Tag: General Interest
George Floyd died tragically during an arrest by Minneapolis Police officers on May 25, 2020. Mr. Floyd’s highly publicized death ignited demonstrations and protests across the United States and Canada against police brutality and in support of anti-racism. Many individuals are also showing their support to this cause with donations to community groups, non-profit organizations, and other fundraising campaigns with a related mission or purpose.
One of the more successful fundraising campaigns has been the George Floyd Memorial Fund established by Mr. Floyd’s brother, Philonise Floyd, on GoFundMe, an online crowdfunding platform. This campaign has raised just over $14 million to date, far surpassing its original target of $1.5 million. The overwhelming success of this GoFundMe campaign invites the question – what happens if more funds are donated to a fundraising campaign than originally requested?
Crowdfunding campaigns are often created in order to raise money for a specific purpose or project. If more money is raised than is needed to fulfill the campaign’s intended purpose, then there will be surplus funds. A common example is a GoFundMe campaign created to defray funeral expenses and the campaign ends up raising funds over and above the actual costs incurred for the funeral. What is the campaign promoter entitled, or perhaps required, to do with the leftover funds?
In general, if money is donated for a specific purpose and not all of the funds raised can be applied to that specific purpose, the surplus funds may be returned to the donors via a resulting trust. Returning donated monies can be burdensome where there have been a significant number of donors and/or anonymous donors who cannot be easily identified. To help avoid this situation, a campaign promoter can include alternative purposes for which funds can be used. These additional purposes must be set out at the time the funds are solicited.
In the case of the George Floyd Memorial Fund, the GoFundMe page states:
“This fund is established to cover funeral and burial expenses, mental and grief counseling, lodging and travel for all court proceedings, and to assist our family in the days to come as we continue to seek justice for George. A portion of these funds will also go to the Estate of George Floyd for the benefit and care of his children and their educational fund.”
The above description includes multiple purposes for the collected funds. Some of these purposes likely have been or will be fulfilled, such as the payment of funeral expenses. However, other purposes are seemingly unbounded, such as supporting the care and education of Mr. Floyd’s children. Thus, although the George Floyd Memorial Fund garnered millions of dollars in excess of its original goal, it is likely that all of these funds can properly be applied to the campaign’s defined purposes. If this is the case, then no portion of the collected funds will be considered to be surplus and all of the money should remain available for the benefit of the Floyd family.
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Ante-Mortem Probate, or Pre-Death Probate, is a process of probate which validates the Will of a testator during his or her lifetime and may be particularly useful for testators who fear that their Will may be subject to a challenge following their death.
Various models of Ante-Mortem Probate have been explored in the past by American scholars and include the following proposed models:
- The “Contest Model”, reviewed by Professor Howard Fink, is where each of the beneficiaries are identified, including those that would benefit on an intestacy and the testator essentially becomes the moving party in his or her own suit against all possible beneficiaries of his or her Estate. [Antemortem Probate Revisited: Can an Idea Have a Life After Death? (1976) 37 Ohio St LJ 264]
- The “Conservatorship Model”, explored by Professor John H. Langbein, is where the testator is required to apply to the Court in a manner similar to the “Contest Model”, however, instead of each of the specific beneficiaries being involved, a Guardian Ad Litem (Conservator) represents the interest of all potential beneficiaries, including any unborn or unascertained beneficiaries. [Living Probate: the Conservatorship Model (1980)]
- The “Administrative Model”, set out by Professor Gregory S. Alexander and Albert M. Pearson is neither judicial nor adversarial. There is no requirement of notice to the beneficiaries or in fact “interested parties” as one of the significant concerns with the other models of Ante-Mortem Probate is the confidentiality of the testator. [Alternative Models of Antemortem Probate and Procedural Process Limitations on Succession (1979-1980) 78 Mich L Rev 89]
Only certain American States allow Ante-Mortem Probate, whereas Canada does not have any provinces or territories with a similar arrangement.
Given the number of suits that are commenced following the death of testators across Canada, such an arrangement could be beneficial in that at the very least, a testator who expects that there will be a challenge to his or her Estate plan could take an active part in adjudicating whether his or her Will is indeed, valid.
Considering the complicated familial arrangements that are often present in our society today, perhaps addressing challenges of things like capacity of the testator, undue influence or the presence of suspicious circumstances would make more sense before the testator’s death. This is particularly an issue where a testator’s capacity had been in question for a while and the Will being challenged was executed a decade or more before death.
There are, of course, certain potential negative effects of any Ante-Mortem Probate regime, particularly the possibility that it would encourage litigation that would not otherwise arise, following the death of the testator.
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On a recent trip to Rochester, New York, my fiancée and I had the pleasure of touring the George Eastman Museum and came across an interesting piece of estates lore.
George Eastman, the founder of Kodak and a pioneer of bringing photography to the mainstream, died leaving a Will drawn in 1925. As his wife had predeceased him and they had no children, Mr. Eastman devised all of his real property and left a substantial cash legacy to his closest family member, his niece, Ellen Dryden. Mr. Eastman’s estate held significant assets, and the value of liquid assets alone was estimated as exceeding the equivalent of USD$35 million today.
However, on March 9, 1932, only five days before his death, Mr. Eastman had a change of heart with respect to the distribution of his estate. Rather than leave the bulk of his estate to an individual, Mr. Eastman wished to ensure that his legacy would be one of service to the community that had fostered his photography empire. True to form as a philanthropist and benefactor of local enterprise, Mr. Eastman executed a Codicil to his Will, changing the primary beneficiary of his estate from his niece to the University of Rochester.
The testamentary dispositions under the Codicil represented a significant deviation from those under his Will. Typically, where a testator’s dispositions vary substantially from one instrument to another, concerns may arise with respect to the their testamentary capacity or the presence of undue influence.
A shrewd entrepreneur in his own right, Mr. Eastman recognized the risk that the Codicil might later be the subject of scrutiny or litigation. On the date the Codicil was to be executed, Mr. Eastman hosted a gathering at his residence and invited many guests and acquaintances. He devoted time to speaking to each individual guest about topical, personal subjects so that they could attest to Mr. Eastman’s soundness of mind in the event that a certain disgruntled niece chose to commence a Will challenge.
In a way, Mr. Eastman’s goal is not too dissimilar from some of the criteria that are relied on even today to assess a testator’s capacity. Third-party evidence that a testator appeared to be of sound mind immediately prior to the execution of a testamentary document may help a trier of fact draw a favourable conclusion with respect to capacity. While the formal criteria to assess capacity primarily consider a testator’s appreciation and understanding of his or her assets, Mr. Eastman’s clever scheme demonstrates that he turned his mind to questions about his own capacity and took steps to mitigate the risks.
Mr. Eastman’s Codicil was not later subject to any litigation, and the University of Rochester received a handsome distribution out of his estate.
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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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The interplay between evolving social norms and the legal foundations that predate or accelerate these changes has seen significant development in the last decade. Courts of law and of public opinion have made important strides in shaping social policy in many areas, such as medically-assisted death, gender diversity and inclusion, and marriage rights, to name a few. A recent case out of the Ontario Superior Court of Justice considered this last issue, marriage rights, with a particular focus on predatory marriages.
In Hunt v Worrod, 2017 ONSC 7397, the Court was tasked with assessing whether an individual who had suffered a catastrophic brain injury possessed the necessary capacity to marry. In 2011, Kevin Hunt suffered a serious head injury following an ATV accident and spent four months recuperating in hospital. He was eventually discharged into the care of his two sons, but three days after his release, Mr. Hunt was whisked away by his on-and-off girlfriend, Kathleen Worrod, to be ostensibly married at a secret wedding ceremony.
Mr. Hunt’s children brought an application to the Court on his behalf to void the marriage, partly to preclude Ms. Worrod from accruing spousal rights to share in Mr. Hunt’s property or assets. Ultimately, the Court concluded that Mr. Hunt did not possess the requisite capacity to enter into the marriage.
In its reasons, the Court relied heavily on the opinions of several expert witnesses and the existing body of legal authority. The Court began by reviewing section 7 of Ontario’s Marriage Act, which provides that an officiant shall not “solemnize the marriage” of any person that the officiant has reasonable grounds to believe “lacks mental capacity to marry.”
The expert evidence tendered by the parties suggested that Mr. Hunt had significant impairments in his ability to make decisions, to engage in routine problem-solving, and to organize and carry out simple tasks. He was characterized as “significantly cognitively impaired”, and was assessed as being incapable of managing his property, personal care, or safety and well-being.
The Court subsequently relied on the test for capacity to enter into a marriage contract established by the British Columbia Supreme Court in Ross-Scott v Potvin in 2014. The Court held that a person has the capacity to enter into a marriage contract only if that person has the capacity to understand the duties and obligations created by marriage and the nature of the commitment more generally.
The Court also identified the tension between balancing Mr. Hunt’s autonomy as against the possibility that he lacked the capacity to appreciate the legal and social consequences of marriage. Ultimately, the Court was satisfied that Mr. Hunt’s children had met their burden of demonstrating that their father lacked the necessary capacity to marry Ms. Worrod. The marriage was declared void ab initio, and the attendant spousal property rights that would have otherwise flowed to Ms. Worrod were lost.
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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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As an estates litigator for the past 25 years, there isn’t much I haven’t seen when it comes to will drafting issues and errors. I’ve made a living out of picking up the pieces and sorting out the conflicts that result from errors and ambiguities in the estate documentation process.
While it’s great for my business, clients pay a high price for those errors and ambiguities in the form of legal fees, bequests lost, and family harmony dashed to bits among other things.
A will may be one of the most common documents in our legal world, but there is nothing off-the-shelf about it, and complexities abound. You’ve likely experienced it your own practice – drafting a will “right” isn’t always easy.
Is there a better way to draft one – so that the proper checks are made, the proper questions asked, and the proper wording applied?
You bet. The Hull e-State Planner is an interactive Will Planning App designed specifically for Canadian lawyers. It takes a visual approach to will planning, one that’s easy for you to use and easy for your client to understand and verify that their wishes have been properly captured.
You can find out more about it here. https://e-stateplanner.com/about/
Or, to see the Hull e-State Planner in action, take a few minutes to watch how the App takes you through the drafting process. https://www.youtube.com/watch?v=wyZWyM9gktQ
Even better, try it yourself, with a 30-day, 100% money back guarantee. You’ll find it a small price to pay for a better way to draft your clients’ wills.
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Last week, Ian blogged on the Retirement Homes Regulatory Authority, financial abuse of the elderly, and the competency of elderly individuals to make financial decisions. As stated last week, it is unclear what the responsibilities are of a retirement home in cases where there have been loans between a resident and the licensee.
The recent Licence Appeal Tribunal decision of 2138658 Ontario Ltd. ola Seeley’s Bay Retirement Home v. Registrar, Retirement Homes Regulatory Authority is the first case to look at financial abuse in the context of the Retirement Homes Act, 2010, S.O. 2010 Chapter 11 (the “Act”). This case involved the Retirement Homes Regulatory Authority’s revocation of Seeley’s Bay Retirement Home’s licence on the basis of the alleged financial abuse of three residents, and a former resident.
The Tribunal determined that the former resident offered to grant the licensee a second mortgage, however, the resident had independent legal advice and a proper written mortgage, and as such, no financial abuse was found.
The Tribunal found financial abuse of one out of the three residents. For the first two residents, the Tribunal did not find financial abuse as they were a couple that had a long-term 25-30 year relationship with the licensee. The couple offered a loan to the licensee but he had counted the loan toward the couple’s rent and had paid off the loan at the time of the hearing. The Tribunal found that this was a trade-off, and that people who are competent to manage their own affairs ought to be allowed to make independent financial decisions, and found the loan to be “a matter of friendship and faith”.
The Tribunal found financial abuse of the third resident. Resident three lived in the home for 6 years prior to her death, and was determined to be capable. She managed her own finances and had no close family. The licensee began approaching her for money, which he applied to her rent, yet continued to borrow money beyond the amount paid of rent. There was nothing in writing, no records of the payment, and the resident had no independent legal advice. In 2016, the resident’s health began to deteriorate and she was worried that she would not be able to cover her expenses due to the amount of money she had lent to the licensee. She approached the licensee about repayment and the licensee took no action. The loans were outstanding upon the resident’s death. The Tribunal found this amounted to financial abuse as it was found to be “misappropriation” of resident money under the Act, pursuant to Regulation 166/11 and section 67.
In considering all of the claims against the residence, the Tribunal found that the loans raised concerns about the licensee’s ability to operate the home with honesty and integrity. This was exemplified due to the third resident’s dependency on the home. Moreover, the Tribunal noted that in the third case, there was harm to the resident’s peace of mind along with a risk that she would not be able to pay for her own long-term care.
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An estate trustee may be bound to a contract previously entered into by the deceased. This duty is distinct from the duty of an estate trustee to discharge all debts of the deceased.
There are four main elements of a contract:
- Intention (consensus ad idem/meeting of the minds)
Prior to the formation of a contract, it is possible for an offer to be revoked by death, if the contract has not been accepted by the surviving party. If performance of a contract has already been initiated by the surviving party, the contract may not be able to be revoked. This is due to the fact that part-performance of a contract may validate a contract. The doctrine of part-performance has been upheld in cases such as Lensen v. Lensen, 1984 CanLII 2424 (Sask CA), and Thompson v Guaranty Trust Co.,  S.C.R. 1023.
In general, contracts often will have a clause stating that the terms are binding on the estate of a contracting party. Therefore, if a contract is found to be valid, the estate of a deceased may be bound by a contract entered into by the deceased. It is important to note that a contract need not be formally executed and signed in order to be considered enforceable by the court.
In Bayer Estate v. Blue Button Club, 2007 BCSC 517, the British Columbia Superior Court upheld a contract on the death of a party. In this case, the deceased, Bernard Bayer, and his employer, Blue Button Club, entered into an employment agreement for 10 years, with an annual base salary of $60,000.00 plus benefits. The contract provided that, upon the death of Bayer, the Club would pay into deceased’s estate an amount equal to the salary and benefits that the deceased would have earned. The amount paid into the estate was to be based on how much time was left in the employment contract. The contract also had a provision naming the Club as a beneficiary of the deceased’s insurance policy, so long as the Club was to maintain insurance on the life of Bernard. Upon the death of Bayer, the Club tried to submit that the employment contract was not enforceable. The Court rejected the Club’s submissions and upheld the contract, requiring the Club to pay the deceased’s salary into his estate.
Aside from part-performance of a contract or having a formally executed contract, it is possible to enter into a verbal contract prior to the formal contract being executed. Where a tentative agreement is reached from oral negotiations, the intentions of the parties are the key factor in determining if a contract is in existence. In attempting to enforce a contract in which one of the parties is deceased, the Court will look to the intention of the deceased in order to determine whether or not they intended for a contract to be formed.
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