Tag: Drafting Solicitor
This week on Hull and Estate, Natalia Angelini and Sydney Osmar discuss Dale v Prentice, in which the Ontario Superior Court of Justice addresses whether a drafting solicitor can represent the estate in a will challenge.
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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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On Monday, Jordan Atin chaired the 2017 Wills and Estates Practice Basics CPD program and presented a paper, “Drafting Protection of Trustees”. His paper provided an important reminder of some ways a testator and drafting solicitor can protect a trustee from litigation ahead of time. Trustees are often friends or relatives of the testator, with no particular expertise in estate administration. The testator may wish to protect such trustees from liability and ensure they are compensated for their time and effort. Sometimes, more sophisticated individuals or trust companies will require certain protective provisions before accepting appointment as trustee.
Trustee compensation is an issue that commonly leads to litigation. Section 61(1) of the Trustee Act states:
A trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice.
Usually, trustee compensation is based on 2.5% of receipts and disbursements, subject to the court’s exercise of discretion. Testators may wish to include provisions in the will that provides certainty and protection for their trustees. Testators can control how much trustees receive as compensation by fixing compensation or making a legacy in lieu of compensation.
Testators can make a provision determining the exact amount of compensation a trustee will receive. Such provisions must be carefully drafted so that s. 61(1) does not apply. If there is any ambiguity in the provision, trustee compensation will be subject to the court’s exercise of discretion. Testators can also fix compensation by properly incorporating a previously executed compensation agreement into the will. The requirements for incorporation by reference can be found here.
Testators can also make a legacy to the estate trustee and specify that the estate trustee is not to receive compensation. Such an approach will avoid the estate trustee “double-dipping” by claiming both compensation and a legacy. There is, however, no certainty that a legacy that is made apparently independent of compensation will survive scrutiny from CRA. Simply put, if the legacy is considered by CRA to have been given in exchange for services, it may nonetheless be considered as income and taxable in the hands of the estate trustee.
The full text of Jordan’s paper can be found in the CPD materials on the LSUC website.
Thank you for reading.
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This week on Hull on Estates, Natalia Angelini and Nick Esterbauer discuss the recent decision of the British Columbia Court of Appeal in Johnston v Johnston Estate, 2017 BCCA 59, and the limitations of the duty owed by a drafting solicitor to disappointed beneficiaries.