Author: Natalia R. Angelini

23 Feb

Public Policy Strikes Again

Natalia R. Angelini Charities, Ethical Issues, Executors and Trustees Tags: , 0 Comments

We have been seeing more cases of late concerning wills with conditions the court is being asked to strike down as being contrary to public policy. We have blogged on some of these cases here.

The most recent decision, released last week, is Royal Trust Corporation of Canada v. The University of Western Ontario et al. In this case, the 1994 Will of Dr. Victor Hugh Priebe contained a charitable purpose clause (paragraph 3(d)(ii)(E)) that included the following language:

“My Trustee shall expend the balance of the income of my estate…to carry out all such purposes at such times as it determines:

To provide funds, from time to time and in the discretion of my Trustee for awards of bursaries to Caucasian (white) male, single, heterosexual students in scientific studies…

Further, to similarly provide funds for an award … to go to a hard-working, single, Caucasian white girl who is not a feminist or lesbian…”

The Estate Trustee brought an application seeking the Court’s opinion, advice and directions with respect to several questions arising out of the Will, including the question of whether any of the provisions in paragraph 3(d)(ii)(E) of the Will were void for being contrary to public policy.

The Endorsement of The Honourable Justice A.K. Mitchell states that “I have no hesitation in declaring the qualifications relating to race, marital status, and sexual orientation and, in the case of female candidates, philosophical ideology…void as being contrary to public policy.” Further, Her Honour states that the qualifications in the offending paragraph of the Will “leave no doubt” as to Dr. Priebe’s views and his intention to discriminate on the grounds of white supremacist, homophobic and misogynistic views.

Dr. Priebe, envisioning that the qualifications for receipt of an award or bursary might offend public policy, included paragraph 3(G) in his Will, which requires the deletion of paragraph 3(d)(ii)(E) should it be found to offend public policy. In compliance with that provision, Justice Mitchell deleted the charitable trust established in the offending paragraph.

Her Honour considered whether the doctrine of cy pres was applicable, and found that it was not given the language of paragraph 3(G). Given what appears to be the courts’ broadening use of public policy to adhere to democratic principles of our society, where equal rights are constitutionally guaranteed, I do not suspect a different result would have been reached had this express provision in paragraph 3(G) been absent from the Will.

Thanks for reading,

Natalia Angelini

 

18 Dec

Executor Assistance

Natalia R. Angelini Executors and Trustees, General Interest Tags: , 0 Comments

Administering an estate is a daunting task, often made more difficult when an estate trustee is a person close to the loved one lost, grieving at the same time as having to fulfill fiduciary obligations to administer and maximize the value of the estate for the beneficiaries.

One service I have come across that can help ease the burden and provide executor support is Peacehold Estate Documentation.  It does not provide legal or accounting services.  However, it does assist with processing the many government and other documents and forms to be completed by an estate trustee as part of attending to the deceased’s affairs.  This includes administrative assistance regarding:

  • the various benefit forms that one may need to submit to the government (e.g. survivor’s benefit, children’s benefit);
  • the various government applications and notifications that need to be made (e.g. SIN card, health card return, citizenship card return etc.);
  • the various pension and insurance benefits that one may need to claim;
  • the various membership refunds to claim (e.g. auto membership refund, Costco membership refund, fitness club notification etc.);
  • the various licenses to terminate (e.g. firearm transfer / disposal etc.); and
  • points transfer, name change and cancellation for loyalty programs (e.g. Air Miles, gasoline companies etc.).

This type of guidance may be particularly appealing to those executors who are administering small estates, and otherwise without professional assistance.

Thanks for reading and have a great weekend!

Natalia Angelini

17 Dec

Saving Lost Wills?

Natalia R. Angelini Wills Tags: , , 0 Comments

Where a will can’t be found at death, there is a presumption that the will has been destroyed by the testator with the intention to revoke it, unless there is some evidence to the contrary.

Section 19 of the Succession Law Reform Act says that a will revoked in any way can only be revived by a new will, by a codicil, or by re-execution.  Where a will has been lost (and therefore presumed to have been revoked), the previous will is not revived unless one of the methods in s. 19 apply.

The doctrine of dependent relative revocation may apply to save the prior will.  This occurs when a testator intends a revocation by destruction to be conditional upon another will being effective (either a prior will that the testator thinks will be revived, or a subsequent one that has yet to be executed).  The doctrine only applies where there is some knowledge or evidence of the testator’s intention to make the conditional revocation.

In the context of lost wills, it seems very unlikely that the prior will would be revived.  The result would, in all likelihood, be an intestacy. The reason for such an outcome is that the court doesn’t know the circumstances under which the will was destroyed. So it cannot know whether the testator intended the destruction to be conditional on either the effectiveness of a new will or the revival of an old will.  Even if it could be shown that the testator intended the revival of a prior will, the intention cannot be carried out because that would amount to a revival of the will otherwise than by the means set out in the statute.

Thanks for reading,

Natalia Angelini

15 Dec

Estate Trustee Duties

Natalia R. Angelini Uncategorized Tags: , 0 Comments

If and when someone asks you to agree to be appointed an estate trustee of their estate, before answering it might help to consider the very high duties owed by an estate trustee as well as the consequences of failing to fulfill them.

Estate trustees are fiduciaries, with the duty to exercise the care, diligence and skill that a person of ordinary prudence would exercise in dealing with the property of another person.  They must show “vigilance, prudence and sagacity” (see Fales v. Canada Permanent Trust Co.).

What underlies all duties is the duty of loyalty, described as the duty to act honestly and in good faith, and to use their powers solely for the purposes for which they were granted (see Oosterhoff on Trusts: Text, Commentary and Materials, 8th ed.).  Section 27 of the Uniform Trustee Act (not yet adopted in Canada) describes the duty of loyalty as follows:

(1) A trustee must exercise the powers and perform the duties of the office of trustee solely in the interest of the objects of the trust.

(2) Without limiting subsection (1), a trustee must not knowingly permit a situation to arise (a) in which the trustee’s personal interest conflicts in any way with the trustee’s exercise of the powers or performance of the duties of the office of trustee, or (b) in which the trustee may derive any personal benefit or a benefit for any other person, except so far as the law or the trust instrument expressly permits.

Other duties that flow from the duty of care and the duty of loyalty include the prudent investor rule (to properly invest the estate assets), the even-hand rule (to act impartially among the beneficiaries), the duty of transparency (to provide information to the beneficiaries), and the duty to account.

Given the seriousness of an estate trustee’s duties, and the fact that those who do not fulfill their duties are liable to the beneficiaries for all consequential losses, one should think carefully before taking on the job.

Thanks for reading,

Natalia Angelini

23 Oct

Passings of Accounts and Serving the Public Guardian and Trustee

Natalia R. Angelini Passing of Accounts Tags: , , 0 Comments

The Public Guardian and Trustee (PGT) is often appointed to review accounts where they are submitted to the court for approval by guardians of property, attorneys and estate trustees.  I recently happened across Richard Coutinho’s paper on the involvement of the PGT in passings of accounts.  While he addresses varying aspects of this topic, for today’s blog I review the issue of service on the PGT, in respect of which the rules are sometimes unclear.

Mr. Coutinho reminds us that the PGT should be served with an application to pass accounts and other required material in the following circumstances:

  • When the PGT represents a person with an interest in the estate;
  • When there is a charitable beneficiary of the estate or trust (pursuant to ss. 49(8) of the Estates Act); and
  • When the PGT is acting on behalf of parties under disability when their guardians/attorneys apply to pass their accounts, unless a close relative or other suitable person would agree to act as litigation guardian in priority to the PGT.

The paper also clarifies for us when the PGT does not get involved in a passing of accounts.  Some examples provided of when the PGT does not need to be served are:

  • When a guardian of property has been replaced, and the former guardian is applying to pass accounts – this is because the new guardian can review the accounts;
  • When the attorney for property is applying to pass accounts and the grantor of the Power of Attorney is not incapable;
  • When the incapable person has died – that person’s estate trustee (unless the estate trustee is the PGT) can review the accounts;
  • When the accounts are served in draft form – the PGT can only review a formal application to pass accounts; and
  • When the PGT has a conflict of interest (e.g. when there are two incapable beneficiaries and the PGT is the guardian of property of only one of them).

Thanks for reading and have a great weekend!

Natalia Angelini

22 Oct

Variations of Trust

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

P. Ann Lalonde’s contribution in the 2008 Edition of Key Developments in Estates and Trusts Law in Ontario (chapter 12) provides some insight into the issue of variations of trusts.  Ms. Lalonde conducts a thorough review of the subject, and below I cite a sampling of points that I found helpful.

The governing legislation is the Ontario Variations of Trusts Act.  Section 1(1) permits the Superior Court of Justice to approve on behalf of, among others, (a) a minor or incapable person with a financial interest in a trust; (b) a person with a future interest under a trust; or (c) an unborn person, an arrangement varying or revoking all or any of the trusts or an arrangement enlarging the powers of the trustee.  The Act does not allow the court to approve a variation of sui juris beneficiaries / capacitated beneficiaries.  Accordingly, their consent is required.  Further, the consent of the trustee is always obtained, although not required, which provides the court with the comfort of knowing that the trustee’s role will continue under the variation.

The Act provides the court with broad jurisdiction, as the court can approve a variation “if it thinks fit” (section 1(1)).   One qualification to this authority is that the court shall not approve an arrangement on behalf of any incapacitated person unless it appears to be for the benefit of that person (section 1(2)).  The court has traditionally looked at three factors when considering a variation of trusts application, being:

(1) the intention of the testator/settlor – an important factor, as courts are intent on preserving such intention;

(2) whether a prudent adult would consent; and

(3) whether the variation would benefit the beneficiary for whom the court was asked to consent – the court will protect even those with a remote or unlikely interest in a trust (e.g unborn and unascertained persons).  Usually, the benefit of the variation is financial (e.g. resulting in a tax saving to the trust), even though this is not a requirement for a successful variation application, and the Children’s Lawyer and the court will generally require a funding procedure that guarantees payment (e.g. paying funds into court).  One cannot expect to obtain approval of the proposed variation where the beneficiaries will lose financially, even when a non-financial benefit would be obtained.

In her paper, Ms. Lalonde also offers practical tips for drafting documents and negotiating with the Children’s Lawyer.

Thanks for reading,

Natalia Angelini

 

20 Oct

Business Assets and Trustee Accounts

Natalia R. Angelini Passing of Accounts Tags: 0 Comments

 

At a recent CLE on The Family Business: Administration and Litigation of Trusts and Estates Holding Business Assets, Angela Casey delivered her paper on the topic of passing trustee accounts when there are business assets.  A sampling of Ms. Casey’s advisable considerations and steps for the parties to take when an estate holds or controls a business include:

For the Objecting Party

  • Before objecting to the trustee accounts, carefully review all of the powers, authorities and discretions granted to the trustees in the will or trust instrument; they could contain privative or exculpatory clauses;
  • Hire an accountant, obtain a business valuation or an investment professional when you are first considering objecting to accounts; this can help determine, among other things, if a business was sold prudently, whether a business has suffered losses as a result of the trustee’s actions or whether the accounting records comply with GAAP; this information can help you determine what objections to make;
  • Review the company’s constating documents, so you are aware of what rights are associated with the deceased’s shares and what restrictions may exist with respect to their disposition; and
  • Consider the application of section 49(10) of the Estates Act, which permits the judge to appoint an accountant or other skilled person to assist in auditing the accounts when in the judge’s opinion they are intricate or complicated and require expert investigation.

For the Accounting Party

  • Consider the applicability of section 35 of the Trustee Act, which can protect a trustee in breach of trust who has acted “honestly and reasonably”;
  • In situations where the allegation is that the trustee continued to run the business without authority, consider relying on section 27(5) of the Trustee Act, which allows a trustee to consider the assets’ “special relationship or special value, if any, to the purpose of the trust or to one or ore of the beneficiaries”; and
  • Consider seeking to strike frivolous and vexatious objections.

Thanks for reading,

Natalia Angelini

03 Jul

Guardianship Applications – The Perspective of the Public Guardian and Trustee (PGT)

Natalia R. Angelini Guardianship Tags: , , 0 Comments

It is helpful in assisting our clients in statutory guardianship matters to get the PGT’s perspective. Dermot C.G. Moore did so in his paper presented at the Six-Minute Estates Lawyer on May 6, 2015. In it he comprehensively reviews the several factors that come into play in statutory guardianship applications, including:

  1. Who can apply – he discusses the differences in who can apply for guardianship of property and guardian of the person, and as replacement guardians (only certain persons can replace the PGT as statutory guardian of property: (i) the incapable person’s spouse; (ii) the incapable person’s relative; (iii) an attorney for property that does not grant authority over all the incapable person’s property (rare); and (iv) a trust corporation, if on consent of the incapable person’s spouse/partner (uncommon).
  2. Interim Arrangements – in statutory guardianship applications, the PGT will manage the incapable person’s property until the application is processed.
  3. Deferral to act – the PGT may decide to defer all or part of the administration for a short period of time where a replacement is likely and the finances of the client can be dealt with appropriately in the interim.
  4. Timing – statutory guardianships are often a more difficult route for applicants, as the PGT has more direct access to information, asks more questions and the process generally takes longer.
  5. Complexity – the time taken to process statutory applications is lengthened by a variety of factors, including self-represented applicants, the administrative process and competing applications.
  6. Security – security requirements in non-resident applicants are stricter in statutory applications.
  7. Refusals – the PGT may refuse the statutory application on the broad grounds of there being reasonable grounds to believe the applicant is unsuitable or the management plan is inappropriate.  Mr. Moore’s paper cites several other specific grounds that have resulted in applications being denied.

Thanks for reading and have a great weekend,

Natalia Angelini

02 Jul

In Terrorem Clauses

Natalia R. Angelini Public Policy, Wills Tags: , , 0 Comments

The objective of an in terrorem clause is to restrict a bequest made in a will, by prohibiting litigating issues relating to the will.  If a lawsuit is pursued, the testator’s wish is that the gift not be made.  While some types of in terrorem clauses will be upheld, others will be struck down on public policy grounds as improper restrictions on gifts in a will.

Such clauses will be struck down when:

  1. The gift is of personal property or blended personal and real property;
  2. The condition is either a restraint on marriage or forbids the beneficiary to dispute the will; and
  3. The threat must be “idle”, in that the condition is imposed solely to prevent certain behaviour.

In contrast, such clauses will be upheld when:

  1. They provide for a gift over in the event that the condition is breached; and
  2. Are not contrary to a public policy objective  – a no contest clause cannot preclude all forms of litigation that would entirely remove a court’s jurisdiction e.g. it can restrict a will challenge, but not an action for the interpretation or enforcement of a will; it also cannot restrict a person from seeking dependant support).

For a more fulsome discussion on this topic, which includes consideration of some recent decisions on the issue, I suggest you read Eric Hoffstein and Lisa Filgiano’s paper presented at the Six Minute Estates Lawyer on May 6, 2015.

Thanks for reading,

Natalia Angelini

30 Jun

Payment by Mistake of Fact

Natalia R. Angelini Estate & Trust, Trustees Tags: , , , , 0 Comments

There are few court decisions dealing with the issue of payment by mistake of fact.   However, this may be in part because there is settled law for the proposition that when a beneficiary receives an inheritance by mistake he/she is obliged to return it to the estate: Cronan Estate v. Hughes, 2000 CarswellOnt 4587, 37 E.T.R. (2d) 27.

In Cronan Estate, the estate trustee redeemed a RIFF and mistakenly thought that the bank had held back appropriate income tax.  The estate trustee held back monies for income tax liabilities and expenses and made an interim distribution to each defendant.  The amount owing for income tax at the time of trial was in excess of the holdback, with interest and penalties continuing to run.

The court held that the interim distribution was made on a mistake of fact, and that the estate trustee was not aware that there was income tax liability which had not been taken care of by deduction from the proceeds of the RIFF.  The estate trustee was therefore an innocent party in making the interim distribution payments.  The court also held that the monies ought to be repaid by the beneficiaries equally, unless they were able to show a “counter-veiling equity” to make it unjust to order the return of the monies.  Making a significant investment in a vacation property in anticipation of receiving the funds was not considered a counter-veiling equity in that case.

The principle behind this ruling is that, prima facie, it is against equity and good conscience that the party who receives the money should retain it.  Although a beneficiary can avoid payment by showing “a countervailing equity” to make it unjust to order the return of the monies, this will likely be decided on the facts of each specific case, and where the party has altered his position to his prejudice or has placed himself in a compromising situation.

Thanks for reading,

Natalia Angelini

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