Author: Ian Hull
Blended families – a family where some or all of the children in the family are not the natural or adopted children of both spouses – are becoming increasingly common. While most individuals are attuned to the emotional difficulties that could arise when blending two families, many might not consider the estate implications that arise upon blending. It is prudent to revise an estate plan upon blending families in order to ensure any children from a previous marriage are not inadvertently disinherited.
While many married individuals might hold assets jointly with their partner so as to minimize tax consequences upon death, this might not be wise when estate planning for a blended family. Additionally, implementing a “standard” Will, whereby upon death of the first spouse, all assets are left to the surviving spouse, could result in an unintended disinheritance of children from a previous marriage. For example, if the surviving spouse dies intestate, then their assets would pass to only their children, not their step-children.
One way to avoid the aforementioned situation would be to create a testamentary spousal trust. Under a testamentary spousal trust, a testator can provide for a spouse during their lifetime, while ensuring that the capital of the assets are preserved for children from a prior marriage or any other beneficiary the testator chooses to benefit.
Consider the following scenario:
Jack and Jane, two divorcees, are planning to get married. Both have children from their previous marriages. Jack wants to ensure that, in the case he dies first, Jane will benefit from the income generated from his assets, but that the capital will ultimately go to his children from his first marriage. Jane wants to ensure a similar outcome if she dies first.
In order to ensure that Jane is financially supported during the remainder of her life, Jack could set up a testamentary spousal trust in which Jane is paid all income from his capital assets. Generally, the trustee is given discretion to encroach on capital should he or she feel it is necessary. On Jane’s passing, the trustee would distribute Jack’s assets in accordance with the trust provisions (likely to his children from his first marriage).
Testamentary spousal trusts are not appropriate in all situations, so it is important that spouses in blended families carefully consider their estate planning options with an experienced lawyer and financial advisor.
Thanks for reading!
Earlier this year, the CEO of Scholastic Inc., M. Richard Robinson Jr., unexpectedly died leaving his family and many others shocked about his succession plans.
Scholastic Inc. is the publishing house behind many well-loved children’s books, including The Magic School Bus, Goosebumps, and Captain Underpants. It also published the cult-classics Harry Potter and The Hunger Games, contributing to the $1.2 billion company valuation.
Scholastic Inc. was founded by Mr. Robinson’s father and so naturally his two sons, John, 34, and Maurice, 25, expected to inherit the family business. However, they must have been surprised when the contents of their late father’s Will were eventually revealed.
Mr. Robinson left all of his personal possessions and control of Scholastic Inc. to Iole Lucchese, the company’s chief strategy officer.
Having never discussed testamentary intentions, the sons were left with virtually nothing, not even an explanation. Both sons were perplexed upon the revelation, not being able to understand why their father made the decision to cut them out of his Will, especially since they had actively been in each others’ lives.
Their mother and Mr. Robinson’s ex-wife, Helen Benham, was also disappointed, as she had worked for Scholastic Inc. for over 30 years and had rekindled an amicable relationship with Mr. Robinson prior to his death. Mr. Robinson had allegedly told Ms. Benham, “you care more about Scholastic than I do” on several occasions, so she must not have been prepared for the cold shoulder she received upon his death.
While it may be a difficult pill for Mr. Robinson’s family to swallow, given that the American succession laws will be applied, it is difficult to know how the lack of provisions made for his family will be treated. In Ontario, however, even if we may expect parents to leave behind something for their children, our succession laws do not require a parent to do so.
In Ontario, there is a strong emphasis on testamentary freedom and in many cases, therefore, individuals are not subject to any legal and moral obligation to provide for their family if they do not wish to. This was made clear in Verch Estate v. Weckwerth, where the Ontario Court of Appeal found that independent adult children who are excluded from their parents’ Will do not necessarily have grounds to make a moral claim against the estate. Courts typically only intervene when dependant spouses or children who were being supported prior to the death demonstrate that a testator failed to make adequate provision for their continued support after death. As a result, there is therefore no right of inheritance in Ontario.
While John and Maurice may plan to pursue legal action, it remains to be seen whether they will be successful or not.
Thanks for reading,
Ian Hull & Ekroop Sekhon
The executor of an estate takes on many roles. For instance, they may be called on to handle funeral and burial arrangements. They may also submit the will to probate, requiring them to complete and file a number of forms with the court to prove that the will is valid and that they are the lawful executor. The executor must track down all the testator’s assets and liabilities, ensuring that all outstanding tax bills and estate expenses have been paid. They must also deal with multiple federal and provincial government officers for administrative tasks, such as cancelling the deceased’s driver’s licence, government benefits and other entitlements, along with preparing and filing the final income tax return. Once the estate’s finances are finalized, they have to turn their attention to the beneficiaries, dispersing money and property as the testator desired.
In short, there are significant responsibilities that can take up to a year, or more, to complete.
Because of this, many people name multiple executors when preparing their last Will and Testament. While there are some advantages to this approach, there are also serious drawbacks that must be considered.
To start, co-executors must agree on everything as they work together, so naming multiple executors can lead to delays and inconvenience. This is especially true if any of the co-executors live out of town or out of the province.
Let’s say a couple has three adult children. Mom and dad don’t want to play favourites, so they name all three children as executors. If the children work together harmoniously, they will have the estate wrapped up in a timely and efficient manner. However, this is often not the case.
Siblings grow apart as they get older, as different values and approaches to life develop. One might be great with numbers and dealing with officials, while another may be difficult when it comes to reaching a consensus and may not want to put in the time and effort required of an executor.
They could also be too busy with their job or family to devote the time to the myriad of tasks the position presents. Maybe they have moved away and cannot physically get to the bank and other offices to sign the required papers.
In these situations, it would be best for that person to renounce their appointment as co-executor by signing a renunciation form that can be included with the Will when applying for probate.
In cases of extreme disagreement amongst executors, one of them can ask the court to remove one or more of the other executors, allowing the estate to be settled without unwarranted delay.
Returning to our family with three children, it may be better for the parents to name just one as the executor, with the others listed as alternates. The executor doesn’t have to be the eldest of the siblings. A group conversation with all family members might lead to a consensus about who is best able to take on the role.
In some cases, it makes sense to name a family member and a financial professional as co-executors. The family member can look after the testator’s personal matters, while the financial professional turns their attention to more complex legal and financial tasks. This is an especially wise option if the deceased had significant business interests that must be managed, such as winding-up a corporation.
Every estate is different, presenting different drawbacks and benefits when considering if having co-executors makes sense. As a general rule of thumb, the main advantage of such an arrangement is that the workload and responsibilities are split up, creating a checks-and-balances mechanism since they have to jointly approve everything. Bringing in an outsider as an expert co-executor works well with complex estates.
The main drawback of co-executors is that they could delay the settling of the estate since they have to agree. It can also amplify resentment between family members, who already may be suspicious of the other’s motives. There is also joint liability – whether a decision was made together or not – which can create risks for both parties.
A better option in some cases is to name an alternate executor, who can step in if the testator’s first choice dies or is unable to fulfill their duties.
Thanks for reading – and have a great day,
When you think of the assets to be distributed upon an individual’s death, the common ones are bank accounts, investments, real estate, and any heirlooms or valuable items that have been accumulated during one’s lifetime. But we can’t forget digital assets as well.
Digital assets are any type of content stored digitally on a computer, website or on the cloud. Most of us are online every day for work and personal reasons, generating documents, sending texts and sharing images. These are all digital assets. So are frequent flyer or store reward programs that allow people to accumulate points that could grow to have substantial worth.
If you think your digital assets won’t amount to much, think again. A 2013 study by McAfee, an American-based global computer security software company, found that the average American had more than $35,000 of assets stored on their devices. Our digital profiles have certainly increased since then, and so has the need to protect those assets when we die.
Millennials, generally defined as those born between 1981 to 1996, know the value of digital assets. They grew up in the digital world and place great value on the movies, music and apps on their various devices.
As they age, they are starting to think about estate planning, sometimes in ways that older generations may not be familiar with. For example, their estates may include Bitcoin or other cryptocurrencies. Their financial profile will not only encompass traditional bank and investing assets, but perhaps PayPal or other financial apps.
Social media accounts are another important form of digital asset. We probably all know someone who has died but their Facebook page lives on. This occurs because when a social media account is opened, the person is asked to approve a user agreement that often prohibits sharing passwords. On death, these agreements can force the executor into long battles to gain access to the account, often in a foreign jurisdiction where the online firm is based.
By listing your digital assets in your will and by designating someone, perhaps your executor, to manage those accounts after your death, you can ensure your online profile does not outlast your time here on Earth. Of course, you have to provide that person with your login information for each of their social media and crypto-currency accounts. Some people rely on a digital vault – which is really an online safety deposit box – to store this information, with the password for the vault shared with their executor.
Digital assets are crucial for those operating online businesses, as they include their website and all its content, plus the firm’s social media and email accounts. Financial information about clients is also part of that, contained in online accounting programs that perhaps only one person can access.
There have been limited legislative reforms to address digital assets. In 2016, the Uniform Access to Digital Assets by Fiduciaries Act was introduced, based on the American Revised Uniform Fiduciary Access to Digital Assets Act. It would provide, by default, access to fiduciaries (including executors) to digital assets, though this Act has yet to be adopted by most provinces and may not be binding on firms based outside of Canada.
In Ontario, the Estates Administration Act does not explicitly refer to any assets of a digital nature. Nor does the Substitute Decisions Act, which governs what happens when someone is not capable of making certain decisions about their property.
Alberta’s Estate Administration Act is the only Canadian succession-related statute to make reference to online accounts within the context of the executor’s duty to identify estate assets and liabilities, which includes online accounts.
Given the amount of digital information that is recorded about each of us, our digital assets reflect the lives we lived. Since Canadians are online more than ever, our electronic footprint is increasing, and so is the need to address digital assets in our wills.
Thanks for reading and have a great day.
The facts of the case serve to highlight the importance of maintaining a continuing professional standard in dealings with clients. More importantly, an awareness of the duty of loyalty owed to the client, especially where there has been a termination of a retainer and emotions may be running high.
The claim is centered around the Last Will and Testament of Budd Kuehl, the father of two of the plaintiffs, a mortgage transaction that intertwined with his estate, and communications made by the defendant in the course of her retainer and after the termination of said retainer.
In 2010, shortly before the father’s death, he had retained the defendant and her firm to draft a new Will. At the same time, the defendant also acted in a mortgage transaction for the daughter on her home. The father jointly applied for the mortgage with his daughter and it was arranged by the defendant for him to have a 50% interest in the mortgaged home as a tenant in common, pursuant to requirements of the mortgagee.
The 2010 Will provided for the estate to be held in trust for the benefit of the surviving spouse during her lifetime, and subsequent to her passing, for the residue to be divided equally between the father’s children, subject to the condition that each child’s share would first be applied to pay off any mortgages they held.
The defendant had been retained by the estate trustee to assist with administrative matters. However, over the course of her retainer, disputes arose between the defendant and the daughter concerning the amounts owed, if any, relating to the mortgage on the daughter’s home and her father’s ownership interest in it. The plaintiffs, in their capacity as estate trustees and executors, terminated the defendant’s retainer.
After her retainer was terminated, the defendant communicated with the Office of the Public Guardian and Trustee (the “OPGT”) concerning the father’s surviving spouse. These communications formed the core of the claim of defamation, as they resulted in the OPGT refusing to accept the daughter’s application for guardianship of her mother. The court agreed with the plaintiffs that these communications were defamatory in nature, the defendant’s claims of qualified privilege notwithstanding.
The facts of this case are a sober warning to lawyers who act for multiple related parties, to ensure clear communication of the rights and liabilities of each party and how they may overlap. Where a breakdown of the lawyer-client relationship does occur, the duty of loyalty and confidentiality to the client should be given exceptional attention.
Thank you for reading and have a great day!
Ian Hull & Raphael Leitz
If you had a First Nations family member or friend who recently passed, there are some special considerations that need to be taken into account when dealing with their estate.
There are two organizations available to help you manage the affairs of your deceased loved one:
- Indigenous Services Canada (ISC) is responsible for estate services in all provinces.
- Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) is responsible for estate services in the Yukon and Northwest Territories.
When an Indigenous person dies, you can email Estate Services at: firstname.lastname@example.org. They help you determine who should look after the estate after considering the deceased’s Indian Status, primary residence, as well as the existence of a Will. They also offer help with funeral costs if the estate cannot cover the expenses.
If the deceased was not living on a reserve at the time of their death, the province or territory bears the responsibility to deal with the estate.
If the deceased was “ordinarily resident” on a reserve at the time of their death, ISC or CIRNAC deals with the estate according to the Indian Act. “Ordinarily resident” on a reserve is defined as an eligible First Nations person who usually lives on a reserve and doesn’t have a primary residence off a reserve, subject to exclusions such as attaining education or care and services unavailable on a reserve.
If the deceased left a Will with a named executor, that person will manage the affairs of the estate. However, if there is no Will, the ISC or CIRNAC will appoint an administrator (usually a family member) or will act as administrator themselves if no one is otherwise willing or able.
Apart from appointing or acting as an administrator to settle the estate, the ISC and CIRNAC offer the following other estate services:
- approving wills so they can take effect,
- transferring reserve lands from the estate to the beneficiaries or the heirs,
- determining the heirs if a person dies without a will, and
- if serving as administrator, distributing estate assets according to the will or the provisions of the Indian Act when there is no will
The ISC and CIRNAC also offer services for the estates of living minor or dependent adults who live on reserves. More information can be found on the Estate services for First Nations page on the government of Canada’s website.
Thanks for reading,
Ian Hull & Ekroop Sekhon
When parents are creating their Last Will and Testament, they often direct that assets are to be divided amongst their children. However, this is not always how it works, as the testator has the right to leave their estate to whomever they want unless they have dependents who must be financially taken care of.
Indeed, some very rich celebrities – Sting, Elton John, Mark Zuckerberg, Warren Buffet and others – reportedly have said that their children will not receive the bulk of their estates. Their reasons include giving them “some semblance of normality, some respect for money, some respect for work” and “huge sums of wealth … distorts anything they might do in creating their own path.”
You may not have multimillionaires as parents, but there is the chance that when they die, you will not be named as a beneficiary in the will. If that happens and you feel you are entitled to some portion of the estate, a legal challenge to the will can be mounted. But beware – the process will be difficult and the chances of success uncertain.
The first thing to keep in mind is that only a spouse or dependent children can contest a will that has disinherited them. You have to have a financial interest in the estate and must be able to show you were named in a prior will, or that the deceased had promised to take care of you after their passing.
If probate has not already been granted, you can file a Notice of Objection with the court registrar. If probate has been granted, then you have to bring a motion for the return of the certificate of appointment.
Before doing that, it is wise to discuss with legal counsel why you are objecting to the will. If your reasons are based on emotion rather than reason, you will likely be advised to walk away and accept the situation. The court has little tolerance for notices of objections based on frivolous claims, and you may end up having to pay the legal costs the estate incurred in defending against your claim.
You also have to consider if contesting the will makes financial sense. Does the potential gain outweigh the legal costs (not to mention the time, effort and emotional stress) the process may cause?
That being said, there are valid reasons for taking legal action. The two main ones are that there was a lack of testamentary capacity when the final Will and Testament was drawn up, or that the testator was subject to undue influence by someone. Other valid reasons for mounting these challenges include:
- the will is unsigned or not properly witnessed
- the testator was not aware of the full contents of their estate
- there are ambiguous terms in the will that are open to interpretation
- simple fraud is alleged
Any of these reasons are grounds for filing a Notice of Objection. If successful, the will may be declared invalid.
Cases that come before the court include instances where a person near the end of their life leaves their estate to a much younger person who was their caregiver or romantic partner. Family members who find themselves cut out of the inheritance have to prove that the new beneficiary exerted undue influence in the writing of the will.
That is difficult, as mental capacity is a fluid concept. A person may have the capacity to enter into a marriage, but be incapable of effectively managing their own financial affairs. As the population ages, with many people holding onto sizeable financial portfolios, we will likely see more of these predatory marriages in the future.
Challenging a will in court can be a costly, time-consuming and emotionally draining experience. Litigation can pit family members against each other, straining relationships in a time when they should be mourning. Even if they win, beneficiaries may have to wait for years as the legal process unfolds.
If you feel you have been unfairly denied an inheritance, you should speak to a wills and estates lawyer. While every case is fact-dependent, they can provide you with an informed opinion about your chances of success.
Thanks for reading, and have a great day.
A headline of a 2019 Forbes article delivered a blunt message to those of us who practice estate law: “Electronic wills are coming whether lawyers like it or not.”
The article notes that the U.S. Uniform Law Commission “recognizes the trend in online everything” and recently approved the Electronic Wills Act, which provides a framework for a valid electronic will. Under the provisions of the Act, individual states can determine the number of witnesses required for the creation of a will and whether their virtual presence is sufficient. The will has to be in text form, meaning that video and audio wills are not allowed but, once the will is signed, witnessed and notarized (if required), it will be legal.
In Canada in 2020, the Uniform Law Conference of Canada (ULCC) approved in principle amendments to its Uniform Wills Act to allow for the drafting of electronic wills. A progress report from the ULCC notes that the Electronic Transactions Act has determined that the electronic medium was “sufficiently established, reliable and usable to be accepted for all business purposes.”
The Act specifically exempts three areas: wills, powers of attorney and conveyances. The exemption for wills should be lifted, the ULCC committee recommends, noting that “we now have almost 15 years of experience of electronic commerce … much of our daily lives and arrangements are performed electronically – most of our banking, all of our healthcare records, most of our insurance and even our professional certification is all carried out electronically. In that context, what argument could be advanced that wills are so different and so exclusive that they could not be accommodated under our approach to electronic commerce.”
The committee claims that “other than ‘tradition’ it is difficult to identify any cogent argument to support the continued exception. An electronic record, once stored, is reliable, can be retrieved for future use and its ‘custody and control’ is probably more clearly tracked in electronic form than in hard copy.”
Most provinces are being cautious about embracing electronic wills, or e-wills. British Columbia has taken the lead with the establishment of Bill 21: Wills Estates and Succession Amendment Act, 2020. Bill 21 was built upon a ministerial order that permitted the electronic witnessing of wills while British Columbia was in a state of emergency due to the COVID pandemic. It expands the definition of a will to allow one done in “electronic form” to satisfy the requirement that a will must be in writing. The bill received royal assent in August, 2020.
In Ontario, Attorney General Doug Downey has been content to partially open up estate law to the electronic medium. With the passage of Bill 245, Accelerating Access to Justice Act, 2021, the virtual witnessing of wills and power of attorney documents is now allowed in Ontario on a permanent basis. Previously, it was introduced on a temporary basis during the pandemic.
Virtual witnessing means the testator and witnesses can be connected through a video call, rather than being physically together in a lawyer’s office. There are two important caveats to keep in mind – the first being that at least one of these witnesses must be a licensed lawyer or paralegal. They are there not just to be a witness, but also to confirm that the testator has the requisite capacity to sign the Last Will and Testament and that they fully appreciate the nature and contents of it.
The second caveat is that while the act of signing can be done virtually, electronic signatures are not allowed. Instead, everyone involved must print out the documents and sign them in wet ink. Once they are put together and stored safely, the will is complete and legal.
While the Forbes article quoted in the introduction may be correct about e-wills being inevitable – some U.S. states, Britain and Australia have either passed laws allowing digital wills or are considering them – there are still many reasons for people to maintain the traditional approach for the time being.
The human contact between the testator and legal counsel offered in a face-to-face meeting cannot be fully replicated in a virtual meeting. This contact builds trust and reassurance, which is vital when drafting this important document. There is also a unique set of concerns surrounding the preparation of estate planning documents that sets them apart from other legal documents that are signed digitally.
At Hull & Hull LLP, we will be monitoring the evolution of e-wills and working to accommodate any legislation the province introduces, but we are glad to see Ontario taking a cautious approach in this area.
Take care, and have a great day.
A recent Globe and Mail Article, published on June 4, 2021, suggests that the booming real estate market in Vancouver has come with a rise in family legal disputes.
A Vancouver estate dispute arose in November of 2020 when a testator (with modest assets at the time), who had bequeathed the remaining assets of her estate to the British Columbia Society for the Prevention of Cruelty to Animals, passed away. When the will was prepared in 2003, the testator never contemplated that the value of her estate would increase so dramatically as a result of a rise in the real estate market. The testator’s remaining assets, left to charity, amounted to more than $1.5 million on her death. It is safe to say that the testator’s heirs were not pleased with this outcome.
A poorly drafted will that fails to consider the volatile real estate market could result in unhappy heirs/beneficiaries and leave an estate vulnerable to litigation. It is also important for testators who reside in British Columbia in particular, to consider the Wills Variation section of their legislation when drafting a will. If a testator has multiple children and chooses to gift one child real property, and that real property increases in value, the remaining children could argue that they were treated unfairly and have a claim against the estate. As litigation lawyer, Josh Woods, states, “… we are not talking about a $100,000.00 lake cabin … we are talking about properties … all of which are skyrocketing in value.”
In order to best protect against estate litigation, it would be prudent to retain an estates lawyer to prepare your will.
Thanks for reading and enjoy your day!
Ian Hull and Tori Joseph
It is a scenario no one wants to contemplate, but there is a chance someone close to you could suddenly die due to an accident or natural causes. Here is some general guidance about what to do in that situation.
You can arrange a traditional funeral with the assistance of your local funeral home, where staff are experienced at guiding grieving families through the process. Alternatively, you can make all the arrangements yourself. For advice, consult the Bereavement Authority of Ontario’s Guide to Death Care in Ontario for general information when making arrangements. This informative guide covers all aspects of what happens after someone dies and is a good reference even for those who choose a traditional funeral.
One of the first choices you will have to make is how to handle the body: burial, cremation or alkaline hydrolysis (AH). With AH, a heated solution of water and potassium hydroxide or sodium hydroxide, along with pressure and agitation, reduces a body to components of liquid and bone. The resulting bone fragments are dried and reduced to a substance resembling cremated ashes.
The death must be registered by completing two documents. A Medical Certificate of Death completed by the attending doctor or a coroner outlines the cause. A Statement of Death must also be completed that details personal information about the deceased, such as family history, age at death and place of death. This is usually completed by the funeral director, in consultation with a family member.
The documents are submitted to the municipal clerk’s office, usually in the municipality where the death occurred.
You will need to get a burial permit in the municipality where you register the death. This permit is needed before funeral services can be performed, including cremation or AH.
If the death occurred outside Ontario but the burial will take place in the province, you will need a burial, transit or removal permit from the jurisdiction where the death occurred.
Another important document is a death certificate. The estate trustee will need this to settle the estate and to deal with government services. This certificate can be obtained online, with more information here.
You may already know if the person had a will, which in many cases bequests everything to the surviving spouse. If you do not know if there is a will, contact the estates division of the local Ontario court.
Private institutions – banks, insurance companies, pension funds – have to be contacted to inform them of the death, along with governmental organizations. If the deceased had been issued an accessible parking permit, you have 30 days to return that by mail to ServiceOntario.
If there is a provincial driver’s licence it must be cancelled. You can apply for a refund if there are six months or more remaining on the licence before it expires, as long as there are no outstanding fines. This can be done at any ServiceOntario centre.
Federal agencies must be contacted. That would include cancelling any benefit paid out through Old Age Security, Canada Pension Plan or Employment Insurance. Be sure to be in touch with the Canada Revenue Agency and provide them with the deceased’s social insurance number, so that any outstanding taxes can be paid or that any benefits can be transferred to a survivor. If the deceased owed money to the National Student Loans Service centre, that debt will be forgiven.
The executor of the estate is also responsible for filing an income tax form on behalf of the deceased person and contacting the Family Responsibility Office if the deceased paid child or spousal support.
The death of a loved one can be devastating, but the resources listed above should help you get through it.
Take care and have a great day.