Author: 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)

29 Nov

Resealing of Foreign Orders Appointing Guardians

David M Smith Estate & Trust, Estate Planning, Trustees, Uncategorized, Wills Tags: , , , , 0 Comments

This blog was written in collaboration with, and with thanks to Yasmin Vinograd of Merovitz Potechin LLP .

In some cases, an incapable person residing outside of Canada has assets in Canada. Can a guardian appointed outside of Canada have access to the incapable’s Canadian assets? By extension, would a Guardianship Order made outside of Canada be recognized in Ontario?

In Ontario, this scenario is dealt with in the Substitute Decisions Act, 1992 (“SDA”). Section 86 of the SDA provides a mechanism by which orders made by a court outside of Ontario to appoint a guardian of property or of the person may be recognized or “resealed” in Ontario. Subsections of s. 86 specify that:

s.86(1): a foreign order is “an order made by a court outside Ontario that appoints, for a person who is sixteen years of age or older, a person having duties comparable to those of a guardian of property or guardian of the person.”

s.86(2): “Any person may apply to the court for an order resealing a foreign order that was made in a province or territory of Canada or in a prescribed jurisdiction.”

s.86(3): an applicant seeking to have the court reseal the foreign order is required to file a copy of the foreign order, along with a certificate signed by registrar, clerk or other officer of the foreign court stating that the order is unrevoked and is of full effect.

The effect of these provisions is that a guardianship order made by a foreign court will be recognized and enforceable in Ontario.

Sounds easy enough, doesn’t it? Unfortunately, it is not.

I had previously blogged about the possibility of resealing guardianship orders made in other provinces and territories. The issue arises when trying to reseal a guardianship order made outside of Canada. The problem is that Ontario has yet to prescribe any other country as a “prescribed jurisdiction” for the purpose of section 86(2). This begs the question: can the court reseal a foreign guardianship in the absence of the list of prescribed jurisdictions?

When faced with this exact issue in Cariello v Perrella, 2013 ONSC 7605, the court refused to apply section 86 to reseal a guardianship order made in Italy. Justice Mesbur stated:

It seems to me that unless and until Ontario creates a list of “prescribed jurisdictions” there is simply no legislative basis on which I can apply s. 86. This is not a case where the statute inadvertently fails to deal with an issue. Here, the province has simply failed to take the regulatory steps necessary to create a list of prescribed jurisdictions to which s.86 would apply. I have no idea of the province’s intentions in that regard. I fail to see how I can simply assume Ontario would designate Italy as a prescribed jurisdiction when it finally creates a list of prescribed jurisdictions under the SDA. I have no basis to conclude that Ontario has any intention of having s.86 apply to any jurisdiction other than another Canadian province or territory. Section 86 cannot apply.

In light of the Cariello decision, it appears that section 86 and the mechanism it provides cannot be used to reseal an order made by a jurisdiction outside of Canada. What, then, is a guardian to do if the incapable has assets in Canada that need to be accessed?

There are two ways in which this could be addressed.

The first is to bring an application to have the guardianship order recognized as a non-monetary order, pursuant to the Supreme Court of Canada’s decisions of Morguard Investments v De Savoye, [1990] 3 SCR 1077 (SCC), Beals v Saldanha, 2003 SCC 72, and Pro Swing Inc v ELTA Golf Inc, 2006 SCC 52. As of now, there is no decision that applied the SCC’s test of real and substantial connection in the context of a guardianship order. It remains to be seen whether an Ontario court would be open to recognizing a guardianship order on that basis and what the Public Guardian and Trustee’s position will be on such an application.

The second option is to commence a new guardianship application in Ontario. The evidence of incapacity in the foreign jurisdiction may be useful in such an application, but it would probably need to be updated to reflect the current status of the incapable and to demonstrate his or her incapacity. The “new” guardianship application will need to conform to Ontario’s requirements under the SDA, including the filing of a Management and/or Guardianship Plan(s), service on required persons, and naming of specific respondents in the notice of application.

Thanks for reading!
David M. Smith & Yasmin M. Vinograd

05 Dec

Fraudulent Conveyance and The Estate Planning Defence

David M Smith Estate & Trust, Estate Planning, Executors and Trustees, General Interest, In the News, Litigation, Public Policy Tags: , , , , 0 Comments

We have previously blogged on Fraudulent Conveyance.  This cause of action can, on occasion, be met with a defence that the conveyance of property was in furtherance of an estate plan and, therefore, without fraudulent intent.  As with most cases, the specific facts of the case will determine whether the defence can succeed.

In Bank of Montreal v. Real Marleau, the Saskatchewan Court of Queen’s Bench was prepared to entertain the notion that the defendant’s assertion might actually be true, but nonetheless, determined that the conveyance ought to be aside.

The estate planning defence was considered and again rejected in Re Whetstone, 1984 CarswellOnt 157.  In this case, the estate planning defence relied on evidence from the family’s solicitor.  The court noted, at paragraph 28,

“In the circumstances, it is not material that the family’s solicitor recommended the conveyance based on general principles and not on actual knowledge of the company’s financial position; the intent we are concerned with is not that of the family’s solicitor, but of [the defendant].”

Lastly, in an unreported decision of the Ontario Superior Court of Justice, RBC v. Nicolau, the defence was considered but not accepted:

“In this case, Mr. Nicolau testified that the transfer was for estate planning purposes.  He submits that there was therefore no fraudulent intent.

RBC referred the Court to jurisprudence in which the estate planning defence was raised.  I agree with the submissions of RBC that this defence must fail.  While the transfer may have also satisfied Mr. Nicolau’s estate planning goals, this explanation is not, in my view, sufficient to displace the inference of fraudulent intent given the timing of this estate planning and the presence of the badges of fraud.  Accordingly, I find that the April 16, 2012 conveyance of 1 Lister Drive to Gabriel Nicolau was fraudulent, and the provisions of the Act are therefore applicable.”

Thanks for reading,

David Morgan Smith

28 Nov

Supreme Court Advocacy

David M Smith Continuing Legal Education, Estate & Trust, Estate Planning, General Interest, Litigation, Wills Tags: , , , , , 0 Comments

I was able to attend a recent CPD program by the Advocate’s Society titled “Supreme Court of Canada Advocacy.”

A powerful keynote address was presented by the Honourable Madam Justice Suzanne Côté of the Supreme Court of Canada. Justice Côté’s remarks included an inside look at what lies behind the Supreme Court of Canada’s “big mahogany doors,” as she so eloquently phrased it. The Honourable Marshall Rothstein, Q.C., then spoke about the unwritten rules to getting leave to appeal.

Debate was had over the need for a script. Most panelists supported coming prepared with a script but cautioned against being married to it. When it comes to answering questions, advocates should see this as an opportunity to get off their script and engage in a dialogue with the bench. As Justice Côté points out, an oral argument is not supposed to be a monolog.

After discussion on the power of oral advocacy, the discussion shifted to the importance of the written argument. Although the factum is a critical component of any appeal, parties are under no obligation to reach the maximum page length. It was suggested that some of the most successful arguments can be made in 25 pages or less.

In addition to the factum, the Condensed Book can be a vital tool for advocates appearing before the Supreme Court. Under the Supreme Court rules, the Condensed Book may contain a two page outline of the oral argument. Preparing the this two page outlines forces advocates to truly narrow down their key points.

The panelists also spoke about the important role interveners can have in a case. Within the confines of a 10 page factum, and 5 minutes of oral argument, an intervenor can illustrate why a matter is of public interest, and provide supplemental answers to questions posed to the parties by the Justices. Interveners can play a critical role, and should not be overlooked.

Finally, the panel highlighted the power of a moot. Practice moots are one of the most valuable tools an advocate can use to prepare their case. The Supreme Court Advocacy Institute offers moot sessions where participants have the opportunity to moot their case before a panel of experienced litigators and retired justices.

Thanks for reading,

David Morgan Smith

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