Many of the guardianship applications our firm prepares concern the management of tort settlement funds. The form of these funds may be typically be either by way of: (i) structured settlement, or (ii) lump sum. A recent decision out of the Ontario Superior Court of Justice in Thunder Bay provides the Court’s opinion as to its preferred form.
In Melvin v. Ontario, despite the guardian’s desire for payment of tort proceeds by way of lump sum, Justice Shaw ordered a structured settlement, on the basis that, in his view, it best protected the interest of the incapable. It seems that this decision was based, not only on the guardian’s lack of expertise in managing settlement monies, but also on the basis that a structured settlement would provide tax free income with predictable, indexed monthly payments for future care. In addition, the Court observed that there is no risk that the monthly payments will run out, and bank management fees are avoided.
In this case, a structured settlement ensured that the incapable would retain his ODSP benefits while also receiving monthly structured payments. Since ODSP remained, health coverage and OHIP continued.
In a recent article in Law Times, McKellar’s advises that the common elements leading to structures include the competency and age of the plaintiff, as well as the fact that they suffered catastrophic injuries and are thus not employable, require community support and could suffer if a lump sum runs out. Further, Baxter Structures notes that as there is such uncertainty in the outside investment market, there is less security and guarantee over funds in a lump sum payment.
However, it is important to note that in certain instances, a lump sum may be more desirable. In the Ontario Court of Appeal decision of Wilson v. Martinello, the Court found in favour of a lump sum because the plaintiff was employable and had no responsibilities to his family.
When preparing guardianship applications, it is important to review the form of the tort settlement in order to ensure that sufficient funds remain available for the livelihood of the incapable, and if necessary, proper financial advice is recommended.
I was recently introduced to the American reality television show Extreme Cheapskates. While I do not at this time admit that I have actually watched the show, it nonetheless sparked my interest to explore cost saving measures for our clients. While most of the focus we come across on our blog pertains to the financial advantages of a well-planned estate, I thought that I would examine advantages available to a guardian or attorney for property/personal care.
Family Caregiver Tax Credit (Federal)
The Government of Canada allows individuals who have a dependant with an impairment in physical or mental functions to claim an additional amount of $2,040.00 for one or more of the following amounts:
- spouse or common-law partner amount (line 303)
- amount for an eligible dependant (line 305)
- amount for children born in 1996 or later (line 367)
- caregiver amount (line 315)
In order to rely on the Credit, a signed statement from a medical practitioner should be obtained stating the date the impairment began, and the expected duration. If the dependant is under 18 years of age, the statement must also indicate that the child requires more assistance than other children their age.
Trillium Drug Program (Provincial)
Available to Ontario residents, the Trillium Drug Program is available for people who have high prescription drug costs relative to their household income. Some 3,800 prescription drugs are covered, including some nutrition products. For those who qualify, it is only required that you pay a set amount of your prescription drug costs each year, generally averaging about 4% of your household’s combined net income.
The Application Form, as well as additional information, can be found here.
Neither the Family Caregiver Tax Credit (“FCTC”) or Trillium Drug Program (“TDP”) were designed specifically for guardians or attorneys. However, given the scope of these cost saving measures, they can assist those individuals found in these roles. While the FCTC or TDP do not offer ‘extreme’ savings, they are nonetheless useful cost-saving measures available to individuals who meet the criteria.
I recently came across an advertisement for a Pet Guardian Agreement offered by FormalWill. For $29 (a savings of $30 on what is a $59 value), pet owners can ensure that, in the event of the owner’s incapacity or death, their pets are looked after by the appropriate people, funds can be set aside for the future care of their pets, instructions can be left with their pet’s veterinarians, groomers or pet walkers, and arrangements can be made to compensate the Pet Caregiver appointed.
The Humane Society of South Central Michigan has their version of a Pet Guardianship Agreement where the Humane Society will agree to provide emergency care for an animal in circumstances such as when the pet owner enters a full time care facility and can no longer care for the animal or where the pet owner predeceases the animal (although there is a caveat that all animals will be spayed or neutered upon entrance to the program unless it is contrary to the health of the animal). In such a circumstance, the animal will be given a full medical examination and be assessed by a behavioral team for “re-homing” suitability. If the animal is not suitable for “re-homing”, directions will be sought from the pet owner’s friends and families. Prior to the Pet Guardianship Agreement becoming valid, the pet owner must advise in writing that provision has been made for a bequest to the Humane Society in the pet owner’s Last Will and Testament.
In the alternative to a Pet Guardianship Agreement, Natalia Angelini has relayed some extreme examples of pet owners leaving money to their pets in her blog entitled From Rags to Riches. My favourite is the story of a German Sheppard, Gunther IV, who reportedly inherited $372 million from his father, Gunther III, the beloved companion of an eccentric German countess. This seems the easiest way to ensure your pet’s financial independence after you are gone.
Have a good weekend.
Today on Hull on Estates, David Morgan Smith and Nadia Harasymowycz discuss guardianship and capacity issues in circumstances where incapacity is a distinct possibility, but not currently the case.
If you have any questions, please e-mail us at email@example.com or leave a comment on our blog page.
Click here for more information on Nadia Harasymowycz.
On Tuesday, I blogged on the recent Ontario Court of Appeal decision of Aragona v. Aragona, 2012 ONCA 639.
There, the application judge denied the guardian compensation. In so doing, the application judge noted the guardian’s failure to keep proper accounts. The Court of Appeal stated that a guardian has, by statute, a fiduciary obligation to carry out his or her obligations with honesty and due care and attention. “The core of these obligations includes the duty to be in a position at all times to prove the legitimacy of disbursements made on behalf of the estate.”
Further, the application judge went on to find that “the conduct [of the guardian] has been shocking. He has literally helped himself to many thousands of dollars from his mother’s estate, at a time when his mother had Alzheimer’s and was unable to look after her own affairs.”
Together, these two factors led to a denial of compensation: a conclusion that was said to be clearly in the discretion of the application judge.
In denying compensation, both the Court of Appeal and the court below relied on the decision of Zimmerman v. McMichael Estate, 2010 ONSC 2947. This decision clearly sets out the obligations of a trustee, including the obligation to account. The application judge found that because significant funds disappeared from the estate without adequate explanation, it was appropriate to award no compensation. The application judge contrasted this with the situation in Re Assaf Estate, 2009 CanLII 11210. There, there was wrongdoing found, but no harm was said to have resulted to the estate. In that situation, compensation was reduced by 50%, but not disallowed completely.
Thanks for reading,
Paul Trudelle – Click here for more information on Paul Trudelle.
In Ontario (as in most jurisdictions), a person entitled to custody of a child may appoint by will one or more persons to have custody of the child after the death of the appointer: see s. 61 of the Children’s Law Reform Act.
The appointment is only effective if there is no one surviving who is entitled to custody. In Ontario, the appointment is only effective for 90 days, during which time an application for guardianship is usually brought.
Choosing a guardian can be a difficult task. Where there are two parents, a consensus should be reached. (Under the Ontario legislation, where there is more than one appointment, the appointment is only effective with respect to the guardian(s) named in both appointments.)
The Will of the recently deceased Beastie Boy, Adam Yauch, contains an unusual clause that may be the result of the difficulty of resolving the question of who to appoint, and the compromises that are sometimes made.
In his Will, according to an article on the Forbes website by Deborah L. Jacobs, if Yauch died in an even-numbered year, his parents are to be appointed as guardians of his daughter, with his wife’s parents as backup. If Yauch died in an odd-numbered year, the situation was reversed, and his wife’s parents were appointed guardians, with Yauch’s parents as backup.
Such a clause would only be effective if his wife predeceased him, or died at the same time as Yauch.
Presumably, the terms of Yauch’s wife’s Will mirrored these provisions.
An interesting solution to a common issue.
Thank you for reading,
Paul Trudelle – Click here for more information on Paul Trudelle.
If more than one person wants to be the guardian, the content of the Guardianship Plans will determine who is best suited for the job. The case of Nguyen-Crawford v. Nguyen  OJ No. 5424, 2011 ONSC 7190 states the areas that a Guardianship Plan should cover:
– the prior and present wishes of the incapable person regarding their long-term care and placement;
– the ability of family members and the incapable person to afford care at home;
– the willingness of family members to access community programs for the incapable person;
– the proposed dietary regime and personal dietary preferences of the incapable person;
– detailed residential plans and changes to those plans if the incapable person’s health is declining;
– a rationale for any proposal to move the incapable person from their community; and
– detailed plans regarding access for family members and friends.
In the latest development in the protracted litigation between the heiress to a cosmetics fortune and her daughter, a French Court this week granted guardianship applications brought by her daughter and grandchildren. The Court made findings that the mother was not capable of managing her own property or making personal care decisions.
In Ontario, guardianship disputes are governed by the Substitute Decisions Act (“SDA”). Under section 3 of the SDA, when the capacity of a person is in dispute, counsel may be ordered to be appointed by the Public Guardian and Trustee and the alleged incapable person will be deemed to have capacity to instruct counsel.
To read more about the history of the proceeding referred to at the outset of this blog, I suggest Forbes magazine’s article.
Thanks for reading,
In the matter of Estate of Divina Damm, 2010 ONSC 5119 (CanLII), Justice Brown reflected on the form of accounts to be used upon the filing of an application by a guardian for property to pass accounts.
Justice Brown noted that in passing accounts of a guardian, s. 42(6) of the Substitute Decisions Act, 1992 provides that "the procedure in the passing accounts is the same … as in the passing of executors’ and administrators’ accounts".
Rule 74.17(1) of the Rules of Civil Procedure specifies in detail the form of accounts to be filed. The Rule requires:
(a) an itemized accounting of assets under administration, cross-referenced to entries showing the disposition or partial disposition of the assets;
(b) an account of all money received;
(c) an account of all money disbursed;
(d) where investments are made, an account setting out all money paid to purchase investments, and money received by way of repayment or realization of assets in whole or in part;
(e) a statement of all unrealized original assets at the end of the accounting period;
(f) a statement of all money and investments at the end of the accounting period;
(g) a statement of all contingent or other liabilities at the end of the accounting period;
(h) a statement of compensation claimed; and
(i) such other statements and information as the court requires.
If the will or the trust deals separately with income and capital, the accounts are to show separately the receipts and disbursements of capital and income.
In the matter before Justice Brown, the accounts were said to lack the detail required by the Rules, and provided information at the "30,000 foot" level. Justice Brown felt that he could not hear the matter without greater particularization of the accounts. The accounts did not comply with the Rules; due to this lack of particularity, a question arose as to whether a respondent served with the accounts could properly understand the conduct of the guardian; and the Court could not link the particulars of the judgment (which sets out specific amounts for revenue receipts and disbursements and capital receipts and disbursements) to the evidence.
While he rejected the application, Justice Brown raised the question of whether the Rules should be amended so as to allow for a simpler form of accounts for smaller estates. However, until a rule change, all accounts must comply with the format set out in Rule 74.17(1).
Thanks for reading,
Who says estates law isn’t glamorous? A French judge in Nanterre, on the outskirts of Paris, has recently rejected the second attempt by Francoise Bettencourt-Meyers to obtain guardianship over her mother, Liliane Bettencourt. 87-year-old Bettencourt is the sole heir of L’Oreal, the world’s largest cosmetics and beauty company that her father founded in 1909. She is the richest woman in the world, with her current fortune estimated at 17 billion euros.
Bettencourt-Meyers failed to produce a medical certificate and “in the absence of this document, nothing more can be done”, the Paris official said.
According to Aol News, Bettencourt-Meyers wishes to protect her mother from a celebrity photographer who befriended Bettencourt and to whom the heiress has given gifts totaling a billion dollars. France24 reports that Bettencourt accuses her daughter of "vile doggedness" and impatience to get her hands on her fortune.
Whether a guardianship application is motivated by the desire for power and money or genuine love and concern, a court will not interfere with an individual’s autonomy lightly. For information on when a court will order a capacity assessment, see my previous blog on this topic here.
Sharon Davis – Click here for more information on Sharon Davis.