Author: Natalia R. Angelini

04 Dec

Do you Wish to Appoint a Foreign Executor? Three Things to First Consider

Natalia R. Angelini Estate Planning, Executors and Trustees Tags: , 0 Comments

A critical decision when making your estate plan is deciding who will administer your assets after your demise.  Given the importance of appointing someone you trust, some find it to be a painstaking decision, at times complicated for those having loved ones living outside of Canada.  The attached article speaks to three things to first consider before naming a foreign executor:

  1. Bond Requirement – If the executor is a non-resident he/she will generally need to post an administration bond equal to the value of the estate when applying for probate. The process to obtain a bond is time-consuming and costly. Bringing a motion asking the court to dispense with the bond requirement also adds expense.
  2. Tax Implications – An estate may be deemed to be non-resident for tax purposes as a result of a foreign executor in control. The ensuing added cost to the estate could include losing preferential capital gains and Canadian dividend tax treatments. An estate’s reporting and tax withholding obligations are also increased. Further, even if the estate is considered Canadian, there lies a risk that it will be subject to the tax laws of the executor’s country.
  3. Practical Challenges — Among an estate trustee’s duties are the obligations to gather the assets, inventory them, preserve them and distribute them. Such administrative tasks take time and are made more challenging when the executor is in another jurisdiction. If there is no trusted local individual, one work-around is to appoint a professional trust company, which has the added bonus of eliminating the bond requirement and tax risks noted above.

It may be prudent depending upon one’s individual circumstances to get the comfort of legal advice on the issue.

Thanks for reading and have a great day,

Natalia Angelini

27 Sep

A Potential Halt to Significant Changes for ODSP Recipients

Natalia R. Angelini Estate & Trust, Estate Planning, In the News Tags: , , 0 Comments

Several newsworthy changes to the Ontario Disability Support Program Act, 1997 (the “Act”), came into force last year. For estates and trusts lawyers, the most important changes were increases in cash exemption limits, as well as increases in permissible payments to ODSP recipients.  Specifically:

  1. basic cash exemption limits were increased for a single person (from $5,000 to $40,000), and for a spouse included with the person (from $7,500  to $50,000); and
  2. permissible payments from a trust fund, segregated fund, gifts and other voluntary payments were increased from $6,000 to $10,000 over a twelve-month period.

This year, further to the Wynn’s Government’s 2018 Budget, a change was to have been made to subsection 43(1) of the general Regulation of the Act. Subsection 43(1) currently delineates several items that shall not be included in income, including the following at paragraph 13:

“Payments in addition to a payment under paragraphs 1 to 12 that are payments from a trust or life insurance policy or gifts or other voluntary payments up to a maximum of $10,000 for any 12-month period.” [emphasis added]

The contemplated amendment is a striking of the words: “up to a maximum of $10,000 for any 12-month period“.  The attached article reviews the intended change and its significance. The author cites that with these words being removed, other paragraphs relating to certain allowable gifts and voluntary payments would also be removed.  The impact would reportedly include that beneficiaries of a trust may receive unlimited monies, and that recipients of ODSP benefits could receive unlimited gifts and voluntary payments.  The $40,000 and $50,000 asset limits noted above would still apply, but RRSPs and TFSAs would no longer fall within the scope of such assets.

The modification to subsection 43(1) was to have already come into force, in part, but has not further to the Ford Government’s July 31, 2018 press release announcing that:

“Over the next 100 days, Ontario will work on a plan to reform social assistance…While work is underway, people receiving support through the Ontario Disability Support Program will receive a 1.5 per cent cost of living increase on September 1, 2018…While work is underway…Ontario will not proceed with initiatives announced in Chapter 1, Section 7 of the previous government’s 2018 Budget.”

It will be interesting to see what reform will be communicated to the public next month. We will keep you posted!

Thanks for reading and have a great day,

Natalia R. Angelini

25 Sep

Three Ways to Improve Protection for The Vulnerable Investor?

Natalia R. Angelini Uncategorized 0 Comments

I have seen an improvement in recent years in the readability of my investment statements.  Previously, I barely gave them a second glance, not out of disinterest, but because the mental gymnastics involved in making sense of them was more than I could muster.  I was not alone. A recent article reviews this common frustration, and looks at the ways in which financial services and disclosure can and are being improved, particularly for the aging and vulnerable investor.  Here are three ways that things are changing:

1.Clarity – Making the font larger in written communications. Reducing jargon and limiting the fine print. In short, communicating in plain English.

2.Enhanced Enforcement – Several provinces are moving to enact legislation that will permit the Investment Industry Regulatory Organization of Canada (IIROC) to have its decisions registered with the courts, making them akin to civil judgments, which should improve the ability to collect fines. Reportedly, 30% or more of complaints to the IIROC involve the older investor, so enforcement in this area should have a tangible impact on this more vulnerable cohort.

3.Trusted Contact – The Ontario Securities Commission is proposing an added layer of communication that, if ultimately enacted, would require registrants to make efforts to obtain contact information for someone the client designates as a “trusted contact person.” This contact would not have attorney for property status or duties. However, if concerns arise about a client’s capacity, the advisor could reach out to that individual. This idea carries with it the added caveat that advisors would need to ensure that the “trusted contact” is truly communicating in the client’s best interest. Otherwise, the input received may be unhelpful. Even worse, the “trusted contact” could be the influencer behind the investor’s change in conduct or investment instructions. This rings true in some of the estate litigation cases we see involving attorneys for property that abuse the trust placed in them to administer the grantor’s assets in their best interest. So caution is a must.

Measures like the above may make headway in the goal of better protection for the aging population, which would likely have the added benefit of reducing litigation and/or negligence claims for advisors in this area.

Thanks for reading and have a great day,

Natalia Angelini

24 Sep

A Hot-Button Decision on Multiple Wills

Natalia R. Angelini Uncategorized 0 Comments

Milne Estate (Re) is a recent decision that has generated lively discussion in our office.  In this case, a deceased couple died on the same day, each leaving identical primary and secondary wills. The primary wills applied to: “all property owned by me at the time of my death EXCEPT…[certain named assets and] any other assets for which my Trustees determine a grant of authority by a court of competent jurisdiction is not required for a transfer or realization thereof”.  The secondary wills, expressly not revoking the primary wills, applied to “all property owned by me at the time of my death INCLUDING…[certain named assets and] any other assets for which my Trustees determine a grant of authority by a court of competent jurisdiction is not required for a transfer or realization thereof”.

The executors of the estates applied for probate in respect of the primary wills, specifically seeking grants limited to the assets referred to in the wills. After written submissions were sought and provided, an oral hearing was conducted. The applications were unopposed.

The Court treated the central issue as whether or not a will is valid if there is uncertainty as to the subject-matter of the trust created by it. The estate trustees submitted (1) that questions of construction or interpretation of the will are no bar to probate, and (2) that there was no uncertainty because the excluded assets are sufficiently defined in the primary wills.

In respect of (1), the Court relied upon Neuberger v. York as providing it with the entitlement to examine the validity of the will where questions arise from an ex facie examination of the will itself. As for (2) the Court proclaimed that a will is a form of trust, such that in order to be valid, it must create a valid trust [and satisfy the formal requirements of the Succession Law Reform Act, which it did]. The primary wills in this case did not create a valid trust as certainty of subject-matter, one of the “three certainties” needed to create a valid trust, was absent.  The Court did not accept it as sufficient for the assets to be determined later by the estate trustees. It reasoned that “If multiple wills are to be employed…the property must be ascertainable objectively based upon the expressed intent of the testator without regard to discretion of the Estate Trustees exercised afterwards.”

I expect this case will generate debate on several points, including the Court’s assessment of validity at the probate stage, the pronouncement that a will must satisfy the three certainties to create a valid trust, and the conclusion that a will is not valid if it confers upon executors the discretion to retroactively determine the assets included therein.

Thanks for reading and have a great day,

Natalia R. Angelini

19 Jul

Interpretation of Wills … and Trusts

Natalia R. Angelini Estate Planning, Litigation, Uncategorized, Wills Tags: , , 0 Comments

The interpretation of wills was the subject matter of my blog earlier this week.  Today I add to that a comment on the decision of Campbell v. Evert, a case where a son and daughter were disputing whether the daughter’s entitlement under a family trust supplants a bequest under the deceased mother’s will.

The will gifts the sister $145,000 (a gift of equal value was previously given to the brother) and divides the residue equally between the brother and sister.  Several years after making the will, the mother settled an inter vivos trust, which provides that the daughter is to receive $150,000 from the trust assets, with the balance divided equally between the son and daughter.

Upon the mother’s death, the trust assets were distributed.  The son asserted that the estate assets should be divided equally, in keeping with his mother’s intention that the daughter receives $150,000 from the trust instead of $145,000 under the will. The daughter argued that with both the trust and will terms being honoured the result was equal, taking into consideration that the gift to the brother made years earlier was appreciating over time.  Nonetheless, the will was clear and unambiguous such that there was no legal basis for a different outcome, and extrinsic intention evidence was not admissible.

There was no dispute that the mother generally intended to treat her children equally in the will.  The real dispute was the mother’s intention when she subsequently created the trust.

Even though the trust agreement is not a will, the Court reasoned that the trust provisions in issue relate to the distribution of the trust assets upon death, such that those provisions have testamentary effect.  In these circumstances, the Court was satisfied that the same rules of construction apply.  Applying the principles set out in Robinson Estate in the context of the trust agreement, the Court found in favour of the daughter.  In so doing, it considered the trust agreement itself and the surrounding circumstances, and found no ambiguity or indication that the mother had intended to replace the specific bequest in the will. It also took note that the will was never amended after the trust was settled. Further, the Court ignored extrinsic evidence of the mother’s intention that the son put forward, as there was no equivocation present in this case that would make such evidence admissible.

The less common arguments of ademption by advancement and presumption against double portions were also put forward unsuccessfully, but for the sake of space I refer you to the case itself for consideration of those arguments.

Thanks for reading and have a great day,

Natalia R. Angelini

17 Jul

Legal vs. Beneficial Ownership – Not so easily distinguished?

Natalia R. Angelini Uncategorized 0 Comments

Khan v. Estate of Ahmed I. Khan et al., 2018 ONSC 4063 is a recent decision in which the primary issue between the widow of the deceased and two of the deceased’s siblings was the beneficial ownership of a real property.

The property was purchased in 1995, with title held as between the deceased’s brother and sister as joint tenants (75:25). The deceased resided in the property and paid its expenses until his death in 2014. Prior to this death, the deceased sought agreement to have the property transferred to himself, but the transfer did not proceed.

The deceased’s widow (his second spouse) pursued a claim to the property on behalf of the deceased’s estate, asserting that it was bought by the deceased as the beneficial owner and that legal title was in the names of his siblings because of the deceased’s matrimonial proceedings. The sister and brother counter-sued, saying that they bought the property to assist the deceased financially during a difficult time and let him live in the property provided he pay the day-to-day expenses. There were also allegations on both sides of loans owing as between them.

A large part of the debate centered on the contributions towards the purchase price and whether or not that constituted evidence of the purchase of a beneficial interest in the property, which was an issue muddied by allegations regarding the source of funds paid from the bank account in question (the account was in the name of the sister, but to which the deceased had access and to which other siblings contributed).

The Court heard oral testimony, and concluded that although legal title to the property was in the names of the sister and brother, the deceased was the beneficial owner and his sister and brother were bare trustees. In so doing, it made various factual findings, including that (i) there was no evidence that the brother contributed towards the purchase price, (ii) at the time of purchase the subject bank account was comprised of monies from multiple sources, including the deceased, (iii) the deceased was entitled to the use of and had control over the monies in the account, (iv) neither the deceased nor his sister could independently fund the full purchase price (one would have needed a loan from the other), and (v) on balance, it was more likely that the sister loaned monies to the deceased to fund the purchase price.

Interestingly, section 10 of the Statute of Frauds was found to apply, thereby saving the claim from being barred as a result of the application of section 9.

Thanks for reading and have a great day,

Natalia Angelini

Other blog posts you may enjoy:

Cheques and Balances: the Enforceability of Promises to Gift

Where is the Trust?

Joint Tenancy Trap

16 Jul

Interpretation of Wills – The Essentials

Natalia R. Angelini General Interest, Wills Tags: , 0 Comments

In the construction of wills there is a presumption against intestacy.  When the court is endeavouring to apply this rule, consideration should be given to what type of evidence it can admit with respect to the testator’s intention.

Where there is an ambiguity in a will and the need for its interpretation arises, the analysis centers on determining the subjective intent of the testator.  This is accomplished by the court putting itself in the place of the testator at the time the will was made, considering the circumstances that then existed and that might reasonably be expected to influence the testator in the disposition of property. The court should also study the contents of the will, try to find the testator’s intention and give effect to it.

Direct evidence of a testator’s intention is not admissible, the rationale being to preserve the role of the written will as the primary evidence of intention.  An exception to this is in the case of an equivocation. The principle simply put is that there is an equivocation where the words of the will apply equally well to two or more persons or things. In such a case, extrinsic evidence of intention may be admitted to resolve the equivocation.  DiNicola v. Tingley is an instance of where an equivocation was found.  The Deceased left a will that provided for the distribution of the residue of her estate, in part, amongst three named beneficiaries. The will provided that if any of the named residuary beneficiaries “should predecease me then I shall direct his or her share designated as aforestated shall be divided and distributed among the survivors of same proportionately as between them.” The Court found that the words “survivors of same” could equally mean the surviving residuary beneficiaries or the descendants of a predeceased residuary beneficiary.  This constituted an equivocation, and the Court accepted for consideration direct extrinsic evidence.

If no intention can be garnered from the language of the will and the admissible extraneous evidence, the court must declare the will void for uncertainty.  One exception to this is where the uncertainty relates to a charitable beneficiary.  In such a case, the court may apply the cy-près doctrine and direct that the property be given to a similar charitable purpose.

Thanks for reading and have a great day,

Natalia Angelini

Other blogs on this subject that may be of interest are:

Interpretation of Wills – a recent case where direct evidence was not permitted

Interpretation of Wills

24 May

A successful case of circumstantial evidence proving undue influence

Natalia R. Angelini Litigation, Uncategorized, Wills Tags: , , 0 Comments

Notoriously tough to prove is the allegation of a testator being unduly influenced to make a will. The burden of proof lies with the objector, and corroborating evidence is required to discharge the evidentiary obligation.

Notwithstanding the difficulty one faces to establish undue influence, it is frequently a ground of attack in will challenge cases, often coupled with an allegation of lack of testamentary capacity. In Kozak Estate (Re), it was rather unusually the sole ground of attack, and it was successful.

The facts in brief are that late in life the testator met and fell in love with a much younger woman, and soon after made real property transactions and two wills favoring her, with the latter will made in contemplation of marriage (which marriage never happened). The testator’s sister and beneficiary under a prior will challenged the wills on the ground of undue influence.

The Court reviewed the law on the question, and in so doing highlighted that circumstantial evidence can be used to establish undue influence, with the types of relevant circumstances including:

  • the increasing isolation of the testator including a move from his home to a new city which increased the respondent’s control over him;
  • the testator’s dependence on the respondent;
  • substantial pre-death transfer of wealth from the testator to the respondent;
  • the testator’s expressed yet apparently unfounded concerns that he was running out of money;
  • the testator’s failure to provide a reason or an explanation for leaving his entire estate to the respondent and excluding family members who would expect to inherit; and
  • documented statements that the testator was afraid of the respondent.

The Court viewed the evidence of the propounder as having many inconsistencies, contradictions and unbelievable elements. In consequence, it did not rely on her testimony at all. No such credibility problems arose respecting the evidence of the objector’s witnesses.

The Court went on to assess and conclude that the objector had established undue influence.  Among the critical supportive findings was that the propounder used the promise of marriage to control and manipulate the testator into providing economic benefits to her.  Further essential indicia of manipulation were the isolation of the testator from friends and family and a change in the testator’s personality.

Pursuing this avenue to invalidate a will is no easy feat, particularly without direct evidence.  What does not come as a surprise to me, however, is that the outcome in this case largely hinged on the credibility findings of the witnesses.

Thanks for reading and have a great day,

Natalia R. Angelini

Some other blogs on the issue that may be of interest are:

When Does the Presumption of Undue Influence Arise?

Undue Influence Revisted

Vanier v Vanier: Power of Attorney Disputes, Undue Influence, and Losing Sight of a Donor’s Best Interests

22 May

How can you spend a donor’s money? Two core considerations

Natalia R. Angelini Power of Attorney Tags: , , , 0 Comments

For the many who take on the fiduciary role of an attorney for property, there is often little or no education received on one’s duties and obligations. The sole guidance often provided is from the language of the power of attorney document itself.  It is rare, I would expect, that an attorney seeks out independent legal advice on the issue, which may in part be why we see so many cases in our practice where attorney spending is challenged. This blog serves as a refresher on the issue.

Obligated Spending

The legislation (Section 37(1) of the Substitute Decisions Act (“SDA”)) provides that a guardian or attorney for property must make certain expenditures out of the assets of the incapable person, listed in priority as being:

  1. Expenditures reasonably necessary for the person’s support, education and care.
  2. Expenditures reasonably necessary for the support, education and care of the person’s dependants (“dependant” is defined as a person to whom the incapable person has an obligation to provide support).
  3. Expenditures that are necessary to satisfy the person’s other legal obligations.

The expenditures may only be made if the assets of the incapable person are sufficient to satisfy them.  The guiding principles are that the value of the property, the accustomed standard of living of the incapable person and his or her dependants and the nature of other legal obligations are to be taken into account.

Optional Expenditures

An attorney may make gifts or loans to the person’s friends and relatives, and may make gifts to charities (Section 37(3) of the SDA).  The policy guidelines include:

  1. Gifts or loans may be made only if there is reason to believe, based on the intentions expressed prior to becoming incapable, that he/she would have made these gifts if capable.
  2. Charitable gifts may be made only if, (i) the incapable person authorized the making of charitable gifts in the power of attorney document, or (ii) there is evidence that the person made similar expenditures when capable.
  3. The gift shall not be made if the incapable person expresses a wish to the contrary.
  4. The SDA sets limits on the quantum of charitable gifts.

With these parameters in mind, coupled with carefully documenting all expenditures and retaining supporting vouchers, an attorney for property can hope to have a smoother ride when satisfying accounting obligations in respect of the administration.

Thanks for reading and have a great day,

Natalia R. Angelini

 

Some other blog posts that might interest you are:

How Generous may an Attorney for Property Be?

Power of Attorney Disputes on the Rise?

Choosing the Wrong Attorney for Property

04 Dec

Takeaways from Make-a-Will Month

Natalia R. Angelini Uncategorized Tags: , , 0 Comments

November has drawn to a close and, with it, the Ontario Bar Association (OBA) and the Toronto Public Library’s (TPL) Make-a-Will Month program, where estate professionals are connected with the community to help them understand the importance of having a will and powers of attorney.

In presenting at one of the Make-a-Will Month sessions, the need for this initiative was readily apparent. I was met with a high level of attendee participation and a myriad of questions about wills and powers of attorney. The following information seemed particularly helpful to impart:

Wills

  • The benefits of making a will, including having control over your choice of executor, tax minimization, protecting assets from creditors, providing for charitable gifts and allowing for staggered entitlement to ensure beneficiaries don’t prematurely spend their inheritance;
  • The consequences of not having a will, including the inflexible entitlement scheme under the Succession Law Reform Act and the unwanted impact this could have in situations where, for instance, you would not want to benefit relatives equally or immediately upon your death (e.g. spouses are separated, immediate family members are estranged, and intestate beneficiaries are minors); and
  • The elements of a will, how to revoke it and the grounds upon which to challenge its validity.

Powers of Attorney

  • The different types of powers of attorney a grantor may select (e.g. springing, enduring, limited and general); and
  • The difficulties that may be caused by not having a power of attorney in place, including the costly and potentially protracted process of pursuing a guardianship appointment.

I was so pleased to participate in the Make-a-Will Month program, and applaud the continuing efforts of the OBA and TPL to share vital information with the public.

Thanks for reading and have a great day,

Natalia Angelini

Some other blogs on related subjects are:

November is “Make a Will Month”

Make Estate Planning One of Your New Year’s Resolutions

When to Make a Codicil

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