Author: Stuart Clark
While placing an advertisement in the classifieds section of a newspaper is a common enough occurrence in the administration of an estate, it is rare that a family attempts to get two birds with one stone, and advertises to prospective buyers for the deceased’s possessions in the obituary itself. The Toronto Star recently reported on a light hearted and humorous obituary which was recently featured in their newspaper which had gone viral on social media. In an entertaining nod to a life well lived, a family wrote an obituary for their late 94 year old mother which in part contained the following:
“She left behind a hell of a lot of stuff to her daughter and sons who have no idea what to do with it. So if you’re looking for 2 extremely large TV’s from the 90s, a large ceramic stork (we think) umbrella/cane stand, a toaster over (slightly used) or even a 2001 Oldsmobile with a spoiler (she loved putting the pedal to the metal), with only 71,000 kilometers and 1,000 tools that we aren’t sure what they’re used for. You should wait the appropriate amount of time and get in touch. Tomorrow would be fine. This is not an ad for a pawn shop, but an obituary for a great Woman, Mother, Grandmother and Great-Grandmother born on May 12, 1921 in Toronto…”
No stone was (literally) left unturned by the obituary, where the family goes on to provide the following description of their late mother:
“Her extensive vocabulary was more than highly proficient at knowing more curse words than most people learned in a lifetime. She liked four letter words as much as she loved her rock garden and trust us she LOVED to weed that garden with us as her helpers, when child labour was legal or so we were told. These words of encouragement, wisdom, and sometimes comfort, kept us in line, taught us the ‘school of hard knocks’ and gave us something to pass down to our children.”
While some may call the obituary unorthodox, it is clear that she was well loved and will be missed by her family. At the end of the day that is all any of us can really ask for, as, in the words of her family, “(s)he leaves behind a very dysfunctional family that she was very proud of.”
Have a great weekend.
The use of a Family Trust is a common estate planning tool, whereby an asset, whether it be cash, a family cottage, or otherwise, is placed into a trust to be held for the benefit of the family. More often than not, when such a Family Trust is established, both spouses are named as trustees of the trust, and the beneficiaries are often the two spouses together with any children that they may have. The trust is often discretionary, whereby the trustees may distribute some or all of the trust assets to any one of the beneficiaries to the exclusion of the others.
While the administration of the trust often goes smoothly while everything is going well in the relationship, the question emerges of what should take place should the spouses later separate and commence divorce proceedings. Although we do not tend to see arbitration used as often within the estates and trusts context, the same cannot be said for family law proceedings, where, anecdotally at least, it appears that parties are much more willing to enter into binding arbitration in order to settle their dispute rather than adjudicate the matter before the courts. When the two spouses (who are also the trustees) separate, and as part of the divorce proceedings agree to enter into binding arbitration, the question often emerges of whether the internal administration of the trust can be caught up in the arbitration process?
Inevitably, as part of such an arbitration, one of the spouses will often take the position that as both trustees have signed the arbitration agreement, that the arbitrator has now assumed the powers of the trustees, and may utilize the discretion afforded to the trustees to determine how the trust assets should be distributed as part of the divorce process. Without commenting on whether a trust may be bound to the arbitration process in the event that the trustees have only signed the arbitration agreement in their personal capacities, and not their capacities as trustees, the courts have been clear that unless the terms of the trust specifically contemplate otherwise, that trustees may not delegate the fundamental decision making powers entrusted to them as trustees to any person (whether it be arbitrator or otherwise). As put by Professor Waters in Waters’ Law of Trusts in Canada:
“The courts, however, continue to adhere to the principle that a delegate may not delegate his duties when the nature of the task is one which he is required to perform personally. This prevents the trustee from appointing an agent to perform the task of this kind, whether or not he has an express, implied, or statutory power to appoint agents. Indeed, any act of an agent purportedly carrying out such a task would have no legal effect; it would bind neither the trust nor any third party.“ [emphasis added] (4th ed., pg. 913)
Using this rationale, unless the deed of trust specifically contemplates that the trustees may delegate their decision making to an arbitrator, the trustees may arguably not delegate their fundamental decision making powers to an arbitrator, for to do so would be an improper delegation of their authority. As made clear by Prof. Waters, any decision made by the arbitrator concerning the internal management of the trust would arguably not be binding upon the trust or any third party, as they could arguably not have assumed such powers in the first place.
This past week Harper Lee published Go Set a Watchman, her first book since To Kill a Mockingbird was first released in 1960. While the book has been released to much fanfare, becoming the most pre-ordered book in the publisher’s history, an equally as interesting story (at least to an estates lawyer) has emerged regarding questions surrounding Ms. Lee’s capacity, and whether it was truly ever Ms. Lee’s intention to have the book released.
As recently outlined in an article in Bloomberg, Go Set a Watchman is a sort of “lost manuscript” of Ms. Lee’s, having itself been written in the mid-1950s before To Kill a Mockingbird was ever written. It was apparently rediscovered by Lee’s lawyer while recently looking through a safety deposit box. Ms. Lee herself is presently 89 years old and resides in a nursing home, having previously suffered a stroke in 2007. Much of her daily life is now apparently managed by her Power of Attorney.
Ms. Lee famously rarely ever spoke publically following the release of To Kill a Mockingbird, having become an almost sort of social recluse, never publishing any further works or giving interviews. To this effect, when news broke that Go Set a Watchman would be published, and that Ms. Lee’s Power of Attorney had supposedly played a prominent role in seeing to its publication, questions immediately emerged regarding whether it was ever truly Ms. Lee’s intention to release Go Set a Watchman. While those around Ms. Lee are quick to point out that in their opinion Ms. Lee is capable, and has consented to the release of Go Set a Watchman, as outlined in the Bloomberg article the questions still remain.
Without commenting on the specifics of Ms. Lee’s scenario, the supposed fact pattern itself, whereby a famous novelist for decades refuses to give interviews or publish any further works, only to allegedly later have their unpublished works released by their Power of Attorney, offers an interesting hypothetical. In Ontario, presuming that there are no further restrictions in the Power of Attorney document itself, an Attorney for Property may do anything on behalf of the grantor except execute a new Will. To this effect, if such a famous novelist had executed a standard Power of Attorney for Property, and their Attorney for Property later discovered unpublished works, it would be fully within the rights of the Attorney for Property to release such works on behalf of the grantor.
From a practical standpoint, should such a novelist wish to execute a Power of Attorney for Property, and should they not want their unpublished works to be released, it would likely be as simple as including a carve out in the Power of Attorney which would simply provide that the Attorney for Property did not have the authority to consent to the release or in any way deal with the unpublished works. Without such a provision being included however, the Attorney for Property would arguably have the authority to consent to the release of the unpublished works on behalf of the grantor.
Thank you for reading.
The administration of estates can be an inherently public affair. Those individuals who may have gone to great lengths to keep their affairs private during their lifetime can suddenly find their intimate personal details published for all to see, with a copy of their Will becoming public record in an open court file if probate is required, as well as an estimate of the total value of their estate for the purposes of calculating any estate administration tax which may be owed. If an Application to pass accounts is eventually required, not only will further details of the Deceased’s assets become public record in the accounts, but specific details of the transactions which the Estate Trustee undertook will be open for all to see.
To many individuals who went to great lengths during their lifetimes to keep such matters private, such a prospect may seem terrifying. As a possible solution to such concerns, a recent article in the Wall Street Journal proposed the use of trusts as a possible way for high net-worth individuals to keep secret just how rich they are.
While trusts created within a Will may be open to the same privacy concerns which are outlined above, inter vivos trusts by their very nature can be kept much more secretive. Such documents need not be disclosed for the purpose of applying for probate, and the value of any assets which are contained in such trusts need not be disclosed to the public for the purpose of calculating estate administration tax, as they by their very nature pass outside of the estate. In the event that the beneficiaries of such trusts remain content, and periodical releases are sought by the Trustees rather than formal Applications to pass accounts, the ongoing administration of such a trust can also be shielded from public view.
While the article acknowledges that in the event that the administration of a trust should become litigious that the privacy advantages may be undone, it suggests as a possible way to safeguard against such matters becoming public is to create a separate trust for each child in the event that there are multiple children who will be beneficiaries, thereby ensuring that in the event that one beneficiary should become litigious that only their portion would become open to the public. It also recommended encouraging mediation and arbitration to disappointed beneficiaries as a way to further safeguard the administration of the trust from public view.
Thank you for reading.
Many people are aware of the rule in Saunders v. Vautier (1841), 41 E.R. 482, which essentially provides that when all potential beneficiaries who may receive an interest in a trust are sui juris (i.e. legally capable), and consent to the variation and/or winding up of a trust, that it is within the rights of these individuals to do so. No further involvement of the court is necessary, and the sui juris beneficiaries may amongst themselves dictate how the trust is to be varied and/or wound up. Should even one sui juris beneficiary refuse to consent to the proposed variation or wind up of the trust however, the trust cannot be wound up, and must be continued to be administered in accordance with the terms as settled.
While the rule in Saunders v. Vautier works well in situations where the potential recipients of a trust is a closed class, and all are sui juris and consenting to the proposed variation, complications can arise when there are minor and unborn beneficiaries. As minors and/or unborn beneficiaries are themselves unable to consent to the proposed variation, the other beneficiaries of the trust are unable to effectively vary the terms of the trust amongst themselves as all beneficiaries of the trust would not be consenting to the variation.
In circumstances where there are minor/unborn beneficiaries, the Variation of Trusts Act authorizes the court to consent to the variation of a trust (including its winding up) on behalf of any individual who is legally unable to do so themselves such as a minor/unborn beneficiary. In determining whether to approve the variation on behalf of a minor/unborn beneficiary, the court is to ask whether the proposed variation is for the benefit of the person on whose behalf the court is consenting.
Practically speaking, when you wish to wind up a trust that includes minors and/or unborn beneficiaries, you need to approach the Office of the Children’s Lawyer (“OCL”) to advise them of your intention, and seek their position on the proposed variation. While the OCL’s consent is not itself required under the Variation of Trusts Act, from our experience it is very unlikely that the court will consent to a variation without first hearing the position of the OCL. Under many circumstances, in the event that there is a gift over to the issue of a beneficiary, the OCL will often consent to the proposed winding up of a trust provided that a certain percentage of the trust (how high depending on how remote the interest) is paid into court for the benefit of the minor/unborn children.
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The use of private corporations, both as a tax planning strategy and as a way to potentially limit personal liability, has become an increasingly popular way for individuals to control and manage their property during their lifetime. While the actual management structures of these corporations are limitless, under many circumstances the structure is fairly straightforward, with the individual setting up the corporation often also being the sole shareholder and director. While this arrangement often works while the individual is alive and capable, complications can arise in the event of incapacity, as the individual left behind to manage the incapable individual’s property is often unsure of how to deal with property that is held through a private corporation.
While at first glance the control and management of property held through a private corporation may seem daunting, in reality there is no reason that it need to be any more complicated to manage than any other asset held by the incapable individual. Under normal circumstances, the shareholders of a corporation appoint the board of directors, who in turn see to the management of the corporation. As such, in the event that the incapable person was the sole or majority shareholder of the corporation, and subject to any contrary provision in the by-laws or a unanimous shareholders agreement, it should simply be a matter of the individual who is managing the individual’s property to use their authority over the shares owned by the incapable to appoint a new board of directors.
In the case of a Power of Attorney for Property, section 7(2) of the Substitute Decisions Act, 1992, allows the grantor of a Power of Attorney for Property to entrust the following authority to an individual:
“The continuing power of attorney may authorize the person named as attorney to do on the grantor’s behalf anything in respect of property that the grantor could do if capable, except make a will.”
As such, assuming that the Attorney for Property’s authority has not been limited in any way, under normal circumstance an Attorney for Property would have the authority to control any shares that the incapable person may have as if they were the incapable person themselves. This power would include any voting authority held by the shareholder vis-à-vis their interest in the corporation, including their power to appoint a board of directors. Under many circumstances, assuming that the incapable person was the sole shareholder and director, it is often just the case of the Attorney for Property appointing themselves as director in place of the incapable individual, and they may then in turn manage the corporation (and any assets it may hold) on behalf of the incapable person.
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Divorce is an expensive fact of life for many in today’s world. It is for this reason that many people, especially in second marriages, opt to enter into a marriage contract at the time of their marriage, which clearly sets out what is to happen between the two spouses as it relates to their property. While the main focus of the marriage contract is often what will happen in the event of a divorce, attention is also often given to what should happen in the event of the death of one of the spouses, with language often being included providing that the surviving spouse has given up any right against the deceased spouse’s estate.
While on its face this broad language may appear to bar the surviving spouse from commencing any proceeding against the deceased’s spouses estate after their death, what many may not be aware of is that the Succession Law Reform Act (the “SLRA”) specifically contemplates that certain types of proceedings may be commenced by the surviving spouse notwithstanding any agreement which may have been entered between the parties saying otherwise. These types of proceedings include an Application for support as a dependant under Part V of the SLRA, where section 63(4) contemplates:
“An order under this section [i.e. dependant’s support] may be made despite any agreement or waiver to the contrary.”
In Butts Estate v. Butts (1999), 27 E.T.R. (2d) 81, Justice Killeen provides the following commentary on how the court may interpret the provisions of a marriage contract in the wider context of an Application commenced by a surviving spouse for dependant’s support:
“…s. 63(4) gives the court a broad judicial discretion to award support to a dependant, as defined in s. 57, notwithstanding the existence of any prior agreement or waiver. The language of s. 63(4) could not be broader or clearer in its purpose and is obviously aimed at achieving justice and equity at the date of the hearing, notwithstanding what the parties might have agreed to earlier on.”
Simply put, the court may ignore any marriage contract or other agreement that may have been entered into between the parties in making an Order for dependant’s support under Part V of the SLRA. If the court is of the opinion that the surviving spouse is a dependant within the requirements of Part V of the SLRA, then they are free to make an Order providing for their support notwithstanding any agreement entered between the parties which may provide otherwise.
Thank you for reading.