At a recent Trusts and Estates Brown Bag Lunch (held on the third Tuesday of most months at various locations: see the OBA web page, here), we discussed the case of Egan v. Burton, 2013 ONSC 3063 (CanLII).
There, in the context of a family law proceeding, the issue was whether a cottage was a matrimonial home, thereby affecting the spouses’ Net Family Property and equalization. If the cottage was a “matrimonial home”, then the husband, who owned the cottage, would not get the credit for the value of the cottage at the time of marriage.
The court held that a two-part test should be applied to determine whether the cottage was a “matrimonial home”. Firstly, was the cottage ordinarily used by the spouses, and secondly, was it used as a family residence.
Here, the court found that the first part of the test was met: the cottage was used by the spouses. However, with respect to the second part of the test, the court found that the wife never treated the cottage as a family residence. The wife treated the cottage differently than the family home. She made no contribution to the operation or maintenance of the cottage. She did not show the same interest in the cottage that she showed to the home. “If she had been asked prior to separation about her intention regarding the cottage, I am satisfied that she would have said that it was his cottage and his alone.” Here, unlike other cases where the cottage was found to be a matrimonial home, there was no evidence of an intention to treat the cottage as a family home.
In the estates context, in advancing or defending a claim for equalization under s. 5(2) of the Family Law Act, consideration should be given to not only the use of a secondary residence, but also the intention of the parties and how the second residence was treated by them.
Thank you for reading.
Several years ago, my neighbour asked me to witness the execution of his will. I was glad to help, but at the same time, a little disappointed.
This is because of s. 12(1) of the Succession Law Reform Act. This section provides that, in effect, a bequest to a witness, the witness’s spouse, or a person claiming under either of them is void. The witness, however, remains a competent witness.
Similarly, s. 12(2) provides that a bequest to a person who signs a will on behalf of the testator is also void, as is any bequest to the person’s spouse or a person claiming under either of them.
However, the provisions are not absolute, and s. 12(3) allows the court to find that the bequest is not void. To trigger this saving provision, the court must be satisfied that neither the witness nor the witness’s spouse exercised any “improper or undue influence” on the testator.
In addition, if the witnessing was not necessary, as in the case where the will was a holographic will, or where there were two other proper witnesses, then the bequest will not be void.
(Things can get complicated where there is a codicil. A gift voided due to an attesting beneficiary can be validated if there is a proper codicil that is properly witnessed. On the other hand, a valid gift in a will is not voided where the beneficiary witnesses a later codicil: see Hull and Hull, Probate Practice, 4th ed., p. 181.)
Solicitors take note: in Whittingham v. Crease, 1979 CanLII 286 (BC SC), the drafting solicitor was successfully sued where a bequest to the plaintiff failed because his wife witnessed the signing of the will.
Alas, in the case of my neighbour, and due to the nature of the bequests (which did not include me), s. 12 did not apply.
Have a great weekend.
A recent decision of the Ontario Court of Appeal, Chambers Estate v. Chambers, 2013 ONCA 511, deals with the concepts of renunciation, resignation, removal and passing over of an estate trustee, and the sometimes subtle distinctions amongst the concepts.
There, a “renunciation” is defined as the “formal act whereby an executor entitled to a grant of probate (or person having the right to a grant of administration) renounces such right.” Renunciation is not available if a party has been appointed as estate trustee under a Certificate of Appointment, or has already intermeddled with the estate, or, put another way, where a party has dealt with an estate without having been formally recognized as estate trustee. Once an estate trustee has accepted the office, he or she cannot disclaim it by renunciation. In such a case, if the estate trustee no longer wishes to act, he or she must resign.
With respect to removal or passing over, the proper terminology is that an estate trustee is “passed over” before a Certificate of Appointment is issued, or before he or she has acted as estate trustee, and “removed” if a Certificate of Appointment is issued or he or she has intermeddled.
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In Kiperchuk v. The Queen, 2013 TCC 60 (CanLII), the Tax Court of Canada held that a spouse who received RRSP benefits upon her spouse’s death was not liable to pay the deceased’s unpaid tax debt arising prior to his death.
There, deceased designated his wife as the beneficiary of his RRSP. The couple subsequently separated, and divorce proceedings were commenced. However, the designation remained in place. Prior to his death, the deceased incurred significant tax debts, which were unpaid as at the time of his death. His estate was insufficient to pay the tax debts. CRA sought to find the wife liable for the unpaid taxes. It relied on s. 160 of the Income Tax Act which, in effect, imposes joint liability for unpaid taxes (to a certain extent) where a tax payer transfers property to a spouse, child or “person with whom the person was not dealing at arm’s length” for less than fair market value.
The Court refused to find the wife liable. Although it had no difficulty in finding that there was, in fact, a transfer, the transfer took place at the time of death. As of that date, the status of marriage ended due to death, and the wife was, therefore, no longer a spouse, and further, “nor was she a person with whom the transferor was not dealing at arm’s length at the time of the transfer”.
The Court may have been splitting hairs here. The transfer took effect on the moment of death, and as of that moment, according to the reasoning, the parties were no longer spouses: the husband “was not related to the appellant by marriage at the time she became entitled to the RRSP”. “The status of marriage is ended by death… .”
Further, the Court does not give much explanation as to why it considered the transfer to be at arm’s length.
Finally, the limited application of the case should be noted. The case dealt only with tax liability arising before death: a beneficiary of an RRSP is liable for unpaid income tax on the RRSP proceeds where the estate is unable to pay: s. 160.2(1) of the Income Tax Act.
Thank you for reading.
Slang plays a large part in our daily lives. Keeping up with slang expressions can be a near impossible task. However, thanks to the Urban Dictionary website, that task is an easier one.
Urban Dictionary, started in 1999, is a “crowdsourced” collection of slang. Readers can submit slang words and definitions, and other readers can “vote” on whether to accept the definition or not. The site currently has 2.3 million definitions posted, and 30,000 new definitions are proposed every month. The format allows for a constantly evolving, always current compendium of slang English language, or as I call it, Slanglish.
As reported recently by Leslie Kaufman in the New York Times, Urban Dictionary has found its way into the courts, with several US courts turning to Urban Dictionary to define terms.
In Canada, three decisions on CanLII have referenced Urban Dictionary. In R. v. Ali, 2011, BCSC 1850, Urban Dictionary was used to confirm that “strapped” meant to carry a gun, and the evidence of a detective on this point was accepted as expert evidence. In R. v. Davies, 2012 ONSC 3631, the court refers to definitions from Wikipedia and Urban Dictionary that were entered as evidence. Counsel objected to the authenticity of the definitions, and the court held that the definitions were not necessary to support the charges. In WCAT-2010-00981 (Re), 2010 CanLII 41721 (BC WCAT), the tribunal footnoted a definition from Urban Dictionary to explain a doctor’s note that the worker’s cough was “supratentorial”. Supratentorial is a word used by doctors and nursed to imply that the patient’s problems were all in their mind. The tentorium is a membrane just under the brain, so “supratentorial” refers to what is above that, being the brain.
So to all of you out there planning to “jack” an estate, be careful. Urban Dictionary, and the courts, are on to you.
Have a great weekend.
The division of personal property left by a loved one on his or her death can be a thorny issue. Often, the deceased gives directions to the Estate Trustee with respect to his or her intentions. These can be in the form of a memorandum incorporated into a Will. In some cases, the wishes of the deceased are just that: wishes that are not binding on the Estate Trustee. Still in other cases, the deceased gives all of the personal property to the Estate Trusee with discretion on the part of the Estate Trustee to decide how the property is to be distributed.
In Borisenko Estate, 2013 ABQB 245 (CanLII), the court was faced with the question of whether one of the deceased’s sons was entitled to a Russian icon owned by the deceased. The icon was said to have a value of $1,600. The deceased died leaving four children. One of the children, Vera, was appointed as Estate Trustee. The deceased’s Will provided that the Estate Trustee had full, uncontrolled discretion in selling, converting into money any property, postponing conversion, retaining property in the form it was in at the time of death and fixing the value of the estate or any part. The decision of the Trustee was final and binding. Further, failing agreement on the disposition of an asset, the Estate Trustee was to have absolute discrection to determine which beneficiary shall receive the asset in dispute.
Despite these provisions, one of the deceased’s children brought an application for a declaration that he was entitled to the Russian icon. The application was dismissed. The court noted the absolute discretion of the Estate Trustee to deal with the icon. “It is not for the court to become involved in dividing up personal assets of an estate when the power and discretion to do so has been left with the Trustee”.
The court rejected the argument that because the Estate Trustee may want to keep the icon herself, she was in a conflict. The court stated that this neither takes away from the Estate Trustee’s discretion, nor puts her in a conflict.
The court also noted (again, without taking away from the discretion of the Trustee) that, normally in the Russian culture, the icon would go to the oldest son. The fact that the Applicant was not the oldest son was not lost on the court.
Thank you for reading.
Sometimes, timing is everything.
In Re Barbeau, the deceased died on September 17, 2011 at 5:40 am. He died leaving a Will that left the residue of his estate to his spouse if she survived him for a period of thirty days. If she did not survive him for thirty days, his estate would pass to one of his spouse’s daughters. Under the spouse’s Will, her estate passed to her five children.
As fate would have it, the deceased’s spouse died on October 17, 2011 at 4:45 pm.
The question the court had to grapple with was whether the deceased’s estate passed to his spouse, and therefore her five children under her Will, or to the one daugther, under his Will.
In the decision, the court set out the two possible interpretations: either the thirty days are calculated as thirty 24-hour periods commencing on September 17, 2011 at 5:40 am, or applying the analogy of the Rules of Civil Procedure, the thirty day period commenced on the day after the date of death. If the second interpretation prevailed, what was the effect of the spouse not being alive for the entire thirtieth day?
The court noted the purpose of such survivorship clauses: to prevent the application of s. 55 of the Succession Law Reform Act (survivorship), and to avoid the imposition of two sets of administration taxes and costs in the event that both spouses died at the same time or within a short period of one another.
The court also noted that the selection of a thirty day period was likely arbitrary. Further, the court noted that interpreting the Will, the court was to strive to determine the intention of the testator.
The court found that there was an inconsistency in the Will, in that it provided different outcomes if the first interpretation was applied. That is, the spouse would have survived for thirty days, but also have died within the thirtieth day. This, the court found, was not intended.
Thus, the court concluded that if the first day was excluded, applying the Rules of Civil Procedure, then the inconsistency was avoided. The spouse would have to survive for thiry full days: that is, survive until some time on the thirty-first day. As the spouse did not survive for thirty full days, and died within the thirty day period, the residue of the estate passed to the one daughter.
“You never call”: a common lament of elderly parents aimed at their adult children. Now, it appears that failing to call, or more specifically, to visit your parents in China may result in legal action.
According to a recent Toronto Star article, China has recently amended its law on the elderly to require that adult children visit their parents “often”, or risk being sued by them.
China, perhaps more than any other country, is facing a significant issue with its aging population. In just fifty years, the average life expectancy soared from 41 to 73. Coupled with family planning policies that limit most families to a single child, and a lack of affordable options for the care of the elderly, such as retirement or nursing homes, this has led to an elder care crisis. The legislation is aimed at assisting the elderly in seeking care.
While the legislation may seem extreme, there is already legislation on the books in Ontario to a similar effect. While it does not require visits, section 32 of the Family Law Act provides that an adult child has “an obligation to provide support, in accordance with need, for his or her parent who has cared for or provided support for the child, to the extent that the child is capable of doing so.”
The Ontario provision was applied in a few reported decisions. It was discussed in an adoption decision, Re Proposed Adoption of Q.(A.L.K.). There, the court noted that “dependencies shift” from parent to child, and an adult child has a “clear responsibility … to shore up the parent’s own financial resources, if the parent has need of that.”
Note to my children: Govern yourselves accordingly, Christopher and Marc.
Have a great weekend.
Yesterday, I read in the Toronto Star about a couple that resolved last year to make the year a year of “firsts”. They resolved to learn, make or experience 365 new things in 365 days. They blogged about their progress in knocking items off of their bucket list at http://www.365thingsin365days.com/.
Inspired by their story, yesterday I went indoor rock climbing with my two teenaged sons at True North Climbing at Downsview Park. We had a blast, and were very proud of our achievements. We tried a new adventure that took us out of our comfort zone. We had a great time, got a little exercise, and bonded over what is a combination of a personal challenge, and a trust exercise. (Sort of like that exercise where you fall backwards, hoping to be caught by the group. Only in this case, the fall is from 10 metres, with your young son at the bottom, controlling (or not) your fall.)
In our Hull and Hull blogs this year, we hope to do something like the couple reported on in the Star did. We want to expose our readers (and ourselves) to new things every day: new lessons to learn, new ways of looking at old issues, new cases, new approaches to difficult estates and trusts issues.
We value you feedback. Please comment on what you read, or what you would like to read.
Please stay tuned. It is going to be a great year.
A representative of William Faulkner’s estate is suing representatives of Woody Allen’s movie project, “Midnight in Paris” over its use of a quote from Mr. Faulkner.
The line, “The past is never dead. It’s not even past”, is taken from Faulkner’s 1950 novel “Requiem for a Nun”. In the movie “Midnight in Paris”, time-travelling Owen Wilson says “The past is not dead. Actually, it’s not even past.”
Faulkner’s estate is suing for copyright infringement, and is seeking damages, disgorgement of profits, costs and attorney fees. The defendants are defending the claim, relying on the “fair use” defence. Consistent with the “fair use” claim, it is noted in the article that President Obama paraphrased the quote in a speech during his 2008 campaign.
Faulkner’s executor, Lee Caplin, is quoted as saying that the suit is being brought in order to look out for the fiduciary responsibilities of the Faulkner estate.
We have blogged before on various estates involving literary works. In most cases, the estate trustee(s) will go to great lengths in order to ensure that there is an appropriate financial return on the literary works, while also ensuring that the works are not devalued or cheapened.
(Paranthetically, I note that Woody Allen did not chose to quote Faulkner’s Guiness Book of World Records record-setting 1,288 word “Longest Sentence in Literature” found in “Absalom, Absalom”, published in 1936.)
“Thank you for reading.”*
Paul Trudelle – Click here for more information on Paul Trudelle.
*may be subject to copyright