Tag: estate law
It’s always good to end the week on a high note and once again the baby boom generation is in the news. A recent report by Decima Research says almost $1 trillion in cash and other assets will be transferred to the children of baby boomers in the years to come. The baby boomers are without a doubt the richest generation that Canada has produced to date. Even in death, the baby boomers will continue to shape our society.
In the past, the typical inheritance was likely considerably less than $100,000. However, when asked, more than 50% of the children of baby boomers expect to receive $283,000 on average. This figure represents a significant increase from the past and is indicative of the wealth that baby boomers have accumulated over the years. Half the $283,000 will be received in cash and the rest in real estate and valuables.
However, to me it is also clear that baby boomers will live longer than past generations and likely spend at a greater rate than their parents ever did as they fight the ravages of old age. Ultimately, there may not be as much to pass along as their children would like to think. The baby boomers also have an altruistic streak and may leave some of their wealth to their favourite charity.
Regardless of who gets the money, the need for proper estate planning is clear. Now is the time for boomers to get their personal affairs in order if they haven’t already. Baby boomers should let their children know now what their wishes are in order to avoid family fights in the future when their estates are being distributed. If parents are afraid that their children will react angrily if treated differently, they should nevertheless let them know and the reason why. The emotional and financial costs to the next generation is far greater than the immediate upset if a parent tells a child that he or she is being treated differently under the terms of their Will or that a charity is slated to receive the bulk of their estate. Perhaps a family conference with an outside facilitator is the way to go. Unfortunately, no matter what the baby boomers do, estate litigation is likely to increase as their children fight over their inheritance or try and prove what the “true wishes” of their parents were.
Finally, the generation which benefits from this trillion dollar transfer will have to carefully decide what to do with the windfall. Many will pay off their mortgages or other debts affording them the opportunity to accumulate their own personal fortune and pass it on to the next generation. Estate planning will always be with us… the sooner it’s done the better.
Thanks for reading and enjoy the weekend.
Justin de Vries
I was recently in the Brampton courthouse. I imagine that Brampton is one of the busiest courthouses in the Province. It serves the Regional Municipality of Peel, which includes Mississauga and Brampton. The courthouse is busy with both criminal and civil matters. While I was there, I heard requests over the loudspeaker for Polish, Punjabi, Vietnamese, Chinese, and Spanish interpreters.
For my part, I was scheduled to speak to a guardianship application, which was to be adjourned on terms. The problem I faced was securing a full day hearing date for the return of the application. My matter involves a widow, whose health is declining. She has been declared incapable of managing her property and making personal care decisions. The application was brought by the widow’s nieces (my clients) to be appointed co-guardians of property and personal care for their aunt. The application is hotly opposed by the attorney for property and personal care, who my clients believe was appointed under suspicious circumstances.
While the adjournment was granted, it was also crucial that I obtain a timely hearing date for the application. However, the presiding judge apologized and advised that the first available date was not until late September 2007. More than six months would pass before the application would be heard. Her Honour explained that the region was understaffed when it came to judicial resources and simply could not accommodate all matters despite their apparent urgency. Her Honour also indicated that criminal matters usually took precedence over civil matters, as the right of an accused to a fair hearing would be prejudiced by undue delay.
The bottom line is that parties intent on litigating, whether in the estate context or otherwise, should understand that institutional delay will often push their “day in court” well into the future. Justice delayed is justice denied. However, that is the reality that litigants face in today’s overburdened court system.
It is for this reason that many alternatives to litigation are frequently promoted. Mediation is a good example, as is binding arbitration in commercial litigation matters. A party should therefore carefully consider what options they have before necessarily assuming that a court hearing is their best course of action.
Justin de Vries
During Hull on Estates Podcast #54, David Smith, Partner at Hull & Hull LLP, discusses his upcoming Probator article (check the Hull & Hull website soon) which concerns making a Will in contemplation of marriage.
David discusses the circumstances that surround this clause, Section 16 of the Succession Law Reform Act and how this issue can cause litigation.
Yesterday I suggested that criminal charges in Estates, capacity and trust cases might become more common.
In R. v. Bunn (2000), C.C.C. (3d) 505, the Supreme Court of Canada considered the sentencing of a Manitoba lawyer convicted of converting some $86,000 worth of trust monies to his own use. The accused acted as attorney for property for Soviet/Russian beneficiaries of Manitoba and Saskatchewan estates. He received monies in trust, but instead of paying it all to the beneficiaries, he redirected some of it to himself.
This conduct was discovered by the Law Society of Manitoba when conducting a spot audit of the accused. The accused was disbarred. Some compassion may be warranted: the accused cared for a disabled wife, was the sole income earner in the family, suffered financial woes for years, and lost his reputation and 20-year law career.
At trial the accused was sentenced to two years in a federal penitentiary, but the Manitoba Court of Appeal substituted a conditional sentence of two years less a day.
The Supreme Court of Canada, in a 5-3 decision, upheld the Appeal decision. The majority decided that the need for restorative justice and the benefits of reducing prison terms outweighed the minority’s desire to denounce the accused and promote general deterrence.
Lawyers tend to be easier targets in these cases because of the need to establish mens rea (the intent to commit a crime). It would be difficult for any competent lawyer to claim ignorance of proper usage of trust monies, but laypersons may be a different matter.
Thanks for reading.
A recent decision out of Alberta deals with the often thorny issue of costs on an abandoned will challenge.
In Re Dool (Estate of), 2007 ABQB 122, challengers to a will decided to abandon their challenge for "financial and health reasons". They sought a discontinuance without costs. The Respondent sought costs from the challengers.
The court not only allowed the action to be discontinued without costs, but it allowed the Applicant’s their costs from the estate.
The circumstances of the case leading to such an award merit closer review. The court noted that the will challengers had significant grounds which warranted judicial inquiry. The court also found that the Respondents failed to cooperate with the Applicants in addressing these concerns. The court also referred to the serious health problems of the Applicants and the effect that this had on their ability to continue with the litigation. The court went on to make significant note of the conduct of counsel for the applicant, which was "reasonable" throughout, as compared to counsel for the Respondent, which was said to be "aggressive, uncooperative and demeaning". This approach by the Respondent prevented the Applicants from effectively assessing the reasonableness of their claim, as was their obligation.
The court specifically addressed the "comportment of counsel". The judge noted that “It was not pleasant having counsel for the Respondent appear before me." Counsel’s conduct was said to border on contempt. The court lamented the increasing frequent lack of civility between counsel, and the comportment of counsel in addressing the court. This clearly influenced the judge in making the discretionary costs award that he did.
One lesson to be taken from this interesting case is that, aside from the merits, the approach taken by counsel can have a significant impact on a costs award made by the court. It is quite possible that a very different approach would have resulted in a very different costs award. The Respondent may have been able to avoid an award of costs in favour of the Applicants, based on the prevailing case law. While counsel must vigorously and fearlessly advance the positions of their clients, this is most effectively done in a reasonable and civil manner.
Thank you for reading,
On Tuesday, March 27, 2007, I attended the Ontario Bar Association Trust & Estates Section Meeting. Kathryn Bennett opened the meeting with a discussion 2007 federal budget and how it affects individuals from an estate planning point of view. Some of these points were touched upon in our earlier blogs.
The meeting continued with presentations by Justices Greer, Croll, Perell and Spies of the estates list. They addressed what the estates bench and bar can do better. The judges touched upon the following matters:
- The Estates court will be sitting every week this summer;
- "1 1/2" judges will be sitting every week (1 in the summer months);
- At some point, an initiative will be put in place whereby the first appearance for long applications will be a 15 minute timetabling appointment;
- The judges stressed the importance of advising the estates office early if a motion or application is not proceeding, or if it is to be proceeding on consent;
- An e-scheduling pilot project will be put in place soon;
- The judges emphasized the advisability of filing a family tree as part of the record;
- In guardianship applications, where the Public Guardian and Trustee has sent a letter raising issues, it may be advisable for a supplementary affidavit to be filed setting out how the issues raised by the Public Guardian and Trustee have been addressed;
- Counsel should try to simplify matters by setting out in the confirmation form what materials are to be reviewed by the judge, and, possibly, by attending at the court office the day before the proceeding in order to tag what materials are to be reviewed;
- Counsel should consider the advisability of having a case management judge appointed in certain proceedings;
- When submitting an "unusual" over the counter motion, counsel should consider sending an explanatory covering letter, and requesting that the matter be put before a judge.
- Mr. Justice Perell referred to a recent work which noted that in an information economy, what is scarce or valuable is attention. Applying this to advocacy, counsel should ensure that their message is effectively and efficiently packaged so that judicial attention is captured and focused. Counsel should have this in mind when considering the procedures to be used to determine the issues, and when preparing materials.
Hull on Estate and Succession Planning Podcast #53 – Beneficiary Designation Considerations for Spousal Trusts
Listen to "Beneficiary Designation Considerations for Spousal Trusts"
Read the transcribed version of "Beneficiary Designation Considerations for Spousal Trusts"
During Hull on Estate and Succession Planning Episode #53, Ian Hull and Suzana Popovic-Montag build on their last podcast regarding succession planning for married couples, and turn their focus to spousal trusts.
They discuss administrative expenses surrounding trusts, the circumstances that lead to surviving spouse litigation, and methods for ensuring the balance between beneficiary designations.
Section 72(1) of Ontario’s Succession Law Reform Act allows a court to deem various assets that may normally fall outside of a deceased’s estate, to be part of the estate for the purposes of satisfying a dependant support claim. This usually includes “any amount payable under a policy of insurance effected on the life of the deceased and owned by him or her”. However, as demonstrated in Madore-Ogilvie (Litigation Guardian of) v. Ogilvie Estate  E.G. No. 4654 (Div. Ct.), this provision will not normally capture insurance policies owned jointly by the deceased and a third party.
In Ogilvie Estate, the deceased was the father of six children (three of them minors) by five different women. Dependant support claims were made on behalf of two of the minor children. It was agreed that the deceased had failed to provide adequately for his minor children.
The issue before the court was whether a joint life insurance policy, issued to both the deceased and his spouse, could be included as part of the deceased’s estate under section 72(1) of the SLRA. The deceased and his spouse were both the owners and beneficiaries of the policy, which provided that the survivor of the two would receive the face amount of the policy on the death of the other. It was undisputed that the spouse had made the majority of the payments under the policy.
The applications judge held that the policy could be included as part of the estate. On appeal, a majority of the Divisional Court reversed this decision. The majority held that a jointly owned policy cannot be included as part of an estate merely because the deceased is one of the owners of the policy. The Court recognized that s. 72 of the SLRA was designed to counter the intentional depletion of an estate at the expense of dependants. However, there are transactions that “would be considered the normal personal commerce of an individual” and not necessarily undertaken to disenfranchise a dependant. In the case at hand, the majority ultimately decided that the contractual rights of the spouse to the joint policy trumped the needs of the deceased’s dependants.
Have a great day!
Read the transcribed version of "The Trustee’s Power to Encroach on Capital"
During Hull on Estates Episode #51, Ian Hull and Suzana Popovic-Montag discuss the circumstances surrounding a trustee’s power to encroach on capital.
Ian and Suzana cover various principles which affect the power to encroach including the Armchair rule of construction, the Evenhand approach and the concept of malafides.
They also touch on various cases including the U.K. case of Gisbourne v. Gisbourne, and Fox v. Fox Estate (1994), 5 E.T.R. (2d) 174 (Ont. Ct. (Gen. Div.))
For more information on the power to encroach, see Ian’s article in Estates, Trusts & Pensions Journal, "Discretion to Encroach: Do the Beneficiary’s Personal Resources Matter?"
Hull on Estate and Succession Planning Podcast# 52 – The Necessity of a Will in Successful Succession Planning
Listen to "The Necessity of a Will in Successful Succession Planning"
Read the transcribed version of "The Necessity of a Will in Succession Planning"
During Hull on Estate and Succession Planning Episode #52, Ian Hull and Suzana Popovic-Montag discuss the importance of having a Will in succession planning.
They cover a range of necessary Will provisions including:
- The appointment of a guardian for your children;
- How to deal with authority over your children’s property and the Office of the Children’s Lawyer ;
- Avoiding the Corvette effect;
- Common disaster clauses; and
- US Estate taxes.