Tag: litigation

28 Jun

Joint Bank Accounts: Intention is Everything

Suzana Popovic-Montag Hull on Estate and Succession Planning, Hull on Estates, Joint Accounts, Litigation Tags: , , , , 0 Comments

The idea of a joint bank account seems simple enough. Two people own assets in a joint account. When one of them dies, the survivor automatically gets ownership of the assets. Straightforward, right?

Unfortunately, not in every case. For example, in a very common situation – where an aging parent creates a joint account with an adult child – courts have looked closely at the intention of the parent in creating the joint account. Was it for convenience primarily, or was it intended as a gift to the surviving adult child? Did the parent understand the consequences of setting up a joint account?

Such arrangements have been the source of much litigation in Canada, and the Supreme Court of Canada has been quite clear: unless the survivorship intention in setting up the accounts is clear, courts will presume that joint account assets are held by an adult child on a resulting trust for the parent’s estate, and distributed according to the parent’s will.

For parents who are considering a joint account arrangement with an adult child – and intend the adult child to inherit the assets through survivorship – they may want to take some steps to ensure that this intention is clear. This includes:

  • Communicating their intention to any other adult children they have, and any other beneficiaries, to reduce the chance of a dispute
  • Documenting the joint account and the intentions for survivorship directly in their will
  • Granting the adult child joint account holder a power of attorney in addition to the joint account arrangement. This shows that the joint account was not created for convenience alone, as the adult child could manage the parent’s financial affairs under the power of attorney.

Here is a good summary of court rulings on this matter: http://www.lerners.ca/lernx/joint-accounts-is-the-surviving-owner-really-entitled-to-the-money/. And for an overview of some of the risks associated with joint accounts, this article outlines some factors to consider: https://nelligan.ca/article/joint-bank-accounts-are-they-a-good-idea/.

While joint accounts can serve many useful purposes, they should be created carefully, with advance thought and sound legal advice.

Thank you for reading … Have a great day.
Suzana Popovic-Montag

26 May

When does the limitation period run when the PGT is statutory guardian?

Doreen So Capacity, Continuing Legal Education, Elder Law, Estate & Trust, Executors and Trustees, General Interest, In the News, Litigation, News & Events, Power of Attorney Tags: , , , , , , , , , 0 Comments

The applicability of limitation periods to estates, trusts, and capacity matters is crucial for litigators to consider.  In a recent decision of the Superior Court of Justice, the Court was asked to consider the application of the limitation period in Part V of the Succession Law Reform Act (“SLRA”) to a claim that was advanced by the Public Guardian and Trustee (the “PGT”) as the litigation guardian of an incapable support claimant.

Shaw v. Barber, 2017 ONSC 2155, is an important precedent for the proposition that limitation periods do not run against the incapable person from the day that the PGT becomes his/her statutory guardian of property.  By operation of section 16(5) of the Substitute Decisions Act, 1992, the PGT automatically becomes an incapable person’s statutory guardian of property the moment they receive a certificate of incapacity from the assessor.  In Shaw v. Barber, the dependant support claimant, Lois Shaw, was assessed and found to be incapable of managing property on February 16, 2015 and a copy of the certificate was sent to the PGT on or about February 25, 2015.

Prior to the assessment, Ms. Shaw lived with Frank Cyril Barber on the date of his death, although they were not married.  Mr. Barber died in August, 2014, leaving a Will which named his son as the sole Estate Trustee and beneficiary of his Estate.  A Certificate of Appointment of Estate Trustee with a Will was issued to Mr. Barber’s son on February 5, 2015.  Pursuant to section 61(1) of the SLRA, an application for dependant support may not be made six months after the grant of probate, subject to the Court’s discretion in section 61(2) to allow claims against the undistributed portion of an estate.  Without considering the Court’s discretion in section 61(2) of the Act, Justice McNamara found that Ms. Shaw’s claim for dependant support was not statute barred despite the fact that it was issued, one year after six months from probate, on August 5, 2016.

In his reasoning, Justice McNamara considered the tolling provision applicable to incapable persons while he/she is not represented by a litigation guardian in section 7 of the Limitations Act, 2002 (which applies to the section 61 of the SLRA).  The turning point then becomes whether a guardian of property is automatically a litigation guardian in relation to the claim at issue since a guardian has the power to do anything the incapable person may do except make a will.  In this case, there was an affidavit from PGT counsel which explained the time consuming investigations involved when the PGT becomes a statutory guardian of property because of the lack of first-hand information from the incapable individual.  Justice McNamara determined that a guardian of property shall act as litigation guardian when he/she has determined that there is a basis for exercising their authority in that role, and that imposing a limitation period from the date in which the PGT becomes statutory guardian is contrary to the Limitations Act and it would create impossible timelines and potential injustice for this vulnerable group.  Furthermore, Justice McNamara was also persuaded by the fact that the Estate Trustee in this case will not be prejudiced by the delay, given that he is also the sole beneficiary, and that he was aware all along that the PGT was considering a claim against the Estate.

This case is also an example of the latitude that Courts may accord to large-scale claimants as seen in 407 ETR Concession Company Limited v. Day, 2016 ONCA 709.

Please do not hesitate to contact our firm for a copy of Justice McNamara’s reasons in Shaw v. Barber and click here for comments from Russel Molot, counsel for the PGT in this matter, as reported in the Law Times.

Doreen So

23 May

Hull on Estates #520 – Role of The Estate Trustee During Litigation

76admin Hull on Estate and Succession Planning, Hull on Estates, Litigation, Podcasts, PODCASTS / TRANSCRIBED, Show Notes, Show Notes, Uncategorized Tags: , , , , , , 0 Comments

This week on Hull on Estates, Ian Hull discusses the role of the Estate Trustee During Litigation and the impact of case law over the last 50 years.

 Should you have any questions, please email us at webmaster@hullandhull.com or leave a comment on our blog.
10 Apr

What is a Disclaimer?

Ian Hull Beneficiary Designations, Estate & Trust, Estate Planning, Executors and Trustees, General Interest, Trustees, Wills Tags: , , , , , , , 0 Comments

Receiving an inheritance under a will is a gift, and there is no obligation, as a beneficiary, to accept it. It is possible for a beneficiary to waive their right, or “disclaim” their interest, to a gift under a will.

As established in Biderman v Canada, 2000 CanLii 14987 (FCA):

A disclaimer is the act by which a person refuses to accept an estate which has been conveyed or an interest which has been bequeathed to him or her. Such disclaimer can be made at any time before the beneficiary has derived benefits from the assets. It requires no particular form and may even be evidenced by conduct.

Furthermore, Biderman v Canada establishes that “there is no entitlement to an estate until it is opened since a testamentary gift can always be revoked until death. Once made, the disclaimer is retroactive to the date of death of the deceased.”

There is no prescribed form for drafting or implementing a disclaimer of inheritance. Generally, the waiver should be a written agreement, acknowledging the waiver of inheritance (preferably drafted by a lawyer). The disclaiming agreement should be signed by the beneficiary, and witnessed.

It is also important to ensure that the beneficiary waiving their right to inheritance was not improperly or unduly influenced to do.

The disclaimer, once signed, does not need to be filed with the court. It is important that the lawyer who acts for the estate or the estate trustee keeps the waiver.

If an inheritance is disclaimed, the gift will be deemed void and fall into the residue of the estate, which will then be distributed according to the deceased’s will, or pursuant to the intestacy provisions of the Succession Law Reform Act. When disclaiming a gift, the beneficiary does not have any control over who receives their part of the inheritance.

A beneficiary can not disclaim part of a gift; once you disclaim part of your interest in an inheritance, you disclaim all of it. In Re Skinner, 1970 CanLii 360, the Ontario Supreme Court established that “the law is clear that, where there is a single undivided gift, the donee must take the whole or disclaim the whole: he cannot disclaim part.”

Thanks for reading,

Ian M. Hull

Other Articles You Might Be Interested In
I Don’t Want That Gift! 

Hull on Estates #379 – Disclaimers of gifts under will

Testamentary Gifts of Personal Property: Avoiding “Sticky” Situations

13 Mar

Removal of an Estate Trustee

Ian Hull Estate & Trust, Estate Planning, Executors and Trustees, General Interest, In the News, Litigation, News & Events, Trustees, Wills Tags: , , , , , 0 Comments

If an estate trustee is not fulfilling their duties and is not acting in the best interests of the estate, it is possible to commence an application for removal.

When seeking to remove an estate trustee in Ontario, anyone with a financial interest in an estate can apply to have an executor passed over or removed, pursuant to s. 37(3) of the Trustee Act. Rule 14.05(3)(c) of the Rules of Civil Procedure, allow an application to be commenced for the purpose of “the removal or replacement of one or more executors, administrators or trustees, or the fixing of their compensation.” The applicable principles for the removal of an executor have been established in Letterstedt v Boers (1884), 9 App Cas 271 (South Africa PC) and have been summarized in Johnston v Lanka Estate, 2010 ONSC 4124:

  • The court will not lightly interfere with the testator’s choice of estate trustee;
  • Clear evidence of necessity for removal is required;
  • The court’s main consideration is the welfare of the beneficiaries; and
  • The estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the estate/trust.

A recent British Columbia Court of Appeal decision, Al-Sabah v Al-Sabah, 2016 BCCA 365,  upheld the removal of an estate trustee of an estate on the basis that she did not comply with the notice provisions of the Wills, Estates and Succession Act, and was not acting in the best interests of the estate.

In this case, the deceased died in 2003, intestate, and left 15 beneficiaries, including his two sons, two wives, and seven daughters. One of his daughters was the appellant and the estate trustee of the estate. The respondents on the appeal comprised 79% of the beneficiaries to the estate.

Upon the death of Mr. Al-Sabah, estate litigation was commenced across several countries, as he had held property in many different locations. The appointment of the estate trustee by British Columbia was successful, however, the appellant had also applied to be the estate trustee of the estate in London, and had her position revoked, and she commenced at least 4 actions in Kuwait against other beneficiaries, all of which were unsuccessful.

In chambers, the estate trustee was removed, and appealed that ruling. On appeal, it was upheld that the estate trustee did not exercise reasonable diligence in providing notice to the other beneficiaries of her intention to apply for the position, and that she failed to disclose relevant information to the beneficiaries.

The British Columbia Wills, Estates and Succession Act section 121, and the British Columbia Supreme Court Rules establish the requirements for notice of the beneficiaries. It was established that the estate trustee did not provide notice to the proper addresses required by the rules, as the addresses to which she forwarded notices were almost all incorrect. The judge also noted that the application was made amidst “hotly contested” and “acrimonious” estate litigation, and that when she applied for her grant of administration, she did not disclose that there was significant litigation surrounding the estate in other countries.

If this case were to have taken place in Ontario, it is likely that the Ontario courts may have come to the same decision as the British Columbia court, in applying the principles as established in Letterstedt v Boers. The court would not have been interfering with the testator’s choice of estate trustee as he died intestate, and it is clear that the removal was required due to her dishonesty and her lack of consideration of the welfare of the beneficiaries, thereby endangering the administration of the estate.

Thank you for reading,

Ian M. Hull

Other Articles You Might be Interested In

The High Bar for Estate Trustee Removal

What Should an Estate Trustee do when a Beneficiary Cannot be Located?

Removing an Estate Trustee for Conflict of Interest

 

 

08 Mar

Lucid Intervals

Suzana Popovic-Montag Capacity, Estate & Trust, Estate Planning, General Interest, Trustees, Uncategorized, Wills Tags: , , , , , , , , 0 Comments

If a person has been found incapable of having the capacity to make a will, the law nonetheless recognizes that such person may experience lucid intervals during which testamentary capacity may be temporarily regained. A will made during a lucid interval may be valid.

The legal test for testamentary capacity is the same regardless of whether the testator suffers from a condition that generally deprives him or her of testamentary capacity. The test was summarized in Re Schwartz, 1970 CarswellOnt 163, as follows:

The testator must be sufficiently clear in his understanding and memory to know, on his own, and in a general way (a) the nature and extent of his property, (b) the persons who are the natural objects of his bounty, and (c) the testamentary provisions he is making; and he must, moreover, be capable of (d) appreciating these factors in relations to each other; and (e) forming an orderly desire as to the disposition of his property.

The critical time during which the testator must have capacity is when instructions are given and when the will is executed. In Re Weidenberger Estate, the Court stated:

What the Deceased’s state of mind was one year before or one year after the date of the document is not overly relevant. The courts have recognized that a Deceased may only have temporary periods of rational and lucid behaviour, and in such moments, an individual may competently dispose of his or her estate.

If a testator generally lacks testamentary capacity, but makes a will during a lucid interval, the evidentiary burden on the propounder is heavier than would otherwise be the case.

We have previously blogged on criticism of the concept of the lucid interval. Some studies suggest that cognitive fluctuations are often short in duration, often seconds or minutes. Such a period of time is unlikely to be sufficient to execute a will. Despite this criticism, the legal concept of the lucid interval remains recognized by the Courts. The concept was recently applied to uphold the validity of a will in Re Zukas Estate, a decision of the Court of Queen’s Bench of Alberta.

Thank you for reading.

Suzana Popovic-Montag

Other articles you might enjoy:

Age and Testamentary Capacity

Dementia and Testamentary Capacity

Capacity While Suffering from Dementia

30 Jan

A Novel Argument by an Adopted Child in British Columbia

Ian Hull Beneficiary Designations, Estate & Trust, Estate Planning, General Interest, In the News, Litigation, News & Events, Wills Tags: , , , , , , , 0 Comments

As societal norms are continuously changing and evolving, there has been a change in attitudes toward the relationship between adopted children and their biological parents. Today, society encourages adopted children and their birth parents to re-establish a relationship. For example, we have previously blogged on a change of the law in Saskatchewan, which provides for an adult adopted child to reconnect with their birth parents.

In Ontario, the legal status of adopted children is governed by the Child and Family Services Act (the “CFSA”). Section 158(2) of the CFSA provides that, upon an adoption order being granted, the adopted child becomes the (legal) child of the adoptive parent and ceases to be the child of the person who was his or her parent before the adoption order was granted. Pursuant to this statute, once a child is adopted, they are not entitled to their birth parent’s estate unless specifically provided for in the birth parent’s will.

Furthermore, in Ontario, there are no direct provisions governing a testator’s wishes in distributing their property. There is no requirement that all children must be treated equally, or that an individual must leave a part of their estate to their children through a testamentary document. Statutory protection does exist, for dependants, however, under Part V of the Succession Law Reform Act.

In contrast, the law in British Columbia provides that the Court has discretion to vary a will to remedy disinheritance of a child. Pursuant to s. 60 of the Wills, Estates and Succession Act (“WESA”), a parent must make adequate provision for their children, and if the court does not find a testamentary division among the children to be equitable, the court can intervene.

A recent case out of British Columbia considered a novel argument: does the receipt of a benefit under a birth parent’s will entitle an adopted child to argue for a greater share of the estate under section 60 of the WESA?

In the Boer v Mikaloff, 2017 BCSC 21, Mr. Boer was legally adopted as a baby to an adoptive family. He became reunited with his birth mother around the age of thirty, and in his birth mother’s last will and testament, he received a portion of her estate. Mr. Boer challenged his birth mother’s last will and testament in court, arguing that pursuant to s. 60 of the WESA, he was not given an equitable share of his mother’s estate compared to his mother’s other children.

The court held that Mr. Boer was not entitled to an equitable share, as he was not legally considered to be his birth mother’s child. The court held that section 3(2)(a) of the WESA does not allow an adopted child to manipulate a bequest by the child’s pre-adopted parent into a s. 60 claim and applied the case of Canada Trustco Mortgage Co. v Canada, 2005 SCC 54, to uphold that the text, context and purpose of the statute in this regard was clear.

Thanks for reading,

Ian M. Hull

More Articles You Might be Interested In

Can you be adopted as an adult?

Do adopted children still receive entitlement to their birth parent’s estate?

Can you be adopted into a trust?

 

 

 

24 Jan

Seeking Assistance from the Court to Fund Litigation

Nick Esterbauer Estate & Trust, Litigation Tags: , , , , , , , 0 Comments

Typically, costs awards are not made until the conclusion of litigation.  However, in rare circumstances, courts may order that costs are paid to a party at an earlier point during the litigation to assist them with the funding of the litigation itself, even if it is not yet known which of the party or parties will ultimately be successful at trial.

In what circumstances will a court order the payment of legal fees on an interim basis?  The Supreme Court of Canada outlined the test for granting an order for interim costs to fund litigation in British Columbia (Minister of Forests) v. Okanagan Indian Band.  The Court summarized the test as follows:

  1. the party seeking the order must be impecunious to the extent that, without such an order, that party would be deprived of the opportunity to proceed with the case;
  2. the claimant must establish a prima facie case of sufficient merit to warrant pursuit; and
  3. there must be special circumstances sufficient to satisfy the court that the case is within the narrow class of cases where this extraordinary exercise of its powers is appropriate.

In the Okanagan Indian Band decision, the Supreme Court considered family law disputes as one of the few unique exceptions to the general rule that the costs of an action or application only be awarded at the conclusion of litigation.  One factor that the Court refers to as making interim costs awards suitable in family law matters is the presumption that the property in dispute is to be shared by the parties in some way.  Ontario courts have acknowledged this presumption to be the basis of allowing interim payments to fund ongoing legal costs in estate litigation, suggesting that the payment of costs to fund the litigation can be accounted for in the final decision.  However, a party to family or estate proceedings still needs to satisfy the above test before an interim costs award will normally be made.

In estate litigation, it is not uncommon for the Court to direct the payment of funds for use toward one or more party’s legal fees out of the assets of the estate while litigation is ongoing.  Most often, the party to whom interim costs are paid will be entitled to a share of the assets of the estate whether he or she is successful in the litigation or not.  The interim costs award can be deducted from the distributions that are ultimately made to that party.  While rarely made within contexts other than family and estate litigation, interim costs orders can allow a party that may otherwise be unable to fund litigation to advance or respond to legal proceedings that affect his or her entitlements as the beneficiary of an estate.

Thank you for reading.

Nick Esterbauer

 

Other posts that you might be interested in reading:

Hull on Estates #490 – Costs on a Will Challenge

A Reminder Regarding the Costs of Estate Litigation

Creative Costs Arrangements

Once again, costs are hard to order where a winner isn’t clear.

 

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