I noticed a rip in a twenty dollar bank note in my wallet the other day. I was struck by the rip because Canadian bank notes are now made with a polymer that is meant to last longer than paper bank notes. The idea that money can be accidentally damaged is a potential issue for estate trustees who are charged with the responsibility of gathering and preserving the assets of an estate until it’s distributed to the beneficiaries.
Luckily enough, The Bank of Canada has a policy on contaminated or mutilated bank notes. Under certain circumstances, The Bank of Canada will redeem bank notes that have become contaminated or mutilated beyond normal wear and tear and issue the claimant with replacement bank notes. The Bank of Canada will carefully scrutinize each note and the circumstances of each claim in order to determine whether the claim is legitimate.
According to The Bank of Canada, a claim will be rejected if it is their opinion that:
- the identity of the claimant cannot be substantiated;
- the notes are counterfeit or there are reasons to believe that the notes were acquired or are connected to money laundering or other criminal acts;
- there has been an attempt to defraud the Bank or there exists contradictory or improbable explanations about significant aspects of the claim, such as how the notes were damaged or how they came into possession of the claimant;
- any of the security features of the notes have been removed or altered or where the notes have otherwise been altered or damaged deliberately or in a systematic fashion, including dyed or chemically washed or treated, by a process that could be reasonably expected to have the effect of altering them.
While this particular problem might seem unlikely to occur, our blog has covered past instances where cash was found to have been destroyed. There is also a very thorough wikiHow on how to replace damaged currency in the U.S. with some practical tips for worldwide application, such as tips on how to package and deliver the damaged currency to the appropriate authorities.
Thanks for reading!
It never stops. Another year on the calendar turns, and we receive another jolting reminder of the years passing. It’s not just loved ones that we lose over time – our way of life is also constantly under threat.
This isn’t necessarily a bad thing. While we may miss some aspects of life in a nostalgic way (milk being delivered to your milk box twice a week), there are other aspects that we’re happy to leave behind.
So, what will we soon lose? Here are five things that could well (depending on your age) disappear in your lifetime.
Sweden may be the canary in the coal mine on this one. Half of the country’s retailers believe that Sweden will stop accepting cash by 2025. This has sparked calls for an e-currency and for actions needed to deal with this change (like what to do when electronic systems fail, or the power goes out). Read about it here.
It’s happening in Canada too of course. The thought of paying for a cup of coffee with a credit or debit card 10 years ago was laughable. Now it’s the norm. Bye-bye bank notes.
This is a change we all want – a cure for, or an end to, cancer. And there’s a new hope – the planting of immune cells from strangers into cancer patients to create the ultimate cancer-fighting treatment. Fingers crossed everyone. https://nationalpost.com/health/health-and-wellness/cancer-may-no-longer-be-deadly-in-future-say-british-researchers-announcing-breakthrough
- Car accidents
Okay, self-driving cars won’t eliminate traffic accidents completely – no technology is perfect or immune from outside attack. But just as traffic deaths in Canada have been cut in half since the 1970s due to safety measures such as seat belts and car seats, the move to the “auto-auto” will dramatically improve road safety. https://www.theatlantic.com/technology/archive/2015/09/self-driving-cars-could-save-300000-lives-per-decade-in-america/407956/
- Print newspapers
Yes, this is an obvious one – print newspaper subscribers are a dying breed. But what may also be reduced is the relevance and reach of news organizations in general, even those that have moved online. While many news organizations will survive post-print, this fascinating article explains how their influence could dramatically decline, even with a robust online presence. http://www.niemanlab.org/2018/09/what-will-happen-when-newspapers-kill-print-and-go-online-only-most-of-that-print-audience-will-just-disappear/
- Farm-raised meat
2018 saw the world’s first steak grown in a lab. There’s still work to be done on taste, texture and economic models, but real meat grown from cells is a new reality. There’s a good chance that “farm animals raised for slaughter” will seem as horrific to our grandchildren as medieval torture and gladiator death battles seem to us today. https://www.theguardian.com/environment/2018/dec/14/worlds-first-lab-grown-beef-steak-revealed-but-the-taste-needs-work
Thanks for reading!
Cash in a safety deposit box (“SDB”) often poses a problem. As there are rarely records as to what was in the SDB, disputes can arise as to how much money was there, and what happened to it.
The Newfoundland and Labrador Court of Appeal decision in Temple v. Peddle, 2019 NLCA 2 (CanLII) illustrates this problem. There, mom set up a SDB, jointly held with her son, Leo. Leo testified that mom had $50,000 in the SDB. Later, another son, Wendell, accessed the SDB with mom present, and removed cash and deposited it in another SDB. Wendell gave evidence that the amount removed was $30,000. Subsequently, Leo, as mom’s guardian, sued Wendell for the return of the difference, being $20,000.
The Court and the Court of Appeal had to grapple with competing evidence as to the amount in the SDB: Leo said that there was $50,000, and Wendell said that there was only $30,000. The court agreed with Leo, and the Court of Appeal upheld the lower court’s decision.
The matter came down to credibility. The lower court reviewed the evidence in detail, and found that Leo’s story was more credible than Wendell’s. When Leo attended to open the SDB with mom, Leo’s common-law spouse attended with them. She gave evidence that the SDB contained $50,000. When Wendell attended with mom, mom’s caregiver was apparently present when the money was counted. However, she did not give evidence.
In deciding the case, the Court of Appeal reviewed the standard of proof required in such cases. The Court of Appeal confirmed that the standard of proof in civil cases is proof on a balance of probabilities: there is no “sliding scale”, such as a requirement of proof to a high degree of probability.
We often see these types of claims. They can apply to cash in an SDB, or under a mattress. These claims are hard to prove or defend.
Clients should be cautioned that undocumented cash, wherever kept, is hard to account for. Disputes can easily arise, where one party claims it is more than what is claimed by another party.
For an earlier discussion of a case where the allegation was that the deceased had a box of money in his house containing $210,000, but only $96,000 was found in a sock, see my blog, The Perils of Keeping Money Under the Mattress, here.
Have a great weekend.
It is not uncommon for Canadian estate trustees to make distributions to beneficiaries living in the U.S. In doing so, the U.S. Customs and Border Patrol (the “US CBP“) could be involved in a myriad of ways.
A recent story from CBC News is an example of what can go wrong if estate trustees are not aware of their US reporting obligations. An estate trustee in Ottawa mailed a bank draft worth $500,000.00 to a beneficiary in the U.S. U.S. border officials seized the bank draft because it was mailed without filing the appropriate customs declaration form. Almost a year later, the bank draft is still held at the border while the unfortunate beneficiary is sick and in need of money for his medical bills.
According to the U.S. Customs and Border Protection website, any time money exceeding $10,000.00 is sent to the U.S. from a foreign country, the sender is required to file a “Report of International Transportation of Currency or Monetary Instructions” (FinCEN Form 105) with the CBP before the money is sent. This applies regardless of whether the sender is acting personally or on behalf of another legal entity. This applies to money in the form of coins, currency notes, travellers checks, money orders, etc. This also applies to money sent by mail, courier, personal delivery, etc.
However, this particular US reporting requirement does not apply where the method of transfer does not involve physically transporting money over the border, such as wire transfers through banking institutions. If a wire transfer is used, the bank is responsible for satisfying the necessary reporting requirements.
In course of sending money worth $10,000.00 or more from Canada, there are corresponding Canadian customs requirements as well. If money is sent by mail, be sure to visit a Canada Post location and inquire about the necessary requirements. The applicable reporting form must be filled out and enclosed within the envelope or package and a copy of the same form must be submitted to the Canada Border Services Agency. If money is sent by courier, the courier is responsible for filing another reporting form while the individual sender is still responsible for providing the courier with the general reporting form.
Like the US CBP, Canada Border Services Agency has the authority to seize the funds and charge penalties if the Canadian reporting obligations are not satisfied.
Thanks for reading!
An Ontario Court of Appeal decision released yesterday provides clarity regarding the situations in which beneficiaries of legacies will be entitled to interest on the sum payable to them under a Last Will and Testament.
In Rivard v Morris, the testator had held farmland of significant value. A prior Will left a farm of comparable value to each of his daughters (as the testator had previously gifted a farm property to his son), and divided the residue of the estate equally between the three children. In the months preceding his death, however, the deceased amended his estate plan to provide for a greater benefit to his son, leaving him the residue of his estate (inclusive of the farm properties) after distributions to each daughter in the amount of $530,000.00.
After the testator died, the daughters challenged his Last Will on the basis of alleged undue influence. The will challenge was unsuccessful. The daughters subsequently commenced another proceeding after their brother (the sole remaining estate trustee after their previous resignations) refused to pay to the sisters interest with respect to the legacies of $530,000.00. They argued that they were entitled to interest commencing one year after the date of their father’s death, notwithstanding that the payment had been delayed in part because of the will challenge initiated by the daughters. Any interest would have been payable out of the assets to which their brother was otherwise entitled as sole residuary beneficiary of the estate.
The daughters were unsuccessful at the hearing of their application and appealed. The Court of Appeal found in their favour. Justice Paciocco ordered the payment to each daughter interest in the amount of $53,000.00 out of the residue of the estate. In doing so, Justice Paciocco relied upon the “executor’s year” and the “rule of convenience”. In describing the rule of convenience, Justice Paciocco stated as follows (at paragraphs 24, 25):
The “rule of convenience” can be easily explained, in my view. One of the maxims of equity is that it presumes as being done that which ought to be done. Since the beneficiaries should be enjoying the earning power of their legacies by at least the anniversary date of the testator’s death, where that enjoyment is postponed and the testator has not provided an alternative date for payment of the legacy, interest is to be paid…This general rule has been adopted in Ontario.
The rule of convenience was considered by the Court of Appeal to promote certainty and predictability, and the lower court’s decision to deny the daughters’ interest on the basis that they had commenced litigation against the estate was said to be contrary to principle, as this would have the impact of discouraging “even meritorious litigation”. While the Court of Appeal did neither confirmed nor denied whether judges are able to exercise discretion to deny interest to beneficiaries of legacies, it found that it had been inappropriate for the application judge to do so in this case.
Thank you for reading,
Other blog posts that may be of interest:
Listen to The Business of Being an Estate Trustee.
This week on Hull on Estate and Succession Planning, Ian and Suzana discuss the business side of being an Estate Trustee and talk about what to do with assets.