A recent decision of the Ontario Superior Court of Justice revisits the issue of whether a presumption of resulting trust should be imposed in the case of a beneficiary designation.
As our readers will know, the leading case on presumptions of resulting trust remains Pecore v Pecore, 2007 SCC 17, in which the Supreme Court summarized the state of the law relating to property that had been gratuitously transferred into joint tenancy with a non-dependent adult child: the asset becomes subject to a presumption that it is impressed with a resulting trust in favour of the parent’s estate. The presumption may be rebutted by evidence that it was, in fact, the parent’s intention to gift the jointly-held property to the adult child by right of survivorship.
Last year, we saw a couple of decisions apply the principles of Pecore to novel situations, potentially expanding the applicability of presumptions of resulting trust. For example, in Calmusky v Calmusky, 2020 ONSC 1506, the doctrine of resulting trust was applied to a RIF for which an adult child had been designated as beneficiary.
In Mak Estate v Mak, 2021 ONSC 4415, Justice McKelvey reviewed the issue of whether an asset for which a beneficiary designation was in place should be subject to the presumption of resulting trust. The plaintiff residuary beneficiaries of their mother’s estate sought an order setting aside the 2007 beneficiary designation for the mother’s RRIF, under which the defendant, their brother and another residuary beneficiary of the estate, was named. The evidence suggested that the deceased had relied upon the defendant, who lived with her and drove her to appointments after the death of the parties’ father in 2002.
After addressing the issue of whether a presumption of undue influence applied to the RRIF beneficiary designation (and finding that it did not because a beneficiary designation is not an inter vivos gift), Justice McKelvey turned to the issue of the principle of resulting trust, writing (at paras 44, 46):
In my view…there is good reason to doubt the conclusion that the doctrine of resulting trust applies to a beneficiary designation. First, the presumption in Pecore applies to inter vivos gifts. This was a significant factor for the Court of Appeal in Seguin, and similarly is a significant difference in the context of a resulting trust. Further, the decision of this Court in Calmusky has been the subject of some critical comment. As noted by Demetre Vasilounis in an article entitled ‘A Presumptive Peril: The Law of Beneficiary Designations is Now in Flux’, the decision in Calmusky is, ‘ruffling some features among banks, financial advisors and estate planning lawyers in Ontario’. In his article, the author comments that there is usually no need to determine ‘intent’ behind this designation, as this kind of beneficiary designation is supported by legislation including in Part III of the Succession Law Reform Act (the “SLRA”). Subsection 51(1) of the SLRA states that an individual may designate a beneficiary of a ‘plan’ (including a RIF, pursuant to subsection 54.1(1) of the SLRA.)
It is also important that the presumption of resulting trust with respect to adult children evolved from the formerly recognized presumption of advancement, a sometimes erroneous assumption for a parent that arranges for joint ownership of an asset with their child is merely ‘advancing’ the asset to such adult child as such adult child will eventually be entitled to such asset upon such parent’s death. The whole point of a beneficiary designation, however, is to specifically state what is to happen to an asset upon death.
As a result, the defendant was entitled to retain the proceeds of his mother’s RRIF, as the plaintiffs unable to establish any intention of their mother to benefit her estate with the asset without the benefit of a presumption of resulting trust.
In light of the conflicting applications of Pecore under the Calmusky and Mak Estate decisions, it will be interesting to see how this issue may be further developed in the case law. For the time being, however, it may be prudent to take care in documenting a client’s wishes to benefit an adult child by way of beneficiary designation in the same manner as we typically would in situations of jointly-held property.
Thank you for reading.
2020….what a year – I’ll say nothing more other than I herewith present the most popular estate and trust cases of 2020 as decided solely and arbitrarily by me:
Calmusky v Calmusky – here, the Superior Court of Justice ruled that the designated beneficiary was presumed to be holding a RIF in trust for the estate of the deceased and had the onus of rebutting the presumption. Essentially, the court applied the rule in Pecore to a RIF by stating that “…I see no principled basis for applying the presumption of resulting trust to the gratuitous transfer of bank accounts into joint names but not applying the same presumption to the RIF beneficiary designation”.
Sherman Estate – should probate applications be sealed? At the Superior Court of Justice, the sealing order over the Sherman probate applications was granted ex parte. This was based upon the perceived risks to the executors and beneficiaries as well as the need to protect the privacy and dignity of the victims of violent crimes and their loved ones. The Court of Appeal, however, held that a public interest component must be met and proceeded to set aside the sealing orders. The matter reached the Supreme Court of Canada on October 6, with a decision yet to be released.
Trezzi v Trezzi – what happens when a will gifts an asset that is actually owned by a corporation? The Court of Appeal had to determine the potential validity of a bequest of property in a will when the property was not directly owned by a testator, but rather owned by the testator through a wholly owned private corporation. Although the court upheld the bequest in question, they noted that the language used in the will was potentially problematic and encouraged counsel to be more careful when drafting in similar circumstances.
Lima v Ventura – notwithstanding COVID, procedural timelines set out in court orders must be respected. Here, a party brought a motion to extend the deadline to exercise an option to purchase a home, citing the circumstances of the COVID-19 pandemic as the basis for the request. The request for an extension was ultimately denied because the party failed to provide evidence to support the claim that the circumstances caused by COVID frustrated efforts to purchase the house. The court did set out a number of factors to consider related to delays due to COVID-19 that could justify varying a court-imposed timeline.
Happy New Year!
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We have previously blogged extensively on the issue of inaccessibility of digital assets and the absence of legislation in Canadian provinces, including Ontario, to clarify the rights of a fiduciary to access and administer digital assets on behalf of a deceased or incapable rights holder.
While the Substitute Decisions Act, 1992, and Estates Administration Act provide that attorneys or guardians of properties and estate trustees, respectively, are authorized to manage the property of an incapable person or an estate, Ontario does not currently have any legislation that clarifies these rights by explicit reference to digital assets. While continuing powers of attorney for property and wills can be crafted to explicitly refer to digital assets and the authority of an attorney for property or estate trustee to access accounts and information in the same manner in which the user him or herself was able, access issues can still arise during incapacity or after death.
A recent CBC article highlights the inadequacy of legislation facilitating access to digital assets. A surviving wife of over forty years was the estate trustee and sole residuary beneficiary of her late husband’s estate. In seeking access to an Apple account that she shared with her husband, she was told that she would require a court order, even after providing Apple with a copy of her husband’s death certificate and will. Apple cited the United States’ Electronic Communications Privacy Act, which predates the prominence of computers and the internet in our daily lives, as prohibiting them from distributing personal electronic information. Four years after her husband’s death in 2016, the Ontario woman is now obtaining pro bono assistance in seeking a court order granting access to the shared account in the absence of any other options.
It is anticipated that the adoption of the Uniform Law Conference of Canada’s Uniform Access to Digital Assets by Fiduciaries Act would resolve some or all of the issues currently faced by Ontario residents in accessing and administering digital assets. However, now over four years since its release, only Saskatchewan has implemented provincial legislation mirroring the language of the uniform act.
It will be interesting to see in coming years whether legislative updates will address continued barriers to the access and administration of digital assets and the corresponding access to justice issue.
Thank you for reading,
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I’ve always loved a good story. I found this story from CNN particularly intriguing as it has to do with art that was stolen by the Nazis, and how this stolen piece of art eventually made its way to the U.S. just like its family had done after the Nazis came to power.
According to the Mosse Art Restitution Project, Rudolf Mosse was a successful Jewish entrepreneur in the late 19th and early 20th century. He had a large publishing and advertising business that included the publication of 130 newspapers and journals. In 1900, Mosse purchased “Winter” directly from the artist, Gari Melchers, at the Great Berlin Art Exhibit. Mosse later died in 1920. The sole heir of his estate was his daughter, Felicia Lachmann-Mosse. Thus, Felicia came to own Mosse’s extensive art collection. Felicia and her husband also took over and ran one of Mosse’s most prominent publications, Berliner Tageblatt, and the newspaper was renowned for its criticism of Adolf Hilter. When Hilter came to power in 1933, Felicia and her husband were forced to leave Germany. According to CNN, “Winter” was amongst the art that was seized by the Nazis when the Mosse family fled their home but “Winter” was only one painting out of the hundreds of pieces of artwork that were stolen at the time.
Some of this art was auctioned off by the Nazis; some have simply disappeared. “Winter” left the Nazis’ possession and changed hands a number of times before Barlett Arkell bought it, as an innocent purchaser who was none the wiser, from a prominent gallery in 1934. Since 1934, “Winter” has been displayed in the Arkell Museum in Canajoharie, New York. When the Museum discovered that “Winter” was taken illegally from its original owner, the painting was surrendered to the FBI in 2019.
“Winter” has since been reunited with the Mosse family by way of the Mosse Foundation which represents the remaining heirs of Felicia Lachmann-Mosse. To date, the Mosse Art Restitution Project remains actively engaged in their work to recover all of the artwork that was stolen by the Nazis.
The Mosse Foundation and the Project have plans to auction “Winter” in the near future and it is estimated to be worth hundreds of thousands of dollars.
Talk about a never-ending estate administration.
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Sometimes there is a grey area when it comes to a person’s loss of capacity, and the time when his or her attorney for property first began to act on an incapable’s behalf. In such a situation, it can be difficult to determine the starting date for an attorney’s fiduciary accounting period.
The recent decision of The Public Guardian and Trustee v Willis at al, 2020 ONSC 3660, dealt with this kind of situation. One of the issues was whether the respondent should be required to pass his accounts for the period before he became the attorney for property for his mother, Mrs. Willis.
The respondent was his mother’s only living child, and was acting as her attorney pursuant to a power of attorney for property dated May 2, 2018. Mrs. Willis was assessed as incapable of managing her property in September 2018, but the decision notes that she had been “clearly suffering from some cognitive deficits prior to June 2018”.
The Public Guardian and Trustee (the “PGT”) sought to have the respondent provide an accounting back to January 1, 2015, because the respondent had arranged several mortgages on his mother’s behalf in that period. The respondent, however, only agreed to pass his accounts starting from May 2, 2018 when he became his mother’s attorney for property. One of the main reasons that the respondent did not want to pass his accounts prior to that period was due to the expense, because it was clear that Mrs. Willis was insolvent, and the respondent would likely have to personally bear the costs of passing his accounts. The PGT clarified during the hearing that it was not seeking court format accounts for the period from 2015-2018, but only “justifiable explanations of money coming in and out of his mother’s RBC account and how mortgage advances were spent plus all relevant disclosure.”
The court found that the respondent had assisted his mother with paying bills and arranging mortgages prior to the time that she was assessed as incapable. It was also noted in the decision that there was “no doubt” that even while Mrs. Willis was capable, she was unsophisticated, vulnerable, and relied on the respondent. The respondent also had access to his mother’s bank account before January 1, 2015.
The court held that, even if an individual is not specifically appointed in a fiduciary role (such as an attorney) one must look at the types of duties that the individual was carrying out to determine if they were acting in a fiduciary capacity. On this basis, the court found that the respondent had been acting as a fiduciary for Mrs. Willis for some time, and determined that he should provide detailed explanations of financial transactions upon the PGT’s request from January 1, 2015 to May 1, 2018 (in addition to the passing of accounts to which the respondent had consented starting from May 2, 2018).
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As many are aware, the Superior Court of Justice has essentially shut down operations, subject to certain narrow exceptions, in light of COVID-19.
On May 13, 2020, a Consolidated Notice to the Profession, Litigants, Accused Persons, Public and Media was published regarding “Expanded Operations of Ontario Superior Court of Justice, effective May 19, 2020”. The Notice can be read in its entirety here. Below, I discuss some of the highlights relevant to the estates list.
- The Notice specifically denotes that the Superior Court of Justice has not closed and that it continues to expand its operations virtually – in writing, or by telephone or video conference hearings. It is further highlighted, that during the suspension of regular in-court operations, lawyers and parties are expected to actively move cases forward.
- Although the requirement to gown for a Superior Court of Justice appearance is suspended, parties participating in video conferences are expected to dress in appropriate business attire and should have an appropriate technical set-up and observe etiquette appropriate to the nature of remote hearings. In fact, some guidance from the Superior Court of Justice on the issue of technical set-up can be found here.
- On the issue of filings, the Notice indicates that factums should be hyperlinked to relevant cases (instead of filing a Brief of Authorities) and there is a very specific format of the email that is to be sent to the Court to request dates or file materials. Importantly, the size of emails has been expanded to 35MB, however, it is also noted to limit filed materials to only those necessary for the hearing (in addition to the restrictions related to the length of material, already in place).
- Although materials are being filed electronically, given the pandemic and the need to isolate, the Superior Court of Justice expects that all materials filed electronically be later filed in hard copy with the Court and the requisite filing fee be paid. That means, that it is important to keep track of all materials filed electronically, as there is a positive obligation to deliver hard copies and payment for the filing, at a later time.
- Service via email is permitted such that it is not necessary to obtain consent or a court order to serve a document by email where email service is permitted.
- Whereas, urgent matters continue being heard (subject to the Superior Court of Justice’s discretion to decline to schedule for immediate hearing any particular matter listed in the Notice), the following Toronto Commercial and Estate List matters are being heard (the Notice to Profession – Toronto, can be found here):
- Select motions;
- Select applications;
- Case management conferences;
- Pre-trial conferences; and
- Judicial settlement conferences.
Reviewing this Notice shows that court services are expanding. Certainly, one positive effect of the pandemic has been the overall embrace of various technologies by the Superior Court of Justice, that had not been in place before.
Here is to hoping that the restrictions associated with COVID-19 are soon lifted and the pandemic blows over. At the same time, I am certainly excited to see whether we will see a significant change in court operations moving forward, as a result of this involuntary technological leap forward.
Thanks for reading!
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The COVID-19 pandemic has resulted in temporary changes to the way that lawyers are able to practice law. For the time being, many of us and our staff are working remotely, avoiding in-person meetings whenever possible, and access to assistance through the courts is limited.
Processes such as examinations for discovery and mediations may not necessarily be postponed with the availability of online platforms through which they can be hosted, such as Zoom. However, an issue remains in how best to address procedural issues for which we would normally seek directions from the court.
For the time being, court dates are available only to provide assistance in respect of truly urgent matters. While some clients may consider the appointment of an estate trustee during litigation or timetabling issues to be urgent, it is unlikely that a judge will share this viewpoint absent compelling circumstances. While the scope of matters that can be heard by teleconference may expand after April 6, 2020, the ability of the courts to keep up with demand can be expected to be limited. Furthermore, once the courts resume operations, one can only expect schedules to fill up quickly as lawyers and clients try to make up for lost time.
Lawyers and our clients have a common interest in moving matters forward during this period of instability. To assist in this regard, I am spearheading an initiative that I have called Estates Arbitration Litigation Management (“EALM“).
What I see as being the key features of EALM can be summarized as follows:
- parties will enter into an EALM agreement that sets out the matters to be arbitrated, primarily being procedural and interim relief;
- senior members of the Bar will assist the parties as arbitrators in determining those issues agreed upon at a reduced hourly rate;
- if the decision of the arbitrator requires a court order to be effective (for example, the appointment of an estate trustee during litigation), the parties agree to file a consent motion in writing to obtain the necessary order; and
- the parties may return to court to address substantive issues once normal operations are restored or may elect to proceed to arbitration or mediation.
These measures have already been successfully employed by the Family Law Bar and we are grateful to Aaron Franks, Judith Nicoll, Martha McCarthy, and Gary Joseph for sharing their experiences in that regard. A link to a precedent draft agreement specific to EALM, as well as an information sheet that lawyers will be able to share with clients, will be added to the resources section of our website within the next couple of days, which will be the result of continued consultations with senior members of the Estates Bar.
Despite the unique challenges posed by COVID-19, it is important that we employ new measures to continue to move matters forward for the benefit of our clients and colleagues throughout the Estates Bar, and I am hopeful that EALM will become a timely and cost-effective tool in limiting the disruption to our practices in the coming weeks. If you have any comments regarding EALM, or are interested in introducing this into your own practice, please contact me at firstname.lastname@example.org.
Thank you for reading and be safe.
In preparing my other blogs this week, I spent some time considering the issue of how we might see the increased access to medical assistance in dying (MAID) impact our practice area. As such, I thought that I would finish off this series of blogs focusing on MAID with a hypothetical question I have not yet encountered in practice, but which is inevitably going to be raised: what impact, if any, does MAID have on a will challenge?
Our regular readers will already be well aware that capacity is task, time, and situation specific.
Presumably, the standard of capacity applying to the decision to access MAID is that required to make other personal care decisions, such as receiving or refusing medical treatment. Section 45 of the Substitute Decisions Act, 1992, defines incapacity for personal care as follows:
A person is incapable of personal care if the person is not able to understand information that is relevant to making a decision concerning his or her own health care, nutrition, shelter, clothing, hygiene or safety, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.
I have been unable to find any literature suggesting whether the standard may be somewhat heightened as a result of the significant impact of the decision to actually receive MAID.
The standard for testamentary capacity typically applied remains that set out in the old English authority of Banks v Goodfellow. While some have suggested that the standard of testamentary capacity be updated, we are generally concerned with the same, well-established criteria:
It is essential to the exercise of such a power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties—that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.
While, historically, standards of mental capacity were viewed as hierarchical, recent case law and commentary have strayed from this understanding, instead viewing the different standards of mental capacity as just that: different. Courts will consider whether an individual understood the nature of the decision being made and appreciated the reasonably foreseeable consequences of their decision.
Consent to MAID must be confirmed very shortly before it is administered, which restriction has been of considerable controversy. While possessing the capacity to confirm consent to obtain MAID may not correspond to testamentary capacity, it may nevertheless become evidence suggestive of a degree of mental capacity that is valuable (in conjunction with other evidence) in establishing that a last will and testament executed shortly before death is valid.
Whether the fact that MAID has been achieved will be important evidence on a will challenge in support of testamentary capacity or not remains to be seen, but it will be interesting to see how the laws relating to MAID evolve and how incidents of MAID may impact estate law over time.
Thank you for reading,
It is the start of a new year and a new decade. Many of us recently enjoyed some holidays and had much to eat and drink. Many of us are also feeling the lingering effects of this merriment. I figured that an uplifting, feel good read would be a nice way to start 2020. I was thus delighted to learn about Eva Gordon, and her estate.
Ms. Gordon passed away at the age of 105. She grew up on an orchard in Oregon, never graduated from college, and worked as a trading assistant at an investment firm in Seattle. In 1964, she married her husband, who was a stockbroker. They did not have any children together. Neither Ms. Gordon or her husband came from money, and they lived a modest life. Ms. Gordon’s godson, who was the Estate Trustee, joked that if Ms. Gordon and her husband went out for lunch or dinner, then they would make sure to bring their Applebee’s coupon.
From the salary that Ms. Gordon received from her employer, she purchased partial shares in numerous stocks, including oil and utility companies, and was an early investor in Nordstrom, Microsoft, and Starbucks. Unlike many at that time, Ms. Gordon held onto these valuable stocks. As a result of this shrewd investing, Ms. Gordon’s wealth increased considerably over the latter years of her life.
Instead of wasting away her money, in her Will, Ms. Gordon decided to bequeath $10 million to various community colleges, with about 17 colleges each receiving cheques for $550,000. Interestingly, no stipulations were put into place as to how the money was to be spent by the colleges. The colleges could do with the money as they wished. For many of them, it was one of the largest donations they had ever received.
For an interesting perspective on the impact of donations to modest, as opposed to elite, institutions, you should listen to Malcolm Gladwell’s Revisionist History podcast (episode 6).
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With the summer vacation now at the midpoint, many people are travelling as part of their holidays. But, what can one do when a friend or family member dies while you are on vacation? Does your trip have to be cut short? Are there additional charges to be paid for changing dates on plane tickets and for hotel room cancellations? Not any longer. In many cases, a livestream funeral service is now available. Some companies provide this service via the internet. Or, depending upon the funeral home, wireless can be used to stream the memorial service using facetime or skype. There are even websites that provide information and assist with the planning of the do-it-yourself camera work.
There are many advantages for those who cannot attend even if not on vacation. Other reasons to not attend in person might be because of illness, distance, cost or other barriers. Now almost everyone can attend from wherever they are.
Also, the funeral service can be archived and watched again online. This can be of benefit not only to those who could not attend the service in person but also to family members who were there. It can help in dealing with their loss or to simply remember things that were missed in the immediate grief of the service. Technology has developed rapidly. It has become accepted and has recently extended into the areas of wills and estates, providing services such as online obituaries instead of publishing in newspapers; advertising for estate creditors using online services instead of much more expensive newspaper print notices; cataloging and registering the location of wills (in some jurisdictions); assisting lawyers in automated interactive drafting of wills (like the Hull e-State Planner); recognizing the validity of electronic wills (in some jurisdictions); among others. The trend towards even more changes coming in this area is strong and there is hope that expanding technology use will serve to assist friends and family members through difficult times.
Thanks for reading!