Category: Trustees

09 Oct

Avoiding Common Errors in an Application for a Certificate of Appointment of Estate Trustee With a Will

Suzana Popovic-Montag Estate & Trust, Estate Litigation, Estate Planning, Trustees, Uncategorized, Wills Tags: 0 Comments

Commencing an Application for a Certificate of Appointment of Estate Trustee With a Will is the first step in having a court formally declare a will as valid. This process was formerly known in Ontario as “probate”.

While these Certificates are not mandatory, some banks and financial institutions may require an Estate Trustee to obtain a Certificate in order to deal with estate assets. Aside from this, a Certificate is usually required in instances where:

  • the estate is large;
  • the assets cannot be easily transferred; and
  • real property forms part of the estate.

Avoiding Common Errors

Although the Application for a Certificate of Appointment of Estate Trustee With a Will is fairly short in length and seems straightforward, it is rare for these Applications to be approved upon their first submission. In the majority of cases, they are returned for corrections.

In order to assist applicants in completing their forms, the Ministry of the Attorney General released the following guidelines that highlight some common errors in these Applications:

  1. An Affidavit of Execution of Will or Codicil (Formed 74.8) signed by one of the witnesses to the will must be filed together with the original will, which will be marked as “Exhibit A” to the affidavit.
  • If there is no affidavit of execution and both witnesses cannot be found or have died, an affidavit attesting to the signature of the testator  must be filed. Ideally, the affidavit should be made by someone who is familiar with the testator’s signature.

 

  1. On Form 74.4 “Application for a Certificate of Appointment of Estate Trustee With a Will (Individual Applicant)”, the question under section 5 regarding an election of the Family Law Act should only be answered if the applicant is the spouse of the deceased.

 

  1. If the will states that someone other than the applicant has the right to apply for the Certificate of Appointment of Estate Trustee (or succeeding estate trustee), that person must give up their right by completing Form 74.11 “Renunciation of Right to a Certificate of Appointment of Estate Trustee (or Succeeding Estate Trustee) With a Will.”
  • This must be indicated on the Application (Form 74.4) and on Form 74.13 “Certificate of Appointment of Estate Trustee With a Will.”

 

4. If the applicant is not named as Estate Trustee in the will, they must obtain consent to their appointment from the beneficiaries who make up a majority share of the assets of the estate.

 

5. If an Estate Trustee who is named in the will or codicil is not the applicant due to death or renunciation, this should be indicated on the Application (Form 74.4) and on Form 74.13.

 

  1. If a will and/or codicil refers to a memorandum, the memorandum must be filed with the court.
  • If the memorandum cannot be found, an affidavit indicating this must be filed, along with the efforts made to locate it.

 

  1. All beneficiaries named in the will must be served with Form 74.7 “Notice of an Application for a Certificate of Appointment of Estate Trustee With a Will.”
  • If a beneficiary has not been served, an explanation must be given in Form 74.6 “Affidavit of Service of Notice” as to why.
  • Form 74.7 must be marked as “Exhibit A” to Form 74.6 “Affidavit of Service of Notice.”

 

  1. The original will should be marked as “Exhibit A” to the affidavit in the Application (Form 74.4).

 

  1. If Form 74.8 “Affidavit of Execution of Will or Codicil” is not submitted, an affidavit must be filed with the Application that explains this and sets out the efforts made to find the people who witnessed the testator sign their will.

 

  1. On Form 74.13 “Certificate of Appointment of Estate Trustee With a Will”, the address of the court should be typed under the Registrar’s signature line.
  • The date should not be filled in on this Form;
  • A plain, unmarked copy of the will should be filed; and
  • The court will impress a seal upon the Certificate of Appointment and the copy of the will attached.

To read the full article from the Ministry of the Attorney General about how to avoid common errors in applying for a Certificate of Appointment of Estate Trustee, visit this link.

 

Thanks for reading!

Suzana Popovic-Montag and Celine Dookie

 

04 Oct

Another Will Challenge Threshold Case

Hull & Hull LLP Estate & Trust, Estate Litigation, Estate Planning, Trustees, Uncategorized, Wills Tags: 0 Comments

There have been a number of recent decisions discussing the threshold to be met before a court will allow a will challenge to proceed. These decisions flow from the Ontario Court of Appeal decision of Neuberger Estate v. York, 2016 ONCA 191 (CanLII). We have discussed this case in a number of our blogs. See here, for example.

Today, Rebecca Rauws and I recorded a podcast on the decision of Naismith v. Clarke, 2019 ONSC 5280. In that decision, the court held that the threshold for challenging a will on the basis of testamentary capacity was not met, while it was with respect to the issue of undue influence. The podcast should be posted soon.

More recently, the decision of Maloney v. Maloney, 2019 ONSC 5632 (CanLII) was released. There, the estate trustees brought a motion to remove a Notice of Objection filed by a child of the deceased.

The court ordered the removal of the Notice of Objection. The court noted that there was no basis for setting aside the will. An affidavit from the lawyer who prepared the will set out the circumstances under which the will was prepared. The lawyer had no concerns about the deceased’s capacity. Although the challenger suggested that there were suspicious circumstances surrounding the creation of the will, there was no evidence to support the suspicions. Further, there was no evidence of undue influence. The challenger “has not provided any evidentiary basis to support a further investigation into the validity off this will.” At best, the challenger’s position was that her father would not have drafted his will in such a way. This was not enough to support a challenge.

Of note is the fact that the court had the evidence of the drafting solicitor. In many will challenges, the challenger or the propounder is not able to put this evidence before the court at this early stage due to issues of privilege. Often, the first step in a will challenge proceeding is to obtain an order to allow the evidence of the drafting solicitor to be obtained, along with medical notes and records.

Another important factor noted by the judge was the effect of the will challenge. The challenge stalled the administration of the estate. The court noted that even if the will challenge was successful, it would have no real effect on the distribution of the estate. The will provided that the estate was to be distributed to the three children of the deceased. On an intestacy, the distribution scheme would be the same, except for the specific disposition of an oak china cabinet.

In such cases, the court’s gatekeeping role is a tough one. The court must ensure that frivolous challenges do not proceed, while ensuring that it is able to ascertain and pronounce what documents constitute the testator’s valid will. The threshold should not be too high. As stated succinctly by Justice Myers in Seepa v. Seepa, 2017 ONSC 5368 (CanLII), “At this preliminary stage, the issue is not whether the applicant has proven his or her case but whether he or she ought to be given the tools, such as documentary discovery, that are ordinarily available to a litigant before he or she is subjected to a requirement to put a best foot forward on the merits.”

Have a great weekend.

Paul Trudelle

02 Oct

A Review Regarding Testamentary Capacity Assessments: Kay v Kay Sr.

Ian Hull Estate & Trust, Estate Litigation, Estate Planning, Trustees, Wills Tags: 0 Comments

In Banks v Goodfellow, the English High Court laid out the benchmark test for assessing testamentary capacity. To this day, it has stood the test of time. Subsequent cases have served to focus and clarify aspects of it. The recent decision of the Ontario Superior Court of Justice in Kay v Kay Sr. is such a case. In Kay v Kay Sr., the court provides a helpful review of the law regarding testamentary capacity, specifically the weight that is to be given to the drafting lawyer’s assessment and a posthumous testamentary capacity assessment.

Facts

The deceased, Annie Wotton, died on August 26, 2019, at the age of 95. Mrs. Wotton created a will in 1992 which essentially left everything to her son, John. It also provided that John, along with her husband, Jack, were to be appointed as joint executors.

Medical assessments conducted in November 2009, September 2010 and October 2010 noted that Mrs. Wotton had a mild to moderate form of dementia. The assessments stated that Mrs. Wotton’s memory was moderately impaired and that her cognitive abilities were progressively declining.

In November 2010, another will was prepared by Mrs. Wotton. The drafting lawyer, Mark Ouimet-McPherson, met with Mrs. Wotton and assessed her capacity. Mr. Ouimet-McPherson believed that Mrs. Wotton had testamentary capacity so he took her instructions and prepared and executed the documents. The new will stipulated that the residue of the estate was to be divided equally amongst John and two of Mrs. Wotton’s three grandchildren: Cindy and John Jr. It also named John as estate trustee, with Cindy as the alternate.

At the time of Mrs. Wotton’s death, John had advanced dementia and was incapable of acting as estate trustee. John’s wife, Rosemary, acted as his litigation guardian and filed a Notice of Objection to Cindy’s application for a Certificate of Appointment of Estate Trustee. Rosemary’s objection was based on the fact that the November 2010 will should be declared invalid as Mrs. Wotton lacked testamentary capacity at that time.

In 2019, a posthumous testamentary capacity assessment was conducted by Dr. Francine Sarazin. Dr. Sarazin found that “there [was] reasonable evidence in support of a determination of incapacity when Mrs. Wotton gave instructions to draw up a last will and testament.”

The Decision

The court relied on O’Neil v. Royal Trust Co. and Vout v. Hay to summarize the legal principle regarding the onus of testamentary capacity: A presumption of capacity exists until it is shown that suspicious circumstances existed regarding the preparation of the will. If suspicious circumstances exist, that presumption is no longer in effect and the onus then shifts to the party propounding the will to prove that the testator had testamentary capacity.

Since medical evidence found that Mrs. Wotton suffered with a form of mild to moderate Alzheimer dementia at the time of signing the 2010 will, and due to Mrs. Wotton’s age and the changes between the two wills, the court determined that the onus should shift to the propounder of the November 2010 will to show capacity.

The court accepted the posthumous assessment of Dr. Sarazin, but the assessment was only afforded a modest degree of weight for the following reasons:

  • Since it was a retrospective capacity assessment which went back nine years, the court thought that it was not very reliable;
  • The assessment was not an exhaustive review of Mrs. Wotton’s life in and around the time she signed the will; and
  • Cindy’s material was not provided to or reviewed by the assessor.

The court then turned to Mr. Ouimet-McPherson’s evidence. In his meeting with Mrs. Wotton, Mr. Ouimet-McPherson filled out a checklist for her. Based upon Mrs. Wotton’s answers to Mr. Ouimet–McPherson’s questions, her knowledge of her family and her assets, he was satisfied that Mrs. Wotton had testamentary capacity.

The court also took other evidence into consideration, such as the medical assessments conducted in November 2009, September 2010 and October 2010. While the assessments provisionally diagnosed Mrs. Wotton with a mild to moderate form of dementia, they noted that she was able to manage daily living on her own as well as her finances.

The court took this evidence and applied it the Banks v Goodfellow test:

  • Understanding the nature of the act of making a will and its consequences: At the meeting with Mr. Ouimet-McPherson, Mrs. Wotton commented that she wanted to be fair and avoid disputes. This demonstrated that she likely understood the consequences of what she was doing.
  • Understanding the extent of one’s assets: In general terms, Mrs. Wotton knew the assets she owned. Although she could not recall specific details such as knowing whether her life insurance lapsed or the last statement of her bank account, Mr. Ouimet-McPherson felt that Mrs. Wotton responded appropriately for someone her age.
  • Understanding the claims of those who might expect to benefit from the will, both of those to be included and excluded: From Mrs. Wotton’s instructions, it seems as if she knew she was changing her 1992 will to divide her assets three ways as opposed to leaving everything to John.
  • Any disorder of the mind or delusions: Mr. Ouimet-McPherson’s evidence seems to suggest that Mrs. Wotton knew what she was doing at the time the will was executed and was not suffering from any delusions or disorders of the mind that impacted her intentions.

After considering all of the above, the court ultimately concluded that, at the time the November 2010 will was executed, it was more likely than not that Mrs. Wotton had testamentary capacity. As such, Cindy was named as the Estate Trustee.

Kay v Kay Sr. provides a helpful review of the test for testamentary capacity as set out in Banks v Goodfellow. It emphasizes that testamentary capacity is to be determined based on the facts and circumstances of each case. The drafting lawyer’s assessment plays a major role in assessing capacity. A posthumous testamentary capacity assessment may also be given considerable weight if it is conducted around the time the deceased’s capacity was in question and if the assessor’s review of the deceased’s life around the time they signed the will is fairly extensive.

Thanks for reading – Have a great day!
Ian Hull and Celine Dookie

25 Sep

New Brunswick Court Reduces “Windfall” Trustee Compensation

Suzana Popovic-Montag Estate & Trust, Estate Litigation, Estate Planning, Ethical Issues, Trustees, Uncategorized, Wills 0 Comments

One steady source of estate litigation is the uncertainty around estate trustee compensation. There is no statutory formula for determining the appropriate quantum. Instead, estate trustees come up with a percentage that is supposed to reflect their contributions, and the beneficiaries are left with the options of accepting, objecting, and everything in between. If matters proceed to court, judges apply an age-old customary analysis in order to find a number that suits the unique circumstances of the estate administration. One of the five factors the courts look at is the size of the estate. Whereas traditionally bigger estates have led to bigger compensation, we have seen a potential turning point out in New Brunswick in the case of Atlantic Jewish Foundation v. Leventhal Estate, [2018] N.S.S.C. 297.

Trustee Compensation

Section 61 of the Trustee Act directs that estate trustees be paid “fair and reasonable allowance[s]” for their “care, pains and trouble”. Over time, courts have set the “tariff guideline” or customary rate at “2.5% of each of the capital receipts, capital disbursements, revenue receipts, and revenue disbursements” (Freeman Estate, Re, [2007] O.J. 3402 at para. 30). This rate must be cross-checked, however, against the five factors, which look at the actual work done, before a final quantum is reached.

Size and Complexity

Historically, estate trustees have earned more in administering bountiful estates, and vice versa. The administration of a small yet convoluted estate has typically been far less lucrative than the administration of a large estate comprised of a handful of simple assets. Courts have, however, been ready to reduce compensation when an estate, despite its net value, involves little complexity – for instance, when the assets are easy to liquefy and distribute (see Forrest Estate v. O’Donohue, [1991] O.J. 1898 (Gen. Div.) at para. 14).

A Deviation in New Brunswick

What is unique with the compensation reduction in Atlantic Jewish Foundation is that the estate trustee’s duties were not particularly simple. He managed the deceased’s hotel, sold it at a good price, oversaw numerous agents, and generally displayed skill and sophistication. Yet the court slashed his proposed compensation in half – a pronounced reduction – and did so not on the basis that the estate was simple, but that he should not receive remuneration that was tantamount to a “windfall or a bequest”. Certainly his case was not helped by the fact that the objector, and residuary beneficiary, was a charity, and that he was seeking $900,000 for 77 hours of work …

In the wake of this case, it will be interesting to see if other courts lessen compensation because the figure is merely too high, rather than applying percentages that coincide with the work done.

 

Thanks for reading,
Suzana Popovic-Montag and Devin McMurtry

13 Sep

Ontario Court of Appeal on Tarantino v. Galvano

Hull & Hull LLP Estate & Trust, Estate Litigation, Estate Planning, Power of Attorney, Trustees, Wills 0 Comments

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.

Thank you for reading.

Paul Trudelle

06 Sep

No Love Lost: Sisters, Parents, Loans and Forgiveness

Paul Emile Trudelle Beneficiary Designations, Estate & Trust, Estate Litigation, Estate Planning, Support After Death, Trustees, Wills 0 Comments

“There is no love lost between sisters [K] and [A].” So starts the endorsement in Nutzenberger v. Pryde, 2019 ONSC 5030 (CanLII).

There, the parents made a loan to A of $75,000. In their wills, the residue of the estate is to pass to the surviving parent. Both wills contained a clause that provided that if the other spouse was not living on the 30th day following the first spouse’s death, the $75,000 was to be forgiven.

Mother died on September 25, 2015. Father died on May 30, 2016.

K, as estate trustee of mother’s estate, brought a claim against A for the repayment of the loan. A moved for summary judgment on the claim.

Justice Harris agreed that summary judgment was appropriate. There were no primary facts in dispute, and no credibility issues. He dismissed the claim on two basis: first, mother’s estate had no standing to bring the claim, and second, the loan had been forgiven according to the terms of the wills.

On the first point, the loan came from father’s assets. Any interest that mother had in the loan passed to father under the terms of her will. Only father, or father’s estate had standing to pursue the loan.

Secondly, although the terms of the wills forgiving the loans were not “a model of drafting dexterity, to put it mildly”, the court interpreted the wills to mean that the intention of the parents was that either one could call in the loan while alive, but upon the death of the survivor, if no action was taken, the loan would be forgiven.

In determining the intention of the parties, the court looked at other terms of the wills. One term in both wills gave the estate trustee the discretion to pursue a loan. Another term acknowledged that a certain advance was in fact a gift. The term in question was “an awkward hybrid”. However, the court was able to conclude that the intention was that the loan would be forgiven if the surviving parent did not take any steps to collect on it.

As usual, more careful drafting may have avoided the litigation.

Thank you for reading.

Paul Trudelle

28 Aug

Questions Surrounding Jeffrey Epstein’s Last Will and Estate

Suzana Popovic-Montag Beneficiary Designations, Estate & Trust, Estate Litigation, Estate Planning, Trustees, Uncategorized, Wills Tags: , 0 Comments

The mysterious death of Jeffrey Epstein is generating a hubbub across the world. It reads like the beginning of an Agatha Christie detective novel and has a central figure who is reminiscent of a James Bond villain: a wealthy financier who is accused of operating a pedophilic sex trafficking ring. He has connections with scores of famous people: politicians, celebrities, royalty … In the early stages of his prosecution, he attempts to commit suicide; then, shortly afterwards, he is taken off suicide watch, the guards purportedly sleep through their checkups on him, and he is found dead.

In the aftermath, there have been conspiracy theories and much controversy, including an FBI investigation. The case has also prompted some questions regarding succession law, for it has just been reported that Epstein signed a new Will two days prior to his death. For the purposes of this post, we shall posit what would happen to the Will and the estate if this had all occurred in Ontario.

Validity of the Will

If Epstein indeed committed suicide, his suicidal mind would be considered in determining whether he had testamentary capacity, but it would not be conclusive (Topp Estate, 1983 CanLII 2329 (SKSU)). The applicable test is still the contextual factors set out in Banks v. Goodfellow.

If it comes to light that Epstein was murdered, then the Will could be attacked on the basis of undue influence. To achieve this, the objector would have to meet a fairly high evidentiary threshold, establishing “that what appears to be the testator’s will is not his or her will” (Kozak Estate (Re), 2018 ABQB 185).

As Epstein’s brother is named the sole beneficiary of the estate, if he is found to have murdered his brother, then public policy would likely bar him from benefiting from the estate (Papasotiriou, 2012 ONSC 6473).

The Estate

It has been reported that the alleged victims’ lawyers are seeking to continue their action against the Epstein estate. One of these lawyers, Lisa Bloom, is demanding a freeze of the assets in the meantime. In Ontario, if the deceased dies during the time in which he or she is a defendant in litigation, Rule 11.02 of the Rules of Civil Procedure may allow for an action to be continued against the deceased’s estate.

If the alleged victims win their lawsuit against the Epstein estate, it is uncertain whether they will obtain their damages awards, for Epstein likely sheltered many of his assets. In Ontario, the claimants could launch claims of unjust enrichment and constructive trust in order to gain access to funds which have been sheltered amongst Epstein’s friends, family, and offshore accounts. Sadly for the accusers, the same dark cunning which enabled Epstein to evade justice was likely employed in securing his assets in inaccessible vaults. Just a little something to think about.

Thank you for reading … Have a great day,

Suzana Popovic-Montag and Devin McMurtry

13 Aug

Severing a Joint Tenancy – A Loosening of the “Course of Dealing” Rule?

Natalia R. Angelini Estate & Trust, Estate Litigation, Estate Planning, Support After Death, Trustees, Uncategorized, Wills Tags: 0 Comments

There are three ways in which a joint tenancy may be severed (Hansen Estate v. Hansen):

  1. Unilaterally acting on one’s own share (e.g. selling or encumbering it).
  2. A mutual agreement between the co-owners.
  3. Any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.

In Marley v. Salga, the Court addressed the third manner in which to sever joint title – by course of dealing. In this case, there were competing applications brought by Ms. Marley, the deceased’s widow, on the one hand, seeking sole legal and beneficial ownership of the matrimonial home, and by the deceased’s children from a prior marriage, on the other hand, seeking an order that the estate is entitled to a half interest in the property as a tenant-in-common.

The Court declared that the estate was entitled to a half-interest in the property as a tenant in common. The evidence considered to determine the issue included a deathbed conversation between deceased and Ms. Marley, in which Ms. Marley acknowledged the deceased’s wish to divide the property 50:50 between his children and Ms. Marley. The Court seemed to place great weight on this evidence, finding that the deceased and Ms. Marley “were in agreement as to how the property should be handled on his death.” One commentator criticizes the Court for accepting that Ms. Marley was prepared to compromise her property rights “…on the basis of soothing words spoken to her husband on his deathbed without fully understanding her rights, without the benefit of any advice as to the consequences that would result to her and without any compensation or consideration for the loss of those rights.”

Another consideration for the Court was the language of the deceased’s Will, which allows Ms. Marley to occupy the deceased’s half of the property on certain terms, purports to terminate her rights in certain circumstances, and provides for the sale of the property. The Will’s language assisted in swaying the Court, as the Court treated it as a piece of evidence used to discern if there was a common intention, and it inferred that the provision in the Will was known to Ms. Marley. This rationale has been the subject of debate as (i) a testamentary disposition cannot sever a  joint tenancy and should not be relied upon as evidence of a mutual intent, and (ii) there does not seem to have been evidence of both spouses taking steps showing a mutual treatment of their co-ownership as a tenancy in common.

If appealed, we may get some helpful clarification on this important issue.

Thanks for reading,

Natalia Angelini

08 Aug

Testamentary Freedom From a Distance 

James Jacuta Estate & Trust, Estate Litigation, Estate Planning, Trustees, Uncategorized, Wills Tags: 1 Comment

We live in a big and beautiful country that is great for summer vacation travel from sea to sea. The vast distance from British Columbia to Nova Scotia is not just geographic, as shown by court decisions involving the review of wills. There is also a great deal of public policy distance between these provinces.

In the recent British Columbia decision on July 17, 2019 of  Grewal v Litt, 2019 BCSC 1154 the  four daughters of the deceased sought a court-ordered variation of the mirror wills of their parents using the Wills, Estates and Succession Act, S.B.C. 2009, c. 13. In their wills, the parents left 95% of their nine million dollar estate to their two sons and the remainder to their four daughters. The daughters sought and obtained a variation based on the facts and legislation with the court ordering 15% to each of the four daughters and 20% to each of the two sons.

In the Nova Scotia decision in Lawen Estate v Nova Scotia Attorney General, 2019 NSSC 162, the court ruled that the deceased had a great deal of testamentary freedom and that this freedom was constitutionally protected. The Estate of Jack Lawen was subject to a claim by some of his adult and competent children under the Nova Scotia Testator’s Family Maintenance Act for a change in the distribution of assets from what was specified in his will. In this case, the daughters applied, but they were not successful. It is interesting to note that the Judge agreed with the argument that the Canadian Charter of Rights and Freedoms could be used to strike down those provisions of the legislation that allowed the adult competent children to even bring their application to the court. The Charter, it was argued, protects the right to decide where the property would go and to disinherit his children. Presiding Justice John Bodurtha wrote in his decision dated May 24, 2019, “A testamentary decision is a fundamental personal decision that is protected under section 7” of the Charter.

Legislation that infringes and limits a testator’s freedom, however, can be justified in some instances, and to certain degrees, depending on the province and the case facts. If you try to disinherit your dependant spouse then the courts would step in and limit your testamentary freedom. This also applies to not providing for dependants who are minor children, non-competent adult children, and even competent adult children in some provinces. One could ask, however, if it is fair and just that the daughters in British Columbia could achieve an equitable distribution of the family estate, but in Nova Scotia, they would have failed.

Canadian limitations on testamentary freedom are small and balanced in comparison to the forced heirship provisions of many European civil law jurisdictions. In those countries, a testator is forced by law to leave a portion of the estate to family members. The percentage of the estate to be distributed and those who are eligible varies by jurisdiction.  It is an interesting public policy approach to make the family unit legally paramount in forced heirship jurisdictions, and not the individual testator.

Thanks for reading!
James Jacuta

02 Aug

Costs Against Attorney and Her Lawyer

Paul Emile Trudelle Estate & Trust, Estate Litigation, Estate Planning, Passing of Accounts, Trustees, Uncategorized, Wills Tags: , , , 0 Comments

In Baca v. Tiberi, the court awarded substantial costs as against an attorney for property/estate trustee for maladministration of her mother’s property while she was alive, and of her estate following her death.

The litigation was settled prior to a court determination. However, under the settlement, the parties submitted the question of costs to the court.

(With respect to problems that can arise from such a settlement, see my blogs, here and here.)

In Baca, the court found that there was serious misappropriation by the attorney and estate trustee. The attorney added her name to her mother’s bank accounts and took out money for her own expenses. She caused her mother to incur tens of thousands of dollars of debt for the benefit of the attorney, her husband and sister. She moved into her mother’s home with her family and did not pay rent. She transferred title to the home to herself and her mother jointly. After the mother’s death, she transferred the home to herself and her husband. She mortgaged the home to pay her own debts.

At the costs hearing, the court asked the parties whether the attorney’s lawyer might have personal liability for costs. The attorney waived solicitor-client privilege and the lawyer was subjected to examination and made submissions.

The court awarded costs against the attorney and the lawyer on a “full indemnity” basis, after a reduction of $50,000 for excessive time spent, in the amount of $301,941.41, plus HST and disbursements. (The estate had a total value of approximately $1m.) The attorney and the lawyer were jointly and severally liable for costs. As between themselves, the attorney was to be liable for 75% of the costs, and the lawyer was liable for 25%.

In its ruling, the court was critical of the lawyer’s conduct. The court found that the lawyer pursued a goal that was unattainable. Further, the lawyer misrepresented facts to the court. In pleadings, the lawyer (not the client, per the court) denied assertions that were, to her knowledge, true. Further, the pleadings contained assertions that were known to be false. The lawyer allowed a misleading affidavit to be sworn by her client. The lawyer also failed to ensure that certain funds were held in trust in accordance with a court order. At a later hearing, the lawyer advised the court that the funds were held in trust when they were not.

The court found the lawyer liable, partially, on the basis that she knew of her client’s misconduct yet advised or acted on instructions to take untenable legal positions. She also took legal steps that costed her client and the other side hundreds of thousands of dollars, yet the steps did nothing to avoid “the only inevitable conclusion possible”: that her  client would have to make the estate whole. There was no evidence that the client was ever advised of the situation.

Thanks for reading.
Paul Trudelle

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