Category: Wills

22 Jun

Commorientes

Paul Emile Trudelle Beneficiary Designations, Estate & Trust, Estate Planning, Hull on Estates, Trustees, Uncategorized, Wills 0 Comments

“People whose deaths are so close to each other (being caused by the same calamity) that it is not possible to determine who died first.” In other words, simultaneous deaths. In its adjectival form, the word is “commorient”, as in “commorient death”.

In Ontario, commorientes are addressed by Part IV of the Succession Law Reform Act. The impact of Part IV was addressed by Natalia Angelini in her blog, here.

Essentially, in Ontario, where two or more persons die at the same time or in circumstances rendering it uncertain which of them survived the other or others, the property of each person shall be disposed of as if he or she had survived the other or others.

This rule does not apply in all jurisdictions. In P.E.I., for example, pursuant to the Commorientes Act, where two or more persons die in circumstances rendering it uncertain which of them survived the other or others, the presumption is that the deaths occurred in the order of seniority, and accordingly, the younger shall be deemed to have survived the older.  This would also apply to policies of insurance and jointly held property. There is an exception in the P.E.I. legislation, however, where a testator and a beneficiary under a will die at the same time or in circumstances rendering it uncertain as to which of them survived the other, and the will provides for a gift over if the beneficiary does not survive the testator. In those cases, the will is to be given effect as if the beneficiary had not survived the testator.

In Alberta, the legislation regarding the exception goes one step further: the presumed survivorship regardless of age applies where there is a will or statute that makes provision for a distribution operative if a person dies or before or at the same time as another person: ie, on an intestacy.

As an illustration of the effect of the different survivorship regimes, consider the case of Re Mandin (Estate), 1998 ABCA 165 (CanLII). There, a son killed his mother, stepfather and two sisters. The mother left a will leaving her estate to her children. In light of the murder, the son was precluded from inheriting. The court had to consider whether the estate passed on an intestacy to the children’s father (the deceased’s first husband), or to the deceased’s mother. The court held that the intestate legislation of Alberta contained gift-over provisions where the children predeceased the mother or died at the same time. The estate therefore passed to the deceased’s mother. The same result would occur in Ontario under Ontario’s survivorship legislation. In P.E.I., the likely outcome would be that the mother was deemed to predecease the children (being older than them), and therefore her estate would pass to the children upon her death, and then to their father upon their deaths, which are deemed to be immediately after their mother’s death.

In the U.S., many states have adopted the Uniform Simultaneous Death Act, which provides that persons who are each other’s heirs under a will or on an intestacy will be deemed to have predeceased the other if they die within 120 hours of one another, unless there is a specific clause in the will that deals with this eventuality. This avoids the issue trying to determine an order of death where deaths happened contemporaneously, and also the issue of having property pass through two estates, and the costs, taxes and delays associated with this result

Have a great weekend.

Paul Trudelle

21 Jun

The Great Irony: Testamentary Intent and Intestate Succession in Eissmann v Kunz

Garrett Horrocks Estate & Trust, Estate Planning, Executors and Trustees, Litigation, Wills Tags: , , , , 0 Comments

Testamentary freedom is a core tenet of estate planning in Ontario.  In general, testators are at liberty to set up their estate plan to include or exclude whomever they wish.  Where part or all of a testator’s estate plan fails as a result of an intestacy, Ontario’s Succession Law Reform Act (the “SLRA”) steps in to provide the parties who will benefit as a result.  Occasionally, the principles of testamentary freedom and intention and the laws of intestacy intersect in peculiar ways.  This intersection came to a head in the Eissmann v Kunz (2018 ONSC 3650) decision.

In Kunz, the testator, Siegfried Kunz, died leaving no fewer than four testamentary documents purporting to be wills, briefly summarized as follows:

  1. A will drawn in 1967, which divided Mr. Kunz’s estate between his wife and their daughter, Petra;

 

  1. A will drawn in 1982 in Mr. Kunz’s handwriting, which stated that the “beneficiary after [his] death is Petra”;

 

  1. A will drawn in 2000, again in Mr. Kunz’s handwriting, which purported to modify the 1967 will and listed a number of specific legacies to various beneficiaries. Mr. Kunz appears to have later written over the original bequests to increase the amount of each.  Petra was once again listed as the sole residuary beneficiary; and

 

  1. A will drawn in 2009, also in Mr. Kunz’s handwriting, which provided that Petra would “not receive a single Euro of out [the] Estate.” In the margin of the 2009 will, Mr. Kunz expressly indicated that the 2009 will was to be an “amendment” to the 2000 will.

The Court was first tasked with determining which will was to govern.  The Court concluded that the 2000 will was a valid holograph will, though noted that the subsequent handwritten amendments were of no force and effect as they did not comply with the formal requirements for valid alterations under the SLRA.  The Court concluded that the 2009 will operated instead as a codicil to the 2000 will as it did not dispose of any property on its face and, therefore, could not function as a standalone will.

The interplay between the 2000 will and the 2009 codicil is such that a conflict arose with respect to the disposition of the residue of Mr. Kunz’s estate.  The 2000 will names Petra as the sole residuary beneficiary.  The 2009 will revokes Petra’s interest entirely.  The 2009 codicil therefore created a partial intestacy with respect to the residue of Mr. Kunz’s estate, and the Court looked to the SLRA to determine who would inherit.

The hierarchy of beneficiaries on an intestacy is set out in Part II of the SLRA.  Mr. Kunz died leaving no surviving spouse, and so the next intestate beneficiaries were to be his children, that is, Petra.  In an ironic twist of fate, the Court concluded that Petra was solely entitled to all of the residue of Mr. Kunz’s estate, notwithstanding that he had intended to expressly disinherit her under the 2009 codicil.  The Court declined to give effect to Mr. Kunz’s apparent intention to exclude Petra.

Simple estate planning steps, such as the appointment of an alternate beneficiary under the 2009 will, could have prevented this great irony.  Ensure the effects of your testamentary dispositions are properly understood by taking time to review your will with a lawyer.

Thanks for reading.

Garrett Horrocks

15 Jun

Who Can Force The Sale of A Property?

Paul Emile Trudelle Beneficiary Designations, Estate & Trust, Estate Planning, Hull on Estates, Trustees, Uncategorized, Wills 0 Comments

This question is addressed in the June 8, 2018 decision of Justice Nishikawa in Galsan Holdings Inc. v. Davalnat Holdings Inc., 2018 ONSC 3600 (CanLII).

There, a corporation, Seabrook Properties Inc. (“Seabrook”), owned a commercial property (actually, the application involved two different corporations owning two different properties, but each property was addressed on the same basis). For sake of simplicity, I will only discuss one of the properties). The corporation was owned by Galsan Holdings Inc. (“Galsan”), as to 50%, and Davalnat Holdings Inc. (“Davalnat”), as to the other 50%. Galsan was, in turn, wholly owned by a Mr. Gallo, and Davalnat was wholly owned by a Mr. Calvano. Gallo and Calvano were the officers and directors of Seabrook.

The business relationship between Gallo and Calvano broke down, and Gallo and his company Galan brought an application for partition and sale.

The application was dismissed. The court held that Gallo and Galsan did not have the requisite standing to bring the Application. Under s. 2 of the Partition Act,

All joint tenants, tenants in common, and coparceners, all doweresses, and parties entitled to dower, tenants by curtesy, mortgagees or other creditors having liens on, and all other parties interested in, to or out of, any land in Ontario may be compelled to make or suffer partition or sale of the land, or any part thereof, whether the estate is legal and equitable or equitable only.

In considering the section, the court applied an Ontario Court of Appeal decision, Greenbanktree Power Corp. v. Coinamatic Canada Inc., which held that a person with “an interest in the land” has a prima facie right to compel partition or sale. Only a person or corporation “entitled to the immediate possession of an estate in property” may bring an action or make an application for its partition or sale.

In the case before the court, the property was owned by Seabrook. The shareholders, Galsan and Davalnat, did not have a possessory interest in the property. The shareholder of Galsan, Mr. Gallo, was “a further step removed” from the property, and similarly had no prima facie right to partition.

There was no suggestion that Seabrook was holding the property as a bare trustee. If the property was owned by a corporation as a bare trustee, the beneficiaries may be considered to have an interest in the land, and may be entitled to compel a partition or sale.

Although the application was dismissed, it is not that the parties are without a remedy. Gallo and Galsan had also commenced an oppression remedy proceeding, seeking a winding up of Seabrook. This proceeding continued.

For another discussion of partition or sale proceedings see my blog, here.

Have a great weekend.

Paul Trudelle

14 Jun

The Eastman Estate: The Original Kodak Moment

Garrett Horrocks Capacity, Estate & Trust, Estate Planning, General Interest, Hull on Estates, In the News, Litigation, Public Policy, Wills Tags: , , , 0 Comments

On a recent trip to Rochester, New York, my fiancée and I had the pleasure of touring the George Eastman Museum and came across an interesting piece of estates lore.

George Eastman, the founder of Kodak and a pioneer of bringing photography to the mainstream, died leaving a Will drawn in 1925.  As his wife had predeceased him and they had no children, Mr. Eastman devised all of his real property and left a substantial cash legacy to his closest family member, his niece, Ellen Dryden.  Mr. Eastman’s estate held significant assets, and the value of liquid assets alone was estimated as exceeding the equivalent of USD$35 million today.

However, on March 9, 1932, only five days before his death, Mr. Eastman had a change of heart with respect to the distribution of his estate.  Rather than leave the bulk of his estate to an individual, Mr. Eastman wished to ensure that his legacy would be one of service to the community that had fostered his photography empire.  True to form as a philanthropist and benefactor of local enterprise, Mr. Eastman executed a Codicil to his Will, changing the primary beneficiary of his estate from his niece to the University of Rochester.

The testamentary dispositions under the Codicil represented a significant deviation from those under his Will.  Typically, where a testator’s dispositions vary substantially from one instrument to another, concerns may arise with respect to the their testamentary capacity or the presence of undue influence.

A shrewd entrepreneur in his own right, Mr. Eastman recognized the risk that the Codicil might later be the subject of scrutiny or litigation.  On the date the Codicil was to be executed, Mr. Eastman hosted a gathering at his residence and invited many guests and acquaintances.  He devoted time to speaking to each individual guest about topical, personal subjects so that they could attest to Mr. Eastman’s soundness of mind in the event that a certain disgruntled niece chose to commence a Will challenge.

In a way, Mr. Eastman’s goal is not too dissimilar from some of the criteria that are relied on even today to assess a testator’s capacity.  Third-party evidence that a testator appeared to be of sound mind immediately prior to the execution of a testamentary document may help a trier of fact draw a favourable conclusion with respect to capacity.  While the formal criteria to assess capacity primarily consider a testator’s appreciation and understanding of his or her assets, Mr. Eastman’s clever scheme demonstrates that he turned his mind to questions about his own capacity and took steps to mitigate the risks.

Mr. Eastman’s Codicil was not later subject to any litigation, and the University of Rochester received a handsome distribution out of his estate.

Thanks for reading.

Garrett Horrocks

11 Jun

Can a Death Note Ever be Considered a Will?

Kira Domratchev Capacity, Estate & Trust, Wills Tags: , , , , , , , , , 0 Comments

The general rule, one that most people are probably familiar with when they think of a Will, is that the testator has to have the requisite capacity in order to be able to execute it. But what does that mean?

Generally, it means that a person should be of sound mind and understanding and have sufficient capacity to appreciate the various dispositions of property that would be put into effect with his or her execution of the Will. In other words, the testator must:

(1) understand that they are giving their property to one or more objects of his or her regard;

(2) have the capacity to comprehend the extent of their property and the nature of the claims of others to whom they are giving nothing under the Will.

In the case of a deceased who committed suicide, a question that may arise is whether a person who is about to commit suicide has the appropriate testamentary capacity to be able to execute a Will?

In that regard, it is important to remember that the onus is on the person who is propounding the Will – in other words applying to the court for an order that the Will is valid. In the usual course, there is certainly no presumption against the testamentary capacity of a testator. Indeed, it is quite the opposite. However, in cases where a proposition is made that a death (suicide) note is the last valid will and testament of a testator, it is more likely that someone may object. That is especially the case where an expected beneficiary is disinherited under such a circumstance.

 

 

As soon as capacity is called into question, the onus lies on the party propounding the Will to affirm testamentary capacity.

Suicide, in itself, does not equate to testamentary incapacity – although it is a circumstance that may be considered. In fact, a testator may have testamentary capacity even if they are not of entirely sound mind. That means that prior to committing suicide, a person can very well have testamentary capacity. If that is the case, then a death note can be considered a Holograph Will, which in Ontario, in accordance with section 6 of the Succession Law Reform Act, has the following requirements in order to be valid:

(1) It must be entirely in the testator’s hand writing; and

(2) It must be signed by the testator.

There is no requirement for witnesses in the case of a Holograph Will and it must be that the testator intended to dispose of their property after death.

Thanks for reading.

Kira Domratchev

Find this blog interesting? Please consider these other related posts:

Testamentary Capacity and Suicide

Will Drafting and Testamentary Capacity

Age and Testamentary Capacity

08 Jun

A Gift With A Catch: Bequests of Real Property and Mortgages

Paul Emile Trudelle Beneficiary Designations, Estate & Trust, Estate Planning, Trustees, Wills Tags: , , , 0 Comments

Assume that you are given real property in someone’s will, but the property is subject to a mortgage. Do you get the real property free and clear, or do you take it subject to the mortgage? Is the estate liable for paying off the mortgage?

The answer lies in s. 32 of the Succession Law Reform Act, and the terms of the will.

Pursuant to s. 32, the real property is primarily liable for satisfying the mortgage, unless there is a contrary or other intention in the will.

Section 32(1) provides:

Where a person dies possessed of, or entitled to, or under a general power of appointment by his or her will deposes of, an interest in freehold or leasehold property which, at the time of his or her death, is subject to a mortgage, and the deceased has not, by will, deed or other document, signified a contrary or other intention,

(a) the interest is, as between the different persons claiming through the deceased, primarily liable for the payment or satisfaction of the mortgage debt; and

(b) every part of the interest, according to its value, bears a proportionate part of the mortgage debt on the whole interest.

Thus, you take the property subject to the mortgage.

But, you may ask, what about the general direction to pay debts that is found in many wills? Isn’t that a “contrary intention”?

Section 32(2) states that a testator does NOT signify a contrary intention by a general direction for the payment of debts. Something more is needed.

While the property is subject to the mortgage, the mortgagee does not have to take action against the real property. Section 32(3) provides that nothing in s. 32 affects the right of a person entitled to the mortgage debt to obtain payment or satisfaction either out of the other assets of the deceased or otherwise.

When taking instructions for a will for a testator who owns property subject to a mortgage, the drafting lawyer should discuss the effect of s. 32 of the Succession Law Reform Act, and confirm whether this outcome is in keeping with the testator’s intentions. If it is not, and the testator wants the beneficiary to receive the property free of the mortgage, wording should be put into the will to set out this intention.

Have a great weekend.

Paul Trudelle

01 Jun

If You Plead It, You Have to Lead It

Paul Emile Trudelle Estate & Trust, Estate Planning, RRSPs/Insurance Policies, Trustees, Uncategorized, Wills 0 Comments

If a party refers to a document in a pleading, the party de facto waives any privilege attaching to the document, and the document has to be produced.

That is the lesson that we are reminded of in Master Short’s decision in TTC Insurance v. MVD Law, 2018 ONSC 2611 (CanLII).

There, TTC Insurance, the insurer for the TTC, alleged that the defendant engaged in an unlawful scheme to defraud the TTC by intentionally submitting forged invoices. In the Statement of Claim, the plaintiff referred to an audit and investigation that was carried out by the plaintiff. The defendant sought production of the details and results of the audit and investigation. TTC Insurance resisted, claiming privilege.

Master Short ordered the plaintiff provide the contents and results of the audit and investigation giving rise to the claim.

Master Short cited case law to the effect that a waiver of privilege does not occur simply because a party refers to the receipt of legal advice, or where a party states that they relied on legal advice. However, it is waived where the party uses the legal advice as a substantive element of the claim. “It is waived when the client relies on the receipt of advice to justify conduct in respect to an issue at trial.”

It should also be noted that once solicitor-client privilege is waived, the waiver applies to the entire subject-matter of the communications.

Master Short’s succinct conclusion was that a party is entitled to have produced for his inspection any document referred to in a pleading or affidavit delivered by another party whether or not that document would otherwise be privileged. Master Short  also relied on Rule 30.04(2) which provides that a request to inspect documents may be used to obtain the inspection of any document in another party’s possession, control or power that is referred to in the originating process, pleadings or an affidavit served by the other party.

Thus, be careful of what you plead: if you plead a document, you will have to produce it, privileged or not.

As Master Short set out in the preamble to his decision:

The Moving Finger writes; and, having writ,
Moves on: nor all they Piety nor Wit
Shall lure it back to cancel half a Line,
Nor all thy Tears wash out a Word of it.

Omar Khayyam

Have a great weekend.

Paul Trudelle

30 May

Lies can hurt – is truth having its moment?

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

In the estates area, we see the damage that lies produce all the time. The deceased husband who leaves money to a previously unknown mistress, the parent who claims to love all her children equally, but makes a special bequest to just one, or the spouse who has led his or her partner to believe that they are well provided for financially, only to leave a trail of debt and deception at death.

Lies in an estates context can be particularly devastating because the liar is dead and nothing can ever be resolved. But in day-to-day life, lies can also have a pronounced, negative impact on our lives.

And there’s a lot being written about it. Jordan Peterson, the University of Toronto psychology professor who has recently gained millions of followers, devotes an entire chapter of his best-selling book, 12 Rules for Life: An Antidote to Chaos, to one simple statement: “Tell the truth, or at least don’t lie.” You can see him explain the concept here.

Peterson himself is a polarizing figure, but love him or hate him, he makes a very strong case for telling the truth. It’s less about being a “do-gooder” and avoiding harm to others and more about the negative impact that lying can have on you over time.

We all tell lies, but the push to be more truthful is gaining momentum, especially with more people getting caught in a rabbit hole of lies in our modern world of texts and social media. This dating and relationship specialist makes the case for truth telling as well as anyone.

And what about those little white lies that we tell to avoid hurt feelings? Apparently, we may be shielding ourselves more than we’re shielding others. This article contains a very astute insight from David Livingstone Smith, Ph.D., professor of philosophy at the University of New England and author of Why We Lie. He says:

“One thing we deceive ourselves about is that we’re lying to protect others’ feelings. That’s not usually true. We often lie because we want another person to love us – we’re trying to protect ourselves from others’ disappointment, anger, or abandonment.”

Just a little something to think about … Thank you for reading,
Suzana Popovic-Montag

28 May

What is a Protector Clause?

Noah Weisberg Estate & Trust, Estate Planning, Executors and Trustees, Litigation, Trustees, Wills Tags: , , , , , , , 0 Comments

The use of a protector to assist in the administration of a trust was traditionally limited to offshore trusts.  However, a protector clause is garnering attention in the USA & Ontario, and is an important clause that estate planners should consider in preparing a will or trust.

Most people are familiar with the office of a trustee – they administer the trust, invest assets, and look out for the best interests of a beneficiary.  But, the administration of a trust is no different than life itself – things do not always go as planned.  Issues can arise between a beneficiary and a trustee and sometimes between trustees themselves.  Before you know it, bickering ensues, litigation follows, and legal costs accrue.

A protector clause, properly drafted, may be useful in avoiding litigation.

A trust protector has been defined as a third party, independent from the trustee and beneficiary, who has the authority to perform certain duties with regard to a trust.

The protector oversees the administration of the trust, looking out for the interests of a beneficiary, and to intervene if necessary.  The powers included in a protector clause can vary, but may include the ability to: remove/replace a trustee; oversee investment decisions; resolve deadlock between trustees and between trustees and beneficiaries; and, approve proposed distributions.  While a beneficiary may have some of these same abilities, not all beneficiaries are sophisticated enough to know when to speak up or, if they do, end up in lingering and costly litigation.

The use of a protector is not without headaches – do they owe fiduciary obligations to a beneficiary?  Do they destroy the role of a trustee?

Nonetheless, as discussed in our prior blog, a protector clause can be a worthwhile feature of a trust or will if litigation is a real possibility.  Some have even proposed that every trust should include a protector clause.

Noah Weisberg

Find this blog interesting, please consider these other related blogs:

24 May

A successful case of circumstantial evidence proving undue influence

Natalia R. Angelini Litigation, Uncategorized, Wills Tags: , , 0 Comments

Notoriously tough to prove is the allegation of a testator being unduly influenced to make a will. The burden of proof lies with the objector, and corroborating evidence is required to discharge the evidentiary obligation.

Notwithstanding the difficulty one faces to establish undue influence, it is frequently a ground of attack in will challenge cases, often coupled with an allegation of lack of testamentary capacity. In Kozak Estate (Re), it was rather unusually the sole ground of attack, and it was successful.

The facts in brief are that late in life the testator met and fell in love with a much younger woman, and soon after made real property transactions and two wills favoring her, with the latter will made in contemplation of marriage (which marriage never happened). The testator’s sister and beneficiary under a prior will challenged the wills on the ground of undue influence.

The Court reviewed the law on the question, and in so doing highlighted that circumstantial evidence can be used to establish undue influence, with the types of relevant circumstances including:

  • the increasing isolation of the testator including a move from his home to a new city which increased the respondent’s control over him;
  • the testator’s dependence on the respondent;
  • substantial pre-death transfer of wealth from the testator to the respondent;
  • the testator’s expressed yet apparently unfounded concerns that he was running out of money;
  • the testator’s failure to provide a reason or an explanation for leaving his entire estate to the respondent and excluding family members who would expect to inherit; and
  • documented statements that the testator was afraid of the respondent.

The Court viewed the evidence of the propounder as having many inconsistencies, contradictions and unbelievable elements. In consequence, it did not rely on her testimony at all. No such credibility problems arose respecting the evidence of the objector’s witnesses.

The Court went on to assess and conclude that the objector had established undue influence.  Among the critical supportive findings was that the propounder used the promise of marriage to control and manipulate the testator into providing economic benefits to her.  Further essential indicia of manipulation were the isolation of the testator from friends and family and a change in the testator’s personality.

Pursuing this avenue to invalidate a will is no easy feat, particularly without direct evidence.  What does not come as a surprise to me, however, is that the outcome in this case largely hinged on the credibility findings of the witnesses.

Thanks for reading and have a great day,

Natalia R. Angelini

Some other blogs on the issue that may be of interest are:

When Does the Presumption of Undue Influence Arise?

Undue Influence Revisted

Vanier v Vanier: Power of Attorney Disputes, Undue Influence, and Losing Sight of a Donor’s Best Interests

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