Category: Estate Planning

16 Mar

Didn’t Get the Memo?

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Wills often deal with personal property by referring to a memorandum that sets out how the personal property is to be distributed. Usually, the memorandum is not executed in accordance with the requirements of the Succession Law Reform Act, or similar legislation. How effective is such a memo?

A memorandum, even if not properly executed, will be “incorporated by reference” and found to part of a valid will if:

a. the memorandum is referred to in a duly executed testamentary instrument;

b. the memorandum is in existence at the time of the execution of the testamentary instrument; and

c. the memorandum is “ascertainable” – that is, there is specific reference to a specific document. The reference to the document must make it identifiable: see Black Estate v. Black, 2006 CarswellOnt 9030, 32 E.T.R. (3d) 282 at para. 19.

Reference in the will to a document that is to be created in the future can be fatal to the application of incorporation by reference. However, reference to a memorandum that does not exist at the time the will was executed, but exists at a time when a codicil confirming the will is executed may result in a valid incorporation by reference: See Re Lady Truro (1866), L.R. 1 P.& D. 201, referred to in Hull, Probate Practice, 4th ed, p. 83.

Thanks for reading,

Paul Trudelle – Click here for more information on Paul Trudelle

06 Mar

Windfall or Sure Thing?

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There seems to be an underlying expectation amongst many that when their parents pass away, the family wealth will be distributed evenly amongst the children. I’m probably oversimplifying. However, who among us can say that the thought hasn’t crossed their minds. It seems to be even more prevalent a topic in recent years with the economic downturn and various efforts to rebound. The reality is that there are circumstances in which parents choose not to pass their assets down in a lineal fashion, and not always as a result of some sort of fallout. 

If you have any doubt about the truth of the above comments, a quick perusal through the last ten years or so of reported Estates cases will certainly yield a significant number of results which show wealth skipping generations, an uneven distribution resulting in litigation, or restrictions placed on gifts. Given the potential for an expected inheritance to not be received, to what extent should your own financial planning (and estate planning) count on such an inheritance?   

This issue was discussed in a blog by Cunningham LLP managing partner Mark Goodfield. Mr. Goodfield doesn’t necessarily encourage planning for an inheritance, but does provide for situations where he believes it may be an appropriate choice. While there are certainly circumstances in which you may want to incorporate your ‘likely’ inheritance in your financial planning, I’m not sure that I would risk it, regardless of the possible financial benefit. With litigation a viable option in many circumstances, potentially resulting in delayed distribution, or even no distribution to you at all, the concept of a ‘sure thing’ seems to go out the window. When viewed in that light, I think I’d prefer any possible inheritance to simply be a windfall.

Until Tomorrow,

Nadia M. Harasymowycz – Click here for more information on Nadia Harasymowycz

28 Feb

The Challenge of Being an Executor

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The job of an executor is rarely an easy one, but it becomes more daunting when the deceased had a high net worth.  An executor’s responsibilities include valuing assets, filing tax returns, paying taxes and debts, keeping records, and giving the gifts to the beneficiaries under the will.  While an executor is usually a family member or a close friend, a person with a high net worth may consider not burdening their loved ones with these responsibilities and hiring a professional instead. 
In an interview with CTV, Paul Fenson of the Scotia Private Client Group stated, "it can take 18 months or more [to administer a will], and that’s a lot of time for someone to invest, particularly if an executor has another job." 
An executor has the added risk of being held personally liable for failing to ensure all debts and taxes are paid before the assets are distributed.  Being appointed as an executor may be more of a burden than an honour with complicated estates.  When substantial assets are involved, appointing a professional as an executor may be the best way to go. 
Holly LeValliant – Click here for more information on Holly LeValliant
15 Feb

Organ Donation Rates Remain Stagnant

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A report released Monday by the Canadian Institute for Health Information reveals that organ donation rates have stagnated in Canada since 2006. 

Despite public awareness campaigns and an increase in need, the report found that the numbers of living and deceased donations in 2010 were on par with those from 2006. The living donor rate in 2010 was 16.3 per million population, compared with 17.0 in 2006. In 2010, the deceased donor rate was 13.6 donors per million population, compared with 14.0 in 2006. 

The report also found that the number of transplants performed in Canada has remained largely unchanged since 2006. In 2010, 557 living organ donors and 465 deceased organ donors contributed to 2,103 solid organ transplants. In 2006, 556 living donors and 461 deceased donors contributed to 2,074 transplant procedures. 

While the current donor rates are above 2001 levels, the report finds that the need for organs still outpaces the supply, and that as a result the “gap between organ donations and the need for transplants is growing.”

As we have blogged before, in Ontario, testamentary instructions or stated wishes regarding organ donation (technically) have no legal effect, and depend upon next of kin or the executor for implementation. Therefore, discussing your views on organ donation with your family and your named executor, leaving a Will with specific directions about organ donation, signing your Gift of Life Donor Card, and registering your consent with ServiceOntario are important to ensure that your wishes for organ donation are known and respected after your death. 

For more information about organ donation, please visit

Saman Jaffery – Click here for more information on Saman Jaffery

27 Jan

Wills and Separation Agreements – Revisited

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On August 15, 2011, I blogged on the decision of Hennessy J. in Makarchuk v. Makarchuk, 2011 ONSC 4633 (CanLII).  There, the court found that a separation agreement did not preclude the surviving spouse from benefitting under the deceased’s will.

On Monday this week, the Ontario Court of Appeal dismissed the appeal, and upheld the decision of the lower court.  In a brief endorsement, the Court of Appeal stated “We have not been persuaded that the application judge erred in her interpretation of the Separation Agreement. Since the deceased never revoked his will, the gift in the will to the respondent stands.”

The Court of Appeal also dismissed a motion to admit fresh evidence. No particulars of this motion were given.

As I stated in my prior blog, separated spouses must consider their estate plan, including terms of their wills and beneficiary designations to ensure that their intentions are properly reflected.  In the case of Makarchuk, it is not clear whether the husband intended to benefit his separated spouse.  However, as the lower court noted, had he wished to not do so, there were a number of means available to him to effectively revoke the gift he had made to his spouse prior to their separation.

Have a great weekend.

Paul E. Trudelle – Click here for more information on Paul Trudelle

19 Jan

If I Die…

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A friend recently drew my attention to a new Facebook app (ifidie) that allows you to leave a message that will only be published after you die. A video about the app can be viewed here, and the press kit on their website identifies that this could “even [be] a will”.    In brief, the app allows you to upload videos and messages, and authorize trustees (it looks like they must be Facebook friends of yours) which can notify Facebook upon your death. Once Facebook has been notified of your death, the messages you have identified will be posted to your profile[1].

You may remember the Sunscreen Song, a smash hit in the late 1990s that gave ‘advice’, most notably to wear sunscreen.   Some of the things that we have to tell people are really important; some are not. I can certainly see this app being used to reveal secrets, leave us with whatever ‘sage’ wisdom or venom is felt necessary, and possibly to simply say goodbye, much in the same vein as the Sunscreen Song. What happens if it doesn’t stop at that? 

In Ontario, under the Succession Law Reform Act, Part I, section 3, “A will is valid only when it is in writing.”  What happens if the video posted includes a testamentary disposition? Certainly, it wouldn’t be a valid will in Ontario, having not met even the minimum writing requirement, but perhaps in other jurisdictions such a statement could be considered a valid testamentary document. In Ontario, would it be, and could it be used as, evidence of testamentary intention?  What if the ifidie post is a written message stamped with electronic signatures? Could the argument be made that it’s a Will?

Leaving aside the various other issues that relate to post-mortem social media presence, the potential for the app to be used for testamentary purposes may have serious ramifications for Estate litigation, both in Ontario and beyond. 

In our constantly changing world… can you keep up?

Nadia M. Harasymowycz – Click here for more information on Nadia Harasymowycz

[1] I could find no reference to whether messages could be deleted or amended, or the general permanency of such a posting.

21 Dec

Issues Involving Foreign Assets

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Conflict of laws issues add complexity to what could otherwise be a straightforward estate administration. In a recent English article on the topic, examples of how cross-border issues can affect the operation of your will are provided. The most common issue noted is that of forced heirship.

Several European and other countries have forced heirship laws requiring a person to pass a fixed portion (typically between a third and one half) of his or her estate to children or a spouse. However, these succession laws may not always apply.   For instance, the author notes that when it comes to ones assets abroad, English courts apply domestic succession law to movable assets (i.e. investments, cash, bank accounts, personal possessions etc.) but may follow the succession law of the country where immovable assets are (i.e. land and property). 

In addition to the conflicts than can arise from cross-border issues affecting your will, there may also be added tax consequences.

Ways to minimize difficulties include:

                    making an additional will abroad for foreign assets, as this may eliminate language ambiguities and make it quicker and less costly to deal with the administration of your estate (any foreign will should not conflict with or revoke your domestic will – careful wording is often needed); and

                    obtain legal advice from foreign lawyers who specialize in the field of their own succession laws, both when making your will and when purchasing property abroad.

Thanks for reading,

Natalia R. Angelini – Click here for more information on Natalia Angelini

13 Dec

RESPs – Not just an end of year issue

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For those of us with young children (or perhaps, not so young children), one of the many things that may be on our “to do” lists before December 31st is to contribute to a Registered Education Savings Plan (“RESP”).

As most of us know, RESPs allow for tax-efficient savings for a child’s post-secondary education.  There are two types of RESPs: a family plan RESP or an individual plan RESP.  With a family plan, a subscriber can name one or more children as beneficiaries, with the requirement that each beneficiary be related by blood or adoption to the subscriber. In an individual plan, only one child can be named as a beneficiary, and there is no requirement that the beneficiary be related to the subscriber. In addition to other incentives, when a subscriber contributes money to an RESP, the federal government will deposit an additional amount – the Canada Education Savings Grant (“CESG”) – equal to 20% of the contribution up to certain limits. The maximum CESG each year is $500 (equal to 20% of a contribution of $2,500) and the lifetime CESG limit is $7,200.  A subscriber can contribute any amount to an RESP, subject to a lifetime contribution limit of $50,000 per beneficiary. Contributions can be made to an RESP for up to 31 years, and an RESP can remain open for a maximum of 35 years.

However, what most of us do not know is what happens to an RESP on the death of the subscriber.  The answer depends largely on the terms of the subscriber’s Will, if any, and on the terms of the RESP contractual agreement. 

Unlike an RRSP, RRIF, or a TFSA, the proceeds of an RESP do not flow outside of the subscriber’s Estate into the hands of a designated beneficiary. Regardless of who is named as the beneficiary of an RESP, the RESP forms part of the subscriber’s Estate, and should be administered in accordance with the Will, if any, or the laws of intestacy.

While the subscriber is alive, ownership and control of the RESP remains with the subscriber.  An individual and his or her spouse may be joint subscribers of an RESP.  Where there are joint subscribers, in the event that one subscriber dies, the surviving spouse will become the sole subscriber.  In the event that the sole subscriber dies, the subscriber’s Estate becomes the subscriber.  

A subscriber of an RESP should therefore give consideration to whether it is prudent to include directions in his or her Will naming a successor subscriber (if the RESP is to be continued), and how the RESP is to be dealt with (e.g., how the RESP will be funded and invested, whether there are to be limits on withdrawals, etc.).  It is also prudent for joint subscribers to agree on how the RESP is to be dealt with on the second of their deaths and whether they wish to have mirror RESP clauses in both of their Wills. 

If the RESP is not subject to a specific direction in the Will or there is no Will, an executor will have to make some difficult and complicated decisions respecting whether the RESP can be maintained or whether the funds in the RESP must otherwise form part of the residue of the Estate.  For a thorough discussion respecting options for an executor dealing with an RESP where no direction is provided in a Will, I suggest Anne Werker’s article “Death, Taxes and Registered Education Savings Plans” (Hull & Hull Probater, May 2004).

Thanks for reading,
Saman M. Jaffery

09 Dec

Inheriting the Encumbered Estate Residence

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Inheriting the estate residence can mean inheriting problems as this article in the National Post points out.  An in specie gift of the estate residence that is encumbered by a mortgage is a wrinkle that runs counter to the usual practice of paying the debts of the estate before making a distribution.

Testators should ensure that, when leaving their home, they don’t also leave a financial burden for their beneficiary.  As quoted in the article: “The beneficiary doesn’t have to assume the mortgage-debt obligation. You can say ‘No, I don’t want the mortgage.’ But, you don’t have a choice of taking half of the gift…You either take the house with the mortgage or you don’t take the house.”

One option to avoid leaving mortgage debt is credit protection insurance.  The National Post quotes a director of mortgage advice: “A credit protection plan is part of your bigger financial plan, not just around your mortgage…“The credit protection allows you to have insurance on your mortgage. As you pay down your mortgage, in case you suffer critical illness or on your passing, the mortgage outstanding balance is paid off.”

David M. Smith – Click here for more information on David Smith

27 Oct

The Costs of Planning

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Yesterday I wrote briefly on the anticipated continued increase in life expectancy for Canadians, and how that impacts our pension plans and general estate planning. The considerations that we will face with an ever aging population are endless and oft discussed amongst those in the estate planning/litigation field. Yet, it’s possible that ‘planning for the future’ includes ‘planning for a future we may not remember’, and this consideration is quickly moving to the forefront for many. 

As people start to live longer, they are inevitably impacted by more illness. Almost everyone I know has a parent, grandparent, sibling, aunt or uncle affected by dementia or Alzheimer’s. It is so common that we almost expect that as we age our memory will fail, eventually to a level where we may become unrecognizable to ourselves. Saddening as that thought is, knowing that we will be well cared for if such disease takes over is a critical part of estate planning. A recent article in the Financial Post touched on how the descent into an unmemorable life can and should impact your long term plan. The article also noted that the varied and possibly significant costs associated with this side of aging isn’t limited to those who themselves are afflicted. As the baby boomers get older, they find themselves caring for their parents, either by personally attending to parental needs and/or by contributing financially to ensure those needs are taken care of. This assistance can put an unexpected financial toll on those who are ‘helping out’.

Estate Litigators routinely see the fallout of those who haven’t planned for this possibility. Guardianship Applications and Applications to Pass Accounts as Attorney for Property are becoming phrases we say everyday. If steps are not taken to plan for the outcome before dementia or Alzheimer’s start taking effect, legal and medical decisions can be much harder to make. Although the initial costs of financial planning, including making a power of attorney and a will, may seem to be a lot, how much is your future worth?

Until Tomorrow,

Nadia M. Harasymowycz – Click here for more information on Nadia Harasymowycz


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