Tag: ian hull

25 May

Estate Planning Considerations for Your TFSA

Ian Hull Estate Planning, General Interest Tags: , , , , , 1 Comment

I recently came across an article titled TFSA Designations May Cause Estate Planning Problems written by Amin Mawani and published by Advisor.ca. The article highlights some important estate planning considerations for TFSA account holders.

In its April 2015 Budget, the Federal Government proposed raising the annual TFSA contribution limit from $5,500.00 to $10,000.00, and raising the cumulative TFSA contribution limit to $41,000.00. For many, these accounts have already become a substantial personal asset. This increased contribution room only increases the likelihood that these accounts will continue to grow into substantial estate assets for those who have and continue to contribute to them.

Without proper planning (i.e. without making the proper designations), one’s TFSA will revert to his or her estate on death, resulting in the unfortunate consequence of the account losing its tax-sheltered status, and rendering the funds subject to Ontario’s hefty probate fees.

Mawani’s article assists account holders by highlighting the various designation options available and by distinguishing between a designated successor-holder and a designated beneficiary. Mawani explains that an account holder may designate his or her spouse or common-law partner as a successor-holder and anyone else as a beneficiary. A successor-holder will trump a beneficiary if both are alive at the time of the original account holder’s death, and a beneficiary will trump the deceased’s estate if no successor-holder was nominated or if the successor-holder predeceases the account holder. If neither a successor-holder or a beneficiary are designated or alive at the account holder’s time of death, the account proceeds will then revert to the deceased’s estate.

Mawani goes on to explain the benefits of making such designations, including the fact that if such designations are made the account holder’s TFSA will not de-registered on death. The assets will remain continuously sheltered, and the successor-holder may make tax-free withdrawals after taking over ownership. In addition, he explains that the successor-holder can continue to have her or her own TFSA, with lifetime and annual contribution limits unaffected, or alternatively may choose to consolidate the deceased’s account into his or her own.

Finally, Mawani helpfully provides links to the designation forms for various Canadian institutions including BMO, Investors, RBC, Scotia and TD. The article is worth a read for anyone who currently contributing or planning to contribute to a TFSA.

Thank you for reading,

Ian Hull

18 May

Kidnapped for Ransom

Hull & Hull LLP Estate & Trust, General Interest, Trustees Tags: , , , 0 Comments

I recently came across an interesting article published by STEP titled “Held to Ransom” written by Robert Mack.  The article outlines several considerations for those setting up trusts in circumstances where it is conceivably possible that the beneficiary (or beneficiaries) of the trust could be kidnapped for ransom.

While the prospect is not pleasant, in some circumstances and for some individuals it may not be entirely far fetched. Our world is becoming increasingly globalized. We are travelling to and residing in countries, which historically, most of us would never have had the opportunity to venture to. Unfortunately, some of the countries we now have the opportunity to visit have an increased prevalence of kidnapping.  This includes kidnapping for political and ideological reasons as well as kidnapping for the sole purpose of obtaining a hefty ransom.

In fact, Mack describes kidnapping as a “booming” industry, with worldwide numbers increasing annually.  As such, it is possible that the inclusion of a kidnap provision in trust deeds, and even the creation of ransom trusts, could become increasingly common in the years to come.

Mack describes how a ransom demand does not necessarily fall neatly into a power to appoint, pay, apply or advance. As such, where there is any possibility that the settlor, beneficiary or a family member might be kidnapped it might be prudent to include a specific power in the trust deed to allow the trustee or some other person to pay the ransom out of the trust fund.

He goes on to state that although many trust deeds have the power to make payments on behalf of a beneficiary ‘to or for his or her benefit’, an interesting question arises as to whether such payment could be construed to be for the ‘benefit’ of such a beneficiary. Accordingly, if there is even a remote possibility of a kidnapping, it is important to ensure that clear provisions are included in the trust deed to empower the trustee or other power holder to pay the ransom demand.

There are, however, several different ways of incorporating a ransom provision into a trust deed and several important considerations for trustees who find themselves required to act in accordance with such a provision.  Mack’s article specifically outlines some of the different ways the inclusion can be structured as well as some of these key considerations for trustees in such circumstances.

Which countries have the highest incidence of kidnapping for ransom? An article published on Thrillist.com outlines the top 7 countries where you are most likely to get snatched.

Thank you for reading,

Ian Hull

27 Apr

Cyberbullying Legislation Applied to Siblings in Estate Dispute

Hull & Hull LLP Estate & Trust, Executors and Trustees, General Interest, Litigation Tags: , , , , 0 Comments

Sibling rivalry coupled with the loss of a parent and an actual or perceived impropriety of one sibling in handling his or her estate can turn even the closest siblings into sparring adversaries.

While such emotionally charged disputes often become heated, most siblings are able to maintain civility in their dealings.

What happens when one sibling takes it too far? Can the courts step in to reel that sibling in?

According to a recent ruling of the Nova Scotia Supreme Court, Nova Scotia (Public Safety) v. Lee, 2015 NSSC 71, they may have expanded powers to prevent or restrict behavior that amounts to Cyberbullying.

The facts of this case involve a particularly heated dispute which arose between a brother (“Mr. Lee”) and sister (“Ms. Murray”) in relation to their late mother’s estate. Prior to her death, their mother had been diagnosed with brain cancer. Ms. Murray and her family moved in with their mother and cared for her throughout her illness. Several months prior to her death, their mother attended upon a solicitor and executed a new will which left her entire estate to Ms. Murray upon her death. Upon learning that their mother had left everything to his sister, Mr. Lee began what the court referred to as a “progression of online abuse” against Ms. Murray by way of text messages, email and public Facebook posts.

The aggressive text messages began when Ms. Murray refused to vacate the mother’s home, and included messages such as:

“[y]ou are dead to me get your lying manipulative abusive [a—] out of that [f—g] house or I will send the RCMP.”

Mr. Lee also sent emails threatening to inform her employer of her alleged misdeeds with respect to their mother’s estate and began posting a series of public messages to his Facebook wall including:

“Does anybody out there in Facebook land think it is ok for the caregiver of a 67 year old lady dying of brain tumours & loaded up with narcotics, take that 67 year old lady into the lawyers office days (literally days) before the lady dies of those same brain tumours and have the lady sign everything she owns (and some stuff she didn’t own) over to the caregiver???? Because that is exactly what my sister did And [sic], any of you cowards in my family that read this and then go “tsk tsk” behind my back and leave my Mother dead and undefended should be as ashamed of yourselves as Veronica should be.”

Ms. Murry filed a complaint with CyberSCAN who asked Mr. Lee to remove the offensive comments and formally apologize to Ms. Murray. Mr. Lee responded with the following Facebook post:

“I said my sister was a lying, manipulative fraudulent thief….. The Cyberscan people said I really should apologize, so here goes, and it is heartfelt and sincere. I am truly deeply and sincerely sorry that my sister is a lying, manipulative, fraudulent thief.

In response, the Nova Scotian Director of Public Safety applied for a Cyberbullying Prevention Order against Mr. Lee pursuant to s. 26D(1) of the Safer Communities and Neighbourhoods Act, S.N.S. 2006, c. 6.

Upon hearing the case, the Court granted the Cyber Prevention Order and ordered that Mr. Lee delete all the online comments made to or about his sister and that he refrain from such conduct going forward.

Canadian laws are evolving to protect against all forms of Cyberbullying. In 2013, Nova Scotia introduced the Cyber-Safety Act, S.N.S. 2013, c.2, which defines Cyberbullying broadly and provides wide ranging powers to the Director of Public Safety under the Safer Communities and Neighbourhoods Act, S.N.S. 2006, c. 6 to provide recourse for behavior such as Mr. Lee’s.

While, Nova Scotia is the first province to enact such sweeping legislation, the other provinces are starting to take note of the important role such legislation can play. As such, while no equivalent law currently exists in Ontario, it could soon land on Ontario’s legislative agenda.

A useful Fact Sheet outlining the Cyberbullying legislation that currently exists across Canada can be found here.

Thank you for reading,

Ian Hull

20 Apr

Disputes Regarding Personal Property

Hull & Hull LLP Estate & Trust, Estate Planning, Wills Tags: , , , , , , 0 Comments

The division of one’s personal property, which may include, jewellery, art, books, furniture, tools and clothing, can often become a significant source of tension and conflict amongst those who collectively stand to inherit such items from the estate.

The sentimental value that is often attached to such items, coupled with the loss of a loved one, can result in emotions running high at the time when important allocation decisions must be made. As such, it is almost inevitable that disagreements will arise.

When such disagreements arise it is important to consult the deceased’s Will. Through the estate planning process individuals often consider and make provision for specific items of personal property within the terms of their Will. A Will may, for example, make a specific bequest of a disputed item. In some instances, the deceased may have gone one step further and referenced an attached memorandum within his or her will. Such a memorandum may contain an itemized list of various items of the deceased’s personal property and outline precisely whom the deceased has directed to receive each item.

It is extremely rare, however, for all items of personal property to be included within the Will or an attached memorandum. Any items not expressly listed will generally fall to the residue of the estate, and as such, must ultimately be divided amongst the beneficiaries of the estate. It is quite common in this regard for the deceased, through the terms of his or her Will, to direct the beneficiaries to “divide any remaining items of personal property equally amongst themselves, as they agree”. Disagreements often arise as a result of the ambiguity created by such wording and where the beneficiaries cannot agree amongst themselves as to the best way to allocate the items.

While there are many options open to executors and beneficiaries, including drawing straws, picking numbers out of a hat or tossing a coin, these options can result in individuals missing out on specific items that they valued above all others purely due to chance. A fair alternative, that allows beneficiaries to walk away with the majority of the items they want and seems to have good results, is to hold an “auction”.

In order to conduct such an action, all items must first be appraised. The total of the appraised value should then be divided by the number of beneficiaries. Each beneficiary can then be provided with a sum equivalent to their share of the appraised value, which he or she will then use to bid on the items. For example, if the appraised value of all items was $10,000.00 and there were two beneficiaries, each beneficiary would receive $5,000.00 to bid on items. A list of all items and their appraised value should be presented to each beneficiary in advance of the auction. On the auction day, each item should be presented one by one before all the beneficiaries. Each beneficiary is given equal opportunity to bid on the items, and the highest bidder will go home with the item. Therefore, if a beneficiary values one item over others, he or she can choose to spend the majority of his or her auction dollars on that item. Any unused auction dollars are returned to the estate. Any remaining items that are not sold at auction can then be divided amongst the parties as they agree, and if they cannot agree they may be listed for sale and the profits split between the beneficiaries. Finally, the value of the items successfully obtained at the auction should be deducted from each beneficiary’s share of the overall estate prior to the final distribution in order to ensure a fair distribution.

For example, lets say there are two beneficiaries to an estate, Jack and Jill. Jack and Jill stand to inherit from the estate equally (50/50) and the Will directs them to divide all items of personal property as they agree. A dispute subsequently arises with respect to specific items of the deceased’s personal property. The total value appraised value of the deceased’s personal property is $10,000.00. Both Jack and Jill would be provided with $5,000.00 to bid with at the auction. Jill bids on items totaling $2,000.00, Jack bids on items totaling $3,000.00. If the total estate value was worth $100,000.00, Jack’s share of the estate would be $50,000.00, and Jill’s share would be $50,000.00. After deducting the value of the items they received at the auction Jack would receive $47,000.00 ($50,000 – $3,000) and Jill would receive $48,000.00 ($50,000 – $2,000).

By using this method each beneficiary has a certain amount of control over the items he or she receives and has the opportunity to actively select the items he or she values most.

Thank you for reading,

Ian Hull

 

13 Apr

Nine Mediation Pitfalls to Avoid

Hull & Hull LLP Estate & Trust, Litigation, Mediators Tags: , , , 0 Comments

In my recent post, To Litigate or To Mediate, I discussed the benefits of participating in mediation at the early stages of litigation.

Today, I’d like to discuss some of the mistakes commonly made by lawyers when preparing for and attending mediation. From my experience, each of the following mistakes can dramatically impact the likelihood of achieving a successfully mediated resolution.

(1)    Choosing the wrong mediator – a mediator’s knowledge, experience, and approach to the dispute can have a significant impact on the outcome of the mediation. As such, it is important to choose a mediator that has considerable knowledge and experience relevant to your dispute

(2)    Failing to prepare the mediator – a mediator who has a thorough understanding of the facts, issues and positions of the parties will be better placed to assist the parties in reaching a settlement. To assist the mediator in this regard, each party should provide the mediator with a mediation brief outlining the facts, issues and the law they feel are relevant prior to the mediation.

(3)    Arriving unprepared for the mediation – to make the most of the mediation each side should arrive prepared. Counsel for each side should have a command of the facts, the law and a considered plan for approaching the session. Also, it is important not to forget a calculator and any relevant documents, including court orders.

(4)    Failing to prepare the client – if your client understands the purpose of the mediation, the strengths and weaknesses of his or her case and how the mediation is expected to unfold, he or she will be better placed to achieve more at the session.

(5)    A lack of commitment to resolve the dispute – Rule 75.1 of the Rules of Civil Procedure requires that parties to any estate dispute commenced in Toronto, Ottawa and Windsor, submit to mandatory mediation prior to attending court for a trial. Unfortunately, this can result in parties attending mediation, not because they wish to settle the dispute, but rather because they have been ordered by the court to attend. The mediation should be approached, by both sides, with a commitment to resolve the dispute.

(6)    Failing to listen to the other side – listen to the other side to identify their interests, perceptions and motivations. Doing so is extremely useful for generating options to settle the dispute.

(7)    Failing to set aside sufficient time for the mediation – while there will often be significant downtime during the session, it is important to set aside sufficient time for the parities to thoughtfully consider a range of options and positions. A settlement is significantly less likely to occur if the parties run out of time or feel rushed into making a decision.

(8)    Failing to ensure all the necessary parties attend – to get the most out of any mediated session all relevant parties should be present, however, it is essential for the person(s) with settlement authority to attend the mediation. If the individuals attending do not have authority to settle the dispute, no agreement will be finalized at the session.

(9)    Failing to ensure the settlement is properly documented – any agreement reached by the parties at the mediation will be non-binding unless and until reduced to a written agreement that is signed by all the parties. A draft settlement agreement can be prepared by counsel prior to attending mediation, such that agreed terms can be finalized efficiently prior to the close of the mediation session.

While mediation can be a challenging process to navigate, it has the potential to result in a viable and effective settlement. By avoiding these common pitfalls you can significantly increase your chances of reaching a successfully mediated settlement.

Thank you for reading,

Ian Hull

06 Apr

Executor and Trustee Compensation

Hull & Hull LLP Executors and Trustees, Litigation Tags: , , , , 8 Comments

Executors and trustees are entitled to compensation for their efforts; however, the quantum of such compensation can often become a contentious issue where the beneficiaries perceive the amount claimed by the executor or trustee to be excessive.

If the Will granting the executor his or her authority does not expressly outline the extent of the compensation claimable or the means by which any compensation should be calculated (and most wills do not) the executor will be required to turn to statute and case law for guidance and in support of his or her claim for compensation.

Section 61(1) of the Trustee Act states that a “personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice”.

However, unlike guardian and attorney for property compensation, which has a calculation expressly provided for in section 40 of the Substitute Decisions Act and section 1 of Regulation 26/95 (as amended), there is no statute in Ontario that specifically outlines how executor compensation must be calculated.

As a result, a percentage tariff calculation has been developed through case law, which now serves as the baseline for the calculation of executors’ compensation. The tariff sets claimable executor’s compensation at 2.5% of the value of each of the capital receipts, income receipts, capital disbursements and income disbursements, and also permits an overall care and management fee of 2/5 of 1% of average annual value of the assets.

However, estates can vary widely depending on the type and value of assets, the number and location of beneficiaries, whether there are claims against the estate and the expertise required of the executor. As the tariff percentages do not consider the actual time and efforts exerted by the executor, sole use of the tariff percentage calculation can result in inadequate compensation in the case of a complex estate or disproportionate compensation in the case of a simple estate.

Therefore, in determining whether the tariff calculation is in fact “fair and reasonable”, the courts will generally have regard to the five factors set out in Re Toronto General Trust v. Central Ontario Railway Co. (1905), 6 O.W.R. 350 which provides a factual analysis of the actual work completed by the executor or trustee. These factors include:

  1. the size of the trust,
  2. the care and responsibility involved,
  3. the time occupied in performing the duties,
  4. the skill and ability shown by the executor or trustee, and
  5. the degree of success resulting from the administration.

Potential challenges to proposed executor or trustee compensation are much less likely to arise if the amount of compensation is thoughtfully considered.  Executors should consider both the percentage tariff and the above noted five factors before proposing his or her compensation to the beneficiaries in order to ensure the amount claimed is truly fair and reasonable.

Thank you for reading,

Ian Hull

01 Apr

$99 Wills – Are They Worth It?

Hull & Hull LLP Estate & Trust, Estate Planning, Wills Tags: , , , , 0 Comments

In April of last year, Suzana Popovic-Montag wrote a blog about Axess Law (“Axess”), which opened up shop providing legal services, including will drafting, in three Greater Toronto Area Walmart stores. Since then, Axess has expanded its practice, attracting attention from customers, the legal media and other practitioners.

Not only have there been articles published on Advocate Daily and Precedent Magazine’s website, the Advocate Daily’s post on LinkedIn has also attracted comments and discussion among lawyers.

Axess founders Mark Morris and Lena Koke opened its first Walmart location in June of 2013. They have now launched a total of eight Axess branches within Walmart stores.

A noteworthy part of Axess’ practice is their $99 will drafting service, which takes approximately one hour of the lawyer’s time. This price tag is well below the average lawyer’s going rate. The combination of affordability and convenience makes this an attractive option for busy people with moderate means.

As Suzana points out (as quoted in Precedent’s article) “in cases where people don’t need substantial advice, a $99 will from Axess Law is ‘the perfect solution’”. The lawyer oversight provides an edge over the use of will kit packages, which can be found online and have also been sold at Walmart stores.

Of course, this kind of speedy will drafting service has its restrictions. At Axess, if will requests are too complex to fit into the one-hour time frame, the customer will be referred to another firm. For more complex estates, planning can be a more onerous endeavour, and a $99 price tag is unlikely to go far enough in ensuring the lawyer can diligently satisfy all drafting obligations.

Concern has arisen among the legal community over situations in which a seemingly “simple” estate turns out not to be. While Axess has software designed to guide lawyers through any and all testator questions with clients, each situation is unique and needs may vary. Depending on testator answers along the way, lawyers may need to ask follow up questions or dig a little deeper into a topic that raises concern. At a $99 rate, however, digging deeper may not be feasible, which in turn could translate to running the risk of trouble down the line.

We often drive home the importance of having a will. If it is a lack of resources or accessibility holding people back, Axess may be one solution to enable individuals to organize their affairs and sleep soundly.

Thank you for reading,

Ian Hull

14 Jul

Transferring the Family Cottage – Part 4 – Hull on Estate and Succession Planning #172

Hull & Hull LLP Hull on Estate and Succession Planning, Hull on Estate and Succession Planning, Podcasts, PODCASTS / TRANSCRIBED, Show Notes Tags: , , , , , , 0 Comments

 

Listen to Transferring the Family Cottage -Part 4

This week on Hull on Estate and Succession Planning Ian and Suzana continue their discussion of the transfer of the family cottage. They explore three ways of transferring the cottage on death; 1) Putting the gift of the cottage in your will 2) Testamentary Trust and 3) Outright gifting.

If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.

08 Jul

Transferring the Family Cottage – Part 3 – Hull on Estate and Succession Planning #171

Hull & Hull LLP Hull on Estate and Succession Planning, Hull on Estate and Succession Planning, Podcasts, PODCASTS / TRANSCRIBED, Show Notes Tags: , , , , , , , 0 Comments

 

Listen to Transferring the Family Cottage – Part 3 – Hull on Estate and Succession Planning #171

This week on Hull on Estate and Succession Planning Ian and Suzana look at the more complex solutions to the transfer of a cottage. The discuss the inter vivos transfer  – putting the cottage in trust for your children while you are living. 

If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.

11 Jun

Social Media and Being Specific Wrap-up – Hull on Estate and Succession Planning #168

Hull & Hull LLP Hull on Estate and Succession Planning, Hull on Estate and Succession Planning, Podcasts, PODCASTS / TRANSCRIBED, Show Notes Tags: , , , , , , , 0 Comments

 

Listen to Social Media and Being Specific Wrap-up

This week on Hull on Estate and Succession planning Ian Hull and Suzana Popovic-Montag begin their discussion by relating Star Trek to social media in terms of technology, costs and viewer/reader feedback. They continue on with a wind-up of their Being Specific series and discuss the last stage of how things unfold. Finally, Suzana mentions a blog post relating to costs from the New York Probate & Estate Litigation Blog by Philip Bernstein.

If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.

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