Category: Estate & Trust
Robert Brown claims to be the unacknowledged “love child” of Queen’s Elizabeth’s late sister, Princess Margaret. In his quest to prove his claim, he has sought access to the secret Royal Wills of Princess Margaret and the Queen Mother.
In 2002, shortly before the deaths of Princess Margaret and the Queen Mother, lawyers for the Royal Family, the British Treasury, and the Attorney General met with England’s highest ranking family judge seeking a practice direction to codify the century-long convention that Royal Wills be kept sealed from the public. The Order was passed and the “secret pact” was not made known to the public or Parliament.
Mr. Brown sought to have the Wills unsealed in family court but his case was struck down as vexatious and baseless. Mr. Brown sought leave to appeal and the court of appeal granted Mr. Brown leave and found that he was entitled to a hearing of his claim to have the Wills inspected. Despite calling his claim to be Princess Margaret’s son “irrational and scandalous”, Lord Chief Justice Lord Phillips found that the public interest outweighed the Royal family’s right to privacy and called the pact unconstitutional.
News of the “secret pact” resulted in an outcry in the British media and calls for transparency within the Royal family. Mr. Brown’s lawyer submitted that members of the Royal family who receive national assets should have their Wills inspected by the public to ensure those assets are not mixed with personal property. If Mr. Brown wins, he will overturn the long standing convention that Royal Wills be kept sealed; a convention started in 1911 by Queen Mary to seal the will of her brother, Prince William of Teck and prevent a Royal scandal.
You never know who is going to change the law.
Have a great (long) weekend,
The Globe and Mail recently interviewed a man living in British Columbia who may be the son of John F. Kennedy.
The article made me reflect on the different ways solicitors deal with persons born outside of marriage when drafting a Will. Since March 1978, persons born inside of marriage and outside of marriage are entitled to share equally in an intestacy estate. In a testate administration, unless a contrary intention is included in the Will, any words identifying a class of persons such as “issue” and “children” includes persons born outside of marriage.
However, a testator may want to exclude persons born outside of marriage from being considered as part of a gift class in order to remove the obligation on an executor to search for members of the gift class who were born outside of marriage.
Given the prevalence of common law relationships, to include a boilerplate clause excluding persons born outside of marriage from inclusion in the gift class may result in the unintentional disinheritance of grandchildren or great-grandchildren. Any exclusion clause has to be considered carefully.
The upcoming LSUC CLE program, The Annotated Will, being held on February 21, 2008, discusses how to deal with difficult drafting issues. The two hour program is being chaired by Laura Kerr, Jennifer A. Pfuetzner, and Corina S. Weigl and promises to offer valuable advice on avoiding common drafting errors.
Have a nice day,
Listen to Pre-probate Checklist
They then wrap up their ongoing discussion about some useful steps to remember when administering an estate.
I am currently attending Osgoode Professional Development’s Fifth Annual Intensive Wills and Estates Workshop which has considered, among other things, common drafting errors and how to avoid them.
When it comes to charitable gifts, a solicitor should confirm the information the testator provides to them. A testator may misname a charity or not know that the charity is no longer in existence. The solicitor drafting the clause should ensure that the correct and exact name of the charity is used.
They may want to refer to a directory, such as the Canadian Donor’s Guide or the searchable charities database available on Canada Revenue Agency’s website, http://www.cra-arc.gc.ca/tax/charities/online_listings/canreg_interim-e.html. It is also important to note for tax purposes, the differences between not-for-profit organizations and registered charities.
For lesser known charities, a solicitor may want to include the registry number of the charity or contact the organization directly to determine how the charity should be named in the testamentary gift.
The solicitor may also want to discuss with the testator what will happen if the named charity is no longer in existence at the time of the testator’s death. Will the charitable gift lapse or will there be a gift-over to an alternate charity? Including these types of instructions in the clause may prevent the need to later on seek directions from the court and attempt to have the gift applied in accordance with the cy-pres doctrine.
Thanks for reading,
Listen to Asset Particulars
This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the importance of keeping track of asset details.
Does the Court have jurisdiction to set aside a Family Law Act election, or is such an election irrevocable?
This question was recently considered in the Ontario Superior Court of Justice decision of Iasenza v. Iasenza Estate 2007 CanLII 23351.
As background, Ontario’s Family Law Act (“FLA”) allows a surviving spouse to elect to either receive benefit under the deceased’s will (or on an intestacy if there is no will), or receive an equalization of net family property under the FLA. Normally, the surviving spouse seeks information regarding each of the options, and then elects for the greater benefit.
However, information regarding the values of each option is not always forthcoming in a timely fashion. The election must be filed within 6 months of the date of death, or the surviving spouse is deemed to elect to take under the will or on an intestacy.
The Court held that it did have discretion to set aside an election made in favour of an equalization. However, the Court noted that the discretion will be exercised sparingly and only in “restrictive circumstances where the interests of justice require it and where the balance of the interests of effected parties clearly warrants it.”
In considering whether to exercise its discretion, the Court will consider:
a. Was the election filed as a result of a material mistake of fact or law made in good faith?
b. Was there any responsibility or culpability on the part of the effected parties in relation to the election?
c. Was the notice of intent to seek revocation of the election given in a timely way, and in particular, how long after the 6 month filing period was notice given?
d. Has the estate been distributed or would interested parties otherwise be adversely effected?
e. Does the election result in an injustice to the surviving spouse in all of the circumstances?
On the particular facts of Iasenza, the Court decided to exercise its discretion and set aside the election filed by the surviving spouse. As a result, the spouse was entitled to receive 1/3 of the estate under the will, whereas she would have received nothing under the election.
Thanks for reading.
As we all know, it is not uncommon for any investor to occasionally experience a substantial decrease in the value of one of the stocks in his or her portfolio. But what if the investor is a trustee?
In light of the recent amendments to the Trustee Act which appear to embrace the modern portfolio theory, it will be interesting to see how the Court will utilize this theory to assess a trustee’s investment performance. Section 28 of the Trustee Act adopts an approach that is consistent with the modern portfolio theory. Under this section, a trustee is insulated from liability if “the conduct of the trustee, which led to the loss from the trust, conformed to a plan or strategy, for the investment of the trust property, comprising reasonable assessments of risk and return that a prudent investor could adopt under comparable circumstances”.
Under the “statutory legal list” approach, which I described yesterday, a trustee was limited to investing trust assets in authorized investments. However, with the development of the prudent investor rule, trustees are provided with a broader range of investment choices, which will likely increase their responsibility in determining an acceptable standard of care.
Presuming that a trustee is found liable for breaching the standard of care, section 29 of the Trustee Act permits a court to assess “the overall performance of the investments” when it is assessing damages. Based on the language of section 29, it appears that a trustee may be allowed to offset the loss of a bad investment against the gain of a good investment.
The trusts and estates bar will be watching with interest to see how the judicial consideration of the prudent investor rule evolves.
Happy Super Bowl Weekend! Go Patriots!
In my blog yesterday, I introduced the prudent investor rule as the standard of care for trustees when investing assets that are held in a trust. Today, I will address how a trustee’s investment performance may be assessed.
Prior to July 1999, trustees were required to make investments pursuant to the “statutory legal list” provided for in the Trustee Act. This had the effect of holding trustees accountable for each particular investment, rather then the investment portfolio as a whole. The principle was further illuminated by the anti-netting rule, which stated that a trustee, who committed a breach of trust, was not entitled to set off a gain in one transaction against a loss in another. However, through recent amendments to the Trustee Act, the statutory legal list was repealed and replaced with the Prudent Investor Rule.
The Prudent Investor Rule reflects the modern portfolio approach to investments, the emphasis being on the prudence of the portfolio as a whole as opposed to each particular component. This theory is captured in Section 27(5) of the Trustee Act. Section 27(5) requires “a trustee to consider … the role that each investment plays within the overall trust portfolio”. Furthermore, under section 27(6) “a trustee is required to diversify the investments of the trust property. It appears that under the modern portfolio approach, a trustee would not be breaching the standard of care, should he or she invest a substantial amount of trust assets into a single security. As described above, section 27(6) requires that the trustee consider diversifying the portfolio, which is necessary if the Prudent Investor Rule is to be followed. To conclude my topic, tomorrow I will consider the liability of a trustee with respect to the investment of trust assets.
Thanks for reading,
Section 131 of the Courts of Justice Act establishes the authority for the Court to award costs. Section 131 states that the Court has absolute discretion in awarding costs, subject to the provisions of an Act or the rules of court.
Before July 2005, the Rules of Civil Procedure provided some sense of certainty to the Court’s broad discretion in awarding costs as the Rules provided a costs grid. The costs grid suggested that costs were to be determined by an hourly rate multiplied by the time spent. In 2004, the Court of Appeal in Boucher v. Public Accountants Council set forth the general principle as to the fixing of costs pursuant to Rule 57.01 and the costs grid. With respect to costs, the Court stated that the overall “objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant”. Subsequently, in July 2005, the Rules were amended.
The amendment to the Rules abolished the costs grid and expanded on the list of factors, set out in Rule 57.01, which the Court may consider before making a cost award. Rule 57.01 was now expanded to include the principle of full indemnity and the reasonable expectations of an unsuccessful party to pay a cost award.
The principle of the reasonable expectations of an unsuccessful party to pay a cost award appears to provide the parties with some flexibility in obtaining the maximum cost award by permitting the successful party to establish the reasonable expectations of the unsuccessful party.
Thanks for reading, and have a great day!
Listen to Initial Estate Meetings
This week on Hull on Estate and Succession Planning, Ian and Suzana discuss how important it is to be prepared for an initial meeting with an estate lawyer.
They have also been listening to and reading David Maister’s new (audio)book Strategy and the Fat Smoker and continue their conversation on The Tipping Point by Malcolm Gladwell.