I recently read an article named “The Lessons of Famously Bad Estate Planning”, authored by Steven Morelli. This article looks at disasters that have followed celebrities because of the absence of a properly planned Will.
Jimi Hendrix died without a Will which started a family war that would end up in court for more than 30 years.
Sonny Bono, an American record producer, singer, actor, and politician, died without a Will. It is mind blowing that someone so successful would not have a carefully planned Will. Of course, numerous people lined up to advance claims against his estate, which included Cher, and the inevitable love child. Sonny could have saved his widow and everyone else involved a lot of grief and aggravation if he had taken the time to do some simple estate planning.
For those of us who have taken the time to prepare our Wills, Mr. Morelli reminds us of the importance of updating our Will. For instance, Anna Nicole Smith died with a Will; however, her Will contained a provision which specifically excluded “future children” from benefiting from her estate. This clause had the effect of leaving her entire estate to her now deceased son, and disinheriting her five month old daughter. A judge eventually fixed this estate mess, but it came at an unnecessary expense.
Mr. Morelli puts it perfectly: “The essence of estate planning: control. Whether it involves celebrities maintaining their image for all posterity, or wealthy land-owners keeping their families’ holdings intact, estate planning protects clients’ control. Quite often people don’t want to discuss estate planning because it involves their death. But clients should understand that it is essential to maintaining their family’s stability and dignity.”
Thank you for reading,
Rick Bickhram – Click here for more information on Rick Bickhram.
Declarations of beneficiaries of Life Insurance policies are sometimes thought to be “unassailable.” However, where a deceased’s first spouse is unexpectedly the named beneficiary of a life insurance policy owned by the deceased, the second spouse may have recourse to various legal remedies in an attempt to remedy what is argued to be an unjust situation. Inevitably, a Separation Agreement between the deceased and his or her first spouse is central to any such argument.
The recent decision of the Honourable Justice Strathy in Richardson (Estate Trustee of) v. Mew considered such a situation. The case also stands as an excellent summary of the recent jurisprudence that has developed in this area.
In short, the disappointed spouse can seek the remedies of either constructive trust or rectification. Justice Strathy points out that “except in exceptional circumstances” the Insurance Act requirements for the change of a beneficiary designation must be strictly interpreted. His Honour clearly had difficulty with understanding “how the designation of a beneficiary under a life insurance policy could be anything other than a juristic reason for an “enrichment.” Although he did not find this to be a case for the exercise of the court’s jurisdiction to rectify the policy, he left open the possibility that, in the right set of circumstances (i.e. clear evidence of a mistake), the court could properly employ such a remedy.
David M. Smith
This week on Hull on Estates David Smith and Sarah Hyndman Fitzpatrick talk about estate planning in uncertain economic times. They discuss how the current economic situation has impacted estate planning and litigation and new tools (such as the "Tax Free Savings Account") to consider in creating you estate plan.
Feel free to send us an email at email@example.com or leave us a comment on the Hull on Estates blog.
Earlier this week I blogged on how estates disputes can take on layers of complexity when principles of Family Law and Contract Law are brought into the process. The recent decision of the Ontario Court of Appeal in Frye v. Frye Estate demonstrates an instance of complexity arising out of the relationship between a shareholder’s agreement and a Will. At issue was a simple question: can the terms of a shareholder’s agreement restrict the testamentary freedom of a shareholder insofar as the shares are concerned? The Court found as follows:
- Contractual obligations do not constrain a person’s ability to bequeath property by means of a will. Rather such obligations may give rise to an action for breach of contract but do not affect the validity of the Will itself.
- Legal title to the shares is transmitted by the Will to the estate trustees, who hold them in trust for the beneficiary of the shareholder’s Will…However, the estate trustees are bound by the shareholder’s agreement and cannot distribute the shares out of the estate without complying with the shareholder’s agreement. The estate trustees’ inability to transfer the shares immediately does not, however, render the bequest void.
- A further complication was the fact that the intended beneficiary of the shares and the estate trustee of the deceased shareholder’s estate were the same person.
Frye will no doubt be the subject of further commentary in the estates bar in the weeks ahead.
David M. Smith
The Interrelationship Between a Guardian of Property and a Trustee Under a Testamentary Trust – Hull on Estates Podcast # 133
This week on Hull on Estates, Rick Bickhram and David M. Smith discuss the complications that can arise when an incapable person is both the subject of a guardianship order and the beneficiary of a testamentary trust.
Comments? Send us an email at firstname.lastname@example.org, call us on the comment line at 206-350-6636, or leave us a comment on the Hull on Estates blog.
As I am sipping on my coffee this morning, I am thinking to myself, who can commence a will challenge?
A will challenge can be commenced pursuant to 75.06(1) of the Rules of Civil Procedure. Rule 75.06(1) is a procedural remedy that permits any person who appears to have a financial interest in an estate to apply for directions or move for directions in another proceeding. This begs the question, who is considered to have a financial interest in an estate? This issue was addressed in the Ontario Superior Court (Divisional Court) decision of Smith v. Vance.
In Smith, the Deceased died on October 27, 1995, leaving a will dated January 5, 1994 which named the applicants as the estate trustees. A notice of objection was filed by three individuals who were cousins of the deceased through marriage. The objection was subsequently struck by the Honourable Justice Perras during the motion for directions on the grounds that the objectors did not have a financial interest in the subject-Estate. In this hearing, the objectors appealed this decision.
The objectors asserted their financial interest in the Estate based on their close relationship with and their physical and financial assistance for the deceased. There was also an earlier destroyed will in which the objectors were named beneficiaries. Finally a letter was allegedly written by the deceased wherein she acknowledged that the objector will have an interest in her estate.
The court acknowledged that a financial interest is not defined in the Rules of Civil Procedure. In such cases, words should be taken by its natural meaning. Black’s legal dictionary defines financial interest as an interest equated with money or its equivalent. The court held that claimants must do more than simply assert an interest. They must present sufficient evidence of a genuine interest and meet a threshold test to justify inclusion as a party. The interest need not be conclusive evidence at that stage but must be evidence capable of supporting an inference that the claim is one that should be heard.
If the evidence offered by an objector is capable of supporting an inference that the claim raises a genuine issue, and thus is one that should be heard, the objector is entitled to standing and should be granted permission to be added as a party. The appeal was allowed and the order by the Honourable Justice Perras was set aside.
I hope you had fun reading today’s blog. Until tomorrow,