In the past, we have written about whether an Estate must first obtain a Certificate of Appointment before issuing a statement of claim.
But what about an Estate that may be entitled to claim a portion of a court-approved settlement?
Over the past year, a number of court-approved class action settlement agreements involving deceased class members appear to have taken into account the cost and complexity of appointing an Estate Trustee.
The settlement agreement approved by the Federal Court in McLean v. Canada is the culmination of litigation concerning tragic, historic events in the lives of those who attended Indian Day Schools. These events include allegations of systemic abuse and mistreatment of children. The “class period” runs from January 1, 1920 until the date of closure or relinquishment of control by Canada of any particular day school or, that date on which the written offer of transfer by Canada was not accepted by the respective First Nation or Indigenous government.
The settlement approval noted that if a class member dies on or after July 31, 2007, their “Estate Executor” is still eligible to be paid the compensation to which the class member would have been entitled.
Similarly, the more recent settlement agreement approved by the Federal Court in Toth v. Canada addresses the claims of veterans who were in receipt of various benefits, including disability pension benefits, and had the disability pension amounts deducted from the other benefits which they received or were entitled to receive. The decision reads:
“Under the proposed settlement, which totals $100 million, every Class Member and the estates of Class Members who have passed away since the Certification Notice was published will receive a payment. Payments will be calculated and made promptly as the majority of Class Members are known and every effort will be made to ensure that all Class Members, or their estates, receive their payment, which will not be subject to income tax.”
If a proceeding has been commenced by an estate before probate has been issued, Rule 9.03 of the Ontario Rules of Civil Procedure offers some relief in stating that the proceeding shall be deemed to have been properly constituted from its commencement.
It is not always necessary for an estate trustee to obtain a Certificate of Appointment in order to administer an estate; however, in certain matters, an estate trustee may be required to obtain probate before being able to represent the estate, whether or not there is a valid Will. The Ontario Superior Court in Carmichael et al. v. Sharpley et al. has set out three circumstances in which probate is required:
- Third parties dealing with the executor may refuse to accept the authority of the Will and demand production of letters probate as authentication of that power…
- Proceedings involving the executor representing the estate as plaintiff or as defendant. It would seem that in such circumstances the court requires probate as an evidentiary matter…
- Where a foreign executor wishes to establish title to estate assets in Ontario he must have his letters probate resealed in Ontario or obtain ancillary grant letters probate. This requires that he first obtain probate in the primary jurisdiction.
Moreover, the Estates Act ensures that estate trustees named in a Certificate of Appointment of Estate Trustee have sole authority in respect of the estate:
“30. After a grant of administration, no person, other than the administrator or executor, has power to sue or prosecute any action or otherwise act as executor of the deceased as to the property comprised in or affected by such grant of administration until such administration has been recalled or revoked”
It will be interesting to see if the Courts will continue to take into consideration the necessity and of appointing an Estate Trustee in light of historic claims, and how third parties making efforts to award a portion of the settlement to the Estate will deal with the requirement for probate.
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It appears that the Ontario government is taking action to make it easier and more affordable for executors of modest estates to access the courts.
Where the value of an estate is relatively small, the cost of obtaining a Certificate of Appointment (otherwise known as “probate”) can be perceived as too expensive. As a result, an executor (“estate trustee”) of a small estate often administers the estate without the protection of probate. In some cases, people choose not to administer a small estate at all and abandon the assets altogether.
Foregoing probate may lead to roadblocks when administering an estate. Third parties (like banks and persons buying the deceased’s real or personal property) will often require that the estate trustee obtain a Certificate. Probate reassures these third parties of the estate trustee’s authority and protects third parties from liability, as it verifies that the person they are dealing with is authorized to deal with the estate’s assets.
In the past, we have blogged about the Law Commission of Ontario’s efforts on this issue, including the release of a questionnaire to Ontarians who have administered what they consider small estates.
It now looks like the provincial government is looking to address the issue as well. Attorney General Doug Downey recently introduced the Bill 161, Smarter and Stronger Justice Act. If passed, the Act is intended to improve how court processes are administered to make life easier for Ontarians.
Notably, one of the proposed amendments includes allowing for a simplified procedure to make it less costly to administer estates of a modest value.
Right now, the probate process for all estates in Ontario is the same, no matter the size of the estate.
The Smarter and Stronger Justice Act would make amendments to Ontario’s Estates Act to exempt probate applicants from the requirement to post a bond for small estates in certain cases.
Other proposed changes to the Estates Act include safeguards to protect minors and vulnerable people who have an interest in an estate, and to increase efficiency by allowing local court registrars to perform the required estate court records searches, rather than a central court registrar.
It will be interesting to see if the proposed changes will be passed, and how they may encourage more people to apply for probate and administer an estate of lower value.
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In a decision out of the Supreme Court of British Columbia, a computer file prepared by the deceased was accepted as a will and admitted to probate. Applying the curative provisions of the Wills, Estates and Succession Act, S.B.C. 2009, c. 13 (“WESA”), which came into force on March 31, 2014, the court was able to conclude that the computer record represented the deceased’s full and final testamentary intentions.
In Hubschi Estate (Re), 2019 BCSC 2040 (CanLII), the deceased died after a short illness. No formal will was found. However, his family was able to locate a Word document on his computer labelled “Budget for 2017”. In that computer file, there was the following statement: “Get a will made out at some point. A 5-way assets split for remaining brother and sisters. Greg and Annette or Trevor as executor.”
By way of family background, the deceased was given up by his birth mother at birth to Children’s Aid. At age 3, the deceased was placed in a foster home with the Stacks. He grew up in the Stack house, and was extremely close to his foster parents and 5 foster siblings. He was treated by the immediate and extended Stack family as a member of the family. Upon his foster mother’s death, her estate was divided into 6 shares, with one share passing to the deceased.
On the other hand, if the document was not found to be a will, the deceased’s estate would pass on an intestacy, and would pass to his birth mother’s sister, with whom the deceased had no contact whatsoever.
The court reviewed a number of decisions applying WESA. The court observed that the purpose of the curative provisions in WESA was to avoid the injustice of a deceased’s testamentary intentions being defeated for no good reason other than strict non-compliance with execution and attestation formalities.
In order to obtain probate of a non-compliant document, the propounder must demonstrate (1) that the testamentary document is authentic, and (2) that the testamentary document contains the full, final and fixed intention of the will-maker. The court found that both of these requirements were met in the Hubschi case.
Previously, I blogged on an Australian case where an unsent text message was admitted to probate under similar legislation. Read about it here. This decision was referred to by the court in Hubschi.
For better or for worse, Ontario legislation does not allow for substantial compliance with the formalities of will execution, and strict compliance is required. While this may lead to greater certainty, it also means that the testamentary intentions of a will-maker are often disregarded where there is not strict compliance with the formal requirements of execution.
Have a great weekend.
In Marsden Estate (Re),  N.B.J. No. 295, upheld on appeal at  N.B.J. No. 304, the deceased was seen by a solicitor and gave instructions for the preparation of a will on September 19, 2016. She died the next day, before the will could be signed.
The estate trustee under the impugned will brought an application to prove the will. She relied on s. 35.1 of New Brunswick’s Wills Act. This section provides:
35.1 Where a court of competent jurisdiction is satisfied that a document or any writing on a document embodies
(a) the testamentary intentions of the deceased, or
(b) the intention of the deceased to revoke, alter or revive a will of the deceased or the testamentary intentions of the deceased embodied in a document other than a will,
the court may, notwithstanding that the document or writing was not executed in compliance with the formal requirements imposed by this Act, order that the document or writing is valid and fully effective as if it had been executed in compliance with the formal requirements imposed by this Act.
The matter was contentious, as two of the testator’s children were essentially excluded from the will. The testator told the solicitor that she had been estranged from them for some time.
The court relied on affidavit evidence, including the affidavit of the drafting solicitor. The court concluded that the unsigned will reflected the testator’s “deliberate, fixed and final expression as to the disposal of her property upon her death”. Further, the court was satisfied that the testator had testamentary capacity, and was not being unduly influenced.
In earlier blogs, we reported on similar applications under similar “substantial compliance” legislation. An Alberta court considered the legislation but declined to apply it where there was an absence of clear and convincing evidence that the deceased failed to execute the will by inadvertence or mistake. An Australian court went as far as admitting an unsent text message to probate.
In Ontario, the doctrine of strict compliance continues to apply. As stated by Nick Esterbauer in his blog of December 11, 2017, it will be interesting to see if Ontario legislation opens the door to substantial compliance in the future. To date, it has not.
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Ante-Mortem Probate, or Pre-Death Probate, is a process of probate which validates the Will of a testator during his or her lifetime and may be particularly useful for testators who fear that their Will may be subject to a challenge following their death.
Various models of Ante-Mortem Probate have been explored in the past by American scholars and include the following proposed models:
- The “Contest Model”, reviewed by Professor Howard Fink, is where each of the beneficiaries are identified, including those that would benefit on an intestacy and the testator essentially becomes the moving party in his or her own suit against all possible beneficiaries of his or her Estate. [Antemortem Probate Revisited: Can an Idea Have a Life After Death? (1976) 37 Ohio St LJ 264]
- The “Conservatorship Model”, explored by Professor John H. Langbein, is where the testator is required to apply to the Court in a manner similar to the “Contest Model”, however, instead of each of the specific beneficiaries being involved, a Guardian Ad Litem (Conservator) represents the interest of all potential beneficiaries, including any unborn or unascertained beneficiaries. [Living Probate: the Conservatorship Model (1980)]
- The “Administrative Model”, set out by Professor Gregory S. Alexander and Albert M. Pearson is neither judicial nor adversarial. There is no requirement of notice to the beneficiaries or in fact “interested parties” as one of the significant concerns with the other models of Ante-Mortem Probate is the confidentiality of the testator. [Alternative Models of Antemortem Probate and Procedural Process Limitations on Succession (1979-1980) 78 Mich L Rev 89]
Only certain American States allow Ante-Mortem Probate, whereas Canada does not have any provinces or territories with a similar arrangement.
Given the number of suits that are commenced following the death of testators across Canada, such an arrangement could be beneficial in that at the very least, a testator who expects that there will be a challenge to his or her Estate plan could take an active part in adjudicating whether his or her Will is indeed, valid.
Considering the complicated familial arrangements that are often present in our society today, perhaps addressing challenges of things like capacity of the testator, undue influence or the presence of suspicious circumstances would make more sense before the testator’s death. This is particularly an issue where a testator’s capacity had been in question for a while and the Will being challenged was executed a decade or more before death.
There are, of course, certain potential negative effects of any Ante-Mortem Probate regime, particularly the possibility that it would encourage litigation that would not otherwise arise, following the death of the testator.
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One of the consequences of having to probate a Will (now referred to in Ontario as applying for a Certificate of Appointment of Estate Trustee) is that the Will, along with the assets covered by the Will, are made public.
I was intrigued to read about the estate of the billionaire co-founder of Microsoft, Paul Allen. In addition to Allen’s Last Will being made public, multiple news articles have published a list of some of the amazing properties owned by him, including a:
- condominium in Portland, Oregon ($700,000 to &850,000)
- 20-acre property in Santa Fee purchased from Georgia O’Keefe’s estate ($15 million)
- 2,066-acre ranch in Utah ($25 million)
- Silicon Valley 22,005 square foot house ($30 million)
- New York City penthouse on 4 East 66th Street ($50 million)
- double property in Idaho totalling 3,600 acres ($50 million)
- 3 acre compound on the Big Island in Hawaii ($50 million)
- 18 bedroom mansion in the South of France ($100 million)
- 387 acre camp in Lopez Island, Washington ($150 million)
- 8 acres of land on Mercer Island, Washington ($130 million)
- 400 foot Octopus Yacht (up to $130 million)
While I have no intention to address the efficacy of Allen’s estate plan, I thought the publicity of his estate provides a reminder that careful estate planning can ensure that privacy is maintained, and the payment of probate tax be avoided. In Ontario, there are numerous options available including preparing a secondary (or tertiary) Will, placing assets in joint ownership with the right of survivorship, or simply gifting assets prior to death. This is by no means an exhaustive list, and each option carries certain advantages and disadvantages.
While I expect that few people have the impressive catalogue of properties that Allen had, it should by no means preclude careful estate planning.
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A recent decision of the Saskatchewan Court of Queen’s Bench highlights the importance of “going big or going home” when challenging a Will.
In the decision of Kot v. Kot, 2018 SKQB 338 (CanLII), an application to revoke probate and allow a will challenge to proceed by the spouse of the deceased was dismissed on the basis of a lack of credible evidence sufficient to raise a triable issue.
There, the deceased died on September 15, 2015. He died leaving a will dated August 4, 2014. In his will, the deceased appointed his spouse and two of his brothers as estate trustees. He gave one of his brothers a right of first refusal to purchase some of the deceased’s farm land upon his death.
Probate of the will was granted, and the three estate trustees proceeded to administer the estate.
The spouse then commenced her application to challenge the will. She said that the deceased tore up his will (actually, a copy of it: the spouse had switched the original will with a copy, and gave evidence that the deceased thought he was tearing up and therefore revoking the original). She said that she told the estate lawyer of the revocation, but the estate lawyer told her that it was better to have a will than no will, and that the estate lawyer did not tell her that if there was no will, she would inherit the entire estate. She also later alleged that the will was the result of undue influence from the brothers.
The court dismissed the spouse’s application.
The court held that the delay in seeking to challenge the validity of the will was not fatal to the application. However, while the delay did not defeat the application, it was a relevant consideration, and suggested that her claims had little credibility. Further, the evidence of the estate lawyer did not support her claim that the will was torn up by the deceased.
The court also found that there was no evidence of undue influence.
Interestingly, the court did not discuss the application of any limitation period. The court relied upon the Ontario Court of Appeal decision of Neuberger Estate v. York in concluding that mere delay did not preclude the challenge. However, in Neuberger, the will challenge was brought within the two year limitation period. In Kot, the challenge was brought 4 ½ years after the deceased’s death.
Have a great weekend.
The recent decision of Re Milne, 2018 ONSC 4174, has caused a lot of discussion among estate planners and litigators. As a recap, in that decision, Justice Dunphy of the Superior Court found that multiple Wills were invalid where so-called “basket clauses” in the Wills provided the Estate Trustees with the discretion to determine which estate assets fell under which Will. The Court found the Wills to be invalid on the basis that Wills are a form of trust and therefore must meet the requisite three certainties of a valid trust (see our blog on the decision here). The decision is now under appeal and many are eagerly awaiting the outcome.
In the interim, estate planners and litigators should be aware of the recent decision of Re Panda, 2018 ONSC 6734, which directly addresses and declines to follow Re Milne.
Like in Re Milne, probate was sought for a Primary Will where a Secondary Will was executed which contained a different, but substantively similar, basket clause allowing the Estate Trustee of the Will to essentially determine which assets fell under the Primary Will and which assets fell under the Secondary Will. The application for probate came before Justice Dunphy who refused to grant probate. A motion for directions was then heard by Justice Penny who carefully analyzed the decision of Re Milne before granting probate.
The Issues in Re Panda
Justice Penny analyzed one procedural issue and two substantive issues, being:
- whether, on an unopposed application for a certificate of appointment as estate trustee, it is appropriate to inquire into substantive questions of construction of the will or whether the inquiry is limited to “formal” validity of the will for purposes of probate [the procedural issue];
- whether the validity of a will depends upon the testamentary instrument satisfying the “three certainties” which govern the test for the valid creation of a trust; and
- whether, apart from the questions of the validity of the will itself, a testator can confer on his or her personal representatives the ability to decide those assets in respect of which they will seek probate and those in respect of which they will not.
Probate vs. Construction
Unlike Justice Dunphy in Re Milne, Justice Penny found that at the stage of determining whether to grant or deny probate, a Court must determine only whether the document presented is a Last Will and Testament. The formal requirements under the SLRA must be met and it must be determined whether the document is testamentary in nature (i.e. disclosing an intention to make a disposition of the testator’s assets on death). Beyond that, Justice Penny found that broader questions of interpretation, including the validity of the conferral of authority to decide under which Will property will fall, should be addressed separately as matters of construction, not on probate applications.
A Will is Not a Trust
Justice Penny also disagreed that a Will was a form of trust such that a Will requires certainty of intention, object, and subject-matter. As stated by Justice Penny, “A will is a unique instrument. A will shares some of the attributes of a contract and some of the attributes of a trust but it is neither; a will is its own, unique creature of law.”
Validity of Estate Trustees’ Authority to Determine Which Assets Fall Under Which Will
With respect to the final issue, Justice Penny found that such a question involves the issue of the construction of a particular instruction to or power conferred in the Wills to the estate trustees. Justice Penny therefore found that it would be inappropriate to make any determination as to the scope and validity of the basket clause found in the Wills as such issues were not before him on the Application for Probate; however, in obiter, Justice Penny went on to note that it was not clear how the basket clauses in issue were “any more extreme or ‘uncertain’ than other, well-established discretionary choices frequently conferred on and exercised by estate trustees.”
Until the determination of the appeal of Re Milne is in, the decision in Re Panda may provide some comfort to practitioners worried about the implication of Re Milne.
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In Milne Estate (Re), 2018 ONSC 4174 (CanLII), the court refused to grant probate to a will where there was uncertainty as to the subject matter governed by the will. We blogged and podcasted on this case here and here.
Historically, probate has been granted to wills that have not disposed of property. For example:
- In Brownrigg v. Pike (1882), 7 P.D. 61 (Eng. P.D.A.), the court probated a Will that did no more than appoint an executor;
- In Jordan, Re (1868), L.R. 1 P.& D. 555 (P.D.), the court probated a will that only appointed an executor, even though the executor had renounced;
- In Re Blow, 1977 CanLII 1274 (ON SC), the court stated that “In my view, it is not an essential element of a testamentary instrument that it have dispositive effect (although the fact that an instrument does not purport to dispose of property may be a factor to be taken into account in determining whether it was intended to have testamentary effect”. There, however, a precatory memorandum of advice to executors was not admitted to probate;
- In Tatnall v. Hankey (1838), 2 Moo. P.C. 342, 12 E.R. 1036, a will that merely executed a power of appointment was entitled to probate;
- In Barnes v. Vincent (1846) 5. Moo. P.C. 201, 13 E.R. 468, the Privy Council held that a grant of probate could be made without an inquiry into the validity of an exercise of the power of appointment, or even whether the alleged power of appointment in fact existed;
- Section 12 of the Estates Act allows for probate to be granted even if the will does not purport to dispose of any property in Ontario.
For a further and more extensive commentary on the Milne decision, see Professor Oosterhoff’s article, “What is a Will and What is the Role of a Court of Probate?”.
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A recent article featured in the New York Times highlights the need to reconsider estate planning strategies in light of developments in the law of inheritance taxation.
As our blog has previously reported, during his presidential campaign, Donald Trump vowed to eliminate inheritance taxes, then payable on the value of American estates exceeding $5.45 million, altogether. To the disappointment of many wealthy citizens of the United States, President Trump has not carried out his promise and, while the exemption has been increased, inheritance tax remains payable in the United States in respect of estates of a size greater than $10 million.
The New York Times reports that these changes to the exemption in respect of inheritance taxation are temporary in nature and that the measures currently in effect will expire in 2026. At that time, Americans (and individuals who hold property of significant value in the United States) may need to amend their estate plans with a view to tax efficiency.
Gifts, including testamentary gifts, are not typically subject to taxation in Canada. While there is no Canadian estate or inheritance tax, assets that are distributed in accordance with a Canadian Last Will and Testament or Codicil that is admitted to probate will be subject to an estate administration tax (also known as “probate fees”). Many of our readers will already be aware of the relatively new requirement (as of 2015) that estate trustees in Ontario file an Estate Information Return with the Ontario Ministry of Finance within 90 days of the processing of a probate application. In some circumstances, details regarding both traditional estate assets and assets typically considered to pass outside of the estate are required, notwithstanding that the latter category may nevertheless be exempt from probate fees. Some anticipate that the law in Ontario may at some point be amended to require further details regarding assets passing outside of an estate in Estate Information Returns and/or the payment of estate administration tax or other fees in respect of these assets. Like variations in the exemptions to American inheritance tax, changes to estate administration taxes may in the future necessitate amendments to existing estate plans with a view to limiting the taxes payable on the transfer of wealth.
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