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

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

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

After disposing of the issue of due execution, the court turned to the doctrine of “suspicious circumstances”. The court referred to these Supreme Court of Canada decision of Vout v. Hay, where it was held that suspicious circumstances maybe raised by circumstances surrounding the preparation of the will, circumstances tending to call into question the capacity of the testator; or circumstances tending to show that the free will of the testator was overborne by acts of coercion or fraud.

Generally, the propounder of a will has the legal burden with respect to due execution, knowledge and approval, and testamentary capacity. However, upon proof that the will was duly executed, the propounder is aided by the rebuttable presumption that the testator knew and approved of the contents and had the necessary testamentary capacity.

The burden of establishing suspicious circumstances rests on those attacking the will. If evidence can be adduced which, if accepted, would tend to negative knowledge and approval or testamentary capacity, this burden is satisfied and the legal burden reverts to the propounder.

In Hix, it was the son who drafted the challenged will. The Court quoted from Vout v. Hay as follows:

“… if a party writes or prepares a Will, under which he takes a benefit, that is a circumstance that ought generally to excite suspicion of the Court, and calls upon it to be vigilant and jealous in examining the evidence in support of the instrument, in favour of which it ought not to pronounce unless the suspicion is removed, and it is judicially satisfied that the paper propounded does express the true Will of the deceased.”

The court concluded that the son should never have agreed to draw the will for the deceased. The fact that he did in the circumstances “does more than raise suspicion; it cries out for it.”

Tomorrow: testamentary capacity, and knowledge and approval

Paul Trudelle

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

However, as reported in the New Jersey Law Blog, a recent California case has determined that when a conservator secures court approval of an estate plan while an individual is still alive, any challenge to the will must be made at that time, and not after the death of the individual.

In Murphy v. Murphy, the Court of Appeal for the State of California, First Appellate District, Docket No. A115177, the testator had suffered a stroke. A conservator was appointed for the testator, who sought court approval of the testator’s estate plan. A son, who was left out of the estate plan, was put on notice and did not challenge the estate plan.

After death, the son sought to challenge the estate plan. The Court of Appeal held that the son’s claim was barred on the basis of “collateral estoppel”. The son was not allowed to relitigate matters that were litigated in a prior proceeding.

The blog’s author observes that the decision “essentially bulletproofs the will of a person found incompetent and placed under the protection of a conservator, if the Court approves a revised estate plan with appropriate notice being given to all parties in interest who may have any basis to object.”

In Ontario, there is no similar procedure for approval of an estate plan. In fact, an attorney for property or guardian for property is expressly barred from making a will on behalf of the incapable person.  

However, at least two Ontario decisions (Stern v. Stern and Weinstein v. Weinstein (Litigation Guardian of) have commented to the effect that the court should not “close its eyes to the fact that litigation among expectant heirs is no longer deferred as a matter of course until the death of an incapable person”.

Paul Trudelle

According to a report in the Chicago Tribune, the lawyer provided legal services to a client and members of her family on various matters. The lawyer and the client agreed that the client, an exotic dancer at the time, would perform nude dances for him in his office as a way to cut down on legal fees. The lawyer also received free nude dances at the club where she worked. 

The lawyer credited the client with $534 as against his accounts. 

The client later complained of sexual assault. A grand jury declined to indict the lawyer, but the Illinois Attorney Registration and Disciplinary Commission, a branch of the state Supreme Court, conducted an investigation leading to the suspension.

Thanks for reading.

Paul Trudelle

In Powell v. Glover, [2008] A.J. No. 961 (Alta. Q.B.)  the deceased and her spouse left wills that specifically provided that the wills were further to an agreement not to revoke or alter the will after the death of one of them. The wills went on to provide that the estate of the first to die was to pass to the surviving spouse. The wills further provided that upon the death of the surviving spouse, the surviving spouse’s estate was to pass to named residual beneficiaries, being children of the two spouses from prior marriages.

The husband died in 2003 and his estate passed to his spouse. She took the position that she was the sole beneficiary under her spouse’s will, and that she has no obligation to ensure that upon her death, any residue was to be distributed in accordance with the prior wills.

The Court had little difficulty in finding that the wills were mutual wills. The Court enforced the agreement between the spouses not to vary from the prior distribution agreement made while both spouses were alive. The surviving spouse’s estate (upon her death) was charged with a trust in favour of the residual beneficiaries of the mutual wills.

The fact that the surviving spouse was still alive did not make the Application premature.

The more difficult issue was what property was charged with the trust. The Court found that the trust would apply to all property acquired by the surviving spouse upon the death of the first spouse. The surviving spouse is allowed to deal with the property she acquired from the other during her lifetime, but is not entitled to divest her property intentionally in order to avoid the terms of the mutual will.

Paul Trudelle

Mr. Justice Brown observed that the purpose of such a Brief is to allow the presiding Judge on any subsequent hearing date to quickly determine the history of the proceeding, and all judicial determinations made to date.

The Schedule also provides that Factums are to be filed on all subsequent motions.

The utility of such a Brief and the requirement to file a Factum appears obvious. The requirements to create the Brief and to file a Factum will clearly assist the Court in determining the history of the proceeding, and allowing for the prompt and efficient determination of the matter before it.

Thank you for reading.

Paul Trudelle

That was the question that was posed to the Honourable Justice D. M. Brown in the matter of The Estate of Gerald Francis Clarke, 2008 CanLII 45541 (Ont. S.C.) released September 12, 2008.

There, the Applicants applied for a Certificate of Appointment of Estate Trustees for the estate of the late Gerald Francis Clarke.  The Application appears to have been unopposed.

The affidavit of execution indicated that the testator was a paraplegic and unable to take a pen in his hand to sign or initial the pages of his will.  The witness deposed that he saw the testator execute his will by placing a stamp which reads “Gerald F. Clarke” on the signature line at the end of the will and on each page of the will.  The witness further deposed that the testator executed the will in the presence of himself and another witness, as attesting witnesses.

Section 4(1)(a) of the SLRA provides that a will is not valid unless “at its end it is signed by the testator or by some other person in his or her presence and by his or her direction”. 

The Court relied upon In Re Bradshaw Estate, [1988] N.B.J. No. 709 (P.C.). There, in interpreting a similar provision in the New Brunswick Wills Act, the Court formulated the applicable test as follows:

(i) were the markings on the will made by the testator, and

(ii) were they intended as his signature and to represent the best that the testator could do by way of writing his name under his physical circumstances? 

Brown J. held that this test should be applied in determining whether a testator had complied with s. 4(1)(a) of the SLRA.

Brown J. concluded that on the evidence before him, the testator stamped the will with a stamp bearing his name and that his stamping of the will in that manner represented the best that he could do by way of writing his name given his physical circumstances. 

A Certificate of Appointment issued with respect to the stamped will.

Paul Trudelle

The one thing that immediately came to mind was the comment of Rodney Dangerfield’s character Al Czervic from the movie “Caddyshack” that “Golf courses and cemeteries are the biggest waste of prime real estate in America.”

Looking a little deeper on the internet, I found a wealth of golf-related murder mysteries!  Yahoo hosts a group for golf mystery collectors. The Waterboro Public Library has compiled a list of well over 100 golf murder mysteries (I stopped counting at 100). 

Titles include “Death is a Two-Stroke Penalty”, “Deadly Divots”, “Death Under Par”, “Rotten Lies”, “Fairway to Heaven”, “Putt to Death”, “Par for the Corpse” and “Six Strokes Under”. There appears to be no limit to the punning.

Whether you’re reading, or golfing, or both, have a great summer!

Thank you for reading.

Paul Trudelle

In Jean Estate v. Wires Jolley LLP 2008 CanLII 14538, an estate trustee and sole beneficiary of an estate entered into a retainer agreement with counsel that provided for a “success fee” of 10% of the value of the estate. The retainer agreement also provided that any dispute relating to the success fee was to be determined by an arbitrator. 

A dispute arose, and the solicitors sought to have the dispute resolved through arbitration. The client applied to the court to have the notice of arbitration struck out, and to have the dispute resolved by the court.

Madam Justice Low granted the application. She held that the provisions of the Solicitors Act applied prima facie. She went on to conclude that even though the parties had previously agreed to an arbitration provision, and could agree to keep private commercial disputes private, the relationship between lawyers and clients is “one which transcends a mere commercial transaction. The profession has a monopoly over the provision of legal services and the occasions upon which lawyers interact with members of the public occur often when the latter are in the most vulnerable of circumstances. There is therefore an overarching public interest to be served in the court’s supervision of the profession’s monopoly.”

As the arbitration provision was a derogation of the client’s statutory right to have the court scrutinize the propriety of the fees, it was not upheld.

Thank you for reading.

Paul Trudelle

“Resomation” is described as “an environmentally responsible, flameless, water based ‘biocremation™’ which sympathetically returns the body to its constituent elements.” In the process, which involves alkaline hydrolysis, the body is placed into a special vessel containing a pool of water and potassium hydroxide, which is heated to a high temperature under pressure. This dissolves the body into its chemical components, leaving only calcium phosphate bone ash. In addition, any mercury fillings and prosthetics remain intact, and can be safely removed.

The web site “Ecogeek” described the process as “The Greenest Way to Die”, and notes that the process does not release harmful mercury vapours, and only uses 90 kWh of energy, compared to 250 kWh for a normal cremation.

The company behind resomation describes the process as “accelerating natural decomposition”. 

It does not appear that the process is available in Canada yet. 

Thank you for reading.

Paul Trudelle

A decision out of the Saskatchewan Court of Queens Bench appears to open the window to this type of claim even wider. Disappointed beneficiaries may also have a cause of action as against financial institutions and others that provide estate planning advice.

In Mayer v. Nordstrom, 2003 SKQB 397 (CanLII), the deceased consulted with a financial adviser with respect to his estate plan. The deceased owned a mutual fund plan, and designated his son as the beneficiary. However, the plan was not registered, and the designation was therefore void.  The fund fell into the deceased’s estate, and the son received only half of the value of the fund as a beneficiary of the estate. The disappointed son sued the financial planner for negligence. 

The financial planner resisted the claim, taking the position that he did not owe a duty of care to the son.

The Court disagreed. The Court held that the “disappointed beneficiary” principles articulated in solicitors’ negligence cases such as Earl v. Wilhelm (2000), 183 D.L.R. (4^th) 45 (Sask. C.A.) and White v. Jones, [1995] 1 All E.R. 691 (H.L.) applied equally to other professions. The “disappointed beneficiary” principle “is not a function merely of the defendant’s occupation”. The planner was a professional who held himself out as possessing special skill, judgment and knowledge in financial planning, which included estate planning tools. The planner ought to have known that carelessness on his part would cause harm to a third party.

The duty of care to potential beneficiaries, opened in the White v. Jones decision, continues to expand.

Thank you for reading.

Paul Trudelle

The requirements call for the making of certain “law statements” by an individual registering a real estate document (transfer or mortgage) under the authority of a power of attorney. The individual must make a statement that they are acting within the scope of the power of attorney. Further, the solicitor must discuss the power of attorney with the client and make a “law statement”. For most purposes, the solicitor must complete the following statement:

I, name of solicitor, confirm that I have reviewed the power of attorney with the attorney, and the attorney has confirmed that:

1. The attorney is the lawful party named in the power of attorney,

2. The attorney is acting within the scope of the authority granted under the power of attorney,

3. To the best of the attorney’s knowledge, information and belief, the power of attorney was lawfully given, and

4. The power of attorney has not been revoked.

In addition, the original signed and witnessed power of attorney must be scanned and registered. 

Lawyer and bencher Robert Aaron discussed the new requirements in a recent article in the Law Times, p. 12. Mr. Aaron stated that while the new requirements will allow the party on the other side of the transaction (and their solicitor) to review the power of attorney document, and provides an opportunity for defective powers of attorney to be caught, “I’m not sure that it will frankly do much to stop fraudulent powers of attorney.”

Thank you for reading.

Paul Trudelle

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

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

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

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,

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