Author: David M Smith

27 Aug

Charitable Pledges and Contractual Pitfalls

David M Smith Estate Planning Tags: , , 0 Comments

Planning one’s estate raises the question of what you want your legacy to be. It is a highly personal decision that does not have a correct answer. For some individuals, this can mean ensuring causes that are close and dear to their heart receive support from their estate. To this end, donations and charitable gifting are a common practice in wills.

In planning such gifts, it is important to ensure that the gifts are valid and enforceable. The testator’s best intentions can be undermined by the failure to comply with legal technicalities.

Testators may make gifts bearing certain conditions, such as having something named after them. Where these conditions are important to the testator, they should: (i) be communicated to the recipient of the gift to ensure they are willing and able to comply with the conditions, and (ii) set them out explicitly in the will.

The case of Brantford General Hospital Foundation v. Marquis Estate is an excellent example where a gift, with good intentions, ran afoul of contract law.

The testatrix and her deceased husband had been long time and generous donors to the Brantford General Hospital Foundation.

The testatrix had pledged, prior to her death, to donate $1,000,000.00  over a five year period. As part of this pledge, a facility was to be named after her family. However, she passed away shortly after the first instalment was paid, leaving $800,000.00 of the pledge unpaid. Her estate refused to pay out the remainder of the pledged funds and the Hospital initiated litigation.

Justice Milanetti ruled against the plaintiff, stating that a promise to subscribe to a charity is not enforceable in the absence of consideration. The promise to name a facility after the family was considered ancillary to the donation of $1,000,000.00  and not of vital importance, and as such, invalid as consideration.

Central to this determination, was that the idea for naming the facility originated from the Plaintiff and was subject to board approval.  The pledge was deemed unenforceable.

Where a testator has ongoing chartable intentions that they wish honored by their estate, it would be wise to review  the enforceability of these plans after their passing.

Thank you for reading and have a great day!

David M. Smith and Raphael Leitz

24 Mar

Virtual Commissioning of Affidavits Now Permissible Subject to Appropriate Safeguards

David M Smith In the News Tags: , , , 0 Comments

The Law Society of Ontario (LSO) has issued a COVID-19 Response which is required reading for all members of the Bar.  As we have noted in many of our blogs posted since the onset of the pandemic, the delivery of legal services requires us all to adopt a new normal.  The LSO has provided guidance in its Response regarding the delivery of legal services remotely that would never previously have been considered other than in person.  As the LSO notes: “This is an unprecedented situation and some flexibility may be required to ensure continuity of essential legal services without undue risk to public health.”

Commissioning of affidavits has always been one such task performed in person.  The LSO has provided guidance on an appropriate departure from commissioning in the physical presence of the deponent.  It is worth noting that s. 9 of the Commissioner for Talking Affidavits Act (“the Act”) only speaks of the commissioner having to be in the presence of the deponent (the requirement for “physical” presence being a best practice but not an essential element of the statute).

Accordingly until further notice and as a result of COVID-19:

  • The LSO will interpret the requirement in section 9 of the Act that “every oath and declaration shall be taken by the deponent in the presence of the commissioner or notary public” as not requiring the lawyer or paralegal to be in the physical presence of the client.
  • Rather, alternative mean of commissioning such as commissioning via video conference will be permitted subject to management of risks associated with this relaxed practice including but not limited to: fraud, identity theft, undue influence, and capacity.

Virtual commissioning is a temporary measure that casts a burden on the lawyer to make extra enquires into the existence of one or more of these risks. The LSO sees the current circumstances as a regrettable opportunity for persons to attempt to commit fraud or other illegal acts.  Lawyers and paralegals must accordingly “be alert to red flags in order to ensure that they are not assisting, or being reckless in respect of any illegal activity.”  To protect against being an unwitting accomplice see the Federation of Law Societies’ Risk Advisories for the Legal Profession.

Thanks for reading.

David Morgan Smith

23 Mar

Court Filings: Do Not Attend Court Houses Except on Urgent Matters

David M Smith In the News Tags: , 0 Comments

The Ministry of the Attorney General (MAG) released a Notice this morning further elaborating on the declaration of a provincial emergency in relation to the 2019 novel coronavirus (COVID-19) and ,more particularly, its impact upon the courts.

The Notice states: “ To further protect the health and safety of all court users and to help contain the spread of COVID-19 , we ask members of the legal profession and members of the public NOT to attend court houses in person at this time, unless they are required to be in court for a hearing or to make an urgent filing in a civil, criminal or family matter.”

Modifications to the filing process are detailed in the Small Claims Court online filing service or the Civil Claims Online Portal for Superior Court of Justice civil matters.

Notwithstanding the foregoing, the court continues to accept non-urgent matters by regular mail.

David M. Smith

09 Aug

A Special Needs Child Requires Special Planning

David M Smith Estate & Trust, Estate Litigation, Estate Planning, Health / Medical, Uncategorized Tags: , , 0 Comments

Oakland Rose is no ordinary child. He is special in more ways than one.

Oakland was diagnosed with Autism at the age of 2 years old and had no verbal communication until the age of 5.

Oakland is currently 20 years old. Although his verbal communication has drastically improved, he is not able to engage in abstract thinking. Oakland’s responses are often rehearsed and premeditated. He is not able to take public transportation alone. Although Oakland will graduate from a specialized high school program, he will never attend university. Oakland has the capacity of a young child.

Oakland will be dependent on his parents for the rest of his life.

Approximately 1 in 66 Canadian children were diagnosed with Autism Spectrum Disorder in 2018. Autism is just one of many developmental disorders that children are diagnosed with each year.

Families with children with special needs are in a unique position when it comes to estate planning. Planning for one’s death and ensuring that your loved ones are supported is an overwhelming task for the average person. For parents with special needs children, the task becomes even more burdensome.

According to one author, a child with special needs includes any child who, at birth or as a result of an illness or injury, is physically, mentally or emotionally disabled. While some people with special needs have successful careers, many will be dependent on their parents for the rest of their lives. Not only will the person be physically and emotionally dependent on their parent, but they will also be financially dependent. As a result, parents of a special needs child face exceptional estate planning challenges.

The higher functioning a special needs person is, the more likely he/she will require assistance from a parent’s estate. This is because government funding typically only provides for basic necessities.

Estate planners must determine whether their clients have children or other immediate family members with special needs. They must also ascertain that individual’s level of functioning. Specialized planning will be required for these families.

A parent of a special needs child might wish to consider:

i) Providing financial compensation for future caregivers in their will
ii) Setting up a special needs trust to ensure their child is not disqualified from government benefits – this trust will supplement but not replace the government benefits
iii) Creating a life care plan for their child which includes educational, living and career planning
iv) Writing a letter of intent summarizing the child’s habits, likes and dislikes
v) Naming a guardian if your child is under the age of 18

It is important to remember that children with disabilities have evolving needs. Thus, parents should create an estate plan that allows for flexibility. The plan should be reassessed and updated regularly to ensure it is in line with the child’s current needs.

Although creating a will and considering your own mortality is a daunting experience, it is far better than the alternative of leaving your child without adequate support!

Thanks for reading!
David Morgan Smith and Tori Joseph

15 Jul

Where There’s a Will to Contract, There’s a Contract to Will

David M Smith Beneficiary Designations, Estate & Trust, Estate Litigation, Estate Planning, Mutual Wills, Support After Death, Trustees, Uncategorized, Wills 0 Comments

In researching common errors in will drafting, we recently stumbled (as one often does through research) on the following question:

In the case of mutual wills, what happens in the event of remarriage?

Mutual wills operate as a contract. Simply put, the terms of the contract are that absent any revocation during the joint lives of the parties, the survivor will not revoke thereafter. The conundrum then becomes: If a will by its very nature is revocable, and wills are automatically revoked by marriage, what then happens to the agreement in the event of a second or third marriage?

The question at hand is best described with an example:

Jane has two children from a prior marriage, as does John. John and Jane get married and draft wills. The wills of Jane and John are identical except for some names and dates and include an agreement that says in part, that if John dies, all assets will be transferred to Jane absolutely, and when Jane dies all assets shall be divided equally among their four children. When John dies, his assets vest in Jane, and her will is now locked such that changing it would frustrate the terms of her agreement with her now deceased husband. But what if then Jane meets and marries Oscar? If all prior wills are null. . . Now what?

The courts have wrestled with the concept of mutual wills since the death of Lord Horatio Walpole in 1797. In his will of 1756, a nephew of the English author and statesman, George Earl of Walpole, demonstrated intent to enter in to a “compact” with his late uncle for the disposition of his and his uncle’s estates to the benefit of their respective families. The question that arose then, as it still does today, is upon what terms the two parties were transacting, and how should they be bound? Or, to quote a commentary from the turn, “How far in law and equity was each at liberty to repent, and to recall his share of the testamentary exchanges between them?”

204 years later, the question continued to be addressed in a seminal decision of the Ontario Superior Court of Justice. In 2001’s Edell v. Sitzer, Cullity J, was tasked with unpacking a bitter family dispute where an alleged agreement not to depart from equal division of assets was at stake. The question before the court then (in part) was, do the facts give rise to a constructive trust? Justice Cullity set out the test for mutual wills thusly:

  1. The mutual wills were made pursuant to a definitive agreement or contact not only to make such wills, but that the survivor shall not revoke.
  2. Such an agreement is found with certainty and preciseness.
  3. The survivor has taken advantage of the provisions in the mutual will.

If the test is satisfied, the court can impose a constructive trust. Rooted in the law of equity, an implied or constructive trust aims to remedy any unjust enrichment by one party of a contract (a surviving spouse, for example) over another.

But what consistently seems to trouble the conscience of the court, is the idea of “contracting-away” one’s testamentary freedom. There is no restriction for a will made in defiance of such an agreement, but in equity, the court is almost bound to treat mutual wills as a single testamentary instrument. This was the problem in the 2016 ONSC case of Rammage v. Estate of Roussel: Alf and Ruth Roussel had made mutual wills 13 years prior to Alf’s death in February of 2009, agreeing in part to divide their estate equally among their four children (both Ruth and Alf went into the marriage with 2 children each). One year after Alf’s death, Ruth made a new will, disinherited Alf’s children, and left everything to her own two kids. Upon the death of Ruth, the litigation began.

The court in Rammage determined that the wills of the deceased testators amounted to mutual wills, imposed a constructive trust, and divided the assets according to the terms of the first wills of Ruth and Alf.  If the court is satisfied that the wills are mutual, any property disposed of in a subsequent testamentary document is subject to a constructive trust in favour of the named legatees, and the subsequent will fails.

Returning to the question of remarriage, one could expect the need for administration and ultimately judicial intervention, should all the beneficiaries not consent to the changes in subsequent wills. Like many decisions that seem like “a good one at the time,” mutual wills should be considered very carefully and with the advice of independent counsel. A decision to enter into a contract that prohibits one from ever changing their last will and testament must be considered from all sides. To quote the late Horatio Walpole, the 4th Earl of Orford: “The wisest prophets make sure of the event first.

Thanks for reading!

David M. Smith & Daniel Enright (Summer Law Student)

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