Tag: Executors and Trustees
Your will sets out how your estate is to be divided upon your death, but it is up to your executor to settle your financial affairs and distribute the remaining assets to your beneficiaries. That is why choosing the right executor is so crucial. Here are some guidelines to help select who will perform this important role.
First, you may want to make sure the person lives in Canada. An estate is considered a trust, so there could be tax implications if it is controlled by a non-resident. Rules vary from province to province, so it is best to get someone close by since they will have to consult with your bank and lawyer when settling the estate.
Even with the simplest estate, your executor will have plenty of paperwork to complete. That includes gathering financial information required to file your final tax return, paying outstanding debts and estate expenses, and perhaps even applying to have the will validated by a court. Your executor should be comfortable with finances and dealing with government agencies. He or she should also not be afraid of asking for professional help when needed.
In many cases, trustworthiness is more important than expertise, as honesty trumps experience in this important role.
You will also want to make sure the person you appoint as executor is willing to devote the time and effort required to handle all these tasks, as the process can last for months, even years. In Ontario, more than one executor can be appointed under your will and you may want to consider obtaining consent before naming someone as an executor in your will.
If you are naming a single executor, however, it is wise to consider appointing an alternate. There is always the risk of your primary executor dying before you, or becoming ill, incapacitated or unwilling to act when it is time to settle your estate.
If you intend to leave the majority of your assets to a single person, such as your spouse, you may want him or her appointed as one of your executors. Adult children or other family members often serve in this role. That usually works well, but problems can arise if one family member feels he or she is performing more of the tasks than the others.
Tensions amongst surviving family members can cause problems within blended families, especially if a child from one marriage is put in charge of distributing your estate while those from another marriage watch suspiciously from the sidelines. Naming an executor from outside the family is definitely the better option in that situation.
There are also estate professionals who can be hired to act as executors. This may be a sensible alternative if your estate is complex, or if minors or disabled children have to be provided for through trusts. Having an outsider administer your estate may also be an effective way to avoid family conflict after you are gone.
Anyone serving as an executor of your estate can apply to the court for what is known as executor’s compensation, a form of remuneration for the work involved in settling an estate.
The age of your executor is also very important. While you may want a friend that you have known since childhood to be entrusted with this role, he or she may not be physically able to do the work that is needed when the time comes.
Just as you should be reviewing and updating your will on a regular basis, your choice of executor should also be revisited periodically. Personal circumstances change over time, and perhaps the person you chose to take on the task decades ago may not be as appropriate now.
Your estate is the last gift you will give to your family. Choosing the right executor ensures that the gift is distributed as you intended.
Thanks for reading … have a great day,
Trustees may be cautious or uncertain when administering trusts, even when the trust deed gives them unfettered discretion in carrying out their duties.
In Ontario, trustees are able to seek advice and directions from the court under section 60 of the Trustee Act and also seek advance approval of various exercises of discretion in administering a discretionary trust. The jurisdiction of the Court to approve the exercise of discretion by trustees was formally recognized in Public Trustee v. Cooper  WTLR 901, a decision of the High Court of Justice in the UK. These orders are often referred to as “Cooper orders”. However, trustees must consider when it is appropriate to involve the Court in decisions that should be made by trustees.
Justice Hart in Cooper outlines instances in which trustees can seek directions from the Court. He states that parties may seek to obtain the blessing of the Court for a “momentous decision” that they have resolved to make in the trust’s life. As long as the proposed course of action is within the proper exercise of the trustees’ powers and where there is no real doubt as to the nature of the trustees’ power, the Court may make a declaration that the trustee’s proposed exercise of power is lawful. The Courts have made it clear that they will not exercise discretionary powers on behalf trustees.
Cooper Orders have been successfully sought in Canada. In Toigo Estate (Re) 2018 BCSC 936, the Trustees of an Estate sought the Court’s declaration that their exercise of discretion was lawful. The deceased created a spousal trust which permitted the trustees uncontrolled discretion to encroach on the capital of the estate in favour of his wife. After his wife’s death, the residue of the estate was to be divided amongst the deceased’s children and grandchildren.
The wife asked the trustees for a significant encroachment. The trustees had uncontrollable discretion to make the encroachment. However, they still wanted the Court’s “opinion, advice or direction” as to whether they should proceed.
The Court held that because of the magnitude of the encroachment, the Court could provide advice on this “momentous decision”. In making the decision, the court asked the following questions:
- Does the trustee have the power under the trust instrument and the relevant law to make the “momentous decision”?
- Has the trustee formed the opinion to do so in good faith and is it desirable and proper to do so?
- Is the opinion formed by the trustee one that a reasonable trustee in its position, properly instructed, could have arrived at?
- Is the Court certain that the decision by any actual or potential conflicts of interest?
Ultimately, trustees need to consider whether it’s suitable in their circumstances to apply to the court for a stamp of approval when taking drastic or “momentous” action.
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On March 30, 2020, Noah Weisberg blogged about the estate trustee’s duty to invest during COVID-19, a time when market fluctuations have become the norm. Today, I consider how pandemic-induced changes in the housing market may impact an estate trustee’s management of real property held by an estate.
Real properties – including primary residences, cottages, and vacation properties – are often some of the largest assets an estate trustee will deal with during the course of their administration of an estate. Unless otherwise stated in the deceased’s will, the estate trustee has a fiduciary duty to sell the estate’s real property for its fair market value and is expected to do so in a timely manner.
However, the exact timing for the market and sale of real property can depend on many factors. It is common for a will to grant an estate trustee the discretion to choose whether to sell or retain assets. As it pertains to real property, this power allows the estate trustee to hold onto a property until such time as they can achieve the best possible sale price on behalf of the beneficiaries. At the same time, the estate trustee needs to be mindful of the costs incurred by the estate in having to maintain the property. Beneficiaries of the estate may also put pressure on an estate trustee to sell the property and convert it to money sooner rather than later.
Like most industries, the real estate market has been impacted by COVID-19. An estate trustee should be attentive to whether recent changes in the housing market make it an ideal or inopportune time to market a particular property for sale, while also bearing in mind the factors described above.
If an estate trustee decides to list a property for sale in today’s uncertain housing market, there are a few things they can do to help protect themselves against future claims from beneficiaries. First, the estate trustee should have the property appraised for its fair market value by a professional appraiser who is an independent third party. For added protection, the estate trustee may want to have the beneficiaries sign off on the property’s price. The estate trustee should also make an effort to keep the beneficiaries apprised of each step of the sale process. Lastly, the estate trustee should take care to keep detailed records of all advice received and steps taken in the event that they need to justify their actions at a later date.
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Testamentary freedom is a core tenet of estate planning in Ontario. In general, testators are at liberty to set up their estate plan to include or exclude whomever they wish. Where part or all of a testator’s estate plan fails as a result of an intestacy, Ontario’s Succession Law Reform Act (the “SLRA”) steps in to provide the parties who will benefit as a result. Occasionally, the principles of testamentary freedom and intention and the laws of intestacy intersect in peculiar ways. This intersection came to a head in the Eissmann v Kunz (2018 ONSC 3650) decision.
In Kunz, the testator, Siegfried Kunz, died leaving no fewer than four testamentary documents purporting to be wills, briefly summarized as follows:
- A will drawn in 1967, which divided Mr. Kunz’s estate between his wife and their daughter, Petra;
- A will drawn in 1982 in Mr. Kunz’s handwriting, which stated that the “beneficiary after [his] death is Petra”;
- A will drawn in 2000, again in Mr. Kunz’s handwriting, which purported to modify the 1967 will and listed a number of specific legacies to various beneficiaries. Mr. Kunz appears to have later written over the original bequests to increase the amount of each. Petra was once again listed as the sole residuary beneficiary; and
- A will drawn in 2009, also in Mr. Kunz’s handwriting, which provided that Petra would “not receive a single Euro of out [the] Estate.” In the margin of the 2009 will, Mr. Kunz expressly indicated that the 2009 will was to be an “amendment” to the 2000 will.
The Court was first tasked with determining which will was to govern. The Court concluded that the 2000 will was a valid holograph will, though noted that the subsequent handwritten amendments were of no force and effect as they did not comply with the formal requirements for valid alterations under the SLRA. The Court concluded that the 2009 will operated instead as a codicil to the 2000 will as it did not dispose of any property on its face and, therefore, could not function as a standalone will.
The interplay between the 2000 will and the 2009 codicil is such that a conflict arose with respect to the disposition of the residue of Mr. Kunz’s estate. The 2000 will names Petra as the sole residuary beneficiary. The 2009 will revokes Petra’s interest entirely. The 2009 codicil therefore created a partial intestacy with respect to the residue of Mr. Kunz’s estate, and the Court looked to the SLRA to determine who would inherit.
The hierarchy of beneficiaries on an intestacy is set out in Part II of the SLRA. Mr. Kunz died leaving no surviving spouse, and so the next intestate beneficiaries were to be his children, that is, Petra. In an ironic twist of fate, the Court concluded that Petra was solely entitled to all of the residue of Mr. Kunz’s estate, notwithstanding that he had intended to expressly disinherit her under the 2009 codicil. The Court declined to give effect to Mr. Kunz’s apparent intention to exclude Petra.
Simple estate planning steps, such as the appointment of an alternate beneficiary under the 2009 will, could have prevented this great irony. Ensure the effects of your testamentary dispositions are properly understood by taking time to review your will with a lawyer.
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Although rare, disputes over the final resting place of a deceased are not unheard of. Such a dispute was the subject matter of Mason v. Mason, a decision of the Court of Appeal of New Brunswick.
There, the deceased died at the age of 53. He was survived by his mother, and his wife of 13 months. At first, the relationship between the mother and the wife appeared to be harmonious. The mother wanted the son’s cremated remains buried next to his father, and the deceased’s wife agreed. Later, however, the wife had a change of heart, as she came to believe that her husband did not have a good relationship with his father. She asked the cemetery to agree to disinter the remains and have them buried in another cemetery. As the original plot was owned by the mother, the cemetery required the consent of the mother. The mother refused to consent.
The wife then applied for and obtained letters of administration. This would normally cloak her with the authority to dispose of the body. The wife then applied to court to exercise this right. The court refused to assist her.
The applications judge held that the administrator had the right to determine the proper burial or disposal of the remains. However, this right was limited to carrying out those actions. The applications judge concluded that the remains were properly dealt with, with the agreement of the mother and the wife. At the time, there was no administrator, and therefore the next of kin could determine the disposition of the body, which they did.
The wife argued that as administrator, she had an ongoing right to determine the burial place. Support for this proposition was found in the Saskatchewan case of Waldman v. Melville. There, the deceased’s sister wished to disinter the deceased, over the objection of the executor. The court held that “The rights of the executor continue after the burial of the body, otherwise it would be an empty right … and those who oppose the executor could disinter the body as soon as it was buried.”
The applications judge distinguished the Melville decision. The rights of an administrator appointed months after burial did not entitle the administrator to disrupt burial arrangements agreed to by the person in her capacity as spouse.
The Court of Appeal upheld the applications judge’s decision. They went on to hold that once the body was properly discharged, it could not be moved, under s. 15 of the Cemetery Corporations Act, without the written consent of the Medical Health Officer or the order of a judge. The Court of Appeal stated that the powers conferred on the court by s. 15 of the Cemetery Companies Act were discretionary in nature. A judge to whom an application is made under that section is required to consider and weigh all the circumstances and make the order he or she considers appropriate. In this case, the court found no valid reason for moving the body.
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When a person dies, loved ones generally attend to the burial and memorial preparations without any thought as to who this responsibility falls upon and who has ultimate decision-making power. Where a dispute arises as to the how to say one’s final goodbyes, however, the courts are ready to provide an answer.
Courts have long held that the right to determine how a body is disposed of falls upon the estate trustee of the deceased’s estate. This right arises because the estate trustee is under a duty to ensure the deceased’s body is disposed of in a manner suitable to the estate left behind by the deceased. With this duty comes the corresponding right to possess the body for the purposes of burial. This right comes in priority of the right of spouses, children and other loved ones to decide how to dispose of the body.
For anyone who is in the process of preparing their wills, they hopefully give some thought and consideration as to the suitability of their chosen estate trustee. Ideally, they’ll ensure that their estate trustee is someone:
- likely to outlive the testator;
- willing to take on the task of administering an estate; and
- who will diligently bring all assets into the estate and attend to their distribution.
Testators may want to give some consideration for how the estate trustee will dispose of their body after death as well. This is particularly so as the disposition of one’s body is not something that one can validly provide for in a will (Williams v Williams (1882) 20 Ch D 659 (Eng Ch Div)). Hence, once deceased, testators are in the hands of the estate trustee, so to speak. Where a testator has any concerns that loved ones might fight over burial plans, then some further thought should be given to choosing an estate trustee who will act in accordance with the wishes of the testator.
Unfortunately, disputes over the burial of remains do come up. We’ve blogged on a few of these cases in the past, including the case of legendary soul singer, James Brown and the case of Leo Johnston, a slain RCPM officer in Alberta.
For anyone concerned about it, they may take some small amount of comfort in knowing that once in the ground, courts will be extremely cautious in disturbing a deceased’s (hopefully) final resting place (see, for example, Mason v Mason, 2017 NBQB 132).
Thanks for reading!
As the holiday season comes to a close, many of us will take stock of the time enjoyed with friends, family, and loved ones, and look forward to the prospect of a new year. Unfortunately, as members of the estates bar, we are occasionally called on to review circumstances in which no family members or loved ones are around for the purposes of a deceased individual’s estate planning decisions. More specifically, we are often asked to consider the proper legal procedures when an individual passes away having named an estate trustee who is incapable of acting, and where the individual died leaving no spouse, children, or next-of-kin in Ontario.
In the foregoing circumstances, Ontario’s Crown Administration of Estates Act gives the Office of the Public Guardian and Trustee (the “PGT”) the appropriate authority to step in to the shoes of an estate trustee and administer the estate, if necessary and subject to certain statutory guidelines. Section 1 of the Act allows the Superior Court of Justice to issue to the PGT “letters of administration or letters probate”, thereby giving it the authority to administer an estate, provided the following conditions are satisfied:
- The deceased person died in Ontario, or was a resident of Ontario but died elsewhere;
- The person died intestate (that is, without a validly executed will), or died leaving a will that does not name an executor or estate trustee who is willing and able to administer the estate; and
- The Deceased had no known next-of-kin of the age of majority residing in Ontario who are willing to administer the estate.
Certain additional policy considerations not listed in the Act have also been adopted to govern whether the PGT will agree to administer an estate. Notably, the PGT will generally only act as an estate trustee of last resort. Before agreeing to act, the PGT will typically take steps to locate another interested party who may wish to be appointed, for example, any of the deceased person’s next-of-kin from out of province. Moreover, the PGT will only step in to administer estates that will hold a value of at least $10,000 after all debts of the estate have been paid. By its own estimates, at any given time the PGT is actively administering more than 1,400 estates. Accordingly, these additional policy considerations ensure that the appropriate resources can be directed to the estates that the office has agreed to administer.
Thanks for reading. Happy New Year!
It’s 8:30 am, you’ve just entered your office, and you get a call from the common-law spouse of one of your long-term clients. It’s bad news – your client is in palliative care and has a will from 2001 that he urgently needs to update. Time is of the essence.
You and your assistant can squeeze in time late in the day to see the client at the hospital. But you know it’s a tricky situation that’s fraught with potential problems. Here are a few steps to consider that could protect you and your client before you head bedside.
- Make sure you have the expertise they need: On the initial call, be sure to ask specific questions about what the client needs done. If there are trusts or other complex arrangements involved, assess whether you have the expertise to assist. If death is imminent, the last thing your client can waste is time in trying to line up another lawyer. So do your due diligence up front.
- Assess capacity: Capacity issues could be front and centre for clients who are close to death. If possible, contact an attending doctor, explain the legal test for capacity and ask them to confirm his or her opinion in writing as soon as possible, even on an interim basis by email.
Learn more about capacity issues here: https://estatelawcanada.blogspot.ca/2010/12/when-is-doctors-opinion-on-capacity.html
- Talk one-to-one: You need, and must insist on, time alone with your client, both to do your own capacity assessment and to minimize any unsubstantiated allegations of undue influence. If the situation is at all suspicious, you have a duty to inquire to satisfy yourself that the client is fully acting on their own accord. This is especially important if the client has had multiple marriages or common-law partners, or has been estranged from family members. If you are not satisfied, you may choose to decline to act.
- Take notes and/or video: Your notes could potentially be used as evidence in a will challenge or solicitor’s negligence action, so be sure to set out the basis for your opinion on issues such as capacity and undue influence, rather than simply stating a conclusion. Consider having a junior lawyer attend with you, to provide a more complete base of evidence. Videotaping the interview may also be helpful, as it can provide important evidence if the will is ever challenged.
Finally, if you have older clients who have indicated a need to revise their will, be proactive. Send them this link and encourage them to act now to avoid the potential drama and perils of a deathbed will: http://globalnews.ca/news/1105176/the-mortality-of-deathbed-wills/
Thanks for reading,
At the recent Six-Minute Estates Lawyer, several areas of interest were discussed. One that served as a helpful reminder to me was the presentation on the estate administration tax-avoidance strategy of using primary and secondary wills. Many tips are contained in the paper presented by Kathleen Robichaud. Here are eight of them:
- Checklist – develop a thorough intake process and form, so you can ensure a detailed meeting with your client takes place that will give you the information needed to make recommendations best suited to your client’s needs;
- Revocation clause – ensure each will has one that takes the other will into account, so each will won’t revoke the other;
- Estate trustee – using the same estate trustee (and same alternate) for both wills may reduce the risk of drafting errors and usually simplifies the administration (although for a second will regarding outside Ontario assets, it is ideal to have the estate trustee and assets both in the same jurisdiction);
- Debts and Taxes – it is of particular importance to delineate how debts are to be paid in both wills, especially if you have difference beneficiaries and/or estate trustees in each of the wills;
- Know which assets require probate – sounds trite, but when in doubt only include assets in the secondary will that you are certain do not require probate (e.g. real property (subject to exceptions), bank accounts with large balances, RRSPs left to the estate, shares of publicly traded companies, an interest in a privately held partnership and investment accounts generally require probate);
- Define the assets carefully – otherwise you may have a partial intestacy that could defeat the testator’s wishes;
- Out of jurisdiction assets – when dealing with out of jurisdiction assets, consider that a second, third or even fourth will may be appropriate for varying reasons (e.g. because of difference succession rules or difference taxation rules); and
- Beneficiaries – listing the correct beneficiaries for the right assets, and matching the right set of beneficiaries with the corresponding will, can avoid drafting errors that may otherwise result in both wills having to be probated and/or rectification orders being needed.
Thanks for reading and enjoy the long weekend!
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