Author: Nick Esterbauer

30 Jul

Interpretation of Settlement Agreements

Nick Esterbauer Estate Litigation, Litigation, Mediators, Wills Tags: , , , , , , 0 Comments

A recent decision of the Alberta Court of Queen’s Bench highlights the importance of carefully reviewing settlement agreements prior to their execution.

In Anderson Estate (Re), 2020 ABQB 428, the Alberta Court of Queen’s Bench revisited a settlement that had been negotiated during a judicial mediation.

Mr. Anderson had left a Last Will and Testament executed roughly one month prior to his death that directed that the residue of his estate be distributed to his three children, who were the parties to the litigation.  The Will addressed certain advances made to his children during his lifetime, the disposition of real property, and declared the testator’s intent that the parties be treated equally.

One son, who later brought the motion with respect to the interpretation of the agreement, had previously disclaimed real property gifted to him under the Will because the value assigned to the property in the Will itself was significantly higher than the appraised value of the property (with a discrepancy of $2 million), such that he would take a correspondingly lower distribution from the residue of the estate to reflect his acceptance of the gifted property.  The judicial mediation process had been initiated with the intention of resolving interpretation issues in respect of the Will arising from the son’s disclaimer of the property.  The terms of the Will and the settlement agreement were not straightforward, but the settlement provided in part that the son would receive at a value of $4 million a different property than that bequeathed to him under the Will that he had disclaimed.

Pursuant to the terms of the settlement agreement, the matter returned to the case management judge for the determination of its proper interpretation.  The son sought an interpretation of the agreement that provided that he had substituted his receipt of one property for the other at a notional cost corresponding to advances tied to the first property.

Justice Jones reviewed the law in general relating to ambiguities appearing in contracts, such as the settlement agreement that the parties had executed (at paragraphs 35 through 40, briefly summarized below):

  • true legal ambiguity arises where a phrase is reasonably susceptible on its face to more than one meaning;
  • courts can consider surrounding circumstances that include everything that affected the language of the document from the perspective of a reasonable person;
  • extrinsic evidence, however, is intended to serve “as an objective interpretative aid to determine the meaning of the words the parties used”, with limitations set out by the Alberta Court of Appeal in Hole v Hole, 2016 ABCA 34;
  • the goal of the courts is to give effect to the objective intentions of the parties, rather than to “second-guess the contract”;
  • even in the absence of ambiguity, a judge is to consider relevant surrounding circumstances in interpreting the contract.

The judge found that the settlement agreement was not susceptible to more than one meaning, stating as follows (at para 84):

A retrospective determination that one entered into an agreement on terms less commercially favourable that one now thinks should have prevailed does not evidence ambiguity.

This decision may serve as a reminder to take care in ensuring that the meaning of a settlement agreement is properly understood by all parties and clearly set out without room for ambiguity.  Remaining silent on certain points that should properly be addressed during the dispute resolution process may limit the rights of the parties to pursue them, even where the settlement agreement will otherwise lead to the distribution of an estate that may be perceived as unfair.

Thank you for reading.

Nick Esterbauer

28 Jul

Life Insurance During COVID-19

Nick Esterbauer Beneficiary Designations, Elder Law Insurance Issues, Estate & Trust, Estate Planning, Health / Medical, In the News, RRSPs/Insurance Policies Tags: , , , , 0 Comments

Life insurance can be an important part of an estate plan, be it taken out to fund payment of anticipated tax liabilities triggered by death, to assist in supporting surviving family members, or to equalize the distribution of an estate within the context of the gift of an asset of significant value (such as a family business) to one child to the exclusion of another, who can be designated as beneficiary of the policy.

In a time when many Canadians are facing their mortality and taking the pause from normal life as an opportunity to review and update estate plans, many Canadians are turning their minds to other aspects of estate planning, including supplementing an estate plan with life insurance.  A recent Financial Post article suggests that life insurance applications have doubled during the pandemic, as more Canadians take steps to plan for the unexpected during this period of uncertainty.

At the same time, premiums for new permanent life insurance policies have increased by as much as 27%.  While term life insurance policies may remain a more affordable option, they too are anticipated to become more expensive, with upcoming premium increases of up to 20%.  The increase in premiums has been linked to lowering interest rates and restrictions to the investment options available to insurance companies.

Other changes to life insurance during the pandemic include the exclusion of the standard medical examination required in order to obtain some types of coverage.  The maximum coverage offered by many providers without a medical exam has increased to reflect limitations to the ability for applicants to safely attend an in-person examinations.  For other providers and types of plans, medical examinations are simply on hold.

Lastly, insurance companies have updated intake questionnaires to include COVID-screening questions.  If an applicant is experiencing potential symptoms, they may be required to wait two weeks before taking out the policy, but are not typically ineligible from coverage altogether.  Some insurers, however, are no longer offering new coverage to seniors or others who are at a higher risk of complications during the period of the pandemic.

One life insurance provider has already doubled its projected COVID-19-related payouts during 2020 from the figures it had released earlier this year.  While there may have been changes to certain eligibility requirements and the cost of life insurance, it remains a suitable estate planning tool for many Canadians.

Thank you for reading,

Nick Esterbauer

 

Other blog posts that you may enjoy reading:

27 Jul

Potential Inheritance Tax Implications of Quarantine

Nick Esterbauer Elder Law, Estate & Trust, General Interest, In the News Tags: , , , , , 1 Comment

Many parts of the world remain under some degree of lockdown due to the COVID-19 pandemic.  For older adults who may have limited access to assistance or company outside of immediate family during the pandemic, and/or whose transition to long-term care may have been delayed as a result, temporary relocation to live with supportive family members may be a suitable option.

As our readers know, inheritance tax is payable in respect of the assets of estates located in a number of jurisdictions, which do not include Canada.  In the United Kingdom, for example, an inheritance tax of 40% is charged on the portion of an estate exceeding a tax-free threshold of 325 thousand pounds (subject to certain exceptions).

One way that some families choose to limit inheritance tax is to gift certain assets, in some cases a family house, prior to death, such that its value will not trigger the payment of inheritance tax.  In the UK, if an asset is validly gifted at least seven years before death, inheritance tax will not be payable on the asset.  However, where the donor of the gift reserves the benefit of the property – for example, if he or she continues to live at real property gifted to another family member – the gift will not be valid for the purposes of inheritance tax calculations.

A recent news article highlights the risk that older individuals in the UK who move back into previously gifted property during the pandemic may lose the benefit of potential inheritance tax exclusions by falling under the “gift with reservation of benefit” exception as a result of benefitting from continued occupation of the gifted property.  While this risk may not outweigh the benefits of obtaining family support, it is a factor that a family may wish to consider as part of a decision to alter living arrangements.

Approximately 600 gifts have failed in the past several years, triggering up to 300 million pounds in inheritance tax in the UK.  It is certainly possible that these figures will continue to increase as a result of shared family accommodations during the pandemic.

Thank you for reading and stay safe,

Nick Esterbauer

 

Other blog posts that you may enjoy reading:

30 Apr

Incapacity Planning Considerations Specific to COVID-19

Nick Esterbauer Capacity, Elder Law, Power of Attorney Tags: , , , , 0 Comments

Earlier this week, Ian Hull and I spoke at Osgoode Professional Development’s program on Powers of Attorney and Guardianship: Non-Contentious and Contentious Matters.

During the program, in addition to discussing new execution options for wills and powers of attorney, the panel shared its thoughts on a number of considerations relevant to the preparation of powers of attorney during the pandemic, including some of the following:

  • It may now be impractical to permit for decisions regarding personal care or property to be made only jointly by two or more attorneys acting together where the attorneys selected are not members of the same household.
  • In light of ongoing travel restrictions, it may be increasingly important that the selected attorney(s) for property and/or personal care are local.
  • It may be more difficult to access multiple medical professionals (or a specified medical professional) to confirm incapacity during a healthcare crisis.  The provision regarding the circumstances in which a power of attorney is to become effective should accommodate potentially limited access to a specified physician or more medical professionals than necessary.
  • It may be more important than ever to ensure that the original power of attorney documents (and/or copies) are physically accessible to the named attorney(s).
  • The current circumstances present a unique opportunity to assist clients in updating outdated plans and ensuring that powers of attorney are put into place for those who do not have them already.

Even outside of the context of a pandemic, considering practical issues like those set out above when creating or updating an incapacity plan is a worthwhile exercise and may expose potential problems with the plan before it is finalized.

Thank you for reading.

Nick Esterbauer

 

Other blog entries that may be of interest:

28 Apr

Funerals During COVID-19

Nick Esterbauer Funerals, Health / Medical, In the News Tags: , , , , 0 Comments

The COVID-19 pandemic has changed the way in which we live our lives, with strict limitations on social gatherings of any kind, including funerals.  However, deaths obviously continue to occur during this period, with death rates among certain population groups on the rise, and delaying memorials and funerals until after the current health crisis has ended, whenever that may ultimately be, may be impractical and/or prolong the grieving process.

A review of recent news articles suggests that several trends are beginning to emerge in respect of funerals as large in-person gatherings continue to be prohibited throughout Canada and much of the world:

  • Some funerals are being held using video-conferencing software such as Zoom, with enhanced ability for family members living abroad to participate, with some funeral services continuing in-person, with very limited attendance (typically limited to five individuals, including the officiant) and distance of no less than six feet between attendees who are not members of the same household;
  • Communities such as Flatrock, Newfoundland, have seen cars line up along the side of a street to blink their lights as the hearse passes by on its way to the cemetery as a way to show their respect without potential exposure to the virus;
  • In Quebec, because of concerns over transmission, embalming in respect of the remains of a victim of COVID-19 is prohibited, there are restrictions as to the timing for visitations and interment, and funeral-related service providers are relying upon protective equipment (such as N95 masks and gloves) to stay safe while handing remains of COVID-19 victims;
  • Funerals in Calgary and elsewhere are reportedly “going digital”, with funeral home directors citing the increased role of online photo gathering and live-streamed funeral services;
  • Online visitations are gaining popularity (according to funeral workers in Windsor), while some Jewish families are sitting shiva on Zoom.

It will be interesting to see whether any of these trends survive the lessening of restrictions on social gatherings.

Thank you for reading.

Nick Esterbauer

 

Other blog entries that may be of interest:

27 Apr

Encouraging Discussion About End-of-Life Wishes

Nick Esterbauer Elder Law, Estate Planning, Health / Medical, Power of Attorney Tags: , , , , , , 0 Comments

COVID-19 has prompted innovation and legislative updates in terms of the way that lawyers can assist our clients with estate and incapacity planning.  A new tool created by a professor at my alma matter, Queen’s University, has recently emerged to supplement formal planning by making it easier for clients to create end-of-life treatment plans and to discuss their end-of-life wishes with their families and health care teams.

The Plan Well Guide is a free online tool that allows users to formulate a “Dear Doctor letter”, which can be provided to a physician for discussion and can be reviewed with family members (or otherwise an attorney or guardian of personal care) to ensure an understanding of the person’s wishes during a health crisis.  The website also includes other information and resources relevant to end-of-life decision making.

I went through the process of creating an end-of-life plan using this resource and found it to be user-friendly and straightforward.  Some highlights of the Plan Well Guide include the following:

  • There are prompts that ask whether a user has a Power of Attorney for Personal Care and Will in place, which may act as a prompt to obtain a lawyer’s assistance if necessary.
  • The website illustrates the user’s wishes, with examples to confirm the accuracy of the information that the user inputs.  Where the illustration is not consistent with the user’s actual wishes, the user can go back to modify priorities to better reflect their wishes.
  • Quizzes to ensure proper understanding of terms such as ICU treatment, comfort care, and the nature of resuscitation.
  • There are prompts for both outstanding questions or issues for discussion with a healthcare provider and explanations of wishes to provide those reading the document with a better understanding of the user’s rationale behind their wishes.

Especially in the midst of the current pandemic, tools like this that make end-of-life planning more accessible, while having the potential to expose deficiencies in incapacity or estate planning and encouraging an open discussion of wishes in terms of medical treatment, can be helpful resources.

Thank you for reading.

Nick Esterbauer

 

Other blog posts that may be of interest:

30 Jan

What Impact Might MAID Have on a Will Challenge?

Nick Esterbauer Capacity, Estate Litigation, Health / Medical, Wills Tags: , , , , , , , , , , 0 Comments

In preparing my other blogs this week, I spent some time considering the issue of how we might see the increased access to medical assistance in dying (MAID) impact our practice area.  As such, I thought that I would finish off this series of blogs focusing on MAID with a hypothetical question I have not yet encountered in practice, but which is inevitably going to be raised: what impact, if any, does MAID have on a will challenge?

Our regular readers will already be well aware that capacity is task, time, and situation specific.

Presumably, the standard of capacity applying to the decision to access MAID is that required to make other personal care decisions, such as receiving or refusing medical treatment.  Section 45 of the Substitute Decisions Act, 1992, defines incapacity for personal care as follows:

A person is incapable of personal care if the person is not able to understand information that is relevant to making a decision concerning his or her own health care, nutrition, shelter, clothing, hygiene or safety, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.

I have been unable to find any literature suggesting whether the standard may be somewhat heightened as a result of the significant impact of the decision to actually receive MAID.

The standard for testamentary capacity typically applied remains that set out in the old English authority of Banks v Goodfellow.  While some have suggested that the standard of testamentary capacity be updated, we are generally concerned with the same, well-established criteria:

It is essential to the exercise of such a power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties—that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.

While, historically, standards of mental capacity were viewed as hierarchical, recent case law and commentary have strayed from this understanding, instead viewing the different standards of mental capacity as just that: different.  Courts will consider whether an individual understood the nature of the decision being made and appreciated the reasonably foreseeable consequences of their decision.

Consent to MAID must be confirmed very shortly before it is administered, which restriction has been of considerable controversy.  While possessing the capacity to confirm consent to obtain MAID may not correspond to testamentary capacity, it may nevertheless become evidence suggestive of a degree of mental capacity that is valuable (in conjunction with other evidence) in establishing that a last will and testament executed shortly before death is valid.

Whether the fact that MAID has been achieved will be important evidence on a will challenge in support of testamentary capacity or not remains to be seen, but it will be interesting to see how the laws relating to MAID evolve and how incidents of MAID may impact estate law over time.

Thank you for reading,

Nick Esterbauer

28 Jan

MAID: Upcoming Developments

Nick Esterbauer Elder Law, Ethical Issues, Health / Medical, In the News, Public Policy Tags: , , , , , , , 0 Comments

In many respects the law of Quebec differs from that of other provinces.  In terms of medical assistance in dying (MAID), however, a September 2019 decision of the Quebec Superior Court of Justice has the potential to spark change in legislation throughout the country.

In Truchon c Procureur général du Canada, 2019 QCCS 3792, the Court considered the constitutional validity of the requirement that the natural death of individuals accessing MAID be reasonably foreseeable.  The applicants had been declared ineligible for MAID on the basis that their deaths were not considered to be reasonably foreseeable.  The first applicant suffered from cerebral palsy and his condition had deteriorated significantly in 2012, when he became totally paralyzed, preventing him engaging in activities that he had previously enjoyed.  The second applicant suffered from paralysis and severe scoliosis, with a significant change in her health in 1992 when she was diagnosed with degenerative muscular post-polio syndrome.  Both applicants lived in constant pain with a poor prognosis of continued suffering and deterioration, but had been denied access to MAID on the basis that their natural deaths were not reasonably foreseeable and decided to seek the Court’s assistance.

The Court first reviewed the issue of whether the reasonably foreseeable natural death requirement violated the rights to life, liberty, and security of the person under Section 7 of the Canadian Charter of Rights and Freedoms.  While the restriction was noted to have the potential effect of prolonging the lives of some individuals who would otherwise request MAID, it was also considered to have the risk of encouraging some patients “to end things prematurely, and often in a degrading or violent manner, before being in mortal agony, or having completely lost their dignity or being in the final stage of life.”  Due to the exposure of some Canadians seeking MAID to (1) a higher risk of death and (2) physical and psychological pain, “depriv[ing] them of the opportunity to make a fundamental decision that respects their personal dignity and integrity”, the reasonably foreseeable death requirement was ruled to infringe the right to life, liberty, and security under Section 7 of the Charter.

Next, the Court considered whether the reasonably foreseeable natural death requirement violated the right to equality under Section 15 of the Charter.  The Court found the applicants were prevented from accessing MAID on the basis of the nature of their disabilities, which notwithstanding being “serious and incurable” did not render death reasonably foreseeable, and that as a result the first applicant in particular was “deprived of the exercise of these choices essential to his dignity as a human being due to his personal characteristics that the challenged provision does not consider. He can neither commit suicide by a method of his own choosing nor legally request this assistance.”

The infringement of the applicants’ fundamental rights under Sections 7 and 15 of the Charter was not considered to be justified by Section 1 and the Court, accordingly, declared these provisions of Quebec and Canadian MAID laws unconstitutional.  The declaration of constitutional invalidity of the reasonably foreseeable natural death requirement for accessing MAID was suspended for six months to provide an opportunity to address amendments to provincial and federal legislation.

Quebec has recently announced that it now intends to eliminate the parts of its MAID legislation that have been declared unconstitutional.  Prime Minister Trudeau has advised that the government will be updating federal legislation to reflect the Truchon decision prior to March 11, 2020, when the judgment will take effect.  Precisely how Canada and Ontario will amend the relevant provisions of MAID legislation has yet to be determined.

As yesterday’s blog mentioned, there has been recent scrutiny regarding the restrictive approach in respect of access to MAID and this decision out of Quebec and corresponding updates to the law may represent an important first step in the right direction in enhancing accessibility.

Thank you for reading,

Nick Esterbauer

27 Jan

Recent Developments in MAID

Nick Esterbauer Capacity, Elder Law, Ethical Issues, Health / Medical, In the News Tags: , , , , , , 0 Comments

Our blog has previously covered the developments in medical assistance in dying (MAID) since the prohibition against MAID ended in Canada in 2016.

Almost 230 thousand Canadians responded to a recent government survey on MAID, making it the largest public consultation in Canadian history.  Although the complete survey results have yet to be released, respondents are reported to have shown great support for making it easier for Canadians to access MAID.

As MAID has gained recognition throughout the country, many have fought for increased accessibility and the expansion of eligibility criteria.  Specifically, some believe that the criteria are too restrictive in excluding (1) individuals whose deaths are not imminent, and (2) those who cannot consent to receive MAID at the time at which it is administered.  Because recipients of MAID are required to provide consent personally immediately prior to its administration (rather than in advance), health problems that may also impact mental capacity can render some of them ineligible.

In some parts of the country, MAID is already accessed at significant levels.  In Vancouver Island, with the greatest access in Canada to MAID per capita, MAID accounted for over six percent of all deaths in 2019.

Given the clear engagement of Canadians regarding the issue of enhancing access to MAID, it will be interesting to see how legislation regarding MAID may be updated over time to address the potential introduction of advanced consent and/or the authority of substitute decision-makers to confirm consent.

Thank you for reading,

Nick Esterbauer

 

Other blog posts that may be of interest:

28 Nov

A Step Toward Equal Inheritance Rights

Nick Esterbauer Estate & Trust, In the News, Public Policy, Wills Tags: , , , , 0 Comments

A recent decision by an Egyptian court saw the reversal of the trend in following Islamic Sharia inheritance law under which female beneficiaries are entitled to half the interest of their male counterparts.

The claimant, a human rights lawyer, applied to obtain the same rights as her brothers on the death of her father.  Her case was previously dismissed by two courts.

In Egypt, Sharia principles are typically applied unless the parties agree that Christian inheritance laws, which do not favour male beneficiaries over females, instead be followed.  In this case, the claimant and her brothers agreed that the administration of their father’s estate would not be subject to Sharia inheritance rules.

Last year, a proposed law in Tunisia designed to promote equality in respect of inheritances sparked discussion regarding unequal inheritances in a number of jurisdictions including Egypt.  A 2017 survey suggests that over half of Tunisia’s population remains opposed to equal inheritance rights.

It is anticipated that this decision may result in significant change in jurisdictions where Sharia law has historically been applied in respect of personal property, regardless of religion.

Canadian courts have also considered the issue of cultures that may support an estate plan favouring sons over daughters simply on the basis of their gender.  In Grewal v Litt, 2019 BCSC 1154, the daughters of the deceased challenged the Wills left by their parents, who both died in 2016, on the basis that they discriminated against them in favour of their brothers on the basis of their sex.  The four daughters applied under Section 60 of the Wills, Estates and Succession Act, SBC 2009, c 13 (the “WESA“), for the variation of the Wills that directed the payment of $150,000 to each daughter, while the residue of the estates valued at greater than $9 million was left to the two sons.

Justice Adair noted that there was no dispute that the parents owed a moral obligation to their daughters under BC law, and, as the Wills made inadequate provision for them, they should be varied under the WESA.  The Court attempted to resolve the matter by balancing the adequate, just, and equitable provision for the daughters with their parents’ testamentary autonomy and varied the division of estate assets from approximately 93% in favour of the sons with only a combined 7% for the daughters, to the more equitable division of 15% of the value of the estates for each daughter and 20% for each son.  Notwithstanding the granting of the variation of the Wills, the Court stopped short of finding that the parents’ testamentary intentions were motivated solely by unacceptable discrimination against the daughters.

While many provinces do not recognize a parental obligation to benefit a non-dependant adult child after death, coming years may nevertheless see an increase in the number of challenges to a will on the basis that its terms are discriminatory.

Thank you for reading.

Nick Esterbauer

 

Other blog posts that may be of interest:

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