Author: Noah Weisberg

27 Jun

What is the Limitation Period in Setting aside a Marriage Contract?

Noah Weisberg Litigation Tags: , , , , , , , 0 Comments

The recent Ontario Superior Court of Justice decision in F.K. v. E.A. addresses limitation periods and discoverability in the context of setting aside a marriage contract.

By way of background,  husband and wife began their relationship in 2000, cohabitating in June of 2004, and marrying on July 20, 2005.  Shortly before marriage, on July 14, 2005, the (soon to be) husband and wife entered into a marriage contract.  The marriage contract was prepared by the wife who obtained a template off the internet.  The husband and wife eventually separated on August 13, 2012.  A dispute arose over certain terms of the marriage contract.  The husband thereafter brought a claim on August 24, 2017 for spousal support, equalization, as well as setting aside the marriage contract.  Two of the issues that the Court addressed included whether (i) the relief sought to set aside the marriage contract is subject to the two year limitation period and, if so, (2) whether the husband brought his claim in time.

Regarding the first issue, the Court found that the husband’s claim to set aside the marriage contract is a claim as defined in section 1 of the Limitations Act and therefore subject to the two year limitation period.

As it relates to the second issue of discoverability, evidence was adduced that the husband met with a lawyer in October 2012 to discuss the dispute with his wife and certain legal issues arising with respect to the marriage contract.  Based on this evidence, the Court established that by that date at the latest, he first knew: that the injury, loss or damage had occurred; that the injury, loss or damage was caused by or contributed to by an act or omission; and, that the act or omission was that of the person against whom the claim is made.  The Court dismissed the husband’s claim finding that the two years began running the date he met with his lawyer.

 

Noah Weisberg 

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04 Apr

When Estates Become Public

Noah Weisberg Estate & Trust, In the News Tags: , , , , , , , , , 0 Comments

One of the consequences of having to probate a Will (now referred to in Ontario as applying for a Certificate of Appointment of Estate Trustee) is that the Will, along with the assets covered by the Will, are made public.

I was intrigued to read about the estate of the billionaire co-founder of Microsoft, Paul Allen.   In addition to Allen’s Last Will being made public,  multiple news articles have published a list of some of the amazing properties owned by him, including a:

  • condominium in Portland, Oregon ($700,000 to &850,000)
  • 20-acre property in Santa Fee purchased from Georgia O’Keefe’s estate ($15 million)
  • 2,066-acre ranch in Utah ($25 million)
  • Silicon Valley 22,005 square foot house ($30 million)
  • New York City penthouse on 4 East 66th Street ($50 million)
  • double property in Idaho totalling 3,600 acres ($50 million)
  • 3 acre compound on the Big Island in Hawaii ($50 million)
  • 18 bedroom mansion in the South of France ($100 million)
  • 387 acre camp in Lopez Island, Washington ($150 million)
  • 8 acres of land on Mercer Island, Washington ($130 million)
  • 400 foot Octopus Yacht (up to $130 million)

While I have no intention to address the efficacy of Allen’s estate plan, I thought the publicity of his estate provides a reminder that careful estate planning can ensure that privacy is maintained, and the payment of probate tax be avoided.  In Ontario, there are numerous options available including preparing a secondary (or tertiary) Will, placing assets in joint ownership with the right of survivorship, or simply gifting assets prior to death.  This is by no means an exhaustive list, and each option carries certain advantages and disadvantages.

While I expect that few people have the impressive catalogue of properties that Allen had, it should by no means preclude careful estate planning.

 

Thanks for reading!

Noah Weisberg

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02 Apr

The Ups and Downs of Estate Trustee Compensation

Noah Weisberg Executors and Trustees, Passing of Accounts, Trustees Tags: , , , , , , , , 0 Comments

When is it appropriate for a court to reduce estate trustee compensation?  The Supreme Court of Nova Scotia addressed this issue in Atlantic Jewish Foundation v Leventhal Estate (“AJF”).

Before getting into the AJF decision, it is worthwhile to include the caveat that determination of estate trustee compensation in Ontario (a summary of which can be found in my paper here) differs somewhat as compared to Nova Scotia.  Nonetheless, both provinces use 5% of the value of the estate, subject to the discretion of the court, as the starting point in determining the quantum of compensation.  As such, AJF remains informative in Ontario.

The deceased left a Will naming his friend, who was also a lawyer, as his Estate Trustee.  AJF was named as the residuary beneficiary.  The Will was silent as to estate trustee compensation.  As the estate was valued at over $15 million, the Estate Trustee sought compensation in the approximate amount of $896,000, being 5% of the gross adjusted value of the estate.  AJF maintained that the amount was excessive and proposed compensation in the amount of $300,000.

In determining how much compensation the Estate Trustee should be entitled to, and applying an approach similar to Ontario’s ‘five factors’, the court made the following observations: the level of responsibility is often greater for higher value estates; the increasing level of responsibility does not necessarily rise in direct proportion to the size of the estate; the Estate Trustee arranged and supervised the funeral and burial, which was mainly handled by telephone; the Estate Trustee acted promptly in selling the house; many of the assets were already in the form of cash, and the Estate Trustee knew the banks the deceased used; the Estate Trustee was diligent, wise and prudent and had to be a hands-on executor; the Estate Trustee made no mistakes; a large part of the estate was made up of investments that were readily converted into cash for distribution; and, the estate was larger rather than complex.

The court noted that 5% should be reserved for estates where there are complicating features that require more than wise and careful planning to maximize the value of the estate.  Therefore, the court awarded compensation in the amount of $450,000, being slightly more than 50% of the maximum amount that could be awarded.  A larger amount of compensation would have the effect of reading into the Will a bequest to the Estate Trustee that the deceased did not intend to make.

Noah Weisberg

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01 Apr

How to Dispense with an Administration Bond

Noah Weisberg Executors and Trustees, Trustees Tags: , 0 Comments

The requirement to post a bond can be found in section 35 of the Estates Act.  An Estate Trustee will be required to obtain an administration bond in instances including where: the deceased passed away without a will; the will does not name the applicant seeking to be appointed; or, the Estate Trustee resides outside of Ontario.

The amount of the bond is to be double the sworn value of the estate.  However, practice has developed (see D’Angelo Estate) such that the size of the bond has been reduced to the sworn value of the estate.

While section 36(1) of the Estates Act sets out specific instances where security is not required, it is section 37(2) which gives the court the general power to reduce the amount of the bond or dispense with it altogether.  In the helpful decision of Henderson (Re), the court indicates that the applicant Estate Trustee who seeks an order dispensing with the requirement to post a bond, should file affidavit evidence in support, containing the following:

  1. The identity of all beneficiaries of the estate;
  2. The identity of any beneficiary of the estate who is a minor or incapable person;
  3. The value of the interest of any minor or incapable beneficiary in the estate;
  4. Executed consents from all beneficiaries who are sui juris to the appointment of the applicant as estate trustee and to an order dispensing with an administration bond should be attached as exhibits to the affidavit. If consents cannot be obtained from all the beneficiaries, the applicant must explain how he or she intends to protect the interests of those beneficiaries by way of posting security or otherwise;
  5. The last occupation of the deceased;
  6. Evidence as to whether all the debts of the deceased have been paid, including any obligations under support agreements or orders;
  7. Evidence as to whether the deceased operated a business at the time of death and, if so, whether any debts of that business have been or may be claimed against the estate, and a description of each debt and its amount;
  8. If all the debts of the estate have not been paid, evidence of the value of the assets of the estate, the particulars of each debt – amount and name of creditor – and an explanation of what arrangements have been made with those creditors and what security the applicant proposes to put in place in order to protect those creditors.

Applicants should make sure to address each of these factors when applying to dispense with an administration bond.

Noah Weisberg

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03 Jan

Can a Non-Party Attend and Assist Counsel at an Examination?

Noah Weisberg Litigation Tags: , , , , , 0 Comments

The Rules of Civil Procedure govern examinations for discovery.  Silent though, is when a non-party will be permitted to attend an examination for discovery and assist counsel.  The answer can be found in case law.

An examination for discovery is not a public hearing, and as such non-parties cannot simply show up like they can at court.  Instead, the party seeking the non-party’s attendance and assistance must either get the consent of counsel or permission from the court.

Master Dash in Poulton v. A&P Properties Ltd., set out the following governing principles:

  1. since a cross-examination on an affidavit is not a public hearing, a non-party may attend to assist a party only on the consent of the other side or on the order of the court;
  2. the onus is on the party seeking such an order to prove entitlement to it;
  3. the non-party should not be a witness at the subsequent trial;
  4. the attendance of the non-party must not disrupt the examination process;
  5. the non-party must not take the role of witness or assist the witness is answering questions; and
  6. a court in exercising its jurisdiction as to whether to allow the presence of a non-party must do so having regard to both substantive fairness to the parties and the appearance of fairness.

While every case will turn on the specific facts, it appears that generally speaking experts may attend to assist with technical and complex evidence (although they cannot later be an expert witness at trial), as well as a resource person or expert assistant who is familiar with a file in a document-intensive case.

Noah Weisberg

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31 Dec

The Top Estate & Trust Cases from 2018

Noah Weisberg General Interest, New Media Observations, News & Events, Trustees, Wills Tags: , , , , , , , , , , 0 Comments

It is nearly a new year.  It is during this time that we reflect on the past year, make goals for the upcoming year, and come across all sorts of ‘best of’ and ‘most popular’ rankings.

As such, I herewith present the most popular estate and trust cases from 2018, as decided solely by me (and without regard to any actual data):

  • Moore v Sweet – the Supreme Court of Canada provided clarification regarding the juristic reason competent of the test for unjust enrichment, as well as confirmed the circumstances in which a constructive trust remedy is appropriate in the context of unjust enrichment.
  • Re Milne Estate & Re Panda – In Re Milne (currently under appeal), the Superior Court of Justice found that multiple Wills were invalid where so-called ‘allocation clauses’ (also referred to as basket clauses) in the Wills provided the Estate Trustees with the discretion to determine which estate assets fell under which Will. Conversely, in Re Panda, the Superior Court of Justice declined to follow Re Milne and probated the Will notwithstanding the presence of an allocation clause.  The Superior Court of Justice also addressed the roles of the court as either the ‘court of probate’ or ‘court of construction’ and whether a Will is a trust that is subject to the three certainties.
  • Wall v Shaw – the Court of Appeal (sitting as the Divisional Court) held that there is no limitation period to objecting to accounts in an Application to Pass Accounts. The Court reasoned that a notice of objection does not commence a ‘proceeding’ for the purposes of section 4 of the Limitations Act.
  • Seguin v Pearson – the Ontario Court of Appeal reiterated the different tests for undue influence that apply in the inter vivos and the testamentary context.
  • Valard Construction Ltd. v. Bird Construction Co. – the Supreme Court of Canada found that a trustee had a fiduciary duty to disclose the terms of a trust (here, it was a bond) to the beneficiary, notwithstanding the fact that the express terms of the trust did not stipulate this requirement.

 

 

Thanks for reading!
Noah Weisberg

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25 Oct

‘Passing’ on your Points

Noah Weisberg Beneficiary Designations, Estate Planning Tags: , , , , , , , , , 0 Comments

As an avid Seinfeld fan, I recently watched the episode where Elaine Benes kept on eating submarine sandwiches just so she could collect enough points to earn a free sub.  Spoiler alert: Elaine lost the loyalty card before redeeming the free sub.  Unfortunately, many estates fail to take advantage of these rewards and end up just like Elaine.

It is estimated that in the US alone, three trillion frequent flyer miles are given annually.  Notwithstanding this dizzying number of points, in Ontario there is no law addressing if, and how, points can be transferred upon death.  Airlines are left to create their own procedure and standards.

There is a helpful resource, here, which sets out the policies of the major US frequent flyer programs in plain english.  The CBC offers similar information for Canadian frequent flyer programs here.  While some airlines permit the transfer of points, many discount their value.  Some even refuse to allow there to be a transfer altogether.

As discussed in my previous blog, Anthony Bourdain included his frequent flyer miles in his will.  Given the suspected value of these points, this estate planning decision makes sense.

In considering an estate plan, a testator should, first, decide whether to choose airlines based on the ability to transfer points.  Second, if a testator has amassed significant points, and they are transferrable, make sure to include them in a will.

Noah Weisberg

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23 Oct

Can a Guardian Settle a Trust?

Noah Weisberg Capacity, Estate Planning, Ethical Issues, Guardianship, Power of Attorney Tags: , , , , , , , , , , , 0 Comments

Does an attorney, or guardian, have the power to change a grantor’s estate plan?

According to section 31(1) of the Substitute Decisions Act, a guardian of property (or attorney for property) has the power to do on the incapable person’s behalf anything in respect of property that the person could do if capable, except make a will.

The statute, however, is deceptively simple.  Can a guardian transfer property into joint tenancy?  Can a guardian sever a joint tenancy?  Can a guardian change a beneficiary designation on a RRSP, RRIF or insurance policy?  Can an inter vivos trust be established or an estate freeze undertaken to save taxes?  There are numerous cases which have tested these issues.

For instance, in Banton v Banton, Justice Cullity found that although the grantor’s attorneys had the authority to create an irrevocable inter vivos trust, they nonetheless breached their fiduciary obligations owing to the grantor, in creating the trust.

The irrevocable trust provided for income and capital at the trustee’s discretion for the grantor’s benefit during his lifetime and a gift over of capital to the grantor’s children, who were also the attorneys.  The scheme of distribution of the irrevocable trust was the same as provided for in the grantor’s will.   However, the court found that the fact that the remainder interest passed automatically to the grantor’s issue defeated the grantor’s power to revoke his will by marriage and would deprive his common law spouse of potential rights under Parts II and V of the Succession Law Reform Act and Part I of the Family Law Act.  The court found that the gift of the remainder of the interest went beyond what was required to protect the grantor’s assets.

Justice Cullity stated:

“I do not share the view that there is an inviolable rule that it is improper for attorneys under a continuing power of attorney to take title to the donor‘s assets either by themselves or jointly with the donor .  This must depend upon whether it is reasonable in the circumstances to do so to protect or advance the interest, or otherwise benefit, the donor.”

Noah Weisberg

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22 Oct

Fiduciary Accounts – Yes, Form Matters

Noah Weisberg Executors and Trustees, Guardianship, Passing of Accounts, Power of Attorney Tags: , , , , , , , , 0 Comments

In the Estate of Divina Damm the Court answers the following question – what form of accounts must a guardian of property use when filing an application to pass accounts?

The facts in Re Damm Estate are not remarkable.  A guardian of property commenced an application to pass accounts in accordance with Rule 74.18 of the Rules of Civil Procedure seeking court approval of her accounts.  No objections arose with respect to the accounts, such that the guardian proceeded to file the application ‘over the counter’ as an unopposed application to pass accounts.

Notwithstanding that there were no objections, the Court refused to approve the accounts.  The Court was concerned with the lack of detail and itemization in the entries, as well as the failure to comply with Rule 74.17.  The judge tried to “…link all numbers listed in the draft judgment with information presented in the accounts but [was] unable to do so – because the accounts are not in proper form”.

Interestingly, the judge considered whether smaller estates should be permitted to file accounts in a simple format, but noted that it was for the Legislature and the Rules Committee to consider.

Accordingly, the Court directed the guardian to re-serve and re-file the accounts prepared in compliance with Rule 74.17.

Noah Weisberg

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16 Aug

When Might a Solicitor be Negligent in Preparing a Will?

Noah Weisberg Capacity, Litigation Tags: , , , , , , , , , 0 Comments

Solicitors preparing Wills need to be mindful of the obligations they owe to a testator.  The seminal Court of Appeal decision in Hall v Bennett Estate provides a helpful refresher of the steps a solicitor should consider to ensure best practices are followed.

According to the Court, it is well established that a “solicitor who undertakes to prepare a will has the duty to use reasonable skill, care and competence in carrying out the testator’s intentions. This duty includes the obligation to inquire into and substantiate the testator’s capacity to make a will”.

Testing for capacity is fundamental – a solicitor has a duty to make inquiries into the testamentary capacity of the testator.

Should the solicitor have any doubt as to capacity, Justice Cullity in Scott v Cousins, famously states that “…careful solicitors who are in doubt on the question of capacity, will not play God – or even judge – and will supervise the execution of the will while taking, and retaining, comprehensive notes of their observations on the question”.

The Court of Appeal proceeds to summarize an article written by M.M. Litman & G.B. Robertson outlining errors made by solicitors in the preparation of a Will, leading to negligence claims,  including failing to:

  • obtain a mental status examination;
  • interview the testator in sufficient depth;
  • properly record or maintain notes; and
  • test for capacity.

As such, notes from a drafting solicitor should ensure that all of these are addressed.

In certain instances, although narrow, a duty of care might also be owed to a disappointed beneficiary.  A two part test is applied as set out by the Supreme Court of Canada in Cooper v. Hobart.

While claims for negligence by testators and disappointed beneficiaries cannot be stopped, a file with detailed notes can go a long way in defending such a claim.

Noah Weisberg

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