Tag: Public Guardian and Trustee
You are the Estate Trustee of an estate in which the testator left a substantial portion of the residue to certain specifically named charities. The charities who are named as beneficiaries are well established large charitable organizations whom you have corresponded with directly. Such charities have retained counsel to represent them concerning their interests in the estate, and such counsel have in turn requested that you commence an Application to Pass Accounts regarding your administration of the estate.
In preparing the Application to Pass Accounts you turn your mind to who you should serve with the Application. Rule 74.18(3) of the Rules of Civil Procedure provides that an Application to Pass Accounts shall be served on “each person who has a contingent or vested interest in the estate“.
Although you are aware of the general supervisory role that the Office of the Public Guardian and Trustee (the “PGT”) has over charities in the Province of Ontario, as the charities in this instance are well established and represented by counsel, you question whether you need to serve the PGT in addition to the charities with the Application to Pass Accounts. It is, after all, the charities themselves who have a “contingent or vested interest in the estate“, and as the PGT and the charities would be representing the same financial interest you question whether it is necessary.
The requirement to serve the PGT with any Application to Pass Accounts where a charitable bequest is involved is established by section 49(8) of the Estates Act, which provides:
“Where by the terms of a will or other instrument in writing under which such an executor, administrator or trustee acts, real or personal property or any right or interest therein, or proceeds therefrom have heretofore been given, or are hereafter to be vested in any person, executor, administrator or trustee for any religious, educational, charitable or other purpose, or are to be applied by them to or for any such purpose, notice of taking the accounts shall be served upon the Public Guardian and Trustee.” [emphasis added]
The requirement to serve the PGT with any Application to Pass Accounts when a charitable bequest is involved as established by section 49(8) of the Estates Act exists in addition to the general requirement to serve all individuals with a “contingent or vested interest” as established by rule 74.18(3). To this respect, when a Will leaves a bequest to a specifically named charity, the Application to Pass Accounts must be served upon the specifically named charity as well as the PGT. Although from a practical standpoint the PGT’s active participation in an Application to Pass Accounts where a charity is representing itself is unlikely, with the PGT deferring to the charity to protect their own interest, the service requirements remain nonetheless, and both entities could in theory participate in the Application to Pass Accounts, and both could in theory file separate Notices of Objection to Accounts.
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This week on Hull on Estates, David Smith and Lisa Haseley discuss a recent decision of the British Columbia Supreme Court, Rosinski v British Columbia (Public Guardian and Trustee), 2016 BCSC 1204
Click here for more information on Lisa Haseley.
A recent decision of the Ontario Superior Court of Justice highlights the real or perceived conflicts of interest that can arise when a guardian for property wears more than one fiduciary hat.
In Taticek v Zeisig, 2016 ONSC 772, Ronald and Peter were appointed as joint guardians for property and personal care for Annemarie in 2012. Annemarie, Ronald and Peter, along with Annemarie’s daughter Sonya, owned a farm property in joint tenancy (the “Farm”). The Honourable Justice Annis had approved the original guardianship order, which included a plan for the management of the Farm.
Ronald and Peter brought an Application to pass their accounts in March 2014, in accordance with Justice Annis’s Order. The Public Guardian and Trustee (“PGT”) objected to the accounts, but subsequently withdrew the objections and initially supported the sale of the Farm.
Ronald passed away on April 23, 2014, with his interest in the Farm passing by right of survivorship to the other joint tenants. The other guardian, Peter, was the sole Estate Trustee for Ronald’s Estate. Peter was also the sole trustee of a family trust (the “Family Trust”), which was settled for the benefit of Ronald’s children.
The Family Trust wanted to purchase Annemarie’s one-third interest in the Farm, and Peter brought an Application to amend the management plan to allow for the joint tenancy in the Farm to be severed. The PGT opposed the Application, and Peter brought a Motion for an Order approving the amended management plan.
On the Motion, Peter argued that he was acting in Annemarie’s best interest, and was not in a conflict of interest because her share of the Farm would be sold at fair market value and the proceeds of sale would be placed in an investment account.
In highlighting deficiencies in the amended management plan, the PGT noted three potential conflicts of interest:
- Peter had to determine whether Annemarie had to reimburse loans from Ronald, and the amended plan lacked details about Peter’s obligations to the Family Trust.
- In determining whether the Farm was to be sold to the Family Trust or to a third party, Peter would potentially continue to personally benefit if the one-third share of the Farm was purchased by the Family Trust.
- Peter’s obligation to maximize the value of Annemarie’s share of the Farm in his capacity as her guardian for property was in conflict with his duty to purchase her share at the lowest possible price on behalf of the Family Trust.
Ultimately, the Honourable Justice Patrick Smith refused to grant Orders dismissing Peter’s Application and appointing the PGT as Annemarie’s guardian for property on the Motion, holding that the PGT’s concerns could be addressed with additional information and an amended management plan. Justice Smith also held that the evidence established that Peter was acting in Annemarie’s best interest.
The Court granted leave for Peter to provide additional details and an amended management plan within 60 days of the judgment, with the matter being returnable before Justice Smith on short notice if the PGT continued to oppose the Application.
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Umair Abdul Qadir
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 Public Guardian and Trustee (PGT) is often appointed to review accounts where they are submitted to the court for approval by guardians of property, attorneys and estate trustees. I recently happened across Richard Coutinho’s paper on the involvement of the PGT in passings of accounts. While he addresses varying aspects of this topic, for today’s blog I review the issue of service on the PGT, in respect of which the rules are sometimes unclear.
Mr. Coutinho reminds us that the PGT should be served with an application to pass accounts and other required material in the following circumstances:
- When the PGT represents a person with an interest in the estate;
- When there is a charitable beneficiary of the estate or trust (pursuant to ss. 49(8) of the Estates Act); and
- When the PGT is acting on behalf of parties under disability when their guardians/attorneys apply to pass their accounts, unless a close relative or other suitable person would agree to act as litigation guardian in priority to the PGT.
The paper also clarifies for us when the PGT does not get involved in a passing of accounts. Some examples provided of when the PGT does not need to be served are:
- When a guardian of property has been replaced, and the former guardian is applying to pass accounts – this is because the new guardian can review the accounts;
- When the attorney for property is applying to pass accounts and the grantor of the Power of Attorney is not incapable;
- When the incapable person has died – that person’s estate trustee (unless the estate trustee is the PGT) can review the accounts;
- When the accounts are served in draft form – the PGT can only review a formal application to pass accounts; and
- When the PGT has a conflict of interest (e.g. when there are two incapable beneficiaries and the PGT is the guardian of property of only one of them).
Thanks for reading and have a great weekend!
It is helpful in assisting our clients in statutory guardianship matters to get the PGT’s perspective. Dermot C.G. Moore did so in his paper presented at the Six-Minute Estates Lawyer on May 6, 2015. In it he comprehensively reviews the several factors that come into play in statutory guardianship applications, including:
- Who can apply – he discusses the differences in who can apply for guardianship of property and guardian of the person, and as replacement guardians (only certain persons can replace the PGT as statutory guardian of property: (i) the incapable person’s spouse; (ii) the incapable person’s relative; (iii) an attorney for property that does not grant authority over all the incapable person’s property (rare); and (iv) a trust corporation, if on consent of the incapable person’s spouse/partner (uncommon).
- Interim Arrangements – in statutory guardianship applications, the PGT will manage the incapable person’s property until the application is processed.
- Deferral to act – the PGT may decide to defer all or part of the administration for a short period of time where a replacement is likely and the finances of the client can be dealt with appropriately in the interim.
- Timing – statutory guardianships are often a more difficult route for applicants, as the PGT has more direct access to information, asks more questions and the process generally takes longer.
- Complexity – the time taken to process statutory applications is lengthened by a variety of factors, including self-represented applicants, the administrative process and competing applications.
- Security – security requirements in non-resident applicants are stricter in statutory applications.
- Refusals – the PGT may refuse the statutory application on the broad grounds of there being reasonable grounds to believe the applicant is unsuitable or the management plan is inappropriate. Mr. Moore’s paper cites several other specific grounds that have resulted in applications being denied.
Thanks for reading and have a great weekend,
Last night, I overheard a distressed woman confiding to a friend about a relative who was declared incapable of managing her property. The Public Guardian and Trustee (“PGT”) had stepped into her shoes to take control and to care for her property. This case peaked my curiosity, so I went home and did some research on this topic.
Pursuant to Section 15 of the Substitute Decision Act (“SDA”), the PGT can be declared a person’s statutory guardian of property where a certificate is issued under the Mental Health Act (“MHA”) certifying that a person who is a patient of a psychiatric facility is incapable of managing property. Whenever a patient is admitted to a “psychiatric facility”, as defined by the MHA, a physician examines the patient to determine if he or she is capable of managing property. If the physician determines that the patient is not capable of managing property, then he or she must issue a certificate of incapacity. The certificate is subsequently sent to the PGT. As a result, Section 15 is triggered and the PGT steps in as the statutory guardian without any procedural requirement.
Pursuant to Section 16 of the SDA, the PGT can be declared a persons statutory guardian of property where a person requests an assessor to perform an assessment of either their capacity or another person’s capacity. This assessment is done with the view of determining whether the PGT should become the statutory guardian’s of the property. If a person wishes to request that an assessor perform an assessment of another person’s capacity, the person requesting the assessment must: (i) have reason to believe that the other person may be incapable of managing property, (ii) have made reasonable enquiries and have no knowledge of the existence of any attorney under a continuing power of attorney, and (iii) have made reasonable enquiries and have no knowledge of any spouse, partner or relative of the other person who intends to make an application for the appointment of a guardianship of property.
Thank you for reading and I hope my blogs added extra flavour to your favourite morning beverage.
On Tuesday, March 27, 2007, I attended the Ontario Bar Association Trust & Estates Section Meeting. Kathryn Bennett opened the meeting with a discussion 2007 federal budget and how it affects individuals from an estate planning point of view. Some of these points were touched upon in our earlier blogs.
The meeting continued with presentations by Justices Greer, Croll, Perell and Spies of the estates list. They addressed what the estates bench and bar can do better. The judges touched upon the following matters:
- The Estates court will be sitting every week this summer;
- "1 1/2" judges will be sitting every week (1 in the summer months);
- At some point, an initiative will be put in place whereby the first appearance for long applications will be a 15 minute timetabling appointment;
- The judges stressed the importance of advising the estates office early if a motion or application is not proceeding, or if it is to be proceeding on consent;
- An e-scheduling pilot project will be put in place soon;
- The judges emphasized the advisability of filing a family tree as part of the record;
- In guardianship applications, where the Public Guardian and Trustee has sent a letter raising issues, it may be advisable for a supplementary affidavit to be filed setting out how the issues raised by the Public Guardian and Trustee have been addressed;
- Counsel should try to simplify matters by setting out in the confirmation form what materials are to be reviewed by the judge, and, possibly, by attending at the court office the day before the proceeding in order to tag what materials are to be reviewed;
- Counsel should consider the advisability of having a case management judge appointed in certain proceedings;
- When submitting an "unusual" over the counter motion, counsel should consider sending an explanatory covering letter, and requesting that the matter be put before a judge.
- Mr. Justice Perell referred to a recent work which noted that in an information economy, what is scarce or valuable is attention. Applying this to advocacy, counsel should ensure that their message is effectively and efficiently packaged so that judicial attention is captured and focused. Counsel should have this in mind when considering the procedures to be used to determine the issues, and when preparing materials.