Tis the season of goblins and ghouls, of ghosts and gremlins, when the boundaries between the natural and supernatural become ever so slightly blurred. Pure fiction, no doubt…or is it? Well, yes, most likely. However, as Mark Twain famously opined, truth can often be stranger than fiction. Consider the following story that’s part Dr. Jekyll and Mr. Hyde and part Twilight Zone, one that presents a curious scenario to the estate litigators among us.
Lawrence Bader was a salesman from Akron, Ohio. One afternoon in May 1957, Mr. Bader rented a boat to go fishing on Lake Erie and told his wife that would be back later that evening. A few days earlier, Mr. Bader had recently designated his wife as a beneficiary on several life insurance policies totaling approximately $40,000.
Severe storms engulfed the area the night of Mr. Bader’s expedition, and he did not return home as promised. The following morning, the Coast Guard discovered his empty fishing boat, bruised and battered by the storm and washed up on shore miles from where he had departed. There was no sign of Mr. Bader. He was presumed “lost at sea.”’
In 1960, following an application from his wife, the probate court in Summit County, Ohio declared Mr. Bader legally deceased. Similar authority is granted to courts in Ontario. The Declarations of Death Act allows an “interested person” to apply to the court for an order that an individual has died if the individual “disappeared in circumstances of peril” and the applicant has “no reason to believe that the individual is alive.” Accordingly, Mr. Bader might reasonably have been declared deceased by an Ontario court under similar circumstances.
The intriguing tale of Mr. Bader’s whereabouts does not end there, however. In 1965, more than five years after he was declared legally deceased, a friend of Mr. Bader’s was attending a sports convention in Chicago and encountered an archery enthusiast who bore an uncanny resemblance to Mr. Bader. In an almost clichéd homage to classic horror and science fiction, the doppelganger purportedly wore an eyepatch and sported a mustache.
The doppelganger introduced himself as Fritz Johnson, a media personality from Omaha, Nebraska. After speaking to him over the phone at the insistence of the friend, Mr. Bader’s brothers flew to Chicago to meet the man they firmly believed was their brother. However, the doppelganger appeared to have no memory of his wife and family, his seafaring escapade, or indeed any details of his former life.
Mr. Johnson had purportedly arrived in Omaha only a few days after Mr. Bader had disappeared. In the years since his apparent alter-ego was declared legally deceased, Mr. Johnson married, fathered a son, became a newscaster, and developed a talent for archery. Curiously, Mr. Bader’s brothers confirmed that he had been regarded as a skilled archer prior to his disappearance.
To Mr. Johnson’s dismay, the authorities confirmed by way of a fingerprint analysis that Mr. Bader and Mr. Johnson were indeed one and the same, notwithstanding that the latter apparently had no memory of the former. They surmised that the entire ordeal was merely an attempt by Mr. Bader to get a fresh start, free of debts and obligations, under a new identity. While this story is likely more hucksterism than it is Hitchcock, there are useful points to discuss.
As estate litigators, our primary area of interest with respect to the Bader-Johnson conundrum would, no doubt, pertain to the distribution of Mr. Bader’s estate. In particular, it is worth discussing what happens to the estate of an individual who later turns up alive, especially if distributions in accordance with a will, for example, had been made prior to his return. For those of us who don’t anticipate an undead doppelganger reappearing to cause turmoil for our estate trustees, the approach is fairly streamlined.
Ontario’s Declarations of Death Act provides a mechanism whereby the court can order that the property of an individual, who was declared deceased by the court, be returned to them if they later turn up alive. Section 6(1) of the Act provides that all distributions out of the estate of an individual who is declared deceased thereunder are final distributions, subject to certain considerations. One such consideration, under section 6(3), provides that a court may make an order requiring the beneficiary to re-convey to the deceased all or part of any property distributed to him or her “if it is just to do so”. In other words, a beneficiary of the estate of a now-undead person that has received a distribution out of that estate may be ordered to return all or part of it.
Despite Mr. Johnson’s insistence to the contrary, there was substantial evidence to support that he was, in fact, Mr. Bader, even though he purportedly had no memory of him. While he ostensibly returned from the dead under a pseudonym and having suffered a bout of amnesia, neither are factors that an Ontario court would likely consider in determining what would happen to his estate.
On Thursday, we will look at similar provisions under Ontario’s Absentees Act.
Thanks for reading. Happy Halloween!
A common problem encountered in estate administrations is locating a testator’s will. Many executors and next of kin do not know where to find the testator’s will. There are even instances where the testator cannot remember where he or she stored their original will for safe keeping.
A potential solution to this problem is a will registry. A will registry is a useful tool designed to assist parties in locating the testator’s will. A quick search of the registry can confirm whether an individual died testate or intestate. It also has the potential to reduce both the time and expense associated with searching for a missing will and the added cost of proving a lost one.
Recently, the County of Carleton Law Association, with support from the Federation of Ontario Law Associations, launched an online wills registry called Will Check. Will Check is run by the County of Carleton Law Association Library. Will Check stores information about the lawyer or firm where the will is being kept but it does not store the actual will. Searches of the database can only be performed by members of the Law Society of Upper Canada. At this time, only lawyers practicing in the Ottawa area can submit wills information to Will Check.
Will Check is not the first wills registry in Canada. The province of British Columbia has a wills registry maintained by the Vital Statistics Agency. In B.C., applicants file a Wills Notice. A Wills Notice contains the location of the will and can be filed by lawyers, notaries, trustees or individuals over 19 years of age. Like Will Check, the registry does not keep an actual copy of the will – only confirmation that one was made, when it was made, and where it is located.
A similar system exists across the pond in the United Kingdom. A private business called Certainty operates an online national wills register. The website is endorsed by the Law Society in the UK. Approximately seven million wills are included in the database.
In the United States, each state has its own approach to will storage. For example, the state of Alaska allows you to deposit your will with the court, and after the testator dies the will becomes a public record.
Will Check could be the solution to the problem of the missing will. Identifying the location of a testator’s will can save on costs and time and provide a testator with the added peace of mind that his or her wishes will be carried out. Even without a registry, testators should consider advising their executors regarding the location of their will. This way, they can take comfort in knowing that their will can be found.
Thank you for reading … Have a wonderful day.
An unsent text message found on the deceased’s mobile phone has admitted to probate bythe Supreme Court of Queensland.
In Re Nichol; Nichol v. Nichol  QSC 220 (9 October 2017), the deceased created a text message on his phone. It was addressed to his brother and nephew, but was not sent. The deceased then committed suicide. The phone was found by the deceased’s brother in the shed where the deceased’s body was found.
The text message read as follows:
“Dave Nic [the deceased’s brother] you and Jack [the deceased’s nephew] keep all that I have house and superannuation, put my ashes in the back garden with Trish Julie [the deceased’s estranged wife] will take her stuff only she’s ok gone back to her ex AGAIN I’m beaten . A bit of cash behind TV and a bit in the bank Cash card pin 3636
MRN190162Q [the deceased’s initials and date of birth]
At the end of the text message was a paperclip and a smiley face emoji.
The court reviewed the relevant Queensland statute, which allows a court to accept an unsigned document to probate. The legislation requires that the court be satisfied that the deceased intended the document to form the person’s will. In considering whether to do so, the court will need to be satisfied that the deceased’s intention was that the document should, without more, operate as his or her will.
The court noted that “great care” is to be taken in evaluating the evidence. More is required than simply showing that the document sets out testamentary intentions. The evidence must show that the deceased wanted the document to be his or her final will, and did not want to make any changes.
With respect to being a “document”, the court relied on the definition of “document” in the Acts Interpretation Act, which includes electronic documents. The court also referred to the case of Re Yu, where documents created on an iPhone were found to constitute a valid will.
The court reviewed extensive evidence about the deceased and his relationships with the parties, as well as evidence as to his capacity.
With respect to the argument that the text was not sent and therefore, the deceased did not want it to be operative as his last will, the court found that the deceased did not send the text because he did not want to alert his brother to his suicide, but wanted the text message to be discovered when he was found.
In Ontario, such an outcome would not be possible. The Succession Law Reform Act requires that, with respect to a typewritten will, it must be executed by the testator (or some other person in his or her presence and by his or her direction) in the presence of or acknowledged in the presence of two or more witnesses, and signed by two or more witnesses in the presence of the testator. With respect to a holograph will, no witnesses are required, but the will must be wholly by the testator’s own handwriting and signature. There is no “saving provision”, such as that found in the Queensland legislation, or “substantial compliance” provisions.
Interestingly, the Queensland court did not comment on the significance or lack of significance of the smiley face emoji. Neither the Queensland legislation nor the Ontario legislation legitimizes wills signed with a J.
Have a great weekend.
In this day and age the priorities for one’s home are changing. Generally, people want to live a happier, healthier and “greener” lifestyle.
I recently came across the blog “Rethink. Reclaim. Remain.” written by Sam and Ryan McLaughlin, who are attempting to do just that. The parents of two, with one more on the way, are renovating their home while keeping three things in mind: “living happily, healthily, and considerately on this planet.”
One problem faced by many young families is how to fit everyone under one roof. The McLaughlin family sought to create the space they needed to accompany their growing family by building an addition to their current home using environmentally friendly and reclaimed materials.
The blog examines how to prioritize not only your time, but your resources. The McLaughlin’s wanted their home to reflect the ideas of sustainable living. To achieve this, they plan to repurpose and reuse viable components and materials. Their design plans incorporate both natural and reclaimed materials into the flooring, structure, finishes and furniture of the new addition. This includes reclaimed factory decking, exposed spruce joists, and reclaimed steel beams.
The environmental movement has seen a surge in recent years. The trend towards “going green” has spread from redesigning office spaces into remodeling homes. The McLaughlin’s blog is one family’s journey to transform their current home into an eco-friendly forever home.
Like every home renovation show on HGTV, not everything goes according to plan. The blog highlights some of the do’s and don’ts for Do It Yourself (DIY) home renovations and when it might be time to call in the contractors.
For those of you who are interested, I highly recommend reading the McLaughlin’s blog and checking out their renovation plans.
Thanks for reading!
A “power” is an authority to act, whereas a “duty” is an obligation. A duty of an estate trustee compels her to act, or prohibits her from acting in certain situations. A power, on the other hand, allows her to act in a certain way, subject to her discretion.
An estate trustee faces potential personal liability from unauthorized actions in the administration of an estate. Although, generally a will prescribes specific powers and duties for an estate trustee when it comes to the administration of the estate, there may also be a situation which the will simply does not contemplate.
As an estate trustee, or even as a beneficiary under such a will, how does one assess what an estate trustee can and cannot do?
The Trustee Act, RSO 1990, c. T23, as amended, is helpful in determining what an estate trustee’s powers and duties are, in the absence of a clear direction from a will.
It is not unusual for an estate trustee to be given discretion with respect to the exercise of administrative powers conferred to manage the estate. However, she may also be given the authority to allocate estate property to the beneficiaries. That kind of power is referred to as dispositive power or discretion and may require an estate trustee to do such things as, divide income and/or capital between beneficiaries at a time of her choosing.
Generally, the powers of an estate trustee will depend on the specific nature of the estate. For example, if the estate consists of property that is to be administered as an investment, the estate trustee will likely be allowed a power of sale, a power to mortgage, and a power to lease. The estate trustee must have the power to keep the property intact as well as meet all financial claims of third parties. An estate trustee will also generally have the power to insure any real property, against loss or damage.
With respect to expenses related to the estate, the estate trustee who believes that an expense is properly incurred, may either pay for it directly from the estate property or pay for the expense personally and later recover the corresponding amount. It is important to note, however, that a court may later disallow an expense if it concludes that it was not properly incurred.
In exercising each power that the estate trustee might have, she must keep in mind that there are certain duties that limit her powers.
- If a power of sale is to be exercised, she cannot delegate it to a third party and later escape responsibility in the event that there is an issue, on the ground that she did not choose the purchaser.
- An estate trustee cannot sell a property to herself, a beneficiary, or a third party with the agreement that she will then re-purchase the said property.
- If the estate trustee sells the trust property, not only must she be honest, but also show a reasonable level of care and skill in her conduct, throughout the transaction. For example, she should not convey title until payment is received, and if she does do so and there is a resulting loss to the estate, there may be personal liability.
An estate trustee with significant discretion in administering the estate can certainly be put in a difficult position with respect to how such discretion is to be exercised. Unfortunately, there are few guidelines available on that end, short of exercising one’s own good sense.
Thanks for reading.
Find this blog interesting? Please consider these other related posts:
Estate Trustees’ Standard of Care
High net worth individuals typically have more than enough money to live their desired lifestyle. But there’s an important element that even the wealthiest amongst us may be lacking – protection. According to recent research by Chubb, more than 50% of high net worth individuals worry that they are underinsured, and less than 30% look for insurers who are specialists in providing coverage for the affluent: https://www.canadianunderwriter.ca/personal-lines/insurance-providers-need-go-understand-needs-high-net-worth-individuals-chubb-1004110295/.
The simple fact is that those who have more, have more to lose. And they have assets and protection needs that go far beyond what an off-the-shelf property and liability policy can provide. Uncovered losses not only have day-to-day lifestyle implications, they could also impact estate values down the road.
Here are some of the coverages available in the Canadian market that high net worth individuals should consider.
- Coverage for high-end homes – As technology advances, home systems have become more sophisticated, and higher-end homes even more so. Assets and equipment that need protection can include state-of-the-art electrical and mechanical systems. back-up generators, pools, home theatres, climate-controlled wine systems, walk-in humidors, and showcase garages. These homes may also have unique architectural detailing that requires special protection.
- Personal security breach protection – Wealth and a higher public profile comes with its own risks – home invasions, stalking, violent threats, even kidnapping. Specialty insurance packages cover expenses related to these events, from loss of income to professional counselling, to additional security services.
- Protection for collectibles and leisure vehicles – An affluent lifestyle often includes vehicles that go beyond basic transportation needs. These can include antique, classic and collector cars, airplanes, speed boats, houseboats and yachts, and other recreational vehicles.
- Increased liability protection – The higher your public or professional profile, the greater the risk of liability claims, with libel, slander or defamation claims being an obvious example. Higher-end insurance policies often include worldwide umbrella liability coverage that extends the range of liability protection available.
This recent Globe and Mail article highlights some other protections that those with an affluent lifestyle might consider: https://beta.theglobeandmail.com/globe-investor/globe-wealth/high-net-worth-lifestyle-brings-liability-tripwires/article34019994/?ref=http://www.theglobeandmail.com&.
Many insurance companies in Canada – such as Aviva and Chubb – offer exclusive protections and services for the high net worth market. An insurance broker can be invaluable in helping you find the right solution.
Thank you for reading!
Let’s say that you are an estate trustee of a trust, or a beneficiary of a trust. The trust consists of investments. How can you be sure that the investments are performing adequately?
A new product from Asset Risk Consultants will allow you to make a quick check of the performance of the investment portfolio.
“Performance QuickCheck” allows you to enter information about the portfolio, and will immediately compare its performance to 130,000 portfolios having similar risk across five major currencies.
To conduct the check, users pick their currency (currently, British Pounds, US dollars, Euros, Swiss Francs or Canadian dollars), and the percentage of the fund invested in equities (allowing the comparison to be made based on the risk assumed by the trust: either cautious, balanced, steady growth or equity risk). The program then asks for the period over which the portfolio was held, and the percentage return over the period.
The program will then compare your investment return to other portfolios having similar risk.
For example, a Canadian portfolio holding 30% equities producing a 7% return for the period from June, 2016 to July 2017 will result in a smiley green face, indicating above average performance. However, a Canadian portfolio holding 80% equities producing a 7% return for the same period will result in a sad red face, indicating below average performance. As suggested by the website, trustees may want to ask their investment manager for a comment, or consider another investment manager. Beneficiaries may want to speak to the trustee, or legal counsel.
A more comprehensive report is also available, for a fee of £25.
Performance QuickCheck from Asset Risk Consultants is a great, easy to use, free tool to allow you to quickly ask and answer, “How am I doing?”.
Have a great weekend.
Have you seen the recent Home Hardware ads, where an adorable young couple tackles a complete home renovation on their own? It’s hard not to root for them. But while the do-it-yourself attitude is admirable, there are some things in life where professional help is needed, and estate planning is one of them. Estate planning mistakes aren’t easily fixed, especially since they might not be discovered until you’re gone. Here are a few reasons why professional help is important.
An objective voice on family dynamics
The influence of family relationships on your plan is greater than any other factor. Who gets along with whom? Who has special needs? Should estate assets be owned jointly by all beneficiaries, or sold? Who do you trust to manage your estate?
That’s where a professional can help. You’re caught up in family dynamics, whether you like it or not. And an objective voice can do wonders for quieting the family voices you hear and providing some clear advice to help you arrange your estate in a manner that reflects the unique dynamics of your situation.
They can also help you communicate your plan to your family during your lifetime, to minimize estate conflicts later. Trust me, we’ve seen it all. If there are issues within your family now, you can be certain they won’t be any better once you’re gone. The more you can do to communicate your estate plan and listen to family members and address concerns during your lifetime, the smoother the estate settlement process will be.
They see things you haven’t thought of
An estate plan doesn’t have to be complicated, but all good plans have one thing in common – they cover all the angles. The mistakes in estate planning often relate to what isn’t in the plan rather than what is.
One of the key benefits of planning with a professional is the use of a methodical approach to cover off the key elements that pertain to your estate, whether related to business, your children from a previous marriage, beneficiaries, or assets in other jurisdictions.
The coordination of beneficiary designations for insurance policies and registered plans is a great example, because it’s a commonly missed item. These policies and plans may have been put in place over many years, with designations that no longer reflect your desired division of assets.
You have a role too
While professional advice is an essential element of a solid estate plan, your input is obviously an important part of it. And the more you know about the estate planning process, the more value you bring to the table. This recent Globe and Mail article highlights three estate planning books you might want to read to learn more about the process and the elements of your estate plan that you may not have considered:https://www.theglobeandmail.com/globe-investor/globe-advisor/beyond-the-beach-read-estate-planning-books-for-canadians/article35981401/.
Thank you for reading,
There are a few holdovers from the Mad Men era of 50 or 60 years ago, when men were the primary breadwinners and wealth managers – and women looked after the home and family.
On the home front, even though almost four out of five women work outside the home, they still do more housework than men. Yes, men are getting better, but as Maclean’s magazine puts it, this evolution is happening “at a glacial pace”:
Perhaps more importantly, the money management part of the 1950s has also been slow to change – with some significant differences in financial literacy and financial confidence between men and women. According to research from Sun Life Financial: https://www.sunlife.ca/static/canada/GRS%20matters/GRS%20matters%20articles/2015/Bright%20Papers/Mind%20the%20retirement%20Gap_Unretirement%20Paper_E%2006-15_June%2011.pdf:
- 46% of women say they lack sufficient knowledge about how much retirement income they would need, versus 37% for men
- 35% of women say they lack sufficient knowledge about how to select investments, versus 26% for men; and
- 32% of women say they lack sufficient knowledge about government programs (such as CPP/QPP, Old Age Security), versus 24% for men.
RBC has also studied the issue and reached a similar conclusion, with only 48% of women feeling confident in their knowledge of wealth and money topics, versus 65% of men: https://www.rbcwealthmanagement.com/ca/en/research-insights/gaining-perspective-on-women-in-wealth-transfer-and-overall-wealth-planning/detail/.
Too often, this lack of knowledge and confidence means that in a male/female relationship, investment, wealth and estate planning falls to the male, with the female less involved. And that’s problematic. With high marital breakdown rates and a longer female lifespan, 90% of women will be solely responsible for their finances at some point in their life. And many women will inherit money twice – once from their parents and once from their spouse. Inheritances are major financial events that can involve a number of decisions and planning changes – and knowledge and good advice is critical.
A couple of changes are needed:
- Get involved – sooner not later. Women not currently active in long-term wealth planning for themselves and their families need to get involved. It’s their future, and, at some point, it’s likely to be a future on their own. Now is the time to get involved to ensure it’s a secure one.
- Get a financial advisor who truly meets your needs. Wealth advisors historically have not been good at catering to the advice and planning needs of women. Studies have shown that in the U.S., 70% of women change financial advisors after their spouse has died. In Canada, the number is 80%. Clearly, many women are not happy with the advice they’re getting. If you’re involved with your finances, and your current advisor is catering to your male partner and not to your concerns, don’t wait until there’s a death in the family to take action.
This article in the Globe and Mail spells out the issues well. It’s worth a read: https://www.theglobeandmail.com/globe-investor/investment-ideas/financial-advisers-have-trouble-talking-to-women/article22726458/.
Thank you for reading!
A common problem in estates administration is getting an occupant out of the house of a deceased person. Often, the deceased lived with a son or daughter, and after the deceased dies, the son or daughter refuses to leave the premises. The question arises as to how to get the occupant to leave the premises.
This was the problem in Filippelli Estate, 2017 ONSC 4923 (CanLII). There, the deceased died on October 22, 2016. At the time of her death, the deceased was living in her house with her son, Roberto. The deceased died leaving a Will that transferred her house to her two other children. 90% of the residue of the estate was to also pass to the two other children, with only 10% going to Roberto.
Roberto refused to vacate the house. The estate trustees, being the two other children of the deceased, brought an application for vacant possession. In response, Roberto argued that he was a “tenant” and that the estate trustees must therefore comply with the Residential Tenancies Act. (“RTA”) Roberto argued that he was paying his mother $650 per month. The evidence however only supported payments of $650 on four occasions over a 16 month period. There was no evidence of an oral or written tenancy agreement. The judge found that the payments were consistent with a mother and son sharing the cost of living expenses, and not a tenancy. The judge stated that “it would be a dangerous precedent if a son or daughter could simply assert that s/he was a tenant and that his/her deceased parent was the landlord and therefore thwart the testator’s intentions in a case like this, and require the Estate Trustees to take proceedings under the RTA.”
An order was made requiring Roberto to vacate the premises within 30 days. If he failed to vacate, the Sheriff was authorized to forcibly remove him.
Ironically, Roberto was ordered to pay “occupation rent” for occupying the property from the date of death to the date of vacancy. The court stated that occupation rent was akin to a claim of unjust enrichment. The mere fact that he remained in the house after the date of death did not make him a tenant and the estate trustees a landlord. In addition, Roberto was ordered to pay maintenance expenses of $282.50, and costs of $5,000.
The outcome may have been different if there was better evidence of a tenancy.
Further, the outcome may have been different if a claim was made for dependant support. Such a claim can often lead to an interim order of continued possession.
Thank you for reading. Have a great weekend.