Category: Estate Planning

11 Mar

Due Execution of a Will: Bayford v Boese

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

For a will in Ontario to be valid, it must meet the statutory requirements for due execution as outlined in section 4(1) of the Succession Law Reform Act (the “SLRA”). In some cases, however, determining whether these requirements have been met is not always clear-cut. Bayford v. Boese, 2019 ONSC 5663 provides such an example.

In this case, the testator, Bruce Boese (“Bruce”), died in June of 2015. Bruce was the sole owner of a farm he inherited from his parents. He never married and did not have any children. For the past two decades prior to Bruce’s death, his friend, Brenda Bayford (“Brenda”), assisted him with the operation of the farm.

Throughout his lifetime, Bruce executed two wills: one in 1992 and another in 2013. Under the 1992 will, Bruce named his parents as his sole beneficiaries. However, since both of Bruce’s parents had pre-deceased him, his estate would pass on an intestacy to his siblings, with Brian and Rhonda each inheriting 50%. Under the 2013 will, the farm property was to be transferred to Brenda, with the residue being equally divided amongst four children of Bruce’s two siblings. Interestingly, the 2013 will had the word “DRAFT” stamped on every page. Also, there were two versions of the 2013 will: “Version 1” and “Version 2”.  Version 1 contained Bruce’s signature but did not contain the signatures of any witnesses. Version 2 contained Bruce’s signatures and the signature of two witnesses, Sophie Gordon (“Sophie”) and Colleen Desarmia (“Colleen”).

After Bruce’s death, Brenda found Version 1 of the will. She brought it to the office of Bruce’s lawyer as she thought that the fully executed version of the will would be there. It was not. Shortly after, Colleen informed Brenda of the existence of Version 2. Upon hearing this, Brenda did a further search and found Version 2.

Brian asserted that the 2013 will did not comply with section 4(1) of the SLRA. His theory was that upon finding Version 1 of the will, Brenda colluded with the two witnesses to procure the 2013 will. In the alternative, Brian asserted that Bruce’s signature was forged on the 2013 will which the two witnesses signed.

Although Brian called an expert to give evidence with respect to Bruce’s signature on the wills, Justice Corthorn did not find the expert’s evidence to be helpful to Brian, nor did she find that it made the two witnesses less credible.

At trial, there were discrepancies between the evidence of the two witnesses with respect to the specific mechanics of Bruce signing the will and the witnessing of his signature. For example, Colleen testified that she believed that both she and Sophie remained standing while Bruce was seated at the kitchen table when he signed the 2013 Will. Sophie’s evidence was that she believed she was the only person standing and that both Bruce and Colleen were seated. Justice Corthorn noted, however, that “these inconsistencies [were] in keeping with the frailty of human memory, including […] the passage of time” and that they did not give her a reason to be concerned with the credibility of either witness.

Furthermore, based on the witnesses’ respective education and work experience, Justice Corthorn drew an inference that each of them had sufficient experience in completing paperwork to know that a witness to a document signs after the document is signed by the principal signatory.

Taking this into consideration, Justice Corthorn concluded that Bruce’s 2013 will was executed in accordance with s. 4(1) of the SLRA and that it was therefore valid.

While Bayford v Boese provides many noteworthy take-aways, perhaps the main one is the importance of ensuring that a will is properly executed, and that it is stored in a safe and easily accessible place that the testator’s lawyer and estate trustee(s) are aware of. Had this happened, the case could have been avoided altogether.

Thanks for reading!

Ian Hull and Celine Dookie

04 Mar

Predator Attorneys and Their Elderly Victims

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

In a recent story entitled, “What can happen when seniors appoint the wrong power of attorney”, CBC News sheds light on a problem that may be on the rise in Canada: attorneys for property preying on elderly incapable people.

The story focuses upon Christine Fisher, a widow and World War Two veteran, and Theresa Gardiner, who became Ms. Fisher’s attorney and then defrauded her of at least $78,000 over the course of three months. The attorney was charged, but after agreeing to pay $20,000 in restitution, the charges were dropped, the police citing an insufficient chance of conviction. The difficulty in convicting predator attorneys, in fact, is all too common, for the key witnesses in such cases often suffer from dementia and other impairments, and therefore struggle to recall or recite the requisite facts in their testimony.

Placing one’s trust in a family member may be safer, but it is not bullet-proof, as evidenced by the case of Royale Klimitz, whose eldest son, David Klimitz, used the power of attorney to drain his mother’s retirement savings from $557,000 to a mere $83. When Ms. Klimitz died shortly after, her other two children alleged it was of a broken heart. Before she died, however, she provided the Crown with two video-taped victim impact statements which contributed to her son’s conviction.

Not all predator attorneys are necessarily evil and insidious. As we have blogged in the past, some predator attorneys are otherwise good people who fall into temptation. This often occurs because being an attorney allows for opportunity to do wrong with little chance of detection; predator attorneys also often rationalize that in doing the work, they are entitled to more desserts; and financial need can be a burden too heavy for some people’s moralities to withstand.

So then, what can elderly people, in arranging their affairs, do to protect themselves? Sections 32, 33, and 35 of the Substitute Decisions Act impose obligations on attorneys to consult with the incapable person’s family members, keep detailed records of the incapable person’s finances, and review the incapable person’s will to ensure that testamentary assets are preserved.

Most importantly, just like picking spouses, business partners, or sports teams, the happiest results flow from the selection of trustworthy people. Similarly, it is best to avoid those with selfish and dishonest tendencies, or who would sway like aspens rather than stand like oaks under economic pressure. So when your sibling cheats on board game night, or your friend constantly “forgets” to bring wine or a dessert to dinner parties, or your child’s favourite conversational topic becomes “my inheritance” – it may be wise to steer well clear and choose another attorney!

Thank you for reading. Have a wonderful day,

Suzana Popovic-Montag and Devin McMurtry

28 Feb

Why Do Fools Fall In Love? Frankie Lymon

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

The song “Why Do Fools Fall in Love”, recorded in 1956, became a number 1 hit, and established the career of Frankie Lymon and the Teenagers. The song has been covered by many, including the Beach Boys and, most notably, Diana Ross.

Frankie Lymon died on February 27, 1968 at the age of 25, as a result of a heroin overdose. In his wake, he left a series of relationships. Years after his death, litigation ensued.

After Diana Ross’s cover version of the song reached the charts in 1981, three women, each claiming to be Lymon’s spouse and lawful heir, sought payment of royalties arising from the song.

The first, Elizabeth Waters, married Lymon in 1964. Together, they had a child who died shortly after birth. Waters, however, was not divorced from her first husband at the time of her marriage to Lymon.

The second woman, Zola Taylor, a singer with the Platters, claimed to have married Lymon in Mexico, 1965. However, no documentation of the marriage could be found.

The third, Emira Eagle, married Lymon in June 1967.

The question of who was Lymon’s proper heir went to trial. According to a Washington Post article, at first instance, the court held that first wife Waters was the proper heir. Although Waters was not yet divorced when she married Lymon, their relationship “satisfied the requirements of a common law marriage in the State of Pennsylvania.” Although Waters was not yet divorced when she married Lymon, the marriage became valid when the divorce from her first husband became final.

On appeal, the court held that the marriage between Waters and Lymon was not valid. The marriage to Eagle was valid and therefore she was entitled to the estate.

The story does not end there. Issues arose as to what royalties Lymon’s estate was entitled to. This involved litigation with Lymon’s former manager. In an article in Ebony Magazine, it is reported that Lymon’s estate was worth more than $1m.

In the Ebony interview, Eagle says that she knows why fools fall in love: “Love doesn’t hurt. Love is supposed to be tender, beautiful and caring. Frankie treated me like his queen.” When asked, Eagle said she would do it all again, “but I would insist on a will.”

Frankie’s life and posthumous issues are portrayed in the movie “Why Do Fools Fall in Love”, starring Vivica Fox as wife #1, Halle Berry as wife #2, Lela Rochon as wife #3 and Little Richard as himself.

Thanks for reading.

Paul Trudelle

21 Feb

Policy and Estate Planning in Film

Garrett Horrocks Disappointed Beneficiaries, Estate & Trust, Estate Planning, General Interest, Hull on Estate and Succession Planning, In the News, Public Policy 0 Comments

This blog is the second and final blog in my series discussing estates-related topics in the film The Grand Budapest Hotel.  While the first part focused on the application of forfeiture rules in the context of a testator’s murder, this blog specifically discusses the policy considerations that arise as a result of the further Last Will and Testament executed by one of the film’s characters, Madame D.

As a brief refresher, late in the film, a further Last Will and Testament executed by Madame D is discovered, the operation of which is only to be given effect in the event of Madame D’s death by murder.  While the concept makes for an interesting twist in the film, in reality the purported condition precedent that the Will takes effect only upon death by murder likely means nothing in the context of Madame D’s estate planning.

Part I of Ontario’s Succession Law Reform Act specifically contemplates that a Will is revoked by, among other actions, the execution of a subsequent Will made in accordance with the provisions of that section.  It is not made clear in the film which of Madame D’s two Wills were executed last.  If the further Will was executed most recently and complied with all of the requirements of due execution, the prior Will would have been revoked and the second Will would likely prevail irrespective of the condition precedent.

Alternatively, a Will may also be revoked by a written direction of the testator to do so.  Failure to expressly revoke a prior Will can potentially create problematic administration scenarios in which a testator may have believed, albeit mistakenly, that a prior Will had been revoked when in fact it had not.

While executing a Will in accordance with the provisions at Part I of the Succession Law Reform Act is sufficient in and of itself to revoke prior Wills, it is nonetheless prudent from an estate planning perspective to include a written intention to revoke prior Wills (provided, of course, the testator intends to do so).

Separately, even if we were to disregard the provisions of the Succession Law Reform Act, there would be a number of practical policy concerns if a Will whose effects were subject to a condition precedent. Notably, a reasonable debate could arise between beneficiaries in scenarios in which the cause of death is ultimately unclear.

The film suggests Madame D’s reason for executing a further Will to take effect on her murder is to ensure her nephew could not benefit from her demise at his hand.  However, as discussed in Tuesday’s blog, that goal is accomplished by the operation of the slayer rule.  Alternatively, Madame D could have relied on a common estate planning technique by making her nephew’s interest in her estate, rather than the Will in its entirety, subject to a condition precedent.

While Ontario prohibits conditions precedent that are deemed to be contrary to public policy, such as restraining marriage or promoting discriminatory behaviour, other conditions precedent are recognized at law.  For example, Madame D could have simply made Dmitri’s interest contingent on his reaching a certain age, or reaching a certain milestone in his life, such as graduating from university.  Instead, the purported condition precedent that the further Will was to take effect on her murder likely has no effect at all, provided the evidence shows it was executed after the initial Will and in compliance with the provisions of Part I of the Succession Law Reform Act.

Thanks for reading.

Garrett Horrocks

21 Feb

Perpetual Cases on Perpetuities

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

Goss Estate (Re), 2020 ABQB 121 (CanLII) is the most recent case to discuss the applicability of the Rule Against Perpetuities.

As stated in the case, “Cases involving the Rules Against Perpetuities are rare, however the Rule is alive and well in Alberta…”.

The case notes, dramatically, that the common law doctrine limits “the grasp of the dead hand … on the hand of the living.”

Simply put, the Rule provides that “No interest is good unless it must vest; if at all, not later than 21 years after some life in being at the creation of the interest.”

In Goss Estate, the Rule was applied and the trust created by the testator was found to be invalid. There, the deceased left a will that provided that the residue of the estate was to “be retained in trust for future generations of children and grandchildren”, with only the interest on the capital to be paid out. There was no ultimate residual beneficiary named.

Although Alberta has a “wait and see” rule that provides that if an interest may vest during the period, the trust is not necessarily invalid, such a provision did not apply in Goss as the court found that the interest was incapable of vesting within the perpetuity period.

In conclusion, the court found that the trust was invalid. As there were no named residual beneficiary, the estate passed on an intestacy, to the testator’s two children. With respect to the trust that was intended, “While [the testator] had somewhat noble ideas about how to deal with his estate, perpetual trusts have been unenforceable since 1682”.

For other blogs on the Rule Against Perpetuities, see Stuart Clark’s blog, Rule Against Perpetuities – It’s not so scary, and my blogs, Property Rights and the Rule Against Perpetuities and Hollywood, and the Rule Against Perpetuities.

As always, thank you for reading.

Paul Trudelle

19 Feb

Unconventional Will Provisions

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

While the majority of people use their wills to provide for their friends and family after they have passed away, some take their wills as an opportunity to creatively leave their mark in their passing.

In today’s blog, we will look at three cases of bizarre will provisions and their outcomes.

A Rose Everyday

Comedian, Jack Benny was married to his wife, Mary Livingstone, for nearly 50 years. While Jack was known to the public for his television persona of being stingy and terrible at playing the violin, Jack was quite the romantic to Mary. When Jack died in 1974, he left a provision in his will that one red rose was to be delivered to Mary every day for the rest of her life.

In a magazine article written by Mary in memory of Jack, it seems as if Jack’s wishes were carried out. Mary stated that “every day since Jack has gone, the florist has delivered one long-stemmed red rose to my home.”

A Millionaire Dog

Real estate investor and hotel owner, Leona Helmsley, died in 2007. Leona was dubbed the “Queen of Mean”. Leona’s will stated that a $12 million trust was to be established for her Maltese dog named “Trouble”. Leona excluded two of her grandchildren from her will but included $10 million for two of her other grandchildren on the condition that they regularly visit their father’s gravesite.

Trouble’s inheritance was reduced to $2 million by the court, with the remaining balance going to Ms. Helmsley’s charitable foundation. While the loss of income may have been upsetting to Trouble, it may also have come as a relief as there were reports that the dog was forced to go into hiding after a reported threat to kidnap her.

Sam Weir

Sam Weir, who was a retired lawyer, stipulated in his will that $3,500 was to be held in trust for the Law Society of Upper Canada. He directed that each year, the income from the trust was to be paid to the student who graduated from the Bar Admissions Course with the lowest marks. His reasoning behind this was that he knew many lawyers who became successful by “keeping their lack of knowledge in the dark.”

Sam strongly recommended that the recipient of the funds spend it on a “night on the town.” If the Law Society accepted the gift, Sam provided that it would receive an additional $10,000 to be spent on a series of lectures named the “Weir lectures”.

The Law Society declined the gift on the basis that it was not charitable.

Final Thoughts

Although adding an unconventional provision in your will might be tempting, doing so is risky as the provision could be declared invalid for a number of reasons such as uncertainty, impossibility of performance, public policy and more. If you do find yourself wanting to add a unique provision in your will such as the testators above, it is best to discuss it with a lawyer. Even retired lawyer, Sam Weir, could have benefited from such a discussion.

Thanks for reading!

Suzana Popovic-Montag and Celine Dookie

To read about some more unconventional wills, check out these blogs:

Fun With Wills – Charles Vance Millar

Want to be creative with your will? Get a lawyer

18 Feb

Forfeiture in Film: The Slayer Rule in The Grand Budapest Hotel

Garrett Horrocks Estate & Trust, Estate Planning, General Interest, In the News, New Media Observations, Public Policy Tags: 0 Comments

Recently, I experienced a series of coincidences involving American filmmaker Wes Anderson.  In the span of a handful of days, I came across the newly-released trailer of his upcoming film, The French Dispatch, and had the opportunity to revisit his 2014 hit, The Grand Budapest Hotel.

Not having seen the latter in several years, I had entirely forgotten a key plot point involving a handful of curious estate planning decisions.  Although the film was released six years ago, I nonetheless attach a mild spoiler warning.

The plot of the film revolves around a specific bequest of a work of art made by one of the characters in the film, Madame D.  The painting, Boy with Apple, is left to Ralph Fiennes’ character, Gustave H, the proprietor of the film’s namesake hotel, per Madame D’s (purported) Last Will and Testament.

Her decision to leave the painting to Gustave, rather than her nephew, Dmitri, creates a firestorm of controversy, not least of all because Dmitri accuses Gustave of murdering his aunt in order to secure

his entitlement to Boy with Apple.  In reality, it is strongly hinted in the film that Dmitri is responsible for her murder.  As an additional twist, a further Last Will and Testament executed by Madame D is discovered later, which appears to leave the entire residue of her estate, rather than just Boy with Apple, to Gustave.  However, it is stated in the film that this further Last Will is only to be given effect in the event that Madame D is murdered.

This single plot point raises a number of points of discussion and policy concerns as to what would transpire if the film were set in Ontario.  This blog will explore the nature of Dmitri’s and Gustave’s potential entitlements in the Estate.

Prior blogs have explored the concept of common law forfeiture rules in Canada, which preclude an individual from deriving a benefit from their own morally culpable conduct.  Colloquially known as the “slayer rule” in the context of a testator-beneficiary relationship, a beneficiary who is found to have caused the unlawful death of a testator will be deemed at common law to have predeceased the testator, thereby extinguishing any interest in the testator’s estate.

In the film, Dmitri accuses Gustave of the murder of Madame D.  In the ordinary course, a conviction proper is not a necessary precondition to the applicability of the slayer rule.  Rather, common law suggests that the rule applies strictly in the event that the beneficiary’s deliberate act caused the death of the testator.  In theory, Gustave’s interest in the estate of Madame D could be in jeopardy despite the lack of culpability.  In practice, despite his efforts to frame Gustave, the evidence would likely show that Dmitri was the culprit, thereby extinguishing any interest in Madame D’s estate.

Of course, the further Last Will purportedly being given effect only in the event a murder adds a further layer of discussion, and will be explored in greater detail in part 2 of this blog.

Thanks for reading.

Garrett Horrocks

14 Feb

Natural Love and Affection

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

As it is Valentine’s Day, our discussion today will consider, naturally, love and affection.

Real property can be gifted to loved ones. If there is no consideration of monetary value, then there will be no Land Transfer Tax payable on the transaction. In the Land Transfer Tax Affidavit, which must be filed when any transfer is registered in Ontario, the transfer is said to be for “natural love and affection”.

Although not specifically exempt from taxes, a transfer for “natural love and affection” is considered to be a transfer for nil value, and therefore, no Land Transfer Tax is payable.

“Love”, as most poets know, is hard to define. There is no definition in the tax legislation. Further, it is not clear what “unnatural” love or affection is.

In certain cases, gifts to non-arms’ length parties may also not attract Land Transfer Tax. For example, a gift to a charity may not be subject to Land Transfer Tax.

If the gift includes the assumption of a mortgage or other liabilities by the receiver, then the value of the mortgage or liability assumed by the receiver is of value to the donor, and must, in most cases, be included in the Land Transfer Tax Affidavit. Land Transfer Tax will be payable on the value of the mortgage or liability assumed. I say “in most cases” because there is an exemption where the transfer is between spouses or former spouses: see R.R.O. 1990, Regulation 696.

Further, if the receiver is not a spouse and the land was subject to a mortgage that was paid off by the receiver, Land Transfer Tax will be payable on the value of the mortgage paid off.

When gifting real property, keep in mind that while Land Transfer Tax may not be payable, this does not mean that income taxes are not payable. In many cases, the gift will trigger a deemed capital gain on the part of the donor.

For more information, see the Ontario Ministry of Finance bulletin, here, and the Government of Ontario publication, “A Guide for Real Estate Practitioners: Land Transfer Tax and the Registration of Conveyances of Land in Ontario”, here.

Thanks for reading.

Paul Trudelle

05 Feb

Making the Taxation of Trusts Fair for Disabled Canadians

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

Changes made in 2016 to the Income Tax Act resulted in unfair treatment to disabled Canadians by restricting which types of trusts were eligible for a “principal residence exemption” (PRE). Now the Department of Finance has issued a letter of comfort, attempting to rectify these unfair changes.

What is the PRE?

In short, the PRE allows Canadians, when selling their principal residence, to avoid being taxed on their realized capital gains. Without this exemption, someone selling their principal residence would be taxed on 50% of their capital gains, which could be very significant when taking into account the value of the property.

Injustice with the Current Rules

The changes introduced in the Income Tax Act in 2016 meant only three categories of trusts could claim the exemption. The first was life interest trusts, the second was qualified disability trusts, and the third was inter vivos or testamentary trusts established for a minor child with one or more parents being deceased.

This definition significantly restricted the type of trusts that were eligible to claim the PRE. Because the second category, qualified disability trusts, are testamentary trusts  (resulting from death), this meant that disabled taxpayers who were the beneficiaries of inter vivos trusts (not resulting from death) could not claim the exception and would have capital gains on their principal residence taxed at the highest rate.

In practice, this would result in an unexpected and significant amount of income tax being due 21 years after the creation of the trust, because after 21 years the trust will have been deemed to have disposed of its capital property. If a disabled beneficiary did not have enough funds available in the trust to pay the capital gains tax, there could be severe consequences.

Proposed Improvements

In response to this problem, the Department of Finance has issued a comfort letter stating that it will make recommendations to the Minister of Finance to fix the issue. This would involve amending the Income Tax Act to permit certain inter vivos trusts to claim the PRE. This would also be subject to certain conditions. Firstly, the beneficiary needs to be a resident in Canada who is disabled (able to claim the disability tax credit). Secondly, the beneficiary must be a child, spouse, common-law partner, or former spouse or partner of the trust’s settlor. Thirdly and finally, no one other than the qualifying disabled beneficiary can receive the income or capital of the trust. If these three conditions are satisfied, the disabled beneficiary would be able to claim the tax exemption for their principal residence.

Fixing the injustice

This proposal was made recently and has not yet been implemented. Any laws that put disabled Canadians at a disadvantage, even inadvertently, ought to be changed and the injustice should be corrected. Implementation of these recommendations would be welcome and cannot arrive soon enough.

Thanks for reading,

Suzana Popovic-Montag & Sean Hess

31 Jan

St. Mark Preaching In Alexandria: Working for Your Bequest

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

St. Mark Preaching in Alexandria is an impressive, substantial work: it measures 3.47 m by 7.70 m.

Gentille Bellini[1] started the canvas in July 1504. However, he died in February, 1507, before the work was completed. The painting was eventually completed in March, 1507, by Gentille’s brother, Giovanni.

It is believed that Gentille asked Giovanni to complete the painting before Gentille died. Giovanni refused. Gentille then prepared a will in which Giovanni was to be given a collection of drawings from their father and one of the founders of the Renaissance style of painting, Jacopo Bellini, but only on the condition that Giovanni complete the painting.

Conditions precedent, although rare, are not unheard of. Consider a will that provides that the beneficiary can inherit a $300m estate if he can spend $30m in 30 days (Brewster’s Millions), a will that provides for the residue of an estate to pass to “the mother who has since my death given birth in Toronto to the greatest number of children” (Millar Estate), or a will that provides that the beneficiary can inherit a substantial gift, but only if he or she spends the night in a (haunted) house (just about every Scooby-Doo episode).

However, wills with conditions can be fraught with difficulty. There are issues of uncertainty or even impossibility of the condition. They can be contrary to public policy. The condition may also be considered to be “repugnant” to the nature of the gift. An issue arises as to whether the condition is a condition precedent, in which the gift may fail in its entirety, or a condition subsequent, in which the gift may stand but the condition may fail. Great care in drafting such clauses is required.

Thank you for reading.

Paul Trudelle

[1]           Fun fact: Yes, the Bellini cocktail is named after Giovanni Bellini. Apparently, the pink colour of the peach puree and prosecco drink reminded its inventor, Giuseppe Cipriani of Harry’s Bar, Venice, of the colour of a toga of a saint in one of Giovanni’s paintings.

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