The Victorians consigned themselves to more subtlety in their works of entertainment than we at present do. To all appearances, theirs was decidedly not an age capable of enjoying rap music and HBO comedies. The spiciest themes in their art, therefore, would include marriage intrigues, duels, financial scandals – or, as we see in George Eliot’s Middlemarch – controversial wills and eccentric testators.
The wills and estates subplot in Middlemarch is comprised of all the ingredients that you may see in a modern legal drama: a rich and erratic miser (Mr. Featherstone) manipulating his relatives with implied promises of future bequests; the idle protégée (Fred Vincy) who accumulates debts with the idea that the testator will bail him out; concern over the testator’s attachment to his young caregiver (Mary Garth); a train of impoverished relatives ill-concealing their greedy expectations; and much discussion on why “blood” was deserving and why “strangers” were not.
It is remarkable how little has changed in a century or so with respect to wills and estates. Then, as now, a Mr. Featherstone who promises a bequest, receives consideration, and then goes back on his word, may be found to have broken a binding contract – as occurred in Legeas v. Trusts & Guarantee Co. Likewise, a ruling of unjust enrichment (Moore v. Sweet) or specific performance (Folsetter v. Yorkshire & Canadian Trust Co.) could be made against him/his estate.
Still relevant today are the challenges of undue influence and incapacity. In the story, the scheming relatives are alarmed at Mr. Featherstone’s connection to Ms. Garth. She, all too aware of an undue influence allegation, refuses her patron’s money and ignores him when he orders her, while on his deathbed, to destroy his wills. In return, he throws his cane at her, which is perhaps evidence of incapacity.
Much as we may laugh at the relatives in Middlemarch who repeatedly visit Mr. Featherstone to remind him of his obligations to his “own flesh and blood”, our own law continues to ascribe significance to bloodlines. The Succession Law Reform Act defines “child” based upon conception, and the statute’s intestacy provisions speak of “issue” and the “nearest degree” of kindred. As many an adopted child and step-child knows, with respect to estates law, blood still matters.
There are some marked differences between Eliot’s England and modern Canada. Whereas Fred Vincy was loaned money in part because the creditors knew he was favoured by Mr. Featherstone, we now have businesses openly and explicitly offering advances to those who “have an inheritance coming”. Although we still use the Banks v. Goodfellow test for evaluating capacity, there have been some innovations, such as capacity assessments done after death and more nuanced, neuroscientific understandings of capacity. Lastly, if Mr. Featherstone had died in Ontario in 2020, he could not take as much comfort in tantalizing relatives and then crushing their hopes, for we have dependency support laws whereby testators must provide “adequate provision” for their “dependents”. Perhaps the creation of such laws was influenced, in part, by the ghoulish conduct of such Victorian literary characters.
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Suzana Popovic-Montag and Devin McMurtry.
Apparently, the tax changes which were introduced in Japan in 2015 lowered the existing tax exemption threshold from ¥50 million to ¥30 million and reduced the existing deduction of ¥10 million for each heir to ¥6 million per heir.
As a result, the estates of a significantly wider segment of the population are now subject to inheritance taxes, and there appears to be a corresponding rise in the number of individuals seeking to reduce their tax burden through adoption.
According to the article, adoption for the sake of “financial adjustment” has always been a common practice in Japan. In fact, such adoptions, usually of adults who only need to be at least one day younger than the adopting parent, constitute the overwhelming majority of adoptions in Japan. In many cases, adults are adopted when a family does not have someone to take over a family business or a male heir who can carry on the family name. The article states that more recently, however, such adoptions appear to be motivated by the desire to reduce inheritance taxes.
The article refers to a recent case of the Supreme Court of Japan, in which the deceased had adopted his son’s son (his “grandson”), thus giving him four heirs instead of three — his son, his grandson (now second son) and two daughters. As a result, the son’s family stood to receive more of the father’s assets than either of the daughters. The daughters commenced proceedings seeking that the adoption be declared void as it had merely been intended as a tax-savings measure. However, the Supreme Court of Japan ruled that the intention to reduce the amount of taxes would not automatically annul the adoption itself and upheld the adoption, which many believe in effect, condones this practice.
This is not the first time adoption has been used in estate planning. Before same-sex marriage was legalized, adoption was used on occasion in Canada and the United States as a means of ensuring the transfer of an inheritance between same-sex couples. An article published in the New York Times in 2009, which outlines the use of adoption for such purposes can be accessed here.
Other Hull & Hull LLP Blogs & Podcasts that may be of interest to you:
- A novel argument by an adopted child in British Columbia
- Reducing probate fees
- The All Families are Equal Act Has Passed
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As societal norms are continuously changing and evolving, there has been a change in attitudes toward the relationship between adopted children and their biological parents. Today, society encourages adopted children and their birth parents to re-establish a relationship. For example, we have previously blogged on a change of the law in Saskatchewan, which provides for an adult adopted child to reconnect with their birth parents.
In Ontario, the legal status of adopted children is governed by the Child and Family Services Act (the “CFSA”). Section 158(2) of the CFSA provides that, upon an adoption order being granted, the adopted child becomes the (legal) child of the adoptive parent and ceases to be the child of the person who was his or her parent before the adoption order was granted. Pursuant to this statute, once a child is adopted, they are not entitled to their birth parent’s estate unless specifically provided for in the birth parent’s will.
Furthermore, in Ontario, there are no direct provisions governing a testator’s wishes in distributing their property. There is no requirement that all children must be treated equally, or that an individual must leave a part of their estate to their children through a testamentary document. Statutory protection does exist, for dependants, however, under Part V of the Succession Law Reform Act.
In contrast, the law in British Columbia provides that the Court has discretion to vary a will to remedy disinheritance of a child. Pursuant to s. 60 of the Wills, Estates and Succession Act (“WESA”), a parent must make adequate provision for their children, and if the court does not find a testamentary division among the children to be equitable, the court can intervene.
A recent case out of British Columbia considered a novel argument: does the receipt of a benefit under a birth parent’s will entitle an adopted child to argue for a greater share of the estate under section 60 of the WESA?
In the Boer v Mikaloff, 2017 BCSC 21, Mr. Boer was legally adopted as a baby to an adoptive family. He became reunited with his birth mother around the age of thirty, and in his birth mother’s last will and testament, he received a portion of her estate. Mr. Boer challenged his birth mother’s last will and testament in court, arguing that pursuant to s. 60 of the WESA, he was not given an equitable share of his mother’s estate compared to his mother’s other children.
The court held that Mr. Boer was not entitled to an equitable share, as he was not legally considered to be his birth mother’s child. The court held that section 3(2)(a) of the WESA does not allow an adopted child to manipulate a bequest by the child’s pre-adopted parent into a s. 60 claim and applied the case of Canada Trustco Mortgage Co. v Canada, 2005 SCC 54, to uphold that the text, context and purpose of the statute in this regard was clear.
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Earlier this week I blogged about the ability for an individual to be “adopted” into a Trust, as well as what effect such an adoption order would have upon their rights in relation to their birth parent’s estate. While it may seem like a lot of work to have to be legally adopted to gain access to a trust, if the thought of living the trust fund lifestyle leaves you saying “sign me up”, you may be asking whether it is possible for you to be legally adopted as an adult.
The legal adoption of individuals above 18 years of age in Ontario is governed by section 146(3)(a) of the Child and Family Services Act. Such a section provides little guidance regarding what the court is to look to in determining whether to grant such an adoption, simply providing that the court has the authority to make an adoption order for an individual above 18 years of age.
In Re: Q. (A.L.K.),  O.J. No. 353, Madam Justice Katarynych provides the following commentary with respect to the factors which the court should look to in determining whether to grant the adult adoption:
- whether the interaction between the applicant and the proposed adoptee is materially and substantially a parent-and-child interaction, assessed not just subjectively by the two individuals at issue, but also from an objective perspective;
- whether the parent-and-child relationship between the applicant and the proposed adoptee has any counterpart in the proposed adoptee’s other relationships; in short, whether an adoption is merely adding a parent to the adult child’s life or rather replacing a former parent;
- whether the adoption will advertently or inadvertently defeat the legitimate claim of the proposed adoptee’s existing parents under other legislation also enacted for the public good; and
- whether the application is made in good faith.
If the court is of the opinion that the adult adoption meets the criteria listed above, it should grant the adoption.
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I recently blogged about the about the fact that, generally speaking, an adopted child would have the same rights to take from a trust established in relation to their adoptive parents as would a biological child of their adoptive parents. While this may leave the dream of being adopted into a rich family alive for some, what impact, if any, does an adoption order have upon the adopted child’s rights vis-à-vis their birth parents’ estates? If an adopted child’s birth parent should die without a Will, or leave a bequest in their Will to their “children”, would the adopted child receive a benefit from their estate?
In Ontario, the legal status of adopted children is governed by the Child and Family Services Act (the “CFSA“). Section 158(2) of the CFSA provides that, for the purposes of law, upon an adoption order being granted the adopted child becomes the child of the adoptive parent and ceases to be the child of the person who was his or her parent before the adoption order was granted.
As a result of section 158(2) of the CFSA, and the clear provision that an adopted child ceases to be a “child” of their birth parent in the eyes of the law upon the adoption order being granted, an adopted child would no longer be a “child” of their birth parent in determining entitlement from the birth parent’s estate. The adopted child would no longer receive a benefit on an intestacy of their birth parent in accordance with Part II of the Succession Law Reform Act, nor be included with the class of “children” or “issue” in any bequest in their birth parent’s Will.
While an adopted child would not take as a “child” of their birth parent on an intestacy or in a bequest in their birth parent’s Will, this does not necessarily mean that an adopted child may never receive an entitlement from their birth parent’s estate. Should the birth parent of an adopted child wish to provide a bequest to such a child from their estate, they may specifically provide a bequest to such an adopted child in their Will. In providing such a bequest however, it is important that the adopted child be specifically referenced by name in the Will, as any general gift to the testator’s “children” would not catch the adopted child as a result of section 158(2) of the CFSA.
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When one thinks of a “trust fund baby“, images of a lavish lifestyle supported by family wealth probably come to mind. But with the images likely comes the sad realization that such a lifestyle will not be enjoyed be you; either you are born into such wealth or you are not. But is this necessarily true? Could you be adopted into a trust, and with it adopt the lifestyle of a trust fund baby? If a trust has been set up which provides that the beneficiaries of the trust are to be the issue (i.e. children) of a specific individual, if such an individual legally adopts you, would you become a beneficiary of the trust?
In Ontario, the legal status of adopted children is governed by the Child and Family Services Act (the “CFSA“). Section 158(2) of the CFSA provides that, for the purposes of the law, upon an adoption order being granted the adopted child becomes the child of the adoptive parent and ceases to be the child of the person who was his or her parent before the adoption order was granted.
With respect to the question of whether an adopted child gains status under any will or trust, section 158(4) of the CFSA provides:
“In any will or other document made at any time before or after the 1st day of November, 1985, and whether the maker of the will or document is alive on that day or not, a reference to a person or group or class of persons described in terms of relationship by blood or marriage to another person shall be deemed to refer to or include, as the case may be, a person who comes within the description as a result of an adoption, unless the contrary is expressed.” [emphasis added]
Simply put, so long as the will or trust deed does not specifically preclude adopted children from becoming included as part of any class of persons described by relationship by blood or marriage, an adopted child would be treated no differently than a biological child in determining who forms part of such a class. As a result, presuming that the trust in question does not bar adopted children from becoming beneficiaries, should the wealthy individual contemplated in the hypothetical above legally adopt you, you would become a beneficiary of the trust.
Your dreams of living as a trust fund baby may not be over yet. Thank you for reading.
On January 1, 2017, the Government of Saskatchewan implemented changes governing the release of adult adoptees birth registration, and access to birth registration information.
In Saskatchewan, prior to the adoption of the new regulations, adult adoptees required the consent of a birth parent in order to find out their birth name, the name and location of the hospital where they were born, and the name of their biological parents. The requirement of consent was very burdensome on adult adoptees who had to go through the Saskatchewan Government, specifically the Post-Adoption Services branch, in order to track down their biological parents. Locating biological parents and obtaining consent would result in average wait times of approximately three years.
Those eligible to apply for the newly implemented Post-Adoption Services regulations, if the adoption was finalized in Saskatchewan, are:
- an adult adoptee (18+ years of age);
- an adoptive parent of an adoptee who is under 18;
- a birth parent of an adoptee;
- the adult child of a deceased adult adoptee;
- the adult child of a deceased birth parent whose child was placed for adoption; or
- an extended family member of an adult adoptee or birth parent.
With the new regulation, adult adoptees no longer require consent from both parties to access birth registration information. The information is readily available to individuals who file a request. With the current regulation, the wait time for information is expected to be a few weeks.
From January 1, 2016 to January 1, 2017, both adoptees and birth parents had the option to veto the release of their birth registration information, specifically the biological names. There was no option to veto the name of the birth hospital or location. According to an article by CBC News, some 84 vetoes have so far been registered by birth parents, and “significantly fewer” by adult adoptees. Vetoes can only be placed on adoptions that occurred prior to January 1, 2017. Therefore, adoptions after January 1, 2017 must be subject to the new regulations.
The Government of Saskatchewan Post-Adoption Services website offers online forms requiring documentation such as a birth certificate, drivers licence and Order of Adoption. Further documentation will be required if the individual is an adult child of a deceased adult adoptee, or the adult child of a deceased birth parent whose child was placed for adoption. Furthermore, the application allows the searching party to specify their preferred method of contact.
From an estate planning perspective, it is interesting to consider that these revisions will, in certain circumstances, cause adoptees to be named as beneficiaries in the will of their biological parents.
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As previously blogged about by Natalia Angelini, the All Families are Equal Act was introduced on September 29, 2016 and it was unanimously passed by the Ontario legislatively assembly on November 29, 2016.
We encourage those interested in this new Act to click here for the Ministry of Attorney General Newsroom release. According to the Ministry,
“The new law will:
- Provide greater clarity and certainty for parents who use assisted reproduction to conceive a child
- Provide a streamlined process for the legal recognition of parents who use a surrogate, together with requirements meant to protect the rights of all parties through independent legal advice and confirmation of the surrogate’s consent both before conception and after birth
- Reduce the need for parents who use assisted reproduction to have to go to court to have their parental status recognized in law.”
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Listen to Talking About Wealth and Personal Finance.
This week on Hull on Estates Suzanna and Ian review the pullout in March 18th’s New York Times and talk about the importance of dialog before and after death.