Category: Beneficiary Designations

11 Sep

The Appointment of Section 3 Counsel: Kwok v Kwok

Suzana Popovic-Montag Beneficiary Designations, Capacity, Estate & Trust, Estate Litigation, Estate Planning, Uncategorized Tags: , 0 Comments

The Substitute Decisions Act (the “SDA”) was passed in 1992. It governs what happens when a person becomes incapable of managing their own property or personal care. Under section 3 of the SDA, if the capacity of a person in a legal proceeding is in issue, the Public Guardian and Trustee (the “PGT”) may arrange for the legal representation of that person. Section 3 also provides that the person shall be deemed to have the capacity to retain and instruct counsel.

Although section 3 seems to be fairly straightforward, the details surrounding the appointment and position of section 3 counsel are somewhat obscure. Cases such as Sylvester v Britton and Banton v Banton have added some clarity to the role of section 3 counsel. The recent case of Kwok v Kwok provides a further illustration as to when section 3 counsel is to be appointed.

In Kwok v Kwok, Jiefu Kwok was involved in two motor vehicle accidents in 2011. He suffered a traumatic brain injury as a result and commenced two legal actions in relation to the accidents. A capacity assessment was conducted in 2014, which revealed that Jiefu was incapable of taking care of himself and managing his own property. In 2015, Jiefu’s son, Derek, was appointed as his guardian for property and personal care. Derek later filed an application to be released from these roles as he stated that it was putting a strain on his relationship with his father. Derek’s mother, Ellie, brought an application to take Derek’s place and be appointed as Jiefu’s guardian of property and personal care.

The PGT took the position that section 3 counsel should be appointed to represent Jiefu and obtain his wishes before Ellie was appointed as Jiefu’s guardian of property and personal care. The PGT was of the view that Jiefu’s capacity assessment conducted in 2014 was outdated and that a more limited guardianship might be appropriate for him.

Counsel for Derek and Ellie (the “Applicants”) argued that section 3 counsel is to be used in cases where a capacity assessment has not already been conducted. They added that, since a capacity assessment was already conducted in this case, the appointment of section 3 counsel was inappropriate. Moreover, a primary concern for the Applicants was the high costs associated with the appointment of section 3 counsel.

The Court considered the arguments of the PGT and the Applicants and noted the following about the role of section 3 counsel:

  • The appointment of section 3 counsel is a safeguard that protects the dignity, privacy and legal rights of a person who is alleged to be incapable
  • Section 3 of the SDA does not make the appointment of legal representation mandatory
  • In deciding whether to appoint section 3 counsel, the Court must consider the specific facts and issues in each case
  • The Court can appoint section 3 counsel even in cases where a capacity assessment has already been conducted or where there is an existing Court order declaring that a person is incapable

The Court concluded that the appointment of section 3 counsel would not be in Jiefu’s best interests and would be a waste of resources. The Court made this finding based on the following reasons:

  • There were no completing claims amongst Jiefu’s closest relatives as to who should be his legal representative. Both Derek and Ellie supported the appointment of Ellie as Jiefu’s guardian of property and personal care
  • There was no evidentiary basis to question the validity of the 2014 capacity assessment
  • A letter from Jiefu’s primary care physician regarding his current condition did not suggest that Jiefu’s condition had improved
  • Jiefu attended Court and expressed that he supported the appointment of Ellie as his guardian of property and personal care

As a result, Derek was released from his role as Jiefu’s guardian for property and of the person and Ellie was appointed in his place.

Kwok v Kwok adds to a growing body of cases examining the role of section 3 counsel. It provides that the Court can appoint section 3 counsel even in cases where a capacity assessment has already been conducted or where there is an existing Court order declaring that a person is incapable. Furthermore, it indicates that the wishes of the incapable person are to be given a considerable amount of weight in assessing whether section 3 counsel is appropriate.

 

For further reading on section 3 counsel, check out these other blogs:

Section 3 Counsel: Duties to the Client and the Court in Sylvester v Britton

SECTION 3 COUNSEL: A CATCH-22

Thanks for reading – have a great day!

Suzana Popovic-Montag and Celine Dookie

06 Sep

No Love Lost: Sisters, Parents, Loans and Forgiveness

Paul Emile Trudelle Beneficiary Designations, Estate & Trust, Estate Litigation, Estate Planning, Support After Death, Trustees, Wills 0 Comments

“There is no love lost between sisters [K] and [A].” So starts the endorsement in Nutzenberger v. Pryde, 2019 ONSC 5030 (CanLII).

There, the parents made a loan to A of $75,000. In their wills, the residue of the estate is to pass to the surviving parent. Both wills contained a clause that provided that if the other spouse was not living on the 30th day following the first spouse’s death, the $75,000 was to be forgiven.

Mother died on September 25, 2015. Father died on May 30, 2016.

K, as estate trustee of mother’s estate, brought a claim against A for the repayment of the loan. A moved for summary judgment on the claim.

Justice Harris agreed that summary judgment was appropriate. There were no primary facts in dispute, and no credibility issues. He dismissed the claim on two basis: first, mother’s estate had no standing to bring the claim, and second, the loan had been forgiven according to the terms of the wills.

On the first point, the loan came from father’s assets. Any interest that mother had in the loan passed to father under the terms of her will. Only father, or father’s estate had standing to pursue the loan.

Secondly, although the terms of the wills forgiving the loans were not “a model of drafting dexterity, to put it mildly”, the court interpreted the wills to mean that the intention of the parents was that either one could call in the loan while alive, but upon the death of the survivor, if no action was taken, the loan would be forgiven.

In determining the intention of the parties, the court looked at other terms of the wills. One term in both wills gave the estate trustee the discretion to pursue a loan. Another term acknowledged that a certain advance was in fact a gift. The term in question was “an awkward hybrid”. However, the court was able to conclude that the intention was that the loan would be forgiven if the surviving parent did not take any steps to collect on it.

As usual, more careful drafting may have avoided the litigation.

Thank you for reading.

Paul Trudelle

28 Aug

Questions Surrounding Jeffrey Epstein’s Last Will and Estate

Suzana Popovic-Montag Beneficiary Designations, Estate & Trust, Estate Litigation, Estate Planning, Trustees, Uncategorized, Wills Tags: , 0 Comments

The mysterious death of Jeffrey Epstein is generating a hubbub across the world. It reads like the beginning of an Agatha Christie detective novel and has a central figure who is reminiscent of a James Bond villain: a wealthy financier who is accused of operating a pedophilic sex trafficking ring. He has connections with scores of famous people: politicians, celebrities, royalty … In the early stages of his prosecution, he attempts to commit suicide; then, shortly afterwards, he is taken off suicide watch, the guards purportedly sleep through their checkups on him, and he is found dead.

In the aftermath, there have been conspiracy theories and much controversy, including an FBI investigation. The case has also prompted some questions regarding succession law, for it has just been reported that Epstein signed a new Will two days prior to his death. For the purposes of this post, we shall posit what would happen to the Will and the estate if this had all occurred in Ontario.

Validity of the Will

If Epstein indeed committed suicide, his suicidal mind would be considered in determining whether he had testamentary capacity, but it would not be conclusive (Topp Estate, 1983 CanLII 2329 (SKSU)). The applicable test is still the contextual factors set out in Banks v. Goodfellow.

If it comes to light that Epstein was murdered, then the Will could be attacked on the basis of undue influence. To achieve this, the objector would have to meet a fairly high evidentiary threshold, establishing “that what appears to be the testator’s will is not his or her will” (Kozak Estate (Re), 2018 ABQB 185).

As Epstein’s brother is named the sole beneficiary of the estate, if he is found to have murdered his brother, then public policy would likely bar him from benefiting from the estate (Papasotiriou, 2012 ONSC 6473).

The Estate

It has been reported that the alleged victims’ lawyers are seeking to continue their action against the Epstein estate. One of these lawyers, Lisa Bloom, is demanding a freeze of the assets in the meantime. In Ontario, if the deceased dies during the time in which he or she is a defendant in litigation, Rule 11.02 of the Rules of Civil Procedure may allow for an action to be continued against the deceased’s estate.

If the alleged victims win their lawsuit against the Epstein estate, it is uncertain whether they will obtain their damages awards, for Epstein likely sheltered many of his assets. In Ontario, the claimants could launch claims of unjust enrichment and constructive trust in order to gain access to funds which have been sheltered amongst Epstein’s friends, family, and offshore accounts. Sadly for the accusers, the same dark cunning which enabled Epstein to evade justice was likely employed in securing his assets in inaccessible vaults. Just a little something to think about.

Thank you for reading … Have a great day,

Suzana Popovic-Montag and Devin McMurtry

26 Jul

New Brunswick Court Admits Unsigned Will to Probate

Hull & Hull LLP Beneficiary Designations, Estate & Trust, Estate Litigation, Estate Planning, Trustees, Uncategorized, Wills Tags: , 0 Comments

The New Brunswick Court of Appeal has upheld a lower court decision that allowed an unsigned will to be admitted to probate.

In Marsden Estate (Re), [2017] N.B.J. No. 295, upheld on appeal at [2018] N.B.J. No. 304, the deceased was seen by a solicitor and gave instructions for the preparation of a will on September 19, 2016. She died the next day, before the will could be signed.

The estate trustee under the impugned will brought an application to prove the will. She relied on s. 35.1 of New Brunswick’s Wills Act. This section provides:

35.1 Where a court of competent jurisdiction is satisfied that a document or any writing on a document embodies

(a) the testamentary intentions of the deceased, or

(b) the intention of the deceased to revoke, alter or revive a will of the deceased or the testamentary intentions of the deceased embodied in a document other than a will,

the court may, notwithstanding that the document or writing was not executed in compliance with the formal requirements imposed by this Act, order that the document or writing is valid and fully effective as if it had been executed in compliance with the formal requirements imposed by this Act.

The matter was contentious, as two of the testator’s children were essentially excluded from the will. The testator told the solicitor that she had been estranged from them for some time.

The court relied on affidavit evidence, including the affidavit of the drafting solicitor. The court concluded that the unsigned will reflected the testator’s “deliberate, fixed and final expression as to the disposal of her property upon her death”. Further, the court was satisfied that the testator had testamentary capacity, and was not being unduly influenced.

In earlier blogs, we reported on similar applications under similar “substantial compliance” legislation. An Alberta court considered the legislation but declined to apply it where there was an absence of clear and convincing evidence that the deceased failed to execute the will by inadvertence or mistake. An Australian court went as far as admitting an unsent text message to probate.

In Ontario, the doctrine of strict compliance continues to apply. As stated by Nick Esterbauer in his blog of December 11, 2017, it will be interesting to see if Ontario legislation opens the door to substantial compliance in the future. To date, it has not.

 

Thanks for reading.

Paul Trudelle

15 Jul

Where There’s a Will to Contract, There’s a Contract to Will

David M Smith Beneficiary Designations, Estate & Trust, Estate Litigation, Estate Planning, Mutual Wills, Support After Death, Trustees, Uncategorized, Wills 0 Comments

In researching common errors in will drafting, we recently stumbled (as one often does through research) on the following question:

In the case of mutual wills, what happens in the event of remarriage?

Mutual wills operate as a contract. Simply put, the terms of the contract are that absent any revocation during the joint lives of the parties, the survivor will not revoke thereafter. The conundrum then becomes: If a will by its very nature is revocable, and wills are automatically revoked by marriage, what then happens to the agreement in the event of a second or third marriage?

The question at hand is best described with an example:

Jane has two children from a prior marriage, as does John. John and Jane get married and draft wills. The wills of Jane and John are identical except for some names and dates and include an agreement that says in part, that if John dies, all assets will be transferred to Jane absolutely, and when Jane dies all assets shall be divided equally among their four children. When John dies, his assets vest in Jane, and her will is now locked such that changing it would frustrate the terms of her agreement with her now deceased husband. But what if then Jane meets and marries Oscar? If all prior wills are null. . . Now what?

The courts have wrestled with the concept of mutual wills since the death of Lord Horatio Walpole in 1797. In his will of 1756, a nephew of the English author and statesman, George Earl of Walpole, demonstrated intent to enter in to a “compact” with his late uncle for the disposition of his and his uncle’s estates to the benefit of their respective families. The question that arose then, as it still does today, is upon what terms the two parties were transacting, and how should they be bound? Or, to quote a commentary from the turn, “How far in law and equity was each at liberty to repent, and to recall his share of the testamentary exchanges between them?”

204 years later, the question continued to be addressed in a seminal decision of the Ontario Superior Court of Justice. In 2001’s Edell v. Sitzer, Cullity J, was tasked with unpacking a bitter family dispute where an alleged agreement not to depart from equal division of assets was at stake. The question before the court then (in part) was, do the facts give rise to a constructive trust? Justice Cullity set out the test for mutual wills thusly:

  1. The mutual wills were made pursuant to a definitive agreement or contact not only to make such wills, but that the survivor shall not revoke.
  2. Such an agreement is found with certainty and preciseness.
  3. The survivor has taken advantage of the provisions in the mutual will.

If the test is satisfied, the court can impose a constructive trust. Rooted in the law of equity, an implied or constructive trust aims to remedy any unjust enrichment by one party of a contract (a surviving spouse, for example) over another.

But what consistently seems to trouble the conscience of the court, is the idea of “contracting-away” one’s testamentary freedom. There is no restriction for a will made in defiance of such an agreement, but in equity, the court is almost bound to treat mutual wills as a single testamentary instrument. This was the problem in the 2016 ONSC case of Rammage v. Estate of Roussel: Alf and Ruth Roussel had made mutual wills 13 years prior to Alf’s death in February of 2009, agreeing in part to divide their estate equally among their four children (both Ruth and Alf went into the marriage with 2 children each). One year after Alf’s death, Ruth made a new will, disinherited Alf’s children, and left everything to her own two kids. Upon the death of Ruth, the litigation began.

The court in Rammage determined that the wills of the deceased testators amounted to mutual wills, imposed a constructive trust, and divided the assets according to the terms of the first wills of Ruth and Alf.  If the court is satisfied that the wills are mutual, any property disposed of in a subsequent testamentary document is subject to a constructive trust in favour of the named legatees, and the subsequent will fails.

Returning to the question of remarriage, one could expect the need for administration and ultimately judicial intervention, should all the beneficiaries not consent to the changes in subsequent wills. Like many decisions that seem like “a good one at the time,” mutual wills should be considered very carefully and with the advice of independent counsel. A decision to enter into a contract that prohibits one from ever changing their last will and testament must be considered from all sides. To quote the late Horatio Walpole, the 4th Earl of Orford: “The wisest prophets make sure of the event first.

Thanks for reading!

David M. Smith & Daniel Enright (Summer Law Student)

12 Jul

Intervention: Trying to Get In The Game

Paul Emile Trudelle Beneficiary Designations, Estate & Trust, Estate Litigation, Estate Planning, Uncategorized Tags: , , , , 0 Comments

Sometimes, you are added as a party to a proceeding when you don’t really want to be. In other cases, a proceeding is started, and you are not a party, but want to be. What can be done about this? Intervention.

Under Rule 13.01(1) of the Rules of Civil Procedure, a person who is not a party to a proceeding may move for leave to intervene as an added party if the person claims:

  1. an interest in the subject matter of the proceeding;
  2. that the person may be adversely affected by a judgment in the proceeding, or
  3. that there exists between the proposed intervenor and one or more of the parties a question of law or fact in common with one or more of the questions in issue in the proceeding.

Rule 13.01(2) adds another consideration. The court shall consider whether the intervention will unduly delay or prejudice the determination of the rights of the parties to the proceeding.

Intervention was considered in the decision of Arnold v. Arnold, 2019 ONSC 3679. There, the proceeding involved a Power of Attorney dispute between 3 of the incapable person’s children. The issue was whether a 2011 Power of Attorney, which appointed children 1, 2 and 3 as attorneys, governed or whether a 2019 Power of Attorney, which only appointed children 2 and 3 as attorneys governed.

The proposed intervenor was child 4. He was not named as attorney in any of the Powers of Attorney, and was not a party to the proceeding. Child 4 was diagnosed with schizophrenia and lived in his mother’s, the incapable person’s, house. He was receiving support from her. He sought to intervene to ensure that his needs were protected.

The court considered the criteria for intervening, and refused to allow child 4 to intervene.

As to the first criteria, the court found that essence of the application was who was to be responsible for the management of mother’s property, not how it was to be managed. While child 4 may have an interest in how the property was being managed, he had not genuine interest in who.

Regarding the second criteria, child 4 acknowledged that he was not adversely affected by the management of mother’s property, as long as the responsible person fulfills that role properly. The court added that child 4 would benefit from the determination of the question raised in the proceeding, as he would then know with whom he is dealing.

With respect to the third criteria, child 4 argued that he had potential claims as against his father’s estate and his mother for child support. The court found that the questions raised in those potential proceedings were not the same as the questions raised in the existing proceeding regarding who was to care for mother. Further, child 4’s lack of intervenor status would not prejudice his claims.

The court also found that allowing child 4 to intervene would result in undue delay and prejudice. The proceeding was already being expedited, and was scheduled to be heard two weeks after child 4’s motion to intervene. Allowing child 4 to intervene would likely delay the proceeding. Had child 4 moved to intervene sooner, this might not have been the case.

Costs were awarded against child 4. However, due to his being on ODSP, costs were awarded against child 4 in the amount of $4,000 to each of the other groups of litigants. Payment was deferred until child 4 received his share, if any, of his mother’s estate.

Thanks for reading.
Paul Trudelle

26 Jun

The estate sale – can it be a treasure island?

Suzana Popovic-Montag Beneficiary Designations, Estate & Trust, Estate Litigation, Estate Planning, Uncategorized Tags: , , 0 Comments

We wrote several months ago about the declining value of household furniture and other items – especially antiques that were highly desired decades ago.

The general rule if you’re selling home assets (typically in an estate or when moving into a retirement home situation) is that you won’t get as much as you think. Tastes change (grandfather clock anyone?), artists fall out of favour (or never gain much market value) and items fall into disrepair. And you usually have to pay a firm to come in and assess and sell the contents. It may not leave you with much.

Mind the small stuff

What can often get overlooked in content sales is the little stuff. We all bring our personal biases when assessing what’s junk and what could be a little treasure. If you see a figurine or small carving and don’t like it, you’ll assume that others won’t like it either. Under the weight of all the other junk you have to dispose of, the item can end up in the trash.

That can be a costly mistake. I was recently visiting an estate home being prepared for sale, and the daughter of the deceased pointed to a small ceramic cat at the end of the mantle. It was, to me, nothing much of note. It was about 2 inches high and 3 inches long and had stripes. I wouldn’t have thought twice about trashing it if I was clearing out the house.

That’s what the daughter thought too, until they had a friend over who identified the cat as an original ceramic piece by Swedish artist Lisa Larson. What was going to end up in the trash was actually a small sculpture worth hundreds of dollars. Oops …

Be mindful of the art-savvy owner

If a homeowner had a good eye for art during their lifetime, there’s a good chance that even small knick-knacks were bought with purpose and could have value. So, before you clear the little stuff off the mantle of someone’s home, it may pay to have an art-savvy friend tour the house just in case.

Thanks for reading – enjoy your day,
Suzana Popovic-Montag

14 Jun

Getting Whited-Out of A Will

Paul Emile Trudelle Beneficiary Designations, Estate & Trust, Estate Litigation, Estate Planning, Trustees, Uncategorized, Wills 0 Comments

After making her will, the deceased “whited-out” the name of a beneficiary using white-out or liquid paper. Was this an effective amendment to the will?

This question was answered in Levesque Estate (Re), 2019 BCSC 927 (CanLII). There, the deceased made a formal will which left the residue of her estate to 7 beneficiaries. However, at some point between the making the will and her death, the deceased obscured the name of one of her beneficiaries using white-out. The estate trustees applied to the court for the opinion of the court with respect to whether this “alteration” was effective.

Applying B.C. law, the court determined that the alteration would be effective if either the alteration made the word or provision illegible, or if the alteration was deemed by the court to represent the intention of the deceased to alter the will.

With respect to the first test, the court found that the whited out provision did NOT render the name beneath to be “impossible to read by ordinary inspection … without chemical or other analysis”. Therefore, the alteration was not valid on this basis.

(In another case out of Newfoundland, the court held that provisions were “whited out” to the extent that “no part of the previous text [was] apparent”. Apparently, the testator used a heavier hand when whiting out. In that case, the whiting out of the text was found to be an effective revocation.)

In Levesque, however, the court went on to apply the second test of substantial compliance, and found that the alteration was a “deliberate or fixed and final expression of the Deceased’s intention” to remove the beneficiary from her will. “Carefully dabbing white-out over the provision in question was undoubtedly a considered and deliberate act on the part of the Deceased. She was applying the white-out to the original Will. It was not a casual act. The only reasonable inference is that her intention was to remove the provision from the Will.” The court was able to use its curative powers to give effect to the alteration.

In giving effect to the alteration, the court applied s. 58 of B.C.’s Wills, Estates and Succession Act, which gives the court authority to give effect to the alteration of a will even if there is not strict compliance with the formal requirements of the Act. In Ontario, there is no similar “substantial compliance” provision. It is not clear that the whited-out changes would have been effective in Ontario.

For another blog on white-out and wills, see “Revocation of Wills: White Out of this World”.

Have a great weekend.

Paul Trudelle

09 May

Can I make a will in my own handwriting?

James Jacuta Beneficiary Designations, Estate & Trust, Estate Litigation, Estate Planning, Trustees, Uncategorized, Wills 0 Comments

There is a well-known case that students read while in law school that has to do with requirements for making a will in your own handwriting. It involves a will by farmer Cecil Harris who was farming near Rosetown, Saskatchewan when on June 8, 1948 while out working alone in his field, he suffered a misfortune and was pinned under his tractor for ten hours. With his pen knife he scrawled on the tractor’s fender: “In case I die in this mess, I leave all to wife” and added his signature. The Saskatchewan court admitted the tractor fender into probate as a will. It had met the legal requirements of being in his own handwriting and signed by him, and the fender is now on display at the University of Saskatchewan Law School.

Making a will is a serious and often complex endeavour that one should not casually undertake without professional advice. Having said that, the law in many countries recognizes a “holographic” or handwritten will, when properly completed. In Ontario the relevant legislation is in the Succession Law Reform Act, which states, “A testator may make a valid will wholly by his or her own handwriting and signature, without formality, and without the presence, attestation or signature of a witness. R.S.O. 1990, c. S.26, s. 6.”

Forty years ago when I first read the “tractor” case in law school in 1979, the most modern piece of equipment in many law offices was the electric typewriter. Since then, changes include the introduction of the fax machine, the word processor and then the computer, the internet and email, and smart phones. Law students today are of a generation that grew up with smart phones in their hands starting at about the same time they learned to walk.

Perhaps it will soon be time to recognize a “handwritten” electronic holograph will. In Ontario there have been none so far. Nevertheless, it seems to be an interesting question. For example, if I take my ipad and handwrite on the device “All to my wife” and sign it as my holographic will so it is available in electronic form, it will not be recognized as valid in Ontario. However, if I take the same ipad and damage the surface of the screen by scratching on it, “All to my wife” with my signature, then this will be recognized as a valid will. This seems to me to be an incongruous result. In a time when everyone has a smart phone the matter might yet be resolved by new legislation or perhaps even by an activist court and a modern version of the tractor case.

 

Thanks for reading!
James Jacuta

07 May

The shortest will.

James Jacuta Beneficiary Designations, Estate & Trust, Estate Litigation, Estate Planning, Trustees, Uncategorized, Wills 0 Comments

On October 3, 1942 the Calgary Herald reported that the shortest will was four words, “Jake everything is yours”, handwritten on a piece of paper by his cousin Reinhard Z. Nice  and recorded at Norristown Pennsylvania by Registrar of Wills, John H. Hoffman. The estate was valued at $16,000 (which would have bought a house in those days).

On November 29, 1965 the Windsor Star reported that the shortest will in England was from a case in 1906 where the will admitted to probate was the three words: “All for mother”. It involved the case of Thorn versus Dickens which was a dispute between the deceased’s mother and the deceased’s widow.

On July 9, 1979 the Vancouver Sun reported that – According to Guinness – the shortest will in the world was the two words: “Vse Zene” the Czech for “All to wife” dated January 19, 1967 by Herr Karl Tausch of Langen, Hesse, Germany.

Thanks for reading!
James Jacuta 

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