Category: Power of Attorney
One of the ways a Will can be declared invalid is if the court finds that there were suspicious circumstances surrounding the preparation of it. In Graham v. Graham, the Ontario Superior Court of Justice found that significant involvement from the testator/grantor’s child was indicative of suspicious circumstances regarding the preparation of a Will and Power of Attorney (POA).
The testator, Jackie, had four children: Tim, Robert, Christine and Steven.
Jackie suffered from terminal cancer. She was hospitalized from November 22, 2015 to December 7, 2015, and again from December 22, 2015 to December 24, 2015, to receive treatment for severe pain.
In mid-December 2015, Robert’s wife, Tammy, searched for and contacted a lawyer to prepare a Will and POA for Jackie. Tammy obtained a Client Information Sheet (CIS) from the lawyer’s office and completed it herself. The lawyer prepared the documents based on this CIS. At Robert’s request, the lawyer went to the hospital to meet Jackie and have her sign the Will and POA. This was the first time Jackie met the lawyer and saw the Will and POA.
Jackie’s Will named Robert as estate trustee and sole beneficiary of her estate. The POA named Robert as Jackie’s sole attorney for property. Robert’s wife, Tammy, was named as the alternate estate trustee and attorney.
On January 4, 2018, Robert used the POA to transfer Jackie’s house to himself as sole owner. Four days later, Jackie died of cancer.
Tim challenged the validity of Jackie’s Will and POA claiming that they were prepared under suspicious circumstances and that Jackie was subject to undue influence by Robert and Tammy.
- Jackie had been in ill health for a long time prior to her death, so it was reasonable to infer she had chosen to die without a will, until Robert’s involvement.
- Jackie was treated with heavy painkillers on the night and morning of the day she signed the will and POA.
- Robert and Tammy “orchestrated virtually every aspect of the Will and the POA”, which included searching for a lawyer, providing instructions, arranging for the lawyer to meet Jackie, remaining in Jackie’s room for part of the meeting, and taking part in the discussions concerning the Will and POA.
- The drafting lawyer relied entirely on Robert and Tammy to provide him with all of the information concerning the Will and POA.
After finding that suspicious circumstances existed, the burden then shifted to Robert to prove that Jackie had testamentary capacity and that she knew and approved of the contents of the Will and POA. Using the test for testamentary capacity as outlined in Banks v. Goodfellow (1870), the court found that Robert could not establish that Jackie had testamentary capacity. In coming to this conclusion, the court considered the following:
- There was no evidence that Jackie was given the Will or the POA to read or that it was read to her.
- Although Jackie knew where she was living, there was no evidence to indicate that she had any knowledge or understanding of the monetary value of her house.
- It was unclear whether Jackie could do more than repeat what she was told.
- Jackie was confused and/or mistaken in certain beliefs about her son, Tim.
- The medications that Jackie was taking for her pain left her confused and drowsy.
As a result, the Will and the POA were declared invalid.
Graham v. Graham serves as a cautionary tale for adult children who become too involved in the drafting of their parents Wills and POAs. It warns us that the courts view this type of involvement as suspicious. Moreover, Graham v. Graham suggests that physical impairment can impact a testator’s mental state, thus making them vulnerable.
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Ian Hull and Celine Dookie
No, we are not referring to the 1979 film featuring Dustin Hoffman and Meryl Streep, but a far more recent (but nonetheless interesting) legal dispute involving an application to pass accounts, suspicious activity on behalf of an Attorney for Property, and the resurgence of the equitable defences of laches and acquiescence.
A complex series of facts is present in the Estate of Ronald Alfred Craymer v. Hayward et al, 2019 ONSC 4600: two Attorneys for Property, six marriages, seven children, thirty years of estrangement between Ronald and his four children, and virtually no financial records for the period during which the first Attorney for Property oversaw the affairs of her incapable husband’s estate.
The cruxes of the dispute are that the first Attorney for Property (Joan, Ronald’s wife) transferred the title of the matrimonial home to herself, she kept scanty financial records, and the value of her assets (over $1 million) dwarfed that of her late husband’s (around $35,000). When Joan died suddenly, John Craymer (Ronald’s son, the plaintiff) applied for a passing of accounts and the second Attorney for Property (Linda, Joan’s daughter) was left in the unenviable position of potentially having to answer for the conduct of her late mother in relation to accounts of which she, Linda, had no knowledge.
Under section 42 of the Substitute Decisions Act, 1992, S.O. 1992, c. 30, the Court may order a passing of accounts. In considering whether to do so, it should examine “the extent of the attorney’s involvement in the grantor’s financial affairs and second whether the applicant has raised a significant concern in respect of the management of the grantor’s affairs” (McAllister Estate v. Hudgin, 42 E.T.R. (3d) 313 (ONSC), at para 13). Since section 42 carries a high threshold, and Linda was not responsible for her mother’s conduct, the Court did not grant the application. In its reasons, moreover, the Court found fault with the transfer of the home, but given the marital relationship between grantor and attorney, it did not attach much weight to the scantiness of detailed accounts.
Noteworthy in this case is the Court’s consideration of the equitable doctrines of laches and acquiescence in the context of a motion for a passing of accounts (in which, in Ontario, there is no limitation period). In determining whether these defences apply, the Court looks at the length of the delay and the resulting prejudice. Neither of these components were applicable here, for when John learned of the value of his father’s estate as well as the transfer of the home into Joan’s name, he acted promptly. Instead, his application was dismissed on the Court’s discretion.
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Ian Hull & Devin McMurtry
Previously, Hull and Hull LLP blogged on the decision of Tarantino v. Galvano, 2017 ONSC 3535 (CanLII). After a ten day trial, the court set aside a transaction whereby the deceased’s daughter, acting as attorney under a Power of Attorney, transferred the deceased’s interest in her home to the daughter. The court also allowed a claim by the daughter for services provided to the deceased. The court disallowed a claim for occupation rent against the daughter.
We also blogged on the costs decision, reported at Tarantino v. Galvano, 2017 ONSC 6635 (CanLII). The collective legal fees of the parties on a substantial indemnity basis (ie., the actual legal fees were higher) were $621,660. The main asset of the estate was 80% of a house valued at $680,000 in 2012. Neither party was awarded costs, other than a reimbursement for the cost of an expert report.
The matter was before the courts once again. On September 6, 2019, the Ontario Court of Appeal dismissed the appeal brought by the grandchildren of the deceased (the daughter’s nieces): Tarantino v. Galvano, 2019 ONCA 699 (CanLII).
The Court of Appeal held that with respect to the dismissal of the claim for occupation rent, the trial judge did not err. The daughter remained in the house (of which she owned 20%) after death. However, the granddaughters had sought and obtained an undertaking from the daughter not to sell the house while the litigation was pending. Of note is the fact that the daughter, under the deceased’s will, had a first option to purchase the house. As the daughter was prevented from selling the house by reason of the undertaking sought by the granddaughters, it would be “unfair” to charge the daughter rent when she was unable to deal with the house.
With respect to a second ground of appeal, the Court agreed with the trial judge that the costs of maintaining the home during the deceased’s lifetime, and while she was in poor health, should fall on the deceased. As the trial judge concluded, “Having accepted that [the deceased’s] wish was to be looked after at home, and having accepted that in her capacity as attorney for personal care it was appropriate for [the daughter] to make arrangements for [the deceased] to be looked after in the home, those expenses are properly attributable to the care of [the deceased].”
The appeal was dismissed, with costs of $15,000 payable by the granddaughters to the daughter.
I expect that this is the last chapter in this unfortunate, expensive saga.
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In dependant support cases, the court shall consider many factors and circumstances in determining the amount and duration of support, pursuant to a non-exhaustive list detailed in section 62 of the Succession Law Reform Act. If the dependant is a spouse, the considerations also include a course of conduct by the spouse during the deceased’s lifetime that is so unconscionable as to constitute an obvious and gross repudiation of the relationship. In Webb v. Belway, we see this consideration taking center stage.
The deceased, Mr. Belway, suffered a stroke. He died approximately six months later at age 82. In the months prior to his passing, Mr. Belway was in the hospital and in long-term care. Ms. Webb assisted in in his care, and was acting as Mr. Belway’s attorney for property and personal care.
Mr. Belway died intestate. He was survived by his daughter, who stood to inherit the entire estate of almost $3.0 million. He was also survived by his long-time common-law spouse, Ms. Webb, age 73. Ms. Webb brought a dependant support claim seeking half of the estate.
Mr. Belway’s daughter opposed the application, arguing that due to Ms. Webb’s abhorrent behaviour she should not be entitled to any assets from the estate. Such behaviour included:
- Webb, acting as attorney for property, transferring more than $570,000 from Mr. Belway’s accounts for her own benefit, when Mr. Belway was hospitalized and incapable;
- Webb did not call Mr. Belway’s daughter to advise of her father’s stroke, of his hospitalization or of his having undergone surgery. She further refused to provide a phone number to reach Mr. Belway; and
- Webb took active steps to isolate Mr. Belway during his final months of life, including instructing caregivers to call the police should his daughter and family members attempt to visit.
The court ultimately found that Ms. Webb’s actions were “improper” but that all things considered she should still receive support, stating:
“Ultimately, I am not persuaded that Ms. Webb’s actions were egregious or malicious, nor do I find her actions to have been so unconscionable as to constitute an obvious and gross repudiation of the relationship.
Moreover, after being a common law couple for at least 18 years, though Ms. Webb’s actions are problematic, I do not find they negate her moral and economic claims against the estate.”
This decision suggests that one may need a greater strength and breadth of evidence to establish a course of conduct sufficient to repudiate the relationship, particularly in a long-term spousal relationship that substantially appears to be fairly typical (at least, in this case, until the pivotal health crisis late in life).
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The recent Ontario Court of Appeal decision in Dzelme v Dzelme acts as a helpful reminder that even if an attorney has standing to seek a passing of accounts, the Court may still refuse to grant the passing.
John was named as the attorney for personal care for his father, Ritvers, and sought an accounting of Ritver’s financial affairs from his brother Arnis (Ritvers’ other son) who was the attorney for property. Both John and Arnis agreed that John, given that he was an attorney for personal care, could apply under section 42(4)(1) of the Substitute Decisions Act for a passing of accounts without leave. Nonetheless, the Court of Appeal identified that even if a person has standing to apply for an accounting, it remains the discretion of the Court to order a passing of accounts.
In deciding whether to order the passing, the superior court judge made the following findings of fact: (i) both the father and mother were capable when they executed written instructions to Arnis not to produce any financial information about his affairs to John; (ii) the mother maintained this position in response to John’s motion; (iii) a capacity assessment found that the mother was capable of making her own decisions; (iv) a third brother corroborated Arnis’ evidence that he was abiding by his parent’s wishes; (v) the application judge did not doubt that Arnis was following his mother’s wishes; and, (vi) there was no reason to suspect that Arnis was acting improperly with respect to certain transactions.
On this basis, the Court of Appeal upheld the application judge’s dismissal of John’s request for an order that Arnis pass his accounts of Ritver’s property.
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The city of Toronto was abuzz this past weekend as we kicked off summer 2019 with wall-to-wall sunshine. There were so many wonderful things to celebrate this weekend. For some, celebrations continued over the Toronto Raptor’s historic NBA Championship win. Some were tapping their feet to the beat for the first weekend of Toronto’s Jazz festival. Others, like myself, were flooding the streets to celebrate one of the city’s largest, loudest, and most colourful parades of the year – the Toronto Pride Parade.
Pride festivities provide a great opportunity to come together with others to celebrate and promote the equal rights of all persons regardless of gender or sexual orientation. While there, I reflected on some key considerations for LGBTQ+ individuals to consider in the context of estate planning in Ontario.
1. The value of a will
A will is an invaluable tool to assist people in planning for the future. The Succession Law Reform Act, RSO 1990, c. 26 (“SLRA”) gives individuals the power to dispose of property post-death.
Provided that your will meets the statutory requirements to be valid (which are prescribed in Part I of the SLRA) testators are free to dispose of their property as they wish. This a right regardless of sexual orientation or gender and includes couples that are in common-law relationships and same-sex marriages.
Importantly, the will provides a testator with a level of control over how children are provided for post-death. This is especially important in scenarios where parents rely on assisted reproduction as a method of conceiving a child. Having a will allows a testator to specifically name children and outline how that child is to take under the will. For more information about this, click here.
2. Rules of Intestacy
If you die without leaving a will, your estate will be subject to the rules of intestacy which are governed by Part II of the SLRA. Under these rules, married couples are entitled to take their spouses property absolutely if the deceased is not survived by issue. On July 20, 2005 the Parliament of Canada enacted the Civil Marriage Act, which legalizes same-sex marriage and provides in section 2, that, “Marriage, for civil purposes, is the lawful union of two persons to the exclusion of all others”. This definition replaced the former definition which described marriage as the lawful union between a man and a woman. As a result, same-sex spouses are entitled to take from their spouses estate on an intestacy.
In contrast, common-law relationships do not share this privilege, regardless of whether it is a heterosexual or homosexual common-law relationship.
3. Incapacity During Lifetime
An important consideration for LGBTQ+ individuals is also what would happen in the event that they become incapable of making decisions regarding their health care and property. Although laws vary by jurisdiction, legal and biological family, such as spouses (sometimes including common-law partners), children and parents, will generally be favoured over other persons who may have a close but legally unrecognized, relationship with the incapable person. This could have a negative impact on an individual whose non-accepting family members step into a decision-making role for them.
4. Dependant Support Claim
If you fall under the definition of a “dependant” under Part V of the SLRA, which could apply to same-sex common-law relationships and spouses alike, you may be entitled to make a dependant’s support claim against your partner’s estate.
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It is often said that an Attorney for Property can do anything on behalf of the grantor’s behalf except make a will. This is on account of section 7(2) of the Substitute Decisions Act (the “SDA“), which provides:
“The continuing power of attorney may authorize the person named as attorney to do on the grantor’s behalf anything in respect of property that the grantor could do if capable, except make a will.” [emphasis added]
Although at first glance it would appear that the potential tasks that an Attorney for Property could complete on behalf of a grantor are almost absolute, with the Attorney for Property being able to do anything on behalf of the grantor except sign a new will, in reality the tasks that an Attorney for Property may complete relative to the grantor’s estate planning is more restrictive than this would suggest at first glance. This is because the definition of “will” in the SDA is defined as being the same as that contained in the Succession Law Reform Act (the “SLRA“), with the SLRA in turn defining “will” as including not only typical testamentary documents such as a Last Will and Testament or Codicil, but also “any other testamentary disposition“. As a result, the stipulation that an Attorney for Property can do anything on behalf of the grantor “except make a will” would include not only a restriction on the Attorney for Property’s ability to sign a new Last Will and Testament or Codicil on behalf of the grantor, but also a restriction on the Attorney for Property’s ability to make “any other testamentary disposition” on behalf of the grantor.
It is fairly common for individuals such as spouses to own real property as joint-tenants with the right of survivorship. When one joint-owner dies ownership of the property automatically passes to the surviving joint-owner by right of survivorship, with no portion of the property forming part of the deceased joint-owner’s estate. Although such an ownership structure may make sense when the property is originally purchased, it is not uncommon for circumstances to arise after the property was registered (i.e. a divorce or separation) which may make one of the joint-owners no longer want the property to carry the right of survivorship. Should such circumstances arise, one of the joint-owners will often “sever” title to the property so that the property is now held as tenants-in-common without the right of survivorship, making efforts to attempt to ensure that at least 50% of the property would form part of their estate should they predecease the other joint-owner.
Although severing title to a property is fairly straight forward while the owner is still capable, circumstances could become more complicated should the owner become incapable as questions may emerge regarding whether their Attorney for Property has the authority to sever title to the property on behalf of the grantor, or whether such an action is a “testamentary disposition” and therefor barred by section 7(2) of the SDA.
The issue of whether an Attorney for Property severing title to a property is a “testamentary disposition” was in part dealt with by the Ontario Court of Appeal in Champion v. Guibord, 2007 ONCA 161, where the court states:
“The appellants argue that the severing of the joint tenancies here constituted a change in testamentary designation or disposition and is therefore prohibited by s. 31(1) of the Substitute Decisions Act because it is the making of a will.
While we are inclined to the view that the severance of a joint tenancy is not a testamentary disposition, we need not decide that question in this case. Even if it were, we see no error in the disposition made by the application judge, because of s. 35.1(3)(a) of the Substitute Decisions Act.” [emphasis added]
Although the Court of Appeal does not conclusively settle the issue in Champion v. Guibord, the court appears to strongly suggest that they are of the position that an Attorney for Property severing a joint-tenancy is not a “testamentary disposition” within the confines of the SDA.
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In the recent decision of Fica v Dmytryshyn, 2018 ONSC 2034, the Ontario Superior Court of Justice confirmed that an attorney for property and/or estate trustee has a duty to pass accounts in accordance with the Rules of Civil Procedure.
The facts in Fica feature a family dynamic in which the mother of two sons heavily favoured one over the other. The mother’s favouritism towards her younger son (the “Favoured Son”) was evident throughout his whole life, and manifested in him receiving generous financial support from his mother, for anything and everything that he needed. Her other son (the “Older Son”) appears to have had a fractured relationship with his mother and was somewhat estranged from his family.
In January 2012, the mother appointed her Favoured Son, and the mother’s brother, as her co-attorneys for property and personal care, and as her estate trustees. Both sons and Uncle were beneficiaries under the mother’s will, and entitled to share equally in the residue of the mother’s estate.
In August 2012, the mother became very sick with cancer, at which time the Favoured Son and Uncle began acting under the mother’s power of attorney for property. Even after the Favoured Son and the Uncle began acting in their roles as attorneys for property for the mother, the Favoured Son continued to receive generous financial support from the mother’s assets and, with the knowledge of his mother, continued to use her credit card to support his lifestyle.
After the mother died, the disgruntled Older Son demanded information about alleged misappropriated money and expenses incurred when his younger brother and Uncle were acting as co-attorneys for the mother. However, in what would prove to be a significant error, the Favoured Son and the Uncle declined to provide an accounting upon request. Steps were only taken in this regard by the Favoured Son and the Uncle after the Older Son brought an application to compel and obtained an order to pass attorney/estate accounts.
The Older Son also sought a court order requiring the Favoured Son and the Uncle to reimburse the mother’s estate for the funds that he alleged had been misappropriated by them. In light of the mother’s pattern of behaviour, of being frequently and consistently generous towards her Favoured Son throughout his life, as well as her knowledge that the payment of such expenses continued after the Favoured Son and the Uncle had begun acting as her attorneys for property, the judge dismissed the Older Son’s motion. The judge stated that it was the mother’s prerogative to decide what she wanted to do with her money. The judge concluded that the funds were accounted for and no undue influence was present.
The big takeaway from this decision is with respect to costs. Notwithstanding their success on the merits, the Favoured Son and the Uncle could not recover any of the costs incurred in passing their accounts. The rationale for this decision was that, as co-attorney/co-estate trustee, the Favoured son and the Uncle failed to comply with their obligations pursuant to the Rules of Civil Procedure.
Under the Rules, an estate trustee, attorney or guardian can pass his or her accounts voluntarily on notice to the appropriate parties, or can be compelled by an order of the court under Rule 74.15. Rule 74.15(1) provides that any person who appears to have a financial interest in an estate may move for an order requiring an estate trustee to pass accounts. Furthermore, Section 42(1) of the Substitution Decisions Act provides for the passing of accounts of an attorney or guardian of property.
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In Ontario, we are fortunate to have the ability to execute powers of attorney in respect of our property and our health care. I recently learned that Jersey, in the Channel Islands, has only lately gained the ability to execute a “Lasting Power of Attorney” to record their decisions and intentions in respect of their assets and care. On that note, I thought I would take the opportunity to provide a quick reminder of the importance of executing powers of attorney, and the possible consequences of not doing so.
Powers of attorney in Ontario are governed mainly by the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (the “SDA”). The SDA sets out, among other things, the requirements for powers of attorney, the requisite capacity to grant a power of attorney, and the powers and duties of attorneys. There are two types of powers of attorney: powers of attorney for personal care (dealing with your health, medical care, and other matters related to your well-being) and powers of attorney for property (dealing with your property and financial matters). Generally, powers of attorney will come into play if you become incapable of managing your property or personal care, respectively, but it is also possible to grant a power of attorney for property that is effective immediately (that is, not conditional upon later incapacity).
What Happens if I Don’t Execute Powers of Attorney?
If you do not execute powers of attorney, and you never lose capacity, you may never realize how important they are. However, as we have blogged about previously, as our population begins to live longer, there has been an increase in dementia and other aging-related conditions associated with cognitive decline, meaning that the use and activation of powers of attorney is increasing.
Taking the step of executing powers of attorney means that you have the chance to make your own decision regarding who will handle your affairs in the event that you are no longer capable. If you become incapable, and have not named an attorney for property or personal care, it is open (and may become necessary, depending on your circumstances) for an individual to bring an application seeking to be appointed as your guardian for property or personal care, thus allowing them to act as your substitute decision-maker. The application process requires that notice be given to certain people (including certain family members), and if someone disagrees with the appointment of the proposed guardian, they may contest the guardianship—but the key detail to remember is that the ability to make the decision is taken away from you.
A guardianship application can also be brought if a person has executed a power of attorney, but the existence of a power of attorney will be an important factor for the court’s consideration: pursuant to the SDA, if the court is satisfied that there is an alternative course of action that is less restrictive of the person’s decision-making rights, the court shall not appoint a guardian.
Naming someone to act on your behalf with respect to your property and personal care is a big decision. It is almost certain that you are in the best position to make a determination as to who you want acting for you in this regard. We should all take the opportunity to exercise our own decision-making rights, to choose the person that we want to play the important role of attorney, and not leave it up to others to make this decision for us.
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The deceased left a will that divided his estate amongst his three children. The deceased also left the following note:
“Nov 3, 2014
The way I interpret any existing Will is Healy Lake is in 3 names Ken Ludlow Bob Ludlow Kathy Clubbe So on my demise they become the owners in joint tenancy & Susan is left out of Healy Lake property. However Susan shares any Cash available with Bob and Kathy on a one third basis. This should be changed so she gets cash up to the current value of Healy Lake Property, before the one third sharing should happen. Kenneth Robert Ludlow (wrote by hand) KRL
Must see Terry Fraser about his change KRL”
Was the note a codicil? The question was answered in the decision of Pattillo J. in Ludlow v. Clubbe, 2019 ONSC 941.
As a bit of background, the deceased, Ken Ludlow, had 4 children: Bob Ludlow, Kathy Clubbe and Susan Ludlow . He was estranged from the fourth child. At one point, the deceased had transferred his cottage to himself and his children Bob and Kathy. Susan was not but on title as she lived in B.C. and would not be able to enjoy the cottage. He later wanted to put the cottage in the names of himself and 3 of his children, including Susan. However, his son Bob did not agree to such a transfer.
The deceased discussed options with his lawyer (the “Terry Fraser” referred to in the note). One option discussed was to redo the deceased’s will, so as to provide for Susan, the child that was not on title to the cottage, with an equalizing bequest of cash.
The son argued that the note was not a testamentary document, but rather, simply the “musings” of the deceased with respect to potential changes to his will.
Justice Pattillo disagreed. He observed that “A holographic paper is not testamentary unless it contains a deliberate or fixed and final expression of intention as to disposal of property on death. Further, the onus is on the moving party to show, by the contents of the paper or by extrinsic evidence that the paper is of that character and nature: Bennett v. Toronto General Trusts Corp., 1958 CanLII 49 (SCC),  S.C.R. 392 at para. 5.”
He went on to find that the note clearly established a testamentary intention on behalf of the deceased. Further, the note “has a formal manner to it” which supported the conclusion that the deceased intended it to be of a testamentary nature. Justice Pattillo referred the manner in which the note was signed (see extract of note, above). Further, the note was put in an envelope and was found amongst the deceased’s papers. “By formalizing it like he did and putting it in an envelope, I am satisfied that Mr. Ludlow considered that he had created a formal document which he intended to finally have dealt with resolving Susan’s earlier exclusion from the ownership of the Cottage.”
Interestingly, Justice Pattillo noted that the deceased’s handwritten note was intended to equalize the gifting by the deceased. However, the note actually provided for a greater benefit for Susan, the daughter who was not on title. It gave her a cash bequest equal to the full value of the cottage. As it turned out, this was not an issue as the cash value of the estate was roughly equal to 1/3 of the value of the cottage.
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