Multiple wills are an extensively used estate planning tool designed to reduce the amount of Estate Administration Tax payable. Essentially, the grant of a Certificate of Appointment is limited to the assets referred to in the will that is being probated, and Estate Administration Tax is only paid on the assets falling under the will that is being probated.
This estate planning strategy was tested and approved by the courts in Granovsky Estate v. Ontario.
Where there is only one will, can similar probate fee/administration tax savings be accomplished by applying for a limited grant? According to the Manitoba Court of Appeal decision of Pollock v. Manitoba, the answer is NO.
In Pollock, the deceased died leaving personal property, mainly shares in privately held corporations, having a value of about $12.5m, and real property having a value of $1m. Probate was required to deal with the real property, but not required to deal with the shares. If probate could be obtained in relation to just the real property and not the value of the shares, the estate would save $75,000 in probate fees. (Using current Estate Administration Tax rates in Ontario, the saving under such a scheme would be $187,500!)
The Manitoba legislation allowed the administration of an estate of a deceased person to be limited to certain assets “as the court thinks fit”. The Manitoba Court of Appeal considered a long line of cases dealing with the issue and concluded that the court must have a “strong reason” for making a limited grant, and stated “I do not regard the saving of probate fees as a sound reason for making a limited grant of probate. An applicant for a limited grant is, of course, entitled to take the least expensive way of administering an estate, but the chosen way must be one permitted by the legislation. The saving of probate fees is not, as I see it, a sufficiently strong reason to justify a limited grant. Nor is a limited grant a money-saving device contemplated by the legislation.”
In Ontario, the Rules of Civil Procedure specifically allow for limited grants. However, the grant is “limited to the assets referred to in the will”: Rule 74.04(1). Thus, in Ontario, if there is only one will, the result would be as in Pollock: even if probate of the will was needed in order to deal with only one asset, Estate Administration Tax would need to be paid on all assets of the estate.
Have a great weekend.
Last night, I attended an advance screening of RBG, a documentary focusing on the career of Justice Ruth Bader Ginsburg, a current Associate Justice of the Supreme Court of the United States. Justice Ginsburg is a long-time social rights activist and advocate well known for her work in promoting gender equality on both sides of the bench.
More recently, Justice Ginsburg has gained notoriety for frequent dissenting opinions within the context of a primarily conservative judiciary. While a dissent is, by definition, “a disagreement with [the] majority decision” (Black’s Law Dictionary) that becomes law, one should not underestimate the value of a strong dissent over time.
At provincial appellate courts in Canada, a strong dissent may be of great assistance in preparing an application seeking leave to appeal to the Supreme Court, as well as at the appeal stage if leave is granted. Dissenting opinions of the Supreme Court of Canada have been referred to as the voice of the future, with prophetic potential.
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Harper Lee died in 2016. Prior to her death, Ms. Lee published a second novel, titled “Go Set a Watchman“, and there was much litigation with respect to whether Ms. Lee was coerced into publishing this new work while she was vulnerable and elderly.
According to the New York Times, Ms. Lee also signed an agreement prior to her death which gave Rudinplay the right to adapt “To Kill a Mocking Bird” into a live stage play. The Estate Trustee of Ms. Lee’s Estate has sued the producers of the play for breach of contract by failing to remain true to the novel. Even though the Estate Trustee sued in Alabama, the producers have, in turn, counter-sued in New York for damages to the production.
Interestingly enough, there were discussions regarding whether the evidence at trial may include a live performance before the jury in New York. If this request is granted, the jury will be privy to the first performance (and perhaps also the last performance) of the anticipated Broadway play. This could be a unique precedent for copyright matters.
The play produced by Aaron Sorkin, which stars Jeff Daniels as Atticus Finch, is scheduled to open in December and tickets may go on sale here.
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The phrase “the expiry of the applicable period” is repeated in the various subrules to Rule 48.14 and we want to take this opportunity to illustrate the meaning of this particular phrase. This phrase is important because it pertains to when an action may be automatically dismissed by the Registrar pursuant to Rule 48.14(1).
Essentially, going forward, actions are given five years from the date of commencement before they may be dismissed for delay by the Registrar. “The expiry of the applicable period” is the expiration date that is referred to in Rule 48.14(1), in which,
48.14 (1) Unless the court orders otherwise, the registrar shall dismiss an action for delay in either of the following circumstances, subject to subrules (4) to (8):
- The action has not been set down for trial or terminated by any means by the later of the fifth anniversary of the commencement of the action and January 1, 2017.
- The action was struck off a trial list and has not been restored to a trial list or otherwise terminated by any means by the later of the second anniversary of being struck off and January 1, 2017.
The expiry of the applicable period for an action commenced on the date of this blog, i.e. November 29, 2016, will be November 29, 2021.
The expiry of the applicable period for an action commenced on the date Rule 48.14 came to force and effect, i.e. January 1, 2015, will be January 1, 2020.
The expiry of the applicable period for an action commenced on the date the Winter Olympic games began in Vancouver, i.e. February 12, 2010, will be January 1, 2017.
This is the case because January 1, 2017 is later than the fifth anniversary of an action commenced on February 12, 2010, whereas the fifth anniversary of the commencement dates in examples 1 and 2 are later than January 1, 2017.
Therefore, it is extremely important to keep in mind that any actions commenced before January 1, 2012 may be dismissed by the Registrar on January 1, 2017.
What happens if an individual dies intestate, and upon application for a Certificate of Appointment of Estate Trustee Without a Will, a Not Clear Certificate is returned to the applying party?
Pursuant to Rule 74.12 of the Rules of Civil Procedure:
(1) A certificate of appointment of estate trustee shall not be issued until the court has received from the Estate Registrar,
(d) on an application where there is no will, a certificate that no will or codicil has been deposited in the Superior Court of Justice.
A will being deposited in the Superior Court of Justice does not necessarily mean that the will belongs to the deceased individual. Therefore, while one may receive a Not Clear Certificate (“Certificate”) from the Estate Registrar for Ontario, it does not guarantee that a will exists in the deceased’s name. Rather, the Certificate creates the need for the applicant to take extra steps to ensure that the wills that are deposited with the Superior Court of Justice are not wills that belong to the deceased.
What Steps Should You Take?
A Certificate sent by the Estate Registrar for Ontario will contain a list of different deposit dates and court file numbers, corresponding to wills that are already deposited with the Superior Court of Justice. The listed wills on deposit will all have names similar to that of the deceased individual.
Upon receipt of the Certificate, it is the applicant’s or their lawyer’s responsibility to track down each of the deposited wills, in order to prove that they do not belong to the deceased. This involves attending the Registrar of the Court where the will has been
deposited. In some circumstances, faxing the Certificate will suffice. The Registrar will then deliver to the applicant a photocopy of the Envelope for Will on Deposit. This will allow the applicant to make the necessary investigation to determine that the will on deposit is not the will of the deceased. The Envelope for Will on Deposit contains the name of testator, the testator’s address, the name of the executor, the executor’s address, and the date the will was deposited for safe keeping.
Once the applicant gathers all of the Envelopes for Will on Deposit, the applicant must go through the envelopes and ensure they do not belong to the deceased. The applicant must then prepare an Affidavit stating that each Envelope for Will on Deposit does not belong to the deceased. The Affidavit should be filed at the Court, along with the Certificate. Once the Court is satisfied the deposited wills do not belong to the deceased, a Certificate of Appointment of Estate Trustee Without a Will should be issued. If the will does, in fact, belong to the deceased, different steps will need to be taken in order to obtain a Certificate of Appointment of Estate Trustee With a Will.
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The Honourable Mr. Justice Thomas McEwen spoke at the Estates Litigation Networking Reception hosted by the Advocate’s Society on November 23, 2015.
Justice McEwen was appointed to the Superior Court of Ontario in June, 2009 and he is currently the Civil Team Leader and Head of the Estates List in the Toronto Region. Justice McEwen spoke at length on various issues that he wishes to convey to the estates bar which is my pleasure to reiterate on this blog.
Given the volume of matters on the Estates List, Justice McEwen noted that the Court should be provided with notice of a settlement as they occur, rather than last minute notice near the time of a scheduling appointment or hearing. He advised that too many days on the list are being lost by last minute cancellations. Notice of a settlement may be provided to the Court by e-mail to email@example.com.
Moreover, he spoke of the fact that each 9:30 scheduling appointment is allocated with ten minutes of time and counsel are expected to converse with one another and resolve as much as possible prior to entering the Judge’s chambers.
In cases where there are issues relating to persons under disability on a motion for directions, the Court prefers that counsel request 10:00 a.m. hearings, rather than 9:30 a.m. scheduling appointments, in order to provide the Judge with 20 minutes to canvas such issues with counsel. Moreover, it allows the Judge to have the benefit of being able to review the full record in advance.
Lastly, communication between counsel is key in order to avoid unnecessary motions for directions.
Click here to review the Consolidated Practice Direction Concerning the Estates List in the Toronto Region as well as the relevant parts of the Consolidated Provincial Practice Direction, the Consolidated Practice Direction for Divisional Court Proceedings as well as any other relevant Toronto region-specific Practice Directions and Guides.
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This week on Hull on Estates, Natalia Angelini and Jonathon Kappy discuss issues involving minors and incapables. Specifically, they discuss accepting payment into court for the benefit of individuals under the age of majority as well as various statutes dealing with accepting payment into court.
Please leave a comment or send us an email at firstname.lastname@example.org if you have any questions.
We have blogged previously on section 35 of Ontario’s Trustee Act, which relieves a trustee who has committed a technical breach of trust but has otherwise acted honestly and reasonably. This provision may not be available to a trustee who, confronted with an ambiguous situation, fails to seek the advice and direction of the court, as is the trustee’s right under section 60(1) of the Trustee Act. Section 60(1) states:
60. (1) A trustee, guardian or personal representative may, without the institution of an action, apply to the Superior Court of Justice for the opinion, advice or direction of the court on any question respecting the management or administration of the trust property or the assets of a ward or a testator or intestate.
Justice Cullity describes the applicable principles in Merry Estate v. Plaxton, 2002 CanLII 32496 (ON S.C.) at paragraph 35:
" On the question of costs, I am satisfied that no criticism can properly be directed at Mr. Meredith for bringing this application. Section 60 of the Act entitles trustees to seek the opinion, advice and direction of the court with respect to the administration of a trust and, in cases where significant doubt exists as to the scope of their powers and responsibilities, they may not be protected under section 35 if they fail to do this. Although such applications must not be made frivolously – and not merely to relieve applicants from making decisions that are part of their responsibilities under the terms of the trust – they are entitled to have their costs paid out of the trust property if, in the opinion of the court, the application was properly brought. I believe this is such a case."
Merry Estate v. Plaxton also contains a discussion of a trustee’s right of indemnity with respect to costs properly incurred, and the relationship between this right of indemnity and litigation cost awards for trustees from trusts. In that application for the court’s advice, the trustee Mr. Meredith was awarded full indemnity for his legal expenses in bringing the application.
Have a great day,
Chris M. Graham – Click here for more information on Chris Graham.
I recently read an article composed by The Children’s Lawyer, Debra Stephens, named Minor Settlements: How to Ensure Court Approval. I found this article to be particularly helpful as the article speaks to the role of The Children’s Lawyer in litigious matters and explains the common issues that arise during settlements involving minors.
Fundamentally, it is important to understand the role of The Children’s Lawyer with respect to their involvement in settlements concerning minors, which Ms. Stephens describes as: “The Children’s Lawyer is not a party to the proceeding and is not in an adversarial role with any of the parties. Rather, The Children’s Lawyer acts as an advisor to the court, making recommendations to assist the judge in determining whether to approve the proposed settlement”.
In her article, Ms. Stephens talks about a few issues that commonly arise during settlements involving minors. One of those issues that Ms. Stephens touches on is legal fees. Ms. Stephens states that legal fees are an important factor in determining whether to approve a settlement on behalf of a minor. Factors that are relied on when considering the reasonableness of a solicitor’s account are set out in the Court of Appeal decision Cohen v. Kealey and Blaney and include:
1. time spent;
2. legal complexity;
3. degree of responsibility assumed by the lawyers;
4. monetary value of the matter in issue;
5. the importance of the matters to the client;
6. degree of skill of the lawyers, results achieved;
7. ability of the client to pay; and
8. expectation of the client with respect to the fee.
Also, another factor not mentioned in the case above is ensuring that access to justice is obtained for parties under a disability. I found Ms. Stephens’ article to be particularly useful in my practice and I would certainly recommend it to any practitioner who ordinarily runs into issues involving The Children’s Lawyer.
Thank you for reading.
Rick Bickhram – Click here for more information on Rick Bickhram.
The recent Ontario Superior Court of Justice decision of Re Steen Estate addresses the issue of getting funds paid into court pending a determination of ownership.
In that case, the deceased left a will that divided her estate equally amongst her three sons. There was also a prior “Family Agreement” in which the deceased and her three sons agreed that the deceased’s intent was that each of her three sons would receive a one third share of her financial assets upon her death. The agreement went on to provide that all existing accounts of the deceased, whether jointly held or otherwise, would be totalled, and the value divided into three upon the deceased’s death.
The plaintiff, one of the sons of the deceased was also the estate trustee, brought a claim as against the two other sons with respect to jointly held accounts held by the two other sons. It appears that the plaintiff also held a joint account with the deceased as well.
The plaintiff brought a motion requiring the two other sons to pay the monies they held jointly with the deceased into court pending a determination of the issue.
The Court considered the test for having funds paid into court under Rule 45 of Ontario’s Rules of Civil Procedure. The three-pronged test requires that the moving party show:
1. That the moving party has a right to a specific fund;
2. That there is a serious issue to be tried regarding the moving party’s right to that fund; and
3. That the balance of convenience favours granting the relief sought by the party.
The motion was dismissed. The court held that there was no “specific fund” as the joint account with one of the defendants had been transferred into his investment account: the fund no longer existed. There was no evidence with respect to the other joint accounts.
The court also found that there was no “serious issue to be tried”. The intention of the deceased with respect to dividing her estate was clear.
Finally, the court held that the balance of convenience did not favour the plaintiff. The plaintiff only sought that the defendants’ joint accounts be paid into court, and not his own joint account. The court held that it would be “grossly unfair” to require the defendants to pay their joint account funds into court while allowing the plaintiff to hold onto his joint account proceeds.
This last point seems to have resonated with the judge. The court noted at several points in the decision that the plaintiff was not seeking to have his jointly held funds be paid into court as well.
Thank you for reading,