21 Mar

Testamentary Wishes Must be Respected

Lisa-Renee Estate & Trust, General Interest, In the News, Wills Tags: , , , , , , , 0 Comments

In a recent case, Ilott v. The Blue Corss & Ors, [2017] UKSC 17 (15 March 2017), the Supreme Court of the United Kingdom has affirmed that a testator has testamentary freedom to disinherit his or her child.

As outlined in a recent National Post article, the Court rejected a daughter’s proceeding to set aside her late mother’s will, which left the majority of the mother’s estate to several animal charities.  In the will, the mother also directed the executors of her estate to resist any efforts her daughter may make to challenge the will.

The disappointed daughter exercised her rights pursuant to the Inheritance (Provision for Family and Dependants) Act 1975 (the “1975 Act”), which allows certain individuals such as spouses and children to make a claim for reasonable financial provision from an estate.

Unlike Part V of Ontario’s Succession Law Reform Act, the 1975 Act does not require the deceased testator to have provided his or her dependant with support or to have been under a legal obligation to provide support immediately before his or her death.  Rather, the 1975 Act requires the surviving child to prove that the deceased’s will did not include reasonable financial provision for his or her child in light of the child’s own financial resources and needs.

Interestingly, the daughter appealed the District Judge’s award of £50,000.00 to her and the Court of Appeal’s decision awarding her £143,000.00 to buy the house she lived in and an additional £20,000.00.  On appeal, the Supreme Court reversed the Court of Appeal’s decision and restored the District Judge’s decision on the basis that the District Judge’s decision struck an appropriate balance between the mother’s testamentary wishes and the daughter’s claim for reasonable financial provision from the estate. In doing so, the Supreme Court upheld the long standing principal that people remain at liberty to dispose of their assets and property subject to provisions of the 1975 Act.

Other Articles you May be Interested In:

Testamentary Freedom Reconsidered
Is Discrimination a Restriction on Testamentary Freedom?
Validity of In Terrorem Conditions

Thanks for reading!

Lisa Haseley

20 Mar

Contractual Obligations and Estates

Ian Hull Estate & Trust, Estate Planning, General Interest, Litigation, Trustees, Uncategorized Tags: , , , , , , , 0 Comments

An estate trustee may be bound to a contract previously entered into by the deceased. This duty is distinct from the duty of an estate trustee to discharge all debts of the deceased.

There are four main elements of a contract:

  • Offer
  • Acceptance
  • Intention (consensus ad idem/meeting of the minds)
  • Consideration

Prior to the formation of a contract, it is possible for an offer to be revoked by death, if the contract has not been accepted by the surviving party. If performance of a contract has already been initiated by the surviving party, the contract may not be able to be revoked. This is due to the fact that part-performance of a contract may validate a contract. The doctrine of part-performance has been upheld in cases such as Lensen v. Lensen, 1984 CanLII 2424 (Sask CA), and Thompson v Guaranty Trust Co., [1974] S.C.R. 1023.

In general, contracts often will have a clause stating that the terms are binding on the estate of a contracting party. Therefore, if a contract is found to be valid,  the estate of a deceased may be bound by a contract entered into by the deceased. It is important to note that a contract need not be formally executed and signed in order to be considered enforceable by the court.

In Bayer Estate v. Blue Button Club, 2007 BCSC 517, the British Columbia Superior Court upheld a contract on the death of a party. In this case, the deceased, Bernard Bayer, and his employer, Blue Button Club, entered into an employment agreement for 10 years, with an annual base salary of $60,000.00 plus benefits. The contract provided that, upon the death of Bayer, the Club would pay into deceased’s estate an amount equal to the salary and benefits that the deceased would have earned. The amount paid into the estate was to be based on how much time was left in the employment contract. The contract also had a provision naming the Club as a beneficiary of the deceased’s insurance policy, so long as the Club was to maintain insurance on the life of Bernard. Upon the death of Bayer, the Club tried to submit that the employment contract was not enforceable. The Court rejected the Club’s submissions and upheld the contract, requiring the Club to pay the deceased’s salary into his estate.

Aside from part-performance of a contract or having a formally executed contract, it is possible to enter into a verbal contract prior to the formal contract being executed. Where a tentative agreement is reached from oral negotiations, the intentions of the parties are the key factor in determining if a contract is in existence. In attempting to enforce a contract in which one of the parties is deceased, the Court will look to the intention of the deceased in order to determine whether or not they intended for a contract to be formed.

Thanks for reading,

Ian M. Hull

Other Articles You Might Be Interested In

Getting Out of a Cellphone Contract

The Legal and Bioethical Questions Regarding Surrogacy Contracts

Enforceability of Domestic Contracts

17 Mar

Relinquishing US status – how do you do it and what are the tax implications?

Natalia R. Angelini General Interest Tags: , , 0 Comments

Some American celebrities spoke of leaving the US depending on the outcome of the election.  I don’t know if anyone has actually followed through…yet.  Nonetheless, it got me thinking back to an interesting paper presented at the 2016 Six Minute Estates Lawyer by Britta L. McKenna.  The issues addressed in Ms. McKenna’s paper include what is involved in relinquishing US citizenship.  Here is how you do it:

  • Formally – A US citizen can formally renounce his/her citizenship at a US consulate, which process involves some initial communication and information exchange, followed by taking the oath of renunciation at the consulate. A final US tax return will need to be filed for the year of renunciation. The former citizen will be sent a Certificate of Loss of Nationality.
  • Informally – A US citizen can informally renounce his/her citizenship by engaging in an expatriating act with the intent of relinquishment. A bold example – committing an act of treason. A more benign example – taking an oath of office with a foreign government.

A person relinquishing their US citizenship will be subject to the US exit tax regime if any of the following is true (with limited exceptions): (1) his/her net worth at the time is US$2,000,000 or more; (2) his/her average US tax liability for the prior five years is US$161,000 or more; or (3) the individual cannot certify that all US tax filing obligations for the preceding five years have been complied with.  The tax consequences include a deemed sale of his/her assets for fair market value on the day before he/she ceases to be a US citizen, and all gains/losses are recognized.

Further, if one is subject to an exit tax regime, an inheritance tax is also imposed on certain gifts made by the expatriate (during life or death) after expatriation to a US citizen or resident.  The inheritance tax (assessed at the highest gift or estate tax rate at the time of receipt) is imposed on the recipient.

Finally, a former citizen who renounces, and who is determined to have renounced for the purpose of US tax avoidance, may be denied entry into the US pursuant to its immigration laws.  Ms. McKenna cites that enforcement was lacking, but that this may change. With the current political climate, I wonder if that change is already underway.

Thanks for reading and have a great weekend!

Natalia Angelini

You may also be interested in the following blog-posts:

The US Elections and Estate Tax 

US Inheritance Tax Deductions for Surviving Spouses

 

Tax Concerns for Snowbirds

16 Mar

#510 – Reasons for Judgment in Birtzu v. McCron

76admin Hull on Estate and Succession Planning, Hull on Estates, Podcasts, PODCASTS / TRANSCRIBED, Show Notes, Show Notes, Uncategorized Tags: , , , , , 0 Comments

This week on Hull on Estates, Ian Hull and Doreen So discuss the reasons for judgment in Birtzu v. McCron, 2017 ONSC, 1420, and the finding that the Plaintiffs were statute barred in this will challenge.

 Should you have any questions, please email us at webmaster@hullandhull.com or leave a comment on our blog.
16 Mar

What Can Reducing Probate Fees Cost You?

Natalia R. Angelini Estate Planning, General Interest, Joint Accounts Tags: , , 0 Comments

Although probate fees in Ontario are relatively modest (approx. 1.5% of the estate value), most wish to avoid or reduce them.

With respect to which assets you must pay probate fees on, section 1 of the Estate Administration Tax Act, 1998 defines the “value of the estate” as “the value of…all the property that belonged to the deceased person at the time of his or her death less the actual value of any encumbrance on real property that is included in the property of the deceased person”.  As joint-property vests in the co-owner of the property immediately before the time of death of their co-owner, the asset cannot be said to belong to the deceased person at the time of their death.  An exception, of course, is the rebuttable presumption of resulting trust expounded in Pecore v Pecore.

Although parents may wish to place assets in joint-ownership with an adult child to avoid probate fees, here are five ways that doing so can have negative consequences:

  1. No savings – If the resulting trust presumption that property transferred into joint tenancy by a parent to the parent and his/her adult child results to the deceased parent’s estate is not rebutted by showing a clear intention of a gift, the transfer may not work to save on probate fees.
  2. Loss of control – The property cannot be sold or mortgaged without the child’s consent.
  3. Negative tax consequences – the transfer of an asset with accrued gains to someone other than a spouse is a deemed disposition at fair market value. Further, if the property is the parent’s principal residence, half of the principal residence exemption may be lost for the years following the transfer during which the child is not living in the property.
  4. Spousal claims – The property may be exposed to claims against the child by his/her separated spouse.
  5. Creditor claims – financial troubles and/or declarations of bankruptcy can result in the child’s interest in the property being subject to creditor claims.

These and other potential pitfalls are reviewed in a recent piece in The Lawyers Weekly.

Thanks for reading,

Natalia Angelini

You may also be interested in the following blog-posts:

Joint Property and Intention Evidence

The High Cost of Probate

Does Jointly Owned Property Pass to the Surviving Spouse?

15 Mar

LCO Recommends Reform in Capacity and Guardianship Law

Suzana Popovic-Montag Capacity, Guardianship, Power of Attorney Tags: , , , 0 Comments

Last week, the Law Commission of Ontario (LCO) released its Final Report on Legal Capacity, Decision-making and Guardianship. The Final Report is the result of work conducted by a LCO Advisory Group since early 2013.

In the Final Report, the LCO outlines the strengths and attributes of Ontario’s capacity and guardianship regime, as well as areas of concern. Some key areas of concern the LCO identifies include:

  • The system is confusing and lacks coordination;
  • There is a lack of clarity and consistency in the law for capacity assessments;
  • Legal tools are not responsive enough for the range of needs of those directly affected;
  • Individuals, families, and service providers are not receiving enough support;
  • The current oversight and monitoring mechanisms for substitute decision makers are insufficient;
  • The dispute resolution mechanisms under the Substitute Decisions Act, 1992 (SDA) are inaccessible to many.

The Final Report includes recommendations for reforms to law, policy and practice. These recommendations relate to (1) improving access to the law, (2) promoting understanding of the law by those directly affected, (3) strengthening protection of rights under the Health Care Consent Act, (4) reducing inappropriate intervention, (5) increasing accountability and transparency, and (6) enabling greater choice of substitute decision makers.

The Final Report makes 58 recommendations on the statutory regime for legal capacity, decision-making, and guardianship, including proposed reforms to the SDA, the Health Care Consent Act, 1996and the Mental Health Act. Some of the Final Report’s key recommendations on the law of substitute decision-making include:

  1. Improved access to capacity assessments under the SDA;
  2. A standard-form “Statement of Commitment” required to be signed by persons accepting an appointment as an attorney;
  3. The delivery of “Notices of Attorney Acting” at the first time the attorney acts, delivered to the grantor, the spouse, any previous attorney and any monitor appointed, as well as for any other persons identified in the Power of Attorney;
  4. The option to name a “monitor”, who would have statutory powers to visit and communicate with the grantor and powers to review accounts and records kept by the attorney;
  5. Development of time-limited or reviewable guardianship orders;
  6. Development of limited property guardianships, in parallel with existing limited personal care guardianships;
  7. Further research and consultation be conducted towards establishing a dedicated licensing and regulatory system for professional substitute decision-makers;
  8. Further research and consultation be conducted towards allowing community agencies to provide substitute decision-making for day-to-day decisions;
  9. Clarification of the duty of health practitioners to provide information to substitute decision-makers upon a finding of incapacity; and
  10. Empowering adjudicators under the SDA to order substitute decision-makers to obtain education on specific aspects of his or her duties.

The Final Report suggests short, medium, and long-term plans for implementing the LCO’s recommendations. You can find a copy of the full report at the LCO website.

Thank you for reading.

Suzana Popovic-Montag

 

Other articles you might enjoy:

Supported and co-Decision-making: Law Commission of Ontario Considers Alternatives to Substitute Decision Making

Law Commission of Ontario’s Proposed Changes to Capacity Assessments

Law Commission of Ontario Proposes Changes to Ontario’s Capacity, Decision-making and Guardianship Legislation

14 Mar

Interpretation of Wills – a recent case where direct evidence was not permitted

Natalia R. Angelini Litigation Tags: , , 0 Comments

In McCarthy Estate (Re), 2016 CanLII 87407 (NL SCTD) the executor of his mother’s estate was seeking directions on the meaning of a clause in the Will.  Clause 5(a) of the Will gifts the residue of the estate as follows:

“to my children, namely … a building lot to be sized and located in accordance with the development regulations … and to be chosen in consultation with my Executor from my land at Paradise Road…”

The executor offered to convey a residential building lot of the minimum size permitted in the town’s regulations to each of his named siblings.  Some of the siblings disagreed, asserting that “a building lot” should be given the widest and most liberal interpretation, and not interpreted as one of the minimum size permitted.  Alternatively, they argued that their mother intended that each child should receive a parcel the same or similar in size to parcels conveyed to certain other children during their mother’s lifetime.

The executor argued that the Will is not ambiguous.  Rather, it contains three directions, including that the executor is given the discretion to choose the size and location of each lot after consultation with the beneficiaries.

The Court reviewed the applicable legal principles, being that it must look to the language of the Will to ascertain whether the testator’s intention can be discerned from the natural and ordinary meaning of the words used.  Only if this is not p
ossible may the court consider indirect extrinsic evidence of surrounding circumstances at the time of making the Will. Further, where an “equivocation” occurs (eg. where the words of a Will apply equally well to two or more persons or things), direct and indirect evidence of the testator’s actual intention may also be admitted.

The Court concluded that the language of the Will was not equivocal, such that direct extrinsic intention evidence was not permitted.  In addition, it found that the intention was discernible from the language of the Will, such that it was not necessary for indirect extrinsic evidence of surrounding circumstances to be considered.  However, as the parties had provided such evidence, the Court reviewed it and was satisfied that the interpretation of Clause 5(a) and the surrounding circumstances also lead to the conclusion that a conveyance as proposed by the executor was in conformity with the mother’s intentions.

Thanks for reading,

Natalia R. Angelini

You may also be interested in the following blog-posts:

Opinion, Advice or Direction of the Court in Interpreting a Residue Clause

Interpretation of Wills – An Example of When Extrinsic Evidence Is Admissible

Considering the Admissibility of Extrinsic Evidence on Will Construction Applications

 

 

13 Mar

Removal of an Estate Trustee

Ian Hull Estate & Trust, Estate Planning, Executors and Trustees, General Interest, In the News, Litigation, News & Events, Trustees, Wills Tags: , , , , , 0 Comments

If an estate trustee is not fulfilling their duties and is not acting in the best interests of the estate, it is possible to commence an application for removal.

When seeking to remove an estate trustee in Ontario, anyone with a financial interest in an estate can apply to have an executor passed over or removed, pursuant to s. 37(3) of the Trustee Act. Rule 14.05(3)(c) of the Rules of Civil Procedure, allow an application to be commenced for the purpose of “the removal or replacement of one or more executors, administrators or trustees, or the fixing of their compensation.” The applicable principles for the removal of an executor have been established in Letterstedt v Boers (1884), 9 App Cas 271 (South Africa PC) and have been summarized in Johnston v Lanka Estate, 2010 ONSC 4124:

  • The court will not lightly interfere with the testator’s choice of estate trustee;
  • Clear evidence of necessity for removal is required;
  • The court’s main consideration is the welfare of the beneficiaries; and
  • The estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the estate/trust.

A recent British Columbia Court of Appeal decision, Al-Sabah v Al-Sabah, 2016 BCCA 365,  upheld the removal of an estate trustee of an estate on the basis that she did not comply with the notice provisions of the Wills, Estates and Succession Act, and was not acting in the best interests of the estate.

In this case, the deceased died in 2003, intestate, and left 15 beneficiaries, including his two sons, two wives, and seven daughters. One of his daughters was the appellant and the estate trustee of the estate. The respondents on the appeal comprised 79% of the beneficiaries to the estate.

Upon the death of Mr. Al-Sabah, estate litigation was commenced across several countries, as he had held property in many different locations. The appointment of the estate trustee by British Columbia was successful, however, the appellant had also applied to be the estate trustee of the estate in London, and had her position revoked, and she commenced at least 4 actions in Kuwait against other beneficiaries, all of which were unsuccessful.

In chambers, the estate trustee was removed, and appealed that ruling. On appeal, it was upheld that the estate trustee did not exercise reasonable diligence in providing notice to the other beneficiaries of her intention to apply for the position, and that she failed to disclose relevant information to the beneficiaries.

The British Columbia Wills, Estates and Succession Act section 121, and the British Columbia Supreme Court Rules establish the requirements for notice of the beneficiaries. It was established that the estate trustee did not provide notice to the proper addresses required by the rules, as the addresses to which she forwarded notices were almost all incorrect. The judge also noted that the application was made amidst “hotly contested” and “acrimonious” estate litigation, and that when she applied for her grant of administration, she did not disclose that there was significant litigation surrounding the estate in other countries.

If this case were to have taken place in Ontario, it is likely that the Ontario courts may have come to the same decision as the British Columbia court, in applying the principles as established in Letterstedt v Boers. The court would not have been interfering with the testator’s choice of estate trustee as he died intestate, and it is clear that the removal was required due to her dishonesty and her lack of consideration of the welfare of the beneficiaries, thereby endangering the administration of the estate.

Thank you for reading,

Ian M. Hull

Other Articles You Might be Interested In

The High Bar for Estate Trustee Removal

What Should an Estate Trustee do when a Beneficiary Cannot be Located?

Removing an Estate Trustee for Conflict of Interest

 

 

10 Mar

What Happens When a Missing Person Comes Back From the “Dead”?

Umair Estate & Trust, Executors and Trustees, General Interest, In the News Tags: , , , , , 0 Comments

This week, I have been blogging about the case of Anna and Kym Hakze, two sisters from Alberta who were found more than thirty years after they last made contact with their families.

I blogged about the Ontario Absentees Act, which allows for a missing person’s affairs to be put under the management of a committee if the Court is satisfied that a “due and satisfactory inquiry” has been made into their whereabouts. Yesterday’s blog talked about the Declarations of Death Act, 2002, which gives the Superior Court of Justice of Ontario the power to declare that a missing person is dead if the Court is satisfied that they disappeared in circumstances of peril or that they have been absent for at least seven years.

But the case of the Hakze sisters raises another interesting legal question: what happens in Ontario when a missing person, who has been declared an absentee under the Absentees Act or dead under the Declarations of Death Act, 2002, is later found to be alive?

When an absentee is no longer an absentee

As previously discussed, section 4 of the Absentees Act empowers the Court to make an order for the appointment of a committee for the custody, due care and management of the property of the missing person. The committee has the same duties and powers as a guardian of property under the Substitute Decisions Act, 1992.

However, section 3 of the Absentees Act states that a Court can make an order declaring and superseding, vacating and setting aside an order declaring a person as an absentee on an application, if it is satisfied that the person has ceased to be an absentee.

It is important to note that any acts or things done in respect of the estate of the absentee while the original order was in force are excepted from section 3 of the Absentees Act. Thus, the Act does not purport to undo any steps that were taken by the committee to manage the person’s property while the person was an absentee.

The legal effect of coming back from the “dead”

Once a missing person has been declared dead pursuant to the Declarations of Death Act, the assets of their estate may be administered and distributed. But what happens if the missing person is later discovered to be alive?

Pursuant to subsection 6(1) of the Act, if an order has been made that applies for the purposes of dealing with the missing person’s estate and all or part of the estate has been distributed in accordance with the order, the distribution is final and the missing person is not entitled to recover the distributed property.

It should be noted subsection 6(1) does not apply if the personal representative had reasonable grounds to believe that the missing person was not, in fact, dead. If this is the case, the personal representative should not take any steps to administer the missing person’s estate until the order is confirmed by the Court.

The Act does provide the Court with discretion, if it is of the opinion that it would be just to do so, to make an order requiring a person who was in receipt of the missing person’s property to reconvey the property or pay a specified amount to the missing person. In making such an order, the Court considers all the circumstances, including any inconvenience or hardship to the person subject to the order. However, absent such an order, any property that has been properly distributed is deemed to belong to the recipient.

Any undistributed property that has not been distributed when the missing person is discovered to be alive remains their property and is deemed to be held in trust pursuant to the Trustee Act.

Thank you for reading,

Umair Abdul Qadir

Other Articles You May Be Interested In:

 

09 Mar

Hull on Estates #509 – Role of Powers of Attorney for Property

76admin Hull on Estate and Succession Planning, Hull on Estates, Podcasts, Power of Attorney, Show Notes, Show Notes, Uncategorized Tags: , , , , , 0 Comments

This week on Hull on Estates, Jonathon Kappy and Stuart Clark discuss the powers entrusted to a Power of Attorney for Property, including whether they may give gifts on behalf of an incapable person.

 Should you have any questions, please email us at webmaster@hullandhull.com or leave a comment on our blog.

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