Many estate solicitors are retained to draft Wills for elderly clients. Concerns over capacity are normal. As such, I am frequently asked how thoroughly a drafting solicitor should enquire into capacity.
Although there is no universal answer, the decision in Wiseman v Perrey, provides helpful insight. Referring to an earlier decision from the Manitoba Court of Queen’s Bench, the Court set out the basic rules dealing with testamentary capacity where a professional, such as a drafting solicitor, is involved:
(a) neither the superficial appearance of lucidity nor the ability to answer simple questions in an apparently rational way are sufficient evidence of capacity;
(b) the duty upon a solicitor taking instructions for a will is always a heavy one. When the client is weak and ill and, particularly when the solicitor knows that he is revoking an existing will, the responsibility will be particularly onerous; and
(c) a solicitor cannot discharge his duty by asking perfunctory questions, getting apparently rational answers and then simply recording in legal form the words expressed by the client. He must first satisfy himself by a personal inquiry that true testamentary capacity exists, that the instructions are freely given, and that the effect of the will is understood.
There are a variety of tools a solicitor should employ, including having the testator take a Mini-Mental State Examination.
Depending on the severity of the solicitor’s concern, the use of a capacity assessor who specializes in assessing testamentary capacity should be considered. The assessor should be specifically instructed to assess whether a testator has the capacity to make a new Will. Although not an easy topic to broach with a client, these types of assessments can assist in ensuring the testator’s last ‘capable’ wishes are followed.
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Submissions from the Joint Committee on Taxation Regarding Proposed Changes to Voluntary Disclosure Program
Last month, I blogged about some changes proposed by the CRA to the Voluntary Disclosure Program. It was noted that the CRA would be accepting comments with respect to the proposed changes until August 8, 2017.
The Joint Committee on Taxation of The Canadian Bar Association and Chartered Professional Accountants of Canada (the “Joint Committee”) made submissions in this regard in a letter to the Minister of National Revenue dated August 8, 2017.
In their letter, the Joint Committee recommends that the Minister reconsider a number of points, including, among other things, the introduction of a multi-tier system including the “general program” and the “limited program”. The Joint Committee states that part of the success of the Voluntary Disclosure Program is due to the fact that taxpayers applying to the Program are able, to a certain extent, to predict the consequences of initiating a voluntary disclosure. This allows non-compliant taxpayers to assess the benefits of the Program as opposed to the ongoing uncertainty of non-compliance and the risk of assessment and/or prosecution. The Joint Committee submits that the proposed changes may lead to uncertainty, and therefore, may encourage non-compliance, which would be inconsistent with the objectives of the Voluntary Disclosure Program and with encouraging non-compliant taxpayers to become compliant.
The submissions from the Joint Committee also comment that the draft Information Circular setting out the proposed changes apparently provides that the No-Name method of disclosure, wherein certain information may be provided to a Voluntary Disclosure Program officer without identifying the taxpayer, in order to obtain a better understanding of how the taxpayer’s disclosure may be addressed, will no longer be available for disclosures commencing after December 31, 2017. In the Joint Committee’s experience, non-compliant taxpayers are more likely to proceed with a voluntary disclosure if the process is perceived as transparent and predictable. If they are correct and the Minister of Revenue proposes to eliminate the No-Name disclosure method, the Joint Committee urges the Minister of Revenue to reconsider this proposed change.
The letter from the Joint Committee makes a number of other submissions that are beyond the scope of this blog, but can be read in full here.
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Today I wanted to discuss a basic, but important concept when it comes to Wills: revocation. There are a number of ways in which a Will can be revoked, and it is crucial that everyone with a Will, or who will make a Will in the future, understands what those methods are, and the requirements that must be met in order to successfully revoke a Will. An incomplete understanding of revocation can lead to unintended consequences if a testator mistakenly believes either that a prior Will has been revoked, or that a prior Will that he or she believed to have been revoked, remained valid and operative.
According to section 15 of the Succession Law Reform Act, R.S.O. 1990, c. S.26,
15 A will or part of a will is revoked only by,
(a) marriage, subject to section 16;
(b) another will made in accordance with the provisions of this Part;
(c) a writing,
(i) declaring an intention to revoke, and
(ii) made in accordance with the provisions of this Part governing making of a will; or
(d) burning, tearing or otherwise destroying it by the testator or by some person in his or her presence and by his or her direction with the intention of revoking it.
Ontario has a strict compliance regime, meaning that the statutory requirements for actions such as executing and revoking a Will must be followed carefully, and that the courts do not have the discretion to declare a document valid that does not do so. Accordingly, if an attempted revocation of a Will does not strictly comply with the statute, it may not be valid.
For instance, one method of revoking a Will is by a writing declaring an intention to revoke and made in accordance with the requirements of the making of a Will. This means that, even if the document revoking the prior Will is not itself a Will, it must nonetheless comply with those requirements, whether it be a formal Will witnessed by two people, or a holograph Will. A testator who does not seek legal advice on revoking his or her Will may mistakenly believe that, for example, a typewritten signed statement would validly revoke a Will, when, in fact, it would not.
Destroying a Will, another method of revocation, must also be done in a particular way to satisfy the requirements of the Succession Law Reform Act. As discussed in Probate Practice (5th ed.), the two elements of destruction and intention to revoke must both be present. The destruction itself must also be done either by the testator personally, or by someone else in the testator’s presence and by his or her direction. Therefore, even if the testator directs another person to destroy his or her Will, if the testator is not present at the time of such destruction, it will be insufficient to revoke the Will in question.
Additionally, the requisite capacity to revoke a Will is the same as that required to execute a Will in the first place.
While this blog only briefly touches upon a few specific issues that may arise in relation to revoking Wills, it is clear that without a proper understanding of how to validly revoke a Will, a testator can easily stray offside of the statute, resulting in a potentially invalid revocation. As with the execution of a Will, revocation can also have significant effects on a testator’s testamentary dispositions, and it is important to seek advice from a trusted legal professional prior to taking any steps that may lead to unintended, and unfortunate, consequences.
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Today on Hull on Estates, Ian Hull and Rebecca Rauws discuss the recent Court of Appeal decision in Vanier v Vanier, 2017 ONCA 561, including the different tests for undue influence and the practice of assessing undue influence by capacity assessors.
We have previously blogged about the CRA’s Voluntary Disclosure Program and how it can, for instance, be useful for estate trustees should they encounter a situation where the deceased whose estate they are administering failed to meet their tax obligations. Essentially, the program gives a taxpayer a second chance to come forward voluntarily and change a tax return that was previously filed, or to file a return that should have been filed, and to request relief from prosecution or penalties as a result of any erroneous or incomplete filings.
However, as discussed in a recent article in the Financial Post, the CRA has proposed some changes to the Voluntary Disclosure Program. The draft “Information Circular – IC00-1R6-Voluntary Disclosures Program” prepared by the CRA for discussion purposes can be found here. The key proposed changes would narrow the eligibility for the Voluntary Disclosure Program, and impose additional conditions on taxpayers who are applying. The proposed changes also include less generous relief in certain circumstances, such as cases of major non-compliance.
As discussed in a PwC Tax Insights publication, another proposed change creates two tracks into which the CRA can assign a taxpayer upon application to the Voluntary Disclosure Program—either the “general program” or the “limited program”. The general program is intended for inadvertent and minor non-compliance, while the limited program is intended for major non-compliance. The general program involves mostly minor changes, including a limitation on interest relief. Major non-compliance, which will fall into the limited program, includes, for example, active efforts to avoid detection, multiple years of non-compliance, a sophisticated taxpayer, or disclosure being made after an official CRA statement regarding its intended focus of compliance or following CRA correspondence or campaigns. If an application is assigned to the limited program, the relief available to the taxpayer will no longer include interest relief or relief from penalties other than gross negligence penalties. The determination of which track an application will be assigned to will be made on a case-by-case basis.
Previously, there were four conditions that had to be met in order to be considered as a valid disclosure. The proposal would add a fifth condition, requiring payment of the estimated tax owing along with the application. The changes described above are only a few of the proposed changes, and all such changes can be found in the Information Circular.
The CRA will be accepting comments with respect to the changes proposed in the draft Information Circular – IC00-1R6 – Voluntary Disclosures Program until August 8, 2017. Any changes to the program would come into effect as of January 1, 2018.
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Vanier v Vanier: Power of Attorney Disputes, Undue Influence, and Losing Sight of a Donor’s Best Interests
Often in power of attorney litigation, relationship issues between past or present attorneys may take centre stage, with the unfortunate consequence that the best interests of the donor of the power of attorney may get lost amid suspicions and accusations being thrown back and forth. This can often arise in situations where siblings are involved in a dispute regarding power of attorney for a parent, and, in fact, was the situation in the recent Ontario Court of Appeal decision in Vanier v Vanier, 2017 ONCA 561.
At issue was the power of attorney for property of Rita, whose husband had predeceased her, leaving her his entire estate. She had three adult children: twin sons, Pierre and Raymond, and a daughter, Patricia. There was a power of attorney for property executed in 2011 naming Patricia. Unfortunately, Patricia allegedly took advantage of her role as Rita’s power of attorney for property, leading to litigation and a settlement. As a result, Rita executed a power of attorney for property in 2013 naming Pierre and Raymond, jointly and severally, as her attorneys for property (the “2013 POA”).
However, Pierre and Raymond became suspicious of each other, steps taken by each of them as Rita’s attorneys for property, and their relationship broke down. Issues arose in relation to Rita’s ability to access her money; in particular, Raymond had failed to cooperate in relation to unfreezing some corporate assets that had been frozen as part of the litigation with Patricia, and instructed Rita’s lawyer not to release settlement funds received from Patricia to Rita. Consequently Rita could not access funds to pay for basic living expenses, including rent at her retirement home. As a result, Pierre suggested that Rita take certain steps to facilitate access to her funds, including executing a power of attorney for property naming Pierre as her sole attorney for property, which Rita did in 2015 (the “2015 POA”).
Litigation and Appeal
Raymond brought an application seeking Pierre’s removal as attorney for property and a declaration that the 2015 POA was void. He also brought a motion seeking interim relief. The decision on the motion was appealed by Raymond, leading to this decision from the Court of Appeal. The Court considered 5 issues on appeal, but I will address only 1 of them for the purposes of this blog, being whether the motion judge erred in applying the wrong test for undue influence.
Proper Test for Undue Influence
Raymond argued that the proper test to be used was not the test for testamentary undue influence, but rather the test for inter vivos equitable undue influence, which would shift the onus of proving undue influence from Raymond, to Pierre, who would have to prove that Rita signed the 2015 POA willingly and without undue influence.
The Court of Appeal found that the application of the inter vivos test had not been argued before the motion judge, was a new issue raised on appeal, and, based on the general rule, the Appeal Court could not consider it. Moreover, there was no need for the Court to consider whether to grant leave to allow a new argument in this regard, as in any event, the inter vivos equitable undue influence test had no application on the facts.
In order to shift the burden of proof from the complainant (in this situation Raymond, arguing on behalf of Rita) to the other party (in this case, Pierre), two prerequisites must be met:
- The complainant reposed trust and confidence in the other party; and
- The transaction is not readily explicable by the parties’ relationship; the transaction is “immoderate and irrational”.
Pierre conceded that Rita did repose trust and confidence in him. However, the Court found that Rita’s decision to execute the 2015 POA was not “immoderate or irrational”. The Court noted that while the decision was emotionally difficult for Rita, it was totally rational. She knew that she was having issues accessing funds needed to pay her basic expenses. She also knew that some of Raymond’s actions had led to her inability to access those funds. The Court also found that the 2015 POA conferred little, if any, benefit on Pierre. Lastly, even if the inter vivos test applied, the Appeal Court held that the record did not support a finding of undue influence.
In conclusion, the Court of Appeal commented that it endorsed the words of the motion judge who had expressed the view that Raymond and Pierre had “lost sight of the fact that it is Rita’s best interests that must be served here, not their own pride, suspicions, authority or desires”, stating also that it hoped that in light of this decision, Rita’s sons would honour her wishes and end the litigation.
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Approximately a month ago, it was reported that an Ontario woman had been charged criminally in relation to an elder abuse investigation. The woman will apparently be appearing in court this Monday, June 5, 2017.
The Ontario Provincial Police attended at a home in Warwick Township, Ontario to assist health-care workers in checking on the well-being of a resident. The home was in a state of squalor, and upon searching the house, they located an elderly woman who was incoherent, in need of medical intervention, and was taken to hospital.
We have previously blogged about the criminal consequences of elder abuse in the context of a financial abuse situation (here and here). However, financial elder abuse is not the only form of abuse that can constitute a crime. Physical, emotional and mental abuse, as well as neglect, can also lead to criminal charges. This can be seen in the situation of the elderly woman in Warwick Township, where a woman was charged with failure to provide the necessaries of life in relation to the elderly woman’s condition after the elderly woman had been found in ill-health and in a filthy environment.
Section 215(1) of the Criminal Code of Canada, R.S.C., 1985, c. C-46 establishes a legal duty for every one to provide necessaries of life to a person under his or her charge if that person (i) is unable, by reason of detention, age, illness, mental disorder or other cause, to withdraw him or herself from that charge, and (ii) is unable to provide him or herself with necessaries of life. Section 215(2) makes it an offence if a person fails to perform that duty if the failure “endangers the life of the person to whom the duty is owed or is likely to cause the health of that person to be injured permanently.” The punishment for this offence can be imprisonment for up to five years for an indictable offence, or imprisonment for up to 18 months on summary conviction.
The above is of course only one example of a criminal offence that may arise as a result of elder abuse. Many types of elder abuse will fall under the general criminal code offences, such as assault, intimidation, theft, and forgery.
The issue of elder abuse is a very real one, and is taken seriously by police and the justice system. It is important for victims of elder abuse, and anyone who suspects elder abuse, to be aware that there are options for reporting the abuse, preventing future abuse, and punishing the abuser.
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We previously blogged about the decision in Ozerdinc Family Trust v Gowling Lafleur Henderson LLP, 2017 ONSC 6, where a failure to advise of the deemed disposition date of trust assets resulted in an avoidable tax liability. Recently, additional reasons were released which set out the court’s decision with respect to costs arising from the motion for partial summary judgment. The court awarded costs to the successful plaintiffs in the amount of $160,889.76 (including tax) plus disbursements of $100,000.00
The costs decision is interesting as it thoroughly considers a number of elements of the litigation in relation to the factors listed in Rule 57.01 of the Rules of Civil Procedure.
Interestingly, while the court held that the matter was “obviously a very complex matter”, it nonetheless concluded that the costs claimed by the plaintiffs were higher than required for a motion of this nature. The court also noted, in considering the time spent by the plaintiffs on the motion for partial summary judgment, that the “total amount of time spent exceeds a fair amount and that which would reasonably be expected to be required in the circumstances”. This conclusion was made despite the court’s acknowledgment that the bulk of the plaintiff’s time was spent by junior counsel.
Another interesting comment was related to the costs awards with respect to disbursements. It seems that a large portion of the plaintiffs’ disbursements were expended to retain several experts. However, the court found that the amount claimed by the plaintiffs was out of proportion with the amounts spent by the defendants to address similar issues, and reduced the award for disbursements accordingly.
This decision may serve as a helpful reminder to litigators to be aware of the amount of their legal fees and disbursements. One should also try to ensure, as much as possible, that costs are proportional, both with respect to the size of the matter at issue, but also, based on this costs decision, with respect to the costs that may be incurred by the other parties.
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It’s 8:30 am, you’ve just entered your office, and you get a call from the common-law spouse of one of your long-term clients. It’s bad news – your client is in palliative care and has a will from 2001 that he urgently needs to update. Time is of the essence.
You and your assistant can squeeze in time late in the day to see the client at the hospital. But you know it’s a tricky situation that’s fraught with potential problems. Here are a few steps to consider that could protect you and your client before you head bedside.
- Make sure you have the expertise they need: On the initial call, be sure to ask specific questions about what the client needs done. If there are trusts or other complex arrangements involved, assess whether you have the expertise to assist. If death is imminent, the last thing your client can waste is time in trying to line up another lawyer. So do your due diligence up front.
- Assess capacity: Capacity issues could be front and centre for clients who are close to death. If possible, contact an attending doctor, explain the legal test for capacity and ask them to confirm his or her opinion in writing as soon as possible, even on an interim basis by email.
Learn more about capacity issues here: https://estatelawcanada.blogspot.ca/2010/12/when-is-doctors-opinion-on-capacity.html
- Talk one-to-one: You need, and must insist on, time alone with your client, both to do your own capacity assessment and to minimize any unsubstantiated allegations of undue influence. If the situation is at all suspicious, you have a duty to inquire to satisfy yourself that the client is fully acting on their own accord. This is especially important if the client has had multiple marriages or common-law partners, or has been estranged from family members. If you are not satisfied, you may choose to decline to act.
- Take notes and/or video: Your notes could potentially be used as evidence in a will challenge or solicitor’s negligence action, so be sure to set out the basis for your opinion on issues such as capacity and undue influence, rather than simply stating a conclusion. Consider having a junior lawyer attend with you, to provide a more complete base of evidence. Videotaping the interview may also be helpful, as it can provide important evidence if the will is ever challenged.
Finally, if you have older clients who have indicated a need to revise their will, be proactive. Send them this link and encourage them to act now to avoid the potential drama and perils of a deathbed will: http://globalnews.ca/news/1105176/the-mortality-of-deathbed-wills/
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If a person has been found incapable of having the capacity to make a will, the law nonetheless recognizes that such person may experience lucid intervals during which testamentary capacity may be temporarily regained. A will made during a lucid interval may be valid.
The legal test for testamentary capacity is the same regardless of whether the testator suffers from a condition that generally deprives him or her of testamentary capacity. The test was summarized in Re Schwartz, 1970 CarswellOnt 163, as follows:
The testator must be sufficiently clear in his understanding and memory to know, on his own, and in a general way (a) the nature and extent of his property, (b) the persons who are the natural objects of his bounty, and (c) the testamentary provisions he is making; and he must, moreover, be capable of (d) appreciating these factors in relations to each other; and (e) forming an orderly desire as to the disposition of his property.
The critical time during which the testator must have capacity is when instructions are given and when the will is executed. In Re Weidenberger Estate, the Court stated:
What the Deceased’s state of mind was one year before or one year after the date of the document is not overly relevant. The courts have recognized that a Deceased may only have temporary periods of rational and lucid behaviour, and in such moments, an individual may competently dispose of his or her estate.
If a testator generally lacks testamentary capacity, but makes a will during a lucid interval, the evidentiary burden on the propounder is heavier than would otherwise be the case.
We have previously blogged on criticism of the concept of the lucid interval. Some studies suggest that cognitive fluctuations are often short in duration, often seconds or minutes. Such a period of time is unlikely to be sufficient to execute a will. Despite this criticism, the legal concept of the lucid interval remains recognized by the Courts. The concept was recently applied to uphold the validity of a will in Re Zukas Estate, a decision of the Court of Queen’s Bench of Alberta.
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