Category: Power of Attorney
If a testator does not adequately shelter the bequests or insurance policy beneficiary designations to a disabled beneficiary, the disabled beneficiary may still have a way of sheltering the gift to him or her by taking advantage of what is known as a “disability expense trust”.
A disabled beneficiary, or member of a benefit unit, is entitled to put monies derived from an inheritance or the proceeds of a life insurance policy into a trust. These funds, up to a maximum value of $100,000, will not be considered assets for ODSP purposes.
This trust is distinct from a Henson Trust in that the funds may be received directly by the recipient and subsequently placed into the trust. Such a vehicle is available to shelter the funds were the testator failed to do so.
Any income earned on the funds and accrued will not be considered income to the disabled beneficiary if it the fund does not exceed $100,000.
READ THE TRANSCRIBED PODCAST
During Hull on Estates Episode #40, Sean and Paul discussed the importance of wills, naming a Power of Attorney and other elements of succession planning that should be considered in the New Year.
The final blog for this week wraps up our theme by considering an interesting instance of the interaction between power of attorney litigation and estate litigation.
In Wolfson Estate v. Wolfson, a recent reported decision of the Ontario Superior Court of Justice, a brother and sister were engaged in litigation relating to the estate of their late mother. The mother had jointly held her investment portfolio with her daughter. After the mother became increasingly physically and mentally frail after a stroke, the sister and brother had a falling out, the result being that the sister signed off of the joint account in place of her brother.
By will and by agreement, the mother and daughter had agreed that the jointly held portfolio would pass in accordance with the mother’s Will. However, on the mother’s death, the son, as new joint owner of the portfolio, took the position that the asset had passed to him by right of survivorship and, as he was not a party to the agreement, he was not to be bound to treat the jointly held asset as an estate asset. Moreover, he argued that the mother was upset with her daughter and that, rather than change her will, she sought to effect a change in her testamentary disposition by effecting a joint transfer to her son.
Perhaps the most difficult issue that arises in power of attorney litigation relates to a determination of the onset of incapacity and the varying degrees of incapacity. These issues have a direct bearing on the nature of the fiduciary obligation of the attorney.
Under the Substitute Decisions Act, an attorney has a higher duty of care (a) if the grantor is incapable of managing property; or (b) if the attorney has reasonable grounds to believe that the grantor is incapable of managing property.
The reality is that there is often no clear determination made that the grantor is incapable. All too often, the Court is left trying to make that determination a considerable period of time after the fact.
In Re Nesbitt Estates, an unreported 2005 decision of the Ontario Superior Court of Justice that is presently under appeal, the actions of an attorney under power of attorney were scrutinized by the Court in an unusual fact situation.
In this case, the attorney managed the property of his elderly aunt and uncle at their request and made a series of transfers of the aunt’s bank accounts into joint bank accounts held with her husband. The evidence suggested that the aunt was capable at all relevant times although there was admittedly sketchy evidence as to whether the aunt knew and approved of each and every transaction that placed her assets into joint ownership with her husband of sixty years. What was clear was that her testamentary intention throughout the period of the transfers was to benefit her husband with her entire estate. The wrinkle was that the aunt inexplicably changed her will shortly before her death to benefit, not her husband but, rather, a family friend.
The provisions of the legislation implementing electronic registration of real estate documentation in Ontario have given rise to some interesting issues relating to the exercise of a Power of Attorney.
An attorney acting under a Power of Attorney may sign documents which are to be registered electronically as part of a real estate transaction.
Where an individual is involved, the Power of Attorney in question is registered in the Land Registry Office where the document is being registered. The document must contain: (i) the registration number of the Power of Attorney, (ii) the date of registration of the power of attorney, and (iii) a statement that the power of attorney is in full force and effect.
Under the Land Registration Reform Act – Electronic Registration Regulation a power of attorney must contain: (i) name of the grantee, (ii) a statement that the attorney is entitled to make statements of spousal status under the Family Law Act on behalf of the Grantor, and (iii) a statement that the granting of the Power of Attorney has been witnessed in accordance with the provisions of the Substitute Decisions Act, if applicable.
The Land Registration Reform Act – Electronic Registration Regulation appears, then, to create a Power of Attorney for the purposes of a real estate transaction by electronic registration. The intention behind the legislation is, clearly, to facilitate a completely paper-free regime.