Tag: Hull on Estates
Today on Hull on Estates, Paul Trudelle and Noah Weisberg discuss the use of discretionary trusts in the context of the payment of child support as raised in the decision of Borges v. Santos
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The recently proposed tax changes by the federal government have left many Canadians on edge. In particular, tax planning for those owning small business corporations is currently under attack, and changes seem inevitable. (You can get a good overview of the proposed changes here.) As we grapple with the implications of these proposed changes in Canada, it is worth noting that our neighbours to the south are in the midst of a tax battle of their very own.
The United States is currently contemplating the new GOP tax bill, which President Trump aims to sign into law by the end of 2017. While discussing the entire breadth of the bill is beyond the scope of this blog (not to mention my caffeine supply), I think one aspect of the proposed bill is particularly worthy of discussion: the planned changes to estate taxation.
Currently, Americans can leave estates worth up to $5.49 million without passing any federal estate or gift tax. Estates worth more than that are subject to a 40% tax. Congress has already raised the estate assets threshold many times over the years; for example, in 2000, 52,000 estates had to pay the tax; it is now down to 5,000.
Congress is looking to raise the threshold once again, with the proposed GOP tax bill doubling that threshold to $11.2 million in 2018 and then doing away with the tax entirely by 2024. According to the Washington Post, the reduction and ultimate elimination of the estate tax would cost American tax payers $172 billion over a decade.
This provision to slash (and ultimately do away with) the federal estate tax has received a lot of buzz, which is perhaps disproportionate considering the proposal’s negligible impact on the American budget overall. According to Congress’ Joint Committee on Taxation, the vast majority of Americans – 99.8%- are no longer affected by a federal estate tax. Of the .2% of Americans who are affected, nearly all those who do pay are among the wealthiest 5% of Americans, with the richest 0.1% paying 27% of the total tax. Thus, the crux of the debate over this provision would seem to rest on principle.
The Republican party argues that the estate tax, sometimes called a “death tax”, should be repealed because it is unfair by its very nature. In an interview with Fox News last Sunday, Speaker Paul Ryan (R- WI) stated the party position as follows: “We just think it’s unfair. Death should be not a taxable event, and we should not be stopping people from being able to pass their life’s work on to their kids.”
Democrats, on the other hand, are widely rejecting this provision, arguing that the proposed estate tax elimination constitutes a giveaway to the mega-rich, and that the money could be used more appropriately elsewhere.
Whether or not the proposed estate tax deduction will pass as part of the GOP tax plan remains to be seen; however, reports suggest progress is being made towards the goal of having a final bill signed into law by the President before Christmas.
Thanks for reading,
Suzana Popovic-Montag and Lindsay Anderson (Law Student)
Catto v. Catto illustrates some of the myriad of issues that can surround the administration of an estate.
There, the deceased died at the age of 50 without a will. He was survived by his wife of one year, and his mother and a brother.
The mother applied to the court to be appointed as Estate Trustee. The mother also sought an Order that the deceased’s ashes be exhumed, so that one half of the ashes could be buried in a family plot in Quebec, and an order that she be reimbursed for funeral expenses.
The brother sought an order for the inspection of a hockey card collection, so that he could determine which of the hockey cards in the deceased’s possession belonged to him.
The deceased’s spouse is alleged to have initially agreed to burial of the deceased’s ashes in the family plot. However, she subsequently obtained the ashes, and buried them in Peterborough.
In deciding what to do with the ashes, the court considered the question of who should be appointed as estate trustee. The estate trustee would be entitled to decide on the location and manner of burial of the ashes.
With respect to the appointment of estate trustee, the court considered the relevant statutes. The court noted that the surviving spouse was entitled to all of the property of the deceased’s estate on intestacy, and did not have any interest that was adverse to the estate, such as a claim for dependant support or other relief against the estate. Buttressing this, the court noted that the deceased’s mother was a resident of Quebec, and that s. 5 of the Estates Act prohibits granting letters of administration to a person not residing in Ontario.
As the deceased’s spouse was appointed Estate Trustee, she alone could determine the disposition of the ashes. The mother’s claim for half of the ashes was dismissed.
The deceased’s mother was entitled to be reimbursed for funeral expenses by the estate. The court rejected the argument that the mother had made a gift to the estate of the funeral expenses. To find a valid gift, the court requires i. an intention to make a gift; ii. acceptance of the gift; and iii. a sufficient act of delivery. Here, the first and second points were not present. There was no intention on the part of the mother to make a gift, and prior to appointment by the court, there was no administrator of the estate able to accept the gift.
The court reviewed evidence that the deceased and his brother collected hockey cards together for many years. The cards were originally in possession of the brother, but were then moved to the deceased’s residence as the brother was expecting twins and did not have space to store the cards. There was allegedly a list kept by the deceased as to which cards belonged to whom. However, this list could not be found.
The court ordered that the cards be inspected by the surviving brother. If the list could not be found, then the cards were to be divided between the surviving brother and the deceased’s estate “in a randomized manner”.
In a separate decision, the court addressed the costs of the parties. The surviving spouse claimed costs of $10,133 plus disbursements and HST. In light of the divided success, and an offer to settle made by the spouse, the mother and brother of the deceased were ordered to pay costs to the surviving spouse of $5,000 plus disbursements and HST.
- Make a will (it is, after all, Make A Will Month);
- if you are holding property for someone else, or if someone else is holding property for you, have clear, shared records.
Have a great weekend.
You advise and document estate plans for clients. You’re meticulous about detail and always do a thorough job. Is there anything you’ve overlooked?
Likely not when it comes to estate assets – but what about the softer, quality of life advice related to the family and estate of your clients? A few actions can not only smooth out the estate settlement process but also enhance the life of your clients today.
Here are five actions that all of us should consider before we die.
Tell your family your estate intentions
We’ve said it before: people can’t read minds and they don’t know what they don’t know. There can be many good reasons for the unequal treatment of family members under a will (such as a disability) but unequal can equate to “unloved” unless it’s explained. Before you put the final touches to your estate documents, let your family members know what you intend to do, and work out any issues now, because you won’t be around to work them out after you’re gone.
Pay for an extended family trip
Travel brings people out of their comfort zone and creates interaction that would otherwise never occur. It may not be all love and honey – family dynamics are what they are – but you may be pleasantly surprised at what happens when your adult children and their families interact outside of their day-to-day lives. The challenge of bringing people together can seem overwhelming, but it’s a challenge worth tackling. It doesn’t have to be an African safari (although those are great if you can afford it). Just make it two nights or longer at a place that’s away from anyone’s family home, cottage or chalet. If they can drop all plans and attend your funeral (they surely will), they can create time for a family trip that mom or dad wants.
Give some gifts during your lifetime
We all know the saying “you can’t take it with you.” As much as we believe it, it can be hard to act on it because we all (secretly) think we’ll live forever. But we won’t, and there’s joy in sharing now. So as the song says, “let it go”, or at least let some of it go. If you have surplus wealth, or surplus assets of value – such as artwork that will never fit in a newly downsized space – you can bring and experience great happiness in sharing things now, rather than after you’re gone.
Record some early memories
You’ve likely experienced this at a family gathering. You tell a simple fact about your early life and someone says: “I never knew you spent a summer in New York City.” It shouldn’t surprise any of us – our adult children can’t possibly know about the 30 or 40 years of our lives before they were born, unless we tell them.
So, record some memories – you’re bound to surprise both them and yourself with what you come up with. You can find some good tips on prompting those memories here: http://www.instructables.com/id/Record-Your-Familys-Oral-History-before-it-dies-/.
Make your funeral intentions known
It’s a hotly debated question: is a funeral for the living or for the dead? In most cases, it’s for both, which is why it makes sense to put some thought into what you envision for your funeral and then talk to your family to work towards a plan that everyone can agree on. There are different levels of pre-planning, both formal and informal, but having the wishes of you and your family documented can go a long way toward a smooth process at a difficult time. For those in Ontario, the provincial government provides a good overview of your rights related to pre-planning with a funeral service provider: https://www.ontario.ca/page/pre-plan-and-pre-pay-final-arrangements.
Thank you for reading!
This week on Hull on Estates, Ian M. Hull and Stuart Clark discuss the recent case of Stajduhar v. Wolfe, 2017 ONSC 4954, and whether two individuals need to live together to be considered spouses within the confines of Part V of the Succession Law Reform Act.
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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!
When considering the commencement of an application for guardianship, either guardianship of property or the person, keep in mind the extensive notice requirements under the Substitute Decisions Act (“the Act”) contain extensive notice requirements.
An application for guardianship of property must be served on:
- the alleged incapable person;
- the person’s attorney for property under a Power of Attorney, if known;
- the person’s guardian of the person, if known;
- the person’s attorney for personal care under a Power of Attorney, if known;
- the person’s guardian of the person, if known;
- the Public Guardian and Trustee;
- the proposed guardian of property.
The above listed people are the parties to the Application.
In addition, application must be served by regular mail on:
- the alleged incapable person’s spouse or partner;
- the alleged incapable person’s children who are at least 18 (16 in the case of an application for guardianship of the person);
- the alleged incapable person’s parents; and
- the alleged incapable person’s brothers and sisters who are at least 18 (16 in the case of an application for guardianship of the person).
Similar service requirements apply to an application to terminate a statutory guardianship of property, a motion to terminate a guardianship of property, an application to appoint a guardian of the person, and a motion to terminate a guardianship of the person.
An exemption to the service requirements on family members is provided if the person’s existence or address cannot be ascertained by the use of reasonable diligence.
In addition to the Notice of Application, the applicant must serve the proposed guardian’s consent, a Management Plan, and a statement signed by the applicant indicating that the alleged incapable person has been informed of the nature of the application and their right to oppose the application, and describing the manner in which the person was informed. If it is not possible to so advise, reasons for not advising must be provided.
Failure to provide proper notice under the Act may lead to an adjournment of the proceeding in order to allow for service, causing further expense and delay.
In J.R.B. v. T.M.T., the court addressed the requirement that family members be served. There, the applicant was applying for guardianship of property for his wife, who was severely injured in a car accident. The applicant did not want to have to reveal his financial circumstances and those of his wife to her family members. The family members agreed that this was not necessary, and consented to a waiver of the service requirements. The Public Guardian and Trustee argued that service on family members was mandatory, and for the benefit of the incapable person, and could not be waived. The court held that the right to service was a right of the family members, and they could therefore agree to waive service.
It is implicit, however, that without such a waiver, service on known family members will be required.
Any person who is required to be served with the application materials is entitled to be added as a party to the application: s. 69(9) of the Act.
Have a great weekend.
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.
Other than the last name of Denis Shapovalov (Canada’s newest rising tennis star), one of the most difficult pronunciations I’ve come across lately is pharmacogenomics – a form of personalized medicine that could be a game-changer in terms of linking the right drug to the right person to improve their health outcome.
Like Shapovalov, it’s a name worth remembering. Pharmacogenomics involves laboratory testing of a person’s DNA to determine gene variations that can predict how a person will respond to medications. Test results can identify which medications will be effective, avoiding the use of medications that would have little or no effect, or many side effects.
For example, there are many medications available to help treat depression, but these drugs can take several weeks to take effect and for a person to feel any improvement. And in many cases, after several weeks, there is no improvement, so the individual is weaned off the first drug and on to the next choice. In the meantime, the person continues to suffer, valuable time is lost, and there’s no assurance that round two will go any better. An effective medication may be found eventually, but months or even years could go by.
Had the individual been introduced to the right medication from the start, they would have been spared months of suffering. In many cases, that’s what pharmacogenomics can provide.
Pharmacogenomic testing is done with a simple cheek swab, and lets a doctor prescribe medications more precisely based on an individual’s DNA.
Toronto-based health care provider Medcan says that while there are many factors that affect our responses to drugs – such as height, weight, gender, and age – anywhere from 20% to 95% of the variation in how a person responds to medication can be directly linked to genetic differences, and specifically the differences in how they metabolize a given drug: http://www.medcan.com/medcan-insights/workforce-wellness/reduce-disability-absenteeism-costs/.
For example, if a person is a fast metabolizer, he or she may need more of a given drug or more frequent doses; if he or she is a slow metabolizer, lower doses of a drug may be necessary to avoid an overdose.
And this is not a “one day we’ll be living on Mars” future possibility. This type of testing is happening right now. In fact, it may be coming to a pharmacy near you soon. The B.C. Pharmacy Association has already conducted trials with an Australian genetic testing company: http://www.benefitscanada.com/benefits/health-benefits/pharmacogenomic-testing-to-be-available-in-pharmacies-across-canada-93665.
As estate litigators, we’re used to dealing with “end of life” issues. It’s nice to find a simple test that can enhance “quality of life”, while we’re here to enjoy it.
Thank you for reading … Enjoy the rest of your day.