In today’s podcast, Paul Trudelle and Sayuri Kagami discuss the recent decision of Re Milne Estate, 2018 ONSC 4174, where Justice Dunphy of the Ontario Superior Court found a Will to be invalid where it provided the Estate Trustee with the discretion to determine whether assets might fall under the Will or not. At the time of recording, it was unknown whether the decision would be appealed. It is now confirmed that the decision is under appeal.
Should you have any questions, please email us at firstname.lastname@example.org or leave a comment on our blog.
As estate litigators, we’ve seen a lot of bad estates and bad estate situations. The good news is because we know the bad, we can advise clients on how to avoid it and make their estate a great one. No uncertainty, no delays, no conflicts, no nasty tax surprises.
If you want to make your estate a great one, here are five essential elements that can make it happen.
- You’ve provided a clear path to the documentation
Ideally, your executor needs the original copy of your will – as do courts to ensure a smooth probate process. So, don’t make your will (and any other estate documents) hard to locate. Whether it’s stored at your lawyer’s office, or registered with the court, or stored in a filing cabinet at home, make sure that you and your loved ones remember where your will is and know how to access it. We discuss this issue in more detail here.
- Your estate assets are easy to identify
Don’t assume your family and your executor know what you own. Many of us scatter our assets and accounts more than we realize. Make a list of all bank and investment accounts, insurance policies, major assets, and any virtual assets of value and keep this list with your will or ensure your named executor has a copy.
- Your executor is trustworthy and can access the help they need
When choosing an executor, trust is essential as the person selected must be capable of acting impartially on behalf of your estate – regardless of their personal feelings about your estate and the beneficiaries.
While your executor doesn’t need to be an accountant or lawyer or investment advisor, they do need to be able to hire the expertise that your estate might require. In other words, they need to know what they don’t know, and have the common sense to seek out the tax, accounting, and legal expertise that may be needed.
This article provides a great “quick list” of things to consider when choosing an executor.
- Everyone knows what’s in your will – in advance
It is dangerous to assume that your intended beneficiaries know what is in your will and have no questions or concerns. Talking today about your intentions and your family members’ expectations lets you address any contentious issues while you’re alive – and avoid potential conflicts after you’re gone.
Even the most well-intentioned gifts – a charitable bequest, the china cabinet to a niece, the vintage hockey cards to a grandson – can lead to questions, hurt feelings and potential conflicts.
Don’t let it happen. Make sure that everyone who might be touched by your will at death knows exactly what’s in it.
- Tax planning in place – if needed
You’re deemed to have disposed of your capital assets at their fair market value when you die. This means your estate is liable for capital gains taxes on assets that have increased in value during your lifetime. Your executors may be forced to sell estate assets to pay for the tax liability – and a forced sale may mean the assets are sold for less than their fair value.
There are many strategies available to help cover an estate’s tax liability, from the use of trusts to the purchase of life insurance. Make sure you’ve considered whether tax planning is needed for your estate, and put a strategy in place if needed.
Thanks for reading … Have a great day!
“No one likes to see a limitation period applied to dismiss a claim. That said, there are good reasons for limitation periods. This case is an example of why they exist.”
So says Justice Nakatsuru in the opening line of his decision of Sinclair v. Harris, 2018 ONSC 5718 (CanLII).
There, the estate trustees of the estate of Virginia Rock (“Rock”) sued Merilyn and Frederick Harris (“the Harris’s”), claiming an equitable interest in lands purchased by the Harris’s, as part of the funds for the purchase of the lands were provided by Rock.
There, the relevant time line was as follows:
July 12, 2000: Rock provides money to the Harris’s to buy a property
August 5, 2003: The Harris’s sell the property. Rock was apparently aware of this.
November 17, 2015: Rock dies
February 24, 2017: Rock’s estate trustees commence the action
Justice Nakatsuru found that the 10 year limitation period under the Real Property Limitations Act applied. He disagreed with the estate trustees’ position that no limitation period applies to a claim for resulting trust. As the claim was a claim for the recovery of land (or “money to be laid out in the purchase of land”), the limitation period in the Real Property Limitations Act applied.
The court held that the limitation period would have commenced on the date the funds were advanced. Alternatively, it would have run from the time when the Harris’s sold the property. Under either interpretation, the limitation period had passed.
The action was dismissed.
Justice Nakatsuru said that “No one likes to see a limitation period applied to dismiss a claim.” No one other than a defendant.
Footnote: Justice Nakatsuru has been called the “poetic” judge and lauded in Macleans Magazine for his “heartfelt, easy-to-read rulings”. For an excellent example of this, see his decision on a bail application in R. v. Sledz, 2017 ONCJ 151 (CanLII).
Have a great weekend.
The Globe and Mail recently published an article on couples that live apart from each other. This particular article focuses on the story of a couple who has never shared a home in the course of their twenty-year relationship. This couple is not alone; approximately 1.9 million unmarried adults in Canada were in an intimate relationship with someone who occupies a separate residence in 2011.
This form of intimate relationships are considered to be a historically new family form. Sociologists have coined this phenomenon as “LAT couples“, i.e. couples that are living apart together.
While the article focuses on couples who are deliberately choosing to live apart, there are also external factors that may prevent a couple from living together (such as immigration or capacity issues where one spouse has greater care needs than the other spouse).
LAT couples raise an interesting question with respect to whether such couples would be considered as a “spouse” within the meaning of Part V of the Succession Law Reform Act for the purposes of dependant’s support. Pursuant to section 57 of the SLRA, the word “spouse” has the same meaning as section 29 of the Family Law Act.
Section 29 of the Family Law Act in turn defines the term spouse as,
- people who are married to each other;
- unmarried people who have cohabited continuously for a period of not less than three years; or
- unmarried people who are in a relationship of permanence if they have children.
Interestingly, the Ontario Court of Appeal has made the following comment in Stephen v. Stawecki, 2006 CanLii 20225:
“the specific arrangements made for shelter are properly treated as only one of several factors in assessing whether or not the parties are cohabiting”.
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A recent Superior Court of Justice decision illustrates the test to be met where one is alleging that an attorney for property should be removed.
In Crane v. Metzger, 2018 ONSC 5382 (CanLII), Ms. Metzger was determined to be incapable of managing her property. While capable, she appointed her brother, Mr. Cason, as attorney for property. Her daughter, Ms. Crane brought an application to remove Cason as attorney, and to have Crane appointed as guardian. Crane alleged impropriety on the part of Cason.
In determining the application, the court set out the test for removal. Citing the decision of Teffer v. Schaefers, 2008 CanLII 46929 (ON SC), the court stated that the courts have generally taken the view that a written power of attorney made at the time when the donor was of sound mind is simpler to deal with and gives the donee more flexibility in dealing on behalf of the donor. Continuing with the appointment respects the wishes of the donor. Thus, in order to set aside the power of attorney, “There must be strong and compelling evidence of misconduct or neglect on the part of the donee duly appointed under an enduring power of attorney before a court should ignore the clear wishes of the donor and terminate such power of attorney.”
The court summarized the test for removal as follows:
- There must be strong and compelling evidence of misconduct or neglect on the part of the attorney before a court should ignore the clear wishes of the donor, and
- The court must be of the opinion that the best interests of an incapable person are not being served by the attorney.
In Crane, Crane submitted a “lengthy list of grievances” in her affidavit materials. These grievances, while not fully enumerated in the decision, were apparently answered by Cason in his affidavit materials.
The court concluded that Cason was doing the best he could in the circumstances. There was no evidence of financial mismanagement, and Cason’s accounts were in order.
In dismissing the Application, the court also focused on two incidents where Crane acted improperly, which were said to seriously affect her credibility: one where Crane said that she was taking her mother to Wasaga Beach, but in fact took her to Seattle (and thereby putting her and her property at risk), and another where Crane took her incapable mother to the bank to withdraw $10,000. These two events “make her position untenable. … For these reasons, where there is a conflict between the evidence of the parties, I accept Mr. Cason’s evidence and reject that of Ms. Crane.”
The test for removal of a properly appointed attorney is a difficult one to meet. Further, the alternative, being the appointment of a guardian, must be compelling. The best interests of the incapable will be an overriding consideration.
Have a great weekend.
In Canada a person generally has the freedom to leave their estate to whomever they choose; known as “testamentary freedom”. However, in many of the civil code countries of Europe, a portion of the estate must be distributed to legitimate heirs; known as “forced heirship”. In Portugal, legitimate heirs include the spouse, biological descendants, adopted children, and ascendants of the deceased. The reserved portion covers up to two thirds of the whole estate, with division of the estate generally as follows:
Spouse’s portion in absence of descendants or ascendants: 50%.
Spouse and Descendants: The reserved portion is two thirds; normally distributed per capita, but in any case the spouse gets a minimum of one quarter of the reserved portion (which results in one sixth of the whole estate).
Only Descendants: The reserved portion depends on the number of children. For one child it is 50%, for two or more it is two thirds.
Spouses and Ascendants: two thirds, of which two thirds are intended for the spouse and one third for the ascendants.
Only Ascendants: 50% for those of first degree, for further degrees one third.
In the case of an intestacy and no spouse, ascendant or descendant, the estate passes to the siblings and their descendants, in their absence to the family up to the fourth degree of kinship, and then finally to the State.
The testator’s freedom to leave the remainder of the estate after the reserved portion is not generally restricted except in some cases like: the deceased’s last treating doctor if the testament was written during the illness which caused the death, the priest of the community where he attended, or a curator, tutor, or administrator of the deceased.
If you are interested in further information on the topic of international inheritance we are pleased to assist, along with our lawyer colleagues in Lisbon Portugal.
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Our estate litigation practice by its nature concerns end of life issues. And while no one expects the “end of life” to happen on a vacation, we’ve been involved in many estate files where that’s been the case. We’d like to think that vacation time is sacred, but the grim reaper begs to differ.
While an unexpected death on land is hard enough for family members to deal with – especially if the body has to be repatriated from a foreign country – a sudden death at sea feels all the more daunting. Where can they store the body? How long can they keep it? Where and how can you take the body off the ship in port? The answers are “in an on-ship morgue,” “about seven days,” and “taking the body off the ship depends on several factors, like the laws of the next port and the country of registration of the ship.”
Yes, cruise ships have body bags and a morgue. They don’t have much choice – about three people die of natural causes each week on cruise ships. In terms of the body repatriation process for family members on board, it can vary depending on the ship and where it’s sailing. In some situations, the body can be taken off the ship at the next port. In others, it will be taken off when the ship returns to its home port. For extended cruises that take months to complete, arrangements will be more complex.
The silver lining in all of this is that because sudden deaths at sea are a weekly event, cruise line staff have procedures and training to support surviving family members and help them make arrangements.
This article from Cruise Critic provides a good overview of what happens when a death occurs on ship.
Cruise for your retirement?
On a more positive note, this CNBC article explores the emerging trend of retiring on a cruise ship, rather than living in an adult community or a retirement residence on land. It can actually be an affordable alternative to more conventional retirement choices.
Thanks for reading … Have a wonderful day,
We sometimes hear about an elderly person marrying a much younger person. What we often do not consider, however, is the possibility that such a marriage is entered into by a “predatory” spouse in order to take advantage of an elderly victim with the ultimate goal of assuming control of his or her finances.
The “predator” is often a caregiver or a family friend or neighbour. In most cases, it is a person who uses a position of trust to cause an elderly victim to change a Will, a power of attorney, an insurance policy designation or other documents. It is also not uncommon for inter vivos transfers to be made while the senior is alive.
According to Ontario law, the act of marriage grants the new spouse certain property rights, specifically with respect to the matrimonial home and spousal support. The most significant effect of a marriage, however, is the fact that the Succession Law Reform Act, revokes any Will executed prior to the marriage. To make matters worse, predatory marriages often occur in private such that the senior’s family members are not aware that he or she has married.
The evidentiary burden imposed upon the elderly victim’s adult family members to prove that a marriage should be declared void as it is a marriage of a “predatory” nature is significant.
Why is it so tough to show that a marriage is void?
Capacity is a fluid concept. It means that a person could have capacity for one task and no capacity for another, as capacity is time and situation specific. Capacity to enter into a marriage, is the lowest threshold of capacity. As such, a person can be entirely capable to enter into a marriage but may be incapable of managing his or her own financial affairs.
In addition, a person likely does not just lose capacity in a day; it is a gradual process such that there is a “grey zone” between having capacity and having no capacity at all. It is in that “grey zone” that a predator will take advantage because a person may start forgetting things but is otherwise capable for all intents and purposes.
Because of that, many are of the opinion that Ontario laws make seniors an easy target for “predatory marriages”. Will there be a change in the law coming our way, in light of the growing phenomenon of such marriages? Only time will tell.
For more information regarding this growing concern and the manner in which this issue has been treated by the courts, please see a paper by Kimberly Whaley of WEL Partners on Predatory Marriages.
Thanks for reading.
On December 15, 2017, I blogged on judicial references to Santa Claus.
Well, the jolly man in red suit has made another (figurative) courtroom appearance: this time in the Ontario Superior Court of Justice.
Santa Claus figures prominently in the decision in Baars v. Children’s Aid Society of Hamilton.
There, the applicants, who were foster parents, refused to utter or affirm the existence or role of Santa Claus (and the Easter Bunny) in relation to foster children under their care. As a result, Children’s Aid removed the 3 and 4 year old sisters that were in their home, and closed the applicants’ foster home.
The Applicants applied to the court for a declaration that the Children’s Aid Society violated their freedom of conscience and religion, their freedom of expression, and their right to be free from discrimination., and a declaration that the closure of their foster home was unreasonable, discriminatory and contrary to their fundamental rights and freedoms.
The Applicants advised Children’s Aid that they do not endorse Santa Claus or the Easter Bunny because they did not want to lie to children. Children’s Aid took the position that the foster parents should honour their foster children’s cultural practices. Children’s Aid then arranged for the removal of the children from the home, and closed their foster home.
In deciding the case, the court was careful to note that the ruling did not purport to address certain questions:
This ruling is not about whether parents or guardians ought to promote or discourage the practice of advising young children about Santa Claus or the Easter bunny. It is not about the existence or utility of proclaiming Santa Claus or the Easter Bunny as a part of the secular celebratory rituals that arise at Christmas or Easter respectively. It is neither about offering commentary over the veracity or validity of one’s belief nor offering any commentary on general parenting or guardianship skills. This decision does not purport to advance any criticism or endorsement in relation to Christian or other religious beliefs or values.
The court concluded that the children were removed from the home in direct response to the applicants’ refusal to lie to the children about the Easter Bunny. This was an infringement on the applicants’ freedom of religion, and their freedom of expression.
As a remedy, the court ordered that Children’s Aid note in the applicants’ file that the decision to close the foster home violated the applicants’ Charter rights. If the applicants sought to be adoptive or foster parents in the future, there should be an inquiry into the applicants’ suitability with the court’s ruling in mind.
In order for a gift to be valid, there must be delivery. The issue of the timing of the delivery of a gift was explored in the recent Quebec decision of Estate of Tilden, 2018 QCCS 2971 (CanLII).
There, the Liquidator (a role similar to that of an estate trustee) of the Estate of Robert Tilden claimed that a gift made by the deceased was not perfected by delivery prior to the death of the deceased, and therefore lapsed, and must be returned to the estate.
The facts of the case are quite bizarre. The deceased was involved in a family law proceeding. He did not attend at a family law mediation. A legal assistant called the respondent, the deceased’s cousin and best friend, to ask about the deceased’s whereabouts. Late on September 17, 2015, the respondent drove to the deceased’s cottage to look for him. The deceased was not there. The cottage was clean and nothing appeared out of the ordinary. The respondent returned home, stopping to pick up his mail on the way. In his mail, he found a letter from the deceased. The letter indicated that the deceased had left two boxes for the respondent in the basement of the deceased’s cottage. The respondent returned to the cottage, and in the boxes he found hashish and over $600,000 in cash.
While the respondent was at the cottage, a neighbour arrived, also looking for the deceased. The respondent said that the deceased was not there, and the neighbour left. The respondent then put the cash in his car and left.
The next day, the respondent found a letter with the cash. In the letter, the deceased said that some of the cash was to be delivered to another friend, and that the rest was for the respondent.
That same day, another relative received a letter containing a cheque in the amount of approximately $230,000. The relative was concerned about the deceased, and phoned the police. The police attended at the cottage and found the deceased dead in a sleeping area above the garage. They also found letters in the kitchen setting out how the deceased wanted his estate divided. The respondent gave evidence that he did not notice these letters on both occasions when he was at the cottage.
The cause of death was determined to be suicide, and the date of death was determined to be September 17, 2015: the same day that the respondent picked up the cash.
The respondent asked the court to conclude that the deceased died AFTER the cash was picked up, and therefore there was a valid gift of the cash. He argued that the court should presume that the deceased waited until the respondent left the cottage with the box of money before taking his life.
The court refused to make such a finding. The court held that such a presumption was too much of a stretch, based on the facts as known. The court’s reasoning included consideration of the following:
- It is not “clear and obvious” that the deceased planned to wait for the respondent to take the box of money before committing suicide;
- The deceased would have had no way of knowing that the respondent would go to his cottage immediately upon receiving the letter, to pick up the gift;
- In the deceased’s “letter of wishes” left the cottage to the respondent. Therefore, the deceased could have expected the respondent to search the cottage after he had died;
- A presumption that the deceased waited for the respondent to pick up the gift before he committed suicide presumed that the deceased knew that the gift had to be completed between two living persons. If the deceased knew this, he wouldn’t have hid from the respondent, but would have given him the cash;
- If the deceased was hiding from the respondent when he first attended at the cottage, he wouldn’t have seen that the respondent left without the box of money, and wouldn’t have known that the respondent would return shortly thereafter;
- It did not make sense that the deceased waited for “delivery” of the gift to the respondent, but not to the other friend who was to receive part of the cash;
- The deceased left other property to the respondent in his valid will. The court queried why the deceased would do this with other property, but not with the cash.
The court concluded that the gift of the money was likely meant to be found after the deceased died, but was to be treated as a “secret”. However, in the circumstances, the gift failed. The respondent was ordered to repay the gift of cash made to him. However, as some consolation, no costs were awarded against the respondent.
For another discussion of a case involving an incomplete gift, see our blog, here.
Thanks for reading. Have a great weekend.