However, where the alleged contempt is not so found by the court, the alleged contemner may be entitled to his or her costs of the motion.

This was the case in Sakellaris v. Vouyioukas, 2011 ONSC 5219 (CanLII). There, Penny J. made an Order in October, 2010 that required the estate trustee to do certain things. The Applicant moved before the court for a finding that the estate trustee was in contempt of the Order. The motion did not proceed on its merits. However, the Applicant sought his costs of the contempt motion in the amount of $20,000. 

Although the motion was said to not have proceeded on its merits, Swinton J. was of the opinion that the contempt motion would not have succeeded. She noted that in order to establish contempt, the moving party must prove beyond a reasonable doubt that the order which has not been complied with clearly set forth what must be done, and the party who disobeyed the order did so in a deliberate and voluntary manner. She found that in the case before her, the record did not show that the estate trustee deliberately disobeyed the order.

Not only was the moving party not entitled to costs, the estate trustee who was alleged to be in contempt was entitled to his costs in the amount of $5,000. His materials were said to be necessary in order to put into perspective the actions which he and his counsel had taken to comply with the order and to respond to numerous requests for information.

Thank you for reading.

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

The Program was the morning in length and was Chaired by Hilary Laidlaw and Timothy Youdan. 

The papers provided, together with the presentations, were very informative and intriguing. The topics included an update on Family Law Act Amendments, Predatory Marriages, a Charities Update, Trust Residence Post-Garron, Inter-vivos Trust Audits, Pet Trusts, Common Issues for Applications on Certificates for Appointment, Administration of Multiple Wills, US Estate Tax Update, Estates and Trusts Hotspots, CPD Requirements, Cy-pres - Section 13 Orders and when to Serve the OPGT, Life Insurance and RSP Beneficiary Designations for Minor Children, Habeas Corpus and the Substitute Decisions Act, Evolution of Orders Appointing Estate Trustee During Litigation, Increasing the Odds of a Successful Mediation, Estates and Privilege, Costs and Impact of Proportionality Considerations, and Conflicts Involving the Role of Estate Trustee and Estate Solicitor. If you are interested in these materials, I understand that they can be ordered from the Law Society of Upper Canada.

The Ontario Bar Association (OBA) also has two half day programs coming up on May 10, 2011. One half day program (from 9:00 a.m. to noon) is entitled “Will and Estate Planning Essentials”, while the other half day program (1:00 p.m. to 5:00 p.m.) is entitled “Beyond Will and Estate Planning Essentials”. The first program is being Chaired by Susannah Roth, while the second program is being Chaired by Joanna Ringrose and Edward Olkovich.

If you are interested in attending the upcoming OBA programs, please contact Blossom Pangowish, OBA Sections Co-ordinator, at (416) 869-1047, ext 399, or by email at blossom@oba.org.

Thanks for reading,

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

The Award for Excellence was created to recognize exceptional contributions and achievements by members of the OBA to the area of trusts and estates.

·         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.

Mary’s distinguished and esteemed career has included her unwavering commitment to, as well as the achievement of, excellence in these areas.   

In addition to the Award for Excellence, the Widdifield Award and the Hoffstein Book Prize will be presented.

For more information, please contact Blossom Pangowish, OBA Sections Co-ordinator, at (416) 869-1047, ext 399, or by email at blossom@oba.org.

Enjoy.

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

Estate Administration Tax is applied to the value of an estate when the estate’s representative applies to the court for a certificate of appointment of estate trustee (often referred to as probate). Currently, court staff of the Ministry of the Attorney General administer the tax. Bill 173 proposes amendments to the Estate Administration Tax Act to enhance, it has been said, compliance by integrating the administration of this tax with audit and verification functions at the Ministry of Revenue, starting January 1, 2013.

Again, it is being proposed that the amendments will apply in respect of applications for estate certificates that are made on or after January 1, 2013, or on or after such later date as may be prescribed by the Minister of Finance

The standing committee on financial and economic affairs was scheduled to meet on April 21, 2011 to consider Bill 173 and hear submissions on its proposed provisions.

If the amendments to the Estate Administration Tax Act pass, the manner in which the amendments are implemented and the regulations that might arise will be important to follow and consider as they will effect Estate Trustees and advice given by professionals advising Estate Trustees.

Thanks for reading,

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

In Buswa v. Canzoneri, the Deceased died without a Will on September 29, 2010. The Deceased did not have a spouse and was survived by seven siblings, and two children.

The concern in this case was that the Deceased did not leave anyone with legal authority or responsibility to arrange his funeral and dispose of his remains.

Two of the Deceased’s siblings, the Applicants, applied for a Certificate of Appointment of Estate Trustee Without a Will. The daughter of the Deceased, the Respondent, also applied for a Certificate of Appointment of Estate Trustee Without a Will.

In his decision, the Honourable Justice Stinson considered the legal interpretation of section 29 of the Estates Act, which reads as follows:

1)  Subject to subsection (3), where a person dies intestate … administration of the property of the deceased may be committed by the Superior Court of Justice to:   a)      the person to whom the deceased was married immediately before the death of the deceased or person with whom the deceased was living in a conjugal relationship outside marriage immediately before the death;   b)      the next of kin of the deceased;

As the Deceased did not have a spouse, the court considered the definition of “next of kin.” In the Black’s Law Dictionary, “next of kin” is defined as “the person's nearest of kindred to the decedent, that is, those who are most nearly related by blood.”

Applying these concepts, the court held that the Respondent daughter was related to the Deceased by blood in the first degree, whereas the Applicants siblings were related to the Deceased in the second degree. Accordingly, the Respondent daughter was appointed as the Estate Trustee During Litigation.

Thank you for reading, and have a great day.

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

Any Trusts and Estates Section member of the OBA in good standing, as well as former members of the section who have retired or been appointed to the bench, but not including current officers of the Executive of the Trusts and Estates Section or the Executive of the OBA, are eligible to be nominated.

·         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.

Any member of the Trusts and Estates Section of the OBA in good standing is eligible to nominate a candidate by submission in writing, together with a curriculum vitae outlining the nominee's qualifications. The nominator must indicate that the candidate has been advised of the nomination prior to the nomination deadline and has consented thereto. The Award is typically presented at the Section’s Annual Awards dinner in late Spring.  

This is a reminder that nominations must be filed by 5:00 p.m. on Friday, January 14, 2011 to:

Blossom Pangowish, Sections Coordinator

Ontario Bar Association,

20 Toronto Street,

Suite 300,

Toronto, Ontario

M5C 2B8

Fax: 416-869-1390

For more information, and/or to obtain a Nomination Form, please contact Blossom Pangowish at (416) 869-0513, ext 399, or email at blossom@oba.org or by visiting on line at http://www.oba.org/en/admin/awards_en/tru_award.aspx.

Health and happiness in 2011.

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

Sharon Davis - Click here for more information on Sharon Davis.

Antle deals with the legality of a “capital property step-up strategy” whereby capital property with an accumulated gain (shares in a company) was shifted from the husband to a Barbados spousal trust. The trust sold the property to the beneficiary wife in exchange for a promissory note. The wife then sold the property to a third party purchaser and used the proceeds to pay off the promissory note. The trust distributed the funds to the wife as beneficiary, after which the trust was dissolved.

This scheme was apparently designed to result in no tax because there was no capital gain taxable in Canada, as there would have been had the husband sold the capital property directly to the third party. The capital gain arose in the trust in Barbados where there was no tax on capital gains.

While one might say that the case deals with the residency of the trust, the penultimate issue was whether a trust was created at all in the circumstances.

In order for a trust to be valid, there must be three certainties, namely, certainty of intention to create a trust, certainty in the subject matter of the trust, and certainty in the objects of the trust. 

In this case, the Minister focused on the lack of certainty of intention to create the trust and the lack of certainty in the subject matter of the trust. The decision of the Minister was appealed to the Tax Court of Canada (“Tax Court Judge”). The decision of the Tax Court Judge was then appealed to the Federal Court of Appeal.

The Tax Court Judge found that there was no certainty of intention. The husband never intended to lose control of the shares or the money resulting from the sale and never intended to create a trust. The Tax Court Judge found that the husband’s actions and the surrounding circumstances could not support a conclusion that signing the Trust Deed reflected any true intention to settle shares in a discretionary trust, no matter how clear the language in the Trust Deed itself.  It simply did not reflect his intentions.

The Tax Court Judge also found that there was no certainty of subject matter. The shares purportedly settled on the trust were in the possession of an unrelated party who claimed a beneficial interest in them. The unrelated party was paid out an amount of money on the final sale to the third party purchaser. The husband later successfully sued the unrelated party and recouped $1.38 million. The husband thereby retained an interest in the shares purportedly settled on the trust. If the husband transferred anything to the trustee, the Court found that it was not his full interest in the shares because there was an element of his ownership in the shares that did not pass. This created a lack of certainty of subject matter.

The Tax Court Judge also found that the trust was never constituted. It never came into existence because the shares were never transferred to the trust and were never in possession of the trustee. The shares remained in Canada throughout and no money ever reached the trustee. The timing and execution were such that the intended steps were not carried out sequentially so as to properly constitute the trust.

Notwithstanding the above findings, the Tax Court Judge determined that the above circumstance was not a sham, as also alleged by the Minister, as the transactions themselves were not disguised.

In an interesting twist, the Federal Court of Appeal concluded “that the Tax Court judge was bound to hold that the Trust was a sham based on the findings that he made”, and dismissed the appeal.

Enjoy the weekend,

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

Essentially, the Act permits the Court to approve a variation of a trust under a will, settlement or other disposition on behalf of minor, unascertained, unborn or contingent beneficiaries if the variation, in the words of the Act, “appears to be for the benefit” of those persons.

While relying on the Act for jurisdiction to make a variation, there are many things to consider in pursuing a variation such as the procedure to follow and the criteria to meet in order to have the variation approved. 

In the well-known case of R v. Irving, (1975), 11 O.R. (2d) 442 (H.C.), the Court set out three criteria to consider in determining whether to approve a variation, namely:

(i) does the variation keep alive the basic intention of the testator or settler?, (ii) does the variation benefit those for whom the Court is asked to consent?, and (iii) whether a prudent adult motivated by intelligent self-interest and sustained consideration of the expectancies and risks of the variation, would likely accept it?

There are a number of cases that have considered these criteria; too many to go into in this blog. Suffice it to say that the Act does provide an answer to the question as to whether one can vary a trust, but the answer is only a partial one as the Court will also consider criteria needed to be met in determining whether to approve a variation.

Thanks for reading,

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

However, in this case the Court came to the opposite conclusion with respect to a GIC jointly held by the Deceased with Joe and Nina. According to the Judge, the GIC clearly stated the three names on it and was different than the bank account “because it is basically a savings item and not to be used to pay ongoing debts.” The Judge held that the GIC document spoke for itself and the two owners of it at the death of the Deceased were Nina and Joe. One might argue that this case seems to exempt jointly held GIC’s from the application of Pecore.

Thanks for reading,

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

The Award for Excellence was created to recognize exceptional contributions and achievements by members of the OBA to the area of trusts and estates.

Any Trusts and Estates Section member of the OBA in good standing, as well as former members of the section who have retired or been appointed to the bench, but not including current officers of the Executive of the Trusts and Estates Section or the Executive of the OBA, are eligible to be nominated.

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.

Nominations must be filed by 5:00 p.m. on Friday, January 14, 2011 to:

Blossom Pangowish, Sections Coordinator

Ontario Bar Association,

20 Toronto Street,

Suite 300,

Toronto, Ontario

M5C 2B8

Fax: 416-869-1390

For more information, and/or to obtain a Nomination Form, please contact Blossom Pangowish at (416) 869-0513, ext 399, or email at blossom@oba.org or by visiting on line at http://www.oba.org/en/admin/awards_en/tru_award.aspx.

Thanks for reading.

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

The issues in Nolan v. Kerry were related to the obligations of an employer under a pension plan for its employees.   

The Supreme Court of Canada dismissed the appeal and affirmed the decision of the Ontario Court of Appeal in favour of the respondents, the employer and the Superintendent of Financial Services. The Court of Appeal had declined to award costs to the Employees Pension Committee (the “Committee”) from the trust fund as the unsuccessful party in the litigation. 

Thanks for reading and enjoy the weekend.

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

I had the pleasure of presenting on the last topic of the morning being a Review and Analysis of Recent Trust Case Law. 

The program topics and presenters are set out below: 

• The Drafting of Trusts – paper prepared by Hilary Laidlaw and presented by M. Elena Hoffstein
• Considerations When Drafting Restricted Charitable Purpose Trusts – presented by Terrance S. Carter
• Remedies for Breach of Trust – presented by Archie J. Rabinowitz
• Drafting Trusts in Contemplation and Consideration of New Reproductive Technology – presented by Clare E. Burns
• Trust and Insolvency – presented by Frank Bennett
• Review and Analysis of Recent Trust Case Law – presented by Craig Vander Zee

For the balance of this week, my blogs will focus on a selection of interesting recent trust cases.

Thanks for reading.

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

I think it’s safe to presume that the majority of people believe that once they have executed a Will, their carefully considered estate plans are locked in. However, the provisions people make for their loved ones upon their death are not exactly locked in. According to Ontario law, marriage automatically revokes a Will.

While shocking for many people, there are ways to avoid this unwanted consequence of marriage. For instance, where a person executes a Will in contemplation of marriage, his or her testamentary plans will survive the marriage.

The automatic revocation of a Will can lead to unfortunate and unintended results, particularly when individuals have capacity to marry, but lack the capacity to manage property and/or execute a Will. In such circumstances, a person who lacks testamentary capacity may end up the target of a greedy opportunist looking to marry for money.

In Ontario, where a person’s Will is revoked upon her marriage and she dies, her estate is distributed under succession law as if she died without a Will. According to the Succession Law Reform Act (“SLRA”), when the deceased, who dies intestate, is survived by a spouse and there are no issue, the surviving spouse takes all property of the deceased’s absolutely. Where the deceased dies with a net value of more than the “preferential share” and with a surviving spouse and issue, the surviving spouse is entitled to the preferential share, being $200,000, absolutely. After the preferential share is distributed to the surviving spouse, the surviving spouse is entitled to a distributive share, which varies with the number of children or issue surviving. If, for example, there is a surviving spouse and one child, the excess above and beyond the $200,000 is allocated equally between the spouse and the child. Where there is a surviving spouse and more than one child, the spouse is entitled to a third of the excess and the remainder is divided equally between the children. 

The scenario that immediately comes to mind is one where an elderly and frail individual is preyed upon by a younger person who sees the marriage as an opportunity to abscond with the property of the elderly spouse who lacks capacity to manage property during his/her life or execute a Will.

In my next blog, on September 6, 2010, I discuss this topic in more detail, focusing on why predatory marriages are, perhaps, too easily accomplished.  

Well it’s happened again…another estate is going to the dogs! Our summer student forwarded me a Globe and Mail article discussing the provisions that the late heiress Gail Posner made for the benefit of her fabulously famous Chihuahua Conchita and her 2 other dogs, April Maria and Lucia. These pampered pooches are to receive an $8.3 million mansion and a $3-million trust fund under her estate while the deceased’s only son, Bret Carr, takes a meagre $1-million in comparison.

According to the terms of a Trust Agreement (amended by the late heiress in 2008), so long as she had dogs at the time of her death, the trustees:

1.  are to retain the mansion property (located in Miami Beach) plus a sum of money not more than $3-million to cover the carrying costs of the mansion.

2.  shall pay $5-million to Elizabeth Beckford to care for Conchita, April Maria, and Lucia. I note that the deceased provided that they are to be cared for with “the same degree of care” they received while Posner was alive (which, I suppose, will mean the continuance of their weekly doggie spa appointments).

Upon the death of the dogs, the mansion is to be sold and the proceeds are to go to charity. The remainder of the estate (after certain specific bequests) goes to animal shelters, breast cancer prevention, and suicide-prevention centres.

Those are some lucky dogs (shhhhh – don’t tell my dogs, Digger and Nicky. They’re spoiled enough)

Thank you for reading!

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

At the time of his death, there were reports that his estate was indebted and/or had pending liabilities in the hundreds of millions of dollars. It is interesting to note that his “empire” is now said to have earned an amount approaching $1 billion since his date of death. Whether these reports are true will have I suppose to be seen. However, if they are true, these astronomical revenue figures would apparently elevate Michael Jackson’s estate to within the top five top earning dead celebrities. 

With such alleged earnings, it is not surprising that the dispute apparently continues regarding his estate and the appointment of the trustees to his estate (apparently litigation continues as between the family and those appointed as executors (administrators) of his estate). Other disputes regarding issues over copyright belonging to Michael Jackson and his estate and his assets and his death would seem not to have an end in the near future. What does appear not to be in dispute though is that his estate will continue to generate incredible revenues.

Thanks for reading,

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

I am very pleased to be the incoming Chair of the Executive. The Vice-Chair will be Ed Esposto. The balance of the slate is as follows:

Past-Chair:                                          Suzana Popovic-Montag

Secretary:                                             Melanie Yach

Newletter Editors:                               Dina Stigas/John O’Sullivan

Continuing Legal Education

Liaison:                                                Joanna Ringrose/Eric Hoffstein

Regional Programming:                   Ed Upenieks/Mitchell Leitman

Members-at-Large:                           Ann Elise Alexander, Vincent De Angelis, Shael Eisen,                  Danielle Joel, Sean Lawler, Mitchell Leitman, Jane Martin, Deborah Petch, Wendela Roberts, Susannah Roth, Susan Stamm, Ameena Sultan, Sender Tator, Diane Vieira and Laura West.

I am looking forward to working with the Executive and having a very successful year.

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

Have a nice day.

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

The Ontario Bar Association is having its annual Dinner with the Honourable Estates List Judges on Tuesday, April 27th at 6:00 p.m. at the OBA Conference Centre in Toronto. It is a great opportunity for estates practitioners to mingle with their own as well as with the Honourable Justices Brown, Conway and Strathy. It has been over a year since the Toronto Estates List Practice Direction so come on out and give some feedback! Last year's dinner was fun and informative so I expect more of the same this year.

Click here for details and registration.   
 
The OBA is also holding an event on Thursday, May 20th from 1:00 to 4:30 p.m. entitled "Solicitors as Attorneys, Trustees and Estate Trustees - What You Need to Know". If you are a lawyer who has taken on any of these roles, or intend to, this program is for you. "Learn how to get paid, how to avoid being sued, and how to manage disputes with family members or co-trustee". That pretty much says it all.

Click here for details and registration.

Osgoode's 7th Annual Intensive Wills & Estates Workshop, with Hull & Hull LLP's own Jordan Atin as Workshop Leader, takes place over three Thursday evenings, June 10, 17 & 24, and runs from 6:00 - 9:00 p.m. at the Osgoode Professional Development Centre, Toronto. Jordan has certainly enlightened me on many occasions so I'm sure he can do the same for you.  For a preview, check out this link to see Jordan on Canada AM.

Click here for details and registration.

That should be enough ongoing learning to keep you busy until summer vacation…enjoy!
 

Sharon Davis - Click here for more information on Sharon Davis.
 

The rule in Clayton’s Case is generally described as the "first in, first out" rule. It holds that where a trustee mixes money from two or more trusts in one account and then removes money from it, the trustee is deemed to have taken out the money that was first deposited in the account. The reason for the creation of the rule in Clayton's Case appears to be to facilitate the tracing of funds in situations where the equities were equal and there may be difficulty in ascertaining the proportionate share to be awarded to each of the trusts in question. At its lowest common denominator, the rule in Clayton's Case appears to be a rule of convenience and administrative expediency.*

The principle was enunciated by the court in the case of Re Hallett's Estate (1879), 13 Ch. D. 696 (CA) and is known as the rule in Re Hallett's Estate. The rule states that where a trustee mixes trust money with his or her own money in a bank account and then withdraws money from that account, it is assumed that the trustee first took out his or her own money rather than money belonging to a trust beneficiary. It may be seen that the rule in Re Hallett's Estate is based on the assumption that trustees are honest and act accordingly. Even if they do mix trust funds with their own money, it is not to be presumed that this mixture was intended to defraud the trusts of those funds.