Author: Paul Emile Trudelle

14 Feb

Natural Love and Affection

Paul Emile Trudelle Estate Planning Tags: , , , , , , 0 Comments

As it is Valentine’s Day, our discussion today will consider, naturally, love and affection.

Real property can be gifted to loved ones. If there is no consideration of monetary value, then there will be no Land Transfer Tax payable on the transaction. In the Land Transfer Tax Affidavit, which must be filed when any transfer is registered in Ontario, the transfer is said to be for “natural love and affection”.

Although not specifically exempt from taxes, a transfer for “natural love and affection” is considered to be a transfer for nil value, and therefore, no Land Transfer Tax is payable.

“Love”, as most poets know, is hard to define. There is no definition in the tax legislation. Further, it is not clear what “unnatural” love or affection is.

In certain cases, gifts to non-arms’ length parties may also not attract Land Transfer Tax. For example, a gift to a charity may not be subject to Land Transfer Tax.

If the gift includes the assumption of a mortgage or other liabilities by the receiver, then the value of the mortgage or liability assumed by the receiver is of value to the donor, and must, in most cases, be included in the Land Transfer Tax Affidavit. Land Transfer Tax will be payable on the value of the mortgage or liability assumed. I say “in most cases” because there is an exemption where the transfer is between spouses or former spouses: see R.R.O. 1990, Regulation 696.

Further, if the receiver is not a spouse and the land was subject to a mortgage that was paid off by the receiver, Land Transfer Tax will be payable on the value of the mortgage paid off.

When gifting real property, keep in mind that while Land Transfer Tax may not be payable, this does not mean that income taxes are not payable. In many cases, the gift will trigger a deemed capital gain on the part of the donor.

For more information, see the Ontario Ministry of Finance bulletin, here, and the Government of Ontario publication, “A Guide for Real Estate Practitioners: Land Transfer Tax and the Registration of Conveyances of Land in Ontario”, here.

Thanks for reading.

Paul Trudelle

07 Feb

Ten-Year Limitation Period for Real Property Claims

Paul Emile Trudelle Estate & Trust Tags: , , , 0 Comments

In the recent case of Wilkinson v. The Estate of Linda Robinson, 2020 ONSC 91, the court rejected an argument that the 2-year limitation period set out in the Trustee Act applied to a claim against an estate for an interest in a real property on the basis of constructive trust. The court held that the 10-year limitation period set out in the Real Property Limitations Act applied.

In the case, the deceased died on July 2, 2015. The deceased died owning a real property that she and her common-law spouse lived in. In her will, the deceased allowed her spouse to live in the house for 2 years. The surviving spouse brought a claim that he was entitled to an equal interest in the house.

However, the claim was not commenced until September 25, 2017. The estate seized upon this delay and brought a motion to have the application dismissed on the basis of the passage of the 2-year limitation period set out in the Trustee Act.

The court dismissed this argument. It held that the appropriate limitation period was not the one set out in the Trustee Act, but the one set out in the Real Property Limitations Act.

The court quoted extensively from the Court of Appeal decision of McConnell v. Huxtable, 2014 ONCA 86. There, the court determined that a claim for a constructive trust in a common law relationship based on unjust enrichment was an action for recovery of land and therefore was governed by the Real Property Limitations Act. The applicable limitation period was therefore 10 years.

In a similar case, Rolston v. Rolston, 2016 ONSC 2937, the court refused to apply the 2-year limitation period to a claim for a remedial constructive trust brought 7 years after the date of death of the deceased. Again, the action was allowed to continue under the 10-year limitation period set out in the Real Property Limitations Act.

Ideally, any claim involving an estate should be brought within 2 years of the date of death of the deceased so as to avoid any limitation period issue. However, where this has not been done, it may still be possible to maintain a claim under certain circumstances.

Thanks for reading.

Paul Trudelle

31 Jan

St. Mark Preaching In Alexandria: Working for Your Bequest

Paul Emile Trudelle Estate Planning, General Interest, Wills Tags: , , , , 0 Comments

St. Mark Preaching in Alexandria is an impressive, substantial work: it measures 3.47 m by 7.70 m.

Gentille Bellini[1] started the canvas in July 1504. However, he died in February, 1507, before the work was completed. The painting was eventually completed in March, 1507, by Gentille’s brother, Giovanni.

It is believed that Gentille asked Giovanni to complete the painting before Gentille died. Giovanni refused. Gentille then prepared a will in which Giovanni was to be given a collection of drawings from their father and one of the founders of the Renaissance style of painting, Jacopo Bellini, but only on the condition that Giovanni complete the painting.

Conditions precedent, although rare, are not unheard of. Consider a will that provides that the beneficiary can inherit a $300m estate if he can spend $30m in 30 days (Brewster’s Millions), a will that provides for the residue of an estate to pass to “the mother who has since my death given birth in Toronto to the greatest number of children” (Millar Estate), or a will that provides that the beneficiary can inherit a substantial gift, but only if he or she spends the night in a (haunted) house (just about every Scooby-Doo episode).

However, wills with conditions can be fraught with difficulty. There are issues of uncertainty or even impossibility of the condition. They can be contrary to public policy. The condition may also be considered to be “repugnant” to the nature of the gift. An issue arises as to whether the condition is a condition precedent, in which the gift may fail in its entirety, or a condition subsequent, in which the gift may stand but the condition may fail. Great care in drafting such clauses is required.

Thank you for reading.

Paul Trudelle

[1]           Fun fact: Yes, the Bellini cocktail is named after Giovanni Bellini. Apparently, the pink colour of the peach puree and prosecco drink reminded its inventor, Giuseppe Cipriani of Harry’s Bar, Venice, of the colour of a toga of a saint in one of Giovanni’s paintings.

24 Jan

Fraudulent Calumny

Paul Emile Trudelle Estate & Trust, Wills Tags: , , , , , 0 Comments

Your sister (falsely) trash talks you to your mom. Mom then writes you out of her will.

“Fraudulent calumny!”, you scream.

Fraudulent calumny occurs where a person poisons the mind of a testator against another person who would otherwise be a natural beneficiary of the testator’s bounty by casting dishonest aspersions on his or her character.

The doctrine has been applied or considered in many UK decisions.

Fraudulent calumny is said to be a species of undue influence. However, rather than influence a testator to do something, the influencer influences a testator to NOT do something: leave a bequest to a certain party.

In order to establish fraudulent calumny, the person alleging fraudulent calumny must prove:

  1. That A made a false representation;
  2. To B, the testator;
  3. About C, a third person;
  4. For the purposes of inducing B to alter his or her testamentary dispositions;
  5. That A made the representations knowing them to be false, or reckless as to their truth; and
  6. That B’s will was made only because of the false representations.

See Kunicki& Anor v. Hayward, [2017] 4 WLR 32 at paragraph 122.

Like other undue influence, the test is a difficult one to pass.

In a recent UK decision, Rea v. Rea, [2019] WTLR 1231, the court rejected a claim of fraudulent calumny. The court held that the challengers did not establish that their sister poisoned their mother’s mind against them, by saying that the challengers had abandoned her. The court found that the mother felt, of her own volition, that she was abandoned. Thus, whether it was true or not, the mother made her own decision without anyone “poisoning her mind”; therefore without fraudulent calumny or undue influence.

For a more artistic depiction of fraudulent calumny, see Boticelli’s Calumny of Apelles. The painting has been described as follows:

On the right of it sits a man with very large ears, almost like those of Midas, extending his hand to Slander while she is still at some distance from him. Near him, on one side, stand two women—Ignorance and Suspicion. On the other side, Slander is coming up, a woman beautiful beyond measure, but full of malignant passion and excitement, evincing as she does fury and wrath by carrying in her left hand a blazing torch and with the other dragging by the hair a young man who stretches out his hands to heaven and calls the gods to witness his innocence. She is conducted by a pale ugly man who has piercing eye and looks as if he had wasted away in long illness; he represents envy. There are two women in attendance to Slander, one is Fraud and the other Conspiracy. They are followed by a woman dressed in deep mourning, with black clothes all in tatters—she is Repentance. At all events, she is turning back with tears in her eyes and casting a stealthy glance, full of shame, at Truth, who is slowly approaching.

In R. v. Muvunga, defence counsel tried to use the painting as a visual prop, to be referred to as an allegory about false accusations. The court rejected the bid. “While the painting is of great interest to art historians and other scholars, I find that it has no place in a modern Canadian criminal trial.”

Thanks for reading.

Paul Trudelle

17 Jan

Tattoo You

Paul Emile Trudelle General Interest, In the News Tags: , , , , 0 Comments

Tattoos are, without a doubt, popular. According to a clinical report in Pediatrics, in 2010, 38% of 18 to 29 year olds had at least one tattoo. A study conducted in 2015 found that 47% of Millennials had at least one tattoo. Tattoos, once the hallmark of rebel culture, have now crossed over into the mainstream. It may be that the rebels are the ones without tattoos.

Tattoos are now also making a mark on the administration of estates.

Take Chris Wenzel, who died in 2018. His dying wish was that his tattoos, which covered most of his body, be preserved and given to his wife. According to a CBC report, with the assistance of an organization called “Save My Ink Forever”, she was able to preserve Chris’ tattoos.

Legal issues relating to the process are discussed in the December 2019 issue of Step Journal. In an article entitled “Whose Skin Is It Anyway?”, authors Julia Burns and Matthew Watson discuss the legal implications of such tattoo preservation services from the point of view of English and Welsh succession law.

One issue is that in the common law, there is “no property in a corpse”. A person cannot dispose of their own body through their will. However, the authors note that courts are relaxing this rule, particularly where the body or parts have “a use or significance beyond their mere existence”.

Estate trustees have the responsibility of disposing of the body. The deceased’s wishes are not binding on the estate trustee. However, while not binding, they are relevant. The authors cite a decision, RE JS (Disposal of Body), [2016] EWHC 2859 (Fam), where the deceased asked that her body be cryogenically frozen. The deceased’s mother wanted to abide by these wishes, but her father did not. The court appointed the mother as estate trustee. The court could not order that the wishes of the deceased be followed, but did order that the father be restrained from interfering with the mother’s arrangements as estate trustee.

If a tattoo is property of the estate, how is it to be disposed of? The authors suggest that the will should specifically address this.

Another issue that the authors identify is whether an estate trustee would have an obligation to preserve a tattoo, assuming that it has value. Is such a tattoo an asset of the estate that the estate trustee must “call in”? There appears to be no easy answer to this. However, the authors conclude that “Common law’s strength is its ability to adapt to new social developments; treating preserved tattoos as art that can be disposed of in the same manner as any other chattel may be one of them.”

Thanks for reading.

Paul Trudelle

10 Jan

Posthumous Literary Works: Sir Terry Pratchett

Paul Emile Trudelle Estate & Trust, Estate Planning, General Interest Tags: , , , , , , , 0 Comments

Sir Terry Pratchett was a noted author and activist. His genre was fantasy, and more than 85 million copies of his books have been sold. He was most noted for his Discworld series of 41 novels.

Sir Terry Pratchett died on March 12, 2015 at the age of 66 as a result of early-onset Alzheimer’s disease (which he referred to as an “embuggerance”). Prior to his death, he was a vocal supporter of Alzheimer’s research and assisted suicide.

Pratchett left a significant number of unfinished works upon his death. These works will never be enjoyed. Pratchett’s daughter, the custodian of the Discworld franchise, has stated that these works will never be published.

More definitively, Pratchett told his friend and collaborator, Neil Gaiman, that he wanted whatever he was working on at the time of his death to be destroyed. More specifically, he asked that his works and computers be put in the middle of the road and run over by a steamroller.

This wish was fulfilled on August 25, 2017. His hard drive was crushed by a vintage John Fowler & Co. steamroller named Lord Jericho at the Great Dorset Steam Fair. The destroyed hard drive was put on display at The Salisbury Museum

Presumably, the destruction was agreed to by his estate trustees. Otherwise, the works would fall into his estate to be dealt with as assets of the estate.

The wishes of authors with respect to their posthumous works are not always fulfilled. Notably, Franz Kafka asked his friend and literary executor Max Brod to destroy all of his works after he died. Brod ignored this request, and as a result, some of Kafka’s most famous works, The Trial, The Castle, Amerika and The Metamorphosis were published after his death. In an essay by Scott McLemee, it is noted that Kafka was a lawyer, and must have known that his intentions set out in a couple of notes would not be binding on his estate trustee.

Thanks for reading.

Paul Trudelle

27 Dec

Year End Lists

Paul Emile Trudelle General Interest Tags: , , , 0 Comments

The year and the decade are quickly winding down. In the days before the onset of 2020, it’s TIME FOR LISTS!

Year-end lists are everywhere: best estate cases, best songs, best movies, best TV shows, best books, best punt returns, best (or worst) Donald Trump moments. The list(s) go(es) on.

Rather than add to what is already a very long list of lists, I thought I would share with you one of my all-time favourite lists: “Changes to the Hotel California, Made in Response to Mr. Henley’s Recent Complaint”, by John Moe[i], as posted on McSweeney’s Internet Tendency.

 

Once read, you will never be able to listen to The Eagle’s Hotel California in the same way again.

Great song. Great guitars. If you haven’t listened to it in a while, give it a listen. Millennials: if you haven’t listened to it ever, give it a listen.

The list:

  • Update room décor, including removal of ceiling mirrors
  • Restock spirit supplies, encourage Captain to offer guests other options
  • Acquire steelier knives and/or less resolute beast
  • Emphasize “heaven” image over less desirable “hell” alternative
  • Install electric-light system in hallway (long overdue), reassign employee who has been showing guests to room by candlelight
  • Upgrade music selection to accommodate both guests who dance to remember and those who do so to forget
  • Improve courtyard air conditioning to reduce occurrences of sweet summer sweat
  • Encourage nightman to be less cryptic when talking to guests
  • Clearly mark passage back to places guests have been before
  • Emphasize core strengths: lovely place, plenty of room, consistent location
  • Reduce power on colitis-oil highway pumps; smell may be overly aggressive
  • Provide “house alibis” to guests who neglect to bring their own
  • Streamline checkout procedures to accommodate guests’ desire to actually leave

 

Thanks for reading. Happy New Year!

Paul Trudelle

*Bonus list: A short list of other John Moe “Pop Song Correspondences” posts:

20 Dec

Death and Holidays

Paul Emile Trudelle General Interest Tags: , , , 0 Comments

We are in the midst of what Andy Williams proclaimed as “the Most Wonderful Time of the Year.” However, holidays can be a particularly difficult time following the death of a loved one.

Marie Curie, a UK organization that provides support for those suffering with terminal illness and their families, has published a list of coping strategies for those dealing with the loss of a partner or parent during the holiday season. Their tips include:

  • Do things differently. If normal traditions are too painful, try something new.
  • Allow yourself to grieve. Acknowledge that the holidays will be difficult.
  • Accept that you may not want to celebrate. You don’t need to socialize if you don’t want to.
  • Visit a garden. Gardens are a great, quiet space to reflect on your loss.
  • Tell others how you wish to spend your time. Choose what you want to do and don’t feel guilty.
  • Be kind to yourself. Take a guilt-free nap.
  • Reach out for support if you think you need it.
  • Involve children in decisions on how they want to spend their time.
  • Have quiet time to reflect on the good times.
  • Don’t feel guilty if you have moments of enjoyment.
  • Talk about favourite memories.

For other tips, see Psychology Today, “How to Deal with Grief During the Holidays”, or Harvard Health Publishing, “Coping with grief and loss during the holidays”.

Whatever your situation, may your days be as merry and bright as possible.

Paul Trudelle

13 Dec

Be Careful When Holding Back (or Not Holding Back)

Paul Emile Trudelle Beneficiary Designations, Estate Litigation, Estate Planning, Trustees, Uncategorized, Wills Tags: 0 Comments

The recent decision of Muth Estate, 2019 ABQB 922, a decision of the Court of Queen’s Bench of Alberta, is a cautionary tale (and a scary one, at that) for estate trustees when distributing an estate.

There, the estate trustee distributed the estate to herself and other beneficiaries of an estate, subject to a holdback. The holdback was insufficient to satisfy amounts owing to CRA. The estate trustee then brought an application for an order requiring that the beneficiaries indemnify her for the amounts owing to CRA.

The estate trustee moved for summary judgment. Summary judgment was denied. The court found that the respondent beneficiaries had no obligation to indemnify the estate trustee.

As background, the estate trustee retained an accountant to prepare estate tax returns. The accountant advised that a holdback of $25,000 was sufficient. The estate trustee therefore held back $25,000, and distributed the balance of the estate. Unfortunately, that accountant did not file the required returns. A second accountant then completed the returns. The tax owing and the second accountant’s invoice totalled $60,772.19. The estate trustee paid this amount, and sought indemnification from the beneficiaries for their share of this amount.

(Query: Whether the estate trustee would have a claim against the first accountant?)

Of note, when making the distributions, the estate trustee could have but did not ask the beneficiaries to provide an indemnity.

The court held that the Income Tax Act imposed personal liability on the estate trustee for unpaid taxes where a clearance certificate is not obtained.

The court went on to find that one of the duties of an estate trustee is to file tax returns and pay taxes owing. As the estate trustee breached her duties, she was not entitled to an indemnity. Relief may have been available if it was the beneficiaries who instigated or requested the breach. However, this was not the case.

The natural corollary of that principle [breach of trust at instigation of beneficiaries] is that if the beneficiaries did not instigate or request the breach, they cannot be obligated to indemnify the trustee. In a fiduciary relationship such as that between a trustee and a beneficiary, the logic of that corollary is that as between the two parties, one who had the obligation to perform the duty and failed and one who had neither the obligation nor the means to satisfy it, it is the former who should bear the consequences of the action or inaction.

Interestingly, the judge dismissed the estate trustee’s motion for summary judgment, but, notwithstanding the finding that the beneficiaries were under no obligation to indemnify the estate trustee, did not dismiss the proceeding. The beneficiaries did not ask for this relief. The matter was therefore allowed to proceed. However, the estate trustee was warned that “if she continues with the lawsuit, she may face a significant costs award if another judge comes to the same conclusion at the end of the suit.”

Thank you for reading.

Paul Trudelle

06 Dec

B.C. Court Admits Computer File to Probate

Paul Emile Trudelle Estate Litigation, Wills Tags: , , 0 Comments

In a decision out of the Supreme Court of British Columbia, a computer file prepared by the deceased was accepted as a will and admitted to probate. Applying the curative provisions of the Wills, Estates and Succession Act, S.B.C. 2009, c. 13 (“WESA”), which came into force on March 31, 2014, the court was able to conclude that the computer record represented the deceased’s full and final testamentary intentions.

In Hubschi Estate (Re), 2019 BCSC 2040 (CanLII), the deceased died after a short illness. No formal will was found. However, his family was able to locate a Word document on his computer labelled “Budget for 2017”. In that computer file, there was the following statement: “Get a will made out at some point. A 5-way assets split for remaining brother and sisters. Greg and Annette or Trevor as executor.”

By way of family background, the deceased was given up by his birth mother at birth to Children’s Aid. At age 3, the deceased was placed in a foster home with the Stacks. He grew up in the Stack house, and was extremely close to his foster parents and 5 foster siblings. He was treated by the immediate and extended Stack family as a member of the family. Upon his foster mother’s death, her estate was divided into 6 shares, with one share passing to the deceased.

On the other hand, if the document was not found to be a will, the deceased’s estate would pass on an intestacy, and would pass to his birth mother’s sister, with whom the deceased had no contact whatsoever.

The court reviewed a number of decisions applying WESA. The court observed that the purpose of the curative provisions in WESA was to avoid the injustice of a deceased’s testamentary intentions being defeated for no good reason other than strict non-compliance with execution and attestation formalities.

In order to obtain probate of a non-compliant document, the propounder must demonstrate (1) that the testamentary document is authentic, and (2) that the testamentary document contains the full, final and fixed intention of the will-maker. The court found that both of these requirements were met in the Hubschi case.

Previously, I blogged on an Australian case where an unsent text message was admitted to probate under similar legislation. Read about it here. This decision was referred to by the court in Hubschi.

For better or for worse, Ontario legislation does not allow for substantial compliance with the formalities of will execution, and strict compliance is required. While this may lead to greater certainty, it also means that the testamentary intentions of a will-maker are often disregarded where there is not strict compliance with the formal requirements of execution.

 

Have a great weekend.

Paul Trudelle

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