Listen to: Hull on Estates Episode #310 – Guardianship and Capacity Issues
Today on Hull on Estates, David Morgan Smith and Nadia Harasymowycz discuss guardianship and capacity issues in circumstances where incapacity is a distinct possibility, but not currently the case.
If you have any questions, please e-mail us at hull.lawyers@gmail.com or leave a comment on our blog page.
The Ontario Bar Association (OBA), Trusts and Estates Section, year end dinner is taking place on May 31, 2011 in the Distillery District in Toronto. I, as the Chair of the Section, will have the pleasure of bringing this year to a close. The Section will also pay tribute to this year’s recipient of the Award for Excellence in Trusts and Estates, Mary MacGregor.
The Award for Excellence was created to recognize exceptional contributions and achievements by members of the OBA to the area of trusts and estates.
The criteria for the award is demonstrated leadership in the trusts and estates bar through knowledge, experience, skill, commitment, passion and strength of character, plus all or some of the following:
· academic excellence through teaching at the Bar Admission Course, lecturing at a law school, participating in Continuing Legal Education and/or academic writing;
· participation in the OBA Trusts and Estates Section Executive or the Law Society of Upper Canada on wills, trusts and estate matters; and
· contribution to the development of wills, trusts and estate law.
Mary’s distinguished and esteemed career has included her unwavering commitment to, as well as the achievement of, excellence in these areas.
In addition to the Award for Excellence, the Widdifield Award and the Hoffstein Book Prize will be presented.
For more information, please contact Blossom Pangowish, OBA Sections Co-ordinator, at (416) 869-0513, ext 399 or at blossom@oba.org or award@oba.org.
Enjoy.
Craig R. Vander Zee - Click here for more information on Craig Vander Zee.
Listen to Piszczek v. Zurawska
This week on Hull on Estates, Christopher Graham and Paul Trudelle discuss the recent decision in the case of Piszczek v. Zurawska that demonstrates the application of a resulting trust of joint accounts.
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 Estates blog.
Piszczek v. Zurawska - Hull on Estates Podcast #131
Posted on October 7th, 2008 by Hull & Hull LLP
Paul Trudelle: Hi and welcome to Hull on Estates. You’re listening to Episode 131 on Tuesday, October 7th, 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.
Christopher Graham: Hi and welcome to another episode of Hull on Estates. I’m Chris Graham.
Paul Trudelle: And I’m Paul Trudelle.
Christopher Graham: 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, all lower case, or you can visit our blog at estatelaw.hullandhull.com, all lower case.
Paul Trudelle: Hi Chris, how are you today?
Christopher Graham: Fine thanks, Paul. How are you doing yourself?
Paul Trudelle: Very good, thanks. Today we thought we would talk about a recent decision out of the Ontario Superior Court of Justice, just as a reminder of the application of the resulting trust-type case that we see with joint accounts from time to time. I think it’s a useful discussion of the issues and a practical application of the case law, in particular the Picorry decision.
Christopher Graham: Yeah, this case is, it’s an illustrative case. I guess in a sense it’s timely, it’s been about a year since Picorry, plus a bit, but there aren’t very many decisions of this nature, I guess, because so many of these cases settle these days?
Paul Trudelle: That’s right. I think that’s fair to say. I think Picorry gave us quite a bit of guidance on this area of the law, but this case did go to Court. It went to Court and the judgment is the judgment of Langdon, Mr. Justice Langdon, on June 25, 2008. I think both of us are steering away from saying the name of the case, but it’s Piszczek and Zurawska. We’ll put a link to that in our show notes.
Christopher Graham: Yeah, I’ll take a wild guess here. Piszczek and Zurawska, and we’ll see if anybody actually knows the name of this one better than we do. Yeah, it’s an interesting case. It’s typical of a lot of estates litigation cases. There’s a long story, it’s a fascinating story. A World War II survivor came to Canada. He was married at the time. He came in 1950 from Poland. Worked hard as a custodian and he made friends with other Polish immigrants, took them into his house as boarders, they paid rent, he made really good friends with one of these boarders, and this boarder was apparently quite a good friend to him as well. He took care of the testator in the testator’s old age. The testator’s wife had died in 1972, so she wasn’t in the picture. And gradually took more and more of an active hand in the testator’s life as his mind went.
Paul Trudelle: Yeah, the deceased had two children from his marriage and he was a stepfather to his son’s wife from a prior marriage, so he did have three children, so to speak. However, it appears that two of those children weren’t very close; the third would see the deceased from time to time but wasn’t particularly close. This one friend was very close and very active in caring for the deceased prior to his death as the deceased’s health failed. And the Court paints a very nice picture of the gentleman in question, and it seems that he had this very close relationship, a very helpful relationship with this individual who was living with the deceased for a time, and later moved out but still was living close to the deceased and helped him with respect to taking care of his own property and maintenance around his house.
Christopher Graham: Yeah, that’s one of the interesting aspects of this case. The interloper, this man really did take care of the testator, by all accounts was a sincere and genuine friend, especially in the later stages of the testator’s life, and then the testator started to lose capacity. And when he lost capacity, this character got a Power of Attorney, or I guess he had it before capacity was lost.
Paul Trudelle: Yeah, he was the attorney under a Power of Attorney given while the deceased still had capacity. It wasn’t used until some point near the end of the deceased’s life when it appears that he did lose capacity. He was no longer able to take care of himself, he was put into a nursing home by his friend, using the Power of Attorney. The deceased at that point had a house and the house was sold by the attorney using the Power of Attorney. But I think it’s interesting to note, and the Court made extensive note of the fact that prior to selling the property, the deceased had a Will. The Will made a small bequest to this friend, left the balance of the estate essentially to the children of the deceased. However, after the deceased appeared to lose capacity, there was a request made by this individual that a lawyer come and see the deceased in order to make a new Will. And the Court made extensive findings, or noted at great length, the discussion between the deceased and this lawyer at the time when this new Will was being planned.
Christopher Graham: Yeah, essentially the deceased, at the time he was taken to the lawyer or the lawyer met with him, he was about as out of it as, well, he couldn’t answer any single question about his assets. He simply, apparently couldn’t respond, apparently had very little, if any, capacity at that point.
Paul Trudelle: And the lawyer noted that, and because of the lack of capacity, the lawyer wasn’t prepared to make a new Will. There was a suggestion that this new Will would have left the entire estate to the friend, however that never came to pass because the lawyer didn’t feel that the deceased had capacity. So following that, the deceased went into, or was in a nursing home at the time. The friend used the Power of Attorney to sell the house and then took the position that the deceased, prior to his death, wanted to give him a substantial gift, wanted to leave something to his family members. So $100,000 was put into a separate account in the deceased’s own name in order to satisfy the bequests under the Will. The balance, which was about $100,000 was left in the joint account. After the deceased died, the friend took the position that he received the balance of that account by right of survivorship and that was a gift made to him during the deceased’s lifetime.
Christopher Graham: Yeah, and here’s where the presumption of resulting trust comes in, because the joint account had been opened during the deceased’s lifetime, well it would have to have been opened during the deceased’s lifetime, but it was, and the funds were transferred in. The presumption arises, and it was up to that man to rebut the presumption of a resulting trust, and he was unable to bring forward sufficient evidence or any evidence to rebut the presumption.
Paul Trudelle: Right, and the matter came before the Court by way of a passing of accounts. The residual beneficiaries of the estate challenged the accounts prepared by the friend, took the position that the joint account proceeds should have fallen into the estate and should have been divided up as residue, so that’s how the matter came before the Court. The Court looked at the presumption and the evidence that existed, in order to see whether that presumption was rebutted. One of the interesting things that I like to note is that there were banking documents here, when the joint account was set up there was a banking document signed that would show that the accounts were being held as joint accounts with right of survivorship. The Court didn’t waste too much time in concluding that those would be for the protection of the bank and that either of the deceased or his friend could access the money during the deceased’s lifetime. But that wasn’t determinative of the question of whether there was a gift of those accounts and whether that rebutted the resulting trust presumption.
Christopher Graham: This is an excellent case to read and it’s one of those cases that doesn’t make law, but it ties together a few concepts that are already out there in a way to refresh, just refresh your memory of the core, but also other principles, like the principle of undue influence which also comes into play here.
Paul Trudelle: The Court didn’t find that there was any arm-twisting or anything like that, but it did find that the friend was taking care of or helping the deceased to such an extent that the presumption of undue influence arose, because the deceased was so reliant on the actions of the friend. So the Court says that there was a presumption of undue influence as well. On the presumption of resulting trust and evidence to rebut that, the Court refers to Section 13 of the Evidence Act which states that in order to rebut that presumption there needs to be some independent corroborative evidence; felt that there was simply no such corroborative evidence presented by the friend in order to rebut the application of the presumption of resulting trust.
Christopher Graham: And that’s another interesting factor about this case because it seems that the Courts have been trending towards, with respect to the application of Section 13 requiring corroborative evidence, the bar seems to have gotten extremely low there, to the point where telephone conversations are held to be corroborative evidence where, we only know the telephone call happened, we don’t actually know what was said other than the word of the claimant against the estate. But in this case, there wasn’t any of that sort of very narrow evidence that a Court is willing to hang its hat on and say, okay, yes you have corroborated your claim against the estate.
Paul Trudelle: Right, and another minor point on evidence that may help, or show why the Court arrived at the conclusion that it did. The friend took the position that the balance in the joint account was a gift to him, however there is some evidence that during the deceased’s lifetime, the friend had made, a gift was made to the daughter of the friend and that cheque was signed by the deceased. And the Court felt that if, in fact, a gift of that bank account was intended to the friend, then it would be odd to see the lengths that the friend went to in order to ensure that the cheque was signed by the deceased. And the Court felt that that didn’t help the friend’s case. It only seemed to support the conclusion that that account remained the property of the deceased throughout.
Christopher Graham: Paul, based on the fact that the deceased was, the meeting was arranged between the lawyer and the deceased, the lawyer who refused to do the Will, how important do you think that factor was, given the evidence? The interview was great, the discovery notes are very powerful, at least to me they seem compelling. Do you think that was the major factor or was there one major factor, or was it a combination, based on the decision?
Paul Trudelle: I think there’s a number of factors. I think that’s an important one, the fact that it was the friend who set up this meeting, called in the lawyer to make the new Will, was instrumental in getting that done. The lawyer was cross-examined or examined for discovery before trial and gave evidence that he had no real discussion with the deceased with respect to the terms of this new Will that was being suggested, and there was never any suggestion by the deceased that he wanted any gift to be made. The fact that all of this was pulled together, or the meeting was set up by the friend, I think, was influential.
So just to conclude, I think that it’s a very interesting case to look at, in that it reviews a very real fact situation. It applies the law from Picorry to that very real fact situation and the result being that the friend was required to turn over or disgorge the funds that he received in that joint account.
Christopher Graham: Now it is an excellent case, you know, and as we were saying earlier, because so many of these cases settle, and don’t go the full nine yards, there probably won’t be too many more like this. And this case really does apply Picorry; it discusses the principles. It’s one of those good all-round cases that’s really worth the time it takes to sit down and read it, give it a good thorough reading to see also how the laws of evidence are applied.
Paul Trudelle: Just before we leave the case, in the last line of the judgment, the Court awards costs to the children of the deceased on a substantial indemnity basis without any discussion. I think it’s important, though, to take that as a warning, that this type of case can result in costs on a substantial indemnity basis and that should be something that I think we consider when looking at the evidence that we have, whether we’re on one side of the case or the other, and in determining or deciding how far we’re going to go and what our approach is to resolving these types of cases.
Christopher Graham: Yeah, that’s a great point and that’s one more reason why so many of these cases are settling these days.
Paul Trudelle: Well thanks, Chris, for bringing that important decision to our attention and for discussing it with me today.
Christopher Graham: It was a pleasure, Paul, and I look forward to podcasting with you again soon.
Paul Trudelle: Yes, and we look forward to hearing from you, our listeners. You can send us an e-mail at hull.lawyers@gmail.com, or pick up the phone and leave us a message on our comment line at 206-350-6636. And be sure to visit our blog at estatelaw.hullandhull.com where you will find more information about the topics discussed today and other topics of interest to the estate bar and others interested in estate matters. We hope you enjoyed the show. I’m Paul Trudelle.
Christopher Graham: And I’m Chris Graham. Until next week, 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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Read the transcribed version of "Trusts"
In this episode of Hull on Estates, Ian and Suzana have a discussion dealing with the use of trusts. They use the example of a case where a family put their cottage into a cottage trust, and when the children grew older, the children wanted cottages of their own.
Click "Continue Reading" for the transcribed version of this podcast.
Trusts - Hull on Estates Podcast #71
Posted on August 7th, 2007 by Hull & Hull LLP
Suzana Popovic-Montag: Hi and welcome to Hull on Estates. You’re listening to Episode 71 of our podcast on Tuesday, August 7th ,2007.
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.
Ian Hull: Hi Suzana.
Suzana Popovic-Montag: Hi there Ian. How are you?
Ian Hull: I’m just terrific thanks.
Suzana Popovic-Montag: That’s good.
Ian Hull: I took a little time off last week. And during my down time when I was relaxing, I was listening to some of the old podcasts and listening to some of our previous attempts at trying to pass on the word. As I noted, and historically, what we’re trying to do in these podcasts is talk about real life examples of things that we are gonna, sort of the topic we’re dealing with. And today’s topic, I thought we could deal with, is just begin to consider some of the details, in some more detail the use of trusts when doing estate planning. And I…it came to mind and what sort of triggered me to get into this topic was a recent example of a situation where a family had put their family cottage into a cottage trust. And sort of what unfolded, just the story is. And it’s a case that’s reported in the Ontario Courts, is that the father who set up the trust when the children were young for a lot of the reasons that we’re going to talk about over the next couple of podcasts: protecting creditors and things like that. He set it up and then lo and behold, by the time…they lived, and enjoyed it when they were young, and then the children were hitting their twenties and started to want their own cottages and want their own different places. And what happened was fairly aggressive litigation ended up ensuing. And what was a happy place turned into a happy place for lawyers as opposed to the family.
Suzana Popovic-Montag: I’m actually quite surprised, Ian, these days how many of these, you know, we call them cottage fights, we actually see. It’s quite remarkable that that’s sort of become such a flashpoint. I guess, as people become more affluent, they have, you know, a second property or cottage property. It just opens up these avenues for litigation.
Ian Hull: Well it does. And so let’s, you know, why don’t we go back to, after sort of considering that real world example. Let’s go back to sort of first principles on trusts because a lot of clients will come to see us and they’re anxious to set up a trust. And what I thought we might do is, let’s sort of start at the beginning here. And what is a trust all about?
Suzana Popovic-Montag: Well, Ian, a trust is created when you have a transfer of property from one person to another, who’s usually called a trustee. And there can be more than one trustee, who will hold that property then in trust for the ultimate beneficiaries.
Ian Hull: And so that ultimate beneficiary is the one who will enjoy the asset at some point in time or during the course of the trust.
Suzana Popovic-Montag: That’s right. And that person is known to have basically the beneficial interest in whatever the asset is that’s actually settled in the trust.
Ian Hull: So as I understand, of course there are various trusts, there are different types of trusts that are created. What are some examples?
Suzana Popovic-Montag: Well, Ian, we can have a trust that can limit what kind of interest the beneficiary can have. And normally what you have is you have a capital and an income interest that arises in a trust. And you might provide that the beneficiary is only entitled to the income that is generated by the assets in trust. Or you might take it a step further and say they also have a right to encroach on capital as well.
Ian Hull: So the more the flexibility that’s created into this, and now when I say flexibility I mean the trustees, what we call sort of the presidents of this little company, the people who are in charge. The more flexibility that the trust document itself gives them, the more opportunities for creative use of these trusts there are. And the balancing act, of course, is that trusts give us protections, fundamental protections that we’re gonna talk about. But at the same time, we can’t go outside of the parameters of that or we’ll lose those protections. And, for example, we’ll lose some of the tax advantages, we’ll lose some of the creditor protection advantages that they can have. What is…let’s just start with the tax side. Without getting overly technical, what are the sort of significant consequences from a tax standpoint with a trust?
Suzana Popovic-Montag: Well, generally speaking Ian, when you create a trust in the right circumstances, you can actually reduce the taxes that would be paid on the income that’s earned in the trust in a particular year.
Ian Hull: So the creation of the trust itself…when we establish a trust and let’s go back to that cottage example. We have a family, a young family starting out. And the father decides that he’s a stay-at-home Dad and the Mom is working hard and making lots of money. And they decide that they want to have a secondary residence. The principal residence is the house in the city and they decide they want a recreational property. So they establish this trust. And the mother is a, let’s say a financial advisor, someone who might be professionally, personally liable for claims and so on. So they put the trust…they think well, gee, let’s buy this cottage. And we want it, of course, ‘cause the kids are young and cute and want to swim and so on. We want to put this cottage into a trust. The first significant tax consequence that we want to keep in mind is, of course, that there’s a price, the cost of that trust, the cottage that goes into the trust, is the starting point of the value that Revenue Canada starts to use as a benchmark. And what some people do, though is, is that they’ll buy the cottage. And then five years later, decide they want to create this trust for a bunch of good reasons. And we can get into that for tax planning reasons and so on. But we can’t forget the sort of first principle tax consequence of creating a trust is that when you put the asset in, there’s a deemed disposition.
So an example is this, is that five years later, you’ve bought this cottage in Muskoka. And five years later, you realize you want to put it in a trust but then you find out that there’s going to be a deemed disposition. They’re going to take this asset and whatever you paid, say you paid $500,000 for the cottage five years ago and now the cottage is worth $750,000. The one consequence even before anything else happens is the tax person is coming to collect some tax. So it’ll be a capital gains tax that’s gonna get created because there’s the disposition of the trust - the dock, the cottage from your name personally into the trust itself. So that’s just something to keep in mind. And I say that example because you wanna plan ahead, you wanna think ahead. Like anything, when you want protection from these sort of useful planning tools, you have to stop, take a deep breath and think long term, short term, and even medium term as to what you want to accomplish. And if you don’t, you might get stuck with a tax hit that makes this, creating this trust impossible. Because for my example, maybe you can’t pay the income tax that’s payable on establishing the trust because you hadn’t thought ahead.
Suzana Popovic-Montag: That’s a good point, Ian, and I think that that’s something that, you know, you get so embroiled in the planning and, you know, the benefits of the trust that you might miss something as basic as the fact that there is this deemed disposition the moment you settle property in trust.
Ian Hull: So the tax consequences are one thing and we’re not going to get overly intense on the issue, but that’s something just to keep in mind. But I think the important rule, as you just said is, is to sit back, take a deep breath and say, what do I want to do, what do I want to accomplish by this trust? And then the second thing, and we’ve talked about this in other podcasts, is that you don’t want to create an estate plan that is tax focused exclusively. You need to…I tell my clients consider all of the options, not just the tax consequences of every option. And the other part, the other sort of other half of creating a trust is, is that there’s a certain amount of control that you lose. And that was what that whole case was about when we started at the beginning was is that Mom and Dad thought it was their cottage. They put it into a trust for what was, at that time, creditor protection. And we can talk about creditor protection and what that means. But basically, it makes it tough for creditors to come after the asset if it’s in a trust. But they did that and they didn’t think through. Like the tax example, they didn’t think through the consequences of creating the trust and the loss of control from their standpoint. Because all of a sudden, what happened in that case was it wasn’t their cottage anymore. It was actually the beneficiary’s cottage and in that case, it was the children. So the children had a tremendous vote on what would happen to this property. And when they got older, the parents got older and the kids got older, and when they wanted to sell the cottage, the kids said I don’t…one kid said I don’t want to sell. The other kid said I do want to sell it but you’ve got to pay this price for it. And it created a whole bunch of litigation. And so the loss of control was something that when they set it up, when they were cute at two and three, they never thought through. And they didn’t…well maybe they did think through…but they didn’t think it through well enough because obviously litigation ensued.
So it seems to me, anyway, that, you know, like all estate planning tools, there is always sort of this fancy, use a fancy term like create a trust and people go to it and they gravitate to the idea. But they sometimes don’t think through the whole consequences of it. And I’m not saying we shouldn’t create trusts, we shouldn’t use them. They’re perfect planning tools in the right situation. And I don’t want to be for a minute being nay saying about a trust. I’m just trying to make it clear that I think that, you know, my clients sometimes don’t think through all of the consequences.
Suzana Popovic-Montag: And it’s just like a lot of the probate tax planning that we see and we want to be sure that we’re doing it for the right reasons. So that we don’t become a product of like, the tail wagging the dog essentially.
Ian Hull: Absolutely. So the last thought I had on this was in this sort of introductory comments on the trusts and using trusts in estate planning. Another benefit of creating a trust is, is that…and this is a positive note as opposed to the negative, the tax and the loss of control which I always like to start with the negatives and then see if the positive balance out. And one of the things a trust does is it creates a trust that you can leave an asset in trust for beneficiaries that really protects that inheritance from the beneficiaries’ creditors and it is essentially a nice legacy that you’re leaving. And you’ve got some mechanism to preserve that legacy. And so there are lots of good reasons to create the trust. And as I say, I don’t want to focus exclusively on a cottage. But a cottage is an easy example where, if you really do think that you want that cottage to stay in the family for as long as many generations as you possibly can, then it does create an important mechanism. And using the cottage example, though, you wanna make sure that you’ve also got it well funded so that there are expenses that are being covered or some mechanism being covered. Because if that starts to dry up, then you can’t maintain the trust and those sorts of things. But that’s the other, sort of my third thought, in terms of the use of trusts generally.
Suzana Popovic-Montag: And maybe just to add a little bit to that Ian. Even if you don’t have creditors necessarily, you know, sort of looming around the assets. A trust is also a very good means by which to protect minor beneficiaries, individuals who are less than the age of eighteen or nineteen whatever it might be in whatever jurisdiction you live in. And it protects those individuals from becoming, you know, suddenly very affluent or from not managing the assets properly until they become responsible and good citizens who are in a position to accept large bequests or important assets in their own names.
Ian Hull: Now that’s a great point. Alright, well I think we’ve at least scratched the surface on the concept of trusts and estate planning. We have lots more we can consider and talk about. And we’ll save that for another podcast. Thanks very much, Suzana.
Suzana Popovic-Montag: Thanks to you, Ian.
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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