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

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

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

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

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

Have a great weekend.

Paul Trudelle

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On April 23, 2008, I attended at the Ontario Bar Association’s Dinner with the Estates Lists Justices.

The evening began with a review of the Case of the Month by Barry Corbin. Barry discussed the Court of Appeal decision of Madore-Ogilvie v. Ogilvie Estate (This case was also discussed by Sean Graham and Rick Bickhram in Hull on Estates, Episode #103.) This case dealt with the inclusion of jointly owned insurance polices as “section 72” assets under the Succession Law Reform Act.

Following Barry’s excellent presentation, Madam Justice Allen, Madam Justice Conway and Mr. Justice Brown took to the dais. They discussed various ways that the bar can work with the bench in order to facilitate the decision-making process, while advocating the client’s position.

Practical tips include organizing the court file, filing meaningful confirmation forms, attending with a working draft of the Order Giving Directions, and filing chronologies and lists of beneficiaries were appropriate.

The importance of filing a Factum was emphasized. These are said to be extremely helpful, and not filing a Factum should be an exception rather than the norm. 

More tomorrow.

Paul Trudelle

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

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

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

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

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

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

Thank you for reading

Paul Trudelle

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

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

There are a myriad of other examples.

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

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

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

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

Thank you for reading,

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It’s just about tax time, so I thought I would briefly discuss the taxation of executor compensation.

The basic premise is that executor compensation is taxable in the hands of the recipient. It is either income from an office or employment (if the executor is not in the business of being an executor) or income from a business (if the executor is in the business of being an executor, or if such a function is in the executor’s usual course of business). Various consequences flow from the distinction, such as allowable deductions, and withholding requirements for EI and CPP.

CRA takes this obligation to report executor compensation quite seriously. An example of the lengths to which CRA will go is found in the decision of Oolup v. The Queen. There, Ms. Oolup, the executor held a joint account with her grandmother, the deceased. She was advised by her lawyer that upon the death of the deceased, the joint account became hers, by right of survivorship. However, for “reasons of family harmony”, she decided to keep only $10,000 from the joint account, and divided the rest with the deceased’s next of kin.

CRA took the position that the $10,000 was executor compensation, and was therefore taxable, and they assessed Ms. Oolup accordingly. To get to this point, they argued that the joint account was held on a resulting trust for the estate. The CRA argued that the presumption of resulting trust applied, and was not rebutted. Accordingly, they asserted that Ms. Oolup received the $10,000 from the estate, as executor compensation.

Luckily for Ms. Oolup, she was able to rebut the presumption, and the court found that the joint account funds became her property upon the death of the deceased. She received the money by right of survivorship. Therefore, her keeping $10,000 was not receipt of compensation by her, and was not to be included in her income.

Thank you for reading,

Paul Trudelle