Category: Estate & Trust
Estate planning and litigation professionals are still mulling over how the legalization of same-sex marriage will affect their practices. Even more complex developments may be in the offing.
An allegedly polygamist community in British Columbia and increased concerns about the possibility of polygamy elsewhere in all but name in other regions of the country raise any number of issues, not only of policy, but also estate planning.
For example, if someone dies leaving multiple spouses but only one legally-married spouse, what advantages would the legally-married spouse have over the others in the division of a contested estate?
How will the fact that bigamy and polygamy remain illegal play out in civil estate disputes?
If proscriptions on polygamy are or become ignored by governments, will the law evolve? And as it did in the case of same-sex marriage, what happens if bigamy or polygamy becomes legal, since families may become large enough that dependant’s support claims could exhaust most estates rendering much estate planning redundant?
Stay tuned and thanks for reading.
Spouses commonly execute virtually identical Wills, called “mutual wills”, on the assumption that each will give the same gifts on death out of the same “family” pool of property. Oftentimes the residue of the estate of the first spouse to die is left to the surviving spouse, as long as he or she lives at least 30 days after the death.
A problem can arise if both Wills provide for the same gifts in case of simultaneous death or death within 30 days. If both spouses do in fact die within 30 days of each other then an unintended double legacy could result.
The following wording might cause exactly that problem in a mutual will scenario (and perhaps should be avoided or redrafted):
1. I direct my estate trustee to pay or transfer the residue of my estate to my said Husband ( Wife) if he (she) survives me by at least thirty days.
2. If my said Husband (Wife) dies before me or fails to survive me by at least thirty days, then I direct my estate trustee to pay $100,000.00 to my daughter Sue and pay or transfer the residue to my son Joe.
If both spouses have that wording in their wills, and both die within 30 days of each other, Sue might get two gifts of $100,000 for a total of $200,000 at Joe’s expense, even though only one $100,000 gift was intended. Joe would not be a happy beneficiary.
Thanks for reading.
Today’s blog is the third in my series this week on cases in the post Cummings v. Cummings era.
Today’s case is Simpson v. Leardi,  O.J. No. 4282 (Ont. S.C.J.).
In Simpson, the deceased had left a substantial estate. The plaintiff had brought an Application pursuant to the Succession Law Reform Act seeking support in the amount of $3,750 per month. The plaintiff was already receiving $1,000 per month pursuant to the deceased’s Will, leaving an alleged deficiency of $2,750 per month. The Court ordered that the Application be converted to an action and made an order awarding the plaintiff $2,750 a month in interim support.
The parties were subsequently in agreement that the plaintiff’s personal financial circumstances had improved since the interim order. The estate of the deceased was worth $10 million and the plaintiff’s assets were worth approximately $3 million.
In yesterday’s blog I noted that in today’s blog I would mention another dependant support case decided in the post Cummings v. Cummings era.
In Reid v. Reid,  O.J. No. 2359 (Ont. S.C.J.),  O.J. No. 826 (Ont. Div. Ct.), the deceased was survived by her son, her daughter and her daughter’s two children (the deceased’s grandchildren).
According to the trial judge, the deceased’s daughter was a 42 year old mentally challenged individual with one of the grandchildren also being mentally challenged.
The deceased’s estate was worth approximately $200,000, consisting primarily of a house. The deceased’s daughter and her two children resided with the deceased. The deceased’s Will left her estate equally to her daughter and son.
The daughter and grandchildren brought an application for support.
Having acknowledged the considerations set out in the Cummings decision, the trial judge found that there was a relationship of dependency such that the deceased was contributing to the support of her daughter and her two grandchildren.
The trial judge held that the son should receive $25,000 from the estate with the balance of the estate (the house) to be held for the deceased’s daughter, and on her death, the net proceeds from the sale of the house divided equally between her two children.
On appeal, counsel for the son conceded the issue of the dependency of the deceased’s daughter and grandchildren as found by the trial judge within the meaning of the Succession Law Reform Act (s.57). Interestingly though, the Divisional Court stated:
“We also agree with the appellant…[the deceased’s son] that the trial judge fell into error by ordering that the residue of the estate pass to… [the grandchildren] without having any evidence before her as to what their needs might be at some unidentified time in the future. Nor was there any evidence before the trial judge that either of these two applicants would still be dependant within the meaning of the Succession Law Reform Act at this unidentified future date, the date of…[the deceased’s daughter’s] death.”
The Divisional Court ordered, amongst other things, that the son be paid $25,000 from the estate (from a mortgage to be obtained on the house), the house be transferred to the daughter, the daughter and her two children may live in the house until 2018, at which time the property will be sold and the proceeds distributed equally between the son and the daughter, provided that the son’s share be reduced by the above-noted $25,000.
Thanks for reading.
The annual conference of Society of Trust and Estate Practitioners is upon us. Yesterday’s full day of interesting talks was capped off with a tenth anniversary gala dinner at The Royal York.
It was great to see a full house of estate, trust, accounting and tax practitioners decked out in their finest to enjoy an evening with their peers, and honouring the lifetime achievements of Professor Emeritus Donovan Waters. Prof. Waters, a pioneer of trust law and author of the leading text of trust law in Canada, was introduced by four esteemed speakers. True to his reputation, Prof. Waters delivered a thoughtful and engaging acceptance speech. It was a lovely evening.
The conference will wrap up after another full day of talks today. See you there!
Have a great weekend,
Yesterday, Hull & Hull LLP hosted one of its informative Breakfast Series.
David Smith started off the seminar with a talk on the challenge of exercising an estate’s controlling interest in private corporations. His discussion included the following observations:
– the obligation of an estate trustee to exercise his or her controlling interest is that of a “reasonably prudent businessman”
– the trustee must determine the value of the company in as timely a manner as possible
– depending on the wording of the Will, the trustee must provide for the company’s continuation, sale or liquidation
– in order for the trustee to make such a decision he/she should review the Will, financial statements and corporate records, and should inquire with individuals who have knowledge of the company’s affairs including beneficiaries, family, directors, shareholders, employees, solicitors, accountants and bankers
– it is advisable for a trustee to have an active role in management by, among other things, sitting on the board of directors (despite there being no legal obligation to do so)
Sean Graham followed with a discussion on evidence in estate litigation, and Ian Hull spoke about interesting case law developments. You can find a more thorough consideration of these topics in their presented papers.
What he doth, he doth by rule of thumb, and not by art.
Sir William Hope. Page 157 of The Compleat Fencing-Master, 1692
And therein lies the earliest known citation of the phrase ‘rule of thumb’, defined by Wikipedia as a ‘principle with broad application that is not intended to be strictly accurate for every situation’.
There are, interestingly, numerous conflicting accounts regarding the origin of the phrase:
- Although it has been said to derive from the belief that English law in the late 1700s allowed a man to beat his wife with a switch as long as it was no thicker than his thumb, the ‘rule of thumb’ has actually never been the law in England and this theory has been fully discredited as nothing more than rumour and hoax. Even The Bias-Free Word Finder, regarded as the bible of politically correct language, considers this origin implausible.
- In the days before thermometers, brewmasters were said to have often gauged the temperature of a batch of wort by dipping a thumb in the brew.
- The Encyclopedia of Word and Phrase Origins indicates that the phrase stems from the ancient use of the last phalange of the thumb of an average adult male as a measuring device for roughly one inch.
Now put that ruler away and get back to work.
David M. Smith
Law firms, such as ours, tend to emphasize the benefits to clients of their respective area of specialization. The common pitch to prospective clients is that there is less of a learning curve on each file and, as a general proposition, most problems have usually (with some variation) been seen before.
However, the flip side of specialization is that it may not always best serve the client who presents a hybrid problem spanning two or more areas of law . In such circumstances, counsel need to candidly assess to what extent their area of specialization may limit their ability to serve their client. On the other hand, because certain areas of law tend to overlap with considerable frequency, the client who seeks specialized advice is well-served when such counsel recognize this fact and adapt accordingly.
Certainly, the practice of estate litigation can often overlap with family law litigation. Take , for example, a beneficiary designation dispute. While at first glance an estates issue, the existence of a separation agreement and its impact on the dispute inevitably gives rise to legal issues where family law counsel will have considered the issue from their own perspective. So, too is the decision facing a surviving spouse as to whether to elect under the Family Law Act on the death of his or her spouse. Again, responsible counsel have an obligation to best serve the client.
Continuing Legal Education plays a role as well. For instance, the Ontario Bar Association has in the past run a program entitled "Kissing Cousins." A joint venture of the Family Law and Estates and Trusts Sections of the OBA, the mandate of this program has been to highlight practice issues in which estates and family law issues overlap.
David M. Smith
The issue of when a missing person will be deemed to be deceased was most recently (and prominently) in the news during the search for Steve Fossett. Notwithstanding the relatively short duration of time since his disappearance on September 3, 2007, circumstantial evidence suggested that, on a balance of probabilities, his death was a safe assumption and Fossett was declared legally dead on February 15 , 2008.
In Ontario, the Absentee Act deals with the situation in which a person is missing but about whom there is "no knowledge as to whether he or she is alive or dead." In such a situation, the Court has the power to appoint a trust company or others to deal with that person’s affairs in the interim. Interestingly, the term "Committee" (which also used to be the title given to the person now appointed as a "Guardian" under the provisions of the Substitute Decisions Act) still is used for this purpose.
The Act provides that certain persons including the Absentee’s spouse or (adult) child can make application to the court for a declaration of Absentee and the appointment of a Committee to manage such person’s property.
The question that inevitably arises in any such situation is: what if the Absentee in fact shows up one day, alive and well, and wanting to know what has happened to his or her property? Of course, such situations are rare but not unheard of. In such a case, the Committee will have the obligations of a fiduciary to account for the Absentee’s property. The Committee will likely make a compelling argument that the Absentee’s assets ought to be available to fund the costs of making the application and compensating the Committee for safeguarding the Absentee’s assets.
David M. Smith
We all know of ways to lead a greener life, but how about ways to go green after you leave the Earth? Eco-friendly funerals have been steadily gaining momentum among those who wish to live, and die, in the most environmentally conscious way.
Although the rising trend in eco-funerals is a relatively new phenomenon in North America, Britain has been a leader in the area for some time. In fact, new legislation in the UK has further encouraged the trend by requiring reductions in the mercury content of plastics and treatments used in coffins starting in 2010. All biodegradable coffins will meet the new standards. Recent studies have also suggested that cremation is less eco-friendly than burial, with the average male body producing as much carbon dioxide during a cremation as one dozen cars attending a funeral.
So what exactly makes a funeral eco-friendly? Green funerals do not embalm bodies with chemical preservatives, but rather dress them in clothes made from natural fibers and place them in cardboard coffins. Although they are more challenging to handle (especially when they are wet), they biodegrade within 3 months. Trees or shrubs are often used to mark individual plots, rather than marble tombstones, as marble is not a renewable resource. Irrigation and pesticides are not used.
Like any eco-friendly choice, going green comes down to values and priorities, not price. Even the smaller details in your funeral planning, such as using fuel efficient cars instead of limousines in a funeral procession, can make a big impact if enough people take the initiative. Find out more about eco-funerals in Canada and elsewhere around the world here.
Be sure to notify your family and friends of your intentions if you are considering an eco-funeral, and reflect those wishes in your estate planning documents as well.
Sarah Hyndman Fitzpatrick