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Yesterday we discussed Modonese v. Delac Estate, 2011 BCSC 82 (CanLII), which considered when there is a presumption of undue influence and the factors that tend to rebut that presumption. 

One important factor is the presence of independent legal advice. But what are the considerations that come into play in assessing the kind of legal advice required to rebut the presumption? 

The function of independent legal advice is to remove a taint that, if not removed, might invalidate a transaction. There are two types of independent legal advice (See Cope v. Hill, 2005 ABQB 625):

a)      Advice as to understanding and voluntariness; and

b)      Advice as to the merits of a transaction.

Some of the factors to be considered in determining whether legal advice given to the granting party is sufficient to rebut the presumption include:

a)      Whether the person benefiting is present at the time the advice is given and/or at the time the documents are executed;

b)      Whether the lawyer was engaged by and took instructions from the person alleged to be exercising the influence;

c)      Where the proposed transaction involves the transfer of all or substantially all of a person's assets, whether the lawyer was aware of that fact and discussed the financial implications with the grantor;

d)      Whether the lawyer enquired as to whether the donor discussed the proposed transaction with other family members who might otherwise have benefited if the transaction did not take place; and

e)      Whether the solicitor discussed with the grantor other options whereby she could achieve her objective with less risk to her.

Ultimately, the adequacy of independent legal advice will always be a situation-specific inquiry and so it is important to consider all the surrounding circumstances in relation to one another.

Sharon Davis - Click here for more information on Sharon Davis. 

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In Modonese v. Delac Estate, 2011 BCSC 82 (CanLII) the deceased left her property to her two children equally in her Will but the bulk of her estate consisted of her house, which was transferred into joint tenancy with her son. The son and his wife and children had always lived with the mother in her home except for a 3-year period after an episode of violence by the son against the deceased. At the end of the day, the son was not a credible witness and the Court accepted evidence that the deceased intended her estate to be shared equally between her son and her daughter. 

Mondonese v. Delac Estate contains some useful discussion (below) regarding the “principled approach” to admissibility of hearsay evidence and the factors to be considered in determining whether there was undue influence. 

To be admissible, hearsay evidence must be:

a)      Necessary – the only available means of putting that evidence before the Court; and

b)      Reliable – there is no real concern about the truth of the statement because of the circumstances in which it was made and it can be sufficiently tested by means other than cross examination.

The two instances where the question of undue influence arises are:

a)       Where the gift was the result of influence expressly used by the donee for the purpose; and

b)       Where the relations between the donor and donee around the time of the gift were such as to raise a presumption that the donee had influence over the donor.

To rebut the presumption of undue influence, the defendant must show that the donor gave the gift as a result of her own "full, free and informed thought" in that:

a)      No actual influence was used or there was no opportunity to influence the donor;

b)      The donor had independent legal advice or the opportunity to obtain it;

c)      The donor had the ability to resist any such influence; and

d)      The donor knew and appreciated what she was doing.

Other relevant factors include undue delay in prosecuting the claim, acquiescence or confirmation by the deceased, and the magnitude of the benefit or disadvantage.

Sharon Davis - Click here for more information on Sharon Davis. 

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The BBC has reported on the successful challenge of a mother's Will by her daughter, Christine Gill, which had left more than £2m to the Royal SPCA.  What was remarkable was the fact that the daughter argued that her father unduly influenced her mother, who suffered from an anxiety disorder, into making a Will she did not want to make.  Certainly this is a rare case.

The BBC noted that this was "just the latest in a long line of high profile, and often bitter, disputes surrounding the estates of deceased family members."

The article went on to note that "it is difficult to pinpoint the exact reasons for such an increase, but the increased wealth generated by many ordinary people over the past two decades has been an obvious factor.  Other influences have been the sharp increases in house prices in the past decade or so, the current recession, and increasingly complex family structures, often with children from two or more marriages." 

In commenting on the Gill case, it was noted that the RSPCA, being a registered charity with a statutory duty to safeguard its assets, will likely feel compelled to appeal.

Have a great weekend!

David M. Smith

David M. Smith - Click here for more information on David Smith.

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Listen to Will Challenge Litigation - Part 8

This week on Hull on Estates, Ian and Suzana discuss corporate issues and implications during a will challenge. Issues of testamentary capacity and undue influence can become extremely complex questions to investigate in a corporate inquiry.

If you have any comments, send us an email at hullandhull@gmail.com or call us on the comment line at 206-457-1985 or leave a comment on our blog.

Will Challenge Litigation Part 8 - Hull on Estate and Succession Planning - Podcast #133

Posted on October 7, 2008 by Hull & Hull LLP

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

Suzana Popovic-Montag: Hi, and welcome to Hull on Estate and Succession Planning. You’re listening to Episode 133 of our podcast on Tuesday, October 7^th, 2008.

Ian Hull:  Hi, Suzana.

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

Ian Hull: Just great.

Suzana Popovic-Montag: That’s good. Just a quick reminder to our listeners to feel free to call and leave us any comments you might have on our call-in line which is 206-457-1985.

Ian Hull: And of course, look to our blog at estatelaw@hullandhull.com and an e-mail, we would welcome any comments through hullandhull@gmail.com. 

So, Suzana, as we are discussing the Will challenge process and you say, listening, and we’re also on the video as well, let’s spend some time today talking about a branch of what we see commonly arising in Will challenges, and that is, what is the corporate implications and what sort of corporate issues can arise?

Suzana Popovic-Montag: And this really is a timely issue, and I think one that we see in many files, just by virtue of the fact that our estates tend to be quite large these days.  And as part and parcel of the planning during a lifetime, there is going to often be a corporate component.

Ian Hull: And that corporate component also, in Ontario, is very much highlighted because we have the primary and secondary Will regime, where assets are being placed, corporate assets are typically being placed in the secondary estate. So we have to be alert to the fact that a lot of estates are going to have a corporate element to it. And what we will tell our clients often is, sit back and help us understand the corporate machinations. And they’ll look at us sort of strangely and say, well what does that have to do with testamentary capacity? Or what does that have to do with undue influence? How can that have any impact on either upholding a Will or setting aside a Will? And the answer to that is fairly straightforward. And that is this: that an element of testamentary capacity is to know and understand the nature and effect of your dispositions. What does that mean? Well, that means that typically, the person who undertakes the Will and estate plan has to understand what they’re doing. Now the case law, without getting too intricate in it, gets very close to the line. It talks about whether or not you knew and understood, but it doesn’t expect the testator to have every single aspect of the estate plan understood at every level of minutiae. 

Suzana Popovic-Montag: And the reason, of course for that, is because these things tend to be complicated, and for a lay person, certainly we can set up corporations and have these kinds of arrangements put in place.  But again, without understanding the minutiae, because we’re relying on professionals to help us with that part of the process.

Ian Hull: And so the Courts have historically said, if you want to develop a complex estate plan, as long as you understand the concepts, you understand generally what’s going on, the Courts have typically been fairly lenient and they won’t go so far as to suggest that the individual didn’t know and understand. So we say to our clients, though, having said that, the problem is this: what if you truly didn’t know and understand? And what if the corporate machinations are so complex, or, that the very fundamental effect of the corporate dealings had such a dramatic tax impact on death that you didn’t understand that? Does that drive into this possibility that the Will is not valid? And that is really what we want to highlight today. And the short answer is, yes. The Courts will start to say, well, wait a minute. Did the deceased understand that by putting a corporation, establishing a corporation this way, would result in a tax over here that would then affect another beneficiary that maybe that deceased didn’t understand. And a classic example is that, in Ontario and Canada throughout is that, RRSPs, and that illustration really demonstrates what a knowledge and approval could be in a situation like that.

Suzana Popovic-Montag: And the key of course, is the fact that you can’t give something away that you don’t own, but you need to know what you own before you can decide how you want to give it away and to whom.  And so to be able to demonstrate that this was, in fact, the case, is maybe quite important in these situations. And of course, that just leads me to think to the evidential difficulties that arise in proving ownership or what someone thought they owned or understood they owned. And again, that comes back to some of our previous discussions, Ian, where that is a difficult thing to establish in some circumstances, so we’ve got to be ready for it.

Ian Hull: Absolutely. And where these things start to get balled up and mixed up is that if someone does a classic estate freeze, where they have a company and they’ve developed it, and they get to the point where they say we want to freeze the tax liability there and then we want to put all of the growth into the hands of my children, and let them enjoy the growth. That’s the classic estate freeze, and we won’t get into great detail today, but one worthy of its own podcast or two. That scenario may well not have been fully understood by the deceased. The deceased may not have understood that impact and then, it might have an impact on and drill down on this whole question of whether or not he knew and understood the nature and effect of his dispositions.

Suzana Popovic-Montag: And in the right circumstances, it really can have a snowball effect, and that’s something that we certainly will try to keep in mind when we’re talking with clients about these kinds of situations.  

Ian Hull: So it seems to me that we’ve tried to answer hopefully the question of, well, why are you bothering getting into an inquiry which could be cumbersome, it can be voluminous. I mean, you talk to people who get into these situations and they’ve established a corporation 30 years ago. You’re looking at the possibility of having to look at corporate records over 30 years. You’re looking at the possibility of talking to the accountant about corporate records over 30 years. Now that may be an extreme example, but if you have multiple corporations and so on, it adds a layer of complexity, when we talked about that intense investigation stage. This adds a layer of complexity. And it comes back to this point that often our clients will say, give me a budget. Tell me how much this is going to cost me.

Suzana Popovic-Montag: That’s right.

Ian Hull: And it’s very difficult when you have corporations. So we will tell our clients: (a) we think we have to look into it, at what level depends on each fact of the case; and (b) we’re not going to promise you that a quick review of the minute book is going to be sufficient. Because it can undermine the whole question of testamentary capacity which is the cornerstone of a significant percentage, I would say higher than 80% of Will challenges, are fundamentally based on the allegation that the deceased did not have testamentary capacity. We’ve talked about the other prongs of attack, but the testamentary capacity tends to be the strongest and the most forcefully pursued element, and so the corporate aspect of it is an important element as well. 

So, during our next podcast, what we’re going to talk a little bit about and we’re going to kind of go sideways, I think, but I think it’s a worthwhile time to, as we set up the types of claims that can be made and we talk about the types of claims that can be made. We’re going to talk about some of the claims that are made concurrent, or at the same time as a Will challenge, which, the old adage is, throw mud at the wall to see what sticks. Well, we don’t really typically, we don’t encourage our clients to throw mud at the wall and see what sticks strategy, because sometimes that bounces back.  But you also want to consider what other claims and we’re going to talk about quantum meruit claims, we’re going to talk about proprietary estoppel claims, things like that, that add more sauce to the gravy.

Suzana Popovic-Montag: That’s great, Ian, I look forward to our next podcast. Just a quick reminder, of course, to our listeners, please feel to call and provide us with any feedback or any comments you might have, on either the video format or the audio portion of our discussion today. Our number is 206-457-1985. 

Ian Hull: And of course as I remember, please e-mail us at hullandhull@gmail.com.

Suzana Popovic-Montag: Thanks very much, Ian.

Ian Hull: Thank you.

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

To listen to other Hull On podcasts, or to leave any questions or comments, please visit our website at hullestatemediation.com.

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Or, listen to Will Challenge Litigation - Part 6 by clicking here.

This week on Hull on Estate and Succession Planning, Ian and Suzana continue their discussion on the Will Challenge Process, step by step.

They pick up where they left off last week by addressing undue influence. What is undue influence and how do we prove it? Next week they will continue their discussion on the different grounds upon which a will can be challenged.

If you have any comments, send us an email at hullandhull@gmail.com or call us on the comment line at 206-457-1985 or leave a comment on our blog.

Will Challenge Litigation Part 6 - Hull on Estate and Succession Planning - Podcast #131

Posted on September 23, 2008 by Hull & Hull LLP

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

Suzana Popovic-Montag: Hi, and welcome to Hull on Estate and Succession Planning. You’re listening to Episode #131 of our podcast on Tuesday, September 23^rd, 2008. Hi there, Ian.

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

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

Ian Hull: Just terrific. We are thinking through this Will challenge process and we’re trying to hopefully take it beyond the typical Will challenge and talk about some sophisticated steps that are often involved, (a) because they’re good, they’re helpful hopefully, for people who want to get into these Will challenges, but (b) it’s helpful to know what you get yourself into. And this is part of it. We talked about in our last podcast getting a retrospective opinion. This is not uncommon, but it’s also a very expensive process. You have to pick the right expert, you have to make sure the report is clear and concise in a way that a judge is going to receive it well, because judges are people, too. They don’t want to see a 20 page report full of esoteric medical terms that nobody can follow. So there’s a strategy within the strategy of bringing that on. 

Let’s talk now about how we deal with the question of undue influence because we described in our last podcast what undue influence was, and that is coercion, and that is the arm-twisting. So, let’s talk a little bit about what do we mean by that and, more importantly, how do we prove it?

Suzana Popovic-Montag: And really, the allegation of undue influence is that the testator, at the time that he or she created their Will, was not doing it on their own free volition.  And so as Ian classically describes it as this arm-twisting, the judges call it that in a lot of cases as well. And the idea there is that someone has influenced you to do something that you would not otherwise have wanted to, or at least not to that extent. So maybe yes, you did want to provide for little Johnny but not to the extent of your full estate, and to the exclusion of your daughter Betty. So that’s the kind of idea when we say undue influence.  Certainly there’s a level of influence that we all have on our family members. The question is, when is that influence undue in the sense that it could compromise your capacity to make a valid Will. 

Ian Hull: And the classic example in the case law of what is undue is, when you sit across the table from your mother and you say, if you don’t do what I say, I’m going to put you in a nursing home. That’s a graphic and obviously, hopefully, never said illustration, but in our world we do see it and we see that it’s being alleged to have been said, and that’s a classic undue influence. The thing that really we’re troubled with, with undue influence is that the nature of the claims and the allegations are typically so volatile, they’re so, some people say, mean-spirited because if you’re going to unduly influence you have probably behaved very badly.  And so one side of the case is going to say you behaved very badly and spell it out, so it looks like allegations of egregious behaviour, and the other side is going to have a complete opposite.  So just the nature of the evidence itself turns this litigation into volatile, typically aggressive, litigation in and of itself. So that’s an important strategy point that we always like to walk through our clients as saying, you go down that road of alleging undue influence, you create a new environment and sometimes a very distasteful litigation environment. So,

Suzana Popovic-Montag: And I was going to say, Ian, and it’s very hard to go back. Once you’ve done that, you’ve sort of crossed the line, it’s very hard to take that back. When you’re dealing with family members, you’re dealing with loved ones, these are really nasty allegations many times. They don’t necessarily have to be, but most of the times we see that they are. And so it becomes a he-said, she-said situation. And by virtue of the allegation itself that someone was unduly influenced, one of the biggest concerns or one of the biggest issues that we face as lawyers, is getting proof of that undue influence.

Ian Hull: Absolutely, and that’s really, so first of all, we don’t like to go down that road because you’re going to have to say some very nasty things or defend very nasty things, and you’re going to create a volatile litigation environment. But the second point is exactly what Suzana has said, and that is that we’re stuck with the legal parameters. I mean the concept of undue influence has been around for hundreds of years. We’re stuck with the legal parameters and the two points within that category are this: one is, is that to allege undue influence is a very tough case to meet. The Courts have said it is the highest of expectation to prove that there was undue influence. The second component is the source of the undue influence has to come, and I may be overstating it, but basically has to come from third party non-participant evidence.  And what do we mean by that?

Suzana Popovic-Montag: Well, Ian, what we are suggesting there is that when you make an allegation of undue influence, then your evidence in support of that will be viewed, if it’s directly your evidence, probably by a judge, as self-serving evidence. Well, of course you’re going to say that you saw this or that this happened or that that happened, because that helps your case. But if you want to add credence to your allegations, you’ve got to have the evidence of someone else, someone who’s not vested in the process or the result of the process, who’s going to say yes, I saw that kind of behaviour being exhibited, I saw these threats being made to the testator, I know that this is what actually happened.

Ian Hull: And a classic example to follow through with that is, we talked about the son sitting across the table from mom saying, you do what I say or I move you into an old folks’ home or a nursing home.  That threat is seen by the next-door neighbour who happens to be over at the house helping out this nice elderly individual.  And that neighbour has no vested interest, is a third party source and is someone that, what we call, corroborates the evidence. And so we remember that we’ve got very difficult expectations. The Courts, undue influence is akin to fraud. It’s like you say that, you’re basically alleging fraud.  So the Courts say there’s a very high standard on those who want to pursue that claim.  Part of that high standard is that you need corroborative evidence and in that component, the third component is Suzana, what are we getting at when we say corroborative evidence and why does that matter in estate matters?

Suzana Popovic-Montag: Well corroborative evidence, of course Ian, is evidence that’s going to prove additional evidence that you have, so the allegations that have been made in support of the fact that someone was unduly influenced. And one of the key things with this type of evidence, of course, is that if you are in fact, an undue influencer, you’re probably smart enough not to be doing it in front of others.  So that you don’t have these third party witnesses or individuals who overhear these threats being made, don’t see this kind of behaviour being exhibited and so it’s very difficult, we tend to find in these situations, to come up with this corroborative, this additional evidence in support of the allegation. 

Ian Hull: Absolutely. And because it’s so difficult though, it’s also a non-starter if you don’t have it in many cases. And that’s because the Courts have sat back and said, if you’re going to allege that certain things were said by someone who is now dead, you have to source that beyond your own evidence. You have to buff that up. You can’t just say that, you can’t speak for the dead so to speak.  And that is really, which is a great old common law tradition, and evidentiary expectation, that you corroborate.  When you’re going to put words in the mouth of a dead person, you have to corroborate it.

So, that’s really, I think, the core spin in terms of the evidence and in terms of the expectations of the Courts with undue influence.  But the last point I was going to say in terms of the process here, and these are, as we talk about these legal issues and we’re going to move on to some of the other ones briefly after this, is that really, typically, an estate challenge, a Will challenge, you’re going to look to lack of testamentary capacity and you’re going to look to undue influence. And at the outset, almost always you’re going to allege both or both are going to be alleged against you. But the trick is, and the strategy is, is when do you let go? And do you let go, I mean we talked about it for cost consequences, but with undue influence, you want to, I tell our clients, we have to monitor that issue on a regular, regular basis.  Because there’s always the chance if you let go, you’re not going to get stung like a bee by having alleged it. Because it’s not such a terrible thing to suggest because it’s one of the four or five cornerstone issues in a Will challenge.

Suzana Popovic-Montag: And I guess, Ian, just in terms of winding up, just one thing I think we should make mention of the fact is that even though there are these traditional five grounds of challenging a Will, not all five have to be present in every case.  And in most cases they’re not.  And you may just have a Will challenge based simply on undue influence or simply on lack of testamentary capacity or a Will not having been properly executed. So these are not things that have to be found altogether, they’re mutually exclusive.  They can, however, be joined in a claim for a challenge to a Will.

Ian Hull: So if we’re ready, from a strategy standpoint, we want to maybe put one, two, three or four out on the table, but also be mindful of the fact that, while you may have a right to investigate those circumstances, you may not want to hang on to that allegation forever. 

So, I think from that standpoint, before we cover off one of the last issues, and that is the question of undue, I mean the lack of due execution and then some of the corporate machinations in a corporate context of how these Will challenges go, I just want to say that, my last comment is on the question of fraud.  As we said before, it really is not worthy of a ton of discussion. It’s just not typically alleged.  But in our next podcast, we’ll start with that issue just because of the one rare occasion when it’s alleged, it can be dealt with on a very, fairly pinpointed and sophisticated basis which we’re going to talk a little bit about in our next podcast, and that’s when we have forged Wills. So thank you very much, Suzana.

Suzana Popovic-Montag: Thanks to you, too, Ian. And to all of you who are listening and watching us by video podcast, a quick reminder that if you have any comments and you’d like to share them with us, we’d certainly appreciate them. Feel free to call us at 206-457-1985.

Ian Hull: And of course, e-mail at hullandhull@gmail.com.

Suzana Popovic-Montag: Thanks, Ian.

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

To listen to other Hull On podcasts, or to leave any questions or comments, please visit our website at hullestatemediation.com.

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Or, listen to the audio version of Will Challenge Litigation - Part 5

This week on Hull on Estate and Succession Planning, Ian and Suzana continue their discussion on the Will Challenge Process, step by step.

They continue to discuss the process of will challenges in closer detail. What makes a good case? They talk about the five different grounds upon which a will can be challenged:

1. Lack of testamentary capacity
2. Existence of suspicious circumstances
3. Will not having been properly executed
4. Existence of undue influence
5. Possibility of fraud

If you have any comments, send us an email at hullandhull@gmail.com or call us on the comment line at 206-457-1985 or leave a comment on our blog.

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Dependency and Undue Influence - Hull on Estates Podcast #108

Posted on April 29^th, 2008 by Hull & Hull LLP

Diane Vieira: Hello and welcome to Hull on Estates. You’re listening to Episode #108 on Tuesday, April 29^th, 2008.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.   Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills.  Now, here are today’s hosts.

Diane Vieira: Hi and welcome to another episode on Hull on Estates, I am Diane Vieira.

Paul Trudelle:  And I’m Paul Trudelle. Hi Diane, how are you today?

Diane Vieira: I’m good, how are you?

Paul Trudelle: Very good, thank you for filling in.  You are filling in for Megan Connelly, who was going to be podcasting with me this week, but she ran off to South America.

Diane Vieira: Yes.

Paul Trudelle: She got out of it.

Diane Vieira: Yes

Paul Trudelle: She didn’t take any trust funds, and she is coming back so there’s nothing  wrong with her going. We hope she has a very good time, and I thank you for joining me today. You have a busy week.  In addition to podcasting, you are also blogging this week.

Diane Vieira: Yes I am. So it is…I will be featured heavily on the website this week.

Paul Trudelle: Yes. Today we thought we would spend some time and talk about a situation that arises in a lot of matters that we see.  It is the type of situation where there is an elderly person with two or three adult children.  The elderly person wants to provide for all of them, however the elderly person is often closer to one of the children.  And prior to death, a property gets transferred to that one child to the exclusion of the other children and they are not able to share in that other property, once the estate falls into place.  And that causes them much concern and leads to a lot of litigation.  So we thought we would talk a little bit about that today.

Diane Vieira: And we are going to discuss a case that you actually wrote a blog on last week, its Bale vs Bale.  And the facts in that case is similar a situation as you just pointed out.  There is a mom who, in her Will, leaves her estate to her three sons equally.  But prior to her death, she conveys her farm to one of the sons.  The son being the child who is taking care of her and the other two sons in the situation were actually not very much part of her life and didn’t provide any care for her and where the applicant’s position was that they were estranged from her.

Paul Trudelle: Right.  There was a bit of an issue is to how close these other children were and that usually is the case and there was evidence heard from both sides as to how close they were.  But I think for the purposes of discussion today, we can just presume that the one child was significantly closer to the mother than the other two.

Diane Vieira: So, just a bit of a background on what happened here was a few years prior to her death, the main asset of the estate was a farm.  And the mother gave the farm to the applicant.  And there was testimony as to the capacity of the mother to make this gift with respect, because the other two sons challenged her…challenged this gift and said it was given to the other son under undue influence.

Paul Trudelle: That’s right and there was actually some fairly extensive evidence from the solicitor who acted on the transaction and also from her family doctor as to her capacity and both the solicitor and her two family doctors felt that while she was elderly and frail, she did have capacity and she understood what she was doing when she gifted this farm to her one son.  Then the mother passed away and the one son brought an application to get a declaration that the gift was valid.  The other two children brought a cross-application to say that the gift was not valid and was a result of undue influence.

Diane Vieira: In the situation the mother, at the time of the gift, was ninety-three years old and a dependant of the applicant.

Paul Trudelle: I think that is quite important that evidence with respect to dependency. The mother was living with the son, she was quite adamant that she didn’t want to be moved into a nursing home and by living with the one son, she was able to avoid having to move into a nursing home, although she was found to be quite, you know, vulnerable and dependant and relied on that one son for essentially all of her care

Diane Vieira: The judge in this case noted that even though the mother likely did have capacity, she was very vulnerable at the time the gift was made in terms of she was just coming out of the hospital and didn’t want to go to a nursing home.  So that point came out in determining whether or not this was under undue influence

Paul Trudelle: That’s right and I think that is very important.  In looking at undue influence, we see undue influence with respect to gifts.  We also see it with respect to Wills that are often said to be the result of undue influence.  And the case law often states that undue influence is beyond influence, it must be undue and it must amount to arm twisting or coercion in the normal course.  If you are making an allegation of undue influence, however, that is quite different where there’s a relationship of dependency or vulnerability.

Diane Vieira: In this case, the judge did see a relationship of dependency and suggested that it was up to the applicant to rebut the presumption of undue influence.

Paul Trudelle: That’s right, and it’s because of that presumption that the onus shifts onto the receiver of the gift.  Presumption of undue influence doesn’t apply in every relationship, although it does apply in certain relationships such as a solicitor and client relationship, parent-child,  guardian and ward, and we are seeing it more and more in other relationships of dependency such as an elderly parent and an adult child.  And in this case, the judge found that there was a presumption of undue influence and in his analysis went through the cases in which you would find a presumption of undue influence and what follows from that. 

I think after finding a relationship of dependency, the Court will then, as set out by the judge in the  Bale and Bale decision and referring to the Goodman Estate and Geffin decision from 1991, a Supreme Court of Canada case.  After there is a finding of a relationship of dependency that gives rise to a presumption of undue influence, the Court will then look at the nature of the transaction.  If it is a commercial transaction or a sale or other transfer, they will look at whether there was consideration or not.  With respect to other transactions like this one where there is a gift, its not that easy to do that, so what the Court will then look at is the onus moving on to the defendant to rebut that presumption.

Diane Vieira: And in this case, the applicant, as part of his evidence, was he offered medical testimony in terms of capacity and her disappointment with her other sons.  However the judge rejects this in a way.  What he expected was evidence that this was a transfer made out of gratitude and that was something that neither the lawyer or the applicant spoke of, the reason for this transfer.  And he found that suggested undue influence.

Paul Trudelle: Right and I think they said that, the Court there said that in order to rebut the presumption, it would have to be a result of the mother’s full, free and informed thought.  She was extremely vulnerable and dependent upon the son for her care and that vulnerability tainted the transaction, so to speak.  And the Court concluded that the decision to convey the farm was the result of undue influence by reason of her dependency.

Diane Vieira: In this situation, do you think it would have made a difference if the mother had independent legal advice?

Paul Trudelle: I think that would help and I think if there was independent legal advice we would have perhaps some evidence with respect to the transaction and the reason for it.  Here there was legal…a lawyer was involved and documented the transaction but there was some question as to how the mother got to see the solicitor and as he stated, there was an absence of any notes with respect to the reason for the transaction, it seems.  So on the issue of undue influence and vulnerability as discussed there was a finding that the gift was made as a result of this undue influence, presumption of undue influence because of the dependency the elderly mother. The Court found that while there was a great deal of affection between the mother and the son and it didn’t say that there was anything improper about the relationship, you know, the Court felt that there wasn’t…the affection that they shared for each other wasn’t sufficient to validate the transfer of the farm to the son.  I think it is important to note there that the farm was essentially all of the estate and would leave the other children with nothing.

Diane Vieira: Another issue that was decided was in terms of the accounting that the applicant provided.  He did take a number…some money from his mother’s bank account while he was caring for her.  He used some of this money to purchase a truck.  He testified the truck was being used to transport the mother back and forth from medical appointments and what not.  In this case, the judge found that this truck was a gift.

Paul Trudelle: Right and I think just because it was a much smaller amount relative to the value of the estate and because of the findings of capacity, the elderly mother was said to have known about this gift and approved of it and consented to it.  I think because it wasn’t all of the estate, the Court was prepared to let that gift stand, whereas a gift of the entire estate was seen as too much.

Diane Vieira: And the judge also found that the respondents, the other two brothers, failed to prove their claim for a loss of occupation rent.  That was going back to the request that the other brother pay them the rent for the farm they had been using.

Paul Trudelle: Right and I think again the Court wanted to be seen as, you know, being fair and balancing that.  They didn’t allow the farm to go to the son but they weren’t going to turn around and charge him occupancy rent for staying in the property during that period because of the assistance he was providing to his mother.

Diane Vieira: So in the end, the judge ordered that the sale of the farm be set aside under the grounds of undue influence, while dismissing the respondents’ other requests for damages and occupation rent.

Paul Trudelle: Right and I think that is a good and useful discussion of that case.  It’s the type of case, as we said, that we see often and I think all of the circumstances surrounding any gift of property by a deceased prior to death need to be looked at.  It’s not just enough to say, well, what’s in the estate and how is it divided now? You’ve got to step back a little bit and see what was in the estate and where did it go, if it was a gift during the lifetime of the testator, was it a gift made while she had capacity, was it a gift that may be tainted by undue influence as a result of his or her dependency.

Diane Vieira: Do you think it would have made a difference if the mother in this case, since she did have capacity, made a new Will?

Paul Trudelle: I think it might have. I think again the same analysis that the Court went into with respect to undue influence with respect to the gift might be used with respect to an allegation of undue influence regarding the Will, if, rather than gifting the farm, she simply made a Will leaving the entire farm to her son, the same arguments would have been made, I expect.

Diane Vieira: I think that brings us to an end of this week’s discussion. Thanks for listening and thanks for joining me today, Paul.  

Paul Trudelle: Well, thank you very much. Diane, and we’ll speak to you again soon.

Diane Vieira: And we look forward to hearing from our listeners.  You can send us an email at hull.lawyers@gmail.com or just pick up the phone and leave us a message or comment at 206-305-6636.  Be sure to visit our blog at estatelaw.hullandhull.com where you will find even more information and discussion on today’s practice of estate law. And you can find the case citation for Bale vs Bale on our website. We hope you enjoyed the show. I am Diane Vieira.

Paul Trudelle: I am Paul Trudelle.  And until next week, we’ll talk to you then.

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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In this week's episode of Hull on Estates, David Smith and Diane A. Vieira discuss the issues surrounding spousal exclusion from the will of the deceased and how to challenge this exclusion.

Click "Continue Reading" to read the transcribed version of this podcast.

Spousal Exclusion Issues - Hull on Estates Podcast #74

Posted on August 28^th, 2007 by Hull & Hull LLP

David Smith: Hello and welcome to Hull on Estates. You’re listening to Episode #74 in our continuing podcast series.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.  Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills. Now, here are today’s hosts.

David Smith: Good afternoon Diane.

Diane Vieira: Good afternoon Dave.

David Smith: Diane, today we decided that we’re going to talk about the issues that generally arise when the surviving spouse of the deceased walks into your office and shows you a Will where she’s not a beneficiary or he’s not a beneficiary. And asks you what you can do for him or her. And I understand that there’s a fact situation that we can relate to our listeners that might help illustrate this example, and I wonder if you could lead us into that.

Diane Vieira: The fact situation is we have someone who’s in a short marriage, less than two years, and they’re away for a short period of time on a small vacation. And during that time, her spouse makes a Will that completely cuts her off or leaves her a very small part of his estate. She doesn’t find out about this until after the Will has been probated and now she’s left in a situation of not knowing what her rights are or what’s she’s entitled to.

David Smith: I guess the first thing that jumps to mind, Diane, when you present the fact situation is a Will challenge. And I think if we look at the Will challenge first of all, does this fact situation, just as you’ve described it, give rise to any basis upon which to challenge the validity of that Will?

Diane Vieira: There are a few red flags that come up immediately. The Will was drafted when she was out of the country for a short period of time.  Other things to consider was the lawyer who drafted the Will was introduced to her spouse by a third party. There’s also some issues regarding the capacity of her spouse to make the Will or to transfer his assets at the time.

David Smith: In this situation where she’s out of the jurisdiction and the Will is made in her absence, what does that suggest in terms of creating a legal argument to challenge this Will?

Diane Vieira: The first thing that immediately comes to mind is undue influence by third parties and in this situation, it was other family members. They waited specifically for a period of time where her spouse would be isolated and she would not know about this Will until after.

David Smith: And earlier, Diane, you mentioned that she was, or that the deceased was taken to a new lawyer by a third party. Do we know in our fact situation as presented whether the third party who took the deceased to a lawyer was in fact one of the family members who benefits under this new Will?

Diane Vieira: In this case it was.  It was a family lawyer known to the other family members and who had done work for the other family members. And the lawyer who drafted the Will actually spoke to the other family members prior to ever speaking to her spouse.

David Smith: You know that just strikes me as just a fantastic set of circumstances. If I’m the lawyer wanting to challenge the Will, you’re telling me I’ve got a situation where the wife is out of the jurisdiction.  The theory will be that the family members swoop in, take the Dad or uncle or whoever the person is in terms of their relationship, to a lawyer of their choosing with whom they have a relationship. It’s kinda surprising, isn’t it, that that lawyer would even agree to make the Will in those circumstances?

Diane Vieira: It is, and it appears that it could be even the third parties in this circumstance who paid to have the Will drafted and the costs associated with that.

David Smith: Wow, I mean that’s just, that’s just something that, for a practicing lawyer, you got to think that the advice, common sense and any good advice would dictate that you just simply would not make a Will in those circumstances.  Or refer the deceased to someone else. So it sure sounds to me like there’s a good basis for a Will challenge there. Of course, if we’re alleging undue influence, the burden of proof is on the surviving spouse challenging the Will to prove undue influence, isn’t it?

Diane Vieira: Yes it is and another thing to consider is testamentary capacity. 

David Smith: And what are we looking for in terms of testamentary capacity?

Diane Vieira: Whether or not the testator was capable of drafting that Will or making his wishes known. 

David Smith: And, of course, we know from the case law, Banks and Goodfellow being the leading case, that what you need to demonstrate is that the deceased knew who he had obligations to, knew the value of his assets, and had a clear plan and a clear understanding of what it was he wanted to do. Now it’s quite possible he may have wanted to cut his wife out of his Will.  It doesn’t necessarily mean that he was capable if he didn’t know the value of his assets, didn’t understand that he had obligations.  It’s not enough simply to have the intention to want to deprive someone of their entitlements. I think now though what I’d like to do, Diane, is why don’t we segway into a different fact situation or same fact situation but different argument which is, let’s assume that we’ve got no basis for a Will challenge. What can we do to help such a person if she were to walk into our office in terms of advancing her entitlements when we don’t have a good case to make a Will challenge?

Diane Vieira: One thing she can, she or he can decide is to not take under the Will and make an equalization claim under the Family Law Act.

David Smith: Alright and in this case, if there’s no entitlement under the Will whatsoever, clearly electing under the Family Law Act would probably be the prudent thing to do.

Diane Vieira: It appears so.

David Smith: Right.  Certainly and, you know, we’ve talked a little bit about Family Law Act elections. The difficulty with Family Law Act elections is that they can be very complicated in terms of preparing the net family property statements and given a choice, what else or is there anything else, Diane, that can be pursued apart from a Family Law Act claim?

Diane Vieira: You might also consider a dependency claim under the Succession Law Reform Act under Part 5.

David Smith: If we want to make a claim for support under the Succession Law Reform Act on behalf of a spouse, can you give me a little bit of an explanation as to what that entails?

Diane Vieira: The spouse will have to look under the definition of dependent in the Act; if they do fall under that definition, they can make a claim.

David Smith: Let’s talk about that just briefly. How is a spouse defined under the Act?   I mean, do you have to be married or can you be a common-law spouse?

Diane Vieira: You can be a common-law spouse as long as you’ve lived together continuously for three years or if you have a dependent child together.

David Smith: Alright and so, I mean, in our fact situation, we’ve said that this was a situation where the deceased was married and I take it, it’s probably obvious that someone who’s married, that meets the definition of spouse as well.

Diane Vieira: Yes.

David Smith: And in terms of dependency, what does it mean to be a dependent?

Diane Vieira: First and foremost, you consider if the dependent is in need of support. There’s also, under Cummings and Cummings, a moral obligation, if that first part can’t be met.

David Smith: Yeah and I think, Diane, what we want to look at there, what we consider is, did the deceased have moral obligations to the spouse which give rise to a support claim? And can that exist independently of need? And, you know, that’s a whole topic for a separate podcast. But I think certainly we want to consider the relevant section of the statute.  And the relevant section of the statute for this purpose is Section 62 of the Succession Law Reform Act. And Diane, I wonder if you can just sort of touch on some of the issues that the court considers under that Section in determining the amount of support.

Diane Vieira: Some things the court will consider are the current assets of the person making the claim. The assets they’re likely to have in the future, the capacity to contribute to their own support, the person making the claims age, physical and mental health.  They will also look at the standard of living, what they were accustomed to when they lived with their spouse and the lifestyle they were accustomed to.

David Smith: And let me interrupt there, Diane.  I think that’s a really important point because if someone comes to your office as a spouse and says my spouse has died, I’m cut off, I’m now in a new relationship.  But my new spouse is not making anything close to the relationship I had with my previous spouse.  And yes, I’m able to get by, but no, I’m not going on vacations and out to dinner and what have you. Isn’t it fair to say that that person could still advance a support claim even though it’s as if they’re missing wants rather than needs.

Diane Vieira: I think that’s fair.  In their Affidavit evidence, they should demonstrate how the lifestyle has changed from what they were previously accustomed to, to what they’re accustomed to now.

David Smith: And then you touched briefly on the Cummings case, Diane, and you know, that’s, of course, engendered a whole lot of debate within the Estates Bar. A decision of the Court of Appeal saying that the court must consider if there’s any moral obligation owing by a spouse, a deceased spouse, to a surviving spouse which gives rise to a determination of support.  And really, the interesting language in that case is when the court says that a surviving spouse is entitled to a fair share of the estate.  And it’s going to take a lot of case law to determine exactly what that means. So I think, Diane, we’ll wrap things up here at this juncture but perhaps, you know, in terms of summarizing, perhaps you can just, for the listeners, summarize what we’ve talked about in very general terms, in terms of claims and entitlements that a surviving spouse can make.

Diane Vieira: Sure, if someone approaches you, a spouse that has been cut off from a Will or did not receive their fair entitlement, some things to consider would be a Will challenge if those circumstances exist. If that is not the case, they can try to make an equalization claim under the Family Law Act and not take under the Will. Or a third option is to make a dependency claim under the SLR Act.

David Smith: And in terms of preparing material and going to court with respect to this, what kind of information gathering should you do if you’re going to make a support claim?

Diane Vieira: I would gather evidence of the lifestyle that you were accustomed to before, the assets of the estate currently and I would refer to Section 62, subsection 1 of the SLR Act under the different subheadings there and see if you have evidence to support your claim.

David Smith: Right and then it’s that evidence which the court will consider, won’t it, in evaluating the claim? So thanks very much.  I enjoyed podcasting with you, Diane, and we’ll look forward to doing this again soon.

Diane Vieira: Thank you.  Bye.

David Smith: Bye-bye.

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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Lack of testamentary capacity and undue influence are usually difficult to prove. However, too many clients are willing to advance such claims on the basis of a weak evidentiary record. A recent decision from the Alberta Court of Appeal, Nicholson v. Kurtz sounds a note of caution.
Two sisters appealed a trial decision setting aside their father’s Will on the basis of lack of testamentary capacity and undue influence.

The father’s previous Will had divided the residue of his estate equally between his three children. However, in 1998, the father, who was 92 at the time, retained a lawyer to prepare a new Will (“1998 Will”). The lawyer asked his client a series of questions. Some of the responses were inaccurate, but the lawyer ultimately concluded his client had capacity. The 1998 Will specifically stated that the father wanted to exclude his son “because I believe if he receives any money he will use it for liquor”. The son had been convicted of drinking and driving offences in 1987 and 1992.

The trial judge concluded that the father lacked capacity and was unduly influenced by his two daughters and set aside the 1998 Will. The Alberta Court of Appeal disagreed and reversed the trial judge’s decision. The 1998 Will was declared valid.

According to the Appeal Court, there was no medical evidence suggesting the testator lacked capacity and there was no direct evidence that the daughters influenced their father’s decision to exclude their brother. Moreover, the father’s lawyer specifically questioned his client to gauge his capacity during their first two meetings. Their third meeting lasted two and a half hours and the lawyer had no reason to conclude that his client’s capacity had changed. After reading the 1998 Will to his client, the lawyer was satisfied that it expressed his client’s wishes.

According to the Appeal Court, the finding of undue influence could also not be sustained on the record. The father’s reason for excluding his son was expressly stated in the 1998 Will. There was also clear evidence that the father’s wish to exclude his son arose several months before the 1998 Will was signed. The Appeal Court held that the trial judge simply failed to give any weight to this evidence. The trial judge also failed to give weight to the lawyer’s evidence that he discussed the possibility of the daughters’ influence with his client who expressly denied such influence. Mise en garde!!

Justin de Vries

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LISTEN HERE

READ THE TRANSCRIBED PODCAST HERE

During this podcast, Ian finished speaking about knowledge and approval, and talked about mistakes in that context as well as reviewing the concept of undue influence.

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LISTEN HERE

READ THE TRANSCRIBED PODCAST HERE

During this podcast on suspicious circumstances, we discussed the following:

(i) the general concept of "suspicious circumstances" and what amounts to such circumstances;

(ii) the onus of proof on a propounder of a will and an alleger of undue influence;

(iii) the meaning of the phrases "the true will of the deceased", and the "righteousness of the transaction";

(iv) the rule in Barry v. Butlin; and

(v) the Supreme Court of Canada's decision in Vout v. Hay. --------

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LISTEN HERE

READ THE TRANSCRIBED PODCAST HERE

During our podcast, we discussed way to "bullet-proof" a will:

(i) ensuring you have proof of your mental capacity to sign a will;

(ii) protecting against claims of undue influence; and

(iii) ensuring your will is properly executed. --------