Tag: pecore v. pecore

03 Feb

A Third Look at PGT v Cherneyko, 2021

Ian Hull Capacity, Elder Law, Guardianship, Litigation, Power of Attorney Tags: , , , , , , 0 Comments

Earlier this year, our colleague Doreen So, blogged in two parts (here and here) on the matter of PGT v Cherneyko. It is a blog that discusses a litany of failures by an attorney for property. While Doreen covered the facts in full, they are worth repeating here in part:

“Jean Cherneyko is a 90-year-old woman.  Jean did not have any children of her own.  Her closest known relative was a niece in the US.  By the time of the PGT application, Jean was in a long-term care home.  Prior to that, Jean lived alone in the same home that she had lived in since 1969.  Jean had a friend named Tina who she had known for about five years.  On August 15, 2019, Jean and Tina went to a lawyer’s office.  Jean named Tina as her attorney for property and personal care.  Jean also made a new Will which named Tina as the estate trustee and sole beneficiary of her estate.  A week or so later on August 27th, Jean and Tina went to Jean’s bank where $250,000.00 was transferred to Tina […]”

The PGT applied to take over as guardian for property and, among other things, to set aside the gift to Tina. The court agreed and ordered the $250,000 returned to Jean on the basis of resulting trust.

In a novel approach to the law of gifts, the court in Cherneyko relied on Pecore to establish that the gift ought to be returned, saying: “The leading Canadian case on the law of gifts, the Supreme Court of Canada in Pecore v Pecore, 2007 SCC 17 (CanLII) at paras. 24-26 established that where a gratuitous transfer of property is found, there is a presumption of a resulting trust. The onus falls to the recipient to rebut the presumption.” In the court’s view, Tina failed to rebut the presumption.

But this represents a new application of the Supreme Court’s analysis and it’s worth revisiting Pecore.

In 2007, Justice Rothstein, writing for a unanimous court (Justice Abella concurring) looked closely at gratuitous gifts of joint bank accounts, between parents and children, and whether the presumption of resulting trust and advancement applied in modern times:

“The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers.  When a transfer is challenged, the presumption allocates the legal burden of proof.  Thus, where a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended: see Waters’ Law of Trusts, at p. 375, and E. E. Gillese and M. Milczynski, The Law of Trusts (2nd ed. 2005), at p. 110.  This is so because equity presumes bargains, not gifts.”

The decision in Cherneyko represents a significant expansion of the principles of Pecore by applying them to inter vivos gifts between unrelated adults. Traditionally, if the courts determine that a transferor lacked the requisite capacity, the gift is void as the transferor lacked the capacity to form the proper intention to gift. Ball v. Mannin, an almost 200-year-old UK case established the original test for granting a gift and held that a person had capacity if the person was “capable of understanding what he did by executing the deed in question, when its general purport was fully explained to him.” The Supreme Court has previously outlined a separate test in Geffen v Goodman Estate in 1991, examining the nature of the relationship itself, and applying a presumption of undue influence where there is the presence of a dominant relationship. While the failed gift in Cherneyko was ultimately returned under a resulting trust, it will be fascinating to see if other courts also continue this expansion of Pecore.  We’ll keep you posted.

Thanks for reading!

Ian Hull and Daniel Enright

 

26 Aug

The Novel Case of Calmusky v. Calmusky

Ian Hull Litigation Tags: , , , 2 Comments

There are relatively few circumstances in which a court will stifle, rather than vindicate, a deceased person’s testamentary intentions. If a testator wished to give all of his or her assets to a charity for cats, but did not leave adequate funds for his or her dependants, the testator’s will may be varied in order to support the dependants. When a deceased person assigned insurance policy proceeds to his spouse, but previously he had promised an ex-spouse that if she paid the insurance premiums, the proceeds would go to her, the courts interceded, in spite of the designation to the spouse, and awarded the proceeds to the ex-spouse on the basis of unjust enrichment.

In this blog we shall discuss Calmusky v. Calmusky, a recent decision which may have added another context in which courts can upset a deceased person’s testamentary intentions.

Gary and Randy were the sons of Henry, the deceased. In Henry’s last will, he left the residue of his estate to one of Randy’s children and his, Henry’s, nephew. Upon Henry’s death, his interests in bank accounts jointly held between he and Gary were transferred to Gary by right of survivorship. He also made Gary a joint holder of his Registered Income Fund (RIF).

Part of the court’s decision was conventional: since the account transfers were gratuitous transfers between a parent and an adult child, according to Pecore, there is a presumption of resulting trust (with the transferee, Gary, holding the accounts in trust for Henry’s estate) that must be rebutted, with evidence of a donative intent on behalf of the parent, before the transferee can retain the assets. Since Gary could not show donative intent, the bank account funds were to revert to Henry’s estate. And then came the unconventional: the court determined that the rule in Pecore applied to the RIF:

“I see no principled basis for applying the presumption of resulting trust to the gratuitous transfer of bank accounts into joint names but not applying the same presumption to the RIF beneficiary designation.”

By stretching the rule in Pecore to this new context, the court may have burst open floodgates which protect beneficiaries of RIFs, pension plans, life insurance policies, and more. And as was observed in our recent blog on Calmusky, there is “legislation that uniquely applies to beneficiary designations (e.g. the Income Tax Act, the Succession Law Reform Act or the Insurance Act)” that appears to conflict with the decision.

And then there is the policy dilemma arising from Calmusky: if the designation is not good enough, what is? Should an affidavit be executed to corroborate the designation, or should a testator put a provision in his or her will that crystallizes existing beneficiary designations? The trouble with the latter option, which ostensibly seems to be the surest option, is that the subject matter of the beneficiary designation may, since it is mentioned in the will, have to be listed in the probate application and the Estate Information Return – leading to heightened expenses.

 The last time that estate solicitors were put in such a dubious position, arguably, was when the court in Re Milne ruled that a will is a trust, thereby rendering “basket clauses”, a common estate solicitor’s tool, precarious or even invalid. Now, while Calmusky stands, there is no clear best practice with respect to bullet-proofing beneficiary designations. And sadly, Gary, who prior to Calmusky would have received the RIF funds, is left disinherited; and Henry, who prior to Calmusky would have had reason to trust in the RIF beneficiary designation, may have had his testamentary intentions frustrated.

Thanks for reading – have a great day,

Ian Hull and Devin McMurtry

08 Nov

Does Jointly Owned Property Pass to the Surviving Spouse?

Stuart Clark Estate Planning, Wills Tags: , , , , , , , , , , 0 Comments

Many people are aware of the presumption which was confirmed by the Supreme Court of Canada in Pecore v. Pecore that assets which are held jointly between the deceased and certain individuals (including their adult children) are presumed to be held by the surviving joint owner on a resulting trust for the deceased owner’s estate unless they can rebut the presumption and show evidence that the deceased intended them to receive the property by right of survivorship. While the application of such a presumption is clear when the property is owned jointly between a parent and an adult child, what about when the property is owned jointly between two married spouses? Does a similar presumption to that in Pecore apply, such that the surviving spouse is forced to show that the deceased spouse intended them to receive the asset upon their death, failing which it is presumed to form part of the deceased spouse’s estate?

When will jointly held property pass to the surviving spouse?
“As a result of section 14 of the Family Law Act, property which is held jointly between two married spouses is presumed to pass to the surviving spouse by right of survivorship.”

The common law presumption that joint assets are held on a resulting trust for the benefit of the deceased owner’s estate has been altered in Ontario as it relates to married spouses by the Family Law Act. Section 14 of the Family Law Act provides:

“The rule of law applying a presumption of a resulting trust shall be applied in questions of the ownership of property between spouses, as if they were not marries, except that,

(a) the fact that property is held in the name of spouses as joint tenants is proof, in the absence of evidence to the contrary, that the spouses are intended to own the property as joint tenants; and

(b) money on deposit in the name of both spouses shall be deemed to be in the name of the spouses as joint tenants for the purposes of clause (a).”

As a result of section 14 of the Family Law Act, property which is held jointly between two married spouses is presumed to pass to the surviving spouse by right of survivorship. That being said, it is a rebuttable presumption, such that if there is evidence that the deceased spouse did not intend the property to pass to the surviving spouse upon death, the deceased spouse’s estate could seek a declaration that the asset in question is held on a resulting trust for the benefit of the deceased spouse’s estate. Section 14 of the Family Law Act effectively reverses the presumption as described in Pecore in the case of married spouses, whereby property held jointly between two married spouses is presumed to pass to the surviving spouse by right of survivorship unless there is evidence to the contrary such that the presumption can be rebutted.

Notably, section 14 of the Family Law Act only reverses the presumption as it relates to married spouses. As a result, an argument could be raised that in circumstances where common law spouses own property jointly, that the standard presumption as confirmed by Pecore would apply, such that the surviving common law spouse is presumed to hold the asset on a resulting trust for the benefit of the deceased spouse’s estate unless they can show evidence to rebut the presumption.

Thank you for reading.

Stuart Clark

19 Jan

Substitute Decision Planning

Hull & Hull LLP Beneficiary Designations, Capacity, Estate Planning, Guardianship, Joint Accounts, Power of Attorney Tags: , , , , , , , , , 0 Comments

Adult children of aging parents are often faced with important responsibilities. Ensuring that parents are adequately cared for is a task that many children lovingly undertake. As highlighted in this article in Forbes, key substitute decision planning ensures that the transition from independence to dependence, proceeds as smoothly as possible. Such steps should be taken immediately, and prior to the onset of dementia, or other incapacitating disorders, to ensure that one’s ability to provide instructions is unequivocal.

A power of attorney is a legal document that gives someone else the right to act on the grantor’s behalf. With the onset of incapacity, not only may the understanding of finances become increasingly difficult, but vulnerability to financial predators may increase. In fact, it is estimated that approximately 10% of the 1.5 million seniors in Ontario experience elder abuse. As such, allowing an incapacitated parent to maintain the authority to sign cheques and manage finances may be dangerous.

To preserve some degree of control, it is often the case that bank accounts are transferred into joint ownership between an adult child and their parent. This is a common practical step taken to ensure that the child who provides care to their parent has sufficient access to their parent’s funds to satisfy expenses arising. However, given the seminal decision in Pecore v. Pecore (SCC), at the time the bank account is transferred into joint ownership, careful notes must be taken to ensure that the evidence of testamentary intention regarding the account is clarified.

Meeting with an experienced lawyer that can explain the types of powers of attorneys, and the associated responsibilities, ensures the adult child has the appropriate powers to assist their parent. As well, the taking of detailed notes by a lawyer or financial institution is a prudent step to avoid possible estate disputes at a later date. While often we focus our efforts on estate planning, substitute decision planning is equally important.

Noah Weisberg

17 Jul

Joint Accounts: When a Sibling is the Surviving Account Holder

Hull & Hull LLP Joint Accounts Tags: , , , , , 0 Comments

In a recent Ontario decision, Tiedemann v Tiedemann, the court considered whether the deceased had intended to gift to his sister the balance of funds in a joint account held by the both of them.

The sister argued that her brother intended to gift to her the balance of the funds as he did not have a good relationship with his son. The son of the deceased, the sole beneficiary of his estate, contented the funds belonged to the deceased’s estate on the basis of a resulting trust. The court found as the deceased was the only contributor to the account, the sister had to rebut the presumption of a resulting trust and as she was neither his spouse nor his child, she derived no benefit from the presumption of advancement.

Referencing the Supreme Court of Canada decisions of Pecore v. Pecore and Madsen Estate v. Saylor, the court looked at the evidence to determine the deceased’s actual intention. The court found the testimony by the deceased’s lawyer and a bank employee indicated that the deceased was interested in providing his sister with the authority to manage his finances and had not intended to gift her funds.

Weighing the evidence, the court found on a balance of probabilities that the resulting trust had not been rebutted and the intention of the deceased was to have his sister assist with bill payments if he became incapable.

To learn more about joint accounts, listen to Episode HOESP #60  where Ian Hull and Suzana Popovic-Montag discuss Percore v Pecore or read the transcribed version.

Thanks for reading,

Diane Vieira

27 Jun

Resulting Trusts – Don’t Overlook Them

Hull & Hull LLP Uncategorized Tags: , , , , 0 Comments

During my talk at Hull & Hull’s recent breakfast held at the Ontario Bar Association offices, I touched on the Pecore v. Pecore, 2007 SCC 17 (“Pecore”) and Madsen Estate v. Saylor, 2007 SCC 18 (“Madsen”) Supreme Court of Canada decisions which essentially did away with the presumption of advancement except as it pertains to minor children. In effect, a child of a deceased who holds assets jointly with the deceased can no longer rely on the presumption that the deceased wanted the child to take the asset at death.

Given that new law, executors not wanting to challenge rights of survivorship by asserting a resulting trust against the surviving account holder should obtain clear and comprehensive releases and indemnities from all beneficiaries. If possible, the beneficiaries should get independent legal advice. Where independent legal advice is feasible the beneficiaries should be encouraged to get it. In any case foregoing a resulting trust claim to joint assets has risks.

The circumstances or even the identities of gift-over beneficiaries can change so much over time that a release or indemnity may not be enforced by the court. New beneficiaries can be born who may be less generously inclined as their predecessors. Family relations can turn to the worst, changing the approach to joint assets.

All in all, a difficult recipe for Executors to be sure.

Thanks for reading.

Sean Graham

20 Jun

Hull & Hull LLP – Breakfast Series

Hull & Hull LLP Uncategorized Tags: , , , , , , , 0 Comments

On Monday morning Hull & Hull LLP hosted its latest Breakfast Series covering notable issues and salient case-law in the estates area.

Justin W. de Vries spoke first on Pecore v. Pecore, [2007] S.C.J. No. 17 (QL) and Madsen Estate v. Saylor, [2007] S.C.J. No. 18 (QL), two compelling decisions of the Supreme Court of Canada, and in that regard provided an effective and comprehensive analysis of the Court’s new take on the presumption of resulting trust and advancement.   Justin’s paper also contains a succinct review of other recent cases you should consider reading.  

Craig Vander Zee followed with a discussion about demand promissory notes and the limitation period issues in respect of the enforcement of such notes, particularly in light of the language of the new Limitations Act, S.O. 2002, c. 24.  In so doing, Craig reviewed the Court of Appeal decision in Hare v. Hare [2006] O.J. No. 5502.  He finished off by informing us about how this issue impacts estate matters and highlighted considerations parties to promissory notes might want to take into account.

Sean Graham ended the presentation with his thoughts on reasons to delay estate distribution.  Three important incentives he touched upon are the risks of an increase in resulting trust claims as a result of the Pecore decision, exacerbated by the fact that there may be no limitation period to such claims; foreign tax issues raised by foreign assets and foreign beneficiaries; and dependant support claims.

The presenters’ papers will be made available on our Hull & Hull LLP website. I highly recommend them all.

Have a nice day, 

Natalia R. Angelini

 

25 May

Resulting Trust Reverberations

Hull & Hull LLP Joint Accounts Tags: , , , , , 0 Comments

Both of the recent Supreme Court of Canada joint account/resulting trust decisions of Pecore v. Pecore, [2007] SCC 17 and Madsen Estate v. Saylor, [2007] SCC 18 involved joint accounts between deceased and child.

It is worth considering whether the decisions will impact cases involving joint accounts between deceased and non-children. (And please note I’m not addressing the impact on situations involving children, which is considerable and needs much more analysis than a blog).

The SCC’s strong statements confirming the presumption of resulting trust do not necessarily change the law as it pertains to non-children situations. However, the rarified source of the decisions could help Estate Trustees asserting resulting trusts over joint accounts with non-children. Consider:

The presumption of resulting trust therefore alters the general practice that a plaintiff (who would be the party challenging the transfer in these cases) bears the legal burden in a civil case. Rather, the onus is on the transferee to rebut the presumption of resulting trust. (Pecore, para 25)

Of course, the presumption of resulting trust means that it will fall to the surviving joint account holder to prove that the transferor intended to gift the right of survivorship to whatever assets are left in the account to the survivor. Otherwise, the assets will be treated as part of the transferor’s estate to be distributed according to the transferor’s will. (Pecore, para 54)

Not really different from pre-existing caselaw, but the SCC rarely enters the realm of Estates and Trusts law. When it does, lawyers pay rapt and lasting attention. Even confirmation of pre-existing common law can have quite an effect.

No doubt every Estate Trustees claiming resulting trusts over joint accounts by a deceased with non-children will be referring to these cases.

Thanks for reading.

Sean Graham

17 May

Rebutting the Presumption of Resulting Trust

Hull & Hull LLP Uncategorized Tags: , , , 0 Comments

I recently blogged on the Supreme Court of Canada’s decisions in Madsen Estate v. Saylor and Pecore v. Pecore.

Specifically, I discussed the ruling that funds in accounts jointly held between parents and adult children will be presumed to form part of the parent’s estate if the parent dies; i.e., there will be a presumption of a resulting trust.

The adult child must then prove that the deceased parent intended to gift the funds to him or her by naming him or her as a joint owner.

In Pecore, the Supreme Court addresses the evidence that may be used to defeat the presumption and prove that the parent intended to gift the funds in the account, including the following considerations: 

  •  Whether the banking documents pertaining to the account show the parent’s intent; 
  •  Who controlled and used the funds prior to the parent’s death? 
  •  Whether the deceased parent had a power of attorney. If so, this would suggest that the account may not have been held jointly for banking purposes; and 
  • Who paid the taxes on the account prior to the parent’s death?

The Supreme Court points out that these considerations are fact-sensitive and that the trial judge must consider the totality of the evidence and the weight to be placed on any particular factor.

Thanks for reading,

Jason Allan

04 May

Decisions on the Difficult Issue of Joint Accounts

Hull & Hull LLP Joint Accounts Tags: , , , , , , 0 Comments

The Supreme Court of Canada released decisions in Saylor v. Brooks ("Saylor") and Pecore v. Pecore ("Pecore") yesterday, which are seminal cases on the issue of joint accounts.

As many of the readers will know, joint accounts are a hotly debated topic in estate litigation. When an account is held jointly between two individuals, both hold an equal, undivided share. If one of the joint owners dies, the other is left with the entire interest in the account.

Previous decisions on the issue of joint accounts have varied but courts typically approached the issue by presuming that if the account was held jointly between a parent and a child, the parent intended to gift the money to the child (the presumption applied even if the child was an adult and financially independent). It was then up to the challenger to prove otherwise.

In Saylor and Pecore, the Supreme Court essentially reversed the presumption in the case of adult children.

The Supreme Court ruled that because it is very common for elderly parents to hold accounts jointly with adult children for banking purposes, the starting presumption should be in favour of including the funds in the parent’s estate. The adult child will then have the onus of proving that the parent intended to gift the funds to him or her.

In the case of minor children, the old presumption of a gift will still apply, based on the assumption that parents intend to support their minor children.

While the clarity of a final ruling on how to approach joint accounts will likely be welcomed, there may remain some uncertain as to the evidence necessary to rebut the presumption. And hence, more litigation to come.

Have a nice weekend,
Jason Allan

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