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

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In a recent decision out of the Supreme Court of B.C., Re Thomasson Estate, the Honourable Justice Gerow considered the circumstances where the court may pass over an executor, on an application by a co-executor/beneficiary.

The two Deceased (collectively referred to as the “Deceased”) had been married and had four children together, all of whom survived the Deceased. In their Wills, they named two of their children, as their executors, and directed the executors to distribute the estate to three of their four children. 

One son commenced this application to obtain an order that would pass over the other son as his co-executor for the Estates. The Applicant argued that it is necessary for the Estates to make a proper enquiry into the nature of inter-vivos transactions between the co-executor Respondent and the Deceased and such an inquiry must be made independent of the co-executor Respondent as he would be in a conflict of interest.

The co-executor Respondent opposed the Applicant’s application, and argued, amongst other things, that the court should not interfere with the testator’s right to nominate his or her executor and removing him would be prejudging the case.

In her decision Justice Gerow states:

B.C. legislation is unique compared to the legislation that governs estate trustees in Ontario; however, if a similar situation arose, an application seeking similar relief could be brought under Rule 14.05(3) of the Rules of Civil Procedure.

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

• Email This
• Print
• Comments
• Trackbacks
• Share Link

I don’t know about you, but I love it when the courts consider novel ideas as a practical solution to a legal problem. That is why the decision of Re D’Angelo Estate, 2010 ONSC 7244 (CanLII) caught my attention.

In D’Angelo Estate, Faust D’Angelo, deceased, resided in St. Catharines, Ontario. In his Last Will, he appointed his son, Emidio, and Emidio’s daughter, Denise as co-executors. His estate was divided equally amongst Emidio and his three surviving siblings. The estate, situate in Ontario, was worth approximately $1.5 Million.

Emidio and Denise, because they both lived in the United States, were obliged to obtain a Foreign Executors’ Bond. The insurer would only issue a bond if a lawyer in counsel’s firm was appointed by the Court as a monitor to supervise the administration of the estate.

The Court allowed the co-executors’ motion and appointed the monitor. Here are a few of the interesting findings leading up to its decision:

·        The co-executors both had standing under Rule 74.15(1)(i) as persons who appeared to have a financial interest in the estate. Emidio had a financial interest because he was a beneficiary. The Court found that the financial interest contemplated by the rule may be direct, indirect or contingent and although Denise was not a beneficiary, she had standing due to her entitlement to claim executor’s compensation, which was a contingent financial interest in the estate.

·        The Court noted that monitors had been appointed by courts in other situations to monitor the business and financial affairs of a charity and under the oppression remedies in the Ontario Business Corporation Act, which makes no provision for a monitor. 

·        The monitor would be an officer of the court and the responsibilities of an officer of the Court are: 1) to act fairly, honestly and impartially as a fiduciary on behalf of all persons having a financial interest; 2) to comply with the powers granted in the order of appointment; and 3) to be accountable to the Court and to the persons in 1).

·        The appointment of a monitor did not require approval or input from the beneficiaries (the motion was made without notice).

·        Pursuant to Rule 1.01(6), it was okay to modify the prescribed forms as circumstances required and so the form of Certificate could be varied to a “Certificate of Appointment of Estate Trustees with a Will and Court-Appointed Monitor”.

I certainly think this case is novel and provides an alternative that could be quite a useful solution in some situations.

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

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In blogs published on our site in March 2008 and January 2010, the fascinating story of the estate of Franz Kafka was considered.  As we have discussed in other blogs (see this blog on Nabakov), an executor of the estate of a literary giant may face temptation to publish unfinished works even in the face of an expressed intention of the testator to the contrary.  Such was the case with Kafka: his named executor and trusted friend chose to edit and posthumously publish certain works (to great acclaim it may be added).

In the second blog, Nadia Harasymowycz noted that certain letters and drawings gifted by Kafka to his mother and sisters prior to his death remained in a safety deposit box.  As reported yesterday online by the National Post, a bank in Zurich "opened up four safety deposit boxes containing some of the unpublished work, and will allow Kafka scholars to look at the work."  This decision follows on the heels of a ruling by the Israeli courts last week, wherein Tel Aviv banks were ordered to produce other similar documents.

Once the process of documentation is complete at the three banks, a judge will rule about the future of the papers: “whether they are the private property of the Hoffe sisters, who can then do with them whatever they want, or whether they constitute a literary treasure that must be transferred to a public archive.”

David M. Smith - Click here fore more information on David Smith.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

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.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

“He who touches the ashes of the past,
Will burn himself with still glowing coals.”  --Elizabeth Heyking

Han Sachs invoked this quote in his autobiographical work: "The World’s Greatest Poster Collection: How it came into being and How it Disappeared From the Face of the Earth."  As the title of his book suggests, Sachs (who was, among other things, Einstein's dentist) compiled an invaluable poster collection that was confiscated by the Nazis in November, 1938.  He died without ever recovering his treasured collection.

In a recent essay published in the Timesonline, his great-granddaughter recounts the subsequent efforts made by Sachs' son to recover his late father's collection.  Despite the fact that Germany: (i) committed to return confiscated art found in museums by signing the Washington Conference Principles on Nazi-Confiscated Art in 1999, and (ii) where the Third Reich was implicated, implied that it would not invoke any statute of limitations, a recent Court decision in favour of the estate was nonetheless appealed by the German government and the decision is pending.

The efforts of an executor of an estate to recover lost art poses special challenges that I recounted in this blog reviewing the efforts of the estate trustees of the estate of Max Stern and the advent of the Lost Art Internet Database.   

David M. Smith 

David M. Smith - Click here for more information on David Smith.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 A claim of devastavit may be made against an estate trustee where mismanagement of estate assets is suspected. Black’s Law Dictionary (seventh edition) provides the following definition for devastavit:

A personal representative’s failure to administer a decedent’s estate promptly and properly, especially by spending extravagantly or misapplying assets. A personal representative who commits waste in this way becomes personally liable to those having claims on the assets, such as creditors and beneficiaries.

In the case of Commander Leasing Corp. v. Aiyede, 16 E.T.R. 183 (1984), an estate trustee distributed an estate even though there was an outstanding claim by a company, Commander Leasing, as a creditor of the estate. The estate trustee did not plead that there were no (“plene administravit”) or insufficient (“plene administravit praetor”) assets in the estate to satisfy the company’s claim. Instead, she stated at her discovery that all of the assets had been distributed.

The effect of the estate trustee’s failure to plead plene administravit or plene administravit praeter was that she must be taken to have admitted that there were assets to satisfy the judgment. The Court ultimately held that in distributing the estate, the estate trustee acted in clear disregard of the company's outstanding claim as a creditor. Her conduct constituted a devastavit for which she was personally liable to the company creditor. 

Have a great day!

Bianca La Neve

• Email This
• Print
• Comments
• Trackbacks
• Share Link

What does an executor do?

The first responsibility is to tend to funeral arrangements and then to gather up all the information relevant to the Estate. This information includes the ownership and value of assets, as well as the nature of all Estate liabilities. These responsibilities need to be taken seriously. 

Some other duties include: make provisions for dependants; notify various government agencies of the deceased's death; collect income from assets; decide about investments; seek advice as required.  The executor’s role is similar to that of a trustee: both owe a duty to the beneficiaries. 

When one plans his or her Estate and prepares a Will, it is useful to consider the attributes of a successful executor.  Some questions might be:

• Is the person organized?
• Does the person have financial skills? 
• What is the demeanour of the person who is being considered as an executor?

A recent British article asks more questions. One point, among many, is that “Honesty and conscientiousness are important, but if you are appointing more than one executor - and often that's a good idea - they also need to be team players.” 

Each situation is different but the hard and soft skills of a potential executor are likely useful considerations.

Examples abound to illustrate what might go awry. Take the Estate of the renowned violinist, Isaac Stern. In 2004, the beneficiaries of the Estate were disappointed when the executor failed to include the value of the deceased's  New York apartment in the calculation of the Estate's value. This decision resulted in a shortfall of funds to meet the Estate’s liabilities. Legacy items, including musical instruments, were apparently sold at auction to the beneficiaries' collective dismay.

Choose your executor(s) wisely.

Enjoy your Thursday.

Jonathan Morse

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In Langston v. Landen, a recent decision of the Ontario Court of Appeal, one of three co-executors of an estate having a value of some $24 million (in the words of the Court) "managed to shunt the other two executors to the sidelines.  He started to loot the estate."  Among Landen's transgressions was his use of estate assets to purchase a home in Forest Hill which he had put in his wife's name.  On a motion for summary judgment, Justice Greer had imposed a constructive trust on the house for the benefit of the estate.

Landen's wife appealed.  However, the Court easily concluded that the fact that legal title was in her name was irrelevant in circumstances in which the entire purchase proceeds came from the estate.  Adopting a quote from the Reasons for Decision of Justice Greer, the Court stated: "Since the money came from Landen in his capacity as a fiduciary, the constructive trust or express trust flows from him and the money can be traced from him to the house purchase and renovation." 

So too, for the same reasons, the wife's entitlement to any share of the property as the "matrimonial home" was negated.  Of passing interest to the profession was the Court's additional conclusion that Justice Greer was well within her jurisdiction by imposing a vesting order on the house for the benefit of the estate in the absence of a motion seeking such relief. 

David M. Smith

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In 1949, Georgia O'Keeffe donated the Alfred Stieglitz Collection of Modern American and European Art to Fisk University ("Fisk") in Nashville, Tennessee.  O'Keeffe, as executor of her late husband's estate, divided his collection of paintings, sculptures, prints and photographs and donated the nearly 1,000 pieces to six institutions, including Fisk.  O'Keeffe had donated the collection to Fisk with the express stipulation that the paintings not be sold or exchanged, as evidenced by a letter written that year to then Fisk-President Charles S. Johnson.  

In 2005, cash-strapped Fisk attempted to sell the paintings from the collection in order to rectify its 'troubled financial condition'.  In court filings, Fisk officials indicated that the school would run out of operating funds by the end of 2007 without selling 50 percent of the collection.

In March 2008, the Court enjoined Fisk from selling the painting and ordered the school to put the collection on display by October 6th or forfeit the collection to the Georgia O'Keeffe Museum in Santa Fe, New Mexico. 

Since then, Fisk, arguing that selling the art for a reported $30 million does not violate O'Keeffe's original intent, has filed an appeal to sell half the collection to a museum in Arkansas.  This week, Fisk asked the appeals court to send the case back to trial court saying the judge should not have blocked the sale without a more comprehensive hearing.  Those of you familiar with my recent Machu Picchu blog, and the Beaverbrook blog trilogy of March 2007, October 2007 and August 2008 will find  some parallels here:  In court documents, the parties disagree as to whether the collection is a charitable gift as opposed to an asset that Fisk can dispose of at will.

Interestingly, the Fisk website indicates that "The Alfred Stieglitz Collection is unavailable for viewing due to renovations currently underway at the Carl Van Vechten Gallery". 

David M. Smith

• Email This
• Print
• Comments
• Trackbacks
• Share Link

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

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

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

A person with more than one set of distinct interests or roles in the same estate may have a conflict of interest.  This can create all sorts of problems and issues in an estate administration and is a driving concept in much estate litigation.

Say Joe Smith is the executor of an estate but also received gifts from his mother the testator during her lifetime.  One of these gifts, say, came in the form of a transfer of a bank account into joint ownership between the two of them. 

Wearing his executor's hat (to use some traditional vernacular), Joe may have a duty to determine whether the bank account transfer was not a gift at all and actually subject to a resulting trust in which case the estate might have a claim to the asset.  Joe may need to do so because, as executor, his duty is to identify estate assets and bring them into the estate. 

However, wearing his hat as a recipient of the bank account, Joe is unlikely to want to give the bank account back to the estate. 

In short, Joe may have a conflict of interest.

In such circumstances, Joe may need two lawyers, one to advise him as estate trustee, the other to protect him personally.  Sometimes an executor’s conflict is such that he cannot continue to act as estate trustee. 

While this example may be simple enough, there is a tremendous range of conflicts that can creep into estate matters.

Thanks for reading.

Sean Graham

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Yesterday, we read about Franz Kafka's unfulfilled wishes with respect to his manuscripts, both published and unpublished, at the time of his death in 1924.  Flash forward eight decades or so.  Dmitri Nabokov, the 73 yr old sole surviving heir of Vladimir Nabokov, continues his 30-yr struggle with his father's deathbed request that his last unpublished work, The Original of Laura, be destroyed.  The stakes are high for Laura; at one point, Dmitri referred to it as "the most concentrated distillation of [my father's] creativity."  The task of burning the manuscript was originally entrusted to Vladimir's wife Vera, but when she died in 1991 she had not yet carried out her husband's last wish.

As discussed in the Business Standard, those in favour of heeding Nabokov's wishes are not willfully destructive.  It is understood that great writers might work through countless drafts before arriving at a final product that meets their approval.  On the other hand, there's the argument that writers (including Kafka) seldom can judge their own work.

The long twisted saga may find its fate as a cliffhanger of sorts.  In a dramatic verdict, Dmitri indicated late last month that he had indeed "decided to make a decision" about what to do, but that he would "neither disclose publicly either the decision or the deed."  Apparently (or should I say apparition-ly?), Dmitri reached his decision after an imagined ghostly conversation with his dead father.  Stay tuned for the future unveiling of either a box of Laura's ashes or what might be Nabokov's greatest literary work.

David M. Smith

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Listen to Executor Obligations

This week on Hull on Estate and Succession Planning, Ian and Suzana discuss what to anticipate as an executor and how to ensure that you are well prepared for your duties.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

A common area of complaint stems from an allegation that the executor or trustee was negligent in his or her efforts to administer the assets of an estate or trust. For a comprehensive discussion of the personal liability of trustees, see Maurice C. Cullity, Q.C., "Personal Liability of Trustees and Rights of Indemnification", (1996) 16 E.T.J. 115.

Generally speaking, most claims or objections to accounts arise out of what is perceived by beneficiaries to be negligence or failure on the part of the executor or trustee to maintain a proper standard of care and skill in his or her office. The most common complaints arise out of the following situations:

• investments by the executor or trustee which are not authorized by the will or by the law;
• the failure to provide a proper mix of investments so as to balance competing interests, such as life interests as opposed to remainder interests;
• the negligent or improper investment by the executor or trustee in investments of a speculative nature;
• an executor or trustee can be held liable for not maintaining the value of assets, such as a residence, by effecting proper repairs and would be liable for such neglect;
• executors or trustees must be extremely careful to make sure that all proper considerations are taken into account in making elections under the Income Tax Act, so as to avoid any criticism by the beneficiaries;
• care must be taken by an executor or trustee to ensure that prompt filings of returns are made and that penalties and interest payable on late filings are not incurred; and
• while trustees are seldom culpable for what are perceived by beneficiaries to be unnecessary delays, care must be taken to ensure that damages are not in fact incurred by the beneficiaries by reason of delays caused by inattention.
  

Surcharging of Accounts

A "surcharge" alleges an omission for which there ought to be credit in the accounts. The most frequent surcharges relate to undervaluation of assets, assets not accounted for, non-disclosure of an asset and, in some cases, the incorrect recording of an entry.

Falsification of Accounts

A "falsification" alleges an item on the debit side of the accounts to be either wholly false or, in some part, erroneous. A claim against the estate which does not exist or is not realistic, or a payment by the estate of an account which is excessive, and in some cases, the incorrect recording of an entry, are all examples.

While the above does not purport to be an exhaustive list of the areas of negligence, we hope it serves as a useful starting point nonetheless.

All the best, Suzana and Ian. --------