Tag: certificate of appointment
One of the consequences of having to probate a Will (now referred to in Ontario as applying for a Certificate of Appointment of Estate Trustee) is that the Will, along with the assets covered by the Will, are made public.
I was intrigued to read about the estate of the billionaire co-founder of Microsoft, Paul Allen. In addition to Allen’s Last Will being made public, multiple news articles have published a list of some of the amazing properties owned by him, including a:
- condominium in Portland, Oregon ($700,000 to &850,000)
- 20-acre property in Santa Fee purchased from Georgia O’Keefe’s estate ($15 million)
- 2,066-acre ranch in Utah ($25 million)
- Silicon Valley 22,005 square foot house ($30 million)
- New York City penthouse on 4 East 66th Street ($50 million)
- double property in Idaho totalling 3,600 acres ($50 million)
- 3 acre compound on the Big Island in Hawaii ($50 million)
- 18 bedroom mansion in the South of France ($100 million)
- 387 acre camp in Lopez Island, Washington ($150 million)
- 8 acres of land on Mercer Island, Washington ($130 million)
- 400 foot Octopus Yacht (up to $130 million)
While I have no intention to address the efficacy of Allen’s estate plan, I thought the publicity of his estate provides a reminder that careful estate planning can ensure that privacy is maintained, and the payment of probate tax be avoided. In Ontario, there are numerous options available including preparing a secondary (or tertiary) Will, placing assets in joint ownership with the right of survivorship, or simply gifting assets prior to death. This is by no means an exhaustive list, and each option carries certain advantages and disadvantages.
While I expect that few people have the impressive catalogue of properties that Allen had, it should by no means preclude careful estate planning.
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If you find this blog interesting, please consider these other related blogs:
We have previously blogged on the various ways that an estate trustee may be removed and/or replaced. Examples include scenarios where an estate trustee dies in the midst of administering an estate, or renounces from his or her position, or where an estate trustee is removed by court order.
Ontario legislation provides guidance for beneficiaries and estate trustees in the aforesaid circumstances. Ontario legislation does not, however, specifically address what to do if an estate trustee is deemed mentally incapable to administer an estate, either before or after probate is granted. For more information on what mental incapacity is, and how to address mental incapacity, click here.
If an estate trustee is deemed mentally incapable, the first question to consider is how far along they were in the administration of the estate.
If the estate trustee has not yet applied for a certificate of appointment of estate trustee with a will (hereinafter referred to as the certificate of appointment of estate trustee), then another person may apply for a certificate of appointment of estate trustee in their place. A person acting under a valid continuing power of attorney for property for the mentally incapable estate trustee may renounce and consent (as appropriate) for the estate trustee. If the incapable individual has not appointed an attorney for property, then their statutory or court appointed guardian assumes this responsibility. Where the will names an alternate estate trustee in the event the estate trustee is unable to act, the alternate should be contacted to discuss whether they are willing and able to assume this role.
In circumstances where an estate trustee has been declared mentally incapable of administering an estate after the certificate of appointment of estate trustee has been issued, any person appearing to have a financial interest in the estate may bring a notice of application for the removal and replacement of the estate trustee. Again, the incapable estate trustee’s power of attorney or statutory or court appointed guardian would likely be involved in this process. Once a court order for removal and replacement is obtained, the replacement estate trustee may apply for a Court Status Certificate of Appointment of Estate Trustee with a Will pursuant to Rule 74 of the Rules of Civil Procedure.
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A recent decision of the Human Rights Tribunal reiterates the necessity of obtaining a Certificate of Appointment of Estate Trustee, with or without a Will, in order to be allowed to continue with a human rights compliant before the Ontario Human Rights Tribunal.
In Pollard v. York Condominium Corporation, 2018 HRTO 1149 (CanLII), the Applicant alleged discrimination on the basis of disability. The Applicant was fired from his employment as a superintendent, allegedly on the basis that he was absent from work due to a disability. The Applicant later died, and the Respondent applied for an Order dismissing the Application because no Certificate of Appointment of Estate Trustee had been obtained. The deceased Applicant’s wife sought to continue the Application.
The Human Rights Tribunal reviewed case law to the effect that an application under the Human Rights Code cannot proceed without the formal appointment of an Estate Trustee.
Rather than dismiss the Application, the Human Rights Tribunal allowed the Applicant’s wife six months to obtain a Certificate of Appointment. If no Certificate was obtained within that time, the Application was to be dismissed.
The requirement of a Certificate of Appointment can cause significant hardship for an applicant. They must incur the costs of applying for the Certificate. In many cases, the estate has no assets: either because it is impecunious or because the assets pass outside of the estate. In other cases, the estate would have to pay Estate Administration Tax that might not otherwise be payable.
There is a similar requirement to obtain a Certificate of Appointment in order to continue other civil litigation: see David Smith’s blog, here.
Have a great long weekend.
Usually a Will challenge takes place after the initial application for probate. Where probate has already issued, a Will challenge may still commence (within the limitations period). A first step is “calling in” the Certificate of Appointment through a motion under sub-rule 75.05 of the Rules of Civil Procedure or an application under sub-rule 75.04 [the former deals squarely with Will challenges, the latter speaks to other considerations].
A recent case before the Trial Division of the Supreme Court of Newfoundland and Labrador explores the criteria for revocation of the already-issued Certificate. In Coombs v. Walsh (Estate), 2017 NLTD(G) 83, Justice Goulding reviewed the jurisprudence on point extensively and held as follows:
“…I am satisfied that the standard is whether there is a genuine issue to be tried and not the higher standard of whether there is a reasonable prospect of success. However, the threshold is not so low that mere suggestion or conjecture or evidence on peripheral points will suffice. As stated, there must be probative evidence which is material to the issues raised which has not been fully answered with uncontradicted evidence by the propounder of the Will” [emphasis added.]
Hence, there is both a legal and evidential burden that must be met. At the end of the day, the Court must balance the interest in maintaining the efficient administration of the Estate with considerations that would not allow revocation of the existing Certificate of Appointment to be used merely as a tool of obstruction.
The discussion in Walsh Estate is an easy and interesting read and I happily commend it to you for review.
Have a nice weekend everyone!
In Ontario, it is trite law that an estate trustee of a testate estate derives his or her powers from the Will of the deceased. Accordingly, unlike an intestate estate, it is not always necessary for an estate trustee to obtain a Certificate of Appointment of Estate Trustee with a Will (“probate”) in order to administer an estate.
However, in certain matters it is necessary for an estate trustee to obtain probate before being able to represent the estate, regardless of whether there is a valid Will. The 2000 decision of Justice Haley in Carmichael Estate (re) succinctly sets out the three instances where probate is required:
- Third parties dealing with the executor may require probate in order to accept the authority of the Will. Justice Haley provides the example of a debtor who wishes to ensure that the proper person is being paid in order to satisfactorily discharge the debt.
- Proceedings where the executor represents the estate as plaintiff or as defendant. Here, Justice Haley notes that the Court will require probate in order to satisfy an evidentiary matter pursuant to section 49 of the Evidence Act.
- Where a foreign estate trustee intends to establish his rights in Ontario, letters probate must be resealed (referred to as ancillary letters probate).
In Re Carmichael Estate, the respondents sought to include a fourth category requiring probate – the removal of an executor under section 37(1) of the Trustee Act. The Court held, however, that an applicant is free to bring a removal application regardless of whether probate has been granted and whether the estate trustee has acted in the administration.
Re Carmichael Estate a decision well worth reading for all history buffs given Justice Haley’s excellent historical analysis of the English common law Courts relating to probate and estates from the 11th century onwards.
When a life insurance policy’s designated beneficiary is the estate of the policy-holder, the proceeds of the insurance policy will be paid into the deceased’s estate. Usually, the value of the life insurance proceeds are included in the value of the estate when applying for a Certificate of Appointment of Estate Trustee. But there may be a case for not including them.
The Ministry of Finance takes the position that the “total value of the estate is all of the assets owned by the deceased at the time of death, including…insurance, if proceeds pass through the estate, e.g., no named beneficiary other than ‘Estate’.” However, the Estate Administration Tax Act, 1998, S.O. 1998, c. 34 defines ‘value of the estate’ as “all the property that belonged to the deceased person at the time of his or her death”.
Therefore, some have suggested that there can be an argument made that, at the time of the deceased person’s death, they did not actually own the proceeds from the insurance policy. Rather, they owned the contract of insurance. The proceeds are only payable after death and therefore cannot be in the deceased person’s possession when they die. Whether this argument would succeed is uncertain, but it does raise an interesting question of a conflict between the clear wording of a statute and Ministry policy.
Considering that, as discussed in this Toronto Star article, Ontario has the highest estate tax in Canada, the issue of what is and is not to be included in someone’s estate for the purpose of determining the amount of estate administration tax is not insignificant. Currently, the rate of estate administration tax is $5 per $1,000 of the first $50,000 of an estate, and then increases to $15 for each $1,000 after that. Keeping an insurance policy outside of the estate could result in significant tax savings.
Of course, there are other ways to avoid including the value of insurance proceeds in your estate. This includes designating a beneficiary other than the estate. In that case the insurance proceeds would pass entirely outside of the estate and no estate administration tax is payable.
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Listen to Administration of the Assets of the Estate
This week on Hull on Estates and Succession Planning, Ian and Suzana discuss things to consider when administrating the assets of an estate and point out burdens of being and executor.
Listen to Applying for Probate
This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the applying for probate. They discuss some of the ways that estate administrators can simplify the process.
If a Will has been proved in common form (i.e. by an administrative proceeding) as opposed to solemn form (i.e. by a judicial proceeding in open court), longstanding English authority has stood for the proposition that the next-of-kin remain, as of right, entitled to have the will proved in solemn form.
However, this entitlement is not absolute. When the next-of-kin have a benefit under the Will, are served with the Notice of Application for Probate in common form, and take no steps to challenge the Will, they may be barred from later seeking to challenge the Will.
So, for instance, in the recent Ontario case of Bermingham v. Bermingham Estate  O.J. No. 1320, when the only daughter of a deceased permitted a Will to be proved in common form and then, eight years later, moved to have the Certificate of Appointment returned to the Court, the Court denied the request on the basis that the beneficiaries relied to the next-of kin’s acquiescence to their detriment. In short, the Court invoked the equitable doctrine of laches to deny relief.
While, intuitively, a delay of eight years in waiting to commence a will challenge is not justifiable, there may be an appropriate case in which the Court will grant relief to a delinquent challenger. Such a case will turn on the personal circumstances of the next-of-kin and the explanation for their apparent acquiescence which may or may not be reasonable.
In addition, evidence of suspicious circumstances surrounding the making of a Will may tip the balance in favour of an Order returning the Certificate. Certainly, any excessive delay should be avoided in making the decision to challenge a Will.
Have a great day.