Author: Laura Betts

24 Feb

A Bequest Made in Error

Laura Betts In the News, Litigation, Wills Tags: , , 0 Comments

I recently came across an article which describes how a woman in the United States inadvertently gifted a share of her estate to the wrong beneficiary.

It would appear Esther Patton wanted to thank her local fire department for their dedication and service to her over the years. She instructed her lawyer to include a bequest to the Sebastopol Fire Department in her Will. However, Ms. Patton was mistaken, as it was in fact the Gold Ridge Fire District who had responded to her calls approximately once a month over the course of several years.

While the two fire departments were located in close proximity to one another, they serviced different areas.

When the Sebastopol Fire Department received a cheque for nearly $82,960.00 USD and a letter explaining that the funds were a token of Ms. Patton’s gratitude, it became clear that an error had been made.

Thereafter, uncertainty arose as to who was legally entitled to the bequest, Sebastopol or Gold Ridge.

There was no ambiguity on the face of the Will, in that the Will clearly directed the gift was to go to Sebastopol. However, on the totality of the evidence, it was clear Ms. Patton had intended that gift go to Gold Ridge.

The Ontario Court of Appeal case, Robinson v. Rondel, confirmed that where there is no ambiguity on the face of the will and the testator has reviewed and approved the wording, the court may rectify the will and correct unintended errors in three situations:

(a) where there is an accidental slip or omission because of a typographical or clerical error;

(b) where the testator’s instructions have been misunderstood; or

(c) where the testator’s instructions have not been carried out.

In this case it was not necessary for the parties to seek the assistance of the Court as they amicably agreed that that Sebastopol would keep 1/3 and Gold Ridge would keep the remaining 2/3.

Nevertheless, this article illustrates the issues that can arise when inadvertent mistakes are made in the preparation of a Will.

Other Hull & Hull LLP Blogs & Podcasts that may be of interest to you:

Thank you for reading.

Laura Betts

23 Feb

Adoption and Estate Planning in Japan

Laura Betts Estate Planning, General Interest, In the News Tags: , , , , 0 Comments

A recent article published in the Japan Times explains how changes to domestic tax legislation could be causing a rise in the number of adoptions in Japan.

Apparently, the tax changes which were introduced in Japan in 2015 lowered the existing tax exemption threshold from ¥50 million to ¥30 million and reduced the existing deduction of ¥10 million for each heir to ¥6 million per heir.

As a result, the estates of a significantly wider segment of the population are now subject to inheritance taxes, and there appears to be a corresponding rise in the number of individuals seeking to reduce their tax burden through adoption.

According to the article, adoption for the sake of “financial adjustment” has always been a common practice in Japan. In fact, such adoptions, usually of adults who only need to be at least one day younger than the adopting parent, constitute the overwhelming majority of adoptions in Japan. In many cases, adults are adopted when a family does not have someone to take over a family business or a male heir who can carry on the family name. The article states that more recently, however, such adoptions appear to be motivated by the desire to reduce inheritance taxes.

The article refers to a recent case of the Supreme Court of Japan, in which the deceased had adopted his son’s son (his “grandson”), thus giving him four heirs instead of three — his son, his grandson (now second son) and two daughters. As a result, the son’s family stood to receive more of the father’s assets than either of the daughters.  The daughters commenced proceedings seeking that the adoption be declared void as it had merely been intended as a tax-savings measure. However, the Supreme Court of Japan ruled that the intention to reduce the amount of taxes would not automatically annul the adoption itself and upheld the adoption, which many believe in effect, condones this practice.

This is not the first time adoption has been used in estate planning. Before same-sex marriage was legalized, adoption was used on occasion in Canada and the United States as a means of ensuring the transfer of an inheritance between same-sex couples. An article published in the New York Times in 2009, which outlines the use of adoption for such purposes can be accessed here.

Other Hull & Hull LLP Blogs & Podcasts that may be of interest to you:

Thank you for reading.

Laura Betts

21 Feb

What happens when an estate trustee dies?

Laura Betts Executors and Trustees Tags: , , 0 Comments

Section 2 of Ontario’s Estates Administration Act provides that upon a person’s death, all real and personal property formerly vested in him/her, with the exception of jointly owned property, will devolve to and become vested in his/her estate trustee, subject to the payment of estate liabilities, for those beneficially entitled thereto (i.e. the beneficiaries).

What happens when the estate trustee who has been actively administering an estate, and in whom the estate property has vested, dies before the administration is finalized?  Will this prevent the estate from being distributed?

Section 3(2) of the Trustee Act  provides, where there are multiple estate trustees and one dies then the powers and duties of the deceased estate trustee will vest in the survivor(s) unless the Will contains a provision to the contrary.

If the sole appointed estate trustee, or the sole surviving estate trustee, dies before the estate has been fully administered and an alternate estate trustee is named in the Will, then the alternate would apply to the court for a Certificate of Appointment of Succeeding Estate Trustee With a Will to obtain the authority to deal with the estate assets.

If there is no alternate estate trustee named in the Will, or the alternate named estate trustee decides to renounce his/her right to act as estate trustee, the executorship will “devolve to” (pass to) the executor named in the sole or last remaining executor’s Will (the “New Estate Trustee”).  The New Estate Trustee will need to apply to the court for a Certificate of Appointment of Succeeding Estate Trustee With a Will in order to obtain the authority to deal with the estate assets.

However, only an executor who has proved a Will can transmit the executorship of the original estate. In other words, for devolution of executorship to apply, the original estate trustee must have obtained probate (i.e. a Certificate of Appointment) before she/he died.

The executorship will not devolve where the sole estate trustee, or the last surviving estate trustee:

(i) dies intestate (without a Will);

(ii) fails to appoint an estate trustee; or

(iii) fails to prove the Will (i.e. does not obtain probate).

In such circumstances the original estate must be administered as if no executor had ever been appointed. While this may delay the administration of the original estate, it should not prevent that estate from being distributed.

Thank you for reading.

Laura Betts

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