Tag: charitable bequest

01 Oct

Art & Taxes (& Estates)

Noah Weisberg Estate Planning Tags: , , , , , , , , , , , 0 Comments

I try to seize every opportunity I can to learn about art.  In preparing today’s blog, I was intrigued to read about the UK’s Cultural Gifts Scheme and its relationship to estates.

The Cultural Gifts Scheme & Acceptance in Lieu allows UK taxpayers to donate important works of art and other heritage objects in return for a tax reduction, which includes inheritance tax.  The donated work is then held for the benefit of the public or the nation at an eligible museum or gallery.  According to this article from the Guardian, the Scheme was first introduced in 1910 as a way of allowing individuals to offset inheritance tax bills, and later, in 2013, to allow individuals to be able to make donations during their lifetime in order to offset future tax liabilities.

Any art admirer should have a look at the 2018-2019 Annual Report which provides a list of items that were received, along with some pretty pictures of the items :).  It is a feast for the eyes and the senses.  Some of the highlights include:

  • a Portrait of the Emperor Charles V by Peter Rubens, which has gone to the Royal Armouries in Leeds
  • a platinum and diamond necklace with black velvet ribbons, convertible to a brooch, made by Cartier in Paris c. 1908-1910, which has been allocated to the Victoria and Albert Museum
  • 361 botanical drawings by the illustrator Florence Helen Woolward
  • Bernardo Bellotto’s painting of Venice on Ascension Day, which settled £7 million of tax
  • Damien Hirst’s Wretched War sculpture, given by the artist’s former business manager Frank Dunphy settling £90,000 in tax

In Canada, although art can be subject to capital gains, and possibly other taxes, it is possible for a donor to limit, or avoid the tax altogether, including by way of claiming a charitable tax credit.  Individuals thinking about estate planning and/or donating art should seek the advice of a professional advisor to maximize the amount of savings.

Thanks for reading,
Noah Weisberg

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12 Oct

Pet Trusts, Charitable Bequests, and Will Challenges

Rebecca Rauws Estate Planning Tags: , , , , , , , , , 0 Comments

I recently came across this article on the Financial Times Adviser discussing estate litigation in the UK in general, and, in particular, a situation relating to the estate of Tracey Leaning. I thought the article was interesting as it touched upon a couple of topics that raised some thought-provoking points for me.

To briefly summarize, Ms. Leaning died in 2015 leaving a Will which provided that her entire estate was to be transferred to her partner, Richard, on the condition that he look after her three dogs. However, she had also made a prior Will leaving her entire estate to four charities. Somehow, the charities learned that, while they had previously been included as beneficiaries of Ms. Leaning’s estate, her last Will did not gift anything to them. They wrote to Richard to advise him that they intended to challenge the later Will. According to the article, it is not clear whether any proceedings have yet been commenced by the charities.

Pet Trusts

The first thing I wanted to touch on was the “pet trust” aspect of this situation. This topic was recently discussed in a paper by Jenny Pho of Dale & Lessmann LLP for the Law Society of Upper Canada’s Practice Gems: Probate Essentials program on September 29, 2017. The arrangement made by Ms. Leaning appears to be in the form of a cash legacy to a pet guardian, namely Richard, together with the condition precedent that Richard take care of her dogs. Generally this option for leaving money for the care of one’s pets would only be recommended if the testator trusts the chosen pet guardian to properly care for the pets, as once the funds have been bequeathed to the pet guardian, the testator loses control over how the funds can be used.

In this particular situation, Ms. Leaning not only left a specific legacy to Richard, but rather her entire estate. It is likely that, in doing so, she did not intend that her entire estate be used solely for the care of her dogs, but rather, she put her trust in Richard to care for the dogs generally, using funds from her estate as needed. According to the article, Ms. Leaning’s later Will had been prepared by Ms. Leaning herself, without seeking legal advice. However, had she not had a trusted individual to care for the dogs, the pet trust arrangements would likely have been much more complicated, and may have required legal advice in order to properly implement.

Will Interpretation

Secondly, I also found one of the alleged bases for the charities’ challenge to Ms. Leaning’s will interesting. As noted above, Ms. Leaning had allegedly prepared her later Will herself, without seeking legal advice. Additionally, the signature page of the Will, which had been stapled to the remaining pages, had apparently become detached, leading to questions as to whether there had been any additional pages that were missing at the time of Ms. Leaning’s death. If such a situation arose in Ontario, it’s not clear what the ultimate outcome would be. If the court could not determine how the Will should be interpreted based on the available pages of the Will itself, it could also consider indirect extrinsic circumstances that were known to the testator at the time the Will was made. However, as it is ultimately a question of interpretation, it would likely be up to the court to decide whether, taking all the facts into consideration, it is satisfied that the Will is complete and should govern the distribution of Ms. Leaning’s estate.

Had Ms. Leaning sought legal advice and assistance with respect to the preparation of her Will, this question would likely have been avoided by the standard use of simple page numbering to indicate that all pages are present and accounted for.

Thanks for reading,
Rebecca Rauws

 

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28 Jul

Failure of a Charitable Gift

Hull & Hull LLP Estate & Trust, Wills Tags: , , , , , , 0 Comments

In the recent case of McDougall Estate, 2011 ONSC 4189 (CanLII) the deceased passed away leaving a handwritten will and codicil that together constituted a valid holograph will. The deceased had one surviving relative, his 83-year-old sister who lived in Florida.  

The will did not name an estate trustee and so the deceased’s close friend applied for and obtained a Certificate of Appointment of Estate Trustee with a Will. 

The will left the deceased’s estate to his sister, with a gift-over to “Eye Care research in Glaucoma and Catarach (sic) research”. The codicil said “this shall be expanded after all expenses and encumberances including burial, and the portion to [illegible – the Court determined it was either “expand” or “eye and”] glaucoma … At my death the remainder of my possession shall be bequathed (sic) to my sister Pearl McDougall, now residing in Florida.”

The estate trustee flew to Jamaica at a cost of $859 to deliver a cheque for $9,000 to a clinic for which the deceased had a passion. She delivered the donation herself because she wanted to make sure the charity was legitimate. 

In interpreting a will, the court commented that its function was to determine the true intentions of the testator in light of all the surrounding circumstances. On a reading of the will as a whole, the testator intended to make a charitable gift for eye and glaucoma research and that the bequest to charity was to be paid before the residue would fall to his sister.  This interpretation gave effect to the evidence concerning the deceased’s intentions including his history of making charitable gifts and his desire to benefit eye research because of his own cataract surgery.

However, the charitable bequest failed because no specific amount or share was stated by the testator.

The McDougall decision also dealt with the passing of accounts and contained some instructive discussion regarding trustee compensation, which I will cover in tomorrow’s blog, so stay tuned!

Sharon Davis – Click here for more information on Sharon Davis

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