When parents consider who should be the guardian of their minor-age children in the event they both were to die, they are probably thinking in terms of who will assume parenting responsibilities. In Ontario, however, there is an important distinction between the custodial guardian and the guardian of property, the latter being the person who will make financial decisions for those children until they reach the age of majority. One person can fulfill both roles or parents can break the responsibilities apart and assign guardians for each.
Let’s explore the second form of guardianship first.
In Ontario, subsection 47 (2) of the Children’s Law Reform Act describes a guardian of the property as someone “responsible for the care and management of the property of the child.”
Their duties include making trustee investments and investing the child’s money as required by the management plan approved by the court. If there is a large amount of money involved, the guardian may be required to pass the accounts before the court at fixed intervals, usually from one to five years.
Detailed records, or accounts, must be kept of all transactions carried out on behalf of the children.
Guardians of property may be paid for their work, following the fee scale set out in Ontario Regulation 159/00. It states they are entitled to three per cent on capital and income receipts, three per cent on capital and income disbursements and three–fifths of one per cent on the annual average value of the assets as a care and management fee.
The court can review the accounts and adjust the amount of compensation given, and, if required, demand that some or all of these funds be repaid.
With the financial responsibilities involved in being a guardian of property, it is easy to see why parents should select someone comfortable with handling money for this role.
When selecting a custodial guardian to assume day-to-day parenting duties, most people look to family members. That often works well, especially if the person lives close by and has children of their own. But don’t be afraid to look beyond your circle of relatives. In some circumstances, a family friend might be the better choice. Just as there are no perfect parents, there are no perfect guardians, but your children will have to live with the choice you have made in the event of your untimely death.
There are a number of factors to consider with any guardian choice, such as geography. School-age children may not appreciate being uprooted from friends and schoolmates if the custodial parent lives in another community or province.
The age and health of the custodial guardian are important as well, as you want someone who has the energy to take on the myriad of tasks involved in child-rearing. For that reason, someone who is nearing retirement might not be a wise choice as a custodial guardian.
Parents also have to think about the attitudes and values they are trying to instill in their children. You want to find a custodial guardian who lives by similar standards as yours, to ensure your children are brought up in a manner in which you approve.
Finances should be a factor in your decision-making. Even if a will provides funding for the children’s needs, the custodial guardian’s expenses will go up, so you won’t want to select someone who is already financially strained.
For both guardian roles, you will want to be sure to discuss the issue thoroughly with the people in question before appointing them in your will. It is a statistical long-shot that their services will be required, but make sure they are comfortable taking on those duties if they are ever required to fulfill those roles.
One final point: review your guardianship appointments on a regular basis. Everyone’s personal circumstances change, and the person who agreed to be guardian 10 years ago may be unfit or unwilling to assume that role now.
Stay safe – and have a great day,
Recent discussion of proposed amendments to the Succession Law Reform Act under Bill 245 has raised questions of whether corresponding changes will be made to the Substitute Decisions Act, 1992. In particular, some estate lawyers are wondering whether a new validation section may be added to the Substitute Decisions Act to address the issue of court validation of powers of attorney (like the new section 21.1 of the Succession Law Reform Act has been proposed to allow courts to validate improperly-executed wills) and/or whether remote execution options may soon be made permanent for powers of attorney as well as wills.
The Substitute Decisions Act already contains curative provisions that allow the court to validate incapacity planning documents in circumstances where the documents are not executed in strict compliance with formal requirements.
Subsection 10(4) of the Substitute Decisions Act reads as follows with respect to the validation of Continuing Powers of Attorney for Property:
(4) A continuing power of attorney that does not comply with subsections (1) and (2) is not effective, but the court may, on any person’s application, declare the continuing power of attorney to be effective if the court is satisfied that it is in the interests of the grantor or his or her dependants to do so.
Subsection 48(4) of the Substitute Decisions Act reads as follows with respect to the validation of Powers of Attorney for Personal Care:
(4) A power of attorney for personal care that does not comply with subsections (1) and (2) is not effective, but the court may, on any person’s application, declare the power of attorney for personal care to be effective if the court is satisfied that it is in the grantor’s interests to do so.
Remote Execution of Documents in Counterpart
While the focus of discussions among estate lawyers regarding Bill 245 may be the proposed updates to the Succession Law Reform Act and, in terms of formal will execution, the amendment of section 4 as it relates to the requirements for the witnessing of wills, Bill 245 also includes proposed changes to the Substitute Decisions Act under Schedule 8.
A new section 3.1 of the Substitute Decisions Act is being proposed to add specific references to the use of audio-visual communication technology and counterpart signing options in the execution and witnessing of Continuing Powers of Attorney for Property and Powers of Attorney for Personal Care. Accordingly, if Bill 245 is passed, the remote and counterpart execution options made available during the pandemic will be made permanent for wills and powers of attorney alike.
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As many of our readers know, Ontario may be well on its way to becoming a jurisdiction in which wills may be validated notwithstanding that they are not strictly compliant with the formal requirements set out under the Succession Law Reform Act. However a recent decision of the Ontario Superior Court of Justice reminds us that Ontario, for now at least, remains a strict compliance jurisdiction where all formalities must be followed in the execution and witnessing of wills and codicils.
During the pandemic, many lawyers have taken advantage of the ability to assist clients in the remote execution and witnessing of their wills, as well as the execution and witnessing of wills in counterpart. In order to validly do so, the will must be witnessed using audio-visual communication technologies. In Re Swidde Estate, 2021 ONSC 1434, however, the drafting solicitor and other witness were neither in the physical presence of the testator nor in her presence by way of audio-visual communication technology, at the time that a codicil was signed. Instead, the witnesses were in communication with the testator over the phone (without video) at the time that she signed the codicil. The codicil was later couriered to the witnesses who then each signed the same document. The Court found that this did not meet the requirements set out under the Emergency Order in Council permitting remote execution and witnessing of wills, and the codicil could not be admitted to probate. This case may serve as a reminder to drafting solicitors to ensure that all requirements are strictly adhered to. In that regard, readers may find it helpful to use a checklist, such as that available through our website (linked here), when assisting clients in the remote execution of wills or other estate planning documents.
Bill 245 is currently in its third reading. Section 5 of Schedule 9 to the Bill provides for the Court validation of wills where a document sets out testamentary intentions but has not been properly executed or made. Such a provision would enable a judge in circumstances such as those in Re Swiddle Estate to validate a will or codicil that was not properly executed. This provision will come into effect no earlier than January 1, 2022 and will apply only to wills left by persons who have died following that date, subject to further changes before the legislation may be finalized and may ultimately take effect. Accordingly, especially while Ontario remains a strict compliance jurisdiction, it is important to exercise caution in ensuring that all wills we prepare are properly executed and witnessed.
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A lawyer was sued for negligence in allegedly failing to ensure that a will was not procured by undue influence or as a result of the testator’s lack of testamentary capacity. On examination for discovery, the lawyer was asked to advise as to texts or other secondary sources that the lawyer regarded as authoritative regarding the drafting of wills, and to advise as to whether the lawyer was aware of any cases (primary sources) that indicated that the lawyer was not required to document evidence of testamentary capacity.
The lawyer refused to answer those questions. The plaintiff brought a motion to compel the lawyer to answer. Must the lawyer answer those questions?
In Marshall v. Jackson, the motions master ordered the lawyer to answer the questions. On appeal, reported at 2021 ONSC 2361, the court held that the questions need not be answered.
The appeal judge held that it was trite law that a party cannot function as his or her own expert. By ordering the questions to be answered, the master in effect required a fact witness to research and deliver a legal opinion, which was contrary to a first principle of the law of evidence. Citing the Supreme Court of Canada, the appeal judge stated that “it is for the [trier of fact] to form opinions, and draw inferences and conclusions, and not for the witness”. The questions, it was held, went beyond asking the defendant for his or her general understanding of the steps he or she should have taken to ascertain testamentary capacity, but required that the lawyer research primary and secondary sources of law in an effort to provide support for legal reasoning going to the standard of care.
A third question was also refused: whether the defendant “understood that he was obliged to ensure that all available means were utilized to ascertain testamentary capacity”. The defendant submitted that the question was too broad to be answerable. Would “all available means” include hiring a team of psychiatrists to evaluate the testator’s capacity? The appeal judge held that while the defendant’s counsel may have a point, the fact that the question was excessively broad did not make it unanswerable. “Indeed, the very absurdity of the literal meaning of the question makes it an easy one to answer.” Presumably, the answer will be “No”.
Next question, counsel?
Thank you for reading.
The basic limitation period under section 4 of the Limitations Act, 2002 provides that a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. However, pursuant to section 7(1) of the Act, the “clock” does not run when the person with the claim,
(a) is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental or psychological condition; and
(b) is not represented by a litigation guardian in relation to the claim.
A person is also presumed to be capable of commencing a proceeding in respect of a claim at all time unless the contrary is proved (section 7(2)), although minors are dealt with separately under section 6 of the Act.
The issue of the plaintiff’s capacity to commence a proceeding in respect of his claim was considered at length by the Court of Appeal in Carmichael v. GlaxoSmithKline Inc., 2020 ONCA 447. Carmichael is a tragic case involving the murder of the plaintiff’s 11 year old son. The plaintiff strangled his son to death in 2004 when he was suffering from mental illness and psychotic delusions. During this time, the plaintiff was also taking an anti-depressant that was manufactured by the defendant drug company. The plaintiff was charged with murder and he was found to be not criminally responsible as a result of his mental disorder. He later received an absolute discharge from the Ontario Review Board on December 2, 2009. Nearly two years after that, the plaintiff commenced his claims against the drug company on October 5, 2011.
The defendant drug company brought a motion for summary judgment to dismiss the plaintiff’s claim as statute barred. The motions judge dismissed the motion because he found that the plaintiff was incapable of commencing a proceeding because of his psychological condition until the day of his absolute discharge from the Ontario Review Board. The Court of Appeal disagreed.
The Court of Appeal affirmed the use of the Huang/Hengeveld indicators as a list of non-exhaustive, objectively verifiable indicators of incapacity under section 7(1)(a) of the Act (see paras. 94-96):
- a person’s ability to know or understand the minimum choices or decisions required to make them;
- an appreciation of the consequences and effects of his or her choices or decisions;
- an appreciation of the nature of the proceedings;
- a person’s ability to choose and keep counsel;
- a person’s ability to represent him or herself;
- a person’s ability to distinguish between the relevant and irrelevant issues; and,
- a person’s mistaken beliefs regarding the law or court procedures.
Moreover, the plaintiff’s physical, mental, or psychological condition must be the cause for the incapacity in order to meet section 7(1)(a). The incapacity cannot arise from other sources, such as lack of sophistication, education, or cultural differences (para. 101).
The Court of Appeal ultimately found that the plaintiff had the capacity to sue the defendant drug company prior to his absolute discharge from the Ontario Review Board. The Court disagreed with the motions judge’s view of the plaintiff’s expert evidence. The plaintiff’s expert witness was criticized for never having prepared a capacity assessment before and for making conclusions that were unsupported by the evidence. Rather,
“The evidence shows that Mr. Carmichael had several reasons for not suing GSK before December 2, 2009: he did not believe he had the necessary expert evidence until he received the genetic test from Dr. Lucire in October 2009; he was worried about repercussions if the Hospital decided that he was not taking responsibility for his actions; and he was concerned for his own and his family’s well-being. These are understandable reasons for not commencing a lawsuit. But in my view, none of these reasons, alone or together, prove that Mr. Carmichael was incapable of suing GSK until December 2, 2009 because of his psychological condition.” (para. 163)
Leave to appeal to the Supreme Court of Canada was denied last week.
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Wage increases are not proportionate to the astronomical rise in the cost of living. As a result, it is not all that uncommon for some to live “pay cheque to pay cheque” – especially those millennials just beginning their careers, starting a family, and hoping to buy property. Even those who have attended graduate programs (many of whom spend several years paying off the massive debt accrued by such ambitions), have double income earning families, and who hold esteemed positions in the workforce, still struggle to put aside any significant amount of money for retirement. Consequently, many young people make the unwise mistake of counting on their impending inheritance to fund their retirement.
According to Ipsos Reid survey, 35% of Canadians are relying on an inheritance to fund their futures. Although baby boomers as a generation possess great wealth, there are several reasons why that fortune might not land in the hands of millennials.
Firstly, individuals might deplete their assets while still living. Given the steady increase in life expectancy, individuals are living longer and correspondingly, their wealth must last longer. For some, this might mean living lavishly in their retirement years and travelling the world. Others who aren’t so lucky might be plagued by illness requiring extensive care. In the latter scenario, savings can be quickly consumed by these unforeseen health care expenses. For context, a private room at a long-term care home in Ontario costs on average $2,640 a month. Retirement homes, not subsidized by the government, cost approximately $3,204 a month if an individual requires assistance.
Another reason why an inheritance should not be counted until it is received is due to the volatility of the stock market. An unexpected downturn in the stock market, or a poor investing decision, could result in a retirement portfolio plummeting and thus no inheritance left to pass along.
Lastly, some parents might share the same beliefs as investing icon Warren Buffett, who infamously remarked that he would leave his children “enough money so that they would feel they could do anything, but not so much that they could do nothing.” A 2014 study by the Insured Retirement Institute confirmed that although in the past over two-thirds of baby boomers reported that they would leave their children an inheritance, this number dropped to just 46% in 2014. It appears that more parents might agree with Buffet’s philosophy than expected. As a result, it seems wise to consider your potential inheritance as a welcome bonus rather than a given.
Thanks for reading – and enjoy the rest of your day!
Suzana Popovic-Montag & Tori Joseph
This week on Hull on Estates, Natalia Angelini and Garrett Horrocks discuss the recent Ontario Court of Appeal decision in Carroll v Toronto Dominion Bank, 2021 ONCA 38, pertaining to the issue of standing in trust litigation.
Should you have any questions, please email us at firstname.lastname@example.org or leave a comment on our blog.
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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I recently blogged on a case where the British court disallowed an adult son’s plea for his wealthy parents to continue to financially support him, which litigation was brought after his parents significantly reduced their financial involvement.
A different outcome was achieved in Dove v. MacIntyre, a recent decision before the Supreme Court of Nova Scotia, Family Division, where divorced parents were dueling over the issue of support for their adult daughter. In this case, the mother applied to the court seeking an order that the father pay child support for their 25-year old daughter during her attendance at a dental hygiene program.
Amongst other issues the Court addressed was whether or not the child was a dependant for the purposes of child support, with the definition in the applicable statute including the situation where a child is over the age of majority but unable, by reason of illness, disability or other cause, to withdraw from the charge of the parents or obtain the necessaries of life. Particular attention was paid to the situation, such as in this case, where post-secondary education was being pursued, which can qualify as an “other cause” for purposes of the definition.
Various factors established by the cases were enumerated by the Court to determine whether the child was eligible for support, including that she tried to finance her education through loans, her income was insufficient to allow her to afford to pay for all of the program costs, her education plan was reasonable and she has secured employment as a result, the mother had taken on extra work in order to help finance her daughter’s studies, her father was remarried and in a two-income household, etc.
The Court was satisfied that the daughter was a dependant child for the period in question, and compelled the father to share in a portion of the education costs equally as the mother.
Had the father been deceased and had the dependant support case been levelled against his estate, I am not certain that the daughter would have fared as well as she did in this case. Under the Succession Law Reform Act, the definition of a dependant is different than in the family law statute under consideration in the Dove case, such that to qualify as a dependant the person must be someone the deceased (i) was providing support to immediately before death, or (ii) was under a legal obligation to support immediately before death. An analysis of the latter of these qualifications would be needed to resolve the issue, and without a laundry list of clearly delineated factors to consider (unlike those applied in the family law context in Dove), the outcome seems less clear to me. Although it also remains open to an independent adult child to apply for dependant support on the moral obligation ground, in Ontario this ground appears to continue to be treated as but one factor to consider in the context of support claims.
Thanks for reading and have a great day,