Category: Executors and Trustees
If a loved one has died and you are named in the Last Will and Testament as a beneficiary, the estate trustee will probably ask you to sign a release before any assets are distributed. This legal document confirms that you approve how the estate has been administered to date.
As a residual beneficiary, you are entitled to receive a detailed report of all income, expenses, and distributions from the estate, plus be given the chance to review and approve any compensation requested by the estate trustee. These reports should be as complete and informative as possible, so that when you sign the release you feel you are doing so in an informed fashion.
Along with the request for the release to be signed, there should be a statement that makes it clear that you have the option not to sign the release. At this stage, it is a good idea to seek independent legal advice. You may be unsure of the estate accounting, or the level of compensation claimed by the estate trustee, or there could be other issues related to how the estate was handled.
As the court stated in Rooney Estate v. Stewart Estate, “It is not an answer to say that the beneficiary approved of the accounts and gave a release. One of the obligations of the solicitor acting for the trustee is to ensure that all beneficiaries have competent, independent advice in reviewing the accounts. There is no suggestion by the solicitor that he advised the [beneficiaries] to obtain independent legal advice when reviewing the trustee’s accounts which he had prepared.”
It can be expected that the estate trustee will have received a Tax Clearance Certificate from the Canada Revenue Agency, confirming that all monies owing by the deceased and the estate have been paid. If the estate is distributed before this Certificate is received, the estate trustee could be held liable for any unpaid tax debts.
While it is easy to understand why beneficiary releases are commonly sought by estate trustees, Ontario courts have held that it is improper for trustees to withhold payment or delivery of an inheritance if a beneficiary has refused to sign. At this point, a passing of accounts may be the next step.
From the estate trustee’s perspective, a passing the accounts is the easiest way to deal with uncooperative or unreasonable beneficiaries. Approval of your accounts by the court also removes the need to obtain the consent of the beneficiaries.
If the estate trustee has not sought to pass his or her accounts, the beneficiaries may seek a court order that compels that to happen. During this court approval process, beneficiaries can raise any concerns they have with how the estate was handled. The estate trustee will also be able to explain to the court what they did for the estate, why certain expenses were incurred/payments made, and provide justification for any claim for compensation.
As part of this process, the beneficiaries can request and review the estate trustee’s documentation, such as bank statements and invoices received. Having said that, you should have a good reason for contesting the handling of the estate, as an unnecessary or ill-founded challenge may end up costing you greatly. For example, if you are challenging the honesty and integrity of the estate trustee but in the end the court finds they acted ethically and competently, you may have to pay not only your own legal expenses, but also the legal expenses incurred by the estate trustee in defending your allegations.
If you have any questions or concerns about a beneficiary release, it is wise to seek legal counsel before making the decision to sign it.
Thanks for reading – and have a great day!
When there is a Last Will and Testament the question of who is going to act as Estate Trustee is usually fairly straightforward, with the Will typically naming an individual to such a role. In the event the individual who is originally named as Estate Trustee is unable or unwilling to act, the Will often provides for an alternate individual to be appointed. But what happens when the Will does not name an Estate Trustee or an individual dies intestate? Who gets to be the Estate Trustee under such a circumstance?
The order of priority for who gets to act as Estate Trustee when there is no one appointed is governed by section 29(1) of the Estates Act, which provides:
“Subject to subsection (3), where a person dies intestate or the executor named in the will refuses to prove the will, administration of the property of the deceased may be committed by the Superior Court of Justice to,
(a) the person to whom the deceased was married immediately before the death of the deceased or person with whom the deceased was living in a conjugal relationship outside marriage immediately before the death;
(b) the next of kin of the deceased; or
(c) the person mentioned in clause (a) and the next of kin,
as in the discretion of the court seems best, and, where more persons than one claim the administration as next of kin who are equal in degree of kindred to the deceased, or where only one desires the administration as next of kin where there are more persons than one of equal kindred, the administration may be committed to such one or more of such next of kin as the court thinks fit.”
Although the court retains the power to select amongst this group as it “thinks fit”, generally speaking the individual entitled to be appointed as Estate Trustee is the Deceased’s spouse followed by their next of kin (or some combination of these individuals). Section 29(3) of the Estates Act contemplates that the right of these individuals to be appointed as Estate Trustee is not absolute, with the court having the ability to select a different person if it thinks fit. The position of a majority of the beneficiaries can also be taken into account in selecting the individual under section 29(2).
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Disposing of the body is a fundamental responsibility of an estate trustee, and an estate trustee is entitled to be reimbursed from the estate for legitimate and reasonable funeral expenses. In considering what is “reasonable”, the court will consider the deceased’s “station in life”, and other circumstances, such as any direction from the deceased in the will or otherwise, the size of the estate, and cultural and religious beliefs, practices and traditions: see Chernichan v. Chernichan (Estate), a decision of the Queen’s Bench of Alberta.
In Zaradic Estate (Re), the Supreme Court of British Columbia disallowed an estate expense of $11,525.01 claimed by the two estate trustees for a trip to Croatia to deliver and scatter the deceased’s cremated remains. There was no specific provision in the will directing that the remains be taken to Croatia. However, the will did provide that the executors could incur expenses in relation to the deceased’s funeral. The executors also gave evidence, which was accepted by the court, that the deceased wanted his remains taken to Croatia. However, the court held that there was no justification for BOTH estate trustees to travel to Croatia. Therefore, only half of the cost of the trip was allowed.
(In Zaradic, the estate trustees, who were friends of the deceased, were also denied executor compensation. Although the will provided that they could claim compensation in the amount of 10% of the value of the estate, the court held that their actions disqualified them from receiving any compensation. The estate trustees had attempted to sell the deceased’s residence to their daughter at a price well below market value. The residual beneficiary commenced litigation in order to stop the proposed improvident sale. “The actions of the executors were an egregious breach of their fiduciary duty. If they had been successful, the beneficiary would have been swindled out of 50% of the estate’s value, and the executor’s (sic) daughter, their only child, would have thereby profited. … the actions of the executors are sufficiently egregious to disentitle them to any fee.”)
In The Estate of George Francis Perkins, the estate trustee claimed payment for airfare for his son and daughter-in-law (the deceased’s grandson and granddaughter-in-law) to travel to the deceased’s funeral. The court disallowed half of this expense, stating that it was unreasonable for the estate to pay for BOTH tickets, in light of the small size of the estate.
Where expenses are incurred for funeral and burial related matters, the beneficiaries of the estate will examine these closely, and the courts will likely disallow anywhere there is a hint of unreasonableness, or where it appears that the estate trustees were unfairly taking advantage of their position at the expense of the estate.
Have a great weekend.
The settling of an estate often involves probate, where the court grants someone authority to act as an estate trustee for the deceased. This procedure, set out in the Estates Act, also confirms that the deceased’s will is their last Will and Testament.
Estate trustees can file an application for an estate certificate (previously called “letters probate” or “letters of administration”) at the Superior Court of Justice, in the county or district office when the testator or intestate lived at the time of death. If that probate application is successful, the court issues a Certificate of Appointment of Estate Trustee, evidencing that the person named in the Certificate has the legal authority to deal with the estate and its assets.
To help people avoid common errors when completing this application, the Attorney General provides this guideline.
As our associate Sydney Osmar has noted, people can now file probate applications, supporting documents and responding documents by email to the Superior Court. Sydney’s blog post provides helpful information about sending these documents electronically, with the email address for each court location listed here.
Certificates of Appointment are not always required when it comes to an estate administration, but they may be if:
- the deceased died without a will;
- the will does not name an estate trustee;
- a financial institution requires proof of a person’s legal authority to receive the financial assets of the deceased; or
- the estate’s assets include land or buildings that do not pass to another person by right of survivorship.
One of the times probate will not be necessary is if the entire estate is held jointly, and all assets are passing to the surviving joint owner by right of survivorship. A scenario might include a husband and wife with a joint bank account and a jointly-owned home. If the husband died and left the entire estate to his wife, probate can be avoided since banks and financial institutions have no risk exposure.
The Estate Administration Tax, better known as probate fees, is charged on the value of the estate if a Certificate of Appointment is applied for and issued. Estate trustees must be able to substantiate the fair market value of the assets at the time of death through documentation, such as financial statements or valuations from appraisers.
Assets to include in determining the value of an estate include real estate in Ontario, bank accounts (including foreign banks), investments, vehicles and insurance (if proceeds are left to the estate).
Once the value of the entire estate is determined, you can then calculate the tax. If the estate is worth $50,000 or less, you do not have to pay any probate fees, although you still must file an Estate Information Return within 180 calendar days after the estate Certificate has been issued.
For estates valued over $50,000, the tax will be calculated as $15 for every $1,000 (or part thereof) of the value of the estate on top of the $50,000 exemption. For example, for an estate valued at $240,000, you would only pay tax on $190,000, resulting in $2,850 being owed to the Minister of Finance.
Use this tax calculator to determine the amount owing.
The probate process can be time-consuming and confusing, which is why many people rely on the services of a wills and estates lawyer to help guide them through the paperwork and procedures.
Please feel free to call me if I can assist you – and have a great day,
Litigation is a fluid exercise. Often, proceedings are commenced by a party with only limited or rudimentary knowledge of the facts giving rise to a particular cause of action. As additional information is discovered, parties may wish to particularize the details of certain claims, or introduce new claims altogether.
The Rules of Civil Procedure permit a claimant to do so without leave of the Court, but only so long as “pleadings are not closed.” The close of pleadings is a term of art that, in the context of actions, is clearly defined by a plain reading of the Rules. However, in the context of applications, the Rules are not so clear, and guidance from the Court is required. The recent decision in Angeloni v Estate of Francesco Angeloni summarized the relevant authorities on this issue.
This case consisted of an application initially commenced by the alternate attorneys for property (eventually litigation guardians and, ultimately, estate trustees) for Concetta Angeloni, concerning the use of the proceeds of sale of a property by her deceased husband and prior attorney for property, Francesco. At a time when Concetta was incapable of managing her property, Francesco, as her prior attorney for property, severed the joint tenancy in a property previously owned by them, sold the property and, it was later discovered, retained all of the net proceeds of sale personally. In reviewing Concetta’s affairs following Francesco’s death, Concetta’s alternate attorneys for property soon realized that she did not appear to have received any share of the proceeds of sale, nor had Francesco made any provision for her in his Will.
Concetta’s attorneys for property commenced an application for dependant’s support against the Estate. However, only after this application was commenced did they confirm that Francesco had retained the sale proceeds entirely. The litigation guardians quickly amended the application seeking additional relief including an accounting as well as a declaration that Francesco had breached his fiduciary duty to Concetta.
The estate asserted that the relief sought in the amended application was not properly before the Court on the basis that the Notice of Application had not been “properly amended.” The Court disagreed. At the outset, the Court found that although a Notice of Application is not a pleading for the purposes of the Rules in the same vein as a Statement of Claim, the same rules with respect to the amendment of pleadings apply nonetheless.
The Court also noted that although Rule 25.05 defines the “close of pleadings” as being when the last Reply to a defence is served or the time to do so has expired, no equivalent definition in the context of applications is provided – a Reply is a pleading that may only be delivered in an action.
The Court considered the decision of the Court of Appeal in 1100997 Ontario Limited v North Elgin Centre Inc. In that case, the Court held that the affidavit materials filed by the parties, and not the Notice of Application, are to be considered the “pleadings” for the purposes of Rule 25.05, as it is the affidavits that contain the relevant facts in support of the relief sought in the Notice of Application. As such, a supporting affidavit would be considered part of an applicant’s pleadings, while a responding affidavit would be considered part of the respondent’s.
Accordingly, the Court found that at the time the Notice of Application was amended, pleadings had not yet closed as the Estate had not delivered a responding affidavit. In any event, the Court noted that the responding affidavit eventually filed ultimately responded to the claims raised in the amended application and, as such, the Estate could not now take the position that those claims were not properly before the Court.
The Court concluded that the applicants did not require leave of the Court to amend the Notice of Application, that the Notice of Application had been properly amended, and that the additional claims could be (and were) determined by the Court.
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Section 38 of the Trustee Act, except in cases of libel and slander, permits estate trustees to commence actions, on the deceased’s behalf, for all torts or injuries to the person or to the property of the deceased, and vice versa for those seeking to commence actions with respect to a wrong committed by a deceased person, so long as those claims are brought within two years of the deceased’s death.
The discoverability principles under the Limitations Act, 2002 are not applicable to toll the two-year limitation period under section 38(3) of the Trustee Act. The application of this strict two-year limitation period is only mitigated by common law principles such as the doctrine of fraudulent concealment: Giroux Estate v. Trillium Health Centre, 2005 CanLII 1488 (ONCA), Bikur Cholim Jewish Volunteer Services v. Penna Estate, 2009 ONCA 196, and Levesque v. Crampton Estate, 2017 ONCA 455.
Recently, the Court of Appeal has considered limitations defences in three of its estates decisions so far in 2021. One of them was the case of Zachariadis Estate v. Giannopoulos, 2021 ONCA 158, which I blogged about the other day. The other two cases were Beaudoin Estate v. Campbellford Memorial Hospital, 2021 ONCA 57, and Hayward v. Hayward, 2021 ONCA 175.
The Beaudoin Estate is a medical malpractice claim by the Beaudoin Estate and the deceased’s wife, daughter, grandchildren as claimants under the Family Law Act. The claimants alleged that the deceased was negligently diagnosed and treated when he was brought to the hospital’s emergency department which led to a delay in surgery that could have saved his life. Mr. Beaudoin died on January 9, 2015 and the action as commenced on April 27, 2017 by way of a statement of claim. The defendants asserted amongst other things in their statement of defence that the plaintiffs were statue barred pursuant to section 38(3) of the Trustee Act. The plaintiffs then alleged that the hospital had fraudulently concealed their cause of action by failing to provide them with the deceased’s complete medical records when they were requested from the hospital, particularly certain CT imaging that was not provided to them until May, 2017.
The hospital then brought a rule 21.01(1)(a) motion to determine an issue of law raised by the pleadings so as to dispose of the action without trial. It is important to note that, unlike a motion for summary judgment under Rule 20, no evidence is admissible on a motion under r. 21.01(1)(a), except with leave of a judge or on consent of the parties: r. 21.01(2)(a).
The Court of Appeal found that the motion judge erred in deciding the question of fraudulent concealment as a question of law under r. 21.01(2)(a). Motions under r. 21.01(1)(a) are not the proper procedural vehicle for weighing evidence or making findings of fact (para. 30). Similar to limitations issues under the Limitations Act, 2002 and the factual dispute surrounding the discovery of a claim, factual disputes surrounding the fraudulent concealment of a cause of action are more properly determined under a motion for summary judgment under Rule 20. To do so would be unfair to a plaintiff when no evidence is admissible on such a motion except with leave of the court or on consent (para. 34).
In Hayward v. Hayward, the appellants raised as a ground of appeal that the trial judge erred by failing to find that the applicants were statute bared. The Court of Appeal dismissed this ground of appeal on the basis that the defence was not raised by counsel regardless of the fact that the application did not have full pleadings like an action would. The trial judge cannot be criticized for failing to respond to a defence that was not raised by counsel (para. 7).
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Dr. Zachariadis was divorced and estranged from his two daughters. After his divorce, he began a romantic relationship with Ms. Giannopoulos. They were together for almost twenty years as common law spouses until Dr. Zachariadis’ passing. A year before his death, Dr. Zachariadis moved in with Ms. Giannopoulos and they had plans to marry. Dr. Zachariadis transferred his medical practice to Ms. Giannopoulos’ son Aris, and he gave Ms. Giannopoulos a bank draft for $700,000.00 which she deposited into her own bank account. He died within six months of that bank draft.
Dr. Zachariadis did not have a relationship with his daughters from his first marriage. He was not invited to their weddings and he has never met his grandchildren. Dr. Zachariadis died without a Will and his daughters became the estate trustees and beneficiaries of this Estate. More than two years after Dr. Zachariadis’ passing, the daughters commenced an action against Ms. Giannopoulos to recover the payment of $700,000.00 to her on the basis of breach of trust, fraud at equity, conversion and unjust enrichment. The action was dismissed on a motion of summary judgment by Justice Koehnen. The appeal of Justice Koehnen’s decision, 2019 ONSC 6505, and his Honour’s costs order, 2020 ONSC 588, were also dismissed by the Court of Appeal, 2021 ONCA 158.
On the motion for summary judgment, Justice Koehnen found that the daughters were statute barred by section 38(3) of the Trustee Act in failing to commence their claims within two years of Dr. Zachariadis’ death. The daughters failed to make out any fraudulent concealment on Ms. Giannopoulos’ part that would toll the operation of section 38(3). Rather, Justice Koehnen found that there was no positive obligation on Ms. Giannopoulos’ part to tell the daughters about the payment, and he found that the payment was a gift in any event. All of which were upheld by the Court of Appeal.
The Court of Appeal also found that there was no basis to interfere with Justice Koehnen’s costs order. The Estate and the daughters, in their personal capacities, were ordered to pay Giannopoulos costs of $199,602.46 on a substantial indemnity scale. The allegations of fraud in the underlying claim were unsupported and pursued to the end. Justice Koehnen noted that the daughters could have pursued their claims on the basis of constructive trust and resulting trust without going so far as alleging fraud. The daughters were also found to have taken unnecessarily aggressive steps and to have lengthened the proceeding due to their lack of cooperation with Ms. Giannopoulos’ counsel while Ms. Giannopoulos’ offers to settle were weighed against them. Issue was also taken with the length of the daughters’ materials which were noted to be in violation of the page limits and other formatting requirements for facta. Lastly, Justice Koehnen rejected the daughters’ argument that they were only pursuing the claim to ensure the due administration of the Estate and out of their concern that the Estate would have sufficient funds to pay its CRA liability. Interestingly enough, Justice Koehnen commented that, if that were the case, the daughters could have simply turned over the claim for CRA to pursue.
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In the recent decision of Carroll v Toronto-Dominion Bank, 2021 ONCA 38, the Ontario Court of Appeal dismissed the appeal of an applicant for lack of standing to bring the application, notwithstanding that the application related to an alleged breach of trust. Standing is required to sue for breaches of trust.
In this matter, the applicant, Marion Carroll, was formerly employed by Toronto-Dominion Bank (“TD Bank”), as a manager who was responsible for the compliance of a group of TD Bank’s subsidiaries relating to the management of mutual funds. Among other things, Ms. Carroll claimed to have exposed regulatory non-compliance and breaches of mutual funds trusts by TD Bank’s subsidiaries. In 2019, Ms. Carroll issued an application against TD Bank with respect to its role as Trustee of designated mutual funds.
The motion’s judge dismissed the application pursuant to Rule 21.01 of the Rules of Civil Procedure, finding that Ms. Carroll lacked standing to bring the application. Ms. Carroll appealed that ruling to the Ontario Court of Appeal.
While the Ontario Court of Appeal addressed other issues within this appeal, the focus of this article will be to highlight the Court’s finding that standing is required to sue for breaches of trust.
Ms. Carroll’s position was that once a court is informed of allegations of a potential breach of trust, the inherent jurisdiction of courts to administer trusts makes standing “subordinate, and largely irrelevant, where allegations of fraudulent or improper misconduct are made against a trustee,” thereby obliging the courts to resolve the litigation. Ms. Carroll also furthered the position that the courts of equity have removed the requirement of standing to protect the interests of incapacitated beneficiaries who cannot effectively sue to enforce trust obligations.
The Court rejected Ms. Carroll’s position stating that the claim that standing is subordinate or irrelevant “misconceives the true nature of the inherent jurisdiction of courts to supervise or administer trusts and is contrary to basic trust principles.” Although, the courts have previously extended access to the court’s inherent jurisdiction to creditors or contingent beneficiaries, the Court noted that the implications of Ms. Carroll’s position would result in strangers being able to enforce trust benefits that beneficiaries are entitled to, even if the beneficiaries choose not to enforce them, and that this would be contrary to the essential character of a trust.
The Courts are able to assist those with an interest in trusts by enforcing and compelling the performance of those trusts. Specifically, the Court noted that:
“the inherent jurisdiction to supervise and administer trusts exists to assist the parties to the trust relationship or those who are interested in the trusts. As such, the inherent jurisdiction of courts to supervise and administer trusts is not inconsistent with the imposition of standing requirements. To the contrary, it is entirely in keeping with the role inherent jurisdiction performs to ensure that those who seek to invoke the inherent jurisdiction to supervise or administer trusts have an interest in the trusts they seek to enforce.”
The Court of Appeal also discussed the following issues within this decision:
- Did the motion judge err by applying the wrong standing test?
- Did the motion judge err by finding that Ms. Carroll had not pleaded facts establishing a prima facie case of standing?
- Did the motion judge err by failing to consider all aspects of the relief sought when determining Ms. Carroll’s standing?
The Court concluded that the motion judge made none of the above-noted errors and dismissed the appeal.
Thank you for reading.
As Ian Hull and Daniel Enright of our office blogged last week, as of April 1, 2021, small estates in Ontario will be defined as those worth $150,000.00, instead of the $50,000.00 figure we are all used to.
The Ontario Attorney General, Doug Downey, advised that the process of applying to manage an estate in Ontario was the same, whether it is worth $10,000.00 or $10 million, which often deters people from claiming smaller estates.
As a result of this change, more estates will be able to access a simplified probate process, though the amount of probate fees payable will not change.
Although these changes are welcome, some consider that there are still a number of other issues outstanding, such as:
- Due to real estate values, estates in Toronto could be considered small, whereas that would not be the case in other parts of the province (e.g. a $500,000.00 estate in Toronto could be considered small); and
- The probate process itself could be simplified, as many financial institutions take the position that assets cannot be managed until such time as probate is obtained (which in turn can often cost an estate, as asset values fluctuate).
A recent article discussing the above-noted points can be found here.
It will certainly be interesting to see if the new changes will make a difference, and whether more changes are coming, in light of the concerns expressed by various members of the legal profession.
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Find this blog interesting? Please consider these other related posts:
In recent months, an Ontario Superior Court of Justice province-wide Notice to the Profession has permitted the filing of applications for a Certificate of Appointment of Estate Trustee with a Will or a Certificate of Appointment of Estate Trustee Without a Will (“probate applications”) by email. Since then, the Rules of Civil Procedure were updated, effective January 1, 2021 to permit for the service of most court materials by email (among other updates).
Most recently, as of January 8, 2021, the Rules of Civil Procedure were further updated to provide for the options of serving notice of probate applications by email, courier, or personal service. Amended sub-rules 74.04(7) and 74.05(5) now read as follows:
Notice under this rule shall be served on all persons, including charities, the Children’s Lawyer and the Public Guardian and Trustee, and, unless the court specifies another method of service, may be served by,
(a) personal service;
(b) e-mail, to the last e-mail address for service provided by the person or, if no such e-mail address has been provided, to the person’s last known e-mail address; or
(c) mail or courier, to the person’s last known address.
Previously, the Rules of Civil Procedure required the Notice of Application in respect of a probate application to be served by regular lettermail.
Forms 74.06 and 74.16 (Affidavits of Service in respect of probate applications) have also now been updated to refer to these new manners of service of the Notice of Application in respect of a probate application. The revised forms are available here.
This further development in the modernization of estates law procedures is welcome and can be expected to better enable lawyers to assist clients in serving and filing probate applications more efficiently while working remotely during the pandemic and beyond.
Thank you for reading.