Disinheritance has long been a subject replete with interest. Is it a doleful mishap, a strange whim rooted in spite, a tragedy, or is it just desserts and a shield by which elderly persons can impose good behaviour on their successors? Charles Dickens was fascinated with the subject. From Great Expectations to Martin Chuzzlewit, many of his tales include fabulously wealthy testators, parasitical and destitute minor relatives, wronged rightful heirs, family bonds eroded by greed, artifice and deception – and often, in the end, a just outcome. Similar to how the poignancy of this theme stirred Dickens’ readers, aggrieved disinherited parties are often so stirred, to put it mildly, that they commence all-out legal warfare – quenching their scorn with the costly and sometimes blackened bread of estate litigation.
From the testator’s point of view, there is no foolproof method of disinheriting a child. It certainly helps if the child is not dependent, is an adult, has no basis for expecting anything, and there is a forceful, probative reason for the disinheritance (i.e. “so-and-so didn’t let me see my grandchildren”). It might be a good idea for a testator to explicitly state that he or she is disinheriting a child, lest the child later make the argument that the omission was a slip-of-the-mind rather than deliberate disinheritance. The testator may also include a clause explaining the rationale, though this can be dangerous – disinheriting someone out of racism (Spence v. B.M.O. Trust Company,  O.N.S.C. 615 at paras. 49-50).
Some drafting solicitors may suggest giving a small, nominal amount to the otherwise disinherited child – to partially appease the child, appear more moderate to a judge, or otherwise “save face”. The problem with this, however, is that as soon as someone is a beneficiary, he or she may be able to invoke beneficiary rights, such as objecting to the passing of accounts.
As for disinherited children, they may have legal recourse, such as section 58(1) of the Succession Law Reform Act, which gives the court discretion to determine if “adequate provision” has been made for a testator’s “dependants”. In Tataryn v. Tataryn Estate,  2 S.C.R. 807, the Supreme Court overturned the explicit disinheritance of a son and wife because it found that the testator failed his “moral obligation” to provide for them. If a dependant support claim leads nowhere, a disinherited child can always challenge the will, for the wellspring of arbitrary disinheritance is often incapacity or undue influence.
It is hard to lose a parent. Hard, too, is the loss of an inheritance. Keeping this in mind, testators who wish to prevent a conflagration of litigation might opt not to light the spark of disinheritance. If they feel the circumstances demand it, however, they should work with their estate planners to fortify their legal positions against the storms which might otherwise gather.
Thank you for reading,
Suzana Popovic-Montag and Devin McMurtry
Tracing your ancestry is big business these days. According to Ancestry.com, the company and its worldwide affiliates have 3 million paid subscribers and have collected 15 million DNA samples from individuals.
Everyone seems to know someone with a story, some happy, some disturbing. Some people discover a 1st cousin and reconnect with them (good news)! Others find out they have a half-sister they never knew about (oops)!
It can get more disturbing than that. Police have used the DNA collected by ancestry websites to narrow down suspects in murder investigations. That’s how the Golden State Killer was arrested in 2018 for rapes and murders committed 30 to 40 years previously. It’s quite the story. The killer’s relatives clearly did him no good service by happily submitting their DNA.
Using ancestry to expand your horizons
One way that we might want to use our ancestry is verifying our roots and exploring opportunities for citizenship in another country. Many Canadians already enjoy dual citizenship because they or their parents were born outside of Canada. But many do not. And there can be advantages, including the ability to travel and work there, own property, or receive health care.
One example: if you have a grandparent who was born in the Republic of Ireland, you likely qualify for Irish citizenship, which would also make you an EU citizen with all of those privileges.
The rules differ by country, and the application process is undoubtedly thorough and time-consuming, even if you are clearly eligible. But if the potential advantages are appealing, dual citizenship might be an idea worth exploring.
Weigh any downside as well
Of course, you’ll need to look at the potential disadvantages as well (for example, there may be tax obligations you hadn’t counted on). This blog post has some good tips on the practicalities of carrying two passports, but also a quick pros and cons list of holding citizenship in two countries.
Thanks for reading … Have a great day,
With the improvement in phone cameras, photographs are a bigger part of our lives than ever, at least in terms of volume. And while digital photos don’t take up any actual space, they can clutter the lives of our loved ones when we leave a mess of hard drives and memory sticks behind, with thousands of photos to sort through.
When we think about arranging our affairs, the author of this blog makes a very compelling argument for including photographs as part of the arrangement process, and organizing family photos so they provide comfort, not nuisance. The article also contains some great advice on how to leave a photo legacy.
Here’s a thought: with photographs now so ubiquitous, it may be possible to actually “do with pictures” what we used to “do with words” in terms of providing a memoir for those we leave behind. The process of reviewing digital photos, scanning older prints, culling and organizing, and then producing a visual timeline of your life, can not only produce a wonderful gift for your family, it can be an important opportunity for reflection for you as well.
While arranging your photo collection may not be top of your priority list during your work life, it might be something you move up the priority ladder when you retire and have the time to devote to the task.
In the meantime, if a parent or older family relative dies and you’re the one sorting through the photos left behind, this article has some valuable tips on how to make the process both practical and meaningful.
Thank you for reading,
The title of a seminar last week on genealogical research by a group in Toronto caught my interest and I was happy that I attended. Ron Wencer has been a speaker at many meetings of genealogical societies over the years and his talk this time was entitled: “My completely new Grandfather: the DNA Gods Giveth, and they Taketh Away”. His talk reminded me of how advancing technology changes society and how society and laws adapt in response. You only have to do an internet search to find numerous recent examples of DNA testing through outfits like Ancestry DNA or 23andme to see how some lives were changed by DNA test results. Among the stories you will find are those locating previously unknown siblings, children, or other family members that have resulted in everything from happy reunions to divorce.
In the case of Ron Wencer, he had begun researching his own family history over twenty years ago. He knew that his family was originally from Poland and that they had immigrated to New York, living in the Maspeth neighbourhood of Brooklyn. But his grandparents on his maternal side were initially a mystery. He was eventually able to find information on them. Both Michal Silakowski and his wife Marianna had died in the 1930s before their first grandchild was born, and not much family history had been transmitted, but the village that they were from was located.
Ron Wencer recently took a DNA test and allowed the results to be posted on the internet. After then connecting with other DNA test results and analyzing the results of first cousins, second cousins and so forth, and then going back up the family tree he came to a startling conclusion. Although all of the earlier research established that his grandfather was Michal Silakowski, the DNA genetically established that it was not possible that Michal Silakowski was the biological son of his Silakowski parents, the Silakowski great grandparents. One of the explanations is that perhaps in infancy this young boy was cared for by the Silakowski family. Such informal adoptions would have been common back then if there was a death of the mother during childbirth or for other reasons.
This however, raises an interesting question on tracing missing heirs in estates. This tracing can be required where there was no will, or where there was a will that resulted in an intestacy due to the predeceasing of a beneficiary or otherwise. It has usually been accepted that a Certificate of Birth from a Vital Statistics Agency showing the family connection is proof of the right to inherit. But, are we perhaps moving into new territory in the future, where DNA testing may be involved and may then “Giveth or Taketh Away” an inheritance?
Thanks for reading,
Conflict occurs in many (if not most) families, so it’s no surprise that it often creeps into estate disputes when a close family member dies as well. No family is immune. Many people who encounter family estate disputes and litigation previously thought that a messy inheritance battle would never happen to them.
There can be many potential causes of estate conflict and estate litigation. These include:
- Questions about the validity of the will or other testamentary documents
- Unequal division of property amongst beneficiaries
- Issues relating to surviving family members who were financially dependent upon the deceased; and
- Disagreements about how the deceased’s assets were managed by an attorney for property or guardian during his or her lifetime.
And disputes aren’t always about a valuable asset or a significant sum of money – it can be about whether the deceased is buried or cremated, how a memorial service is carried out, or some other disagreement based on preference or principle.
While complete conflict avoidance is unrealistic for many families, a better focus is on conflict management – taking steps to minimize the impact of conflict and helping ensure a smooth estate settlement. Here are a couple of steps that can help minimize or manage family conflict.
Choose your executor with care
Selecting the right executor to fulfill your wishes completely and accurately can go a long way towards mitigating any possible family squabbles. It’s a big job. The executor is required to locate testamentary documents, plan the funeral, probate the will (if necessary), collect and secure assets, pay debts, attend to any necessary tax filings, and, eventually, distribute the assets of the estate. You want someone with not only a personal connection but also the financial acumen to be effective in their role. You also want someone who:
- understands the circumstances that can lead to conflict
- can keep emotions out of the mix, and
- not get caught up in any related family conflict.
Even if a dispute arises, keep the line of communication open to clarify positions and enhance the understanding of the source of the dispute. An open dialogue – ideally with the help of a good executor – can go a long way to preventing a dispute from escalating and to ultimately resolving it.
Of course, the ideal time for good family communications is during the estate planning process, while the testator is still alive. This article outlines some key steps: http://www.primewealth.ca/e-newsletter/2017/2017-04/article-3.htm. Meeting with family members during the planning process allows the testator to clearly express his or her wishes, but, just as importantly, gives them a chance to listen to the wishes of others. In this way, potential problems can be identified, and, where possible, resolved. This is especially important if it’s known that siblings don’t get along, or there are children from a prior relationship.
Thank you for reading … Have a great day.
The laws relating to trusts are complex enough, before issues relating to family law are introduced. Even at the best of times, individuals establishing trusts need the advice and services of professionals to ensure that trust structures are sound and their trust goals are met.
But toss in marital discord or separation, and the picture can get murky.
In Ontario, and some other provinces, family law requires an equalization of net family property when a marriage ends. What would happen then if a spouse, perhaps knowing the marriage is on rocky ground, transfers some assets to an alter ego trust, with a child as beneficiary. The transfer to a trust has the effect of reducing the individual’s net family property.
The issue? If the exclusion of a trust asset is challenged, a court could examine the timing and intention in establishing the trust and include it in net family property because the establishment of the trust was a fraudulent conveyance, or intended to avoid an individual’s family law obligations.
Another complication relating to trusts and the calculation of net family property is valuing a spouse’s contingent or vested interest in a discretionary trust. Unless the interest is excluded (gifts or inheritances received during the marriage are excluded for example), interest in a trust forms part of net family property. How then do you value an interest when distributions from the trust are at the discretion of the trustee? Courts have taken different positions – a good overview of different valuation methods is provided here: http://cswan.com/valuing-interests-in-a-discretionary-family-trust/.
Estate freeze considerations
Other forms of estate planning that don’t necessarily involve a trust – such as an estate freeze – can also be impacted by family law. Because the law in many provinces excludes gifts from family property definitions, courts have ruled that shares received gratuitously as a gift through an estate freeze can be excluded from net family property. What’s not clear is whether shares purchased for a nominal amount would still be considered a gift (and excluded for family law purposes) or considered a purchase (which is not excluded).
Thanks for reading.
You’re planning a client’s estate. You’ve identified the assets and tax issues and planned accordingly. Most importantly, your client has provided clear instructions on her wishes for the distribution of her estate. You’ve prepared her will and it’s ready for execution. It’s taken some time to get things right, but it’s a job well done.
Or is it?
What about your client’s family – have they been kept in the loop about what the plans are? Your client undoubtedly has the best of intentions in distributing her estate, but even the best of intentions can be misunderstood.
In my experience, a successful estate plan is no longer solely developed from the top down; it also involves planning from the bottom up. Family members are far less likely to experience emotional distress or family discord – or challenge a will – if they have been given an explanation of the reasons for the distribution of property and have had a chance to express their opinions about that distribution.
This quick video on the Ontario Security Commission’s Get Smarter About Money website brings the point home well.
If you have clients currently in the estate planning process, have them build in some time for a family discussion. It could save a lot of heartache and litigation down the road.
Thanks for reading,
The recent Ontario Superior Court of Justice decision of Zecha v Zecha Estate, 2017 ONSC 1972, 2017 CarswellOnt 4882, raises the issue of how separation agreements ought to be interpreted in circumstances where one party to the contract has predeceased the other.
In this case, a separation agreement was entered into by the plaintiff and her husband, who had since died. With respect to the sale of the couple’s matrimonial home, the separation agreement, dated May 31, 2012, stipulated as follows:
- The plaintiff and the deceased would advise one another of all offers to purchase the matrimonial property;
- If the plaintiff received an offer to purchase the property for less than $1,500,000.00, the deceased could require that the plaintiff accept the offer, but, upon compelling her to do so, would be responsible for paying any shortfall between the sale amount and $1,500,000.00;
- If the property had not been sold within 18 months of the date of the agreement (and the plaintiff had not declined an unconditional offer to purchase the property for a price higher than $1,500,000.00):
- The deceased would assume carriage of the sale;
- The plaintiff would cooperate with the sale process and sign any documents to give effect to the sale; and
- If the property sold for less than $1,500,000.00, the deceased would be responsible for any shortfall between the purchase price and $1,500,000.00.
The plaintiff listed the matrimonial property for sale on October 29, 2012. On April 30, 2014 (23 months after the execution of the separation agreement), the plaintiff entered into an agreement of purchase and sale, and sold the property for $1,180,000.00. There was no evidence before the Court that the plaintiff had advised the deceased that she had received or accepted an offer to purchase the property for less than $1,500,000.00. The deceased died on November 28, 2014, and the plaintiff commenced proceedings against the deceased’s estate for the difference between the sale price of $1,180,000.00 and $1,500,000.00, relying upon the terms of the separation agreement.
At trial, the plaintiff submitted that, pursuant to the terms of the separation agreement, she was entitled to $320,000.00, representing the difference between the sale price of the property and $1,500,000.00, because the property had been sold more than 18 months from the date of the separation agreement. The deceased’s estate asserted that the plaintiff could not enforce the terms of the separation agreement, as she had not complied with its terms as to which party would control the sale of the property if it took place more than 18 months after execution of the separation agreement. Pursuant to the separation agreement, the deceased was only responsible for paying the shortfall if (a) he had compelled the plaintiff to accept an offer to purchase the property for less than $1,500,000.00 within 18 months of the date of the separation agreement, or (b) he had assumed control of the sale of the property 18 months after the date of the separation agreement and accepted an offer to purchase the property for less than $150,000.00.
The Court found that the separation agreement was a properly executed contract and should be interpreted as a whole, giving meaning to all of its terms and avoiding an alternative interpretation that would render a term ineffective (in a manner consistent with commercial law principles). Accordingly, the Court dismissed the action, declining to order payment of the $320,000.00 shortfall by the estate to the plaintiff. The Court stated that the plaintiff had interpreted the terms of the contract too narrowly, in an attempt to obtain a greater payout from the proceeds of sale of the matrimonial property. The Court found that, pursuant to the separation agreement, the deceased had a clear right to decide if an offer to purchase the property for less than $1,500,000.00 would be accepted at the time of its sale, being more than 18 months after the execution of the separation agreement, and the plaintiff could not rely upon the corresponding provisions of the separation agreement.
Circumstances like these, in which one party to a separation agreement has died and the assistance of the Court is required in interpreting the contract for the purposes of considering a claim made (or if an entitlement is apparently limited) under the contract, are not uncommon. It can be important for estate lawyers who may encounter this issue to understand how separation agreements are most likely to be interpreted by the courts.
Thank you for reading,
Other Articles that may be of Interest:
BMO Wealth Management recently released a report entitled “Estate planning for complex family dynamics,” which details the findings of a survey commissioned to ask Canadians for their views on estate planning, inheritance, and communications about these topics within their families. The results of this survey illustrate the importance of communication in avoiding family conflict, particularly in situations where a parent is in a second marriage or common-law relationship.
Only 30% of respondents indicated that their parents had discussed their estate plans or shared details about their wills with them. The report suggests that parents who were separated or divorced were less likely to discuss their estate plans with their children.
The survey respondents were asked whether they believed the distribution of their parents’ estates had been fair. About half of the respondents believed the distribution had not been fair. The report states that respondents whose parents had any kind of relationship other than a first marriage were most likely to feel that the distribution was not fair. Of the respondents who believed the distribution was fair, three-quarters responded that their parents had divided the estate equally. The remaining quarter of respondents who thought their parents had distributed their estates in a fair way reported that the unequal distribution was justified.
When asked about what would constitute a fair distribution of assets, respondents to the survey gave a wide range of answers. Most respondents believed that children of a testator should be treated equally. A minority of respondents believed an unequal division might be fairer, for reasons such as financial need or a particularly close relationship with one child.
The dynamics of a blended family are fertile ground for conflict. Communication with all interested parties about what to expect after the death of a parent or spouse can help ease tensions and avoid surprises after death that often lead to estate battles.
You can find a copy of the full report on the BMO website.
Thank you for reading.