Tag: Substitute Decisions Act
When you think of the assets to be distributed upon an individual’s death, the common ones are bank accounts, investments, real estate, and any heirlooms or valuable items that have been accumulated during one’s lifetime. But we can’t forget digital assets as well.
Digital assets are any type of content stored digitally on a computer, website or on the cloud. Most of us are online every day for work and personal reasons, generating documents, sending texts and sharing images. These are all digital assets. So are frequent flyer or store reward programs that allow people to accumulate points that could grow to have substantial worth.
If you think your digital assets won’t amount to much, think again. A 2013 study by McAfee, an American-based global computer security software company, found that the average American had more than $35,000 of assets stored on their devices. Our digital profiles have certainly increased since then, and so has the need to protect those assets when we die.
Millennials, generally defined as those born between 1981 to 1996, know the value of digital assets. They grew up in the digital world and place great value on the movies, music and apps on their various devices.
As they age, they are starting to think about estate planning, sometimes in ways that older generations may not be familiar with. For example, their estates may include Bitcoin or other cryptocurrencies. Their financial profile will not only encompass traditional bank and investing assets, but perhaps PayPal or other financial apps.
Social media accounts are another important form of digital asset. We probably all know someone who has died but their Facebook page lives on. This occurs because when a social media account is opened, the person is asked to approve a user agreement that often prohibits sharing passwords. On death, these agreements can force the executor into long battles to gain access to the account, often in a foreign jurisdiction where the online firm is based.
By listing your digital assets in your will and by designating someone, perhaps your executor, to manage those accounts after your death, you can ensure your online profile does not outlast your time here on Earth. Of course, you have to provide that person with your login information for each of their social media and crypto-currency accounts. Some people rely on a digital vault – which is really an online safety deposit box – to store this information, with the password for the vault shared with their executor.
Digital assets are crucial for those operating online businesses, as they include their website and all its content, plus the firm’s social media and email accounts. Financial information about clients is also part of that, contained in online accounting programs that perhaps only one person can access.
There have been limited legislative reforms to address digital assets. In 2016, the Uniform Access to Digital Assets by Fiduciaries Act was introduced, based on the American Revised Uniform Fiduciary Access to Digital Assets Act. It would provide, by default, access to fiduciaries (including executors) to digital assets, though this Act has yet to be adopted by most provinces and may not be binding on firms based outside of Canada.
In Ontario, the Estates Administration Act does not explicitly refer to any assets of a digital nature. Nor does the Substitute Decisions Act, which governs what happens when someone is not capable of making certain decisions about their property.
Alberta’s Estate Administration Act is the only Canadian succession-related statute to make reference to online accounts within the context of the executor’s duty to identify estate assets and liabilities, which includes online accounts.
Given the amount of digital information that is recorded about each of us, our digital assets reflect the lives we lived. Since Canadians are online more than ever, our electronic footprint is increasing, and so is the need to address digital assets in our wills.
Thanks for reading and have a great day.
“Ademption occurs when the property which is the subject of a specific gift, although in existence at the date of the will, is not in the testator’s estate at his death. It may have been sold or given away by the testator, or it may have been lost, stolen or destroyed. In the absence of a statutory provision to the contrary, if a specific gift has adeemed, the beneficiary gets nothing.”
This explanation of ademption comes from Oosterhoff on Wills, 8th ed. (Toronto: Carswell, 2016) at 538, as quoted in Best v. Hendry, 2021 NLCA 43 (CanLII).
In Best, the issue of ademption was front and center. The testator left a will that provided that her house was to go to her niece Hendry, and the residue of her estate was to go to her niece Best. Many years after making the will, the testator developed dementia, and was moved from her home to a nursing home. Best applied to be her guardian, and proceeded to sell the home.
Upon the testator’s death, Best claimed that the gift of the house adeemed, and the proceeds of sale fell into the residue. The Newfoundland Court of Appeal agreed.
In Ontario, recourse to ss. 35.1 and 36 of the Substitute Decisions Act may have applied. Section 35.1(1) provides that a guardian shall not dispose of property that the guardian knows is subject to a specific testamentary gift in the incapable person’s will. Section 35.1(3) allows for the disposition of the property if it is necessary to comply with the guardian’s duties. However, s. 36 provides that the doctrine of ademption does not apply to such dispositions by the guardian, and that the beneficiary is entitled to receive from the residue of the estate the proceeds of disposition, without interest.
According to the decision in Best, only Ontario and B.C. have such anti-ademption legislation.
(Best also dealt with issues relating to a release initially signed by Best, the liability of the estate trustee to Best, and the right of the estate trustee to recover funds improperly paid to a beneficiary (Hendry). I will not address those here.)
This brings me to my favourite ademption joke. A testator went to a lawyer to prepare his will. He told the lawyer that he wanted to make a bequest of a house to his loving wife, a cottage to his two loving sons, and a Frisbee collection to his loving dog. When the lawyer reminded the testator that he did not have a house, a cottage or a Frisbee collection, the testator responded: “Well, that’s their problem. I’ll be dead by then.”
Have a great weekend.
Pursuant to section 3 of the Substitute Decisions Act, 1992 (the “SDA”), if there is a proceeding under the SDA where a person’s capacity is in issue, but they do not have legal representation, the court may direct that the Public Guardian and Trustee (the “PGT”) arrange for legal representation for the person. The person will be deemed to have capacity to instruct counsel. This legal representation is often referred to as “section 3 counsel”.
We have previously blogged about the role of section 3 counsel (for instance, here and here). Section 3 counsel has been described as a safeguard that protects the dignity, privacy, and legal rights of a person who is alleged to be incapable.
Section 3 counsel plays a very important role in proceedings dealing with a person’s capacity, as they allow the person whose capacity, and possibly their rights and liberties, are at issue, to have a voice before the court.
In Singh v Tolton, 2021 ONSC 2528, there was a proceeding relating to the validity of powers of attorney executed by Rajinder Kaur Singh. The PGT proposed that the court consider appointing section 3 counsel for Rajinder. One of Rajinder’s children also requested that section 3 counsel be appointed. One of her other children, Anney, took the position that section 3 counsel was not necessary and raised a concern with the expense of appointing counsel, which cost would be borne by Rajinder.
The court concluded that this was an appropriate situation for the appointment of section 3 counsel. In coming to this conclusion, the court considered the purpose of the SDA, which is to protect the vulnerable. As noted by Justice Strathy, as he then was, in Abrams v Abrams,  O.J. No. 5207, proceedings under the SDA do not seek to balance the interests of the litigants, “but the interests of the person alleged to be incapable as against the interest and duty of the state to protect the vulnerable.” Section 3 is just one of the provisions of the SDA that demonstrate the care that must be taken to protect the dignity, privacy, and legal rights of the individual.
The court in Singh v Tolton also noted that the material before it disclosed a family at odds regarding Rajinder’s personal care. In a situation such as this, there may be a concern that the wishes or best interests of the person whose capacity is in issue will be lost amidst the fighting family members. Section 3 counsel can serve a crucial function in these types of circumstances, by sharing the person’s wishes and instructions with the court.
Thanks for reading,
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Amazon Films has recently released a very dark new film called “I Care A Lot”, starring Rosamund Pike and Peter Dinklage. It’s the story of a crooked legal guardian who drains the savings of her elderly wards and meets her match when a woman she tries to swindle turns out to be more than she first appears.
It’s not an instant classic and it’s total fiction, but it got us thinking about real-life scenarios where a manipulative guardian may be taking advantage of someone and what can be done. We were instantly reminded of the saga of Beach Boys legend, and “Inventor of California,” Brian Wilson.
In May of this year, it will be 55 years since the release of the solid gold classic, Pet Sounds. A testament to the genius of Brian Wilson, Pet Sounds paved the way for other classic records like Sgt. Pepper’s Lonely Hearts Club Band. But a grueling creative and recording process and an abundance of recreational drugs saw Wilson suffer a nervous breakdown in 1965 and he wouldn’t tour with the band again until 1983. Wilson began suffering auditory hallucinations in mid-1965 which persisted throughout his life; he also became increasingly paranoid and anti-social, leading to a disintegration of relations between him and his bandmates, culminating in the famous episode where he refused to get out of bed for two years.
In an effort to assist Wilson with his myriad of physical and psychological issues, Wilson’s family enlisted the services of California psychotherapist Dr. Eugene Landy – And a dark story took a darker turn. For the next nine or ten years, Landy exploited and manipulated Wilson – entering into business contracts worth 25% of future record earnings, while also administering psychotropic drugs, moving into Wilson’s Bel Air estate, supervising his every move, and limiting any contact with the outside world. According to this Diane Sawyer interview from October 10, 1991, Landy was billing Wilson up to one million dollars a year, including $25,000 a month for “vitamins.”
It took nine lawsuits and several years for Wilson to be released from Landy’s “care,” and Wilson has been doing much better over the last few decades, but we still wondered: What if Wilson lived in Ontario and didn’t have any family, or Diane Sawyers, trying to fight for his freedom? What if Landy or the unscrupulous guardian in I Care A Lot were operating in Ontario?
Enter the Office of the Public Guardian and Trustee (the “PGT”).
While any concerns of physical or mental abuse should immediately be brought to the attention of local authorities as soon as possible, the PGT also has significant investigative and enforcement powers under the Substitute Decisions Act. Where financial concerns are present, the PGT has investigative powers under section 27 and where the integrity of the person is at issue, section 62.
Both sections recognize that “serious illness or injury, or deprivation of liberty or personal security, are serious adverse effects” and the PGT shall investigate. The PGT is provided extensive powers that include entry without a warrant, assistance of the police, as well as bringing emergency applications before the court to intervene as a temporary guardian.
So while Brian Wilson (and more recently Britney Spears) made headlines, there are strong police and government mechanisms in place to protect vulnerable people from abuse and exploitation. But the one thing that Wilson (and Ms. Spears) had, was some kind of connection to people. Isolation from family, friends, or community, is one of the most dangerous risks to vulnerable people.
Thanks for reading,
Ian Hull and Daniel Enright
I just checked the news, and it appears that “voting” is a hot topic right now.
A question then occurred to me: Can an attorney under a Power of Attorney vote in a public election on the grantor’s behalf?
Under Ontario’s Substitute Decisions Act, 1992, s. 7(2), a power of attorney may authorize a person “to do on the grantor’s behalf anything in respect of property that the grantor could do if capable, except make a will.” Under s. 46(1), a person may give a written power of attorney for personal care, authorizing the person or persons named as attorneys to make, on the grantor’s behalf, decisions concerning the grantor’s personal care.
However, voting in a public election is considered to be an act that is personal in nature to the individual and not something that can be done by an attorney under a power of attorney.
(Not all voting by an attorney is prohibited: An attorney may have the ability to vote in the place of the grantor in a corporate context.)
According to the website “Probate Stars”, in most US states, voting by attorney is not allowed. In some states, for example, Florida and Arizona (gotta love Arizona), legislation expressly prohibits an attorney from voting on behalf of the grantor.
In other states, voting by attorney is presumed to be not allowed, as voting is considered to be an act that is “personal” in nature, and cannot be delegated. Quoting from a Tennessee appeals court decision of Rich Printing Co. v. Estate of McKeller (citation not given):
It is axiomatic that an agency may be created for any lawful act and that whatever a person may lawfully do, if acting in his own right and in his own behalf, he may delegate that authority to an agent. It is also axiomatic that authority cannot be lawfully delegated which is illegal, immoral or opposed to public policy, nor can one delegate an act which is personal in its nature, such as designating an agency to perform a personal duty or a personal trust. Of course an elected officer cannot delegate one to hold the office to which he has been elected in the absence of statutory authority so to do, nor to cast his vote for him.
In Ontario, it would appear that this reasoning applies as well.
Even though an attorney cannot vote for the grantor, it may be possible for the grantor to authorize someone to vote on their behalf through a proxy in limited circumstances. For example, there is a reference to proxy voting in the “Voter’s Guide for Ontario Municipal and School Board By-elections 2016-2018”. The Guide confirms that an attorney cannot vote on behalf of the elector, but a properly appointed proxy can.
Thank you for reading.
One of the reasons people pursue wealth is to render themselves, and their loved ones, less vulnerable. Wealth can protect against unhappy contingencies and mitigate ill fortune, such as loss of employment, sickness, or the death of a provider. With COVID-19, some of the most adversely-affected Canadians are those without any economic cushion to fall back upon. Wealth, however, can also make people more vulnerable, for it can draw the jealous attention of unscrupulous have-nots, as evidenced by the abundance of greed-fuelled elder abuse and power of attorney predation. Our legal system, therefore, has developed safeguards against the improper use of an incapable person’s funds – and as a recent New Brunswick decision demonstrates, as well as checking bad actors, these safeguards also apply to the more innocent missteps of parties with apparently good intentions.
In Public Trustee v. Morley,  N.B.Q.B. 18, the Public Trustee in charge of an infirm person, Norma Morley, sought the Court’s authorization to transfer Norma’s house to her adult daughter, Patricia Morley, on the pretexts that Patricia “suffer[ed] from mental issues that prevent[ed] her from leaving [Norma’s] home” and that Norma, who resided in a nursing home, “ha[d] assets that [could] provide for her maintenance other than the house”. Ostensibly, the Public Trustee’s request was reasonable, for the statute – subsection 13(1) of the Infirm Persons Act – allows for an infirm person’s representative to provide for the infirm person’s dependants, and at first glance, Patricia qualified as a dependant.
The Court denied the request, however, finding that the proposed gift was not in the best interests of Norma. In coming to this decision, the Court was guided by several considerations: (1) it was uncertain whether there were enough assets to provide for Norma following the gift; (2) the proposed gift was at odds with Norma’s Will; (3) Norma had not made similar gifts in the past, when she was capable; (4) there was no evidence tendered as to Patricia’s needs and means; and (5) Patricia’s needs are secondary to Norma’s. On this last point, other than the house, Norma had approximately $70,000 in assets – a thin and precarious economic cushion.
If this case had been adjudicated in Ontario, we could expect a similar result. Subsections 37(1) and 37(2) of Ontario’s Substitute Decisions Act, 1992 dictate that an incapable person’s property can be used to support dependants, but expenditures on behalf of dependants are conditional upon sufficient property remaining to provide for the incapable person. Subsections 37(3) and 37(4) allow for a guardian of property to make gifts to the incapable person’s relatives if, again, enough property remains and there is reason to believe the incapable person, if capable, would make such gifts. In this case, insufficient property remained to justify a gift and there was no reason to believe Norma would have gifted her house to Patricia, for her prior conduct and Will suggested otherwise.
The Public Trustee’s position was unenviable – trying to stretch limited means to cover two vulnerable people – but the cure proposed ran counter to Norma’s previously expressed wishes as well as leaving her exposed to mischance.
Thank you for reading – Have a great day!
Suzana Popovic-Montag and Devin McMurtry
Does a testator have to sign his or her own Will to be valid? A little used provision of the Succession Law Reform Act permits a Will to be signed by some other person (an “amanuensis”) in testator’s presence and by the testator’s direction.
Our managing partner, Suzana Popovic-Montag, wrote several on this very topic.
With the logistical issues associated with execution of wills by video-conference, it may be that this manner of execution may become more widely used.
If this is to be done using presence by video conference, we have come up with some suggestions in our Hull e-State Planner Blog. (click here)
Note that the Substitute Decisions Act, 1992 does not specifically permit execution by an amanuensis for Powers of Attorney.
We continue in unchartered waters and we welcome any suggestions or comments.
In uncertain times, it can be helpful to remember what we can do to plan for our own health, security, and well-being. In the past, we have blogged about “longevity planning” (i.e. advice for longer life expectancy) and the resemblances it has to executing powers of attorney for personal care (“POA PC”).
In Ontario, powers of attorney for personal care are generally governed by the Substitute Decisions Act, 1992 (the “SDA”). The Health Care Consent Act, 1996 also applies to certain decisions made by attorneys for personal care.
Personal care decisions are about health care, medical treatment, diet, housing, hygiene, and safety. An attorney for personal care will be able to make almost any decision of this nature that the grantor would normally make for him/herself when they were capable.
According to the SDA, an attorney for personal care must follow the known wishes of the grantor or make decisions in the best interest of that person. In doing so, the attorney must choose the least restrictive and intrusive course of action that is available and is appropriate in the circumstances.
If you are appointed as an attorney for personal care, below is a non-exhaustive list of steps you should take or obligations you may have:
- Obtain a copy of the POA PC and determine whether it is in effect. The POA PC only comes into effect once the grantor is incapable of making his or her personal care decisions.
- Determine whether there are any specific instructions/restrictions in the POA PC.
- Encourage the grantor’s participation in decision-making and try to foster the grantor’s independence as much as possible.
- Encourage and facilitate communication between the grantor and his/her family and friends.
- Consider developing a guardianship plan. While this is not mandatory for an attorney whose powers stem from a POA PC, it may help provide a roadmap for future decisions.
The above checklist is non-exhaustive list of some of the obligations an attorney for personal care have. Section 66(4) of the SDA also sets out a number of factors to consider when determining what personal care decisions are in the incapable person’s best interest. Most importantly, an attorney for personal care must not lose sight of the fact that he/she is a fiduciary and held to a higher standard.
Making decisions as an attorney can be difficult, particularly in uncertain circumstances. It is important to be prepared. The Ministry of the Attorney General also provides some useful information about an attorney’s obligations here. A lawyer should be consulted so the attorney understands their duties.
Thanks for reading!
It is often said that an Attorney for Property can do anything on behalf of the grantor’s behalf except make a will. This is on account of section 7(2) of the Substitute Decisions Act (the “SDA“), which provides:
“The continuing power of attorney may authorize the person named as attorney to do on the grantor’s behalf anything in respect of property that the grantor could do if capable, except make a will.” [emphasis added]
Although at first glance it would appear that the potential tasks that an Attorney for Property could complete on behalf of a grantor are almost absolute, with the Attorney for Property being able to do anything on behalf of the grantor except sign a new will, in reality the tasks that an Attorney for Property may complete relative to the grantor’s estate planning is more restrictive than this would suggest at first glance. This is because the definition of “will” in the SDA is defined as being the same as that contained in the Succession Law Reform Act (the “SLRA“), with the SLRA in turn defining “will” as including not only typical testamentary documents such as a Last Will and Testament or Codicil, but also “any other testamentary disposition“. As a result, the stipulation that an Attorney for Property can do anything on behalf of the grantor “except make a will” would include not only a restriction on the Attorney for Property’s ability to sign a new Last Will and Testament or Codicil on behalf of the grantor, but also a restriction on the Attorney for Property’s ability to make “any other testamentary disposition” on behalf of the grantor.
It is fairly common for individuals such as spouses to own real property as joint-tenants with the right of survivorship. When one joint-owner dies ownership of the property automatically passes to the surviving joint-owner by right of survivorship, with no portion of the property forming part of the deceased joint-owner’s estate. Although such an ownership structure may make sense when the property is originally purchased, it is not uncommon for circumstances to arise after the property was registered (i.e. a divorce or separation) which may make one of the joint-owners no longer want the property to carry the right of survivorship. Should such circumstances arise, one of the joint-owners will often “sever” title to the property so that the property is now held as tenants-in-common without the right of survivorship, making efforts to attempt to ensure that at least 50% of the property would form part of their estate should they predecease the other joint-owner.
Although severing title to a property is fairly straight forward while the owner is still capable, circumstances could become more complicated should the owner become incapable as questions may emerge regarding whether their Attorney for Property has the authority to sever title to the property on behalf of the grantor, or whether such an action is a “testamentary disposition” and therefor barred by section 7(2) of the SDA.
The issue of whether an Attorney for Property severing title to a property is a “testamentary disposition” was in part dealt with by the Ontario Court of Appeal in Champion v. Guibord, 2007 ONCA 161, where the court states:
“The appellants argue that the severing of the joint tenancies here constituted a change in testamentary designation or disposition and is therefore prohibited by s. 31(1) of the Substitute Decisions Act because it is the making of a will.
While we are inclined to the view that the severance of a joint tenancy is not a testamentary disposition, we need not decide that question in this case. Even if it were, we see no error in the disposition made by the application judge, because of s. 35.1(3)(a) of the Substitute Decisions Act.” [emphasis added]
Although the Court of Appeal does not conclusively settle the issue in Champion v. Guibord, the court appears to strongly suggest that they are of the position that an Attorney for Property severing a joint-tenancy is not a “testamentary disposition” within the confines of the SDA.
Thank you for reading.
This blog was written in collaboration with, and with thanks to Yasmin Vinograd of Merovitz Potechin LLP .
In some cases, an incapable person residing outside of Canada has assets in Canada. Can a guardian appointed outside of Canada have access to the incapable’s Canadian assets? By extension, would a Guardianship Order made outside of Canada be recognized in Ontario?
In Ontario, this scenario is dealt with in the Substitute Decisions Act, 1992 (“SDA”). Section 86 of the SDA provides a mechanism by which orders made by a court outside of Ontario to appoint a guardian of property or of the person may be recognized or “resealed” in Ontario. Subsections of s. 86 specify that:
s.86(1): a foreign order is “an order made by a court outside Ontario that appoints, for a person who is sixteen years of age or older, a person having duties comparable to those of a guardian of property or guardian of the person.”
s.86(2): “Any person may apply to the court for an order resealing a foreign order that was made in a province or territory of Canada or in a prescribed jurisdiction.”
s.86(3): an applicant seeking to have the court reseal the foreign order is required to file a copy of the foreign order, along with a certificate signed by registrar, clerk or other officer of the foreign court stating that the order is unrevoked and is of full effect.
The effect of these provisions is that a guardianship order made by a foreign court will be recognized and enforceable in Ontario.
Sounds easy enough, doesn’t it? Unfortunately, it is not.
I had previously blogged about the possibility of resealing guardianship orders made in other provinces and territories. The issue arises when trying to reseal a guardianship order made outside of Canada. The problem is that Ontario has yet to prescribe any other country as a “prescribed jurisdiction” for the purpose of section 86(2). This begs the question: can the court reseal a foreign guardianship in the absence of the list of prescribed jurisdictions?
When faced with this exact issue in Cariello v Perrella, 2013 ONSC 7605, the court refused to apply section 86 to reseal a guardianship order made in Italy. Justice Mesbur stated:
It seems to me that unless and until Ontario creates a list of “prescribed jurisdictions” there is simply no legislative basis on which I can apply s. 86. This is not a case where the statute inadvertently fails to deal with an issue. Here, the province has simply failed to take the regulatory steps necessary to create a list of prescribed jurisdictions to which s.86 would apply. I have no idea of the province’s intentions in that regard. I fail to see how I can simply assume Ontario would designate Italy as a prescribed jurisdiction when it finally creates a list of prescribed jurisdictions under the SDA. I have no basis to conclude that Ontario has any intention of having s.86 apply to any jurisdiction other than another Canadian province or territory. Section 86 cannot apply.
In light of the Cariello decision, it appears that section 86 and the mechanism it provides cannot be used to reseal an order made by a jurisdiction outside of Canada. What, then, is a guardian to do if the incapable has assets in Canada that need to be accessed?
There are two ways in which this could be addressed.
The first is to bring an application to have the guardianship order recognized as a non-monetary order, pursuant to the Supreme Court of Canada’s decisions of Morguard Investments v De Savoye,  3 SCR 1077 (SCC), Beals v Saldanha, 2003 SCC 72, and Pro Swing Inc v ELTA Golf Inc, 2006 SCC 52. As of now, there is no decision that applied the SCC’s test of real and substantial connection in the context of a guardianship order. It remains to be seen whether an Ontario court would be open to recognizing a guardianship order on that basis and what the Public Guardian and Trustee’s position will be on such an application.
The second option is to commence a new guardianship application in Ontario. The evidence of incapacity in the foreign jurisdiction may be useful in such an application, but it would probably need to be updated to reflect the current status of the incapable and to demonstrate his or her incapacity. The “new” guardianship application will need to conform to Ontario’s requirements under the SDA, including the filing of a Management and/or Guardianship Plan(s), service on required persons, and naming of specific respondents in the notice of application.