Author: 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

26 Sep

Accountings and Incapable Persons – How Is Privacy Protected?

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

It is trite law that an executor administering a deceased persons’ estate has an obligation to account to the beneficiaries. The law is a bit more complex when an attorney for property is applying to the court to account for his/her administration of an incapable person’s affairs.

Rule 74.18(3) of the Rules of Civil Procedure provides that service of the application material is required on persons who have “a contingent or vested interest in the estate”. Because a will speaks as if it was made immediately prior to the death of a testator, a beneficiary has no financial interest until the testator dies, the result being that in an accounting for the administration of the assets of an incapable person, only the incapable person him/herself has a contingent or vested interest in the assets.

Although it may seem inadequate that an attorney would be required to serve the grantor and no other family members, as an incapable person will arguably not have the wherewithal to level objections in respect of the administration, keep in mind that the welfare of the grantor is already being safeguarded by the Public Guardian and Trustee (who must also be served with the court material) and a litigation guardian who may be appointed within the context of the accounting application to protect the interests of the grantor.

Couple the above with the strict duty of confidentiality and privacy owed to an incapable person by the attorney, as set out in the Substitute Decisions Act, 1992 (Regulation 100/96), and we have a protective framework when dealing with disclosure of financial affairs of living persons.

This makes total sense to me. However, it may come as an unwelcome surprise to an adult child who, for instance, learns that she does not have an automatic right to receive disclosure of her incapable parents’ finances. Feeling unfairly shut out, she may consider seeking the court’s assistance.

Although she can apply to the court for leave to compel an accounting, the prevailing view of the court is that a person’s privacy is paramount such that leave should be granted sparingly. In a prior blog on the subject, my colleague Umair Abdul Qadir cited the Groh v Steele decision, where the Court makes an important pronouncement on this point, stressing that leave should not be granted absent the applicant establishing an interest (at least indirectly) in the affairs of the grantor, and some evidence that the attorney is not properly handling the administration.

Thanks for reading and have a great day,

Natalia R. Angelini

Some other blog posts on this and related subjects that may appeal to you are:

Attorneyship Accounting with a Capable Grantor

Abuse of a power of attorney: when good people do bad things

Passings of Accounts and Serving the Public Guardian and Trustee

25 Sep

Where should you store your testamentary documents?

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

Getting a will done is step one. Step two is ensuring it is safely stored. Although many people choose to leave their will with their lawyer, store it themselves or put it in a safety deposit box, there is another option that seems to be less popular but just as secure – deposit with the court.

The Process

Rule 74.02 of the Rules of Civil Procedure governs the process, and amongst the requirements are the following:

  • The depositor is restricted to limited number of individuals, including (i) the testator or a person authorized by the testator in writing, (ii) a lawyer who held the will or codicil at the time of retirement from practice, or, if deceased, the lawyer’s estate trustee, and (iii) a person authorized by the court;
  • The court office must follow specific procedures for processing and storage of the documents; and
  • During the testator’s lifetime, his/her will or codicil can only be copied, inspected or removed by the testator in person, by his/her guardian of property or by court order.

Rule 74.02 also provides for access to and release of the documents post-death.

Regarding post-death access, any person may copy or inspect a will or codicil of the testator on deposit, on filing a written request stating the testator’s date of birth and proof of death.

Regarding post-death release, this can only be to a named estate trustee or such other person as the court may direct, and is done after the filing of (i) a request for delivery, (ii) proof of death, and (iii) if no order directing delivery of the will or codicil has been made, an authorization signed by every estate trustee named in the will specifying the estate trustee (or the estate trustee’s lawyer) to whom the will or codicil is to be delivered (if an estate trustee is not available to sign, a written explanation will need to be given satisfactory to the registrar).

Is this for you?

If it isn’t convenient or viable for you to personally and safely store your testamentary documentation, if you don’t want it kept with your lawyer (or if there was no drafting lawyer), and if you don’t mind putting your executor to the task (and additional time and expense) to secure the document from the court post-death, this may be the option for you.

However, if you expect to periodically be making changes to your estate plan the deposit process may not be something that you would like to keep repeating. Further, if you wish to revoke your will on an urgent basis, it may be more difficult to do so. In the worst case scenario, this could result in a testator not having his/her testamentary wishes executed.

Thanks for reading and have a great day,

Natalia R. Angelini

10 Aug

When are Corporate Directors Personally Liable?

Natalia R. Angelini Litigation Tags: , , 0 Comments

Estate litigation often intersects with other areas of law, and frequently with corporate law where, for instance, a testator has an ownership interest in a corporation and/or is a director of a corporation. Accordingly, we pay attention to important cases in corporate law that may impact upon our practice. One such case is Wilson v. Alharayeri, a recent Supreme Court of Canada (SCC) decision, where the SCC considered when an oppression remedy may lie against a director personally.

The facts in brief are that Mr. Alharayeri (Mr. A) was the president and CEO of a corporation. He was also a director and a significant minority shareholder of the corporation, with half of the shares being convertible into common shares if the corporation met certain financial targets. Mr. A resigned for failing to disclose a conflict of interest. The appellant, Mr. Wilson, replaced Mr. A as president and CEO. A few months later, the board of directors issued a private placement of convertible secured notes to its existing common shareholders. Prior to doing so, the board accelerated the conversion of certain convertible preferred shares, but not those held by Mr. A given the conduct leading to his resignation. Wilson played a lead role in this decision. The result was that the value of Mr. A’s portfolio was diluted.

Mr. A brought an oppression claim against four of the directors, including Wilson. The Superior Court of Quebec found oppression, and Wilson and another board member were held personally liable for the board’s failure to convert Mr. A’s shares. They were Ordered to pay Mr. A compensation. The Quebec Court of Appeal affirmed the decision, and Wilson appealed to the SCC on the question of when personal liability for oppression may be imposed on corporate directors.

The SCC dismissed the appeal, and in doing so applied a two-pronged approach. First, the oppressive conduct must be attributable to the director. Second, a personal remedy must be “fit” in all of the circumstances – four general principles should guide the court, being:

(i) whether personal liability is fair in consideration of all circumstances;

(ii) any order should go no further than needed to remedy the oppression;

(iii) any order may serve only to vindicate the reasonable expectations of a security holder, creditor, director or officer as a corporate stakeholder; and

(iv) the general principles of corporate law.

It is noteworthy that the hallmarks of conduct attracting personal liability remain, being where a director derives a personal benefit and where a director acts in bad faith, but they are not necessary conditions of the two-pronged approach.

Thanks for reading and have a great day,

Natalia R. Angelini

You may also enjoy the following blogs:

https://hullandhull.com/2016/11/beneficiaries-corporate-documentation/

https://hullandhull.com/2014/11/control-of-private-corporations-in-the-event-of-incapacity/

https://hullandhull.com/2006/09/trusteedirector-conflicts-part-ii/

 

08 Aug

How Can We Add Clarity to Inter Vivos Gifting?

Natalia R. Angelini Estate Planning, Joint Accounts, Uncategorized Tags: , 0 Comments

I was surprised to learn of a recent statistic indicating that about half of all singles in Toronto under age 34 are living with their parents – I thought this was just the way we do things in my family! But seriously, if you are a parent longing to cut the ties that bind, or if you just want to help your adult child get a head-start in life, you have probably considered doing so by way of a gift or loan. To avoid any confusion or worse, litigation, it is important to document the transaction and record the intention.

If the intention is to loan, a loan agreement should be used. If, however, the intention is to gift, keep in mind that to have a valid gift there are three necessary elements: (i) intention to donate; (ii) acceptance by the donee; and (iii) sufficient act of delivery and transfer. The onus of proving that a gift is valid is on the recipient of the gift, who must show a clear and unmistakable intention by the donor to have voluntarily given the gift. In order to ensure legal clarity, using a deed of gift is ideal.

The benefit of using a deed of gift is that it can provide an answer to any challenges that others may have to the transfer in question, which we often see in situations of transfers of property (bank accounts, real property etc.) into the joint names of the parent and child. Otherwise, upon death, the gift is usually presumed to form part of the parent’s estate unless proven otherwise by the child.

Other potential benefits to using a deed of gift include increasing the chances of protecting the funds upon marital breakdown (e.g. if the deed of gift stipulates that the funds are for the child alone, and not the married couple, this may prevent the monies from forming part of the family assets). It can also assist an estate trustee to correctly apply a hotchpot clause (which often requires the executor to take inter vivos gifts into account when making an equal distribution amongst the beneficiaries) and distribute the assets as the testator intended.

Thanks for reading and have a great day,

Natalia R. Angelini

Other articles you might enjoy:

https://hullandhull.com/2017/02/can-delivery-gift-precede-intention/

https://hullandhull.com/2016/10/validity-inter-vivos-gift/

https://hullandhull.com/2015/10/mortis-causa-gifts/

You may also enjoy the July 7, 2017 interview of Nicole Ewing, a TD Wealth business succession advisor and tax and estate planner, which can be found on www.moneytalkgo.com.

19 May

Eight Drafting Tips for Primary and Secondary Wills

Natalia R. Angelini Beneficiary Designations, Estate & Trust, Estate Planning, Executors and Trustees, General Interest, Trustees, Uncategorized, Wills Tags: , , , , , 0 Comments

At the recent Six-Minute Estates Lawyer, several areas of interest were discussed.  One that served as a helpful reminder to me was the presentation on the estate administration tax-avoidance strategy of using primary and secondary wills.  Many tips are contained in the paper presented by Kathleen Robichaud.  Here are eight of them:

  1. Checklist – develop a thorough intake process and form, so you can ensure a detailed meeting with your client takes place that will give you the information needed to make recommendations best suited to your client’s needs;
  2. Revocation clause – ensure each will has one that takes the other will into account, so each will won’t revoke the other;
  3. Estate trustee – using the same estate trustee (and same alternate) for both wills may reduce the risk of drafting errors and usually simplifies the administration (although for a second will regarding outside Ontario assets, it is ideal to have the estate trustee and assets both in the same jurisdiction);
  4. Debts and Taxes – it is of particular importance to delineate how debts are to be paid in both wills, especially if you have difference beneficiaries and/or estate trustees in each of the wills;
  5. Know which assets require probate – sounds trite, but when in doubt only include assets in the secondary will that you are certain do not require probate (e.g. real property (subject to exceptions), bank accounts with large balances, RRSPs left to the estate, shares of publicly traded companies, an interest in a privately held partnership and investment accounts generally require probate);
  6. Define the assets carefully – otherwise you may have a partial intestacy that could defeat the testator’s wishes;
  7. Out of jurisdiction assets – when dealing with out of jurisdiction assets, consider that a second, third or even fourth will may be appropriate for varying reasons (e.g. because of difference succession rules or difference taxation rules); and
  8. Beneficiaries – listing the correct beneficiaries for the right assets, and matching the right set of beneficiaries with the corresponding will, can avoid drafting errors that may otherwise result in both wills having to be probated and/or rectification orders being needed.

Thanks for reading and enjoy the long weekend!

Natalia Angelini

Other Articles You Might Be Interested In

The Unsatisfactory State of Professional Negligence for Defective Will-Drafting

Drafting Trustee Compensation

Drafting to Prevent Attacks by Disappointed Beneficiaries

 

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