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.
Dividing one’s personal property upon death can be a contentious matter. If an item of personal property is not specifically gifted to an individual, there is a chance that the beneficiaries may find themselves litigating.
A specific bequest can provide clarity. Pursuant to Black’s Law Dictionary, a specific bequest is “a legacy of a specified property or chattel to a particular person that is detailed in a will.” We have previously blogged on the use of specific bequests.
Another way to give personal property is through the use of a memorandum attached to the will. This memorandum may be updated to list all of the personal property being gifted, and can either be binding (assuming certain requirements are met) or precatory. We have previously blogged on the use of a memorandum to give personal property.
The use of a specific bequest or a memorandum may help to avoid battles over personal property. If personal property is not given to an individual through a specific bequest, an individual may receive items through a percentage division of either such property (e.g. “to be equally split between my two sons”), or the residue.
One possible issue with giving a percentage division of property or leaving residue to the beneficiaries, is that they may fight over specific items. This is what is happening with the Estate of Audrey Hepburn. In Audrey Hepburn’s will, she left a storage locker as part of the inheritance for her two sons. The locker was filled with various items including fashion accessories, posters, awards, scripts, and pictures, and was to be shared equally. Her two sons are now in dispute over who gets to keep what items in the locker. If Hepburn were to have specified the items to be given, it is possible that this inheritance dispute could have been avoided.
While specific bequests and memoranda are helpful in certain circumstances, it is important to consider the potential value of the bequest before gifting it. Valuations are important in order to ensure that the property being gifted is truly representative of the testator’s intention in leaving the property. For example, an individual may decide to leave each of her sons a separate painting. Without a valuation, this seems like an equitable arrangement. With a valuation, however, it may be that one painting is worth $300.00, and the other is worth $3,000.00. Equalizing the value of personal property may be an important consideration in making a specific bequest in order to avoid potential litigation.
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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?
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.
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One of the primary duties of an Estate Trustee is to ascertain the assets of the estate. Sometimes, at the time of death, property of another person may be left at the deceased’s place of residence or otherwise in their possession. This property, unsurprisingly, can be assumed to be the deceased’s. However, if property entitlement is in dispute, when and how does a claimant to property go about inspecting the property?
Rule 32.01(1) of the Rules of Civil Procedure provides:
The court may make an order for the inspection of real or personal property where it appears to be necessary for the proper determination of an issue in a proceeding.
In Catto v Catto, 2016 ONSC 3025, the Court considered this Rule in the context of an application seeking the opinion, advice and direction of the Court relating to various issues in the administration of an estate.
The Deceased had died suddenly and without a will. He and his brother had been collecting hockey cards for over twenty years. His brother claimed to have left his part of the collection with the Deceased when he ran out of storage room in his own home. A list indicating the ownership of the cards went missing when the cards were left in the possession of the Deceased. The Deceased’s wife, Ms. McKay, knew the Deceased collected hockey cards but did not know that the cards may belong to anyone other than her late husband. Affidavits were filed detailing the storage of all the collected cards at the Deceased house. Evidence was also provided supporting the two brother’s long history of collecting hockey cards together. The Court found the Deceased’s brother was entitled to inspect the cards at a time and location mutually agreeable to the parties. It also found that if the list could not be located, the parties could randomly divide the cards as they might agree or the Court would make a determination.
This case also raises a worthwhile point to remember. It might seem that an obvious solution would have been to allow the Deceased’s brother to simply take what he thought was his. In the facts of this case, Ms. McKay was the sole beneficiary of the Estate, and presumably, if there were no creditors or dependants, she could have easily done so without attracting liability. However, had there been concerns with respect to creditors, beneficiaries, or dependents, as estate trustee, she could have potentially incurred liability for making a distribution.
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This week on Hull on Estates, Paul Trudelle and Lisa Haseley discuss Sidney Peters and Citlally Maciel’s paper, “Reclaiming Autonomy: Practical Considerations when Client’s resume Capacity”, which was presented at The Six-Minute Estates Lawyer OBA conference on May 3, 2016.
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The Substitute Decisions Act directs that, when a person who does not reside in Ontario is appointed as a guardian of property, that person must provide security, as approved by the Court, for the value of the property to be administered. However, the Court also has discretion to waive the requirement that security be provided by a non-resident guardian of property. Under what circumstances the Court will exercise its discretion to waive the requirement to post security when appointing a non-resident guardian of property is unclear within the legislation and little guidance is provided by the sparse case law that deals with this issue.
In a paper presented by Dermot Moore of the Office of the Public Guardian and Trustee (the “PGT“) at this year’s Six-Minute Estates Lawyer, Mr. Moore outlined the policy of the PGT on recommending security when a non-resident guardian of property is being appointed. The PGT will typically recommend that security be required in the following circumstances:
- If the proposed guardian is not a parent or spouse of the incapable person and the value of property is greater than $100,000.00;
- If the proposed guardian is a parent or spouse, the incapable person does not own real property, and the value of the property is greater than $250,000.00; and
- If the proposed guardian is a parent or spouse, the incapable person owns real property, and the value of the property is greater than $500,000.00.
It may be worth noting that in a jurisdiction such as Toronto, where property values are so high, a guardianship application by a non-resident of Ontario in respect of the average person who own real property will result in a recommendation by the PGT that security be posted.
In his paper, Mr. Moore notes that it is not infrequent for the Court to dispense with the requirement that security be provided if there is some argument in support of waiving the requirement. One of the few decisions in which the issue of security in the appointment of non-resident guardians has been considered is Salzman v. Salzman, 2011 ONSC 3555, 2011 CarswellOnt 15786. In this case, a resident of Quebec was appointed as guardian of property for his mother and was not required to post security upon his appointment. In dispensing with the requirement to post security, Justice Hoy made note of the proposed guardian’s close relationship with his incapable mother, his historical assistance in managing her affairs, and the consent of his siblings, the only other beneficiaries of his mother’s estate, to the non-resident’s appointment and the dispensing of the requirement to post security.
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The 2015 movie, Woman in Gold, brought to the mainstream the Nazi appropriation of art throughout Europe and Russia, and the various art Restitution Board proceedings to repatriate art to their proper owner or heir. For devotees of art, history, and estates, restitution of art continues to appear in the mainstream media providing emotional stories behind beautiful pieces of art, and the steps taken by estate representatives to recover property.
In 2008, the heirs of Saemy Rosenbaum and Isaak Rosenberg (the “Estate“) submitted a request for the return of the 1526 Hans Wertinger painting titled Bildnis Pfalzgraf Johann III (Portrait of ElectorPalantine Johan III).
Apparently, the Nazi Government required the owners, who were art dealers in Frankfurt, to sell the painting in 1936, and place the proceeds of sale into a Nazi Government bank account. The painting ended up in the hands of an art collector in 1948, who bequeathed it to a museum in Stuttgart, Germany.
The claim for restitution appears to be based on the premise that, although the painting was sold, the owners were not free to make arms-lengths transactions, nor to use the proceeds freely. An interesting read in the Economist, discusses the process of claiming looted artwork, alleging that it is often opaque, ad-hoc, expensive, and uncertain, given the fact that ownership records may be patchy.
Nonetheless, researchers at the museum have now been able to prove beyond a reasonable doubt that the Portrait of ElectorPalantine Johan III was in fact stolen from the original owners. Therefore, the museum has since returned the looted artwork to the Estate.
The results of a recent study published in the American Medical Association Oncology Journal suggest that more patients with cancer are obtaining Continuing Powers of Attorney for Property than in the past. Approximately 74% of Americans facing cancer have a Power of Attorney for Property in place. However, while not considered statistically significant, the use of Powers of Attorney for Personal Care and frequency of discussion with respect to end-of-life preferences have actually become less prevalent in recent years, with rates of only 40% (down from 49% in 2000) and 60% (down from 68%), respectively.
Older studies have suggested that physicians should re-evaluate a patient’s mental capacity after significant changes in medication, infection, metabolic disturbances, or diagnosis with a new medical problem, including cancer diagnosis and treatment, which may contribute to changes to mental capacity. While mental capacity is time and task-specific and will require analysis on a case-by-case basis, memory and concentration problems are frequently linked to certain chemotherapy regimens. Some reports suggest that oncology patients may experience the same mental impairment that is often seen at increased rates within the aging population. Further, the cognitive difficulty that is often referred to as “chemo fog” is believed to become more debilitating with the intensity of the chemotherapy. Other cancer treatments, including radiation and surgery, are believed to be less likely to influence a patient’s mental capacity, but medications, such as narcotic painkillers, that may be used to address treatment side effects can nevertheless impact lucidity and the understanding of medical procedures to which the patient’s consent is required. Further, when cancer originates or metastasizes within the brain, neurological functioning may be more likely to become compromised, whether temporarily or for the long term.
The presence of powers of attorney within the cancer community according to the study conducted by Johns Hopkins School of Medicine does not differ greatly from the estimate of 71% of Canadians that have Powers of Attorney in place. Generally, it is a good idea to ensure that individuals of all ages take the time to consider an incapacity plan and to have Power of Attorney documents prepared. However, cancer patients may be more likely than others to have to make important decisions between different treatment options. In situations where diminished capacity may become a more likely scenario due to illness (or related treatment) or age, arrangements should be made to ensure that, if one becomes incapable of making important decisions him or herself, someone who can be trusted is authorized and prepared to do so on their behalf.
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Today on Hull on Estates, Paul Trudelle and Holly LeValliant discuss a decision of the Queen’s Bench of Saskatchewan, which dealt with the issue of whether a person who transfers real property into joint tenancy is entitled to change her mind.
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Yesterday’s blog considered the fact that a common law spouse has no beneficial entitlement to his or her deceased spouse’s estate on an intestacy. There are, however, remedies available to the disappointed spouse.
The first of these is a claim for dependant support found in Part V of the Succession Law Reform Act, whereby a common law spouse (or any other “dependant” of the deceased) can ask for support where no adequate provision has been made for the dependant by the deceased.
The Court has broad discretion to grant relief that, according to section 62(3) of the Act, can take a variety of forms, including the transfer, use or occupation of specified property in satisfaction of the dependant’s need for support.
In many situations involving long-term common law relationships, there may also be an argument for equitable (as opposed to legal) ownership of property by the surviving common law spouse. These rights will be founded on the principles of unjust enrichment and include, for example, resulting or constructive trust, and proprietary estoppel.
The Supreme Court of Canada has recently considered two cases that provide guidance on unjust enrichment in the context of common law relationships. The Court released one decision in the matters of Kerr v. Baranow, and Vanasse v. Seguin, which I will be discussing in the next couple of blogs.
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