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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Adult children of aging parents are often faced with important responsibilities. Ensuring that parents are adequately cared for is a task that many children lovingly undertake. As highlighted in this article in Forbes, key substitute decision planning ensures that the transition from independence to dependence, proceeds as smoothly as possible. Such steps should be taken immediately, and prior to the onset of dementia, or other incapacitating disorders, to ensure that one’s ability to provide instructions is unequivocal.
A power of attorney is a legal document that gives someone else the right to act on the grantor’s behalf. With the onset of incapacity, not only may the understanding of finances become increasingly difficult, but vulnerability to financial predators may increase. In fact, it is estimated that approximately 10% of the 1.5 million seniors in Ontario experience elder abuse. As such, allowing an incapacitated parent to maintain the authority to sign cheques and manage finances may be dangerous.
To preserve some degree of control, it is often the case that bank accounts are transferred into joint ownership between an adult child and their parent. This is a common practical step taken to ensure that the child who provides care to their parent has sufficient access to their parent’s funds to satisfy expenses arising. However, given the seminal decision in Pecore v. Pecore (SCC), at the time the bank account is transferred into joint ownership, careful notes must be taken to ensure that the evidence of testamentary intention regarding the account is clarified.
Meeting with an experienced lawyer that can explain the types of powers of attorneys, and the associated responsibilities, ensures the adult child has the appropriate powers to assist their parent. As well, the taking of detailed notes by a lawyer or financial institution is a prudent step to avoid possible estate disputes at a later date. While often we focus our efforts on estate planning, substitute decision planning is equally important.
A recent decision of the Ontario Superior Court of Justice, Post Estate (Trustee of) v Hamilton, 2015 ONSC 5252 (available on Westlaw) considered a rather unusual set of facts with respect to joint tenancy and an interesting application of the equitable remedy of adverse possession.
Edward and Heather had been common law spouses several decades ago. They purchased a home together (the “home”) in 1980, as joint tenants. Three years later, Edward and Heather ended their relationship, and Heather moved out of the home they had bought together. Edward lived in the home ever since, until his death in December 2014. Heather has not been heard from since 1983.
When Edward died last year, his Estate ran into a roadblock with the home. Edward’s family had understood that the home was in Edward’s name alone, but were surprised to find that Heather and Edward still owned the home together as joint tenants. Under the law of joint tenancy, when one of the joint owners dies, the asset passes to the surviving joint tenant, by right of survivorship. Theoretically, therefore, the home should have become Heather’s property.
The wrinkle in this case was that, despite “strenuous efforts”, Heather could not be found. Edward’s Estate Trustee then brought an Application for an Order vesting title in the home in the Estate. The issue considered by the Honourable Justice MacDougall was thus, whether one joint tenant can acquire full title to property by way of adverse possession. In order to establish title by possession, Justice MacDougall stated that a party must show three things:
- i. Actual possession for the statutory period by him/herself and those through whom s/he claims;
- ii. That such possession was with the intention of excluding from possession the owner or person entitled to possession; and
- iii. Discontinuance of possession for the statutory period by the owners and all others, if any, entitled to possession.
With respect to the first and third requirements, Edward had actual possession of the home by himself for 32 years, which is well beyond the 10 year statutory period required. With respect to the second requirement, the court found that, although Edward did not have a “clear and direct intention” to exclude Heather, the court can still infer a presumed intention to exclude and consequently find in favour of adverse possession. In this case, Justice MacDougall was able to infer such presumed intention due to the facts that Edward believed he had full ownership of the house, he paid all the expenses for the house for 32 years, and made mortgage payments and renewed the mortgage without Heather’s signature or agreement.
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