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Listen to Deductions from Compensation.

This week on Hull on Estates and Succession Planning, Ian and Suzana finish up the discussion on the question of accounting by reviewing deductions from compensation and briefly sum up the procedure of the passing of accounts.

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.

Deductions from Compensation - Hull on Estate and Succession Planning Podcast #125

Posted on August 12, 2008 by Hull & Hull LLP

Suzana Popovic-Montag: Hi, and welcome to Hull on Estate and Succession Planning. You’re listening to Episode #125 of our podcast on Tuesday, August 12^th, 2008.

Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada. From the offices of Hull Estate Mediation in Toronto, Ontario, Canada, here are Ian and Suzana.

 

Suzana Popovic-Montag: Hi there, Ian.

Ian Hull:  Hi, Suzana. How are you doing?

Suzana Popovic-Montag: I’m good thank you, how are you?

Ian Hull: Just great. We’re having some fun with this whole question of accounting, and I think I’ve done the numbers, and I think we’re almost done. But before we go through our podcast today, let’s remind everyone, please feel free to call in on our call-in number and our call-in number is of course, 206-457-1985.

Suzana Popovic-Montag: Or send us an e-mail at hullandhull@gmail.com or of course, you can visit our blog at estatelaw.hullandhull.com as well. 

Ian Hull: So before we launch into the substantive podcast today, I just wanted to do a couple of things. One, I want to deal with an e-mail that came in and another is I want to just welcome people to listen and look at the, last week we enjoyed Jordan Atin who is our associate counsel here, our Senior Associate Counsel, and he was on Canada AM for four days in a row talking about family feuds and the link to the webpage where CTV is still running the streaming is worth looking at, and we’ll make sure that’s in our show notes.  But Jordan had a great opportunity to talk about family feuds and sort of the issues that arise out of his book, “The Family War” which is co-written by Les Kotzer and of course, my good friend, Barry Fish.

Alright, so we were talking about some of the e-mails. And we had two e-mails last week come in. Both of them were semi-related and so I’m sort of going to merge the two of them together. And the question really comes down to this:  What are we talking about with The Shoebox Effect? And what we’ve been mentioning in the past and what we’re going to talk a little bit about today, because part of our wind-up is the importance of vouchers, is The Shoebox Effect is this. When you are a trustee, no matter what you think, no matter what you do, you will be someday possibly asked to show your receipts and that’s all I’m saying The Shoebox Effect is. Make sure you keep receipts, even if it’s in a shoebox. Your lawyer or your accountant can work on the presentation of it when you ultimately have to go to Court, but keep the receipts. So that was the two questions that came in, actually, both were from different parts of Canada but asking about the same question. So I’m not going to dwell on it other than that and say that when we’re winding up our comments on accounting, please, please, please keep your receipts if you’re a fiduciary.

Suzana Popovic-Montag: And just to add one thought to that, Ian, I would also suggest that it’s really helpful to make sure that you document as much as possible everything that you do as a trustee.  And when it comes to exercising your discretion, and if particularly the Will or the trust document allows you to have a broad discretion, to write down your thoughts or your reasoning or the underlying reasons that you decided to do something or not do something and include that in the shoebox that you end up bringing to a lawyer one day possibly.

Ian Hull: That’s a great suggestion and it comes down to, when we’re talking about getting paid for all of these efforts, the deductions from compensation that we briefly talked about in the last podcasts, what can you look to? So we talked about that you can get paid, say approximately 5% as a tariff, so to speak.  And we’ve talked about some of the things we’re going to knock you out from, but one of the easy deductions is the delineation between the executor’s work and lawyer’s work or accountant’s work. And that ties into your comment, Suzana, on docketing, keeping records beyond just the receipts that I talked about.

Suzana Popovic-Montag: And things for instance, like the preparation of tax returns, when fees are associated with that, depending on who’s preparing the tax returns and how much those fees are, that’s another thing that might possibly be a deduction from compensation if the trustee for instance is an accountant. And these are situations where a trustee is an accountant or a lawyer that you see most often, where these issues can arise.

Ian Hull: Alright, so another concern that we raise and probably the last deduction from compensation we’ll just mention now, is this whole idea of pre-taking compensation. Under Ontario legislation, if you’re a fiduciary or, as I say, a guardian under the Substitute Decisions Act, they actually allow you to pre-take your compensation, take before you’ve made your efforts. But we’ve talked about in the past the cases, and we’ve talked about them in the show notes as well, the case law that talks about Re: Knoch which we talked about in our previous podcast and others, and we want to be very, very careful about pre-taking, getting paid before you’ve done your work. So that’s an easy deduction.

Suzana Popovic-Montag: Ian, just a question that I find often gets asked is whether or not GST is actually payable on executor’s compensation. What are your thoughts about that?

Ian Hull: Well, that’s a great question and it’s a murky area of the law.  And what has happened in the past is you would typically have to look at it case by case. First and foremost, you have to look at the amount of the payment that the compensation is. If it is over $30,000 that you’re being paid in compensation, which could be the case because it’s typically a one-time payment, you may have to pay GST on that income as having rendered services. So it’s really case-by-case. Talk to your accountant, get good advice before you wrap up that issue, but that’s an excellent question and a really important heads-up for people who are accounting and doing compensation work.

Okay, I think we’ve pretty well covered off our accounting in the in-depth form and so we wanted to make sure that we stayed the course and came full circle to our sort of checklist that we’re trying to work through. And one of the things I will say is we’re hopefully going to be changing our format and trying to pick up a video feed for our podcasts which is in the process. Some technology glitches haven’t allowed for it to fall in just yet, but we’re going to be moving into some different topic areas. But one of the topic areas that we have to, I think, just sort of at least wrap up in a minimum way, is the process itself. We’ve talked about the passing of accounts process but let’s talk about the physical steps that are taken because many people don’t understand passing of accounts and what you can expect in the courtroom once we’ve got the Court format accounts.  And my introduction to this, by way of the fact that we’re going to be moving this into an audio, is that we’re going to have our own mini-series on this issue, where we’re really going to flush out these topics.  But I think its worthwhile talking about them briefly now, so that people understand what they’re going to get themselves into once they’ve got these beautifully created Court format accounts.

Suzana Popovic-Montag: And procedurally speaking, certainly here in Ontario, the Rules of Civil Procedure will govern what is included in an Application to pass the Court format accounts. And we started when, before we got into this discussion of how we would audit estate accounts or how to prepare a best kind of set of accounts in the circumstances, we talked about the fact that it’s all part of an application process.  And so there will be an actual Court date that’s assigned to the hearing for the return of the executor’s accounts, and you’ll serve a Notice of that application on all the beneficiaries together with, in many circumstances and many situations, a copy of the accounts as well. And the Rules themselves specifically provide what has to be in this Application record and I thought, Ian, it might be good to just sort of flush out some of those specific requirements.

Ian Hull: Alright. Well I think and it’s helpful because it’s not quite as daunting when you get the document itself thrown at you because, as I say, a lot of these accounts are passed in a non-contentious environment.  But it’s legal mumbo-jumbo to some people so you want to make sure you sort of know what you’re getting yourselves into when you get it. And the main document behind the accounts is the Affidavit verifying the accounts, they’re proving that you’re swearing to the truth of the accounts, and that’s the fiduciary sort of statement that says these accounts are true and accurate.

Suzana Popovic-Montag: And that Affidavit, as I say, is included in the record that is served upon everyone who has a financial interest in the estate. And financial interest in the estate I think we’ve talked about on previous podcasts, has a very broad meaning in the sense that even people with a contingent interest in an estate will be served with the accounts as well.

Ian Hull: And talking about service, we don’t want to forget that there may be government agencies that we have to serve, of course; the Office of the Children’s Lawyer should there be any minor child’s interests, or interests of those who are unborn and unascertained.  And without getting too technical about it, we just want to look at the trust document or the Will and see if there is a trust. And typically if there’s a trust, more often than not, almost certainly in fact, the Children’s Lawyer would be served, that’s the Office of the Children’s Lawyer.  And it’s different in each Ontario jurisdiction, but basically the lawyer in charge of minor interests. Another person to be concerned about serving is

Suzana Popovic-Montag: the Public Guardian and Trustee. That office would be served on behalf of any incapable beneficiaries of the estate. And so just like the Children’s Lawyer protects the minor, the unborn or the unascertained, the Public Guardian and Trustee here in Ontario will represent those incapable beneficiaries.

Ian Hull: So those are just things to keep a heads-up on so that you don’t get out of the box and miss a page of the application process by not putting important entities on notice. Obviously, we come back to our cardinal rule: Read the document, read the Will, read the trust and make sure you’ve served everyone named in that, but the Public Guardian and Trustee and the Office of the Children’s Lawyer, are two entities that aren’t necessarily named and quite often aren’t named, so just a heads-up. 

So I think that gives you sort of a sense of what the document itself, in a friendly environment will be, so I think we’ll wrap up today’s podcast and again reminding you, please feel free to e-mail at hullandhull, h u l l a n d h u l l @gmail.com.

Suzana Popovic-Montag: Or feel free to call and leave us an audio comment at 206-457-1985. Thanks very much, Ian.

Ian Hull: Thanks, Suzana.

You’ve been listening to Hull on Estate and Succession Planning with Ian Hull and Suzana Popovic-Montag. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

 

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

 

Our theme music is UpTempo14 by Gary and is courtesy of the Podsafe Music Network.

 

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Listen to The Formal Passing of Accounts.

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

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

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

Posted on May 20, 2008 by Hull & Hull LLP

Suzana Popovic-Montag: Hi, and welcome to Hull on Estate and Succession Planning. You’re listening to Episode #113 of our podcast on Tuesday, May 20^th, 2008.

Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada. From the offices of Hull Estate Mediation in Toronto, Ontario, Canada, here are Ian and Suzana.

Ian Hull:    Hi, Suzana.

Suzana Popovic-Montag:   Hi there, Ian. How are you today?

Ian Hull: I am fantastic. Looking forward to lucky 113 on our podcast efforts.  And we finished off last week reminding our listeners to please feel free to contact us.  And the best way is to jump on our webpage at hullandhull.com and we have an easy navigation to our podcasts and our other sources we have on the webpage.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ian Hull: Thanks very much, Suzana.

You’ve been listening to Hull on Estate and Succession Planning with Ian Hull and Suzana Popovic-Montag. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

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

Our theme music is UpTempo14 by Gary and is courtesy of the Podsafe Music Network.

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Listen to Applying for Probate

This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the applying for probate. They discuss some of the ways that estate administrators can simplify the process.

Comments? Send us an email at hullandhull@gmail.com, post a comment on our blog at http://estatelaw.hullandhull.com/ or leave us a message on our comment line at 206-457-1985.

Applying for Probate - Hull on Estate and Succession Planning Podcast #105

Posted on March 25^th, 2008 by Hull & Hull LLP

 

Suzana Popovic-Montag: Hi and welcome to Hull on Estate and Succession Planning. You’re listening to Episode #105 of our podcast on Tuesday, March 25^th, 2008.

 

Welcome to Hull on Estate and Succession Planning, a series of podcasts hosted by

Ian Hull and Suzana Popovic-Montag, that will provide information and insights into estate planning in Canada, from the offices of Hull Estate Mediation in Toronto, Ontario, Canada.  Here are Ian and Suzana.

 

Ian Hull: Hi Suzana.

 

Suzana Popovic-Montag: Hi there Ian. How are you today?

 

Ian Hull: Just great, thanks. Glad to be podcasting again with you. Missed you last week.

 

Suzana Popovic-Montag: Sorry about that.

 

Ian Hull: No it’s – these things happen.

 

Suzana Popovic-Montag: They do.

 

Ian Hull: Don’t forget to all those who are listening, feel free to call us at 206-457-1985.

 

Suzana Popovic-Montag: Or if you’d like to drop us an e-mail at hullandhull@gmail.com or, of course, you can visit our blog at estatelaw.hullandhull.com.

 

Ian Hull: Okay, we’ve been trying to follow through the process of an estate administration per se, and what it takes to get the job. One of the things that we talked a little bit about, not at the last podcast but the one before, was the application for probate itself. And I thought what we could do today is, sort of, talk about some of the things that might come as a surprise to people just how much notice you have to give to the beneficiaries.  And just who needs to be given notice in the application process and some of the other, sort of, what I might consider more mundane steps you have to take in the process. We talked, not in the last podcast but the one before though, about the bonding requirements in Ontario anyway, the probate tax that gets calculated.

 

Suzana Popovic-Montag: And we didn’t mention the fact though, Ian, that when you don’t necessarily know the exact value of the estate and you can’t necessarily calculate the administration tax that will be payable, you can still file on the basis of an estimated value for the estate, as long as you provide an undertaking that our statute here in Ontario provides for.

 

Ian Hull: That’s right.  It gives us some flexibility and so it means that you don’t have to know the numbers right down to the dollar.

 

Alright one of the next things that I think of whenever I’m applying for probate is I think of the Affidavit of Execution.  And that’s because you need it, it is such a vital document. I mean, when you’re dealing with an estate, to administer an estate, you have to have a valid Will and you have to prove that it was properly executed with two witnesses in the room at the same time as the deceased. So the Affidavit of Execution is something you want to track down and sometimes that’s not as easy as it sounds.

 

Suzana Popovic-Montag: And that Affidavit, for people who aren’t familiar with it, is an Affidavit by those witnesses to the Will saying that they were actually present for the signing of the Will and that all the formalities required by the legislation were abided by.

 

Ian Hull: And some difficulties can arise because, for example, say the Will was done 20 years ago and you don’t have any real information about the Will and the Affidavit wasn’t signed at the time, you can get into some trouble with the Affidavit of Execution in the sense of trying to track it down. So I always remind my clients whenever they do sign their Will up, make sure that they have asked their lawyer where the Affidavit of Execution is and make sure it’s in a secure place, because it is a vital part of the application itself.

 

Suzana Popovic-Montag: That’s for sure, Ian. And then once you’ve got all this documentation in place and this information all put together, then what you’ll typically do is actually meet with the lawyer and have the documentation signed up.

 

Ian Hull: Now in Ontario, and I think it’s a useful exercise to go through because when you do this for the first time, I find people are often surprised at just what needs to be involved in an application for probate. Now let’s talk a little bit about some of the people that get notice of the application itself.

 

Suzana Popovic-Montag: And that basically is all of the beneficiaries who are named in the Will. And so if you’ve got a beneficiary who’s actually a charity, in that instance, you have to serve not only the charity itself but also possibly the Public Guardian and Trustee as well.

 

Ian Hull: And people forget that when you have made a gift of a charity, what you’ve done is you’ve created a new layer of bureaucracy in the probate process and in the accounting process, if the gift is part of the residue, and we’ll get into more of that later. But the point is, is that it’s wonderful to give to charities in the Will but I notice in the last 10 years certainly, the taxing authorities in Canada have started to encourage us to gift during your lifetime. You get better tax advantages than you used to for that gifting and, quite frankly, on death, the gift to a charity can be a bit cumbersome. It’s not overwhelming, but it’s just another layer in the process.

 

Suzana Popovic-Montag: And another government institution that you serve with this notice of application, if you have minors who are beneficiaries of an estate, is the Children’s Lawyer’s office here in Ontario. And that is, again, if you’ve got a minor who’s a beneficiary of an estate, you’ll serve the Children’s Lawyer on their behalf, as well as the parents of the minor.

 

Ian Hull: So we can’t forget, too, because a lot of these Wills will have what we call is a gift-over provision and they will have a situation where there may be a trust or something of that nature, and so there are minor beneficiaries’ interests that need to be protected. And the governing authority gets a copy of it, opens a file and then is in a position to audit your administration, so to speak. So you put them on notice of the Will and you put them on notice of the financial interests.

 

Suzana Popovic-Montag: And if you have beneficiaries who are actually not capable, whether if mentally or otherwise, you may have to also, in those circumstances, serve their guardian of property or their attorney for property, if they’ve got one that you are aware of.

 

Ian Hull: That’s a really good point because sometimes people overlook that aspect of the administration.

 

Now the final step, of course, is to go up to the Court and file the application itself, and that can be done by your lawyer or it can be done by yourself, it depends in your circumstances. So let’s just take a minute now and we’ve filed for the application, we’ve covered off and maybe been a bit surprised at who all knows about the information.  And I say that because, in Ontario anyway, we’re required to say and provide a copy of the Will to the individual who’s a beneficiary. But we’re not necessarily required to put the amount of the estate. You actually file an Affidavit of Execution with the Court and you also file an Affidavit verifying the amount of the assets when you file in Ontario, so that it’s a public document, but it is not necessarily produced in this first series of disclosure steps. So it’s one of those things that I often will say to my clients “Look, you know what, it’s a public record. Maybe you want to go up to the Court, get a copy of the Affidavit that they file in support because in it will tell you the value of the estate and you might get some answers very quickly as to what’s going on.”

 

Alright, so we’ve got our Certificate of Appointment and now what do we do? This is the document we’ve all been waiting for, so to speak, and we are in a position now to start to show it to third parties to start to meaningfully administer the estate and get access to certain aspects of the assets that we haven’t been – we’ve been prevented from getting until we got this famous probate document.

 

Suzana Popovic-Montag: And so one of the first things that my clients will normally want is to have a couple of copies, notarial copies, you know, our Court of approval or seal of approval on that document, indicating that it is a valid probate document that they can then take and use with the authorities who actually require it, in order to help them collect and administer the assets of the estate.

 

Ian Hull: And that lets you get into various… gets access to various assets. It’s like getting into a safety deposit box, for example.

 

Suzana Popovic-Montag: And also closing out bank accounts as well.

 

Ian Hull: And we talked about in other podcasts and the problem is, is that the banks and third parties will not necessarily deal with you as executor without this formal order.  And banks are classics for that and the brokerage companies are classics for that because they want to know that they’re dealing with the right person before they start to release the funds to the estate bank account. Often the bank will also insist on probate before they’ll even open an estate account. So that’s case by case, but that’s something that, you know, as I say, it’s great to have the document now, get lots of notarial copies of it, use them properly and you’re in a position to start to really meaningfully administer the assets.

 

Suzana Popovic-Montag: And that’s particularly important when you’re trying to collect life insurance policies which typically are in large denominations. And so you’ve now got that Certificate that you can give to the institutions in order to be able to get those funds.

 

Ian Hull: Another one asset that we sometimes run into glitches on is RRSPs, here in Canada, and again, with our probate documentation, we can usually complete that transfer fairly quickly.

 

Suzana Popovic-Montag: As part and parcel of that, too, just other kinds of securities where you have to provide the transfer agents with proof of the fact that you’ve got authority to deal with those assets. And again, you’ve now got it in hand and you can give that to them in order to collect those assets as well.

 

Ian Hull: And, of course, one of the fundamental assets that you have to concern yourself with is the transfer of real estate. And with many different jurisdictions, it is mixed in terms of whether or not you need probate or not. But I would say, sort of, as a good general rule, probate is almost always required. And so now we can start to transfer and sell real estate.

 

Okay, now one little twist that some people don’t often think of the beauty of probate and before we get into some of this, what I will call some of the other action items that you can take the steps on with the probate document, are things like dealing with personal affects. And for our next podcast, I want to start to…we’ll talk a little bit about not just personal affects but automobiles, talk about other assets that we can now start to administer with the document in hand, that being probate, and with authority that we’ve been waiting for.

 

So thanks so much Suzana. Good to have you back and we look forward to our next podcast.

 

Suzana Popovic-Montag: Thanks to you, too, Ian. And just a reminder to our listeners, that we’ve got our comment line set up at 206-457-1985.

 

You’ve been listening to Hull on Estate and Succession Planning with Ian Hull and Suzana Popovic-Montag.  The podcast you have been listening to has been provided as an information service.  It is a summary of current legal issues in estates and estate planning.  It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

 

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

 

Our theme music is UpTempo14 by Gary and is courtesy of the Podsafe Music Network.

 

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Listen to The Family Conference

This week on Hull on Estates, Natalia and Allan discuss the Family Conference.

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 Estate blog.

 

The Family Conference - Hull on Estates Podcast #96

Posted on February 5^th, 2008 by Hull & Hull LLP

 

Natalia Angelini: Hello and welcome to Hull on Estates. You’re listening to Episode #96 on Tuesday, February 5^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 on Hull on Estates. I’m Natalia Angelini.

 

Allan Socken: Hi and I’m Allan Socken.

 

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.

 

So Allan, it’s great to be podcasting with you today. It’s our first time together.

 

Allan Socken: I’m very excited about it, Natalia.

 

Natalia Angelini: That’s good. We’re going to be talking about the family conference. So perhaps I’ll just set out what it is. The family conference is a professionally mediated conference and it essentially provides a forum whereby a testator can reveal his or her proposed estate plan to intended adult beneficiaries. And the objective is to obtain their approval of the plan. So it’s quite a unique animal, the family conference. It’s really the only formal mechanism in place in estate matters where someone can, you know, look their loved ones in the eyes and explain their plan to them, answer any questions about why they wish to have their plans set out in that manner. And ultimately in an ideal scenario, get agreement on it. So Allan, why don’t you tell our listeners what needs to happen in preparation for a conference.

 

Allan Socken: Well before the conference, I think probably the most important question to ask is who do you invite to the conference? And the simple answer is you invite all adults who are involved in the estate plan. At least, at a minimum, the people you invite would be the spouse of the person who made this estate plan as well as his children. And I think in inviting these people, it’s really important that you speak to them and have a candid conversation with them, obviously before the conference, explain the purpose of a conference, namely for all the people to appreciate what the person’s estate plan looks like and the reasons as to why they’re leaving certain gifts the way that they are.

 

Natalia Angelini: And who else can be invited?

 

Allan Socken: Really, any person who has an interest or involvement in the estate plan of the person.

 

Natalia Angelini: Right. And that would even include professionals, like the testator’s estate lawyer, their financial planner or accountant, because they certainly can have a critical role in explaining or answering questions dealing with the assets.

 

Allan Socken: For sure. And I think the other important thing to make mention of is there may be certain circumstances, probably quite frequently, where minor children have an interest in the estate plan. And it’s important to note that minor children should not be included in the family conference. In most jurisdictions, Ontario included, there’s an office known as the Office of the Children’s Lawyer, whose mandate is to protect the interests of minor children. And depending on what the estate plan looks like, it may be necessary to have discussions with them to see if it’s necessary for them to attend the conference as well.

 

Natalia Angelini: That’s a good point, Allan. So are there any other preparatory steps?

 

Allan Socken: The only other thing I’d like to make mention of is the question as to where to hold the family conference. Often people think that it may be prudent to hold it at a family member’s house.  But the reason why, I think, it’s not a good idea is, is often when you go to a person’s house, it may turn into a social function and it may lose the business touch that’s essential in planning for this conference. So I think probably the best place to hold a conference would be at the mediator’s office so people can really appreciate the business-like environment that they’re encountering and the importance placed on the family conference.

 

Natalia Angelini: In addition, it really is like a mediation and you want to be able to have individual caucuses as well as group caucuses. So you need several rooms and breakout rooms and privacy so you can really have it proceed in a meaningful way. So again, I think a mediator’s office or some other kind of office is ideal.

 

Allan Socken: I think moving along, Natalia, now we should address the agenda that’s put in place before the family conference. I think it’s important to stress to our listeners that an agenda is essential to have so that people are aware of what’s going to be taking place at the conference and so that divergence can be avoided as much as possible. So probably what’s important to include in the agenda is really the overview of the person’s estate plan which would include the proposed new Will, who the executor will be, funeral arrangements, debts of the person, taxation issues, guardianship of minor children, who may be the Power of Attorney and dealing with the distribution of specific assets for the estate.

 

Natalia Angelini: Right. I think it is critical to have an agenda and the family conference is chaired. And it’s usually chaired by either the testator or the mediator or someone else selected by the testator. So it’s great assistance to them to have an agenda to follow.

 

Now in respect of how the actual conference works over the course of a day or more than one day, it is much like a mediation.  And, you know, there is, I think, initially, commonly a group meeting where the chairperson goes through the rules of the day. There’s usually a family conference agreement signed which sets out that the mediator is neutral, that he or she is not offering legal advice, that all discussions are without prejudice, and of course, that the mediator is not liable for anything done or omitted at the family conference. So the usual sort of waivers. In addition, a document entitled Rules for Meeting is also signed. And Allan, why don’t you set out what is contained in that document?

 

Allan Socken: Typically for the Rules of the Meeting, it sets out that the parties understand who’s paying for the mediator’s time but not withstanding whoever is paying for the mediator’s time, the mediator still will be neutral throughout the process. As well, the parties agree that they’ll conduct themselves in a business and professional approach. And in that sense, there’ll be no harsh language spoken either at the other parties or the mediator. And believe me, I’m sure Natalia also can attest to the fact she’s seen certain times where discussions can get pretty heated.

 

Natalia Angelini: This is true. This is true. And I think in this kind of conference you really want to encourage views to be shared and grievances to be aired, but at the same time, in order for resolutions to come about, you want to make sure that everything is discussed in a cordial manner.

 

Allan Socken: And just the other thing to make mention of also is one of the rules should also include that all the parties are bound and acknowledge that they’re bound by the Family Conference Agreement. So they can leave whenever they feel like it if they feel progress is not being made. Certainly the mediator will try to keep them there and have the parties agree to at least spend a day there to try to sort things out. But even if the parties want to leave at the end of the day and no agreement can be reached, the parties still agree that all information and all people who were present can’t be subpoenaed in that respect. I think that’s important also to include in the agreement, Natalia.

 

Natalia Angelini: Good point, Allan. So again, it is a fluid process like any other type of mediation and it really can unfold in a different way depending on the parties and the circumstances.  And if an agreement is not ultimately reached at the end of the day, you can, you know, reconvene on another day if all or some of the people are willing to and you can get an agreement at a later time. What that looks like doesn’t necessarily have to be in accordance with the proposed estate plan. It’s not necessarily an imposition of that plan. The plan can be varied or amended pursuant to the comments and views of the beneficiaries and once an agreement is ultimately reached, it’s papered in a document that’s called The Family Constitution. And Allan, maybe you can expand a bit on that.

 

Allan Socken: Sure. Basically, you probably remember from law school, Natalia, that we always talk about the constitution as being a living tree.

 

Natalia Angelini: That’s right. Way back when I do remember.

 

Allan Socken: Well not surprisingly, The Family Constitution is also a living document that requires amendments from time to time. Because as people move on and age in years, no doubt their estate plan changes and when their estate plan changes, it’s really important that The Family Constitution is also updated. And I think as a preamble to The Family Constitution, it’s important to note that while family members may have different views and opinions, they unanimously - hopefully that’s the goal at the end of the day - that they unanimously decide to create this Family Constitution. And I mean, in certain circumstances, there may be family members who don’t want to agree to The Family Constitution or some people may not even want to have the meeting in the first place. So I think the role of the mediator shouldn’t necessarily be to prevent the family conference from going ahead, but perhaps to engage the people who are willing and interested at first to participate in the conference and hopefully, if success can be achieved there, people who didn’t want to participate in the first place may be inclined to give it another look and perhaps be willing to review the constitution that was agreed to. And even in certain circumstances, they may be willing to sign the agreement, albeit they may expect some changes to be made. But at the end of the day, some progress can happen even if not everyone in the family conference is willing at first to participate. And I think that’s important to keep in mind.

 

Natalia Angelini: Right, and one benefit to proceeding even if you don’t have everyone’s consensus is that the process can be of real value because it shows a testator’s clear intention as to how he or she wishes to divide his or her assets, which can really deflate any kind of brewing Will challenge at the end of the day. So litigation avoidance is one real positive potential outcome of the conference. And if you actually do get a Family Constitution signed, then it’s a great thing to have because it includes an agreement not to contest the Will. So that’s a great way to avoid litigation or ultimately if litigation is commenced, to use that document in defence of that.

 

Allan Socken: And just one final point for me to make Natalia, if that’s okay, is probably the most complicated aspect of this family conference is really the need for full disclosure. And for a lot of people, that’s really a difficult thing to do because there may be situations that people are embarrassed to admit or really don’t want to disclose.  For example, extra-marital affairs, not dividing your estate equally among your children.  But at the end of the day, if you want success to be reached with the family conference and you don’t want your Will to be contested or other legal remedies pursued when you die, I really think it’s important that you make mention of these difficult aspects so people can appreciate and they don’t feel as though you’re hiding anything. So while it’s difficult to disclose this information, I really think it’s important to get across that at the end, if you hide it, it will really do more harm than good at the end of the day.

 

Natalia Angelini: That’s right. I mean the fact is this is a delicate process and it’s not one that I think most people are willing to enter into because I think a lot of us would rather not deal with these delicate and difficult issues during our lifetime and we’ll just wait for everyone else to kind of deal with it after we’ve passed on. So I think people need to have, I think in a lot of cases, it helps to sort of have the courage to go ahead with the process and be open and ultimately, in an ideal scenario, get agreement on the issues or at least, you know, canvass them in an open and honest way.

 

So well, I think that brings us to the end of this week’s discussion.  Thanks for listening and thanks for joining me today, Allan.

 

Allan Socken: Thanks Natalia, I had a great time.

 

Natalia Angelini: That’s great. And we look forward to hearing from our listeners. You can send us an email at hull.lawyers@gmail.com or just pick up the phone and leave us a message on our comment line at 206-350-6636. And again, you can also visit our blogs at estatelaw.hullandhull.com, where you’ll even find more information and discussion on today’s practice of estate law. We hope you enjoyed the show. I’m Natalia.

 

Allan Socken: And I’m Allan.

 

Natalia Angelini: And until next time, so long.

 

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

 

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

 

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

 

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Listen to Consent Orders

This week on Hull on Estates, David Smith and Christopher Graham discuss what to consider as a lawyer seeking an order on consent.

Consent Orders - Hull on Estates Podcast #91

Posted on January 3^rd, 2008 by Hull & Hull LLP

David Smith: Hello and welcome to Hull on Estates. You’re listening to Episode #91 on Wednesday, January 2^nd, 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.

David Smith: Hello, my name is David Smith and I’m here today with Chris Graham of my office. Hi Chris.

Chris Graham: Hi David.

David Smith: Chris, today we thought we’d discuss consent Orders and what you need to consider as a lawyer when you go in front of a judge seeking an Order on consent. It seems simple enough in the sense that if there’s several parties to a proceeding, all of whom agree to a certain form of relief, the general thinking is that if you go in front of a judge with an Order and say, judge, this Order is on consent, there’s a tendency to think that the judge will effectively be a rubber stamp and simply sign the Order. But, of course, that’s not the case, is it, Chris?

Chris Graham: That’s right, David. In most situations where you have a consent Order, what you’re asking the judge to do is usually a matter of judicial discretion. In other words, the judge has the option to grant the relief or not grant the relief.

David Smith: And I think that’s the important point, isn’t it? It’s really…certainly it’s disrespectful to even suggest that a judge is a rubber stamp. I mean, a judge has a role to play, the Court has an inherent jurisdiction over the proceeding. And I think sometimes the tendency as counsel is to think well, unless there’s a minor, unless there’s a party under disability, there’s going to be no reason for a judge not to sign a consent Order because everyone is represented by counsel. But the judge will often want to make that inquiry and Chris, what’s the basis upon which the judge will seek further evidence if necessary, and what situations do we commonly see a judge ask for further evidence?

Chris Graham: Well, one of the most common situations that I’ve noticed now that I’m starting to do this type of thing more and more often, is a situation where the parties may ask the judge to authorize the estate trustee, for instance, to make payments to some or all of the parties. One example of this would be to make a payment for legal fees. But, of course, that’s not the only example.

David Smith: And if we’re talking about the estate context, I guess what comes top of mind is a situation where you’ve got an estate trustee, likely an estate trustee during litigation appointed. And it’s important to remember that the estate trustee during litigation is entirely a creature of statute. He or she only functions under the supervision of the Court and cannot make any kind of distribution whatsoever without the direction and supervision of the Court. And so, if you’re in a litigious context where there’s no authority to distribute, on that authority alone the estate trustee during litigation will need the direction of the Court. And that’s when the judge may say, well, hold on a second, even if you’re all consenting to this Order, is this an Order that should be made? Chris, what kind of evidence is a judge looking for?

Chris Graham: Well, in order to make a decision on facts, the judge needs to know what the facts are. Of course, the only way to bring facts into Court on an application or a consent Order hearing is…well, you can do it through viva voce evidence which is where the lawyer gives evidence to the Court. But that’s not the best way to do it. Judges don’t like indulging in that way. What ideally what you should have is an Affidavit where one of the parties swears the Affidavit setting out the facts and then counsel explains and makes an argument submission to the judge based on the facts in the Affidavit.

David Smith: Right. And so that’s the type of evidence you have. And in terms of substantively what that evidence would include, I would think the concerns of the judge would be, does this Order that I’m about to make prejudice anybody? Does it prejudice any creditors of the estate, for example? Does it prejudice the beneficiaries? Obviously, that’s the foremost consideration. Is there sufficient money in the estate to pay obligations owing to the Canada Revenue Agency, for example? I think all of these are necessary. And if I’m a judge, I would think I would want to be concerned that the parties were not asking me to make an Order that benefits them to the possible exclusion of other people who could later complain (a) that they weren’t given notice; or (b) that they were not protected by the judge, whose role is as an overseer and as noted, to protect the interests of anyone who could possibly have a claim against those funds. I think that’s always a concern. So I think possibly the Affidavit might want to include evidence as to creditors, the tax situation, sufficient evidence to satisfy the Court that people will not be unduly prejudiced by the payment of legal fees or some kind of interim distribution to the parties, all of whom are consenting. Is there anything else we can think about, Chris?

Chris Graham: Yeah, I think you might want to make sure that the Affidavit or some other Affidavit that might already be before the Court, sets out the basic story, because at least I’ve found that judges like to know what the big picture is, the history of the estate. So maybe if the estate stretches back three, four or five years, you might want to just make sure that the Affidavit, if nothing else before the Court already does so, just gives the judge the very broad picture, especially if the judge is having a very busy day, for instance, may not have had time to refresh himself on the materials which he probably read a week ago.

David Smith: I think that’s a really good point, Chris. And, you know, the other thing is, and maybe it’s rather obvious but its worth repeating, is the Will is always front and centre. And even if you’ve got an estate challenge where the Will is being challenged, then have all the Wills in front of the judge, all of the parties who have a financial interest identified clearly for the judge, and then the other thing I think we focus on again, and perhaps its being repetitive but I think it bears repeating, is as much detail as possible about the assets of the estate and the liabilities of the estate. Because at the end of the day, that’s really going to be the judge’s concern, I think, is am I putting anybody at risk who has an interest here? And not that the judge should be suspicious of counsel but I think a judge will always want to ensure, to again repeat the phrase, want to ensure that he or she is not being used as merely a rubber stamp. And counsel must always be sensitive to the fact that judges play an important role in the process and while there’s litigation ongoing, nothing can be done without the sanction of the judge. And in some of these cases, you may have a Rule 37.15 judge or a Case Management judge who becomes familiar with the case, knows the estate rather intimately and this isn’t a bad thing because what it does is, it allows the judge to have greater knowledge of all of the facts. And in those kinds of situations, that kind of a judge may be better positioned to consider any issues of concern.

Chris Graham: Yeah, I’d add to that, that point…just…if you’re trying to get, for instance, an interim consent Order, one consideration that judges seem to pay a great deal of attention to is not depleting the assets of the estate at an early point. And if you’re asking them to do that, you’d better have a very good Affidavit, a very detailed Affidavit, setting out exactly why you want to make large withdrawals from the value of the estate.

David Smith: That’s right. Now, Chris, I know that this is really…this is expanding the ambit of the discussion a little bit. But let’s assume we do have minors in this estate with an interest in this estate. What’s the likely response of the Office of the Children’s Lawyer to a motion seeking the consent of the parties to an interim distribution, or for payment of legal fees? Have you had any experience with that particular issue?

Chris Graham: Yes, I’ve had some. I guess the first thing to say with respect to the Office of the Children’s Lawyer is, give them lots of notice or they’ll simply ask for an adjournment because they want to fully consider the issues pretty much every single time.

David Smith: The other thing I’ve found, too, Chris, in dealing with the Children’s Lawyer is they will commonly take the position, or she will commonly take the position that even if she doesn’t necessarily oppose what the other parties are seeking, she will not consent to it. She will say that is a subject for a judge. And if a judge knows that a minor has an interest in the estate, in my experience, the judge is very concerned to protect the minors and will always give that forefront consideration, as well as a similar situation where you’ve got parties under disability. In addition to protecting potential creditors, I think probably the first thing a judge will look at is to say, is anyone here under disability? Is anyone here a minor? And do I need to know…do I need to take specific steps to protect those people? 

So Chris, it’s been a really interesting discussion and certainly there’s more to consider than is commonly thought to be the case when you go to Court on a consent basis. And it’s good to always cross your “t”s and dot your “i”s.

Chris Graham: Thank you David.

David Smith: Thanks Chris.

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

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

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

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Listen to "Litigation Involving Minors"

Read the transcribed version of "Litigation Involving Minors"

In Episode 70 of Hull on Estates, Paul and Sean discuss Court approval of settlements affecting the interests of minors. They refer to Rule 7.02 and 7.08 fo Ontario's Rules of Civil Procedure as well as the case of Marcoccia (Litigation Guardian of) v. Gill, 2007 CarswellOnt 15 (Ont.S.C.J.).

Click  "Continue Reading" for the transcribed version of this podcast.

Litigation Involving Minors - Hull on Estates Podcast #70

Posted on July 31^st, 2007 by Hull & Hull LLP

Sean Graham: Good morning. It’s Tuesday, July 31^st, 2007 and you’re listening to Episode 70 of Hull on Estates.

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.

Paul Trudelle: Hello Sean.

Sean Graham: Morning Paul, how are you?

Paul Trudelle: Very good thanks. 0Today we thought we would talk about the approval of infant settlements in the context of litigation involving minors and what is required in order to settle a case that involves a minor. 

Sean Graham: Yeah, and just to put it in context, it’s an interesting proceeding because often what has happened is that you’ll be dealing with a family, generally in which a minor has been injured, sometimes quite badly.  And they will then have been through a very difficult litigation proceeding against insurance companies.  And once they’ve settled that litigation, they figure thank goodness, the ordeal is over, we can get on with our lives.  However, they need court approval of that settlement.  And the court approval is not a rubber stamp, and so that can cause a lot of dismay.

Paul Trudelle: That’s true.  Nothing is ever easy in litigation.  So with the scenario that you put forward, the car accident involving a minor, the minor is hurt, the minor brings a claim for damages. How is that claim prosecuted on behalf of the minor?

Sean Graham: Well the first step is that a litigation guardian needs to be appointed to protect and prosecute the interests of the minor who cannot do it him or herself. 

Paul Trudelle: Right, and the provision for that is Rule 7.02 of the Rules of Civil Procedure that deals with litigation guardians for plaintiffs.  And the procedure there for appointing a litigation guardian is quite simple and straight forward, I understand.

Sean Graham: Yeah.  You have to present the court with an Affidavit which covers off certain grounds. And the court appointment can be sought.  But the more simple way to go is to file an Affidavit saying that first: you consent to act as litigation guardian; secondly, that you’ve given written authority to a named lawyer to act on your behalf; thirdly, you have to provide evidence concerning the nature and extent of the disability.  And for a child, it might simply be that the person is a minor.  But often the accident will have caused more profound disabilities. You have to, for a minor, you have to simply state the minor’s birth date, whether the minor or person under disability is ordinarily resident in Toronto, setting out the relationship to the person under disability, and with minors, you’re often dealing with a parent, stating that there’s no interest of the litigation guardian opposing the interests of the child.  And finally, acknowledging that you’ve been informed of your liability to pay personally any costs awarded against the litigation guardian or against the minor.

Paul Trudelle: That’s right.  And that’s all from Rule 7.02 which sets out, in effect, a checklist.  If your Affidavit hits all of those points, then that Affidavit gets filed with the court when the claim is commenced.  And you’re off and running as litigation guardian. No formal order is required.

Sean Graham: Exactly.  So it’s a fairly simple proceeding.  And then the defendants can deal with you, knowing that you actually have authority.

Paul Trudelle: So you’re off and running, you’re going through your litigation, the minor is acting, or represented by a litigation guardian. Now, can the litigation guardian enter into a settlement on behalf of the minor?

Sean Graham: Yes, with a pretty huge caveat. You can enter into a settlement, but the settlement cannot be enforced unless you get court approval of the settlement. So for all practical purposes, you’re going to need court approval of that settlement.

Paul Trudelle: So what the parties would normally do in those cases is settle the case, subject to court approval of the settlement on behalf of the minors.  And failing that, the settlement isn’t binding on the minors.  And any defendant wouldn’t settle on that basis without court approval because it’s not binding and it leaves the defendant open to litigation once the minor comes of age. 

Sean Graham: For sure, and the thought is generally that the lawyer advising on the settlement has done a good job, the litigation guardian has done a good a job. And the thought tends to be that no problem, we’ll get that approval, it’s just a rubber stamp motion. That is true in some cases but it’s a dangerous assumption because the courts, I’ve found, are becoming more and more alert to these settlements.  And more and more are serving as sort of an auditor function to make sure, as a last barrier to protect the minor, that the settlement is in fact in minor’s interest.

Paul Trudelle: So what is the procedure for getting the motion to approve the settlement before the court, to get the court to look at the settlement, to consider it and say “yes, this is a valid settlement” or “no it’s not?” And then we’ll talk about what happens if the court rejects the settlement.

Sean Graham: Well you bring a motion under Rule 7.08 of the Ontario Rules of Civil Procedure.  And it’s a motion.  You can bring an application…

Paul Trudelle: I think you bring an application if there has been no action started, so…

Sean Graham: That’s right.

Paul Trudelle: If you’re at…if you were able to negotiate a settlement before any claim is even started, any defendant or any payor in that circumstance, would want court approval. So in that case, you’d start a separate application.  Normally, however, there’s an action already started, so you bring a motion in that action.

Sean Graham: Yeah exactly, thanks Paul. And the materials you have to file in support of your motion or application is an Affidavit of the litigation guardian setting out the material facts and the reasons supporting the settlement and the position of the litigation guardian in respect to the settlement which is, of course, that the litigation guardian agrees with it. You also need, though, and this is kind of an interesting one, you need an Affidavit of the lawyer who acted for the litigation guardian, setting out the lawyer’s position in respect of the settlement. And then you need the minor’s consent in writing if the minor is between the age of sixteen and the age of majority, eighteen, unless the judge orders otherwise. And then finally, of course, you actually need a copy of the Minutes of Settlement.

Paul Trudelle: So with those materials, I understand preparing those materials can often be a difficult or a bit of a fine line that you have to walk down because you need to put some evidence before the court to say that the settlement is reasonable.  But you want to be careful not to tip your hand too much.  You can’t go in with an Affidavit saying wow, I can’t believe the defendant settled this on the basis that they did. It’s a great settlement because we had no case.  So you’ve got to be very careful in preparing your materials there. How do the courts deal with the Affidavit materials that you’re able to put before it?

Sean Graham: I think it’s a really tough one.  Especially, I mean, you need an Affidavit from the lawyer.  So, in essence, an Affidavit from a lawyer which does not at least imply what the legal advice was, is a useless, in my view, Affidavit.  It’s not helpful to the court. So the lawyer is put in a very difficult position because you obviously don’t want to disclose privilege or breach confidentiality, disclose privileged information or breach confidentiality.  But by the same token, you have to swear an Affidavit. So again, you’re put in a very difficult position of either just doing a sort of a pablum Affidavit with a bunch of motherhood statements which don’t really mean very much to the court, which I don’t think can have been the intention when the Rule was drafted.  Or setting out what your legal advice was and why. I think it’s a very difficult problem.

Paul Trudelle: Probably one of the best ways to address that is to either put all of that information in and ask for an order that the motion be sealed if that’s possible.  Otherwise it may be just enough for the lawyer to say that in my experience, in my considered opinion, the reason the settlement is reasonable and set out some of the basis upon which the settlement was entered into.

Sean Graham: For sure.  I just, you know, to me it’s, you wouldn’t be before court unless that was the case.  So, you know, because they wouldn’t have settled. So, I suspect that there will be some changes relatively quickly to resolve this theoretical…I view it as a bit of a deadlock.  I think it’s a great Rule because the court should be involved in these things, should be a protection to the minor. But by the same token, there needs to be some protections for the lawyer and the litigation guardian in terms of what happens if the court doesn’t approve the settlement? Then you’ve got all this material before the court in terms of the weaknesses in the minor’s case.  And that cannot have been the intent either.

Paul Trudelle: That is a difficult issue. Another difficult issue is that the lawyer normally has to put in some information with respect to his or her fees.  The settlement often calls for a payment of fees of some sort to the lawyer and that will require court approval as well. So there must be some information there with respect to the fees and the reasonableness of those.

Sean Graham: No question.  And so you’ve got the lawyer being advocate for the client in terms of pushing this settlement through.  But at the same time. lawyers want to get paid as much as any service provider.  And so you, at the same time, you’re advocating for yourself as to why your fees are valid. And the question I always have is what happens if the court agrees with the settlement but not the fees? Do you have a settlement? And if not what, what happens then?   I think that’s another tough, tough sort of nut to crack.

Paul Trudelle: Difficult issues indeed. Now if the court does approve the settlement and the funds are payable to the minor, is that the end of it? The cheque is written to the minor and he’s off to the races, or the racetrack.

Sean Graham: No, it never seems to be over. The next step then, and this sometimes can happen all at once, is a guardianship application.  And it’s most often the litigation guardian also wants to become the guardian of property of the minor and that’s a whole other proceeding. 

Paul Trudelle: And I think that’s often a bit of a shock to the parents of the minor.  The parents can’t presume and it’s not the case that they’re automatically the guardians for property of the minor. A separate application is required for the parents to be appointed as the guardian. Now that procedure, I understand, can be brought as a separate guardianship application or can possibly be brought in the context of the action before the court?

Sean Graham: Yeah.  There’s a recent decision on this actually, and it’s quite a lengthy and well considered decision by Justice Wilkins.  It’s the Marcoccia decision.  And we’ll put that in the show notes.  But Justice Wilkins goes through a lot of issues at length.  And is of the very strong view that in fact all these things should be brought at once because they’re all, all the facts obviously are related and there’s going to be a lot of duplication if you bring the motion for court approval and then the application for guardianship.  And so Justice Wilkins was of the view that it should all be done at the same time wherever possible. And, you know, to keep the legal fees down and don’t have duplication and so forth.

Paul Trudelle: I also think that the judge considering the motion to approve the settlement has all of the information needed or a lot of the information that would be considered in determining whether the guardianship plan is appropriate as well.

Sean Graham: Yeah.  And what in practical terms it does is the children’s lawyer generally is on notice of the motion to approve the settlement but is definitely on notice of the guardianship application. So if the children’s lawyer has not been brought in on the motion to approve settlement, and it’s certainly my practice to bring them in anyway, but if they’re not brought in on that, they’re going to be brought on the guardianship application. So you’ll be dealing with another party.

Paul Trudelle: We should talk a bit about that in the notice when you move to approve a settlement. The Rules don’t expressly require the children’s lawyer be put on notice.  It’s the Rule directs that the court, if it sees fit, can direct that the children’s lawyer be served. I think the best practice, however, is to serve the children’s lawyer with the materials at for instance.

Sean Graham: I think so too because the majority of the time, if you haven’t, the court is going to ask you to do it anyway.  And then you go to court twice when, you know, you might not have needed to so. I think the approach of the children’s lawyer to these things might actually be worth another podcast.

Paul Trudelle: I think so.  And I think the guardianship for property of minors merits its own podcast as well. So maybe we’ll wrap up at this point.  Just before we do, another procedure short of applying for guardianship for property of the minor is simply to have the funds paid into court.

Sean Graham: Yeah.  And that is maybe a lot more efficient.  The problem is you lose control if you’re the parent of the child.  And the child him or herself, you know, may want their parents making a lot of these decisions.  And so you may lose the sort of investment advice that you would normally get under a guardianship and so on.  But it’s definitely a quick way to do it.

Paul Trudelle: I think that’s very helpful Sean, thank you very much.

Sean Graham: Thank you Paul.

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.

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