Category: Estate Planning

30 Jul

Funeral Pre-Planning: Take a Lesson From a Pirate

Paul Emile Trudelle Estate Planning, General Interest Tags: , , 0 Comments

Sailors, and in particular, pirates are often depicted as wearing gold earrings. There are many legends as to why they adopted this particular fashion statement. One has a clearly estate-related basis.

Sailors were often given earrings to commemorate certain sailing milestones, such as crossing the equator or rounding the treacherous Cape Horn. Superstition also played a role, as many believed that gold earrings would improve their eyesight, prevent seasickness or even drowning. Wax was often pressed onto the earrings, which could serve as earplugs when firing a cannon. Another theory is that the gold earrings were just a way for pirates to show off their wealth.

From an estate planning point of view, sailors would wear valuable earrings so that their funerals could be paid for if their bodies washed ashore. If a pirate died on the ship, the value of the earrings could be used to cover the cost of transporting their body back home, so as to avoid a burial at sea (assuming that there is honour amongst thieves, and that the earrings were used as intended).

Actor (non-pirate) Morgan Freeman sports gold earrings. He has been reported as saying that his earrings are worth just enough to pay for a coffin in case he dies in a strange place.

Preplanning a funeral is always a good idea. It alleviates significant stress, both financial and emotional, on those left behind. It also allows the planner to ensure that they are given the burial they want. Take a lesson from a pirate: make a plan.

Thanks for reading. Have a great weekend.

Paul Trudelle

28 Jul

Estates, Art and Valuations

Suzana Popovic-Montag Estate Planning Tags: , , , 0 Comments

This week, we thought it would be interesting to touch on the intersection of law and art in estate planning.

Artwork collections, whether they are comprised of a multitude of works or just one piece, are often a treasured possession of their owners, carrying deep emotional significance and/or high monetary value.

In estate planning, the sentimental and financial aspects of an art collection can become intertwined. Testators and beneficiaries may have competing views. As a simple example, there could be disagreement on whether the art should be sold or kept within the family. That being said, the valuation of artwork is an issue that may often fly under the radar.

The value of an artwork collection can have serious repercussions on the administration of an estate, especially where the estate lacks liquidity to address expenses, such as estate administration taxes.

However, the valuation of art may not always be a clear cut issue, as discussed by Mr. Ronald D. Spencer, Esq. in this article. Value can vary drastically over time, and even where the value remains stable, there may be significant challenges in finding buyers, especially where the collection is large or mostly one artist, potentially burdening the estate with tax liabilities and no certain financial benefit in exchange.

Understanding and articulating one’s wishes concerning their art collection is the first step in minimizing the impact of some of these issues. You will want to set out your intentions and wishes clearly in your will.

Avoiding uncertainty can be achieved through several means. The collection can be distributed through testamentary or inter vivos gifts where appropriate beneficiaries exist. It can be sold, which may carry advantages where the valuation and marketability of the collection is uncertain over time and a potential buyer has been found. Donation to a charitable organization is also an option, with many registered charities dedicated to art.

Whatever path one chooses, it is important to understand the implications from a tax and transactional perspective to ensure the most efficient execution of the testator’s intentions.

For those interested in further reading on art and law, our colleagues at Hull & Hull LLP have written some excellent blogs on the topic here and here.

Thank you for reading and have a great day!

Suzana Popovic-Montag & Raphael Leitz

16 Jul

Bequesting What You Don’t Have: Ademption

Paul Emile Trudelle Estate & Trust, Estate Planning, Wills Tags: , , 0 Comments

“Ademption occurs when the property which is the subject of a specific gift, although in existence at the date of the will, is not in the testator’s estate at his death. It may have been sold or given away by the testator, or it may have been lost, stolen or destroyed. In the absence of a statutory provision to the contrary, if a specific gift has adeemed, the beneficiary gets nothing.”

This explanation of ademption comes from Oosterhoff on Wills, 8th ed. (Toronto: Carswell, 2016) at 538, as quoted in Best v. Hendry, 2021 NLCA 43 (CanLII).

In Best, the issue of ademption was front and center. The testator left a will that provided that her house was to go to her niece Hendry, and the residue of her estate was to go to her niece Best. Many years after making the will, the testator developed dementia, and was moved from her home to a nursing home. Best applied to be her guardian, and proceeded to sell the home.

Upon the testator’s death, Best claimed that the gift of the house adeemed, and the proceeds of sale fell into the residue. The Newfoundland Court of Appeal agreed.

In Ontario, recourse to ss. 35.1 and 36 of the Substitute Decisions Act may have applied. Section 35.1(1) provides that a guardian shall not dispose of property that the guardian knows is subject to a specific testamentary gift in the incapable person’s will. Section 35.1(3) allows for the disposition of the property if it is necessary to comply with the guardian’s duties. However, s. 36 provides that the doctrine of ademption does not apply to such dispositions by the guardian, and that the beneficiary is entitled to receive from the residue of the estate the proceeds of disposition, without interest.

According to the decision in Best, only Ontario and B.C. have such anti-ademption legislation.

(Best also dealt with issues relating to a release initially signed by Best, the liability of the estate trustee to Best, and the right of the estate trustee to recover funds improperly paid to a beneficiary (Hendry). I will not address those here.)

This brings me to my favourite ademption joke. A testator went to a lawyer to prepare his will. He told the lawyer that he wanted to make a bequest of a house to his loving wife, a cottage to his two loving sons, and a Frisbee collection to his loving dog. When the lawyer reminded the testator that he did not have a house, a cottage or a Frisbee collection, the testator responded: “Well, that’s their problem. I’ll be dead by then.”

Have a great weekend.

Paul Trudelle

30 Jun

Why Most Canadians Don’t Have a Will

Suzana Popovic-Montag Estate Planning, Wills Tags: , 0 Comments

Most things in life are not guaranteed, but one thing most definitely is – death. Although that may be an unpleasant thought for many, we cannot escape from this inevitable truth and should become more comfortable talking about and planning for it.

While a large part of the Canadian population had previously ignored the need for estate planning, the COVID-19 pandemic encouraged people to change their thinking and realize the importance of doing so. In fact, many Canadians took matters into their own hands.

According to a poll conducted by the Angus Reid Institute in 2018, 51% of Canadians did not have a will in place before the pandemic. There were several reasons to explain this lack of estate planning, with the majority being summarized below:

  • 25% think they don’t need to worry about it because they’re “too young”
  • 23% feel it isn’t worth their time because they don’t have enough assets
  • 18% think it’s too expensive to get a will made
  • 8% don’t want to think about dying
  • 5% think it’s too time consuming

There have been general studies conducted to find out why people hesitate to make a will. It has been determined that many people are simply avoiding making tough decisions. But why spend time working hard to accumulate assets during your lifetime only to risk having them be distributed without any consideration of your wishes?

There is no harm in starting your estate planning “early” and then periodically reviewing and updating your will and estate plan after a framework has been established. Revisiting plans every five years, as frequently recommended, would greatly reduce the difficulty and time that would be spent once you are older with a larger and more complicated estate.

As well, the expense that can later be incurred as a result of estate litigation is likely to be higher than the cost of making a will now. Alternatively, if you don’t have a large estate, you can make a simple will yourself, although one should be weary of the complications that arise from not seeking professional advice.

The Coronavirus was the wake-up call many Canadians needed to start thinking about their own estate plans. While it is a relief that the pandemic may soon be behind us, the threat of death never truly goes away. Estate planning is a life-long conversation that should be normalized so that one can ultimately “rest in peace” whenever the time may come.

Suzana Popovic-Montag and Ekroop Sekhon

29 Jun

Presumptions of Resulting Trust and Beneficiary Designations Revisited

Nick Esterbauer Beneficiary Designations, Estate & Trust, Estate Planning, Joint Accounts, RRSPs/Insurance Policies Tags: , , , , , , , , 0 Comments

A recent decision of the Ontario Superior Court of Justice revisits the issue of whether a presumption of resulting trust should be imposed in the case of a beneficiary designation.

As our readers will know, the leading case on presumptions of resulting trust remains Pecore v Pecore, 2007 SCC 17, in which the Supreme Court summarized the state of the law relating to property that had been gratuitously transferred into joint tenancy with a non-dependent adult child: the asset becomes subject to a presumption that it is impressed with a resulting trust in favour of the parent’s estate.  The presumption may be rebutted by evidence that it was, in fact, the parent’s intention to gift the jointly-held property to the adult child by right of survivorship.

Last year, we saw a couple of decisions apply the principles of Pecore to novel situations, potentially expanding the applicability of presumptions of resulting trust.  For example, in Calmusky v Calmusky, 2020 ONSC 1506, the doctrine of resulting trust was applied to a RIF for which an adult child had been designated as beneficiary.

In Mak Estate v Mak, 2021 ONSC 4415, Justice McKelvey reviewed the issue of whether an asset for which a beneficiary designation was in place should be subject to the presumption of resulting trust.  The plaintiff residuary beneficiaries of their mother’s estate sought an order setting aside the 2007 beneficiary designation for the mother’s RRIF, under which the defendant, their brother and another residuary beneficiary of the estate, was named.  The evidence suggested that the deceased had relied upon the defendant, who lived with her and drove her to appointments after the death of the parties’ father in 2002.

After addressing the issue of whether a presumption of undue influence applied to the RRIF beneficiary designation (and finding that it did not because a beneficiary designation is not an inter vivos gift), Justice McKelvey turned to the issue of the principle of resulting trust, writing (at paras 44, 46):

In my view…there is good reason to doubt the conclusion that the doctrine of resulting trust applies to a beneficiary designation. First, the presumption in Pecore applies to inter vivos gifts. This was a significant factor for the Court of Appeal in Seguin, and similarly is a significant difference in the context of a resulting trust. Further, the decision of this Court in Calmusky has been the subject of some critical comment. As noted by Demetre Vasilounis in an article entitled ‘A Presumptive Peril: The Law of Beneficiary Designations is Now in Flux’, the decision in Calmusky is, ‘ruffling some features among banks, financial advisors and estate planning lawyers in Ontario’. In his article, the author comments that there is usually no need to determine ‘intent’ behind this designation, as this kind of beneficiary designation is supported by legislation including in Part III of the Succession Law Reform Act (the “SLRA”). Subsection 51(1) of the SLRA states that an individual may designate a beneficiary of a ‘plan’ (including a RIF, pursuant to subsection 54.1(1) of the SLRA.)

It is also important that the presumption of resulting trust with respect to adult children evolved from the formerly recognized presumption of advancement, a sometimes erroneous assumption for a parent that arranges for joint ownership of an asset with their child is merely ‘advancing’ the asset to such adult child as such adult child will eventually be entitled to such asset upon such parent’s death. The whole point of a beneficiary designation, however, is to specifically state what is to happen to an asset upon death.

As a result, the defendant was entitled to retain the proceeds of his mother’s RRIF, as the plaintiffs unable to establish any intention of their mother to benefit her estate with the asset without the benefit of a presumption of resulting trust.

In light of the conflicting applications of Pecore under the Calmusky and Mak Estate decisions, it will be interesting to see how this issue may be further developed in the case law.  For the time being, however, it may be prudent to take care in documenting a client’s wishes to benefit an adult child by way of beneficiary designation in the same manner as we typically would in situations of jointly-held property.

Thank you for reading.

Nick Esterbauer

28 Jun

Electronic Signatures Still not an Option for Wills in Ontario

Nick Esterbauer Estate Litigation, Estate Planning, Wills Tags: , , , , , , 0 Comments

Our readers will already know about the recent approval of legislation providing for will validation in Ontario under Bill 245, the Accelerating Access to Justice Act, 2021.  The act received Royal Assent in April 2021.  The changes under Schedule 9, which addresses amendments of the Succession Law Reform Act, RSO 1990, c S.26 (the “SLRA”), come into effect on January 1, 2022 (other than the update to virtual will witnessing in counterpart, which has already been made permanent under the revised Section 4 of the SLRA).

As of January 1, 2022, a new Section 21.1 of the SLRA will read as follows:

Court-ordered validity

(1) If the Superior Court of Justice is satisfied that a document or writing that was not properly executed or made under this Act sets out the testamentary intentions of a deceased or an intention of a deceased to revoke, alter or revive a will of the deceased, the Court may, on application, order that the document or writing is as valid and fully effective as the will of the deceased, or as the revocation, alteration or revival of the will of the deceased, as if it had been properly executed or made.

No electronic wills

(2) Subsection (1) is subject to section 31 of the Electronic Commerce Act, 2000.

Transition

(3)Subsection (1) applies if the deceased died on or after the day section 5 of Schedule 9 to the Accelerating Access to Justice Act, 2021 came into force.

We have seen Section 21.1 referred to as both a will-validation provision and as a “substantial compliance” provision.  In fact, Section 21.1 does not specify that substantial compliance with the formal requirements for a valid will under the SLRA is required and it may, accordingly be more accurately referred to as a will-validation provision.  Either way, this is a significant change to the law of validity of wills in Ontario and our province, as of January 1, 2022, will no longer be a strict compliance jurisdiction where some documents clearly intended to function as a valid will are rejected and deemed ineffective for technical reasons.

Notably, the legislation carves out the use of electronic signatures.  Some estate practitioners had been hopeful that electronic signatures would be accepted under the proposed estate legislative reform, given the recent increased acceptance of electronic signatures in the swearing/commissioning of affidavits and other legal documents and options available to verify their authenticity.  Section 31 of the Electronic Commerce Act, 2000, SO 2000, c 17, excludes the application of that act to wills, codicils, testamentary trusts, and powers of attorney.

Accordingly, it appears that a will signed by the testator or witnesses using electronic means cannot be validated by the Court, even after the new Section 21.1 is introduced to the SLRA.  For now (including after January 1 of next year), all wills still require actual, “wet” signatures in order to be valid.  Furthermore, even if a will may be validated by the Court under Section 21.1, the uncertainty, delay, and expense relating to applying for court-ordered validation of a will may still be best avoided by seeking an experienced estate planning lawyer’s assistance in the preparation of a Last Will and Testament.

Thank you for reading.

Nick Esterbauer

23 Jun

The Real Estate Boom and a Rise in Estate Litigation – Is There a Correlation Between the Two?

Ian Hull Estate Planning Tags: , , , , 0 Comments

A recent Globe and Mail Article, published on June 4, 2021, suggests that the booming real estate market in Vancouver has come with a rise in family legal disputes.

A Vancouver estate dispute arose in November of 2020 when a testator (with modest assets at the time), who had bequeathed the remaining assets of her estate to the British Columbia Society for the Prevention of Cruelty to Animals, passed away. When the will was prepared in 2003, the testator never contemplated that the value of her estate would increase so dramatically as a result of a rise in the real estate market. The testator’s remaining assets, left to charity, amounted to more than $1.5 million on her death. It is safe to say that the testator’s heirs were not pleased with this outcome.

A poorly drafted will that fails to consider the volatile real estate market could result in unhappy heirs/beneficiaries and leave an estate vulnerable to litigation. It is also important for testators who reside in British Columbia in particular, to consider the Wills Variation section of their legislation when drafting a will. If a testator has multiple children and chooses to gift one child real property, and that real property increases in value, the remaining children could argue that they were treated unfairly and have a claim against the estate. As litigation lawyer, Josh Woods, states, “…  we are not talking about a $100,000.00 lake cabin … we are talking about properties … all of which are skyrocketing in value.”

In order to best protect against estate litigation, it would be prudent to retain an estates lawyer to prepare your will.

Thanks for reading and enjoy your day!

Ian Hull and Tori Joseph

16 Jun

The Simplicity of Online Will Kits is Their Biggest Shortcoming

Suzana Popovic-Montag Estate Planning, Wills Tags: , , 0 Comments

The appeal of an online will kit is undeniable. Advertisements promise that, for less than $100, anyone can draw up a will in just 20 minutes without ever having to set foot in a lawyer’s office.

While this convenience and low cost will appeal to some, there are significant drawbacks that must be considered when comparing a do-it-yourself document to a traditional Last Will and Testament that a lawyer would prepare.

For example, one of the key selling points of a kit is that it is simple, with few forms to fill out. That should set off alarm bells. Most of us have complicated personal and financial lives. When we die, we will leave behind complex estates that include investments, property, securities and perhaps multiple beneficiaries. A proper estate plan can hardly be captured in the fill-in-the-blank format of an online will kit.

Although these kits claim to cover all the legal issues that govern estate planning, how will you know that they do? If there is a mistake or omission, your beneficiaries will pay the price for the shortcut you took when drawing up your will.

Convenience and a low up-front cost are no substitutes for the advice a wills and estates lawyer can provide. As mandated by the Law Society of Ontario, we constantly take courses to ensure we are aware of new developments in the law. Standardized online kits may not reflect changes brought about by the courts and provincial government.

For example, Bill 245, the Accelerating Access to Justice Act, significantly alters Ontario’s estate laws. As I discussed in a previous post, it makes five major changes to the Succession Law Reform Act. It can be assumed that an online will kit will not address those legislative updates.

The role of the lawyer is to make sure your Last Will and Testament reflects your intentions for your estate after you die. Estate lawyers are versed in the laws of the province, so we can ensure your Last Will and Testament complies with all provincial legislation as it divides up your asset as you desire.

A will drawn up by a legal professional should help avoid uncertainty and court challenges after your death, reducing the fees your estate will have to pay. The more complex your estate, the more important it is to make sure your will reflects that complexity, while clearly laying out your final wishes. An online form that can be completed in 20 minutes pales by comparison.

Another problem with online will kits is that they may be met with court challenges. With a traditional will, clients discuss the details of their estate with a lawyer who can identify problems that may arise in the future, as well as suggest ways to avoid them. Do-it-yourself kits may not effectively address scenarios such as blended families or if you have children with different spouses. These issues require appropriate language when drafting a will – phrasing that an estate lawyer can provide.

Legal counsel can ensure your will is free of vague wording and conflicting or ambiguous provisions. The wording in an online kit may sound professional, but it may not meet the high standard a legal practitioner would bring to the document’s preparation.

Don’t take a chance with the inheritance you want to leave loved ones. You may never know if saving a few hundred dollars on preparing your will was worth it, but your loved ones may if problems arise.

Contact me if you need assistance with drawing up this important document – and have a great day!

Suzana Popovic-Montag

15 Jun

Vacation Wills – Can you admit a foreign Will to probate in Ontario?

Stuart Clark Estate Planning Tags: , , , , , , , , , , , 0 Comments

Remember travel? Remember getting on an airplane and going somewhere (anywhere) else? Although you would be forgiven for thinking of these activities as science fiction due to recent world events, with the COVID-19 pandemic hopefully on its downward trend the idea of travel could again be creeping back into the collective consciousness.

Although the more common souvenirs to bring back from a vacation are likely a sunburn and some tacky items with the name of the destination emblazoned across it, as this is an estate blog it got me thinking of whether there may be any estate related souvenirs that you could bring back. Could you, for example, sign a new Last Will and Testament while on vacation, potentially adding a Will with an exotic destination name at the top to the list of items you bring back? Could such a Will later be admitted to probate in Ontario? Like any good legal question the answer is “maybe”.

In Ontario the potential admittance of a foreign Last Will and Testament is governed by section 37(1) of the Succession Law Reform Act, which provides:

“As regards the manner and formalities of making a will of an interest in movables or in land, a will is valid and admissible to probate if at the time of its making it complied with the internal law of the place where,

(a) the will was made;

(b) the testator was then domiciled;

(c) the testator then had his or her habitual residence; or

(d) the testator then was a national if there was in that place one body of law governing the wills of nationals.” [emphasis added]

In accordance section 37(1)(a) of the Succession Law Reform Act, a foreign Will can be admitted for probate in Ontario so long as it complied with the internal law of the place where it was made at the time it was signed. As you would presumably be presently located in the destination on which you were on vacation, so long as the Will complied with the laws of the jurisdiction where you were on vacation at the time it was signed it could theoretically later be admitted to probate in Ontario making your vacation Will a valid Will in Ontario.

In considering your potential vacation Will it would be wise to remember that just because you “can” do something doesn’t mean you “should”, with a vacation Will likely being in the same category as a vacation tattoo as something that should be very seriously considered and thought through before it is done.

Thank you for reading.

Stuart Clark

14 Jun

Zombie Deeds – Can you intentionally delay registering a deed until after death?

Stuart Clark Estate Planning Tags: , , , , , , , , , , 0 Comments

You are the owner of real property that you would like to transfer to one of your children upon your death. Although you could include the bequest of this property in your Last Will and Testament, in the hope of potentially minimizing estate administration tax you decide to sign the transfer for the property now and provide your lawyer with clear instruction that it is not to be registered until after your death. Is this transfer valid and/or an effective estate planning tool?

A transfer/deed of land for real property which is not registered until after the transferor’s death is known colloquially as a “zombie deed”, insofar as they are said to come back to life after the transferor’s death. The use and availability of zombie deeds in Ontario is highly problematic.

The potential validity and/or enforceability of “zombie deeds” was recently considered by the Ontario Superior Court of Justice in Thompson v. Elliott Estate, 2020 ONSC 1004, wherein the court confirmed that zombie deeds were generally inoperable and could not be registered by a lawyer after the transferor’s death. In coming to such a decision the court places great emphasis on the fact that the Ontario registry office is correct in refusing to allow the registration of “zombie deeds” as they require the lawyer registering the document to knowingly make false statements, namely that the individual completing the transfer is still alive.

The Ontario Court of Appeal in Re Sammon (1979), 22 O.R. (2d) 721, confirmed that in order for a transfer to be valid the transferor must have intended to be “immediately and unconditionally bound” by the transfer at the time of signing. This requirement to be “immediately and unconditionally bound” by the transfer raises obvious questions surrounding whether a transfer that was signed under the instructions not to be registered until after the transferor’s death could be a valid transfer, as by the very instruction it would appear the transferor did not intend to immediately be bound by the transfer.

The Ontario Court of Appeal in Carson v. Wilson, [1961] O.R. 113, confirmed that a transfer that was signed under direction not to be registered until after the transferor’s death could not be considered effective due to the issues surrounding the requirement to be “immediately and unconditionally bound”. As summarized by the court in Tubbs v. Tubbs, [2006] O.J. No. 4373:

The court held that the documents did not operate as present assignments or either immediate or remainder interests in the particular lands because there was no acknowledgement by the deceased, express or implied, of any intention to be immediately and unconditionally bound by them. Nor could the deeds be regarded as effective escrows. Delivery was contingent on death, and accordingly the court found that they were not effective deeds or assignments but testamentary dispositions which failed for want of compliance with the Wills Act. The Court of Appeal went on to hold that it could not be argued that the documents amounted to valid declarations of trust by the deceased.” [emphasis added]

The requirement that the individual transferring the property must have intended to be immediately and unconditionally bound by the transfer makes the potential use and availability of zombie deeds problematic, for by their very design the transferor likely intended to continue to enjoy some level of control over the property after signing the deed, whether it be the continued use and occupation of the property or otherwise. As a result any individual considering the potential use of a “zombie deed” should likely approach the topic with caution.

Thank you for reading.

Stuart Clark

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