don’t think I’ll be watching any horror flicks this weekend,   

Natalia Angelini

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Although it seems that I hear of a new tale of familial strife weekly in this practice, I still find myself surprised and saddened to learn of each new account. One such case takes us to England, where it was recently reported that the daughters of a millionaire farmer are accused by their brothers to have plied their father with whisky and sleeping tablets before making him sign a Will leaving the sisters £600,000. At the time, their father, 89, was apparently grieving for his wife, who had died days earlier after a 65-year marriage. He was also possibly suffering from Alzheimer's.

The brothers’ version of events paints a picture of a man in a weakened condition being taken advantage of in a grief-stricken state. In contrast, the sisters explain that their father was a stubborn man who knew what he was doing and who wanted to treat all his children equally (he had already apparently left land worth an equivalent amount to his sons).

Both sides called expert medical witnesses, with doctors offering different opinions over the testator’s capacity. In addition, others close to the deceased gave evidence of their observations of him. Notably, the Will was drawn up by a solicitor who had acted for the father for many years, who testified that he had the necessary capacity and knew and approved of the Will’s contents. 

If the brothers’ case is successful, the court will uphold a prior Will in which they will inherit most of the £1.2million estate. Their sisters, in contrast, will each receive only £15,000.

While the outcome of this case is not yet known, to me it highlights the importance of gathering evidence to support one’s position in this type of litigation. As a deceased loved one is unable to offer up assistance from the grave, medical evidence, lawyer’s evidence and the evidence of people close to a testator are often all necessary to help put the pieces of the puzzle together.

Have a good day,

Natalia Angelini

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In Ontario, the law is that a Will is revoked by marriage (for exceptions, see section 16 of the Succession Law Reform Act (SLRA)). 

If after a testator makes a Will he or she divorces or the marriage is declared a nullity, (a) a gift in a Will of property to one’s former spouse; (b) an appointment of one’s former spouse as executor or trustee; and (c) the conferring of a general or special power of appointment on one’s former spouse, are revoked. The Will is construed as if the former spouse had died before the testator (see section 17(2) of the SLRA). Notably, this law does not apply if a contrary intention appears in the Will.

Divorced couples (or the other beneficiaries under their Will) can take comfort in knowing that they won't be surprised by having a gift no longer intended for a former spouse honoured, which could otherwise reduce the entitlement of others named in the Will.   

As reported in the February 2010 edition of Will Power, until not so long ago the common law in Nova Scotia lead to a very different result.  A gift by Will to one’s spouse was construed prima facie to refer to the person to whom the individual was married at the time the Will was made, unless circumstances showed that a future spouse was intended. If the individual was later divorced or the marriage was later annulled, this event had no effect on the gift made in the Will. To the likely chagrin of the divorced testator, unless the Will was changed after the divorce, his or her former spouse would still get the gift on the testator's death.

That has all changed with the coming into force of section 19A of the Nova Scotia Wills Act. This legislation brings the law in Nova Scotia in line with that of Ontario and some other provinces. It is good to see growing uniformity being applied in Canada on this issue.

Enjoy the rest of your day,

Natalia Angelini

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I recently read an article composed by The Children’s Lawyer, Debra Stephens, named Minor Settlements: How to Ensure Court Approval. I found this article to be particularly helpful as the article speaks to the role of The Children’s Lawyer in litigious matters and explains the common issues that arise during settlements involving minors.

Fundamentally, it is important to understand the role of The Children’s Lawyer with respect to their involvement in settlements concerning minors, which Ms. Stephens describes as: “The Children’s Lawyer is not a party to the proceeding and is not in an adversarial role with any of the parties. Rather, The Children’s Lawyer acts as an advisor to the court, making recommendations to assist the judge in determining whether to approve the proposed settlement”.

In her article, Ms. Stephens talks about a few issues that commonly arise during settlements involving minors. One of those issues that Ms. Stephens touches on is legal fees. Ms. Stephens states that legal fees are an important factor in determining whether to approve a settlement on behalf of a minor. Factors that are relied on when considering the reasonableness of a solicitor’s account are set out in the Court of Appeal decision Cohen v. Kealey and Blaney and include:

1.                  time spent;

2.                  legal complexity;

3.                  degree of responsibility assumed by the lawyers;

4.                  monetary value of the matter in issue;

5.                  the importance of the matters to the client;

6.                  degree of skill of the lawyers, results achieved;

7.                  ability of the client to pay; and

8.                  expectation of the client with respect to the fee. 

Also, another factor not mentioned in the case above is ensuring that access to justice is obtained for parties under a disability. I found Ms. Stephens’ article to be particularly useful in my practice and I would certainly recommend it to any practitioner who ordinarily runs into issues involving The Children’s Lawyer.

Thank you for reading.

Rick Bickhram

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As most of us return to our offices from a long weekend, I would like to share with you an interesting case, which I read over the weekend and deals with an Application to declare a family member unworthy to inherit. S.R. (Succession de), 2008 QCCS 4015, is a decision released by the Quebec Superior Court.

In, S.R. (Succession de), the Deceased was survived by his spouse and four children.    The Deceased was a savvy businessman who, during his lifetime, was quite successful. In 1995, the Deceased asked a notary to prepare a Will. A draft Will was sent to the Deceased for his review but it appears that he never executed the Will. In 2000, the Deceased was diagnosed with cancer and subsequently died in 2003.

After the Deceased died, the children looked for their father’s Will in the home and at the Deceased’s office with no success. We are given to understand that all of the children, searched, under the bed, every closet, every brief case belonging to the Deceased, but were unable to recover a Will.   

One of the daughters prepared a proposal requesting the siblings to acknowledge that the Deceased promised to transfer a certain property to her. This would have the effect of increasing her entitlement under the Deceased’s estate. Her siblings refused to sign the acknowledgement, which led to the ensuing dispute. The disgruntled daughter, subsequently informed everyone that she had in fact, located a Will of the Deceased in an old briefcase, which was allegedly in the bedroom closet of the Deceased’s residence.

The discovered Will was similar to the draft Will prepared earlier, except that it included two additional provisions which favoured the disgruntled daughter, in the amount of $2.4 million dollars and was apparently executed by two witnesses from New York. 

The disgruntled daughter tried to probate this Will, but it was contested by her siblings and it was ultimately ruled that the Will could not be probated by the Honourable Justice Gagnon. Justice Gagnon held that there were all the sorts of question marks surrounding the validity and execution of the Will. 

After the Application for probate was refused, the disgruntled daughter then produced a document which was a blank cheque allegedly signed by the Deceased and which purported to give the disgruntled daughter her share in a building that she coveted and various other monies for her home. The siblings refused to admit the authenticity of the blank cheque and commenced proceedings against the disgruntled daughter to have her declared unworthy to inherit under the Deceased’s estate. 

Under the section 621 of the Civil Code of Quebec, it states that a person “may be declared unworthy of inheriting where a person is guilty of cruelty towards the deceased, and where the person has concealed, altered or destroyed in bad faith the Will of the deceased, or a person who has hindered the testator in the writing, amending or revoking of their Will.” 

In relying on this provision, the children advocated that the disgruntled should be precluded from inheriting because she concealed and altered, in bad faith the alleged Will of the Deceased. 

The court held that the disgruntled daughter had likely altered the Deceased’s Will, had taken the draft prepared by the notary and added some typewritten additions that benefited her to the detriment of her siblings and mother. The court further held that the disgruntled daughter likely had taken the blank cheque from the Deceased’s home and also forged that after his death.

Accordingly, the disgruntled daughter was declared unworthy to inherit and her claims against the estate were dismissed.

An interesting point, in Ontario we do not have any similar case law or legislation that would actually allow someone to commence a proceeding, seeking to have someone else precluded from receiving their entitlement absent criminal activity such as murder.

Have a great day,

Rick Bickhram

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The United State’s federal estate tax, more commonly known as the “Death Tax” is a tax applied to the transfer of a person’s assets at death. It is defined by the U.S. Internal Revenue Service as “a tax on your right to transfer property at your death.”

The Death Tax is paid by the recipients of an inheritance and is due within 9 months of the decedent’s death.   If there is not sufficient cash in the estate, personal property and business assets must be sold to pay the tax. 

As noted in one of our prior blogs, due to changes made by Congress during the George Bush administration back in 2001, the Death Tax was due to fall from 45% to 0% on January 1, 2010.  Many thought this loophole would be addressed before the start of the year. However, due to a Congressional tax standoff, no action was taken in time and the Death Tax has been repealed. However, the repeal is not permanent and the Death Tax is scheduled to be resurrected on January 1, 2010, at a rate of 55% on all assets above $1 million (the current exemption amount). 

It remains to be seen which way the political winds will blow, as Congress will likely address the issue this year. In the interim, estate planners in the U.S. are in uncharted territory, as no one can predict whether/when the Death Tax will be resurrected and if so, whether Congress will make it retroactive to the beginning of the year. This may ultimately be a matter for the courts to decide. Stay tuned!

Bianca La Neve

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I think it’s fair to say that the Internet has severely disrupted the traditional value chains in regards to how we obtain our media content. The value of content, starting with music, movies, TV shows, news and most recently books are being redefined for the Internet age.

I recently read an article published by the BBC News Magazine entitled “Page-turning Passion”, which details the culture of book reading and particularly how we have obtained and received the content from books. 

In the 1640s, books were more than just a tool to obtain information. It was a “treasured personal possession, and object whose loss would be keenly felt. To their privileged owners they were coveted objects, symbols of conspicuous consumption to be displayed alongside paintings, sculpture and silverware”.

Over time, manuscripts were replaced with printed books. Noticeably, printed books lacked that unique quality that gave each manuscript its touch of art. After all, printed books were simply copies produced on the production line. I am a product of the printed book era and have thoroughly enjoyed reading. I reject the idea that some have asserted indicating that printed books are impersonal volumes. As a reader, we find creative ways to make them ours, by underlining and highlighting in these books. I can dog ear pages if I want to.  I can rip out pages.  I can draw pictures in them. 

Now we have entered into a new era, the e-book era. If you have not yet heard of the Kindle, it is Amazon’s wireless reading device. The Kindle also has applications for most smart phones, which makes downloading and reading even more convenient and, unlike the 1640s, the Kindle is simply a tool to obtain information. 

Rush, scuttle and hurry seems to be the ear marks of today’s society. As an urban commuter, rarely do we have the time or the space to pull a book out while crammed onto a subway. Now it is as simple as purchasing a book while on my way to the subway and doing all of the reading off of the smart phone while I am on the subway.

There will always be advocates against the growth and importance of technology, but as an urban resident and a commuter, if it weren't for phone reading, I wouldn't be reading at all.

Thank you for reading,

Rick Bickhram

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The Toronto Star recently reported on Alzheimer’s disease, stating that “cases of the mind-robbing disease will more than double to 1.25 million within 30 years as baby boomers age”. 

With the numbers pointing upward as the population grays, a recent report by the Alzheimer Society, entitled Rising Tide: The Impact of Dementia on Canadian Society suggests the following steps to help reduce the impact of dementia:

1.                  Prevention programs based on healthy diet and physical activity that can delay the onset of dementia by two years, with a potential cost saving of $219 billion over the 30-year period.

2.                  Enhanced skill-building and support programs for family caregivers, many of whom suffer financial hardship because they must leave jobs to look after a relative with dementia.

3.                  Assigning a case manager to each newly diagnosed dementia patient and their caregivers, which could help the person remain at home longer and lessen the strain on the long-term-care system.

Today, annual funding for Alzheimer’s is approximately $24 million. The Toronto Star reports that if “nothing changes, this sharp increase in the number of people living with dementia will mean that by 2038, the total costs associated with dementia will reach $153 billion a year”. 

We have already seen a substantial influx with respect to Will challenges, particularly because there has been a big question mark about the testator’s capacity. The grim realty is that this will be a continuing problem that Estate Solicitors are going to have to tackle.

Thank you for reading.

Rick Bickhram

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As we are in the beginning of a new year, a quote from one of my favourite poets, T.S. Eliot, comes to mind:  “For last year's words belong to last year's language and next year's words await another voice.”  

I recently came across an article entitled "The 8 Life Stages of Estate Planning", authored by G.M. Filisko.  In his article, Mr. Filisko points out the obvious - during our life we will go through different phases and our estate plans should reflect these changes. Mr. Filisko lists the following stages to consider regardless of the phase one may be currently in:

1.      Young, single and carefree
2.      Single, but committed
3.      We’re Engaged
4.      Just Married
5.      The Joys of Parenting
6.      Divorce (if unfortunately applicable)
7.      The Middle Ages
8.      The Golden Years

Regardless of where one may fall in this spectrum, it is never to late to get started.

Since making New Year’s resolutions seems to be the theme around this time of the year, let’s make a resolution to be more organized this year and spend some time considering our estate plans.

Thank you for reading.

Rick Bickhram

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This is our last blog of 2009!

Thank you for reading our blog posts over the past year. We have enjoyed preparing them. We hope that we have been informative.

With the close of 2009, we turn and look to the promises of 2010. While there is no doubt many things are to be considered for the new years, from a family perspective, perhaps this is the year to resolve to consider, or reconsider, whether your family’s legal affairs have been properly planned.

On behalf of everyone at Hull & Hull LLP, I would like to wish you a wonderful new year. We hope that you have a safe, restful holiday. 

Happy New Year.

Rick Bickhram

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Without understanding what the term “social media” is, it can sound intimidating to those in our industry who are not computer literate. But what is social media? Wikipedia defines social media as “media which are formed mainly by the public as a group, in a social way, rather than media produced by journalists, editors and media conglomerates." In an article, composed by Gary Edgar of LawPro, he defines social media as anyone looking to engage, connect and network with others online.

Gary Edgar does point out that one thing social media is not, is a fad.   Social Media is fundamentally changing the ways we interact and communicate with others and it will be interesting to see how this form of media continues to evolve. 

Social networks can be used to learn, exchange ideas and collaborate on projects. I have participated in numerous forums where I have learned how to troubleshoot many problems that I may have encountered with my automobile and computer, moreover, I have also learned neat little tips on some home renovations.  Social Media can also be used as a form of marketing. As Gary Edgar points out in his article, 15-20 years ago, the options for self promotion were limited to newspaper ads, the yellow pages, a radio or TV. Now with the concept of social media, our options have multiplied and the costs for self promotion have been drastically reduced.

However, the social media world is not the flawless paradise that we all would like it to be. There have been instances of online imposters, questions as to how much of my real life persona should I share online, how many people are seeing the things I post and who owns the information that is placed online?  These are all very important questions that will become clearer as this form of media continues to evolve.

Until next time,

Rick Bickhram

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As our year winds down and we prepare for the New Year, we have much to look forward to as our judicial system has undergone a minor facelift to reflect the changes in our society.  One such change has been the implementation of new legislation, The Apology Act (the “Act”), which came into effect on April 23, 2009.

The Act would permit the communications of expressions of sorrow or regret without worrying that the comments can later be used adversely in a civil court. Under the Act, an apology is defined as:

An expression of sympathy or regret, a statement that a person is sorry or any other words or actions indicating contrition or commiseration, whether or not the words or actions admit fault or liability or imply an admission of fault or liability in connection with the matter to which the words or action relate.

Proponents of the Act, suggest that the new legislation will enhance the dispute resolution process, promote accountability and enhance the affordability and speed of justice by shortening or avoiding litigation. The rationale for the implementation of this Act is similar to the rationale for the changes to the Rules of Civil Procedure, which is to make our system accessible, cost effective and efficient.

I agree with the purpose, the idea behind implementing this act, however I question .. has our society become so litigious that we now require the legislature to protect us from apologizing?

Thank you for reading my blog, until next time, 

Rick Bickhram

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Attorneys for property who receive gifts from grantors tomorrow will have to give them back, unless they have good evidence supporting the fact of the gift.  The rule that fiduciaries (including attorneys for property) must prove purported gifts is stated in Cooke v. Lamotte(1851), 15 Beav. 234 at page 239.

Justice Sheard applied this rule in Kee v. Yip [1995] O.J. No. 2879, disallowing a series of transfers by an attorney to himself, stating with respect to one such transfer, “The burden on Tom Kee to show that his mother gave him the $20,000 is a heavy one. His evidence, simply the assertion that this transaction, one of many that he did under power of attorney, was intended by her as a gift to him falls well short of discharging that burden of proof. Under the principle stated in Cooke v. Lamotte, supra, the $20,000 cannot be allowed as a gift and must be refunded." 

Even more recently, in Volchuk v. Kotsis, 2007 CanLII 28527 (ON S.C.) Justice Langdon disallowed a series of purported gifts (cheques and money transfers) effected by an attorney, noting in addition that attorneys were precluded from relying solely on their own evidence by section 13 of the Ontario Evidence Act, which provides that the claimant “shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.” 

 

In estates litigation, this rule is very useful in passings of accounts initiated pursuant to section 42 of the Sustitute Decisions Act by disappointed beneficiaries of an estate against the deceased's former attorney for property.  Of course, this rule forms part of the Common Law and is not confined to passing of accounts proceedings.

Merry Christmas to fiduciaries including attorneys, and enjoy your presents.

Chris Graham

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This is by far my favourite time of year. The holiday parties are in full swing, I am eating sweets and miniature puff pastries on what seems like a daily basis, and my birthday is around the corner.  Well, truth be told there is not that much to celebrate about my getting older at this point, but any excuse to continue the festivities is fine by me!

Birthdays and hallmarks like Christmas and New Years are great annual reminders to review your estate plan and to see if any changes need to be made to, for instance, account for a new or pending marriage, divorce, birth or death etc. 

Today is the last day I will be blogging until the New Year. So I just wanted to thank everyone for reading and for staying in tune with our blog and podcasts this year. We certainly enjoy doing them. 

Have a wonderful holiday season!

Natalia Angelini

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The Rules of Civil Procedure are a wonderful resource, and provide guidance as to, among other things, the types of applications that can be brought when someone wants to have an estate trustee appointed in Ontario in unusual circumstances. For instance:

(a)               where there is an estate trustee appointed with or without a Will in the United Kingdom or in a province in Canada (outside of Ontario), an application is to be made for Confirmation by Resealing of Appointment of Estate Trustee;

(b)               where there is a foreign estate trustee and no Will, an application is to be made for a Certificate of Appointment of Foreign Estate Trustee’s Nominee as Estate Trustee Without a Will; and

(c)               where there is a foreign estate trustee with a Will, and the applicant was appointed by a court having jurisdiction outside Ontario, other than a jurisdiction referred to in (a) above, an application is to be made for a Certificate of Ancillary Appointment of Estate Trustee.

What the Rules don’t speak to, however, is when you have a Will and a foreign grant of probate with a Will, but no estate trustee is named in the Will or appointed in the foreign grant.   I would imagine this is a rare occurrence, yet I am currently facing that very situation.  

I have chosen to address this situation by applying for an ancillary grant, as that seems to be the closest applicable Rule to this fact scenario. However, the application is being accompanied by a motion record wherein we explain the circumstances of our case and seek a court order that a person in Ontario (an individual or trust company, as the case may be) be granted a Certificate of Ancillary Appointment of Estate Trustee. 

I hope this will satisfy the court, and will let you know the results!

Have a great day,

Natalia Angelini

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At the recent Estates and Trusts Summit, the Children's Lawyer (Debra L. Stephens) gave us some insight into her office's view about the “do’s and don’ts” for counsel when preparing guardianship applications, including the following:

·                    Do – provide a rationale as to why the appointment of a guardian to manage the minor’s assets is better than transferring the assets to the Accountant of the Superior Court of Justice;

·                    Don’t – forget that the guardian’s investment options are restricted by the Trustee Act (s. 27) if nothing is stated in the plan about investments;

·                    Do – bring the application to the right court e.g. if a plan provides for payments out of the assets other than reasonable management fees and expenses, only the Superior Court of Justice (not The Ontario Court of Justice) has the authority to approve the plan;

·                    Don’t – forget that all appointed guardians are jointly and severally liable for their management of the minor’s property;

·                    Do – teach your client about the duty and complexity of accounting for his/her actions as guardian;

·                    Don’t – bring the application prematurely e.g. in a custody dispute the appointment of a guardian should only be made after custody issues are resolved;

·                    Do – address the need for a bond and the evidentiary basis for any request to dispense with it;

·                    Don’t – forget to take into account risk tolerance and the investment horizon when preparing the plan of care and management; and

·                    Do – address professional fees of an investment advisor and compensation.

You can get a more comprehensive read of these “do’s and don’ts” by reading Ms. Stephens’ paper entitled “Stuff” the OCL thinks is more interesting than the recession, which addresses guardianships, selling property, annuities, trust property, separation agreements and more.

Have a good day,

Natalia Angelini

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It is always a learning experience when going to court, and reading Paul J. Pape’s perspective on how he prepares for advocacy in the Court of Appeal will surely be of help to me when appearing in appellate court, or any court for that matter. I found some of his noteworthy insights to be:

·                    Imagine your mother as the adjudicator – if you can’t convince her of the righteousness of your position, you will not persuade the court:

·                    judges are swayed by the same considerations as ordinary people - a sense of humanity and justice will likely appeal to the panel;

·                    take a common sense approach, as judges try to solve matters by taking a practical approach;

·                    capture the court’s attention - tell a story, not an argument or submission;

·                    focus on the facts, this is more interesting - appeals, like trials, are determined on them;

·                    the court knows the law better than we do - the law should in many cases play a minimal role;

·                    be brief, and tell the story in simple terms – be specific and detailed, but keep the facts to those that advance the tale;

·                    there is always only one issue, was the result just – keep this as your focus; and

·                    anticipate the court’s questions and welcome them.

I did not have space here to address more of Mr. Pape’s commentary and tips on how to prepare your factum and compendium, so I would recommend reading his article, which can be found in the Winter 2009 issue of The Advocates’ Journal.

Have a great day,

Natalia Angelini

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As counsel, we are often engaged in litigation with self-represented litigants. The number of self-represented parties appears to be growing in Ontario.

Matters involving self-represented litigants raise special considerations and practice issues for both counsel and the courts.

One issue is the recording of court proceedings. Where a court hearing with self-represented parties is involved, the courts usually require that the proceedings be recorded, even if evidence is not being heard and the court is only hearing submissions. (If all parties are represented by counsel, the submissions will not normally be recorded.)

In order to avoid delays and inconvenience to the parties and the court, counsel should advise the court in advance that a self-represented party is appearing so that prior arrangements can be made for the attendance of a court reporter. This might best be done on the confirmation form that is faxed to the court prior to the hearing.

Thank you for reading.

Paul Trudelle

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Hull and Hull LLP is named as the “Winner: best Multimedia website” in Canada in the December 2009 edition of National, a magazine published by the Canadian Bar Association.

To quote two of the judges:

Connie Crosby: “They are the only firm that has truly experimented with video and podcasting in a big way. The others I saw don’t understand that they need to produce episodes on a regular basis to explore a subject area, or that podcasts and videocasts need an RSS feed to be syndicated. Hull & Hull gets that.”

Omar Ha-Redeye: “They’ve probably been doing it as long as anyone, and have fully integrated videos and podcasts into their practice. Experience with these formats has not only resulted in a highly polished product, but also content that is actually relevant to what they do.”

Why, thank you.

Paul Trudelle

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Yesterday, I introduced the matter of Estate of William Lipson (Pattillo, J., December 1, 2009, not yet reported).

There, multiple wills were executed. Unfortunately, the second will purported to revoke the first. In addition, both wills purported to deal with all assets, except for shares in a private corporation.

One of the issues addressed was whether the Court could rectify the wills by adding or deleting words. The Court reviewed numerous cases, and concluded that words could be added or deleted from a will to correct an error. Before doing so, the Court must be satisfied that:

i.                    Upon a reading of the will as a whole, it is clear on its face that a mistake has occurred in the drafting of the will;

 

ii.                  The mistake does not accurately or completely express the testator's intentions as determined from the will as a whole;

 

iii.                The testator's intentions must be revealed so strongly from the words of the will that no other contrary intention can be supposed; and

 

iv.                The proposed correction of the mistake, by the deletion of words, the addition of words or both must give effect to the testator's intention, as determined from a reading of the will as a whole and in light of the surrounding circumstances.

The Court rectified the will by deleting the revocation clause of the second will (so that the first will was not therefore revoked), and by altering the disposition clause of the second will so that it only dealt with shares that the deceased owned in a private corporation.

These alterations, the Court concluded, best gave effect to the intentions of the testator.

Thank you for reading.

Paul Trudelle

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The recent decision in Estate of William Lipson (Pattillo, J., December 1, 2009, not yet reported) illustrates an important issue that can arise where multiple wills are executed.

Multiple wills can serve as a valuable estate planning tool for the purposes of saving Estate Administration Tax (probate fees). Simply put, one will deals with assets that require probate in order to be administered. The other will deals with assets that do not require probate: usually shares in a privately held corporation. Probate is only required for the one will, and probate fees are only payable with respect to those assets. As probate is not required for the other will, no probate fees are payable with respect to those assets where probate is not required.

The wills are usually executed at the same time. However, great care must be exercised so that the signing of the second will does not revoke the first.

This was precisely the problem in the matter of Estate of William Lipson. There, draft wills were prepared. Unfortunately, the clause that revokes all prior wills was not properly crafted, and each contained a clause that revoked all prior wills. Therefore, the execution of the second will revoked the first. The possible effect of this was that there was a partial intestacy with respect to all assets dealt with by the first will. The draft wills were executed by the testator prior to a final review.

(There was also a problem with how the two wills identified the assets: both wills purported to deal with all assets other than shares in a private corporation. Therefore there was a potential intestacy with respect to the shares.)

One lesson that can be taken from this decision is that when executing multiple wills, extreme caution must be taken in reviewing the wills and monitoring their execution so that one will does not inadvertently revoke the prior will.

More on this decision tomorrow.

Thanks for reading.

Paul Trudelle

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Settlement privilege excludes communications made in furtherance of settlement from the record.  Settlement is a fundamental component of our trial system for trite reasons.  Virtually every litigation proceeding has a parallel settlement component that the court does not and usually ought not to see, until after the main proceeding. 

In Re Hallman Estate, the applicant had filed an affidavit including a letter that was a settlement offer from respondent trustees.  The letter was marked "Without Prejudice".  The trustees brought a motion to expunge that part of the affidavit.  The applicant asserted that the trustees had impliedly waived settlement privilege by relying on the letter in exercising their discetion when, at a trustees' meeting, they had discussed the letter then refused to pay trust income to the applicant, and later disclosed the minutes of the meeting to the applicant.  Also, the trustees sent a letter to the applicant's counsel noting that the letter had been discussed and offering to provide redacted minutes.  The issue was whether this constituted implied waiver.

No waiver was found.  Settlement privilege can be waived expressly or by implication.  A clear intention is not always necessary.  The privilege can be waived by conduct (waiver by implication), even in the absence of intention, and one situation where this occurs is where fairness requires it (for instance, taking a position inconsistent with the maintenance of privilege).   

But here, it was the applicant asserting the waiver who first filed the Minutes referencing the letter, not the trustees relying on the privilege.  Second, the communication to the applicant's lawyer of the reliance on the letter constituted confirmation of non-waiver, not the opposite.  Finally, there was no evidence the trustees actually did rely on the letter to exercise their discretion as trustees, only that they had discussed the applicant's lack of reply to the letter during the meeting.  On this final point, the decision does not unequivocably state that such reliance would have been sufficient.        

The onus for proving waiver of the privilege rests with the party asserting the waiver, but that should not prevent litigants from fastidiously maintaining the privilege (as the trustees did in this case).

Have a great week,

Chris Graham

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In a captivating article authored by Kent Sepkowitz, an infectious-disease specialist at a Cancer Center in New York City, he recounts the practical difficulties when someone dies at home - doing it yourself can be thorny and chaotic without the administrative help of Hospitals.

Specifically, when someone dies at home, a licensed professional must determine that the person is indeed dead.  While this should be arranged in advance with the doctor, the timing may not ultimately work out.  If no doctor is available, the other option is to call an ambulance…for a dead person.  There are reportedly other annoyances as well, including:

·                    the death certificate must be completed in black ink (using only certain approved diagnoses);

·                    an undertaker needs to be selected; and

·                    law enforcement must be called to establish that no foul play occurred – not an investigation anyone wants to deal with after just losing a loved one.

Mr. Sepkowitz notes that, with the active support of hospice care, savings could come from facilitating the wishes of those who choose to die at home.  He also considers what is likely the more important benefit of assuring tranquility and dignity for the person dying and their family.

Thanks for reading and have a great weekend!

Natalia Angelini

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Hugh Lawford, co-founder of Quicklaw - the world's first online legal database - recently passed away.  

As noted in Mr. Lawford’s obituary, he created the project at Queen's University in 1967 when he realized that legal documents could be computerized and made available in a database. This insight led to his creation of QUICKLAW Inc. together with Professor Richard von Briesen in 1973.

Mr. Lawford spent virtually the next thirty years dividing his time between teaching law at Queen's University and building QUICKLAW into a household name in the legal community. It was a system that without a doubt revolutionized the practice of law, putting an end to long days of cumbersome legal research.  

In 2002, QUICKLAW was sold to LexisNexis. By that time, it had over 200 employees in a dozen offices in North America.

Some of Mr. Lawford’s other noteworthy achievements are:

·                    He was chosen as Rhodes Scholar for Alberta in 1955.

·                    He obtained his Bachelor of Civil Law degree from Oxford University.

·                    Returning to Canada, he joined the new Law Faculty at Queen's University in Kingston, Ontario, and became Queen's youngest Associate Professor, teaching International and Administrative Law; and

·                    He was Special Assistant for a time, first to the President of the Privy Council and then to the Prime Minister.

An interesting article on his life can be found in the Globe and Mail.

Have a great day,

Natalia

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The Chicago Tribune provides an interesting commentary on a recent decision of the Illinois Supreme Court, which ruled that a Jewish couple could legally disinherit any grandchildren who married outside their faith, as long as the method of doing so did not encourage divorce. 

The facts giving rise to the case are that the husband discovered that his grandson was taking a gentile to the junior prom.  The husband wrote his strong feelings about religious loyalty into his Will.  Specifically, his Will indicated that upon his wife’s death their grandchildren would become lifetime beneficiaries of certain trusts. However, if any of them married outside the faith and their non-Jewish spouse did not convert to Judaism within a year, they would not receive their share of the trusts.

The husband predeceased the wife. The wife came up with a slightly different approach in her Will.  She bequeathed $250,000 to the one grandchild who had married within the faith. Those who did not do so received nothing.  

One of the disinherited grandchildren argued that the clause violated public policy by offering money to practice a particular religion.  The court disagreed, pointing out that the wife did not set up a system that encouraged heirs to divorce and remarry to claim an inheritance.  Rather, she made a bequest to reward those grandchildren whose lives embraced the values she and her husband cherished.

Thanks for reading,                                                                                                       

Natalia

 

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Hull & Hull LLP hosted its quarterly breakfast series on September 24, 2009.   Megan Connolly started off the day with a very informative talk on charitable gifts, with a focus on when a charitable beneficiary can not be identified or cannot be found. 

Megan reviewed ways in which the charitable gift may survive in these circumstances, which are touched upon below.

·                    When the charity is inaccurately described, but the description is sufficient to make it clear to which charity the gift was intended and the beneficiary is discoverable, the gift will not fail;  

·                    When the institution can still be identified, although its form might have changed (i.e. unification of churches), then the court will often be willing to give effect to the gift – a key consideration is whether the charity has maintained a “continuing identity”;

·                    When it is impossible or impracticable to carry out the gift (i.e. the named institution ceased to exist during the testator’s lifetime) an application for the advice direction of the court can be brought on the basis of the cy-près doctrine; and

·                    Section 13 of the Charities Accounting Act provides a mechanism for obtaining a cy-près order without having to commence a formal court proceeding when the consent is obtained of the Public Guardian and Trustee and everyone else required to be served with such an application.

An interesting panel discussion followed between Ian Hull and Suzana Popovic-Montag on undue influence, which is seen to be the most difficult ground upon which to successfully challenge a Will.

If you would like to receive a copy of the papers on these topics please contact us.

Have a great day,              

Natalia Angelini

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Yesterday I wrote about Edward Kennedy – I began to wonder about the tax implications on his estate.

Assuming he held $75 million in assets, his estate would have been taxed at a rate of 45% and the bill owing would be $33,750,000. But this is unlikely because much of his wealth was held by trusts which, in Ontario, are separate taxable entities. 

My colleague, Sarah Fitzpatrick wrote in July 2008 about the upcoming changes to the U.S. tax law.  That time is four months away. Congress must act soon; if it does not, taxes on nearly everyone will soar under a plan enacted in 2001 called the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) which provides that in 2011 the tax law that had been in effect in 2000 will reappear.

The estate tax is set to vanish for a year if nothing happens before the end of 2009 as the EGTRRA sunsets in 2010. In 2011, an effective rate of 55% on estates would come into effect.

Only a small number of individuals pay the estate tax each year. In 2007, there were 36,458 estate tax filers – out of 235 million total tax filers that same year in the United States.  . Smaller estates (under $3.5 million) make up the bulk of filers – over 60 percent in years 2002-2007. Large estates (over $10 million), however contributed between 18 and 30 percent of the total revenue in the same time frame.

During the 2008 campaign, President Barack Obama supported permanent extension of the 2009 law – effectively a permanent 45 percent top rate with $3.5 million exemption per individual ($7 million for couples).

Either side of the political spectrum will present different numbers, but what seems certain is that if there is no legislative action in the U.S. in the next few months, 2010 will be a good year for estates. My bet is that the large loophole will be filled quickly, especially as the U.S. operates with a large deficit.

Thank you for reading. Please remember that Hull & Hull is hosting another breakfast seminar tomorrow morning.

Enjoy your Wednesday.

Jonathan Morse - Click here for more information on Jonathan Morse.

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The death of Edward M. Kennedy on August 25, 2009 marked the end of era. The Lion of the Senate received much praise for his 47-year contribution to American politics. 

In his memoir – True Compass –  “Teddy” provides a posthumous review of his life and of his famous family.  It is a reminder that people leave a range of legacies when they die. Several of his siblings left their own mark, including his sister Eunice.  Edward Kennedy’s political accomplishments are a great part of his legacy. (I have read about JFK and Bobby and will enjoy this read.)

There is the financial side of Edward Kennedy’s life (and of each Kennedy) which presumably continues to back many of the endeavours of the current generation. Edward Kennedy, apparently, reported a net worth  in 2008 between $15 million and $72.6 million, but a year earlier the range was between $46.9 and $157 million. As a U.S. senator, Kennedy earned a base salary of $165,200 a year.

The main source of Kennedy's wealth was his father and family patriarch Joseph P. Kennedy, a former U.S. Ambassador to Great Britain, whose fortune stemmed from banking, real estate, liquor, films and Wall Street holdings that eventually grew to an estimated $500 million by the 1980s.

A big portion of that wealth came from Kennedy Sr.’s purchase of Chicago's Merchandise Mart  in 1945 for $12.5 million. Spanning two city blocks and rising 25 stories, the sprawling limestone and terra-cotta mart had its own zip code. It was the world's largest building until the Pentagon was built in the 1940s. The Kennedy family sold its interest in the Merchandise Mart in 1998 for $450 million in cash and a $100 million interest in the purchasing trust. The holdings of Edward Kennedy included a string of publicly and non-publicly traded trusts and assets. 

The Kennedy family contributed a great deal to public service. Liberal projects and public service work by the family is supported in part, I expect, by the resources available to them through family investments.

While we did not know the patriarch of the Kennedy family, we can glimpse the satisfaction he likely felt that his investments – in his family and businesses – contributed to the greater good.

The scale may be far different, but within our own families, each of us can support the work and the dreams of the next generation with careful planning and wise investments of our time, energy and financial resources.

Thank you for reading.

Jonathan Morse

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The Toronto International Film Festival brought stars to town and brought an estate issue into focus. The Art of the Steal  received accolades as a “thrilling whodunit” about the world-renowned Barnes art collection, valued in the “billions and billions.” Dr. Albert Barnes assembled art in the twenties and housed it in the suburb of Merion, Pennsylvania.

On his death in 1951, Dr. Barnes’ will gave control of the collection to the trustees of Lincoln University, the first black university in the United States. However, according to the film’s producer, in the nineties, a scheme was hatched to permanently remove the collection from Merion that some would later call the heist of the century.

The trustees’ decision to move the exhibit to downtown Philadelphia was met with legal challenges that did not succeed.  On a site called The Barnes Letters  it seems interest groups used the courts to deviate from Dr. Barnes’ express wishes to focus on “an educational organization designed to promulgate a unique way of teaching art appreciation.”

At an opening ceremony for the new site, protestors marked the occasion with signs advocating that Barnes’ “…Will Should Be Honoured.”

Art disputes relating to trusts and foundations are not uncommon. Here in Canada, one example involves a long-standing legal dispute between the U.K. Beaverbrook Foundation which claims that it only loaned art to a New Brunswick gallery – art that originally belonged to New Brunswick newspaper baron Max Aitken.  (See Paul Trudelle's September 14, 2009 blog).

These examples point to the idea that a testator’s expressed wishes for certain assets may not always be respected. Dr. Barnes wanted his art to stay put, while it was alleged that Lord Beaverbrook’s art was gifted to the people of New Brunswick.

Have a good Monday.

Jonathan Morse

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Lonnie Holloway of Saluda, South Carolina was recently buried sitting upright in the front seat of his 1973 Pontiac Catalina.

According to the New York Times report (there is a video link, too), the 90 year old, described by a cousin as a “stylin’ and profilin’” man, had always said that he had wanted to be buried that way. He was also buried with his gun collection. He had said that he didn’t want them falling into the wrong hands.

The expressed wishes of the deceased raise a number of interesting issues to consider. Some immediate include:

• Whether the directive regarding the means of burial is binding on the Estate Trustee. The rule is that directions contained in a deceased’s will are not binding on an executor. Additionally, an estate trustee is only allowed to recover reasonable burial expenses from the estate, taking into account the deceased’s position in life.
• In Canada, there are restrictions that would intervene with respect to the disposal of weapons.
• Will a Will that calls for the destruction of property be enforceable? In Wishart Estate (1992), 46 E.T.R. 311, the deceased left a will that called for the shooting of his four horses. The court found that the direction was void as being against public policy. In that case, the court referred to a Missouri Court of Appeals decision where a term in a will calling for the demolition of the deceased’s house was, similarly, found to be void as being in violation of public policy.

Have a great weekend. Keep your eyes on the road and your hands upon the wheel.

Paul Trudelle

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On Tuesday, I spoke to a wonderful group at the Chai Tikvah Foundation on the topic of estate planning and providing for a disabled beneficiary.

“Chai Tikvah” means “life” and “hope”. 

The Chai Tikvah Foundation provides housing, support and education to psychiatrically challenged adults in Jewish residential settings to enable them to lead more productive lives, and to help them integrate into the community. The Chai Tikvah Foundation operates a housing facility in North York, and offers additional support and education to the residents, non-residents, their families, and to the community.

Special estate planning concerns and considerations arise where individuals have family members who have special needs. It was a pleasure to address some of these issues with the group.

To the Chai Tikvah Foundation, thank you for having me and for the wonderful services that you provide. Keep up the good work!

Thank you for reading.

Paul Trudelle

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In October 2008, I spoke at the Hull and Hull Breakfast Seminar on the topic of obligations with respect to disposing of the deceased’s remains, as well as other issues that arise immediately upon death. (See my paper, here.)

In Lajhner v. Banoub, [2009] O.J. No. 1327, this issue was addressed once again. There, the deceased died on March 18, 2009 at the age of 24. He died without a Will. His parents on the one part, and his alleged spouse, on the other, sought to be appointed as Estate Trustees, primarily for the purpose of assuming the obligation of determining the disposition of the deceased’s remains.

Both sets of parties, the court found, were motivated by a desire to do what they believe the deceased would want.

The parents wanted to cremate the deceased’s remains. The alleged spouse opposed this, stating that the deceased was Muslim, and that the Muslim faith did not accept cremation.

The issue became who was most likely to be appointed as estate trustee under s. 29 of the Estates Act.

The court went on to find that the alleged spouse was not in a conjugal relationship with the deceased immediately before his death. The evidence was that they were not residing together, and that there was no intention of reconciliation. Thus, the court concluded that the parents would most likely be appointed as Estate Trustees, as the spouse did not qualify under s. 29 of the Estates Act. They were therefore entrusted with the obligation to dispose of the deceased’s remains.

The court once again confirmed prior case law to the effect that religious laws or beliefs are not a factor that the court may take into consideration. What the court must do is determine who is most properly appointed as Estate Trustee. As the alleged spouse did not qualify under s. 29 of the Estates Act, she could not be appointed as Estate Trustee.

Thanks for reading.

Paul Trudelle

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In a novel decision of the Ontario Superior Court of Justice, the court removed Estate Trustees who no longer wished to act in that role. No one else consented to act. What is novel is that no replacement Estate Trustee was appointed.

In the 2009 case of Evans v. Gonder, (incorrectly cited as 2000 CanLII 27170), the deceased named her sister and brother in law as Estate Trustees. A Certificate of Appointment was obtained by them. However, the Estate Trustees were elderly, and in poor health. They lived far away from the estate, and said that they could not afford to continue to defend litigation that was brought against the estate by one of the heirs. They had already spent $40,000 of their own money in defending the litigation.

The estate was said to be small, consisting of a modest house in Hamilton. By her Will, the deceased left a life interest in the house to her mother. The mother was still alive, but not able to live in the house: the house was vacant. 1/3 of the residue was left to a brother (who brought an action against the Estate, claiming that the house was held by the deceased for his benefit). It is not clear who the other beneficiaries were.

The brother opposed the motion for an Order removing the Estate Trustees. He argued that the legislation did not allow the court to remove Estate Trustees unless another person has consented to replace them. He made no suggestion as to how the Estate Trustees could be relieved of their duty, and submitted that “they are stuck with it”.

The court disagreed. It cited 1867 case law which found that “if there was no means by which a trustee could denude himself of that character, it would operate as a great discouragement to mankind to undertake so arduous a task”.   It also held that a trustee is not bound to show that someone else is ready to act. The court may, however, in an appropriate case, keep the Estate Trustee on, “taking care that the trustee shall not suffer thereby”.

In the present case, the court discharged the Estate Trustees. In the circumstances, it did not feel obliged to keep them before the court. The court ruled that the trustees were not in a position to do anything meaningful. They could not sell the house, due to the litigation, and could not settle the litigation, due to a tax lien that was registered against the property. The brother’s litigation was not prejudiced, as he could move to appoint a litigation administrator.

Thanks for reading.

Paul Trudelle

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I conclude my blog week by writing about the late Michael Jackson who was finally laid to rest on September 3, 2009. Ten long weeks after his death, Michael Jackson’s coffin was placed in a mausoleum in the Forest Lawn Memorial Park, which is located outside of Los Angeles.

If reports are to be believed, his body has been placed in the Holly Terrace, which is a large hall at the centre of Forest Lawn's monolithic grounds. Although the fascination of Michael Jackson will continue long after his death, the mausoleum is policed by private guards and is rumoured to be among the highest security resting places in the world.

There have been reports indicating that the price of grave-plots close to Michael Jackson's tomb have gone up $2,000 - $3,000 in value since Michael Jackson joined the neighbourhood.

Some reports have indicated that some private parties have asked for substantially more, with one person rumoured to have asked for $34,000 for a double unit inside of the Michael Jackson mausoleum. Even after death, Michael is still making headlines, this time in the cemetery world.

Thank you for reading and I hope you have an enjoyable weekend!

Rick Bickhram

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Planning your estate feels a lot like preparing for your taxes. It takes time and it’s something the average person hates to turn their mind to. Nevertheless, a solid estate plan is, without a doubt, the best defence against the potential threats to hard earned wealth posed by disgruntled family members or tax authorities.

Recently, I read an article written by Hyman Darling, an Attorney in the State of Massachusetts, in regards to the top 10 issues regarding wills. Mr. Darling states that the top 10 issues that are frequently being considered by the average person are:

1.                  Should I have a Will?

2.                  What kind of Will should I have?

3.                  How does a Will work when I die?

4.                  What if I have a Will but am not satisfied with it?

5.                  Do both spouses need Wills?

6.                  Is it possible to set up a Trust under my Will?

7.                  How can I include a charity in my Will?

8.                  How can a charitable bequest benefit me?

9.                  How much does a Will cost?

10.              How do I go about getting an attorney?

Mr. Darling does an exceptional job at considering each issue and I certainly recommend that everyone considering an estate plan review his article.

Thank you for reading,

Rick Bickhram

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It should come as no surprise that we live in an aging society. As our society continues to grow old, family members should be concerned about their loved ones who live with disabilities.  

I recently read an article (found here) that describes the obstacles that our law enforcement and emergency professionals are confronted with when responding to an emergency involving a disabled or elderly person.

The article describes stories where law enforcement and emergency professionals were not aware or misunderstood the unique limitations of people with disabilities and were unable to offer the best assistance during their need for help. For instance, the article describes “a California man who, while waiting for his bus home from work, was beaten by officers who mistook his folded white cane for a martial arts weapon and a Florida man dumped from his wheelchair by a deputy who didn't believe he was paralyzed.”

The focus of this article should be for family members to be prepared for emergencies. Some helpful tips to becoming prepared are:

1. Instructing family members with disabilities to contact family members right after emergency professionals;

2. Keeping relevant health records in an easily accessible location and instructing family members to give the materials to emergency professionals; and

3. Enlisting your neighbours and nearby friends to offer assistance in emergency situations.

There is no full-proof method of preventing some of the tragedies that the article describes but our family members are the most important people in our lives and we can protect them from traumatic and life-threatening events through careful planning.    

Thank you for reading.

Rick Bickhram

 

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After a long and relaxing weekend, most of us now return to work geared to face the challenges of our week.  I start my blog by discussing the recent issue of the Probater.

The Probater is a quarterly newsletter that is prepared by the lawyers at Hull & Hull LLP and is provided to the community as an information service.  Our most recent newsletter was released in September 2009.  In the September 2009 issue, Jonathan Morse writes about the fundamental principles behind Rules 74 and 75 of The Rules of Civil Procedure, but more particularly focuses his article on the purpose behind Rule 74.15.

Rule 74.15 allows “any person who appears to have a financial interest in an estate” to obtain orders that would assist them in administering an estate. There is an abundance of case law that defines financial interest and clarifies the threshold question as to who may have a financial interest in an estate.

In his article, Jonathan does a good job in explaining the application of such orders and concludes by referring to a recent decision of the Honourable Justice Brown in Barletta v. Donne, which highlights the recent application of Rule 74.15. 

Thank you for reading,

 

Rick Bickhram

 

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There is nothing like sex to get someone’s attention. The matter of the estate of Paul Raymond was recently brought to my attention – mainly due to the deceased’s business undertakings. 

Britain’s Paul Raymond died on March 2, 2008 leaving an estimated estate of 650m pounds. Raymond is described as “the porn baron turned property tycoon”. Raymond is said to have built his empire on profits from his soft-porn business, which he launched in 1957. According to a BBC report, Raymond’s big break came when he side-stepped censorship laws that prevented naked women from moving on stage by having topless women stand on stage completely still. Britain’s Hugh Hefner went on to stage plays such as “Yes, We Have No Pyjamas”. He also launched various pornographic magazines and a strip club. He used earnings from these endeavours to invest heavily in real estate. According to the TimesOnline report, by 1992 he had overtaken the Duke of Westminster as the richest man in Britain, with a fortune estimated at 1.5 billion pounds. He is said to have become a recluse in his final years.

 He left his entire estate to his two granddaughters, aged 22 and 16. It is said that they now control 60 of the 87 acres that make up the Soho district of London. (See Rick Bickhram’s blog on one of the granddaughters, Fawn.) However, his illegitimate son is now contesting the will. Another son was also cut out of the will. It is not known whether that son will be challenging the will.

*According to the BBC article, Raymond described himself as a “spiv” (I had to look that one up), and behaved like one, “sporting fur coats, a Rolls Royce, a tiny mustache and a fake tan”.

Have a great weekend.

Paul Trudelle

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The recent decision of Brown J. in Re Willis Estate, 2009 CanLII 30681 (Ont. S.C.J.) addresses the issue of an appropriate sentence to impose on an attorney for property who has been found in contempt of a court order requiring him to account for his dealings with his mother’s property.

In that proceeding, the court ordered in January 2008 that a son produce an inventory of assets held by his mother either alone or jointly with him, and to provide a full accounting of all dealings with the joint assets.

The son failed to do so. Various further orders were made, and ultimately, a motion was brought to punish the contempt. 

In making a ruling, Brown J. reviewed the court’s contempt power. “A court exercises its contempt power to uphold the dignity and process of the court, thereby sustaining the rule of law and maintaining the orderly, fair and impartial administration of justice.”

Brown J. then considered whether the son had, in fact, complied with the orders, and found that the contempt had not been purged. 

Turning to sentencing, Brown J. noted the difference between criminal and civil contempt. The purpose of criminal contempt sentencing is to punish, whereas the purpose of civil contempt sentencing is coercive and persuasive, designed to enforce the rights of a private party and to secure compliance. As such, custodial sentences are rare, and lengthy custodial sentences even rarer. Incarceration, although not unheard of, is a sanction of last resort. 

The sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender.

After considering the nature of the contempt, and various mitigating and aggravating factors, the court ordered that the son pay a fine of $7,000, failing which, he was to be jailed for 7 days. He was also to retain professionals to assist him in preparing the accounting and inventories. Costs were to be spoken to.

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Yesterday, I set out the fact situation in Turner v. DiDonato (2009), 95 O.R. (3d) 147 (Ont. C.A.).

The trial judge decided that Dilia was entitled to the difference between the insurance proceeds that she received and the $100,000 insurance policy that was supposed to be in place. The trial decision was upheld on appeal.

The trial judge held that there was a clear breach of the Separation Agreement, and that the remedy was appropriate in order to put Dilia in the position that she would have been in had the contract been performed.

The Court of Appeal did not agree that the trial judge did not give properly interpret the Separation Agreement. In particular, it did not agree that the clause allowing Dilia to have a first charge against the estate for in the event that Albert died without insurance provided Dilia with the appropriate remedy. This clause, the Court of Appeal held, did not apply because Albert did, in fact, have insurance – it was simply insufficient. 

The Court of Appeal also dismissed the suggestion that the insurance policy was simply security for the support payments. Firstly, the Separation Agreement did not express that it was security. Secondly, the Separation Agreement did not allow Albert to reduce the amount of insurance as the support obligations diminished. Thirdly, it was held that allowing Dilia less under the Separation Agreement as a result of its breach by Albert than Dilia would have received but for the breach was “counterintuitive”. Fourthly, the estate’s suggestion that it would have a claim against Dilia for any insurance proceeds in excess of the support obligations was “at odds” with the stated intention of the parties in the Separation Agreement to fully settle their rights and obligations.

The Court of Appeal agreed that Dilia’s admission that her understanding was that the insurance policy was security for the support payments was not relevant. The Separation Agreement was unambiguous, and contained an “entire agreement” clause, and extrinsic evidence was irrelevant. Further, as such, corroboration under s. 13 of the Evidence Act was not required, as the decision was based on the interpretation of the agreement, and not the evidence of Dilia. Finally, the Court of Appeal dismissed the suggestion that Dilia received a windfall: it held that Dilia received simply what she was to receive under the Separation Agreement.

Did you concur or are you in dissent?

Paul Trudelle

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Today I will set out a fact situation and let you determine the outcome. Tomorrow I will let you know how the trial judge and Court of Appeal decided the matter.

(As observed by a judge in Newmarket recently, being appointed a judge is like going to heaven – all lawyers want to go there, but just not yet.)

The Facts:

Albert and Dilia separated. They entered into a Separation Agreement whereby Albert was to pay spousal support to Dilia until she turned 65. He was also required to maintain a policy of life insurance benefitting Dilia in the amount of $100,000 until Dilia turned 65. The policy also provided that in the event that Albert died without insurance in effect, then his support obligations would be a first charge on the estate.

Albert died before Dilia turned 65. At the time of his death, he didn’t have the required life insurance. Dilia only received insurance proceeds of $43,507.15. She then sued Albert’s estate and his second wife, claiming the difference between the $100,000 that she was to receive under the Separation Agreement, and the amount that she in fact received.

Albert’s estate and second spouse argued that the policy of insurance was only security for the spousal support that Dilia was to receive, and that the insurance proceeds that Dilia received were in excess of her support entitlement. (It was an agreed fact that the support obligations until the age of 65 were less than the insurance proceeds received.) They argued that an award of $100,000 would be a windfall to Dilia.

What did the Court (and Court of Appeal) do? Tune in tomorrow.

(For those who can’t wait, see Turner v. DiDonato (2009), 95 O.R. (3d) 147 (Ont. C.A.).)

Paul Trudelle

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I’m not sure what to make of this.

Coffin Couches is a US company that “recycles” coffins into couches. The company collects “used” coffins from funeral homes. Apparently, the coffins are not used for burial due to slight cosmetic inconsistencies, and cannot be resold. Coffin Couches reconfigures them into a “unique one of a kind coffin couch”. The couches even sport a biohazard insignia. According to the website, once a human body is placed in a coffin, it is considered biohazard tissue. The couches have to have the biohazard insignia “in the event body fluids are exchanged on these coffins”. (Increased “creepy” for many; increased “cool” for some.)

According to the website, Jesse James of West Coast Choppers, Kat Von D of LA Ink and the Los Angeles County Coroners Office each have a coffin couch.

US prices range from $3,500 to $4,500 ($2,800 for the Monster Chair), plus shipping.

I don’t expect to see one in our reception area any time soon.

Thanks for reading.

Paul Trudelle

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CNN recently reported disturbing events, whereby employees at a historic cemetery near Chicago allegedly dug up more than 300 graves as part of a conspiracy to resell burial plots to unsuspecting buyers.  

Reportedly, at least four people are in custody facing a slew of felony charges. Additionally, investigators are in the process of attempting to determine the scope of the scheme. It may not be an easy task since, among other things, it is possible that the employees doctored records to conceal the scheme.   They are expected to use thermal imaging to assist their efforts, and have brought in forensic scientists to help.

While most of the excavations reportedly occurred in back lots, where the plots were older and not frequently visited, they are not certain of this. Other plots may have been disturbed as well.

Investigators are faced with the unenviable task of trying to find the families of those whose graves were disinterred, as well as those people who unknowingly purchased occupied plots. 

A sad day indeed….

Natalia Angelini

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Given the nature of estate litigation, a party to the dispute, and/or a witness that is to testify at trial, are at times elderly, in poor health, incapable of testifying or out of the jurisdiction, such that it is appropriate for their evidence to be given out of court in advance of the trial date. Rule 36 of the Rules of Civil Procedure regulates taking of evidence before trial. 

A person may be examined under this Rule either by consent of the parties or with leave of the court. The court is to take into account several factors when determining whether to grant leave to order an examination before trial, which are particularized in Rule 36. These include the convenience of the witness and saving of costs. This permits the court to take a more broad approach, since previously these orders were limited to situations where it was established that the witness will likely be out of the jurisdiction or incapable of testifying.  

Moreover, previously, leave of the court was necessary before the examination of a witness could be used at trial. Now, the transcript or videotape of the examination of a witness who is not a party may be used “unless the court orders otherwise”, and the witness shall not be called to give evidence at trial except with leave of the court. In contrast, the transcript or videotape of the examination of a witness who is a party may not be used except with leave of the court or the agreement of the parties.

While it seems to me that live testimony will likely have more impact then a transcript or videotape, if the circumstances warrant it, this is a handy tool to avoid difficulties and complications in attempting to get witnesses and/or parties on the stand when the trial date arrives, and ensures the evidence is preserved and gets before the court.  

Have a great day,

Natalia Angelini

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As noted in one of my earlier blogs, gone are the days where estate litigants almost automatically were awarded their costs out of the estate. The trend in recent years has adopted elements of the loser- pays philosophy, which has long been applied to other types of litigation. 

Moreover, parties in estate matters who conduct themselves in such a manner that serves to protract and unnecessarily increase the costs of litigation can more and more often find themselves penalized with a cost award.

This trend is no more clearly seen than in Teffer v. Schaefers, a recent decision of the Ontario Superior Court of Justice, where an estate trustee was Ordered to personally pay more than half of the legal costs awarded to the various other parties due to his conduct in the litigation.

That said, less than 25% of the aggregate legal costs sought were actually awarded (although I understand further submissions are being made).  This result is indicative of another noteworthy trend that we are seeing in estate matters. That is, judges are increasingly exercising their discretion to ensure cost awards are subject to the overriding principle of fairness and reasonableness in light of all the circumstances of each particular case, as well as proportionate to the amount at issue (in addition to being reflective of the factors set out in Rule 57.01(1) of the Rules of Civil Procedure).

This decision should serve as a caution to anyone involved in estate litigation – costs (even to the victor) are not guaranteed! 

Have a great day,

Natalia Angelini

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In estate litigation it is not uncommon for one or more disputing parties to be under disability. Unless the court or a statute provide otherwise, a party under disability must be represented by a litigation guardian (see Rule 7 of the Rules of Civil Procedure, which regulates proceedings by or against parties under disability). 

Someone can act as the litigation guardian for a plaintiff (or applicant) by filing an affidavit with the court, the required contents of which are set out in Rule 7.

In the case of a defendant (or respondent) who is a minor, the Children’s Lawyer shall act as the litigation guardian, unless the court orders otherwise.

In contrast, in the case of a defendant who is an adult, aside for a few exceptions set out in the Rule, no one can act as a litigation guardian until appointed by the court. The evidence that must be filed in support of the motion for such appointment is also particularized in the Rule.

Some other noteworthy provisions in Rule 7 are:

·                    a litigation guardian other than the Children’s Lawyer or the Public Guardian and Trustee must be represented by a lawyer;

·                    a litigation guardian shall diligently attend to the interests of the person under disability and take all steps necessary for the protection of those interests, including the commencement and conduct of a counterclaim, crossclaim or third party claim;

·                    where it appears to the court that a litigation guardian is not acting in the best interests of the party under disability, the court may substitute the Children’s Lawyer, the Public Guardian and Trustee or any other person as litigation guardian; and

·                    no settlement of a claim made by or against a person under disability, whether or not a proceeding has been commenced in respect of the claim, is binding on the person without the approval of a judge.

Have a great day,

Natalia Angelini

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The sudden death of Michael Jackson has sent a shock-wave of sadness across the globe. I expect it will be some time before you can tune in to various media without seeing coverage on it. 

I find myself drawn in to the discussion, which one of my colleagues also blogged on last week.  His commentary focused on the expected complex administration of Jackson’s estate, given both his sizeable assets and debts. This blog focuses on one aspect of the human element of the tragedy, sparked by Jackson’s Will. 

As noted in a recent New York Times Article, in his Will Diana Ross is appointed as the guardian for Jackson’s children if his mother is no longer willing or able to fulfill that role. 

In Ontario, a custody or guardianship appointment by Will is not determinative of the issue. It only has a temporary effect, in that any appointment for custody or guardianship expires ninety-days after such appointment becomes effective (i.e. ninety-days from the date of death in this case) (see section 61(7) of the Children’s Law Reform Act). 

However, if the appointee applies to the court for custody or guardianship within the ninety-day period, the appointment expires when the application is disposed of.   While each case is usually fact-specific, I would expect that a testator’s wishes set out in his/her Will is a factor a court would give significant weight to when considering such an application.

In Jackson’s case this issue is already a live one, with potentially several people vying for custody and/or guardianship. It will be interesting to see who ends up being the primary caregiver(s) of his young children.

Have a great day,

Natalia Angelini

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Tomorrow is July 1^st.  It makes me think of Hatley, a small village in Quebec’s Eastern Townships and its annual Canada Day Celebration. (My wife grew up nearby.)  Across Canada, flags fly high and memories abound. 

If you will allow this segue, memories are often a significant part of estates that are easily overlooked.  When an estate arises, we often focus on assets without putting our mind to the deceased’s legacy.  For many of us, our papers and personal files do not amount to much. But it’s a different story for politicians.

An interesting paper from the Faculty of Information Quarterly at the University of Toronto compares the treatment of Presidents’ papers versus Prime Ministers’ papers. The retention of U.S. papers seems to be more statute driven, although presidential Executive Order can govern the ultimate treatment of documents.

Apparently, on his first day on the job, President Obama overturned President Bush’s order that had limited access to presidential papers. 

In Canada, Prime Ministers’ papers fall into two categories: government/institutional records and personal/political records. Former Prime Ministers receive tax credits for the value of the personal papers they donate to Library and Archives Canada. That value is not disclosed.

Similarly, in the U.S., some financial incentives exist for Presidents: in 2000, the Justice Department paid the Nixon estate $18 million to compensate for records seized in 1974.

In both cases, restrictions regarding the release of certain documents might apply. For example, apparently here in Canada, for 2.5 million records in the National Archives, one must write to Mr. Mulroney directly for permission. 

Have a safe, relaxing Canada Day.

Jonathan

 

 

 

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Many people, including myself, paused on learning of Michael Jackson’s death.   While I have not searched out his music for several years, his death marks the end of an era. 

Michael Jackson’s music is part of my memory of growing up. I attended his concert in October 1984 at the Canadian National Exhibition in Toronto.

Of course, in my role as an estate litigator, other thoughts also come to mind. Namely, what issues will arise in untangling Michael Jackson’s estate?

Some of these issues are addressed in a New York Times article. One executive describes the singer's estate as a "mess".  There are clearly valuable assets, including a 50 percent share of Sony/ATV Music Publishing which owns the rights to more than 200 Beatles songs; this asset alone may be worth more than $500 million.  Apparently these shares were not owned directly by the pop star, but rather by a trust controlled by his mother.  The shares therefore may not fall to Michael Jackson's  estate but they would be part of his legacy.

The estate has debts too: Neverland cost many millions of dollars to operate annually and in recent years there was a $24.5 million debt against the property. Some commentators estimate Michael Jackson’s overall debt to be $400 million. 

All of these issues – from copyright and real estate assets to Michael Jackson's personal and business loans – will take many months, if not years, to sort out.   

There were recent plans for a 50-concert comeback in London, England. Apparently fans had paid $90 million which will have to reimbursed and the concert preparations included payments for renovations to the venue as well as advance payments to Michael Jackson. 

As the administration of Michael Jackson’s estate unfolds, I suspect there may be more related topics to be covered in our blog.

Of course, for us regular folks, estate issues that we encounter in our own lives will be simple in comparison to the challenges faced by the Jackson family.  But there are some lessons: careful management of one’s affairs and good planning will lessen the load on named executors and estate trustees. 

Enjoy your Monday. 

Jonathan

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Today’s blog is a continuation of my blogs this week addressing some aspects of preparation for a trial in a contested passing. I briefly touch upon transcripts, the Request to Admit and Witnesses today.

It is important in preparing for trial to review the transcripts of the examinations conducted to assist counsel with locating evidence in the transcripts during trial, including admissions and/or inconsistent statements made by a witness at trial, to address the completeness of questions on the examinations, and whether additional discovery is needed before trial.

If a damages brief is to be provided by the opposing party as a result of an undertaking at examinations or otherwise, ensure that it has been provided.

A party may also, further to Rule 51.02 of the Rules of Civil Procedure, at any time, by serving a Request to Admit, request any other party to admit, for the purposes of the proceeding only, the truth of a fact or the authenticity of a document. A copy of any document mentioned in the Request to Admit shall, where practicable be served with the request (unless a copy is already in the possession of the other party).

The opposing party must respond to the Request to Admit within 20 days, failing which the opposing party will be deemed to admit the truth of the facts asserted in the Request to Admit or the authenticity of the documents referred to in the Request to Admit. As such, the Request to Admit should be served at least 20 days before the commencement of the trial, and quite some time before that, if possible, so that counsel will know what facts need not be proved or the authenticity of documents that will not need to be proved.

 

There may be cost consequences if a party refuses to admit the truth of a fact or authenticate documents which are proven or authenticated during the trial.

 

Requests to Admit may be effective to: (i) reduce the facts in dispute, (ii) reduce the number of witnesses to be called and/or the examination of a witness, (iii) minimize the costs and length of the trial, and (iv) avoid having to authenticate documents.

With respect to witnesses, amongst other things, it is helpful to make a witness list of anticipated witnesses for each of the parties, prepare a chart of the issues/documents to be proved by each witness and identify and consider the concerns, evidentiary or not, with the evidence and documents to be dealt with by each witness. If the witnesses are experts, Rule 53 of the Rules of Civil Procedure is applicable. Summons to Witness need to be considered (Rule 53.04) as well as whether an Order excluding witnesses is necessary (Rule 52.06).

Thanks for reading.

Craig

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In yesterday’s blog, I mentioned that the election of the Ontario Bar Association (OBA), Trusts and Estates Section Executive for the year 2009-2010 was confirmed at the Section’s year end dinner on May 28, 2009. 

Suzana Popovic-Montag is the incoming Chair of the Executive and I happen to be the incoming

Vice-Chair. The balance of the slate is as follows:

 

Past-Chair:                   Kimberly Whaley

 

Secretary:                      Ed Esposto

 

Members-at-Large:     Ann Elise Alexander, Clare Burns, Robert Coates, Vincent De Angelis, Shael Eisen, Jan Goddard, Eric Hoffstein, Danielle Joel, Sean Lawler, Mitchell Leitman, Jane Martin, Deborah Petch, Joanna Ringrose, Liza Sheard, Susan Stamm, Dina Stigas, Sender Tator, Ed Upenieks, Laura West and Melanie Yach.

 

I look forward to again working on the Executive and having a successful year.

 

Before turning the page on this past year, though, I would like to sincerely thank Kimberly Whaley for all of her efforts, hard work and counsel as the Chair of the Executive.

 

Have a nice day.

 

Craig

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The Ontario Bar Association (OBA), Trusts and Estates Section, year end dinner was held on May 28, 2008 at the Gardiner Museum in Toronto. 

Kimberly Whaley, the Chair of the Section for the past year, brought the past year to a close and the election of the OBA, Trusts and Estates Section Executive for the 2009/2010 year, was confirmed. 

The Section also paid tribute to this year’s recipient of the Award for Excellence in Trusts and Estates, Timothy Youdan.

The Award for Excellence was created to recognize exceptional contributions and achievements by members of the OBA to the area of trusts and estates. The criteria for the award is demonstrated leadership in the trusts and estates bar through knowledge, experience, skill, commitment, passion and strength of character, plus all or some of the following:

·         academic excellence through teaching at the Bar Admission Course, lecturing at a law school, participating in Continuing Legal Education and/or academic writing;

·         participation in the OBA Trusts and Estates Section Executive or the Law Society of Upper Canada on wills, trusts and estate matters; and

·         contribution to the development of wills, trusts and estate law.

In addition to the Award for Excellence, C. David Freedman was presented with the Widdifield Award and Kimberly Whaley with the Hoffstein Book Prize.

Congrats to Tim, David and Kim. The venue, dinner and evening were all quite enjoyable.

 

Thanks for reading.

 

Craig

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Being immersed in the world of law, we're constantly confronted with upsetting and often depressing stories.  It feels good to occasionally resurface to hear about a positive story.  

In the London Evening Standard, David Cohen writes about the new queen of Soho, a 23 year old, named Fawn James.  For those of you who are not familiar with the area, Soho is located in the centre of the West End of London, England, in the City of Westminster.  

Fawn James inherited £75 million from her grandfather Paul Raymond, who was well known as Soho's property tycoon.  Paul died approximately one year ago.

In his article, Fawn James is described in a manner that we can all relate to at some point in our life, a student living on a budget.  One year later, Fawn is £75 million richer and both her and her family now controls 60 of Soho's 87 acres.

In her first interview since inheriting her grandfather's treasure chest Fawn says that her "first mission will be to make Soho greener.  We're looking at retrofitting our entire stock of buildings to make them more environmentally friendly".   She's also committed to her community, "I think it's important to support charities operating Soho and in the coming months I'll be assessing which one we want to assist."  As she reflects back on her time with her grandfather her only concern now is "to make him proud".  

Thank you for reading,


Rick Bickhram

 

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An article published in The Columbus Dispatch, an Ohio publication, shows us how vulnerable seniors can be to fraud through the purchase of financial products that are technically legal but not in their best interest.

An 83 year-old woman had her life savings placed in an annuity but was subsequently solicited to cash in her existing policy and buy a new one. The 83 year-old suffered from partial blindness as a result of diabetes, dementia and she had recently moved into a nursing home. After being convinced to purchase a new annuity, the woman died two weeks later. She received one monthly payment of $1,500 before she died. 

The beneficiaries of her estate received half of what they thought they should have from the new annuity and sought to recover from the investment company. The arbitration panel of the Financial Industry Regulatory Authority sided with the deceased’s estate and awarded the beneficiaries of her estate compensatory damages.

The article states that this is not an uncommon practice. In January 2008, the Financial Industry Regulatory Authority fined the broker $225,000 for “making unsuitable sales of deferred variable annuities to 23 customers”. 

Annuities can be great investments, but BUYER BEWARE. If there are questions about the age and health of the potential purchaser, it may not be in their best interest to purchase the annuity.

Thank you for reading,

Rick Bickhram

 

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James Brown’s estate issues have appeared on our blog on a number of occasions: see here, here, here and here.

It appears that the matter may now be at an end. On Tuesday, a South Carolina judge approved a settlement that gives nearly half of his estate to a charitable trust, a quarter to his wife and young son, and a quarter to his six adult children, according to an Associated Press report on the Macleans.ca website.

James Brown died on December 25, 2006. Numerous issues arose following his death. There were allegations of improper management of his estate; a dispute over where and how to bury his body; and an issue as to the entitlement of his wife and son, both of whom came along after his will was made in 2000.

The exact size of the Godfather of Soul’s estate is unknown. His estate was said to be valued at $80m, but subject to substantial debt.

The settlement was reached in January 2009, but the court refused to approve the settlement, and required further information. That approval was granted on Tuesday.

But wait! There may be an encore. There are pending lawsuits by the prior estate administrators, and a former employee. We may not have heard the last of this matter.

Thank you for reading, and have a great weekend.

Paul Trudelle

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Ontario’s new harmonized sales tax is coming into effect on July 1, 2010. One of its effects will be to impose PST on funeral services: services that have previously been exempted from PST.

According to the harmonized sales tax, funeral services will now be taxed at the rate of 13%, up from 5%. The effect on a $5,000 funeral would be to raise the tax payable from $250 to $650.

The new harmonized tax may also have an effect on prepaid funeral services. According to a May 27, 2009 Toronto Star article, there are 224,257 prepaid funeral contracts in Ontario, and about 1 in 4 funerals in Ontario are prepaid.

The Ontario Minister of Finance has indicated that the government hopes to implement some sort of grandfathering clause, so that funeral services prepaid before a certain date remain exempted from the PST. However, nothing has been finalized yet. The cut-off date would likely be some time before July 1, 2010.

Those considering a prepaid funeral would be wise to complete their plans sooner rather than later. The new tax, like death, is approaching.

Thank you for reading.

Paul Trudelle

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Probably “123456”. No? Try “password”, or some variation of it.

Our heads are becoming jammed with passwords. Almost every website service we visit requires a password. 

A few diverse posts that I have come across have looked at password usage. 

In one study, which lists the 500 most popular passwords, reported here, the top 4 most common passwords are said to be “123456”, “password”, “12345678” and “1234”.

In another report, found here, Robert Graham writes about his analysis of the passwords of 20,000 users taken from a popular website and posted by a hacker.

He finds:

-16% of the passwords matched or were based on a person’s first name;

-14% were patterns on the keyboard, such as “123456” (I thought I was the only one to think of that) or “qwerty” or “1qaz2wsx” (check your keyboard);

-4% were variations of the word “password”, such as “passw0rd” or “password1”;

-4% referred to nearby items, such as the name brand on your computer or monitor;

-3% are swear words, or terms of endearment. The F-word is particularly popular;

-35% had 6 characters, 0.34% had 1 character, 1.14% had 10 characters.

See Robert Graham’s report for more detail, and check out the “Top 500” to see if your password makes the list.

As for estate practitioners, guessing their password is easy: 9 times out of 10 it is “intervivos1”.

Thanks for reading.

Paul Trudelle

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Yesterday, my blog touched on the use of Rule 39.03 to examine non-party witnesses before the hearing of a pending motion or application.  As noted, Rule 39.03 can be used to summons solicitors to give relevant evidence about a deceased former client in estate litigation proceedings. However, given the special relationship between a solicitor and his/her client, it is always good practice to obtain a court order in advance which directs a solicitor to attend an examination and waives confidentiality and solicitor-client privilege over any evidence provided.  As demonstrated by a recent case, Rule 39.03 is not a carte blanche to examine solicitors about former clients.

In Nieweglowski Estate (Re) 2009 Canlii 13033 (On. S.C.), Justice Strathy held that a solicitor is entitled to the protection of a court order before being examined as a witness pursuant to Rule 39.03.  The case involved estate litigation over Mr. Nieweglowski’s Will and a property transfer made by him before his death.  Further to a prior court order, the solicitor who had assisted Mr. Nieweglowski produced his files regarding the matters.  However, the court order did not provide for the solicitor’s examination. The solicitor was then subpoenaed to give evidence pursuant to Rule 39.03.  Although the solicitor attended at his examination, he refused to give evidence. The ground for his objection was the absence of any express provision in the first court order. The party that had subpoenaed the solicitor moved before Justice Strathy for an order that the solicitor provide his evidence and that he be personally responsible for the costs of the first aborted examination.

Justice Strathy refused to order costs against the solicitor. His Honour held that it was not unreasonable for the solicitor to insist upon a court order directing him to attend an examination and provide evidence about privileged communications with a former client.  Accordingly, Justice Strathy ordered that the solicitor was entitled to provide his evidence regarding matters that would otherwise be privileged or confidential.

Have a great day!

Bianca La Neve
 

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Estate litigation differs in many ways from general civil litigation, as noted in previous blogs on our website. Differences notwithstanding, estate litigators should still make it a habit to consider all of the Rules of Civil Procedure when planning out their litigation strategy.

In gathering the necessary evidence in estate litigation matters, counsel must resort to Rule 39 of the Rules of Civil Procedure. Rule 39 deals with how evidence may be provided on motions and applications. In the usual course, evidence is given by affidavit and cross-examination on affidavits. However, Rule 39 provides for other ways to obtain evidence:

• by the examination of a witness before the hearing of a pending motion or application [rule 39.03(1)];
• by the examination of a witness orally at the hearing, with leave of the court [rule 39.03(4)]; or
• by the use of an examination for discovery on the hearing of a motion [rule 39.04].

The examination of a witness before the hearing of a pending motion or application [rule 39.03(1)] can prove a useful tool for obtaining evidence from non-parties to the litigation. If a non-party witness has relevant evidence, there is arguably a prima facie right to resort to this rule so long as the right is not exercised in a way that constitutes an abuse of process. A witness examined under Rule 39.03 may be cross-examined by the examining party and any other party. 

In my own estates and trust litigation practice, I have used Rule 39.03 to summons solicitors and health practitioners to give relevant evidence about a deceased individual in Will challenge proceedings. Rule 39.03 can prove a useful tool to other estate litigators in marshalling their evidence for motions and applications. 

Have a great day!

Bianca La Neve

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I couldn’t help but do a double-take when I came across an interesting article in the Globe and Mail by Anne McIlroy with the above-captioned title. 

Ms. McIllroy comments on the latest advances in stem-cell research, which indicate that it may be possible for someone to become a biological single parent - the source of both the egg and the sperm! 

How it seems to work is that adult skin cells can be turned into stem cells, and once they have been reprogrammed, these cells can be turned into many of the specialized cells that make up the human body. If some of the reprogrammed stem cells were transformed into sperm, and others into eggs, together they could be used to create an embryo. 

It hasn’t happened yet, but the possibility has made this a hot topic.   While it may be a discussion the Canadian legislature is not yet prepared to engage in (we have one of the more restrictive laws governing stem cell research), I would expect that if and when things change, advancements such as this will have widespread impact. 

I wonder how it can affect the estate planning area: Would it simplify estate planning by carving out spousal bequests and/or claims? Would it impact on how children of a testator are defined and/or treated? Would it increase the strength of a dependant support claim by the biological single parent child versus that of a competing child born with two biological parents?

I find the concept of biological single parenthood to be bizarre, unnatural and a little scary.  But perhaps I'm just too much of a traditionalist to keep up with this rapidly changing world of ours. 

Have a great weekend!

Natalia

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You would expect that a minor or a party to a proceeding who is declared mentally incapable to manage his/her property and/or personal care (under sections 6 and 45 of the Substitute Decisions Act) would not be able to or required to participate in the litigation.   However, this is not so. 

Pursuant to Rule 31.03 (5)(b) of the Rules of Civil Procedure, a party under “disability” (defined to include minors and mentally incapable adults) can be examined for discovery if he/she is "competent to give evidence".  

The onus of establishing incompetence rests on the party alleging it: Barnes v. Kirk, [1968] 2 O.R. 213 (C.A.).

Application of the Rule has led to varying decisions and approaches, a few of which I note below.

Mental Incapacity

·                    a party under disability may be examined if competent to give evidence subject to the discretion of the court to impose limits where the examination would be oppressive, vexatious or unnecessary: Nyilas v. Janos (1985), 50 C.P.C. 91 (Ont. Master);

·                    an appointment for discovery should be struck out on the grounds of unsoundness of mind only in the clearest cases – the preferable course is to allow the trial judge to rule on the admissibility of the examination and the credibility of the witness: McGowan v. Haslehurst (1977), 17 O.R. (2d) 440 (H.C.);

Minors

·                    the right to examine a minor for discovery is not absolute – the court should interview the child before exercising its discretion in that regard: Bennett v. Hartemink (1983), 42 C.P.C. 33 (Ont. H.C.);

·                    a defendant was denied the right to examine a ten-year-old plaintiff where it was found that the examination would result in psychological herm to the child: Kidd v. Lake (1998), 42 O.R. (3d) 312 (Gen. Div.); and

·                    the court permitted the examination of two plaintiffs (ages 16 and 11) notwithstanding evidence that it might cause serious psychological damage: Nyilas v. Janos, supra.

Have a great day,

Natalia

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Trusts can be varied or terminated prematurely in two ways: (1) through the operation of the rule in Saunders v. Vautier; and (2) under the powers of the court given by way of the Variation of Trusts Act.  There is also potentially a third method - by a trustee’s exercise of his absolute discretionary power given by the trust document.  

This third method begs the question: is a trustee’s discretion truly absolute? Debra L. Stephens, The Ontario Children’s Lawyer, comprehensively reviews this topic, several relevant authorities and the law in other jurisdictions in her paper given at The Six-Minute Estates Lawyer 2009, entitled "Trusts: When is a Termination a Variation?".

Ms. Stephens gleans the following principles from the authorities: that payment of all of the capital of a trust to the beneficiaries is an improper exercise of discretion where it is not in keeping with the primary intention of the settler. However, it can be justifiable where it appears the circumstances of the beneficiaries are such that payment would further, rather than frustrate, the settlor’s intentions.

Ms. Stephens also notes that the circumstances surrounding the exercise of discretion will have a large impact on its perceived propriety - each case will be examined on its unique facts i.e. the wording of the trust document, the needs of the beneficiaries and the value of the trust.

It is noteworthy that The Children’s Lawyer (Ontario) takes the position that a trustee’s “termination” of a trust is, in essence, a “variation” if there are contingent interests involved. As such, even if the discretion is absolute the trustee does not have the right to transfer the capital to beneficiaries without first giving notice to The Children’s Lawyer and securing court approval. 

Obtaining the necessary consents and court approval is something I agree with in every circumstance of a trust variation or termination by way of a trustee's exercise of his/her discretion.  It is surely the best way a trustee can avoid exposure to future litigation on the matter.

Have a great day,

Natalia Angelini

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Removing an attorney for property is notoriously difficult. A person should only seek to remove an attorney for property when clear and compelling evidence presents itself. 

Where you feel the circumstances necessitate the commencement of a removal application, I recommend that you consider the following practical and strategic evidence-gathering steps, which may add teeth to your claim:

·                    Compile a detailed list of the attorney’s misdeeds and inactions;

·                    Consider asking The Office of the Public Guardian and Trustee to investigate;

·                    Talk to neighbours and caregivers to gather critical information;

·                    Maintain regular contact with the incapable person and try to ascertain his/her wishes; and

·                    Ask the attorney for regular progress reports.

Finally, it is worth considering applying to the court for directions regarding the conduct of the attorney before embarking on a removal application. The court may implement conditions and/or restrictions on an attorney’s activities and may also provide guidance as to whether a removal application is warranted as a next step.

For more on this topic and power of attorney litigation generally, I suggest you read Ian Hull’s book, Power of Attorney Litigation, 2000, CCH Canadian Limited.

Have a great day,

Natalia Angelini

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It's Friday in late April. The May long weekend and all that cottage fuss is just around the corner.  (I like the cottage, but understandably a lot of people choose the backyard.)

In Ontario, we do not have inheritance tax like they do elsewhere, including the United Kingdom. In some cases, the several-generation home has to be sold to cover a £14,000 tax bill or, in one instance, a painting donated in lieu of inheritance tax of £700,000.

To be certain, we have taxes here. At death, often there is a deemed disposition of property unless steps have been taken in advance. An article from last year provides some thoughts on how one might plan to avoid the situation where the capital gains tax cripples an estate or the next generation.

Apparently, and maybe not surprisingly, the cottage market may be down by about 20% this season. Good news for buyers. Maybe it is also good news for those who are looking at estate planning this year. 

If the goal is to keep a cottage in the family, relative to the previous few years it might be an opportunity to trigger a disposition by transferring the property this season and, presumably, incurring a lower capital gain. Each situation requires specific tax advice. 

The economy is lousy but it might be a chance to avoid financial strain and family tension for the next generation.

Have a safe weekend, wherever you spend it.

Jonathan

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On Tuesday I blogged about mortgage fraud and suggested that financial institutions may be at greater risk because of the B.C. Court of Appeal decision: Re Oehlerking Estate, 2009 BCCA 138.

Why would they be at increased risk?

In the B.C. case, the Judge ordered that the fraudster’s title be set aside and that a new title be issued in the name of the plaintiff executrix. However, the Judge was satisfied that the financial institution had not “participated in the fraud” therefore the mortgage remained as a valid charge on title to the land. 

The B.C. Court of Appeal overturned that latter point when it declared that the mortgage is null and void as against the plaintiff and her title. 

The reasons were the same as those presented in a B.C. Court of Appeal decision released on the same day in Gill v. Bucholtz  (2009 BCCA 137). There is a thorough review of the Torrens land registry system and the development of B.C.'s Land Title Act.  Land title systems differ per province but the B.C. decision is likely persuasive.

In Gill v Bucholtz, the Court held that the B.C. Legislature adopted the policy that the cost of frauds perpetrated against mortgagees and other chargeholders should be borne not by the public (as the funders of the Assurance Fund but by lenders and other chargeholders themselves.”

Parties to real estate transactions rely on title searches. The case law shows that title searches have limitations, especially if a fraudster has used someone else’s identification to change the title document. It is up to lenders to now perform due diligence that may require that they delve deeper than the documents alone. Sometimes good old fashioned shoe leather might be put to work to check out the property in question; even a knock on the door to ensure that the owner is actually refinancing by way of a new mortgage. This extra work may come with a fee though. 

Thank you for reading. 

Jonathan

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In keeping with yesterday’s blog on a British Columbia real estate matter, today I focus on another BC case - Albas v. Gabriel 2009 BCSC 198 - that involves the Indian Act, a federal statute. 

For a quick recap of the interplay between provincial and federal jurisdiction regarding estate matters and First Nations people living on reserves, I refer to David Smith’s 2007 blog: The Administration of Estates under the Indian Act. 

Albas v. Gabriel involved an action by the plaintiff, as executor of the estate, for a declaration proving the deceased's Will in solemn form.  The defendant beneficiaries appealed to the Minister of Northern and Indian Affairs because the Minister has jurisdiction to approve a Will made by an Indian and to confirm the appointment of an executor to administer the estate. Specificially, the Minister’s authority is provided by section 43 of the Indian Act.

A member of an Indian Band and a resident of a reserve, the deceased operated a trailer park and he was a “locatee” of the land because he owned “certificates of possession”: valuable assets that he left equally to his daughter and two step-children. This was just one of the businesses with which the deceased was involved.

The daughter challenged both the validity of the Will and the administration of the estate. The judge determined that the daughter believed that if the Will was declared invalid, she would inherit the entire estate.

Because of the Will challenge, the Minister transferred jurisdiction over the estate to the Supreme Court of British Columbia pursuant to s. 44(1).

Ultimately, the Court found that the Will was valid because it was not forged and the testator had capacity as well as knowledge of the Will which he approved.

Enjoy your day.

Jonathan

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Howard J. Feldman made a presentation on the circumstances where a net family property ("NFP") equalization can set aside an estate feeze.  He also discussed structuring the estate freeze transaction to qualify as an exclusion from the transferee child's NFP. 

To refresh: the classic estate freeze is a transaction involving a business-owning parent and his or her child.  The parent transfers the equity shares in the business to the child but retains control of the company through preferential shares ("prefs").  The prefs have a fixed redemption and liquidation value, so all capital growth is with the equity shares transferred to the child.  The parent "freezes" his own level of equity in the business, leaving future capital growth to the child.  The goal is to avoid the child receiving the equity in the company on the parent's death, because the capital gains tax liability would presumably have grown significantly.  Capital gains tax is payable when the parent transfers the shares under the estate freeze transaction, but presumably smaller than it would be on the parent's death.  

The problem is that an estate freeze during the transferor parent's marriage potentially removes assets from that parent's property for the purposes of the NFP equalization.  This can conflict with the philosophy of the NFP equalization payment, which is that marriage is a partnership and spouses' collective increase in net worth during the marriage should therefore be evenly divided between the spouses at the end of the marriage.  The parent's subsequent death or divorce can trigger a challenge by the spouse of the estate freeze. 

Among Mr. Feldman's points and recommendations:

• the form of the transaction and relevant documents is critical (see the paper for reasons)
• the solicitor must have a well-documented file and written instructions from the client, due to the risk of the transaction being challenged
• Declarations to Revenue Canada and financial institutions are not considered binding in family law
• a gift of shares under a corporate reorganization may not excluded where there is not family trust, but beware that sooner or later the leading cases may be overturned (with a plethora of qualifications and circumstances detailed in the paper)
• gifting shares or the cash to buy the shares are subject to numerous, complex considerations (no pun intended)

This barely scratches the surface of the summary and recommendations.  It is well-worth the read.  The entire Six-Minute Estates Lawyer 2009 program can be purchased here.

Have a good day,

Chris Graham

 

 

  

 

    

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On February 26, 2009, the Canadian Radio-television and Telecommunications Commission (“CRTC”) approved an application for a French-language specialty programming service that would be dedicated to the broadcast of obituary notices, notices of hospitalization and messages of thanks and prayers. The channel, called “Je me souviens”, will also air documentaries on the life of popular or important individuals.

According to a Montreal Gazette report, the station plans to go to air this summer. If it is successfully, the promoter plans to launch an English language channel for the rest of Canada.

The channel will be able to air national ads. The channel will also raise money by charging a fee, as yet undisclosed, for airing the obituaries.

Gerald Dominique, the promoter, says that his channel will give family and friends an opportunity to broadcast more information about their deceased loved ones: more than what can be published in a standard death notice. “My goal is that no death goes unnoticed.”

Thank you for reading.

Paul Trudelle

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A trustee, whether incoming or outgoing, needs to be aware of and consider his or her potential liability as trustee and over the administration of the trust. The trustee’s conduct may be protected, limited or exonerated by the terms of the trust, statute, an Order relieving the trustee of liability, the existence or provision of releases or indemnities, a passing of accounts, the conduct of the beneficiaries, whether indirect or direct, and/or the assistance of the Court. 

My blogs this week will, to some extent, touch upon some of the ways that the potential liability of a trustee can be protected, limited or exonerated.

 

To begin with, a trustee, whether incoming or outgoing, ought to carefully review the terms of the trust document as the trust document may contain provisions that impact on the potential liability of the trustee.

A trust document may or may not include exculpatory provisions that appear to absolve a trustee from consequences of a breach of trust or abuse of directions.   

Exculpatory clauses can protect the trustee by raising the level of culpability required to be found personally liable. The clause may also limit the extent of the trustee’s personal liability to the value of the assets of the trust instrument.

 

A trustee should be cautious, however, if he or she is relying on an exculpatory clause in a trust document to exonerate him or her from liability as such clauses can be held to be invalid, especially where they are broad, or attempt to completely exonerate any and all conduct of the trustee. While there is little Canadian caselaw on the issue, relatively speaking, commentators have suggested that the following principles might be adhered to by Canadian Courts: (a) an exculpatory clause will not excuse liability for acts of gross negligence; (b) an exculpatory clause will not excuse liability for willful defaults or intentional wrongdoing; (c) an exculpatory clause will not excuse liability for acts of fraud or dishonesty; and (d) an appropriately drafted exculpatory clause may be effective to relieve a trustee from liability for breaches of trust of lessor culpability than acts of gross negligence, intentional wrongdoing or bad faith.

 

Thanks for reading.

 

Craig.

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I recently stumbled on an article by Eileen AJ Connelly, where she discusses the issues that might arise with aging relatives or friends. I found Ms. Connelly’s article to be interesting because Canada is an aging society, but more particularly because it provides her readers with a strategy on how to approach the subject of managing finances with an elderly relative and what signs to watch for if it is suspected that an elderly relative might be having trouble handling finances.

In her article, Ms. Connelly lists the following “warning signs” to watch for if you suspect an elderly relative, client or friend may be having trouble handling finances:

 

1.                  Unopened mail;

2.                  Late or unpaid bills; collections actions;

3.                  Confusion or lack of interest about what bills have been paid;

4.                  Bounced checks;

5.                  Disorganized personal paperwork;

6.                  Uncashed cheques or unclaimed property reverting to the government;

7.                  A large number of magazine subscriptions; and

8.                  Unusual or increasing direct mail or shopping-channel purchases.

 

The theme behind Ms. Connelly’s article is not to wait to get involved, but be proactive. If you have noticed a possible problem with an elderly relative or friend you should not wait to have the dreaded conversation of managing finances. The longer you wait, the greater the risk that any existing problems will only accumulate. Ms. Connelly states that most elderly relatives, like parents, are afraid that they are bothering their children and it’s up to the children not to assume that your offer for help will be refused.

 

Thank you for reading and have a great weekend.

 

Rick Bickhram

 

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An Estate Trustee During Litigation (“ETDL”) is typically seen as an officer of the court who represents the Deceased.  An ETDL has a wide variety of duties, which fundamentally includes administering assets, and paying the outstanding debts of the Deceased.  The purpose of today’s blog is to consider two Ontario decisions where an application seeking the appointment of an ETDL was rejected and granted, respectively.

Re Lloyd, 24 O.R. (2d) 340, is a 1979 decision by the Ontario Surrogate Court, as it was called.  In this case, the widow of the deceased filed a Notice of Objection challenging the Last Will and Testament of the deceased and sought the appointment of an ETDL.  On the motion, the evidence indicated that the Applicant was unhappy because she was not being kept aware of the status of the assets, but there were no allegations expressing a concern about the preservation of estate assets or that an ETDL was necessary to prevent waste or mismanagement.  In fact, the evidence indicated that the assets of the estate were well managed, and increasing in value.  Accordingly, the Honourable Justice Clements refused the appointment of the ETDL.  

Re Groner Estate, 1994 CarswellOnt 2478, is a decision by the Ontario Superior Court of Justice.  In this case, the Applicant filed a Notice of Objection challenging the Last Will and Testament of the Deceased and also sought the appointment of an ETDL.  The Applicant was concerned that the named estate trustee had been administering the estate, despite no legal authority to do so.  The named estate trustee opposed the appointment of an ETDL.  The Honourable Justice Greer held that the size of the estate was large, however the administration of the estate was uncomplicated.  Nevertheless, Justice Greer, expressed concern over the conflict in having the named estate trustee’s lawyers acting as de facto administrator.  Justice Greer held that assets cannot be administered in a vacuum and that the perception of neutrality must be seen.

From an evidentiary point of view, both cases provide insight into what Lawyers should consider when drafting materials seeking the appointment of an ETDL.

Thank you for reading, and have a great day.

 

Rick Bickhram

 

 

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I recently learned that an old neighbour of mine was residing in a long-term care facility and I decided to visit him.  As a child, I remember my neighbour would often come out to join us in a pick up game of baseball or street-hockey.  Having known my neighbour to be a strong and vibrant individual, and despite having prepared myself, it was nonetheless disarming for me to see him in need of assistance and so dependent on others. Although, in my practice, I have cause to consider the issue of capacity almost daily, this experience caused me to reflect on the issue in a much more personal fashion.

Lawyers, particularly in our area of practice, are often required to consider capacity issues and it is easy to allow our personal views to affect our analysis.   For instance, if my neighbour left his entire estate equally among his three children, in most circumstances we would presume he had capacity.  However, if he left his estate to his caregiver, to the exclusion of his children, most of us would be inclined to conclude that he had either acted for want of capacity or was perhaps coerced to make a Will while vulnerable to undue influence.  

People do not typically become incapacitated overnight, except in circumstances where a catastrophic event has occurred.   Capacity to make a Will has been described as knowing and understanding the nature and effect of your dispositions and understanding who would be the natural persons to enjoy the bounty of their estate.

In making this determination, if there is any doubt regarding a client's capacity it is surely advisable to obtain the appropriate capacity assessment in the circumstances.

Have a great week! 

 

Rick Bickhram

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In a paper recently given by Mark Handelman, he comprehensively reviewed POA for PC, which document, he notes, is more often prepared as an afterthought to the Will and POA for Property package - too frequently granted without serious discussion between lawyer and client and between client and proposed attorneys.

A variety of noteworthy issues are covered in Mr. Handelman’s paper, including the following:

· the requirements of execution (i.e. required age of grantors and attorneys, as well as witness requirements and restrictions);

· when POA for PC become effective;

· revocation of POA for PC (i.e. capacity requirement and method and scope of revocation)

· the two tests (minimum) for a grantor's capacity that lawyers ought to turn their minds to (see the Substitute Decisions Act, s. 45; and Health Care Consent Act, s. 4(1));

· precautions to take when the grantor's capacity to execute a POA for PC is in question;

· special considerations, conditions, restrictions and instructions in POA for PC (i.e. authorizing use of force or restraint to place a grantor for treatment) and special processes for them to be effective; and

· advance directives in POA for PC (i.e. to give or refuse consent to a particular care plan) and the enforcement of same.

If you are interested in reading more on this topic, you can find Mr. Handelman’s paper by contacting the Ontario Bar Association.

Have a great weekend!

Natalia Angelini

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When advancing a dependant support claim, it is important to determine where the deceased person was domiciled[1] at death.

Under the former dependants’ relief legislation (Dependants’ Relief Act, R.S.O. 1970, c. 126) the court could only make orders for dependant support in cases where the deceased died domiciled in Ontario. In contrast, under the Succession Law Reform Act (SLRA), courts in Ontario have the jurisdiction to also make such orders for support where the deceased died domiciled outside of Ontario.

The issue becomes one of jurisdiction – what assets will the Ontario courts have authority over? In brief, the answer appears to be as follows:

-          if the deceased person was not domiciled in Ontario, then the jurisdiction of the Ontario court will be limited to real property/immovables in Ontario;

-          if the deceased was domiciled in Ontario, and a support application was brought in Ontario, the court has jurisdiction to charge the movables of the deceased worldwide; and

-          even if the deceased person was domiciled in Ontario at death, an Ontario court order directing support for a dependant may not be enforced over real property/immovables located outside Ontario, such that the dependant may be forced to bring an application in the jurisdiction where this property is located in order to obtain the relief granted in the Ontario court order.

In Corina Weigl’s paper entitled “Conflicts of Laws in the Context of Dependant’s Relief – A Matter of Domicile”, presented at the Ontario Bar Association 2009 Institute of Continuing Legal Education, she discusses this and other related issues in greater depth. A worthwhile read!

Have a great day,

Natalia Angelini

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The Succession Law Reform Act permits dependant support claims to be brought by a spouse, sibling, child and parent of a deceased. In order to qualify as a “dependant”, however, a spouse, parent, child or sibling must be someone to whom the deceased: (a) was providing support immediately before death; or (b) was under a legal obligation to provide support immediately before death.

It is noteworthy that the definition of a “child” is not limited to minor children, or even financially dependant children. 

While claims of adult children financially supported at death are clearly recognized by the Courts, it appears that there may be a new type of claimant on the horizon – that of an independent adult child to whom no financial support was being paid immediately prior to death. 

The reason for this change can be linked to the development and application of the concept of the “moral” obligation of a deceased (see Tataryn v. Tataryn Estate and, more recently, Cummings v. Cummings), and the Courts’ interest in protecting spouses and children through applying such principle.

While it is still early days, the reasoning in certain cases subsequent to Cummings (including Juffs v. Investors Group Financial, Broderick v. Papathanasiou and Perilli v. Foley Estate) may foretell that independent adult children will have a better chance of succeeding on a dependant support claim than before. Some factors that may impact on such a claim could include the size of the estate, whether there are other competing support claims, and the intentions of the deceased.   

While claims of independent adults will no doubt remain more tenuous than claims of adult children to whom financial support was being provided at death, it will be interesting to see how the law develops in this regard. For a more comprehensive analysis of this issue, I recommend reading Susan J. Woodley’s paper entitled “The (Almost, Possible, Probable) Right of an Adult Child to Receive Support”, presented at the Ontario Bar Association 2009 Institute of Continuing Legal Education.

Have a great day!

Natalia Angelini

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Normally, it is the estate trustee who has the authority to deal with the disposition of the deceased’s remains. A deceased’s stated wishes with respect to disposition, including donation, are seen as merely precatory.

However, Ontario’s Trillium Gift of Life Network Actvaries this usual authority, in a number of respects.

Firstly, a deceased’s consent to organ donation is “binding and is full authority for the use of the body…”.

Secondly, where the deceased has not specifically consented to a donation, the Act allows specified persons to consent to the donation of the person’s own body or body parts upon death. A spouse or other family members, in a specific order, are authorized to consent to such a donation if the deceased has not consented during his or her lifetime. One of the persons authorized to consent to the donation is “the person lawfully in possession of the body”. This appears to be a reference to the estate trustee.  However, the estate trustee’s authority to consent is low on the list, after the spouse, children, parents, siblings and other next of kin.

The consent of a spouse or other person listed in the legislation is “binding and full authority” for the use of the body. The legislation therefore appears to make a limited exception to the common law authority of the estate trustee.

Consent is not to be given if it is believed that the deceased would have objected during his or her lifetime, or if the deceased did not consent, if someone higher on the hierarchical list would object.

Have a great weekend.

Paul Trudelle

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Someone forwarded me a terrific article from the February 2, 2009 issue of Fortune magazine. In it, Jim Collins, the author of “Built to Last” and “Good to Great”, notes the current economic volatility and uncertainty and states that such instability is in fact “normal”, as contrasted to the relative stability from 1952 to 2000, which he feels was an aberration.

Collins states that in order to succeed in such unstable times, organizations need a fabric of values, of underlying ideals or principles that explain why it was important that they exist. In addition, companies need to understand that it is the calibre of their people that will see them through and allow them to succeed. He gives examples of companies that have used difficult times to beef up their personnel, contrary to the prevailing trends. 

Collins observes that under duress, there is a tendency to “zoom in” on the immediate problem. His counsel is that, rather, we should be “zooming out” and looking at the bigger picture.

Collins gives some employee relations advice along the way. On the topic of staffing, he says that the right people don’t need to be managed. “The moment you feel the need to tightly manage someone, you’ve made a hiring mistake.” “The right people don’t think they have a job: they have responsibilities.”

In the context of estates, death of a loved one can indeed trigger crisis. Similarly, estate litigation can be seen as a time of chaos and despair. Maintaining an ability to “zoom out” and see the bigger picture can not only help us through these tough times, but can also help us use the crisis to grow as humans.

Thank you for reading.

Paul Trudelle

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A eulogy is a speech or writing in praise of a person or thing. The word derives from the Greek (gotta love those Greeks) word “eulogia”, meaning “good” and “words”. Although a eulogy can be used for a living person, it normally refers to a funeral oration, given in tribute to a person who has recently died.

A eulogy can be contrasted with an “elegy”, which is a poem written in tribute to the dead. A eulogy can also be contrasted with an “obituary”, which is a written biography recounting the life of the deceased. However, a eulogy can often cross the line into an elegy or obituary.

As usual, the web has a myriad of resources to help those called upon to prepare a eulogy.

Speech-writers.com offers “a pack of relevant, proven and 100% risk free speeches and or poems for your eulogy”, as well as a 100% immediate refund if you are not satisfied! (It is not clear whether the guarantee extends to the satisfaction of the deceased or other funeral-goers.)

Eulogyspeech.net offers eulogy writing guides, samples, poems, quotes and famous last words, amongst other resources.

Suite101.com has a short by helpful guide to composing and delivering a funeral tribute.

And then there is Eulogy, a 2004 movie starring Hank Azaria, Jesse Bradford, Debra Winger, Ray Romano, Kelly Preston and Rip Torn. Described as a ”black comedy that follows three generations of a family, who come together for the funeral of the patriarch - unveiling a litany of family secrets and covert relationships”, the movie received 6.6 stars out of 10 on IMDB.com.

Thank you for reading.

Paul Trudelle

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The recent Ontario Superior Court of Justice decision of Re Steen Estate addresses the issue of getting funds paid into court pending a determination of ownership.

In that case, the deceased left a will that divided her estate equally amongst her three sons. There was also a prior “Family Agreement” in which the deceased and her three sons agreed that the deceased’s intent was that each of her three sons would receive a one third share of her financial assets upon her death. The agreement went on to provide that all existing accounts of the deceased, whether jointly held or otherwise, would be totalled, and the value divided into three upon the deceased’s death.

The plaintiff, one of the sons of the deceased was also the estate trustee, brought a claim as against the two other sons with respect to jointly held accounts held by the two other sons. It appears that the plaintiff also held a joint account with the deceased as well.

The plaintiff brought a motion requiring the two other sons to pay the monies they held jointly with the deceased into court pending a determination of the issue.

The Court considered the test for having funds paid into court under Rule 45 of Ontario’s Rules of Civil Procedure. The three-pronged test requires that the moving party show:

1.                  That the moving party has a right to a specific fund;

2.                  That there is a serious issue to be tried regarding the moving party’s right to that fund; and

3.                  That the balance of convenience favours granting the relief sought by the party.

The motion was dismissed. The court held that there was no “specific fund” as the joint account with one of the defendants had been transferred into his investment account: the fund no longer existed. There was no evidence with respect to the other joint accounts.

The court also found that there was no “serious issue to be tried”. The intention of the deceased with respect to dividing her estate was clear.

Finally, the court held that the balance of convenience did not favour the plaintiff. The plaintiff only sought that the defendants’ joint accounts be paid into court, and not his own joint account. The court held that it would be “grossly unfair” to require the defendants to pay their joint account funds into court while allowing the plaintiff to hold onto his joint account proceeds.

This last point seems to have resonated with the judge. The court noted at several points in the decision that the plaintiff was not seeking to have his jointly held funds be paid into court as well.

Thank you for reading,

Paul Trudelle

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The 2009 federal Budget contains a few items relevant to Estates, particularly with respect to Registered Retirement Savings Plans (“RRSPs”). 

For a thorough review please see the 343-page document.  A Bloc Quebecois amendment to the Budget yesterday evening was defeated; Opposition Party amendments have yet to occur.  Budget speech to approval of the Budget motion could take up to four days.

While there are benefits for first-time home buyers in the Budget, and a host of infrastructure investments, not everyone is happy. Other media view the bad-time Budget as possibly providing the boost we need.

Regarding Estates, the Budget proposes that certain losses now be applied against terminal income – see page 318 of the Budget. The fair market value of investments held in an RRSP at the time of an RRSP annuitant’s death is generally included in the deceased’s income for the year of death. A subsequent increase in the value of the RRSP investments is generally included in the income of the RRSP beneficiaries upon distribution.

Similar rules apply in the case of Registered Retirement Income Funds (RRIFs). 

There is, however, no existing income tax provision to recognize a decrease in the value of RRSP or RRIF investments that occurs after the annuitant’s death and before they are distributed to beneficiaries.

Budget 2009 proposes to allow, upon the final distribution of property from a deceased annuitant’s RRSP or RRIF, the amount of post-death decreases in value of the RRSP or RRIF to be carried back and deducted against the year-of-death RRSP/RRIF income inclusion. The amount that may be carried back will generally be calculated as the difference between the amount in respect of the RRSP or RRIF included in the income of the annuitant as a result of his or her death and the total of all amounts paid out of the RRSP or RRIF after the death of the annuitant.

Assuming the Budget motion passes, this measure will apply in respect of deceased annuitants’ RRSPs or RRIFs where the final distribution from the RRSP or RRIF occurs after 2008.

This change, especially in this uncertain economy, might help to make a weak financial situation a bit more palatable.

Thank you for reading our blogs this week.  Enjoy your weekend. 

Jonathan

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The British lawyer and author, John Mortimer, died on January 16, 2009. During his 85 years he produced more than 50 novels, biographies and memoirs. Of course he was best known for the creation of Rumpole of the Bailey.

Mr. Mortimer had an active professional life, and by many accounts, an active private life as well. He was first married in 1949: apparently he noticed his first wife while he rode a horse and peered over a hedge.  After divorcing around 1970, he married again in 1972.  Both wives were named Penelope, although he called his second wife Penny.

While the deceased lawyer may have organized his affairs with the requisite estate planning in place, the experience in Canada might suggest that Mr. Mortimer’s Estate will encounter some challenges not least of which may relate to copyright issues.

I refer to Lucy Maud Montgomery who died on April 24, 1942. The creator of Anne of Green Gables left a legacy of work and maybe just a few headaches for her heirs. 

After all the copyright kinks were ironed out, it seems that Anne of Green Gables has a bright future ahead of her.  With luck, and the combined efforts of lawyers and artists, Rumpole will experience similar success and longevity.

Thank you for reading.

Jonathan Morse

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In many estates, the estate trustee seeks to dispense with the normal requirement of posting an administration bond, if one is in fact necessary. (A bond is usually required where a person dies intestate, where the will does not name an estate trustee, where the will names a foreign estate trustee, or where the application is by a succeeding estate trustee where the will does not name a successor.)

The primary purpose of the bond is to ensure that the estate trustee pays the debts of the estate, and distributes the estate to those who are entitled to it. An applicant that wants to dispense with the bond must satisfy the court that the protection afforded by the bond is not required or will be met in some other way.

Brown J. in the recent decision of Re Henderson, 2008 CanLII 69136 addresses the issue, and highlights the evidence required by the court when determining whether a bond is to be dispensed with. He states that in order to allow the court to properly consider the matter, the applicant should file affidavit evidence setting out:

(a)               The identity of all beneficiaries of the estate;

(b)               The identity of any beneficiary who is a minor or incapable person;

(c)               The value of the interest of any minor or incapable person;

(d)               Executed consents from all sui juris beneficiaries to the appointment and to the dispensation of the bond. If consents cannot be obtained, the applicant must explain how the interests of those beneficiaries will be protected;

(e)               The last occupation of the deceased;

(f)                 Evidence as to whether all debts of the deceased have been paid, including any obligations under support agreements or orders;

(g)               Evidence as to whether the deceased operated a business at the time of death, and if so, whether any debts of that business have been or may be claimed against the estate, and a description of each debt and its amount;

(h)               If all debts of the estate have not been paid, evidence as to the value of the assets of the estate, particulars of each debt (amount and creditor), and an explanation of what arrangements have been made with those creditors to pay their debts and what security the applicant proposes to put in place to protect those creditors.

Thank you for reading.

Paul Trudelle

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This is our final reminder to register for our Breakfast Series presentation scheduled for Thursday January 15, 2009 from 8:30 am to 9:30 am. The presentation is followed by an “Estates Roundtable” discussion from 9:30 am to 10:15 am. The presentation is being held at the Ontario Bar Association facilities at 20 Toronto Street, Toronto. If you can’t attend in person, you can dial in for live audio, or view the presentation from your PC via live webcast.

This Thursday’s presentation will cover the following topics:

• A Trustee's Discretion to Benefit vs. A Guardian's Obligation to Support – By David M. Smith;

• Dependant's Relief: Cummings and Beyond – By Craig Vander Zee; and

 

• Insolvent Estates – By Ian M. Hull.

Click here to download a registration form or contact Diane Labao at 416.369.1140.

If you can’t attend, call in or watch the webcast, you can view the presentation over the internet at a later date. Check out our website for details. You can also check our website for past seminar presentations.

I hope that you can participate.

Paul Trudelle

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Two certainties and a long-shot.

The Toronto Star reported on January 4, 2009 that on the day Donald Peters died, he unknowingly provided financial security for his wife of 59 years, and for their family.

Peters bought two Connecticut Lottery tickets on November 1, 2008. He died of a heart attack later that day. His wife, in her grief, didn’t check the tickets until some time later. In fact, she states that she almost threw them out before checking them. On January 2, 2009, she collected the winning prize of $10,000,000 (U.S.).

Considering this matter from an estate administration angle, a number of potential questions or issues arise.

For example, in Ontario, would Estate Administration Tax (“E.A.T.”) be payable on the winnings under the Estates Administration Tax Act? E.A.T. on $10,000,000 would be approximately $150,000.

E.A.T. under the Act is payable based on the “value of the estate”, the stripped-down definition of which is the value of all the property that belonged to the deceased at the time of his or her death. Presuming the lottery took place after death, the value of the ticket at the date of death would likely be its face value or purchase price. Until the lottery takes place, a $1 ticket is, in most cases, only worth $1. (Believe me, I’ve tried to sell them for more, but my family wouldn’t pay my asking price, no matter how lucky I told them the ticket was.)

However, if the draw was pre-death, but the ticket wasn’t checked until post-death, then one would presume that the winnings would need to be included as property belonging to the deceased at the time of death, and E.A.T. would be payable on the winnings.

Good luck and good health,

Paul Trudelle

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Listen to Managing Estate Issues

 

This week on Hull on Estates, Ian Hull and Suzana Popovic-Montag talk about how to manage an estate dispute as opposed to preventing it. They use an example of a joint account shared between 'Mom' and 'daughter' to examine the best way to approach posthumous problems and misunderstandings.

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

 

Managing Estate Issues - Hull on Estates Podcast #140

Posted on December 9^th, 2008 by Hull & Hull LLP

Suzana Popovic-Montag: Hi and welcome to Hull on Estates. You’re listening to episode 140 of our podcast on Tuesday, December 9^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.

 

Suzana Popovic-Montag: Hi and welcome to another episode of Hull on Estates. I’m Suzana Popovic-Montag.

Ian Hull: And I’m Ian Hull.

Suzana Popovic-Montag: And we’re very glad to be back on Hull on Estates. Just a quick reminder to our listeners that if you’d like to be heard on Hull on Estates, you can participate by leaving us a comment, e-mail us with any thoughts you may have at hull.lawyers@gmail.com.

Ian Hull: Or please visit our blog at estatelaw.hullandhull.com.

Suzana Popovic-Montag: How are you today, Ian?

Ian Hull: Terrific, thanks.

Suzana Popovic-Montag: That’s good.

Ian Hull: We thought we’d talk today about a very practical issue and that is, how to manage a problem as opposed to preventing. We spend a lot of time on Hull on Estates and on our companion podcast, Hull on Estates and Succession Planning, on talking about how to avoid problems, which is great, which we like to do and we encourage. But the reality is, problems do creep up, people don’t listen, people don’t understand, people don’t do what may be needed to be done or people simply just make an honest mistake and a problem gets created after death. So one of the illustrations we thought we’d talk about how we manage problems is in the context of a joint account. So let’s create this scenario, let’s make a very simple scenario and that is, we’ve got a dutiful daughter and a dutiful brother. One daughter, though, lives in the city with her Mom, looks after the Mom attentively, everyday and did so for 10 years. And then over the course of the 10 years, Mom wanted to give her more than her son, so she actually got some advice and did it during her lifetime. So she created joint accounts. And let’s use the illustration of a joint account with say $100,000 in it, and then another account which was not joint but was simply an outright gift. And it was smattered over the 10 years. So it happened once 8 years ago and another 6 years ago. So we’ve got these two different scenarios and the clients come to see us and they say well what can we do? And we look at the Pecori case and we sit back and we create a practical solution to that problem.

So we’ve got our first steps we would take. And the first step is that how do we prove that this is indeed a gift or a series of gifts? And secondly, how do we convince the other side? And let’s presume we’ve got a lawyer on the other side. 

Suzana Popovic-Montag: And the reason, of course, Ian, that we are concerned about how it is that we go about proving this is because as a result of the Pecori decision, we know that there is a presumption that there was not a gift being made but that the joint account would revert back to the mother’s estate in this case. And so we need to be able to demonstrate at the end of the day that this was the intention, that this was what was supposed to happen and I guess that’s where you’re sort of leading us to in terms of how we go about preventing these?

Ian Hull: Right. So, we’ve got a situation where we need to justify, because we’re acting for the dutiful daughter who got the money; we need to justify this. There are the non-litigation steps and the litigation steps. But the first non-litigation step I would typically take is to set out in a letter sort of a two-part letter. The first part is, okay, let’s acknowledge that these are the assets of the estate, these need to be administered, let’s set up a plan of action for them, and identify whatever is left in the estate; and secondly, put in the letter at the early stage full disclosure as to your position on the joint accounts. I find it’s better not to hide behind this issue as opposed to saying to the other side here is the estate assets, there’s $10 left, and the rest flowed outside of the estate and I’m not going to tell you about it. I find that early detection and early acceptance of the fact that you’re going to have potential conflict there is somehow best managed by setting out with particularity what the joint assets are or what assets you say flow outside of the estate.

Suzana Popovic-Montag: And we know, certainly from our experience, that a lot of people are hesitant to do that but the reality is if they don’t do it, they create an aura of mistrust right from the get go and its very, very hard to overcome that no matter how much you start disclosing afterwards.

Ian Hull: Absolutely. And I say to my clients look, be proud of the gift, don’t be ashamed of it. And if you’re ashamed of it, then you have something to hide.

Suzana Popovic-Montag: That’s a really good thought, Ian, and that’s a really good mindset because many times people are apologetic and they’re on the defensive already without anyone even making it necessarily an issue and so to think positive and work forward I think is great advice.

Ian Hull: Because after all, it is usually in the circumstances, it is clearly the intention of the mother to have gifted that money. And it wasn’t intended to be shared and you know, you want to be able to show the other side quickly and efficiently. Now that may not solve the problem, but if we start with that attitude and we start with the attitude of full disclosure, let’s talk a little bit about what that opening letter or that opening discussion with the other side might include.

And the first thing I like to include in it is the date the account was established. So I particularize that, I will get back-up if necessary. But I like to try to identify the date it’s established.   The second thing I like to do is I sit back and I say well look, if I’m on the other side of this, what is going to really bother me is the source of this money. Because this is, at this point in time with mother now dead, money that people will perceive to be family money, it’s part of the family. So with some particularity, I like to create the source of the money. If it’s just come out of a GIC that Mom rolled into you, or if it came out of the sale of the proceeds of the cottage or something like that, identify where it came from. Again, setting the tone for how the specific, exclusive account is set up. And I try to describe these as exclusive accounts as opposed to joint accounts, because once she’s dead, it’s no longer joint. It’s exclusive, it was exclusive during their lifetime and it is exclusive now. And when I say exclusive, of course, during the lifetime it was shared between the two as joint tenants but it was exclusive in the sense that no other family member had access to it or used that money. 

Now, another demonstration of how I like to set out early on some of my protection to the joint account case is I like to set out and say to my client, alright, how was the money indeed used during the lifetime? And in our earlier illustration, we talked about a joint account that was set up 8 years ago and then one that was set up 6 years ago. And just for the purposes of illustration, let’s say the 8 year ago one wasn’t joint, it was simply a gift because the daughter had taken her mother through a very tough time, she’d just had hip surgery and daughter basically quit her job and spent 6 months with Mom to rehabilitate. So Mom was at that point, 8 years ago, said geez, you know, I just want to give you something for this. I know you’ve lost a lot of salary and money and so here’s a $100,000. And it comes out of a GIC, goes into daughter’s name exclusively and then how does the daughter use that money during her lifetime is an important question, because the judge will want to know, and its an important thing to disclose early, and especially if the money was used exclusively for the daughter. For example, in that 8 year old account, the daughter used the money to send her kid to private school. And now there is only $30,000 left and the other child wants to split the $30,000 of course, but the daughter is saying well, first of all, it was set up a long time ago; second of all, I used it as though it was my own; third of all, I never even talked to Mom how I used it. I used it to my exclusive benefit. So its treated like a gift in that sense.

Suzana Popovic-Montag: So you’re suggesting, Ian, that its very different from a situation where the money would be used somehow for mother’s benefit going forward and the idea there being that of course it was always intended to be hers, it was just in someone else’s hands as trustee or whatever you want to describe the relationship.

Ian Hull: Absolutely. So the second illustration is more problematic. And that’s the joint account where it is set up with daughter and mother, with joint right of survivorship. And typically the bank document is all that has been established. We always tell people to do more but let’s say they haven’t. Again, it seems to me that two threshold questions are: source of the money, when it was opened, and then describe how the money was used. And if it was used exclusively for mother, or if it was used in part for Mom and part for daughter, I don’t know; depends on your facts and your circumstances. But if you can take those three steps along the way to establish your core position, the other side…I’m not saying people fold their tent, but the other side has to seriously consider whether or not they are going to pursue this because it’s sounding very gift-like.

Suzana Popovic-Montag: Now, Ian, from your experience, would you say that the inter vivos gifting tends to be easier to prove than the joint account gifting? Or not?

Ian Hull: I think its slightly easier, yeah, I think because you put it in your name alone, that helps. But, you know, I still think at the end of the day, its so much depends on how much, well without a note or some additional evidence, so much depends on what the intention was of the parties. And part, you really only have, because you aren’t typically planning for this fight, all you have to show the other side is how the money was used. And if it was just sitting there accumulating interest, never touched, that’s okay too, if you have a reason. And then your reason might be look, I took it, Mom gave it to me and I saw that as my retirement savings.

Suzana Popovic-Montag: Right.

Ian Hull: I don’t know, you always have separate facts and stuff. So anyway, I think that that’s just an illustration of how we like to sit down and begin the problem-solving process as opposed to the other end of the day when we would love to see all of the problems solved before they get to us, but that’s not always the case.

So there’s that three-part step: identify the source of the asset, second of all identify when the account was established, and third of all, identify how the money was used during lifetime, and it may go a long way to either resolving or at least crystallizing the issues quickly.

Suzana Popovic-Montag: Well I think that, Ian, brings us to a wrap for this week’s discussion. Thanks to everyone for listening and thank you, Ian, for joining me today.

Ian Hull: Thanks very much, Suzana.

Suzana Popovic-Montag: Just a quick reminder, of course, please feel free to send us an e-mail at hull.lawyers@gmail.com or visit our blog at estatelaw.hullandhull.com. Thanks very much.

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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On Tuesday of this week, I blogged on s.35.1 of the Substitute Decisions Act.  This section of the Act provides that a guardian of property for an incapable person has an obligation to preserve property that is subject to a specific legacy in the incapable person's Will unless that property must be used to fund the needs of the incapable person.  As I noted, litigation can ensue on the death of the incapable person if a disappointed beneficiary is not in receipt of his or her legacy.  The disappointed beneficiary must demonstrate that the guardian knew or ought to have known the contents of the incapable person's Will.  While the Act itself  provides an imperative in this regard, it is not at all clear what other evidence would be admissible.  Specifically, the notes and records of the solicitor who drew the incapable person's Will may shed some light on whether the guardian knew of the contents of the Will.  The question, of course, is whether such solicitor's notes are privileged.

In a conventional will challenge, little thought is given to the potentially sticky issue of privilege.  Indeed, solicitor's notes and records are produced as a matter of course when the validity of a Will is challenged.  But when the notes are sought, not to challenge the Will but, rather, to establish the knowledge of someone other than the testator as to the contents of the Will, it is not at all clear whether privilege would be waived by the Court.  

As a corollary to the entitlement of a beneficiary under a Will to make enquiry under s.35.1, a recent decision which Megan Connolly blogged on supports the obligation of a guardian (who is also an estate trustee) to account to such beneficiaries.

David M. Smith

 

 

 

 

 

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Section 35 of the Substitute Decisions Act ("Act") states that "a guardian of property shall not dispose of property that the guardian knows is subject to a specific testamentary gift in the incapable person's will."  And under s 33.1 of the Act, a guardian of property needs to make reasonable efforts to determine "whether the incapable person has a Will" and, if so, "what the provisions of the Will are."

Under the authority of these sections of the Act, a beneficiary of a specific testamentary gift can legitimately make enquiry into the actions of the guardian who, more often than not, is also the estate trustee under the Will.  Take, for instance, a demonstrative legacy of a bank account at a specific financial institution.  If the account is no longer in existence at the date of death, the legacy will usually be subject to ademption: the gift has failed because the account was closed before the date of death.  But what if the account was accessed by the guardian either: (i)  for his own purposes or (ii) for the care of the incapable person when there where other assets available to fund the care of the incapable person?  In such a situation, the beneficiary of the account under the Will may seek redress. 

To prove his or her case, the beneficiary will seek an accounting from the guardian in order to ascertain to what extent his or her beneficial entitlement was wrongfully encroached upon in breach of the Act.  Given the imperative under s. 33.1 of the Act, it questionable whether the guardian/estate trustee could ever  successfully argue ignorance of the terms of the Will as a defence to such claim.

 David M. Smith

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

Topics (and speakers) included:

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

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

Thank you for reading,

Paul Trudelle

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

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

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

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

The will was therefore found to be invalid.

Paul Trudelle

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

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

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

1. be aware that they are making a will that takes effect on their death;
2. understand the nature and extent of the estate to be disposed of by Will;
3. be aware of those having a claim to the estate;
4. have no disorder of the mind.

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

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

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

Paul Trudelle

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Yesterday, I introduced the will challenge decision of Hix v. Ewachniuk Estate, 2008 CarswellBC 1300 (Hinkson J.).

After disposing of the issue of due execution, the court turned to the doctrine of “suspicious circumstances”. The court referred to these Supreme Court of Canada decision of Vout v. Hay, where it was held that suspicious circumstances maybe raised by circumstances surrounding the preparation of the will, circumstances tending to call into question the capacity of the testator; or circumstances tending to show that the free will of the testator was overborne by acts of coercion or fraud.

Generally, the propounder of a will has the legal burden with respect to due execution, knowledge and approval, and testamentary capacity. However, upon proof that the will was duly executed, the propounder is aided by the rebuttable presumption that the testator knew and approved of the contents and had the necessary testamentary capacity.

The burden of establishing suspicious circumstances rests on those attacking the will. If evidence can be adduced which, if accepted, would tend to negative knowledge and approval or testamentary capacity, this burden is satisfied and the legal burden reverts to the propounder.

In Hix, it was the son who drafted the challenged will. The Court quoted from Vout v. Hay as follows:

“… if a party writes or prepares a Will, under which he takes a benefit, that is a circumstance that ought generally to excite suspicion of the Court, and calls upon it to be vigilant and jealous in examining the evidence in support of the instrument, in favour of which it ought not to pronounce unless the suspicion is removed, and it is judicially satisfied that the paper propounded does express the true Will of the deceased.”

The court concluded that the son should never have agreed to draw the will for the deceased. The fact that he did in the circumstances “does more than raise suspicion; it cries out for it.”

Tomorrow: testamentary capacity, and knowledge and approval

Paul Trudelle

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A recent case out of the British Colombia Supreme Court provides an excellent illustration and discussion of various grounds upon which a will can be challenged.

In Hix v. Ewachniuk Estate, 2008 CarswellBC 1300 (Hinkson J.), the deceased was survived by a son and two daughters. The deceased, the son and the two daughters had varying levels of shareholdings in a holding company.

In a prior will, the deceased left her estate to her three children, equally. In a will drawn January 11, 2004, the deceased left her estate to her three children equally, on the condition that the two daughters transferred their shareholdings in the holding company to the son. The deceased died on June 1, 2006 at the age of 90. The daughters challenged the validity of the will, and the court considered the validity of the will from a number of perspectives.

The court first considered the issue of due execution of the will. The formal requirements necessary to execute a valid will are set out in the relevant legislation. While the court was not prepared to accept the evidence of the son with respect to the execution of the deceased’s will, it did accept the evidence of one of the two witnesses to the will. The court was satisfied that the will was signed by the testator in the presence of two witnesses who were present at the same time and who subscribed the will in the presence of each other and the testator.

Court concluded that the will was validly executed. This aspect of the will challenge was rejected.

More tomorrow.

Paul Trudelle

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Primary and secondary wills are common enough situations for estates practitioners: one will for probate and the other for assets that can pass outside probate, to minimize estates administration taxes.  But what about situations with multiple wills requiring probate?

According to the October 8, 2008 endorsement of Mr. Justice Brown (court file no. 01-2725-08, no link available yet), where a testator makes 2 wills, each covering different assets, and each naming different executors, a local estates registrar can issue separate Certificates of Appointment of Estate Trustees to different executors limited to the assets referred to in each Will.

The endorsement closes with 2 "reminders" to applicants in multiple wills situations (I won't paraphrase):...

 

First "reminder":

 

 "If multiple wills exist and the executors plan to obtain probate for each, in addition to including an affidavit attesting to non-revocation as I described above, the applicants should ensure that the draft limited assets certificates of appointment which they submit each clearly identify the will for which probate is sought - e.g. the General Will dated X, or the Secondary Will dated Y, or the "will dated Z styled as the Limited Assets Will".  With each will clearly identified on the face of each certificate, the risk of any confusion arising from the issuance of separate certificates for each will should be kept to a minimum."

Second "reminder":

"If the application for a certificate involves a Granovsky-type situation where probate is sought only for one of the wills, it is important that the application materials contain a brief affidavit attesting that the non-probated will does not contain any provision revoking the will for which probate is being sought.  Such evidence will permit the Estates Office to be satisfied that the will for which probate is sought remains in force and governs the disposition of the assets enumerated in it: Re Kerzner Estate, 2008 CanLII 42020 (ON S.C.)."

I hope this helps.

Chris Graham