Author: Suzana Popovic-Montag
Last week, we commented on our Blog about the whole question of joint accounts. At the end of the week, Eugene Meehan’s email newsletter announced that 2 important decisions from the Ontario Court of Appeal had been granted leave.
In Pecore v. Pecore, the deceased transferred assets held in his name jointly with his daughter. The jointly-held assets amounted to approximately 80% of the value of the Estate. The deceased was concerned that the transfer of the assets to his daughter’s name could trigger a deemed disposition and result in tax consequences. As a result, he wrote the financial institutions and told them not to adjust the cost bases for the investments, as he retained 100% ownership and that the transfer to joint names was for probate purposes only. For the trial decision, click here.
Subsequent to the transfer of the investment accounts, the deceased also amended his Will to name his daughter and his daughter’s husband as residual beneficiaries. The daughter was married to a man who was a quadriplegic as a result of a motor vehicle accident, and the daughter was her husband’s primary caregiver.
Approximately two years after the deceased’s death, the daughter and her husband’s marriage ended and the daughter’s husband, in the course of the divorce proceedings, learned that she had received a substantial inheritance by way of a joint ownership account following her father’s death. The husband brought a claim against the daughter claiming an interest in the jointly-held assets and claiming that he was entitled to 50% of those assets.
Of interest, in this case the transfer of the joint account was not challenged by the siblings of the transferee, it was challenged by the deceased’s son-in-law. At trial, the Judge reviewed the evidence and concluded that the deceased intended the gift of the assets held on joint account with the daughter. The Court again, as is customary in these matters, reviewed the specific factual circumstances relating to this matter.
As Madam Justice Greer said, a gift is not a kiss in the dark. Unlike the memory of a kiss, which fades in time, the giving of a gift has lasting consequences: Feeney’s Canadian Law of Wills, 4th Edition (Lexis Nexis), p. 1.1, per Justice Greer in Schilthuis v. Ainold,  O.J. No. 2212 (Gen. Div.) at p. 2 of 25.
There are two fundamental ways in which a person may make a gift. The first is, of course, by testamentary disposition and the second is by inter vivos gift. The question of validity is naturally paramount in the context of estate litigation matters. Consequently, once the intended gift has been challenged, unless there has been compliance with the appropriate legal requirements to perfect that type of gift, the transaction will be invalidated, no matter how clear the intention of the donor might otherwise be.
Generally speaking, the governing statement of law with respect to the ownership of money deposited in a joint account, when the money is deposited by one of the account holders only, is as set out by the Supreme Court of Canada in Niles v. Lake,  2 D.L.R. 248 at 254 (per Taschereau J.).
As such, the onus is on the recipient of the inter vivos gift to rebut the presumption of a resulting trust and, where the person is deceased, the presumption can only be met by providing the same convincing and unimpeachable corroborative evidence.
The decision of Mr. Justice Cullity in Cho Ki Yau Trust v. Yau Estate (1999), 29 E.T.R. (2d) 204 (Ont.Sup.Ct.J.), is an excellent illustration of how the Courts have dealt with the whole question of ownership of inter vivos gifts and joint accounts. The Court considered issues such as the ownership of the joint account in light of the lack of an express right of survivorship in the language of the bank’s joint account agreement. Justice Cullity made it clear that, in circumstances such as this, the question of whether the son obtains a beneficial right to the funds on deposit depends upon the intention of his mother and that, for this purpose, the terms of the document provided by the bank for their signatures are of secondary importance. The Court made it clear that those documents really just determine the rights and obligations in respect of the bank.
In essence, the Court made it clear that where there is evidence that the original deposit of the funds was made by one of the individual joint account holders, in the absence of any evidence to the contrary, it must be presumed that the sole depositor was the beneficial owner of the funds. This circumstance, where the one individual deposits most, if not all, of the funds into the account and the other joint holder is there solely for the convenience and benefit of the depositor, is of course common in many family situations.
Ian just returned from an excellent seminar put on by the Law Society of Upper Canada. It was called "Elder Law – Your Growing Clientele". Like most of this group’s continuing legal education, it was supported by a high calibre cast of speakers and a good range of topics.
The seminar started off with a dynamic roundtable discussion concerning criminal and civil remedies when dealing with Powers of Attorneys. There were 2 members of the Greater Toronto police force present and Susan Woodley, of Woodley Law, represented the civil bar.
Dr. Ken Shulman and Ian spoke about inter vivos gifting and the presence of undue influence in such circumstances. Ian prepared a paper on the subject and, in part, reviewed the current circumstances relating to inter vivos gifts, or gifts during one’s lifetime, from the perspective of the ever-present cases regarding joint accounts. Ian pointed out that the onus or burden of proof lies on the recipient of an inter vivos gift. Furthermore, he noted that the Courts will look at all of the surrounding circumstances when trying to determine if a gift is indeed truly received by someone, or whether they are merely holding the account in trust for the estate. One of the most intriguing speakers was Dr. Ken Shulman from Sunnybrook Hospital. He provided the medical/psychiatric analysis underlying the whole issue of undue influence.
Once Ian has had a chance to review the papers that were presented more carefully he will be reporting further on the conference.
Recently I listened to a 3-part series of interviews of F. Lee Bailey on "Coast to Coast". Not only were the interviews interesting, they were what we think are a true sign of the Podcast times. These were informal discussions with one of the great American lawyers. They were done at his home and F. Lee Bailey provided us with some wonderful war stories as well as some guidance to the profession as a whole for the future.
It seems to us that the fact that someone can go online and listen for free to a legal icon is truly the spirit of what Podcasting is today.
We hope to present some Canadian legal heroes in future "Hull on Estates" Podcasts and we will keep you posted.
READ THE TRANSCRIBED PODCAST HERE
During this podcast on knowledge and approval and mistake, we discussed the following:
(i) the general concept of "knowledge and approval" and what amounts to such;
(ii) the case of Hastilow v. Stobie;
(iii) how to ordinarily establish "knowledge and approval", and what might be needed in special circumstances;
(iv) the cases of Crerar v. Crerar, Re Phelan and Fulton v. Andrew; and
(v) words appearing in a will by inadvertance. ——–
As we thought about our Blog this weekend, it struck us that perhaps we haven’t been entirely clear on how we hope to send out our own unique form of social media. Presently, our plan is to produce our 2 Podcasts weekly and we are going to try to Blog on a daily basis.
Unlike many current Blogs, there are 2 of us who are primarily going to be Podcasting and Blogging. Ian and I intend to jointly Blog, recognizing that it is "outside of the box" a bit because, right now, most Blog on their own. However, given the fact that we are working so closely on the Podcasts together, we thought a joint Blog format would make sense in the circumstances.
As to the format of the Blog itself, we are going to try each day to provide a quick comment relating to the social media world, together with a note on a legal issue that catches our attention.
As to the social media comment, Ian has now signed up for an upcoming conference called "Podcasters Across Borders", a Podcaster conference being help in Kingston on June 23 and 24. It looks like a fantastic event and we are sure it will enhance our own Podcasting.
As for the legal note, we are currently working on an intensive review of the whole concept of testamentary capacity. Our "Hull on Estates" Podcast for April 25, 2006 (Episode 5) addressed the following legal issues:
· constructive trusts;
· specific devises and bequests;
· life insurance;
· the description of beneficiaries;
· trusts/life interests;
· the selection and powers of trustees, including the power to encroach; and
I was reminded by the Globe and Mail May 18, 2006 article on the VoIP software "Skype" that this is a technology boom that not everyone has become aware of.
The first question to ask is what is VoIP? It is essentially using the Internet to conduct phone calls. It is known as "Voice over Internet Protocol" (VoIP). It is a technology that allows you to make telephone calls using a broadband Internet connection instead of a regular (or analog) phone line. Some services using VoIP may only allow you to call other people using the same service, but others may allow you to call anyone who has a telephone number – including local, long distance, mobile and international numbers. Also, while some services only work over your computer or a special VoIP phone, other services allow you to use a traditional phone through an adaptor.
Skype is a leader in this technology. Just how big is Skype? It has over 100 million registrants. It is clearly a part of the technology boom that is on a very fast track. We use the Skype software everyday and, generally speaking, it is very affordable and effective. The Skype technology has advanced to the stage that you can call from a Skype line to a regular phone line.
Those who are not keeping up with the technology are bound to be left behind!
In our ongoing effort to keep you up-to-date on our Podcasts, we have the following summaries: Hull on Estates Podcast – Summary Episode No. 4 During our 4th podcast on "Hull on Estates" – for April 18, 2006 – we discussed the following legal issues:
- the International Will;
- revocation of a will by marriage;
- the concept of lapse;
- the concept of abatement; and
- the rule in Saunders v. Vautier.