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Listen to Strategies to Prevent Estate Litigation

This week on Hull on Estates, Natalia Angelini and Rick Bickhram discuss tools and strategies to prevent estate litigation.

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

Strategies to Prevent Estate Litigation - Hull on Estates Podcast #119

Posted on July 15^th , 2008 by Hull & Hull LLP

Rick Bickhram: Hello and welcome to Hull on Estates. You’re listening to Episode 119 on Tuesday, July 15^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.

Natalia Angelini: Hi and welcome to another episode of Hull on Estates. I’m Natalia Angelini.

Rick Bickhram: And I’m Rick Bickhram.

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

Today we’re going to be talking about strategies to prevent estate litigation. This is the first time Rick and I are blogging together; this should be good fun.

Rick Bickhram: Whoo hoo!

Natalia Angelini: Glad to see you’re excited, and I’m excited about our topic. I think it’s definitely something that testators want to keep in mind. So, Rick, why don’t you get us started.

Rick Bickhram: Thank you, Natalia. There really is no substitute to good planning. Good planning can go a very long way to prevent a family fight down the road when, unfortunately, someone demises and it comes time to divvy up the assets of that person’s estate. So, Natalia, what do you think are some good tools that a testator can consider when, or just before, executing his Will to help manage the estate planning?

Natalia Angelini: Well, Rick, aside from as you said, having a properly drafted Will, you say you’ve got good planning in place, and you have your Powers of Attorney in place.  Aside from those kinds of things, there are a bunch of strategies that a testator can think about, particularly if they know that in their unique circumstance, they have likely got a Will challenge brewing post-death. 

So some of these strategies are gifting assets before you die. And it can be somewhat of a dangerous strategy, but you know, with the proper advice and the right circumstances, it can have its benefits. So one of the first things you want to think about when you do this, that might be a good idea to think about rather, is getting tax advice and accounting advice and seeing a lawyer who can properly paper any kind of gifts that you want to give away.   But it definitely can be a way of ensuring that your estate is either as minimal as possible or at least cuts out some of the contentious items because you’ve already gifted them away.

Rick Bickhram: And I think this is a really good tool because let’s say, for instance, mom dies and she has two sons. She gifts all her assets to one of the sons. The son who received nothing is obviously upset about the situation, so what does he do? He goes and challenges the Will. Well, what would he get in a Will challenge if he was successful? Really not that much. If the gift aspect was done correctly and the reason being is that all of the assets in that regard would have probably transferred outside of the estate.

Natalia Angelini: Right, and I think you’re touching on a good point there. If by gifting assets before you die, you do it in a way where, let’s say, you’re transferring ownership into joint names with your favourite children, then that is something that can still be contested.  But it’s likely a type of challenge that’s harder to win than a Will challenge.

Rick Bickhram: Well, with that said, with every benefit there is a burden, and with this estate planning tool, there are many risks as Natalia pointed out earlier on. Some of these risks include, let’s say, for instance we put the subject asset into joint with the son, going back to my first example. It’s my intention here to leave this asset to my son.  Upon my demise, my son and his wife separate, eventually divorce.  That asset could be the subject of matrimonial litigation over the asset because it would possibly be considered the matrimonial property.

Natalia Angelini: Yeah, that’s right. And also it could be subject to attack by any creditors of your son’s, so that’s definitely something to keep in mind. But you know, there is a certain strategy to doing this and I think before a testator decides to go this route, some of the things they should think about are: number one, that they have a loving and trusting and close relationship with their favourite relative; that they won’t require these assets back for their own support; and that I guess that she or he accepts that they also won’t get back these assets unless they get the consent of the child that they’re gifting it to.

Rick Bickhram: All very good points, Natalia.

Natalia Angelini: Thank you, Rick.

Rick Bickhram: Now moving along, another estate planning tool, which is a double-edged sword here again, is videotaping. The testator could videotape herself explaining her intentions after the Will, but I must point out that a videotaped Will, in the jurisdiction of Ontario, is not considered a Will. A Will must be in writing.

Natalia Angelini: That’s true, Rick, but it can be a tool that can really help because you have an opportunity in a videotape first of all, to be seen and to be heard, and to explain exactly why your wishes are as they are, and why the bequests are set out as they are. And having said that, though, because it is a videotape, it can be very carefully scrutinized and little things like mispronunciations or forgotten names or fidgeting, that kind of thing, unusual phrasing, or other kinds of mannerisms, those can potentially be used against you by someone challenging a Will and they can perhaps assert that well, that’s evidence that she didn’t have mental capacity or that he was unduly influenced. So I think if your eyes are open to that, when you are doing that kind of a videotape, it might help in actually how it gets recorded. And, you know, those risks are some reasons why sometimes lawyers don’t recommend videotaping. But I think that it is, for the right kind of testator, it can be helpful.

Rick Bickhram: Good point, Natalia. Moving along in terms of other estate tools that can be used when managing or planning a person’s estate. One tool that is strongly recommended is known as the family meeting or the family conference. And in the family meeting or family conference, what it is really is, it’s an informal meeting where the testator here sits with her family, her children, mother and father if they’re alive, nephews and nieces if they’re included in the estate, depending on how close the family is, and what their plan is. It’s pretty much sitting down with your family and explaining to them what you’re going to do and why you’re going to do it. And Natalia, maybe you can shed more light on this because you’ve seen more cases than I certainly have. Why is this such a good tool?

Natalia Angelini: It’s a good tool because it’s really your only chance or the main way that you’re going to really speak directly to your beneficiaries, and to those that maybe you’re not intending to have as beneficiaries and really explain why it is that you have structured your estate in the way that you have. But I don’t want to confuse a family meeting with a family conference. A family conference is a formal meeting where you’ve got a third party chair; we do them at our office, for instance, and you’ve got potentially the accountant of the testator in attendance and the financial planner in attendance, and so it’s a much more structured event and I podcasted on that previously. Unfortunately I don’t have that episode off the top of my head, but if you’re interested in that, we certainly do have quite a detailed podcast on it.

So, what Rick was talking about which is a more informal family meeting, just with you and your family, you know, it’s got its risks because, of course, you can create real hostilities there.  But it can also potentially avoid litigation down the road because you’re all together and there are witnesses and people that can give favourable evidence to say well, mom wanted her estate this way. So that might avoid a Will challenge down the road.

So why don’t we go to another strategic tool that you can use to hopefully prevent litigation. And I think, I don’t think that this is used often enough, but I certainly do see it more and more. And that is inserting protective clauses in Wills.

Rick Bickhram: I’m going to guess but I think the protective clause pretty much protects the testator’s wishes and ensures that they’re pretty much flushed out or carried out.

Natalia Angelini: Well I think if it’s enforced, yes. And I think, you know, that leads me to my next point, which is that this type of clause isn’t valid in every jurisdiction and even if it is, it really ought to be drafted with precision so a Court will accept it. But essentially these types of clauses either say anyone challenging this Will will lose their interest in the estate or it will say that if anyone challenges the Will and that kind of clause can also read, if you challenge a Will and you’re unsuccessful in the challenge, then you lose your bequest. So there can be two different kinds of phrasing; I mean there can be several different kinds of phrasing but those are two that I’m aware of. So it really creates a disincentive to proceed with Will challenge litigation.

Rick Bickhram:  So it’s pretty much like an all or nothing scenario, correct?

Natalia Angelini: Exactly. And another way to do this more indirectly perhaps than having an actual protective clause is to give a gift directly to your grandchild.  so you can bypass your child that you’re not, that you don’t want to benefit from your will and you can give the gift to your grandchild, and that can really discourage your child from challenging the Will because they will essentially be at cross purposes with their own child. And really, by litigating and challenging the Will, they’re potentially diminishing their own child’s claim and who wants to do that?

Rick Bickhram: All really good points again. Good stuff, Natalia.

Natalia Angelini: Thank you, Rick.

Rick Bickhram:  The final point we would like to touch on today, the final tool that we would like to explain today is basically mental assessment. How does the mental assessment tool work? Should it be used and if so, how could it be used? What are your thoughts on that, Natalia? Natalia has more litigation experience than I do, so she could…

Natalia Angelini: Oh, don’t be so modest.

Rick Bickhram: She could provide more background here in that regard. My guess is, if an assessment occurs, just around the same time as when the Will is signed, and it is a favourable report, it could be beneficial to someone who is defending a claim against the estate that mom or dad lacked the testamentary capacity to execute the Will. What do you think about that?

Natalia Angelini: I think that’s absolutely the case. I mean, it certainly can be just one of the tools in your arsenal. If you know or you suspect that a Will challenge is going to come down the pipeline, then it’s a great idea, especially if you know that testamentary capacity is going to be an issue.  It’s a great idea to have yourself professionally assessed. There are other ways to do it; you can go to your family doctor that you’ve known for 40 years and have them write a supportive letter and/or you can get professionally assessed.

Rick Bickhram: What do you think, Natalia, about let’s say for instance, I’m going to execute my Will and I go see my family doctor. My family doctor has known me for a few years obviously, he’s my family doctor. I go to him, I explain to him I’m about to execute a Will and I would like for him to write me a letter, pretty much explaining his observation as to my mental capacity. Do you think that that letter would be given much weight presuming, after my demise, there is an estate battle between the beneficiaries of my estate?

Natalia Angelini: Well, I mean, I think that’s going to depend on the particular facts of the case and what all the other medical evidence is, but it certainly can’t hurt.  And if your family doctor has known you for many years and had the time and opportunity to really observe you, and their evidence really brings that out in trial, then that letter, coupled with their evidence, could be quite helpful, particularly if it’s done close to the time of signing the Will and I think that’s important, especially when you go the other route and you get a mental capacity assessment done. And that is likely, and again depending on the specific facts, an even more useful tool because someone who is hopefully, a professionally recognized capacity assessor and they are looking specifically to determine whether you have the mental capacity to not only manage your finances but also to make a Will.

Rick Bickhram: Well, Natalia, I think that brings us to the end of this week’s discussion.

Natalia Angelini: That’s right and I wanted to say it was great podcasting with you, Rick. We got some of our ideas from a great book written by Jordan Atin, Barry Fish and Les Kotzer, called “The Family War - Winning the Inheritance Battle. It’s a great book and it does cover a bunch of areas and this was one of them, so definitely an interesting read. And we look forward to hearing from our listeners. You can send us an e-mail at hull.lawyers@gmail.com or just pick up the phone and leave us a message on our comment line at 206-350-6636. Be sure to visit our blog at estatelaw.hullandhull.com where you’ll find even more information and discussion on today’s practice of estate law. We hope you enjoyed the show. I’m Natalia Angelini.

Rick Bickhram: And I’m Rick Bickhram, until next week, so long.

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

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

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

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Looking out of our office window on such a beautiful summer day, my mind drifted from blogging to golfing. I then struggled to make a connection between the world of trusts and estates, and thoughts of golfing.

The one thing that immediately came to mind was the comment of Rodney Dangerfield’s character Al Czervic from the movie “Caddyshack” that “Golf courses and cemeteries are the biggest waste of prime real estate in America.”

Looking a little deeper on the internet, I found a wealth of golf-related murder mysteries!  Yahoo hosts a group for golf mystery collectors. The Waterboro Public Library has compiled a list of well over 100 golf murder mysteries (I stopped counting at 100). 

Titles include “Death is a Two-Stroke Penalty”, “Deadly Divots”, “Death Under Par”, “Rotten Lies”, “Fairway to Heaven”, “Putt to Death”, “Par for the Corpse” and “Six Strokes Under”. There appears to be no limit to the punning.

Whether you’re reading, or golfing, or both, have a great summer!

Thank you for reading.

Paul Trudelle

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Recently, the Ontario Superior Court of Justice struck down an arbitration clause in a retainer agreement.

In Jean Estate v. Wires Jolley LLP 2008 CanLII 14538, an estate trustee and sole beneficiary of an estate entered into a retainer agreement with counsel that provided for a “success fee” of 10% of the value of the estate. The retainer agreement also provided that any dispute relating to the success fee was to be determined by an arbitrator. 

A dispute arose, and the solicitors sought to have the dispute resolved through arbitration. The client applied to the court to have the notice of arbitration struck out, and to have the dispute resolved by the court.

Madam Justice Low granted the application. She held that the provisions of the Solicitors Act applied prima facie. She went on to conclude that even though the parties had previously agreed to an arbitration provision, and could agree to keep private commercial disputes private, the relationship between lawyers and clients is “one which transcends a mere commercial transaction. The profession has a monopoly over the provision of legal services and the occasions upon which lawyers interact with members of the public occur often when the latter are in the most vulnerable of circumstances. There is therefore an overarching public interest to be served in the court’s supervision of the profession’s monopoly.”

As the arbitration provision was a derogation of the client’s statutory right to have the court scrutinize the propriety of the fees, it was not upheld.

Thank you for reading.

Paul Trudelle

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A few of our past blogs discussed eco-friendly or other alternatives to a natural burial. (See Eco-Funerals - Green to the Grave and Natural Burial.) In researching an issue regarding cremation and the scattering of ashes, I came across yet another alternative: resomation.

“Resomation” is described as “an environmentally responsible, flameless, water based ‘biocremation™’ which sympathetically returns the body to its constituent elements.” In the process, which involves alkaline hydrolysis, the body is placed into a special vessel containing a pool of water and potassium hydroxide, which is heated to a high temperature under pressure. This dissolves the body into its chemical components, leaving only calcium phosphate bone ash. In addition, any mercury fillings and prosthetics remain intact, and can be safely removed.

The web site “Ecogeek” described the process as “The Greenest Way to Die”, and notes that the process does not release harmful mercury vapours, and only uses 90 kWh of energy, compared to 250 kWh for a normal cremation.

The company behind resomation describes the process as “accelerating natural decomposition”. 

It does not appear that the process is available in Canada yet. 

Thank you for reading.

Paul Trudelle

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The Succession Law Reform Act (“SLRA”) governs the rights of beneficiaries to receive support and other benefits on death.

In Cummings v. Cummings, [2003] 5 E.T.R (3d) 81 (Ont. S.C.J.); affirmed [2004] 69 O.R. (3d) 398 (Ont. C.A.), Ontario’s Court of Appeal held that when examining all of the circumstances of an Application for Dependant’s Relief under the SLRA, the Court is entitled to take into account not only the needs of the dependants but the moral obligation of the deceased to those dependants.

Today’s blog, as well as my blogs for the balance of this week, will look at several dependant support cases in the post Cummings era. 

In Broderick v. Papathanasiou, [2006] O.J. No. 4707 (Ont. S.C.J.), Ms. Broderick contended that she lived with Mr. Papathanasiou (the “deceased”) in a common law relationship for 8 years prior to his death.

 

The deceased did not provide for Ms. Broderick in his Will or during his lifetime.  Ms. Broderick earned more money than the deceased during some of the years they lived together.  They lived in residences owned by the deceased.

 

Ms. Broderick claimed she was a dependent spouse and asked that the Court make an order for her support under the SLRA.

 

The Court found that Ms. Broderick’s contributions to the deceased’s personal and financial well-being, to the detriment of her own finances, should be recognized by an award from the estate.

 

The Court held that the requirement for “adequate provision” to a dependant under the SLRA had been expansively interpreted by the courts; it was no longer a strictly needs based analysis; the deceased’s moral duty towards his dependents was now also a relevant decision, citing Cummings.

 

As the estate was not large enough to make provision for Ms. Broderick’s support indefinitely, the Court found that a lump sum would support her in transition and provide for her relocation and that it was also equitable that the deceased’s daughters should enjoy the benefit of their father’s estate as he intended under the will.

 

In the end, the Court ordered that the deceased’s condominium be sold and Ms. Broderick receive one half of the net proceeds in recognition of her contributions to the deceased’s well-being.

 

Thanks for reading.

 

Craig

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The annual conference of Society of Trust and Estate Practitioners is upon us.  Yesterday’s full day of interesting talks was capped off with a tenth anniversary gala dinner at The Royal York. 

It was great to see a full house of estate, trust, accounting and tax practitioners decked out in their finest to enjoy an evening with their peers, and honouring the lifetime achievements of Professor Emeritus Donovan Waters.  Prof. Waters, a pioneer of trust law and author of the leading text of trust law in Canada, was introduced by four esteemed speakers. True to his reputation, Prof. Waters delivered a thoughtful and engaging acceptance speech.  It was a lovely evening.

The conference will wrap up after another full day of talks today. See you there!

Have a great weekend,

Natalia

 

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Yesterday, Hull & Hull LLP hosted one of its informative Breakfast Series.

David Smith started off the seminar with a talk on the challenge of exercising an estate’s controlling interest in private corporations.  His discussion included the following observations:

-                   the obligation of an estate trustee to exercise his or her controlling interest is that of a “reasonably prudent businessman”

-                   the trustee must determine the value of the company in as timely a manner as possible

-                   depending on the wording of the Will, the trustee must provide for the company’s continuation, sale or liquidation

-                   in order for the trustee to make such a decision he/she should review the Will, financial statements and corporate records, and should inquire with individuals who have knowledge of the company’s affairs including beneficiaries, family, directors, shareholders, employees, solicitors, accountants and bankers

-                   it is advisable for a trustee to have an active role in management by, among other things, sitting on the board of directors (despite there being no legal obligation to do so)

Sean Graham followed with a discussion on evidence in estate litigation, and Ian Hull spoke about interesting case law developments.  You can find a more thorough consideration of these topics in their presented papers.

Until tomorrow,

Natalia

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In Schwartz Estate v. Kwinter the divorce of the mother and father in 1996 divided the family, with one daughter, Elaine, siding with the father and the other daughter, Shelley, siding with the mother.  The father then made new Wills giving everything to Elaine, and the mother likewise made new Wills giving everything to Shelley.

The father died in 2003.  A dispute arose about the purported understanding between the parents in making these Wills leading Elaine to commence an action seeking, among other things, that her mother disclose the testamentary instructions given to her solicitor for the purposes of drafting her Wills, which the mother opposed on the ground that such instructions were privileged. 

The Court held that although a Will is privileged until the testator dies, and although instructions to a testator's solicitor and the related work product are also privileged, that the mother voluntarily waived privilege by producing her Wills and by swearing affidavits relying on their content.

Another approach one could perhaps take in such circumstances is to refuse to produce a Will at the outset and claim that it is a privileged document, which may then likely lead to a court determining the issue.  If one is ultimately compelled to produce their Will by court order it would likely be viewed as involuntary disclosure, and therefore any claim for further disclosure (i.e. solicitor's instructions and file documents) could again be met with a fresh assertion of privilege. 

Have a nice day,

Natalia

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In a recent edition of the OBA Estates and Trusts Section newsletter, Deadbeat, Justin de Vries wrote an article commenting on the summary trial and how it can be a way to curb the costs of estate litigation (in claims of $50,000 or less).  This article is worth a read, and I thought in today's blog I would add my voice to his chorus.

While counsel may often overlook the option of summary trial (in Rule 76 of the Rules of Civil Procedure), there is no reason that it shouldn't be invoked in certain estate disputes.  At a minimum, some thought should be given to it before the pre-trial stage, since the pre-trial judge or master can decide what mode of trial is appropriate if no agreement has been reached between the parties before that time.

Some of the cost-saving measures of a summary trial include the following:

1. Evidence in chief is to be adduced by affidavit.

2. A party wishing to cross-examine the deponent on an affidavit, which can be done orally, can take no more than 50 minutes.

3. Closing arguments can take no more than 45 minutes for each party.

Proceeding by way of summary trial may also lead to a comparatively quick result and correspondingly lower cost awards.  Something worth considering…

Thanks for reading,

Natalia

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Soulsbury v. Soulsbury is an interesting appeal from a decision of the Central London County Court about a contract dispute involving a divorced couple.

The couple had been married for 20 years, and after the breakdown of their marriage the ex-husband was ordered to make periodic payments to the ex-wife.  The couple remained on friendly terms.  The ex-husband later suggested that rather than continue to pay periodic support that he should leave £100,000 to the ex-wife in his Will.  The ex-wife agreed to this proposal and they put their agreement into effect.

The ex-husband subsequently fell ill and died, marrying another woman on the morning of his death, which revoked his Will.  After his widow refused to pay the legacy from the estate, the ex-wife brought a claim for payment.

The trial judge found in favour of the ex-wife, holding that a binding agreement had been entered into between the couple.  The widow unsuccessfully appealed.  In response to her arguments to the contrary, the appellate Court held that (i) by entering into the agreement the ex-wife had not bartered away her right to future maintenance or ousted the jurisdiction of the matrimonial court; and (ii) the agreement between the couple was governed by ordinary contract principles (not principles relating to an agreement for the compromise of ancillary relief) and therefore the principal that such an agreement does not give rise to a contract enforceable at law did not apply. 

This serves as a good reminder that when contemplating rearranging one’s support arrangements, in even the most amicable of scenarios, a contingency plan should be in place to deal with the event that either of the parties may enter into a subsequent marriage.

Have a good day,

Natalia

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Following up on Allan Socken’s blog of March 31, 2008 entitled “What is Legacy Coaching”, I came across an article in the American College of Trust and Estate Counsel Journal entitled “Is Your (Ethical) Will in Order?” (2008) 33 ACTEC Journal 154 by Zoe Hicks. In her article, the author reviews what an Ethical Will is, what types of topics are normally covered, the format of the Ethical Will, and how estate planning practitioners have embraced the concept of advising clients with respect to leaving an Ethical Will.

Essentially, an Ethical Will is a testament of what you want your survivors to know, rather than what material assets you want them to have. Ethical Wills can include expressions of wisdom, values and beliefs of the “testator”, reminders of heritage, apologies, explanations of actions taken or not taken, regrets, expressions of love and gratitude, and words of encouragement.

Ms. Hicks sets out numerous extracts from Ethical Wills so that the reader can get a flavour of the types of matters that an Ethical Will can to address. She concludes by observing that an Ethical Will can be a valuable exercise for both the writer and the recipient.

For more information, read her article, or visit www.ethicalwill.com. This site explains the concept, and provides several examples of Ethical Wills in different forms. 

Have a great weekend.

Paul Trudelle

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Mom dies, leaving a will that divides her estate among her three sons. The only trouble is that before she died, Mom gave the farm to one of her sons. Accordingly, the other two sons receive nothing upon Mom’s death. 

This fact situation was recently considered by Jenkins J. in Bale v. Bale.

The two disappointed sons were not actively involved in Mom's care. The other son lived with Mom, and helped her extensively. The court found that Mom relied on the one son for her care and well being.

The lawyer on the transfer said that Mom, who was 93, understood the transaction and what she was signing. A doctor confirmed her capacity.

Notwithstanding this capacity, the judge concluded that the relationship between Mom and son was one of dependency. The presumption of undue influence was triggered. Although the court found that Mom had great affection for her one son, this was not sufficient to validate the transfer of the property to him. The court concluded that the transfer of the farm was influenced by Mom’s dependence on the one son. The transfer was set aside.

When considering the value of an estate, one should consider any transfers by the deceased prior to his or her death; particularly where any such transfer might have resulted from undue influence due to a dependency.

Thank you for reading

Paul Trudelle

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In determining whether to litigate, or how far to go with a claim, a paramount consideration must be the costs involved, and the prospect of their recovery or payment.

Recently, I came across a case that highlights the issue. There, a wrongful dismissal matter, the court awarded the employee 2 ½ months’ notice, or $9,166. However, in the costs ruling, the judge noted that the employee’s own costs, according to the employee’s bill of costs, were $14,246. (Actual costs incurred by a client are often in excess of the costs claimed in a bill of costs.) The judge, for various reasons, did not award any costs to any party.

There are a myriad of other examples.

There is also the old joke about the man who said he only went bankrupt twice: once when he lost a lawsuit, and once when he won.

Parties often state that it is the “principle” of the matter that warrants the fight. However, “principles” come with a cost, and this reality must always be kept in mind.

Parties to a piece of litigation must be aware of these costs, and these costs should inform, to a considerable extent, the actions of the parties. Hopefully, all parties will take reasonable approaches in light of the costs of proceeding to court.

This, however, is easier said than done, particularly in the context of estate litigation. Here, emotions are usually close to the surface, and often interfere with reasonable judgment. One of the functions of the litigation lawyer is to attempt to calm these emotions, and to bring a reasoned, objective vision to the table.

Thank you for reading,

Paul Trudelle  

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The Court of Appeal recently rendered its decision in Madore-Ogilvie and Ogilvie v. Ogilvie Estate, 2008 ONCA 39.  One of the issues was whether the proceeds from a jointly owned life insurance policy could be included in the deceased’s estate for the purposes of satisfying a dependant’s relief claim. 

One of our previous blogs reviews the facts of the case and the appellate decision of the Divisional Court, which I will not repeat except to say that the Divisional Court reversed the application judge’s finding that the policy could be included as part of the estate, and decided that the contractual rights of the spouse to the joint policy trumped the needs of the deceased’s dependants.

Two of the minor children appealed the Divisional Court’s decision and asked that the application judge's decision be restored.  The deceased’s spouse cross-appealed. 

The Court of Appeal dismissed both the appeal and the cross-appeal, finding as follows:

-          the policy was not caught within the ambit of section 72(1)(f) of the Succession Law Reform Act;

-          the policy was not an arrangement that was made to jeopardize the maintenance of the deceased’s dependants; and

-          section 199 of the Insurance Act did not apply to the policy.

Have a good day,

Natalia

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I thought I would close off this week’s blogs with a recent decision that reviews the law on surrogate parents.

In M.D. v. L.L. a married couple wished to have a child.  Unfortunately, the wife, M.D., was unable to bear children.  So, the couple turned to a family friend, L.L., who was willing to act as a surrogate mother.  M.D. and L.L. papered the terms of their understanding in a Gestational Carriage Agreement. 

After L.L. gave birth to the child, a Statement of Live Birth had to be completed and filed with the Registrar, which statement required L.L. to place her name on the form as the “mother” of the child, notwithstanding the Agreement and the fact that M.D. and her husband were the genetic parents of the child.

M.D. and her husband sought orders declaring themselves to be the parents of the child, and declaring L.L. and her husband not to be the parents.  The Court granted the orders sought, and in so doing held that despite a statutory definition defining “mother” by reference to birth, the genetic parents were the true parents.

This decision is likely going to be the authority relied upon in surrogate parenting litigation to come.

Have a great long weekend!

Natalia

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In a recent Superior Court of Quebec decision a family’s patriarch, Leon, died intestate in 1968.  The main asset of his estate was his home (registered in Leon’s name) where he resided with his wife and son, Walter.  At law Leon’s wife was entitled to 1/3 of the home, and Walter was entitled to 2/3 of the home.  Following Leon’s death, his wife and son continued to live in the home and dealt with it as their own property.

 

Leon’s wife died intestate in 1983.  Her sole heir was Walter.  The home remained registered in Leon’s name, but Walter continued to live there and dealt with it as his own property.

 

Walter disappeared after 1992, and in 2004 was declared dead.  Walter’s maternal and paternal cousins began fighting over Walter’s estate.  While all the cousins agreed they were equal beneficiaries of Walter’s estate, the argument of the maternal cousins was that they were beneficiaries of his mother’s estate (including her interest in the home), since she died intestate and Walter had never formally accepted her estate.

 

After applying various provisions of the Quebec Civil Code, the Court held that Walter, by being an absentee, was deemed to have accepted his mother’s estate because an absentee can only renounce through his representative. 

 

This case reveals an interesting distinction between Quebec and Ontario legislation, the latter of which does not impose any obligation to accept or reject one’s interest in an estate.

 

Until tomorrow,

Natalia

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On December 20, 2006, the Ministry of Government Services Consumer Protection and Service Modernization Act, 2006 (Bill 152) received Royal Assent. The Act contained amendments to a number of statutes, including the Land Registration Reform Act, Land Titles Act and Registry Act, to address issues related to real estate fraud.

The Ministry recently released a Land Registration Bulletin (No. 2008-02, dated March 7, 2008), which provides information related to, among other things, new registration requirements for powers of attorney and any documents registered under the authority of a power of attorney.  These include the following:

·           A law statement will be necessary when an individual registers any document under the authority of a Power of Attorney. In these cases, a lawyer will be required to discuss the Power of Attorney with their clients and provide the requisite law statement.

·           A law statement will not be required in documents signed under the authority of a Power of Attorney given by a corporation or a bank. In those cases, the attorney will be required to make a statement that they are acting within the scope of the Power of Attorney.

·           The original signed and witnessed Power of Attorney must be scanned into the electronic registration of a Power of Attorney.

·           Most of the existing statements in an electronic Power of Attorney and Revocation of Power of Attorney document are being retired and replaced with new statements, which are particularized in the Bulletin.

Keep in mind that these changes take effect on April 7, 2008.

Have a good day,

Natalia

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Listen to Assets and Liabilities

This week on Hull on Estate and Succession planning, Ian and Suzana expand on last week's discussion about determining value. They also discuss taking an inventory of an estate's assets and liabilities.

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

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I came across an interesting article in The Prairie Star, a Montana-based newspaper, about an incentive being offered to farm and ranch couples, both young and old, who plan their estates early. 

Montana State University is offering a promotion whereby the first 40 couples who work through an estate planning process will receive $100.00 off any follow-up legal fees.    

A reason for the program is to encourage families in the agricultural business to start thinking about how they are going to plan their estates early on.  This is especially important where there is an operational farm which will make up the bulk of the estate.  Complications can arise when, for example, there is no clear plan in place and one beneficiary wants to keep and run the business, while another wants to take his or her inheritance in cash.

The presence of a family farm can affect the estate planning of more than one generation.  For example, members of an older generation may control the farm, while members of a younger generation may be structuring their estates in anticipation of inheriting it.  Or, members of multiple generations might have ownership interests in the farm that will affect the way it can be dealt with in the estate of any one of them. 

Of course, many of the issues that families owning a farm in Montana my face are the same as those faced by families owning any kind of business anywhere.  However, the program does underscore the importance of planning early and planning well. 

You can read more about the program in Montana here.

Thanks for reading,

Megan F. Connolly

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Environmental consciousness is spreading, and is making its way into the realm of estates.

There is a growing movement towards “natural burial” or “eco-cemeteries”, and away from more traditional practices such as a conventional burial or cremation. Both of these traditional practices are said to have adverse environmental effects that can be avoided through natural burial. 

Conventional burial normally involves the use of formaldehyde, a potential carcinogen. Vast amounts of steel, wood and cement are involved in the burial process. Cemeteries are often simply fields of grass, with grave markers, that require watering, mowing, pesticides and herbicides.

As for cremation, the process requires huge amounts of natural gas. Emissions from crematories contain hazardous materials.

In natural burial, the body is prepared without use of chemical preservatives such as embalming fluids, and the body is buried in a biodegradable casket or shroud. The physical layout of the cemetery is distinct in that traditional grave markers are avoided, and the grave markers are designed to blend in with the landscape. Pesticides and herbicides are avoided. 

For more information, visit the Natural Burial Co-operative website at http://www.naturalburial.coop/

According to their website, the Natural Burial Co-operative is currently working to establish Canada’s first natural burial preserve.

The movement still appears to be in its infancy; however, interest in the concept of natural burial is growing.

Have a great weekend.

Paul Trudelle

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One final note of caution arises from the Rooney (2007), CarswellOnt 6560 decision – a decision of the Ontario Superior Court of Justice that I have referred to in my blogs earlier this week. This caution refers to the release that the Estate Trustee seeks from the beneficiaries.

In Rooney, the beneficiary was provided with a form of accounts, and was told that if she signed a release, she could receive a distribution from the estate. (The court was critical of this practice.) The beneficiary did so.

Later, the beneficiary sought to compel a passing of accounts. The court allowed the Application.

The trustee had asserted that because of the release, the beneficiary could not compel a passing. The court stated “It is not an answer to say that the beneficiary approved of the accounts and gave a release. One of the obligations of the solicitor acting for the trustee is to ensure that all beneficiaries have competent, independent advice in reviewing the accounts. There is no suggestion by the solicitor that he advised the [beneficiary] to obtain independent legal advice when reviewing the trustee's accounts which he had prepared.”

Additionally, the court noted that the account rendered by the solicitor to the estate was a blended account, and included both solicitor’s work and trustee work. “The solicitor was in the best position to know what charges related to which services. He was also in the best position to know what portions of his fee account should be paid by the trustee out of her compensation or by the estate. There is no evidence that he gave any advice about these distinctions to the beneficiary so that she could consider them.”

The court concluded by stating that “There is no evidence that the beneficiary executed the release knowing that double charges for the trustee's work had been made against the estate. There is no evidence that the beneficiary knew the solicitor charged the estate more for legal and trustee's services than would arguably be allowed on quantum meruit basis. In these circumstances, the release was not a fully informed one; it cannot be enforced against the beneficiary.&rdqu