Category: Hull on Estates
We act in different capacities: sometimes in a personal capacity, and sometimes in a representative capacity, such as in the capacity as Estate Trustee. What capacity we are acting in can sometimes have a significant impact on our legal rights.
Take, for example, the Court of Appeal decision in Bennett v. Bennett Estate, 2018 ONCA 45 (CanLII). There, four brothers, Dennis, George, Donald and John, owned several parcels of land. They entered into an agreement that provided a right of first refusal in the event that any of them sought to sell any of the lands to a third party. Donald died, and was survived by his wife, Darlene. John died, and his property was transferred to his wife Joyce and two sons.
In 2012, Joyce and her sons proposed to sell their property to a third party. The agreement of purchase and sale acknowledged the right of first refusal, and the sale was conditional upon George, Dennis and the estate of Donald not exercising their right of first refusal. Darlene purported to exercise her purported right to purchase the property.
The third party purchaser took the position that Darlene could not exercise the right of first refusal because she was not a party to the first right agreement. It was acknowledged that Donald’s estate was entitled to exercise the right of first refusal. However, Darlene claimed to exercise the right of first refusal not as estate trustee of Donald’s estate, but as a family member. The motions judge rejected this submission based on the judge’s review of the first right agreement, and the Court of Appeal upheld the motions judge’s ruling.
On appeal, Darlene submitted that she in fact exercised the right of first refusal on behalf of Donald’s estate. However, there was no evidence of any right of Darlene to act on behalf of the estate. In fact, the third party specifically asked Darlene to produce proof of her authority to act on behalf of Donald’s estate, but Darlene refused to produce such evidence. “The appellant [Darlene] had many opportunities to establish the facts upon which she seeks to rely but chose not to do so. As a result, there was no evidence before the motions judge – and no evidence before this court on appeal – concerning the appellant’s ability to exercise the right of first refusal on behalf of the [Donald’s] estate.”
In assessing legal rights and positions, it is important to not only assess what those legal rights are, but to consider in what capacity we hold them.
Thank you for reading. Have a great weekend.
In an ideal situation, if you suffer a health crisis, you’ll be able to communicate your health care preferences directly to your doctors or hospital staff. But if you’re not able to communicate your health care wishes, you need someone to do that on your behalf.
Enter the Power of Attorney for Personal Care (or a similar health care directive document specified by your province). This document typically describes your health care preferences in end of life situations, and also names a substitute decision maker to make health care decisions on your behalf in the event you’re no longer able to.
This decision maker will look to your stated health care preferences in making decisions, but as you can imagine, it’s impossible to anticipate every medical situation. Canadian Virtual Hospice has an excellent article on the advantages and limitations of health care directives. To make the most of what a directive can do, Dying With Dignity has a very thorough planning kit that’s tailored to the requirements of each province:
Video option – the unselfish selfie
In addition to, or instead of, paper-based health care instructions, a recent U.S. article highlighted some reasons why a video directive may be a powerful tool in helping doctors and substitute decision makers arrive at an appropriate course of treatment.
A Texas-based company, MyDirectives, has developed a website and a smartphone app to help people record videos and upload them to an online cloud that doctors and loved ones can access with a code.
Let’s face it, in a medical emergency, there may be little or no opportunity to locate and read paper-based forms. But a video health care directive can be accessed bedside on a smartphone, with doctors, nurses and the substitute decision maker seeing firsthand the patient’s treatment preferences.
While video may not be a substitute for a written health care directive, it could offer powerful guidance in a difficult situation. Whether you record a video yourself, or use a third-party provider, it’s an idea worth considering.
Thank you for reading … Have a great day,
One quality often overlooked in this frantic information era of texts, tweets, and instagrams is clarity. Our communications and responses are faster than ever, and you’ve likely seen first-hand how clarity can suffer. In a perfect world, we’d have a friend by our side objectively reviewing each communication and setting us straight when our message wasn’t clear.
“Don’t put it that way – it sounds like you’re angry,” or “It’s not clear where you’re meeting, better spell it out.”
Of course, there is no objective friend by our side 24/7. And in our daily back and forth with friends and family, the lack of an objective voice usually doesn’t matter. If there is confusion, it’s easily resolved by a follow-up message. We may live inside our own little bottles, but reading the label “right” the first time doesn’t matter that much in our day-to-day living.
Clarity in estate planning – get outside the bottle
But what about communications that can have a more profound impact, like our estate plan, where we detail our final wishes for end-of-life care and the distribution of our assets? There are few tasks in which clarity is more important. You can’t send a final “clarifying” text from the grave, so you have one chance to get it right. And if you don’t have objective, outside advice, it’s remarkably easy to get it wrong. What is crystal clear to you may not be to others.
The recent case of a dying Florida man is an excellent example. The 70-year-old man was found intoxicated and unconscious outside of his nursing home. When doctors took off his shirt, they found the words “Do not resuscitate” tattooed on his chest, with a tattooed signature underneath:
While the message was quite clear on its face, doctors faced a dilemma. They had an unconscious, dying man in front of them, with a tattoo that told them to take no further action. Was this what the patient truly wanted? Was it a legally valid instruction, or an ironic joke? Doctors were aware of a case reported in a medical journal where a man had “DNR” tattooed on his chest and was admitted to hospital. When doctors saw the tattoo, they asked him if that was indeed his wish, and he said it wasn’t at all – he had lost a bet in a poker game and the tattoo was the result.
So, when it comes to your own planning, make clarity a priority. Objective, professional advice can ensure that your “message to the world” about your estate will both reflect your wishes and be read accurately by others. Take a look at the four-step approach taken by Toronto firm Creaghan McConnell Group in helping Canada’s leading families preserve and pass on wealth. Their step number one? Family clarity.
Make it your priority too – and take a pass on the tattoos!
Thank you for reading,
“This is one of too many cases that appear in our courts demonstrating family disputes over what the preceding generation has left behind. In coming to court for resolution, the parties risk any potential for a continuing, friendly or at least cordial relationship amongst siblings; the present generation. At times the problem is over the failure of the children to acknowledge the intention of their parent as expressed in a will. Here, unhappily, the problem arises from the actions and apparent change of heart by the father … .”
This lament comes from the opening paragraphs of 1268223 Ontario Limited v. Fung Estate, 2016 ONSC 8020 (CanLII). There, the father incorporated a company, being the plaintiff. His daughter was sole officer, director and shareholder of the company. The company then purchased a building in Toronto with funds provided by the father. Years later, the property was sold. The father said that he needed money in order to cover other debts, and received a cheque from the company for $1,070,000.
The father never repaid the money. The daughter then sued the father for repayment. The father defended, alleging that the property and the sale proceeds were held in trust for him. After he died, his estate continued the defence.
At trial, the judge found that the father gifted the company and the purchase money for the property to the daughter. There was extensive evidence to support this, including the fact that the father had made similar gifts to his other two children, the fact that the father had told the daughter that “I am going to buy you a property.”, the fact that the mother referred to the property as being the daughter’s property or the daughter’s mall; the fact that none of the documentation surrounding the purchase of the property suggested that it was a purchase in trust for the father, and the fact that, although the father remained involved in the operation of the property, it was the daughter who determined that the property should be sold. Perhaps most tellingly, in an alleged exchange between the father and one of his sons, the son said “you gave it to her…you can’t take it back”, to which the father said “so what…I want it back”.
The trial judge concluded that “There is no basis upon which [the father or the father’s estate] can claim the ownership of the money taken. There is no evidence that there was any intention that the company or the property it purchased, operated and sold, was for the benefit of anyone other than [the daughter].”
It is not clear if the presumption of resulting trust was argued. The presumption is not addressed in the reasons for decision. However, it is likely that the daughter’s evidence could have rebutted the presumption.
The decision was upheld on appeal. The Court of Appeal found that the evidence supported the three criteria for a gift set out in McNamee v. McNamee, 2011 ONCA 533 (CanLII), being an intention to make a gift, an acceptance of the gift by the done, and a sufficient act of delivery or transfer.
Thank you for reading.
If you own property in the U.S. or another foreign jurisdiction, having a valid and up-to-date will that complies with the laws in your province may not be enough to protect your estate. The reason? Your Canadian will may not be recognized if it doesn’t comply with the laws of the foreign jurisdiction.
In some cases, you may need to prepare a second will covering only the assets located in the foreign jurisdiction. Your foreign will can also address foreign tax laws that may differ from Canadian tax laws. For example, some countries, unlike Canada, impose death or inheritance taxes, and your foreign will may help you minimize the impact of those taxes.
In other cases, your Canadian will may be all you need, but you may need a resident of the foreign country to act as executor for your foreign property. In that situation, your Canadian will can appoint two executors – one for your Canadian property and one for your foreign property.
Get professional advice
If you own foreign assets, play it safe. Consult a professional in the foreign jurisdiction to make sure your will distributes your foreign assets the way you intend.
If you do need two wills, it’s important that they be professionally drafted so that the provisions of the wills are coordinated with each other. In addition, the wills should provide that neither revokes the other.
Although there may be additional costs in preparing a second will, it will make settling your estate easier and faster, and will ensure that your assets are distributed according to your wishes. This article provides an excellent case study showing why a separate will for foreign assets can be so important.
Other reasons for multiple wills
Owning foreign assets isn’t the only reason that one or more additional wills may be advantageous. From a need for privacy to a desire to save on probate fees, we explore many of these other reasons here.
Thank you for reading … Have a wonderful day.
As the year ends, it is hard to get through the day without seeing some sort of “year in review” feature. I will leave it to you to reflect and determine whether 2017 was a great year, a good year, or an annus horribilis.
As the book closes on 2017, let’s look forward with optimism to the new year. Some things to look forward to (or not) in 2018 include:
- The Law Society of Upper Canada becomes the Law Society of Ontario
- The 2018 Winter Olympics in PyeongChang
- The FIFA World Cup (sadly, senza Italia) in Russia
- The real possibility of a (hopefully long) Toronto Maple Leafs post-season
- The royal wedding of Prince Harry and Meghan Markle
- A royal baby for Prince William and Duchess Catherine
- The legalization of marijuana
- A probable spike in the price of snack food
- The 100th anniversary of the end of World War I
- The 50th anniversary of the US Civil Rights Act of 1968 (Fair Housing Act)
- An Ontario provincial election
- A Toronto municipal election
- US midterm elections
- The filming of the last (and Kevin Spacey-less) season of House of Cards
- 252 more Hull and Hull blogs!
We live in interesting times. Cheers to a great new year.
A recent decision of the Supreme Court of Canada deals with the issue of proprietary estoppel.
In Cowper-Smith v Morgan, the court dealt with an arrangement between two siblings to provide care for their mother. Gloria assured her brother Max that if he moved back into the family home, he would acquire Gloria’s share of that property after their mother’s death.
At trial, the judge concluded that all the elements of proprietary estoppel were established:
(1) The sister promised the brother that he would be able to purchase her eventual interest in their mother’s property;
(2) The brother relied on the expectation that he would be able to do so; and
(3) Because of the detriment the brother suffered as a result of his reliance, it would be unfair and unjust in the circumstances to permit the sister to resile from her promise.
Gloria appealed the trial judge’s decision to the British Columbia Court of Appeal which, in a split decision found that, since Gloria owned no interest in the property at the time of the promise, proprietary estoppel could not arise.
On appeal, the majority of the Supreme Court of Canada found that the trial judge did not err in concluding that proprietary estoppel operates to enforce Gloria’s promise. Ownership at the time the representation or assurance was relied upon is not a requirement of a proprietary estoppel claim:
 …With respect, the conclusion reached by the Court of Appeal majority conflates proprietary estoppel with the equity to which it gives effect. That Gloria did not own an interest in her mother’s property at the time of Max’s reliance is not dispositive in itself: see MacDougall, at p. 456; see also Thorner, at para. 61, per Lord Walker; Re Basham (deceased),  1 All E.R. 405 (Ch.), at p. 415. An equity arises when the claimant reasonably relies to his detriment on the expectation that he will enjoy a right or benefit over property, whether or not the party responsible for that expectation owns an interest in the property at the time of the claimant’s reliance. Proprietary estoppel may not protect that equity immediately. It may not protect the equity until considerable time has passed. If the party responsible for the expectation never acquires a sufficient interest in the property, proprietary estoppel may not arise at all; where there is proprietary estoppel, there must be an equity, but not vice versa. When the party responsible for the expectation has or acquires a sufficient interest in the property, however, proprietary estoppel attaches to that interest and protects the equity: see MacDougall, at p. 458; Wilken and Ghaly, at pp. 265-66; see also Watson v. Goldsbrough,  1 E.G.L.R. 265 (C.A.), at p. 267. Ownership at the time the representation or assurance was relied on is not a requirement of a proprietary estoppel claim.
 An equity arose in Max’s favour when he reasonably relied to his detriment on the expectation that he would be able to acquire Gloria’s one-third interest in their mother’s house. That equity could not have been protected by proprietary estoppel at the time it arose, because Gloria did not then own an interest in the property. But that does not mean that proprietary estoppel cannot attach to Gloria’s share of the house once she receives it. I conclude that it can.
Thanks for reading,
Find this blog interesting? Please consider these other related posts:
Attorneys and guardians of property are fiduciaries who are required to put the interests of an incapable person before their own. But what happens when the nature of ownership of the incapable’s property puts those interests at odds with one another?
The case of B (ME) v E (O) (Trustees & Guardians of), 2007 ABQB 259, explores the position of conflict created when a fiduciary holds property jointly with an incapable person and the potential for the conflict to cause the fiduciary to breach the duties that he or she owes to the incapable. The facts of the case relevant to this issue can be summarized as follows:
- E.B. had been the equivalent of a guardian of property for his mother, O.B.;
- B. suffered from ailments affecting both her physical and mental health;
- E.B. transferred real property into joint ownership with his mother; and
- E.B. subsequently predeceased O.B., raising the issues of:
- (1) whether it was intended that M.E.B.’s interest in the property transfer to O.B. by right of survivorship,
- (2) whether M.E.B. had breached the fiduciary duty owed to O.B. by placing the property into joint ownership and, if so,
- (3) whether the breach of fiduciary duty precluded M.E.B.’s estate from asserting an equitable claim in respect of the property against O.B.
On the issue of M.E.B. having transferred the property into joint tenancy with O.B., the Court made the following statements:
…[I]t would have been a clear conflict of interest for M.E.B., as O.B.’s trustee, to have intended that he and his mother hold the beneficial interest in the home as joint tenants. (para 134)
There is no evidence that [the lawyer attending to the transfer] advised M.E.B. he might be in a position of conflict or in breach of his fiduciary duty to O.B. in placing title to the Millwoods property in their joint names. (para 153)
The litigation at bar has resulted from O.B.’s acquisition of sole legal title through survivorship and it epitomizes the conflict that can arise when placing property into joint title between a dependent adult and her trustee. (para 169)
I find that M.E.B. was in breach of his fiduciary duty to O.B. in placing legal title to the property in their joint names without court approval. (para 170)
While this is a case from Alberta, it may nevertheless be the case that the same conclusion would be reached by an Ontario Court – that property jointly-held by a fiduciary and incapable person whose property he or she administers puts the fiduciary in a position of conflict with the potential to impact the suitability of the person to act as fiduciary and/or their ability to claim an interest in the joint property.
Thank you for reading.
David M. Smith
Other blog posts that you may enjoy:
The Twelve Days of Christmas, or Twelvetide, is a festive Christian celebration of the Nativity of Jesus Christ. The first day is December 25, and the celebration extends until January 5. (Fun fact: Shakespeare’s Twelfth Night is set on the last day of the Twelve Days of Christmas.)
Borrowing on the popular carol, I submit for your consideration the following list of estate planning considerations to assist in bringing your estate plan up to date. Please consider these steps, whatever your religious affiliation.
Also, feel free to sing along.
On the first day of Christmas: Locate your will. You should know where it is. Further, your estate trustee(s) should know where it is. Ensure that your will is immediately accessible when needed.
On the second day of Christmas: If you don’t have a will, make a will!
On the third day of Christmas: If you have a will, review your will to make sure that it remains relevant and appropriate. Has the makeup of your family changed? Have the nature or worth of your assets changed? Should you consider making a primary and secondary will? Have you appropriately provided for minors or disabled beneficiaries?
On the fourth day of Christmas: Review what assets may pass outside of your estate, either by right of survivorship or by beneficiary designation. Are these consistent with your plan? Are these assets to pass as a gift, or are they held in this manner only as a matter of convenience or tax planning, with the intention that they are to be distributed in accordance with your will? If a gift is intended, is their sufficient evidence to overcome any presumption of resulting trust?
On the fifth day of Christmas: Make a list of your assets, with particulars of where they are held, and account numbers. Make an inventory of your golden rings. This will simplify the job of your estate trustee.
On the sixth day of Christmas: Consider your digital assets. Make a list of all of your online accounts and passwords. Make sure that these are accessible by your estate trustee when necessary.
On the seventh day of Christmas: Consider charitable donations, either testamentary or otherwise. Non-testamentary charitable donations should be made before year end for maximum tax benefits.
On the eight day of Christmas: Consider making powers of attorney for personal care and for property. If you already have them, review them to make sure they remain appropriate. Consider who your proposed attorneys may be. Speak to your attorney(s) for personal care with respect to end of life decisions.
On the ninth day of Christmas: Discuss your funeral plans with your estate trustee and your family. Make your wishes known. This will make your estate trustee’s job easier, and may help to avoid conflict amongst your family, who may have different notions of what you would have wanted. Consider preplanning and prepaying for your funeral arrangements.
On the tenth day of Christmas: Consider sharing time with loved ones now. See Five Things your clients should do before they die.
On the eleventh day of Christmas: Review your insurance coverage. Do you have enough? Are your beneficiary designations in keeping with your estate plan? If the beneficiaries are minors, have you established an appropriate insurance trust for them?
On the twelfth day of Christmas: Sit back and relax. Look back over the past year and count your blessings. And take comfort in the peace of mind that comes from knowing that your estate plan is in better order than ever.
The Government of Canada is developing regulations to establish a monitoring system in respect of medical assistance in dying (MAID), and it recognizes the importance of timely public reporting on the matter. To that end, its 2nd Interim Report on Medical Assistance in Dying in Canada provides information on requests for MAID made between January 1 and June 30, 2017, and includes some notable findings.
To summarize a few statistics gathered from participating jurisdictions, during the first half of 2017 there were reportedly more than 1000 medically assisted deaths, which represents an almost 50% increase since the first six months of the legislation being in place. However, taking all deaths in Canada into account this still represent less than 5% of overall deaths. There has also been an increase in the number of deaths administered outside of a hospital setting, although it is not yet known if this is a signal of improved facilitation for home-based assisted deaths or other factors (e.g. lack of services in institutions in smaller communities). In looking at demographics, the average age of the patient was 73. Although deaths spanned a vast population of persons aged 18+, most were between ages 56 and 85. The most common underlying medical condition associated with MAID was cancer, which made up more than 60% of all deaths.
Although the legislation is in its infancy, various jurisdictions have worked to implement legislation or policies related to the oversight and delivery of MAID. In Ontario, the Medical Assistance in Dying Statute Law Amendment Act came into force this year to provide greater clarity and legal protection for health care providers and patients. Further, Ontario launched a provincial care coordination service to help patients and their loved ones with access to additional information and services related to MAID and other end-of-life options.
It will be interesting to see the progression stemming from the MAID legislation, both from the perspective of growing services for providers, patients and caregivers, and from the standpoint of developing case law on the subject. With approximately one-third of applicants denied their requests, no doubt the court’s interpretation of the legislation will be moving at a clip.
Thanks for reading and have a good day,
Some other blogs you may enjoy on the subject: