Tag: estate law blog

29 Mar

Predatory Marriages: knowing what it means to say “I do.”

Garrett Horrocks Capacity, Common Law Spouses, Elder Law, Ethical Issues, General Interest, Health / Medical, In the News, Public Policy Tags: , , , , , 0 Comments

The interplay between evolving social norms and the legal foundations that predate or accelerate these changes has seen significant development in the last decade.  Courts of law and of public opinion have made important strides in shaping  social policy in many areas, such as medically-assisted death, gender diversity and inclusion, and marriage rights, to name a few.  A recent case out of the Ontario Superior Court of Justice considered this last issue, marriage rights, with a particular focus on predatory marriages.

A person has the capacity to enter into a marriage contract only if that person has the capacity to understand the duties and obligations created

In Hunt v Worrod, 2017 ONSC 7397, the Court was tasked with assessing whether an individual who had suffered a catastrophic brain injury possessed the necessary capacity to marry.  In 2011, Kevin Hunt suffered a serious head injury following an ATV accident and spent four months recuperating in hospital.  He was eventually discharged into the care of his two sons, but three days after his release, Mr. Hunt was whisked away by his on-and-off girlfriend, Kathleen Worrod, to be ostensibly married at a secret wedding ceremony.

Mr. Hunt’s children brought an application to the Court on his behalf to void the marriage, partly to preclude Ms. Worrod from accruing spousal rights to share in Mr. Hunt’s property or assets.  Ultimately, the Court concluded that Mr. Hunt did not possess the requisite capacity to enter into the marriage.

In its reasons, the Court relied heavily on the opinions of several expert witnesses and the existing body of legal authority.  The Court began by reviewing section 7 of Ontario’s Marriage Act, which provides that an officiant shall not “solemnize the marriage” of any person that the officiant has reasonable grounds to believe “lacks mental capacity to marry.”

The expert evidence tendered by the parties suggested that Mr. Hunt had significant impairments in his ability to make decisions, to engage in routine problem-solving, and to organize and carry out simple tasks.  He was characterized as “significantly cognitively impaired”, and was assessed as being incapable of managing his property, personal care, or safety and well-being.

The Court subsequently relied on the test for capacity to enter into a marriage contract established by the British Columbia Supreme Court in Ross-Scott v Potvin in 2014.  The Court held that a person has the capacity to enter into a marriage contract only if that person has the capacity to understand the duties and obligations created by marriage and the nature of the commitment more generally.

The Court also identified the tension between balancing Mr. Hunt’s autonomy as against the possibility that he lacked the capacity to appreciate the legal and social consequences of marriage.  Ultimately, the Court was satisfied that Mr. Hunt’s children had met their burden of demonstrating that their father lacked the necessary capacity to marry Ms. Worrod.  The marriage was declared void ab initio, and the attendant spousal property rights that would have otherwise flowed to Ms. Worrod were lost.

Thanks for reading.

Garrett Horrocks

12 Feb

Does spousal support end on death?

James Jacuta Litigation, Support After Death Tags: , , 0 Comments

Family law has long been clear on the question of spousal support in that it is provided to satisfy the needs of the spouse during his/her lifetime and the entitlement to support does not survive the death of the recipient.

Whether this remains the status quo may have been put into question with the recent Alberta’s Court of Queen’s Bench decision in Marasse Estate. In this case, the couple’s separation agreement required the husband to pay monthly support to the wife for five years. The wife passed away after the husband had made only a few payments, and her estate trustee sought the remaining payments. The husband resisted the claim, asserting that the premise underlying the support was the wife’s need. As she no longer had need, he should not be required to make further payments.

The Court concluded that the estate was entitled to continue to receive the support payments. It reasoned that the contractual agreement of the parties created a juristic reason to continue support for the following reasons:

1.The separation agreement contained the fairly standard enurement clause, which provides that the agreement enures to the parties’ heirs, executors etc.

2. The separation agreement contained a non-reviewability clause that states: “entitlement, quantum, and duration of spousal support is non-reviewable and may not be varied on any material change of circumstances.”

3. The separation agreement was comprehensive, negotiated with give and take on both sides, and it should be considered as a whole.

4. Actual need is not expressed in the agreement to be a precondition to payment. For instance, if the converse to the husband’s argument were true, being that the wife remained in financial need and lived longer than five years, the wife would not have been able to collect any further amounts.

Notably, the parties had also turned their minds in the agreement to what would happen if the husband died before all payments were made, as he agreed to maintain life insurance to secure support in the event of his death.

The Court found that the agreement was unambiguous, and could not be set aside as the parties to it (1) intended it to be a full and final resolution, and (2) there were no new circumstances not reasonably anticipated that led to a situation that could not be condoned.

A recent article found here discusses the Court’s decision.

Thanks for reading and have a good day,

Natalia Angelini

04 Dec

Takeaways from Make-a-Will Month

Natalia R. Angelini Uncategorized Tags: , , 0 Comments

November has drawn to a close and, with it, the Ontario Bar Association (OBA) and the Toronto Public Library’s (TPL) Make-a-Will Month program, where estate professionals are connected with the community to help them understand the importance of having a will and powers of attorney.

In presenting at one of the Make-a-Will Month sessions, the need for this initiative was readily apparent. I was met with a high level of attendee participation and a myriad of questions about wills and powers of attorney. The following information seemed particularly helpful to impart:

Wills

  • The benefits of making a will, including having control over your choice of executor, tax minimization, protecting assets from creditors, providing for charitable gifts and allowing for staggered entitlement to ensure beneficiaries don’t prematurely spend their inheritance;
  • The consequences of not having a will, including the inflexible entitlement scheme under the Succession Law Reform Act and the unwanted impact this could have in situations where, for instance, you would not want to benefit relatives equally or immediately upon your death (e.g. spouses are separated, immediate family members are estranged, and intestate beneficiaries are minors); and
  • The elements of a will, how to revoke it and the grounds upon which to challenge its validity.

Powers of Attorney

  • The different types of powers of attorney a grantor may select (e.g. springing, enduring, limited and general); and
  • The difficulties that may be caused by not having a power of attorney in place, including the costly and potentially protracted process of pursuing a guardianship appointment.

I was so pleased to participate in the Make-a-Will Month program, and applaud the continuing efforts of the OBA and TPL to share vital information with the public.

Thanks for reading and have a great day,

Natalia Angelini

Some other blogs on related subjects are:

November is “Make a Will Month”

Make Estate Planning One of Your New Year’s Resolutions

When to Make a Codicil

26 Sep

Accountings and Incapable Persons – How Is Privacy Protected?

Natalia R. Angelini Uncategorized Tags: , , , , 0 Comments

It is trite law that an executor administering a deceased persons’ estate has an obligation to account to the beneficiaries. The law is a bit more complex when an attorney for property is applying to the court to account for his/her administration of an incapable person’s affairs.

Rule 74.18(3) of the Rules of Civil Procedure provides that service of the application material is required on persons who have “a contingent or vested interest in the estate”. Because a will speaks as if it was made immediately prior to the death of a testator, a beneficiary has no financial interest until the testator dies, the result being that in an accounting for the administration of the assets of an incapable person, only the incapable person him/herself has a contingent or vested interest in the assets.

Although it may seem inadequate that an attorney would be required to serve the grantor and no other family members, as an incapable person will arguably not have the wherewithal to level objections in respect of the administration, keep in mind that the welfare of the grantor is already being safeguarded by the Public Guardian and Trustee (who must also be served with the court material) and a litigation guardian who may be appointed within the context of the accounting application to protect the interests of the grantor.

Couple the above with the strict duty of confidentiality and privacy owed to an incapable person by the attorney, as set out in the Substitute Decisions Act, 1992 (Regulation 100/96), and we have a protective framework when dealing with disclosure of financial affairs of living persons.

This makes total sense to me. However, it may come as an unwelcome surprise to an adult child who, for instance, learns that she does not have an automatic right to receive disclosure of her incapable parents’ finances. Feeling unfairly shut out, she may consider seeking the court’s assistance.

Although she can apply to the court for leave to compel an accounting, the prevailing view of the court is that a person’s privacy is paramount such that leave should be granted sparingly. In a prior blog on the subject, my colleague Umair Abdul Qadir cited the Groh v Steele decision, where the Court makes an important pronouncement on this point, stressing that leave should not be granted absent the applicant establishing an interest (at least indirectly) in the affairs of the grantor, and some evidence that the attorney is not properly handling the administration.

Thanks for reading and have a great day,

Natalia R. Angelini

Some other blog posts on this and related subjects that may appeal to you are:

Attorneyship Accounting with a Capable Grantor

Abuse of a power of attorney: when good people do bad things

Passings of Accounts and Serving the Public Guardian and Trustee

25 Sep

Where should you store your testamentary documents?

Natalia R. Angelini Estate Planning, Uncategorized, Wills Tags: , , 0 Comments

Getting a will done is step one. Step two is ensuring it is safely stored. Although many people choose to leave their will with their lawyer, store it themselves or put it in a safety deposit box, there is another option that seems to be less popular but just as secure – deposit with the court.

The Process

Rule 74.02 of the Rules of Civil Procedure governs the process, and amongst the requirements are the following:

  • The depositor is restricted to limited number of individuals, including (i) the testator or a person authorized by the testator in writing, (ii) a lawyer who held the will or codicil at the time of retirement from practice, or, if deceased, the lawyer’s estate trustee, and (iii) a person authorized by the court;
  • The court office must follow specific procedures for processing and storage of the documents; and
  • During the testator’s lifetime, his/her will or codicil can only be copied, inspected or removed by the testator in person, by his/her guardian of property or by court order.

Rule 74.02 also provides for access to and release of the documents post-death.

Regarding post-death access, any person may copy or inspect a will or codicil of the testator on deposit, on filing a written request stating the testator’s date of birth and proof of death.

Regarding post-death release, this can only be to a named estate trustee or such other person as the court may direct, and is done after the filing of (i) a request for delivery, (ii) proof of death, and (iii) if no order directing delivery of the will or codicil has been made, an authorization signed by every estate trustee named in the will specifying the estate trustee (or the estate trustee’s lawyer) to whom the will or codicil is to be delivered (if an estate trustee is not available to sign, a written explanation will need to be given satisfactory to the registrar).

Is this for you?

If it isn’t convenient or viable for you to personally and safely store your testamentary documentation, if you don’t want it kept with your lawyer (or if there was no drafting lawyer), and if you don’t mind putting your executor to the task (and additional time and expense) to secure the document from the court post-death, this may be the option for you.

However, if you expect to periodically be making changes to your estate plan the deposit process may not be something that you would like to keep repeating. Further, if you wish to revoke your will on an urgent basis, it may be more difficult to do so. In the worst case scenario, this could result in a testator not having his/her testamentary wishes executed.

Thanks for reading and have a great day,

Natalia R. Angelini

10 Aug

When are Corporate Directors Personally Liable?

Natalia R. Angelini Litigation Tags: , , 0 Comments

Estate litigation often intersects with other areas of law, and frequently with corporate law where, for instance, a testator has an ownership interest in a corporation and/or is a director of a corporation. Accordingly, we pay attention to important cases in corporate law that may impact upon our practice. One such case is Wilson v. Alharayeri, a recent Supreme Court of Canada (SCC) decision, where the SCC considered when an oppression remedy may lie against a director personally.

The facts in brief are that Mr. Alharayeri (Mr. A) was the president and CEO of a corporation. He was also a director and a significant minority shareholder of the corporation, with half of the shares being convertible into common shares if the corporation met certain financial targets. Mr. A resigned for failing to disclose a conflict of interest. The appellant, Mr. Wilson, replaced Mr. A as president and CEO. A few months later, the board of directors issued a private placement of convertible secured notes to its existing common shareholders. Prior to doing so, the board accelerated the conversion of certain convertible preferred shares, but not those held by Mr. A given the conduct leading to his resignation. Wilson played a lead role in this decision. The result was that the value of Mr. A’s portfolio was diluted.

Mr. A brought an oppression claim against four of the directors, including Wilson. The Superior Court of Quebec found oppression, and Wilson and another board member were held personally liable for the board’s failure to convert Mr. A’s shares. They were Ordered to pay Mr. A compensation. The Quebec Court of Appeal affirmed the decision, and Wilson appealed to the SCC on the question of when personal liability for oppression may be imposed on corporate directors.

The SCC dismissed the appeal, and in doing so applied a two-pronged approach. First, the oppressive conduct must be attributable to the director. Second, a personal remedy must be “fit” in all of the circumstances – four general principles should guide the court, being:

(i) whether personal liability is fair in consideration of all circumstances;

(ii) any order should go no further than needed to remedy the oppression;

(iii) any order may serve only to vindicate the reasonable expectations of a security holder, creditor, director or officer as a corporate stakeholder; and

(iv) the general principles of corporate law.

It is noteworthy that the hallmarks of conduct attracting personal liability remain, being where a director derives a personal benefit and where a director acts in bad faith, but they are not necessary conditions of the two-pronged approach.

Thanks for reading and have a great day,

Natalia R. Angelini

You may also enjoy the following blogs:

https://hullandhull.com/2016/11/beneficiaries-corporate-documentation/

https://hullandhull.com/2014/11/control-of-private-corporations-in-the-event-of-incapacity/

https://hullandhull.com/2006/09/trusteedirector-conflicts-part-ii/

 

08 Aug

How Can We Add Clarity to Inter Vivos Gifting?

Natalia R. Angelini Estate Planning, Joint Accounts, Uncategorized Tags: , 0 Comments

I was surprised to learn of a recent statistic indicating that about half of all singles in Toronto under age 34 are living with their parents – I thought this was just the way we do things in my family! But seriously, if you are a parent longing to cut the ties that bind, or if you just want to help your adult child get a head-start in life, you have probably considered doing so by way of a gift or loan. To avoid any confusion or worse, litigation, it is important to document the transaction and record the intention.

If the intention is to loan, a loan agreement should be used. If, however, the intention is to gift, keep in mind that to have a valid gift there are three necessary elements: (i) intention to donate; (ii) acceptance by the donee; and (iii) sufficient act of delivery and transfer. The onus of proving that a gift is valid is on the recipient of the gift, who must show a clear and unmistakable intention by the donor to have voluntarily given the gift. In order to ensure legal clarity, using a deed of gift is ideal.

The benefit of using a deed of gift is that it can provide an answer to any challenges that others may have to the transfer in question, which we often see in situations of transfers of property (bank accounts, real property etc.) into the joint names of the parent and child. Otherwise, upon death, the gift is usually presumed to form part of the parent’s estate unless proven otherwise by the child.

Other potential benefits to using a deed of gift include increasing the chances of protecting the funds upon marital breakdown (e.g. if the deed of gift stipulates that the funds are for the child alone, and not the married couple, this may prevent the monies from forming part of the family assets). It can also assist an estate trustee to correctly apply a hotchpot clause (which often requires the executor to take inter vivos gifts into account when making an equal distribution amongst the beneficiaries) and distribute the assets as the testator intended.

Thanks for reading and have a great day,

Natalia R. Angelini

Other articles you might enjoy:

https://hullandhull.com/2017/02/can-delivery-gift-precede-intention/

https://hullandhull.com/2016/10/validity-inter-vivos-gift/

https://hullandhull.com/2015/10/mortis-causa-gifts/

You may also enjoy the July 7, 2017 interview of Nicole Ewing, a TD Wealth business succession advisor and tax and estate planner, which can be found on www.moneytalkgo.com.

17 Mar

Relinquishing US status – how do you do it and what are the tax implications?

Natalia R. Angelini General Interest Tags: , , 0 Comments

Some American celebrities spoke of leaving the US depending on the outcome of the election.  I don’t know if anyone has actually followed through…yet.  Nonetheless, it got me thinking back to an interesting paper presented at the 2016 Six Minute Estates Lawyer by Britta L. McKenna.  The issues addressed in Ms. McKenna’s paper include what is involved in relinquishing US citizenship.  Here is how you do it:

  • Formally – A US citizen can formally renounce his/her citizenship at a US consulate, which process involves some initial communication and information exchange, followed by taking the oath of renunciation at the consulate. A final US tax return will need to be filed for the year of renunciation. The former citizen will be sent a Certificate of Loss of Nationality.
  • Informally – A US citizen can informally renounce his/her citizenship by engaging in an expatriating act with the intent of relinquishment. A bold example – committing an act of treason. A more benign example – taking an oath of office with a foreign government.

A person relinquishing their US citizenship will be subject to the US exit tax regime if any of the following is true (with limited exceptions): (1) his/her net worth at the time is US$2,000,000 or more; (2) his/her average US tax liability for the prior five years is US$161,000 or more; or (3) the individual cannot certify that all US tax filing obligations for the preceding five years have been complied with.  The tax consequences include a deemed sale of his/her assets for fair market value on the day before he/she ceases to be a US citizen, and all gains/losses are recognized.

Further, if one is subject to an exit tax regime, an inheritance tax is also imposed on certain gifts made by the expatriate (during life or death) after expatriation to a US citizen or resident.  The inheritance tax (assessed at the highest gift or estate tax rate at the time of receipt) is imposed on the recipient.

Finally, a former citizen who renounces, and who is determined to have renounced for the purpose of US tax avoidance, may be denied entry into the US pursuant to its immigration laws.  Ms. McKenna cites that enforcement was lacking, but that this may change. With the current political climate, I wonder if that change is already underway.

Thanks for reading and have a great weekend!

Natalia Angelini

You may also be interested in the following blog-posts:

The US Elections and Estate Tax 

US Inheritance Tax Deductions for Surviving Spouses

 

Tax Concerns for Snowbirds

16 Mar

What Can Reducing Probate Fees Cost You?

Natalia R. Angelini Estate Planning, General Interest, Joint Accounts Tags: , , 0 Comments

Although probate fees in Ontario are relatively modest (approx. 1.5% of the estate value), most wish to avoid or reduce them.

With respect to which assets you must pay probate fees on, section 1 of the Estate Administration Tax Act, 1998 defines the “value of the estate” as “the value of…all the property that belonged to the deceased person at the time of his or her death less the actual value of any encumbrance on real property that is included in the property of the deceased person”.  As joint-property vests in the co-owner of the property immediately before the time of death of their co-owner, the asset cannot be said to belong to the deceased person at the time of their death.  An exception, of course, is the rebuttable presumption of resulting trust expounded in Pecore v Pecore.

Although parents may wish to place assets in joint-ownership with an adult child to avoid probate fees, here are five ways that doing so can have negative consequences:

  1. No savings – If the resulting trust presumption that property transferred into joint tenancy by a parent to the parent and his/her adult child results to the deceased parent’s estate is not rebutted by showing a clear intention of a gift, the transfer may not work to save on probate fees.
  2. Loss of control – The property cannot be sold or mortgaged without the child’s consent.
  3. Negative tax consequences – the transfer of an asset with accrued gains to someone other than a spouse is a deemed disposition at fair market value. Further, if the property is the parent’s principal residence, half of the principal residence exemption may be lost for the years following the transfer during which the child is not living in the property.
  4. Spousal claims – The property may be exposed to claims against the child by his/her separated spouse.
  5. Creditor claims – financial troubles and/or declarations of bankruptcy can result in the child’s interest in the property being subject to creditor claims.

These and other potential pitfalls are reviewed in a recent piece in The Lawyers Weekly.

Thanks for reading,

Natalia Angelini

You may also be interested in the following blog-posts:

Joint Property and Intention Evidence

The High Cost of Probate

Does Jointly Owned Property Pass to the Surviving Spouse?

06 Oct

Is an Update to the Laws of Parentage Coming?

Natalia R. Angelini Ethical Issues, General Interest, In the News, Uncategorized Tags: , , 0 Comments

We do not have an automatic recognition of same-sex parents in Ontario, as the rules of parentage in section 1 of the Children’s Law Reform Act (“CLRA”) state that a person is the child of his or her “natural parents”.  The exception to this is where an adoption order has been made, which is what one or both same-sex parents would need to obtain in order to have their parentage recognized.

Father holding his child, changes to the Laws of Parentage
“On September 29, 2016, the All Families Are Equal Act was introduced, and, if passed, is expected to take effect in the New Year.”

On June 22, 2016, by way of a consent Order, the Court declared the CLRA to be in breach of s.1 of the Charter of Rights and Freedoms to the extent that “the legislation does not provide equal recognition and benefit and protection of the law to all children, without regard to their parents’ sexual orientation, gender identity, use of assisted reproduction or family composition, and to the extent that the legislation does not provide equal recognition and the equal benefit and protection of the law to all families.”

On September 29, 2016, the All Families Are Equal Act was introduced, and, if passed, is expected to take effect in the New Year.  Among other things, this new legislation will reportedly ensure the following:

  • where a child is conceived through assisted reproduction, the parents are the birth parent and the birth parent’s partner, if any, at the time of the child’s conception (no court order required);
  • the intended parents of a child born to a surrogate would be recognized without a court order if (i) the surrogate and the intended parent(s) received independent legal advice and entered into a written pre-conception surrogacy agreement; and (ii) the surrogate provides written consent to give up her parental status before conception and seven days after the child’s birth; and
  • a court can grant a declaration of parental status to a deceased person in relation to a child conceived after their death (the child can inherit and seek support from the deceased parent’s estate if born within three years of death).

I look forward to seeing how the legislation is interpreted, and whether the uncertainty that has long plagued this area of the law will be eliminated.

Thanks for reading,

Natalia Angelini

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