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

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Yesterday, I attended at a seminar put on by the Law Society of Upper Canada entitled “Practice Gems: The Administration of Estates 2011: Avoiding the Pitfalls”. (There is a repeat performance scheduled for October 31, 2011: see details here.)

One of the presenters was Clare Burns. She has prepared an excellent checklist for solicitors advising estate trustees. The checklist covers topics such as the first interview with the client, reviewing wills, codicils and affidavits of execution, preparing and delivering initial report to the client, determining the estate assets and liabilities, applying for the Certificate of Appointment, realizing and distributing the estate, and preparing the final report to the client. Under each heading, there are detailed descriptions of matters to be considered.

Ms. Burns has advised that she hopes to have the checklist available on the LSUC website shortly.

Solicitors are encouraged to download the checklist, and personalize it and expand to it according to their needs and experience.

The benefits of using a good checklist cannot be overstated. They are an essential tool in any practice.

Thank you for reading.

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

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At present, the City of Toronto can provide help with funeral costs to Toronto residents who do not have enough funds in their estate to fully cover funeral expenses.

The program provides assistance for funeral services, burial services or cremation services. With respect to funeral services, the program can pay for the transfer of the body. If there is to be a burial, the program can pay for the purchase of a burial lot, or if the deceased owned a lot, can pay for the opening and closing of the grave. If there is to be a cremation, the program can pay for the cremation, and a standard urn, and the cost of scattering the remains in a cemetery.

Eligibility is based on the financial situation of the deceased and his or her spouse at the time of death. A caseworker will be assigned, who assesses the assets, income, RRSPs and life insurance of the deceased. 

If the deceased person was on Ontario Works, or ODSP, the funeral home can assist in obtaining benefits. (The Province of Ontario can also provides assistance to those on ODSP or Ontario Works.) If the deceased was not on Ontario Works or ODSP, the family or estate trustee should contact the City of Toronto’s Employment and Social Services office. The Employment and Social Services office must be contacted, and must authorize services before a contract is signed with the funeral home or cemetery.

For more information, see the City’s website, here, or call 416.392.1666.

Thanks for reading.

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

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An article in the Toronto Star reports on a recent study conducted by psychologist Nicholas Rule entitled “Judgments of power from college yearbook photos and later career success”, and published in the journal Social Psychological and Personality Science. In it, Rule concludes that future success can be predicted by looking at yearbook photos. 

Rule had college students assess yearbook photos of managing partners of 100 US law firms. He had the students rate the photos on the impression of power and warmth that they evoked. He then compared those assessments to the profitability of the law firm of the managing partner.

He concluded that law firms making the most money for the number of files they handled were managed by managing partners having higher “power” ratings attributed to their photos. The impression of power was said to predict their success.

Rule says that the same principle applies to politicians and CEOs. 

However, judging by the number and tenor of the comments posted on the Star website, the study is not being warmly received by all.

Thanks for reading.

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

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Prosecutors have dropped the charges of kidnapping and carrying a concealed weapon against the shopkeeper accused David Chen.  Readers will remember Mr. Chen as Toronto's Chinatown shopkeeper who arrested a shoplifter, with the help of two employees, then got charged himself.

Mr. Chen, owner of Chinatown store Lucky Moose Mart, had spotted the thief and with the assistance of his employees, tackled the thief, bound him in twine and detained him in a delivery truck until the police arrived four minutes later.  The thief had allegedly victimized local stores, and has a criminal record going back 32 years, all according to this news report.  Incredibly, this record includes - according to the news report - stealing from Mr. Chen's own store and a neighbouring store, including on that same day.  Truth being stranger than fiction, the thief was granted a plea-bargain sentence of 30 days in relation to his theft from Mr. Chen's store in part because he agreed to testify against Mr. Chen and the two employees. 

The Crown's theory seems to be that because the arrest was not contemporaneous with the crime, the thief having returned to the store about an hour after committing the theft, the arrest is not protected by citizen's arrest provisions.  Mr. Chen has apparently rejected a plea bargain - he had videotape evidence of the theft. 

Mr. Chen is married with 2 children, aged 2 and 6, and has become a bit of a folk hero.  How hot is this story?  The Globe and Mail reported at 12:13pm yesterday, the National Post at 4:03 pm, CBC at 2:54pm, the Toronto Star right away too. 

Have a good day,

Chris Graham

Christopher M.B. Graham - Click here for more information on Chris Graham.

 

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There is nothing like sex to get someone’s attention. The matter of the estate of Paul Raymond was recently brought to my attention – mainly due to the deceased’s business undertakings. 

Britain’s Paul Raymond died on March 2, 2008 leaving an estimated estate of 650m pounds. Raymond is described as “the porn baron turned property tycoon”. Raymond is said to have built his empire on profits from his soft-porn business, which he launched in 1957. According to a BBC report, Raymond’s big break came when he side-stepped censorship laws that prevented naked women from moving on stage by having topless women stand on stage completely still. Britain’s Hugh Hefner went on to stage plays such as “Yes, We Have No Pyjamas”. He also launched various pornographic magazines and a strip club. He used earnings from these endeavours to invest heavily in real estate. According to the TimesOnline report, by 1992 he had overtaken the Duke of Westminster as the richest man in Britain, with a fortune estimated at 1.5 billion pounds. He is said to have become a recluse in his final years.

 He left his entire estate to his two granddaughters, aged 22 and 16. It is said that they now control 60 of the 87 acres that make up the Soho district of London. (See Rick Bickhram’s blog on one of the granddaughters, Fawn.) However, his illegitimate son is now contesting the will. Another son was also cut out of the will. It is not known whether that son will be challenging the will.

*According to the BBC article, Raymond described himself as a “spiv” (I had to look that one up), and behaved like one, “sporting fur coats, a Rolls Royce, a tiny mustache and a fake tan”.

Have a great weekend.

Paul Trudelle

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I’m not sure what to make of this.

Coffin Couches is a US company that “recycles” coffins into couches. The company collects “used” coffins from funeral homes. Apparently, the coffins are not used for burial due to slight cosmetic inconsistencies, and cannot be resold. Coffin Couches reconfigures them into a “unique one of a kind coffin couch”. The couches even sport a biohazard insignia. According to the website, once a human body is placed in a coffin, it is considered biohazard tissue. The couches have to have the biohazard insignia “in the event body fluids are exchanged on these coffins”. (Increased “creepy” for many; increased “cool” for some.)

According to the website, Jesse James of West Coast Choppers, Kat Von D of LA Ink and the Los Angeles County Coroners Office each have a coffin couch.

US prices range from $3,500 to $4,500 ($2,800 for the Monster Chair), plus shipping.

I don’t expect to see one in our reception area any time soon.

Thanks for reading.

Paul Trudelle

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The 11^th Annual Estates and Trusts Summit was held in Toronto on November 19 and 20, 2008. This excellent program featured a number of experienced practitioners speaking on a broad array of estates and trusts topics.

Topics (and speakers) included:

• Family Law Update (Karon Bales)
• Shareholder Issues – The Family Business in Succession Planning (Frank Archibald)
• Dealing with Insolvent and Bankrupt Estates (Barry Corbin and Robert Klotz)
• The Non-Resident Factor in Estate Planning (Mary Anne Bueschkens and M. Elena Hoffstein)
• Update on the Trust and Estate Provisions in the Protocol to the Canada/U.S. Income Tax Treaty (Beth Webel and Jim Yager)
• New Strategies for Post-Mortem Tax Planning – The Eligible Dividend Rules and More (Heather Evans)
• Powers of Attorney and the Duty to Account – An Update (Liza Sheard)
• Powers of Appointment (Timothy Youdan)
• The Will is Not the Whole Picture - Integrating the Transfer of Wealth both Inside and Outside the Estate (Wendy Templeton)
• New Developments in Insurance and Estate Planning (Graham Carter)
• Update on Practice Directions for the Estates List (The Honourable Mr. Justice David M. Brown)
• Capacity and Other Issues in Power of Attorney and Guardianship Disputes (Jan Goddard)
• A Clinician’s Perspective on Assessing Testamentary Capacity and Related Capacities (Dr. Kenneth Shulman)
• Capacity Issues – The Perspective of the Hospital, Retirement Home and Group Home (Wendy Griesdorf)
• The Vulnerability of Pre-Death Gifts (Eric Hoffstein)
• The Scope of the Attorney’s Powers (Sender Tator)
• The Incapable Minor Turning 18 (Clare Burns)
• Remarks from the New Children’s Lawyer for the Province of Ontario (Debra Stephens)
• Marshalling the Evidence For and Against Capacity in a Will Challenge (Hilary Laidlaw)
• Short Circuiting the Frivolous Will Challenge (Hull and Hull’s Craig Vander Zee)
• Mediation of Capacity Issues – The Mediator’s Perspective (Felice Kirsh and Archie Rabinowitz)

If you were not able to attend, the seminar materials will be available from the Law Society of Upper Canada.

Thank you for reading,

Paul Trudelle

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Today is the final installment of my discussion of Hix v. Ewachniuk Estate, 2008 CarswellBC 1300 (Hinkson J.).

After dismissing the will challenge on the basis of due execution, testamentary capacity and knowledge and approval, the court turned to the issue of undue influence. Despite the presence of suspicious circumstances, the court held that the challengers, not the propounder, had the burden of proving undue influence. However, while the son did not have the burden of disproving coercion, his evidence was to be tested against the preponderance of probabilities that rationally emerge out the all the evidence in the case.

The deceased was found to be vulnerable and dependant upon her son for all aspects of her existence. Conversely, the son was found to have an aggressive and domineering personality, both in general and with respect to his desire for absolute ownership of the family holding company.

The court found that the son was very caring of his mother. However, it did not accept his evidence on the issue of undue influence. The court asked a number of rhetorical questions as to why the mother would make the will that she did, despite the circumstances. The court concluded that that will was procured by the undue influence of the son.

The will was therefore found to be invalid.

Paul Trudelle

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Yesterday, I discussed Hix v. Ewachniuk Estate, 2008 CarswellBC 1300 (Hinkson J.), and the finding of the judge that suspicious circumstances existed, placing the onus back on the propounder to prove testamentary capacity and knowledge and approval.

As to testamentary capacity, the court referred to the oft – quoted decision of Banks v. Goodfellow, and the test for testamentary capacity.

It noted that the capacity required to direct the distribution of one’s estate by Will is “modest”. To be of a sound and disposing mind and memory, a testator must:

1. be aware that they are making a will that takes effect on their death;
2. understand the nature and extent of the estate to be disposed of by Will;
3. be aware of those having a claim to the estate;
4. have no disorder of the mind.

The court reviewed the evidence of the plaintiffs and the witnesses (other than the son) as to testamentary capacity. The court was satisfied that on the preponderance of the evidence, the testator had the necessary capacity to direct the disposition of her estate by will as of the date of the will.

As to knowledge and approval, the court noted that a suspicious circumstances raised in the case required that the son, as the propounder of the will, prove that the deceased knew of and approved of the contents of the will. The court did not accept the evidence of the son to the effect that the deceased had to carefully read her will and discuss it with him on numerous occasions. Despite this, the court concluded that the deceased knew of the provisions of the will that she signed.

To this point, the will survived most of the challenges to it. Will the will be accepted to probate? Can it withstand the final challenge: undue influence? Tune in tomorrow.

Paul Trudelle

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A recent case out of the British Colombia Supreme Court provides an excellent illustration and discussion of various grounds upon which a will can be challenged.

In Hix v. Ewachniuk Estate, 2008 CarswellBC 1300 (Hinkson J.), the deceased was survived by a son and two daughters. The deceased, the son and the two daughters had varying levels of shareholdings in a holding company.

In a prior will, the deceased left her estate to her three children, equally. In a will drawn January 11, 2004, the deceased left her estate to her three children equally, on the condition that the two daughters transferred their shareholdings in the holding company to the son. The deceased died on June 1, 2006 at the age of 90. The daughters challenged the validity of the will, and the court considered the validity of the will from a number of perspectives.

The court first considered the issue of due execution of the will. The formal requirements necessary to execute a valid will are set out in the relevant legislation. While the court was not prepared to accept the evidence of the son with respect to the execution of the deceased’s will, it did accept the evidence of one of the two witnesses to the will. The court was satisfied that the will was signed by the testator in the presence of two witnesses who were present at the same time and who subscribed the will in the presence of each other and the testator.

Court concluded that the will was validly executed. This aspect of the will challenge was rejected.

More tomorrow.

Paul Trudelle

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As we all know, it is not uncommon for any investor to occasionally experience a substantial decrease in the value of one of the stocks in his or her portfolio.  But what if the investor is a trustee?   

In light of the recent amendments to the Trustee Act which appear to embrace the modern portfolio theory, it will be interesting to see how the Court will utilize this theory to assess a trustee's investment performance. Section 28 of the Trustee Act adopts an approach that is consistent with the modern portfolio theory.  Under this section, a trustee is insulated from liability if “the conduct of the trustee, which led to the loss from the trust, conformed to a plan or strategy, for the investment of the trust property, comprising reasonable assessments of risk and return that a prudent investor could adopt under comparable circumstances”.

Under the “statutory legal list” approach, which I described yesterday, a trustee was limited to investing trust assets in authorized investments.   However, with the development of the prudent investor rule, trustees are provided with a broader range of investment choices, which will likely increase their responsibility in determining an acceptable standard of care.

Presuming that a trustee is found liable for breaching the standard of care, section 29 of the Trustee Act permits a court to assess “the overall performance of the investments” when it is assessing damages.  Based on the language of section 29, it appears that a trustee may be allowed to offset the loss of a bad investment against the gain of a good investment.

The trusts and estates bar will be watching with interest to see how the judicial consideration of the prudent investor rule evolves.

Happy Super Bowl Weekend!  Go Patriots!

Rick

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In my blog yesterday, I introduced the prudent investor rule as the standard of care for trustees when investing assets that are held in a trust. Today, I will address how a trustee’s investment performance may be assessed.

Prior to July 1999, trustees were required to make investments pursuant to the “statutory legal list” provided for in the Trustee Act. This had the effect of holding trustees accountable for each particular investment, rather then the investment portfolio as a whole. The principle was further illuminated by the anti-netting rule, which stated that a trustee, who committed a breach of trust, was not entitled to set off a gain in one transaction against a loss in another. However, through recent amendments to the Trustee Act, the statutory legal list was repealed and replaced with the Prudent Investor Rule.

The Prudent Investor Rule reflects the modern portfolio approach to investments, the emphasis being on the prudence of the portfolio as a whole as opposed to each particular component. This theory is captured in Section 27(5) of the Trustee Act. Section 27(5) requires “a trustee to consider … the role that each investment plays within the overall trust portfolio”. Furthermore, under section 27(6) “a trustee is required to diversify the investments of the trust property. It appears that under the modern portfolio approach, a trustee would not be breaching the standard of care, should he or she invest a substantial amount of trust assets into a single security. As described above, section 27(6) requires that the trustee consider diversifying the portfolio, which is necessary if the Prudent Investor Rule is to be followed. To conclude my topic, tomorrow I will consider the liability of a trustee with respect to the investment of trust assets.

Thanks for reading,

Rick

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Not all Wills provide for an outright distribution to the beneficiaries. In some cases, the assets of an estate are held in trust over a period of time for the benefit of one or more beneficiaries, sometimes in succession.  When a trustee administers a trust, he or she is entrusted to act for the benefit of others. As such, our common law and statutes impose standards that trustees must comply with when dealing with trust property.

With the recent plummet in the stock market, I believe many trustees are considering how the stock market losses have affected the trust investments and what action they should take in the circumstances. 

Section 27 of the Trustee Act addresses the standard of care for trustees when investing assets held in a trust. Section 27(1) states, “in investing trust property, a trustee must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments”. Section 27(2) states that “a trustee may invest trust property in any form of property in which a prudent investor might invest”.

Section 27(1) and (2) outlines the prudent investor rule. When investing trust assets, a trustee must comply with the prudent investor rule to protect himself or herself from liability.   Section 28 of the Trustee Act, emphasizes this point as it states that a Trustee will not be liable for losses arising from investments if the standard of the prudent investor is met. Nevertheless, the issue remains how does a trustee meet the “prudent investor” standard? In keeping with this theme, tomorrow I will address how a trustee’s investment performance may be assessed.

Thanks for reading, and have a great day!

Rick

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Section 131 of the Courts of Justice Act establishes the authority for the Court to award costs. Section 131 states that the Court has absolute discretion in awarding costs, subject to the provisions of an Act or the rules of court. 

Before July 2005, the Rules of Civil Procedure provided some sense of certainty to the Court’s broad discretion in awarding costs as the Rules provided a costs grid. The costs grid suggested that costs were to be determined by an hourly rate multiplied by the time spent. In 2004, the Court of Appeal in Boucher v. Public Accountants Council set forth the general principle as to the fixing of costs pursuant to Rule 57.01 and the costs grid. With respect to costs, the Court stated that the overall “objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant”. Subsequently, in July 2005, the Rules were amended. 

The amendment to the Rules abolished the costs grid and expanded on the list of factors, set out in Rule 57.01, which the Court may consider before making a cost award. Rule 57.01 was now expanded to include the principle of full indemnity and the reasonable expectations of an unsuccessful party to pay a cost award.

The principle of the reasonable expectations of an unsuccessful party to pay a cost award appears to provide the parties with some flexibility in obtaining the maximum cost award by permitting the successful party to establish the reasonable expectations of the unsuccessful party.  

Thanks for reading, and have a great day!

Rick

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As this is the beginning of the week, I would like to take this opportunity to visit two of the rules from the Rules of Civil Procedure, which are frequently used by estate litigators.

Rule 14.05(3)(a) states that "a proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is, the opinion, advice or direction of the court on a question affecting the rights of a person in respect of the administration of the estate of a deceased person or the execution of a trust".  In contrast, Rule 75.06(1) states that "any person who appears to have a financial interest in an estate may apply for directions … as to the procedure for bringing any matter before the court".

It is clear from the language of these rules that an Applicant may use either rule to apply for directions from the court.  The difference between the two rules lies in the relief that the Applicant seeks. 

Rule 14.05(3)(a) is a substantive remedy that addresses the rights of a person with respect to the administration of an estate or the execution of a trust.  Therefore an Applicant who relies on Rule 14.05(3)(a), is asking the court to make a determination of his or her rights in the context of an estate.  For example, whether or not an Applicant has an interest under the deceased's Last  Will and Testament.

Rule 75.06(1) is a procedural remedy.  In essence, Rule 75.06(1) provides the road-map for "any matter before the court".  Therefore an Applicant who utilizes Rule 75.06(1) may seek a court order that permits the disclosure of relevant documents to their matter and establish time-lines for the completion of a specific phase in their court proceeding.  For example, the court may decide that mediation should be completed within 90 days and as such, include a mediation clause in a court order.

In summary, both rules can may be used to apply to the court for direction, however with Rule 14.05 (3)(a), the Applicant is asking the court for a specific answer to a question affecting his or her rights, whereas with Rule 75.06(1), the Applicant is requesting that the court provide them with a guideline to their court proceeding.

Have a Great Day!

Rick Bickhram

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Over the next week, I will blog on a variety of topics within the estate and and trust world. I will canvas notable case law as well as draw on my recent experience. My first topic deals with evidence.

It is crucial when litigating to amass the right evidence. A great deal of thought usually goes into deciding whether to litigate, but once that decision has been made, the right evidence has to be put forward in order to win or to facilitate a favourable settlement. Much of what litigators now do is by way of application so affidavit evidence is key. The beauty of affidavit evidence is that it allows the lawyer time to draft or finesse the evidence - not change it, but just present it in its most persuasive format.

When dealing with a will challenge and capacity, the notes of the solicitor who drew up the will are obviously critical, as is any medical evidence particularly from a family doctor. In a guardianship fight, medical evidence is again key, but so is evidence from family or friends. However, when deciding what evidence to submit, a careful litigator will take the time to decide what evidence is required over and above the usual. In other words, what avenues are worth exploring that may reveal the unexpected. Is there some person who may be able to add fresh evidence that will make the difference and carry the day?

In a recent guardianship case that I was involved with, the evidence of two neighbours turned out to be critical. The neighbours were able to comment on the slow deterioration of the incapable. As family members had applied to the court to be appointed guardians, the neighbour were also able to comment on whether the family members visited and how often. The neighbours, who still kept in touch with the incapable, were also able speak to the wishes of the incapable when it came to who should look after the incapable. A caregiver at a nursing home was also in a position to comment on the mental state of the incapable and, in fact, assisted a doctor who was retained to prepare a retrospective assessment. What the neighbours and the caregiver brought to the table was the fact that their evidence was credible and independent. In other words, they had no particular stake, one way or the other, in the outcome of the litigation. They were simply interested in doing what was best for the incapable. When it comes to evidence from outside or third parties, their evidence will likely be believed because it is seen as untainted. As a result, every effort should be made to get evidence from outside or third parties and from sources that may be out of the ordinary.

Thanks for reading.

Justin