Tag: Trust

30 Sep

What can you do if you Suspect that a Loved One is no longer Capable?

Rebecca Kennedy Capacity Tags: , , , , , , , , , , 0 Comments

Something that no one ever wants to deal with, but which is sometimes an unfortunate reality, is the incapacity of a loved one. You may notice that your spouse or parent is not themselves, or has acted in a way that causes you some concern.

If the person has a power of attorney for property and a power of attorney for personal care, the attorney(s) named in those powers of attorney may need to step in and begin to manage the person’s finances and care. The terms of the power of attorney may set out when the attorney can begin acting. For instance, some powers of attorney for property are effective immediately upon execution by the grantor, and continue to be in effect in the event of any subsequent incapacity.

The power of attorney may also outline what kind of confirmation of the grantor’s incapacity is necessary before the attorney may begin acting on the grantor’s behalf. If the grantor is willing to cooperate in whatever capacity assessment is required, this step may be simple and straightforward to complete. However, as is often the case, the person may resist acknowledging any decline in their capacity or cognition, and may not wish to have their capacity assessed.

Pursuant to s. 78(1) of the Substitute Decisions Act, 1992 (the “SDA”), a person must consent to having their capacity assessed. If they refuse to be assessed, the assessor is precluded from performing an assessment.

If a person refuses to be assessed, it is possible to seek a court order for an assessment, pursuant to s. 79(1) of the SDA. In order to do so, the following will be required:

a) the person’s capacity must be in issue in a proceeding under the SDA; and

b) the court must be satisfied that there are reasonable grounds to believe that the person is incapable.

As a capacity assessment can be an intrusive process, the court takes requests to order them very seriously, and will often not be quick to order one. As discussed in Abrams v Abrams, [2008] O.J. No. 5207, some of the factors that the court will consider in making a determination in this regard include the following:

i) the purpose of the SDA, being to protect the vulnerable;

ii) the nature and circumstances of the proceedings in which the issue is raised;

iii) the nature and quality of the evidence before the court as to the person’s capacity and vulnerability to exploitation;

iv) whether the assessment will be necessary in order to decide the issue before the court;

v) whether any harm will be done if an assessment does not take place; and

vi) the wishes of the person sought to be examined, taking into account his or her capacity.

Thanks for reading,

Rebecca Rauws

 

You may also enjoy these other blog posts:

28 Sep

Could Robot Pets Help with Loneliness in Elderly People?

Rebecca Kennedy Elder Law Tags: , , , , , , , , , , , , 0 Comments

An issue that we see all too often with older adults, and which was exacerbated throughout the pandemic lockdowns, is that they can be lonely and isolated. With spouses who pass away, and children and grandchildren having their own lives, our elders may end up spending a great deal of time on their own. They may feel that they don’t want to bother their family members by calling, or asking them to visit.

According to this New Yorker article from earlier this year, loneliness and isolation can have a serious impact on an elderly person. Without anyone to call, or anyone to check on them, an older adult could remain on the ground for a long time after a fall, or be living in unsafe or unhygienic conditions. From a medical perspective, loneliness is thought to result in a heightened inflammatory response, which can increase the risk of a number of conditions including dementia, depression, high blood pressure, and stroke. All this to say that loneliness is a serious problem. And it has the potential to impact many people; the article notes that nearly thirty per cent of Americans over 65 years of age live by themselves, and that forty-three per cent of Americans over 60 years of age identify as lonely.

An interesting project that has popped up in recent years involves distributing robot pets to elderly people. A study published in 2020 found that elderly users who interacted with the robotic pets for sixty days reported greater optimism and sense of purpose, and were sometimes less lonely.

Anecdotal comments from some older adults who were given a robot pet indicate that even though they know the pet isn’t real, at times it can feel real. One owner noted that he had put out water for his cat, even though he knew she wouldn’t drink it, but that he likes to “kid around with her” about this. Frequently, owners of the pets like and interact with their pet so much that the batteries run out.

Some critics are concerned that it may be indecent for us to offer robotic company as an alternative to human company. However, the difficulty seems to be that there is a lack of human company.

Although this approach may not be for everyone, that it has had some success with a number of users so far is, in my view, a positive thing. If younger generations can rely on technological innovations to improve our everyday lives, the same should apply to older adults. The robotic pets are not intended to replace human companionship, but if it helps alleviate loneliness, it seems to me to be worth trying.

Thanks for reading,

Rebecca Rauws

 

These other blog posts may also be of interest to you:

27 Sep

The Power of Testamentary Charitable Giving

Rebecca Kennedy Charities Tags: , , , , , , , , , , , , , 0 Comments

This month marks the beginning of the Will Power campaign, led by the CAGP Foundation and the Canadian Association of Gift Planners.

Will Power is designed to show Canadians the power they have to make a difference with their Wills by leaving charitable gifts.

Many Canadians feel that if they leave a charitable gift in their Will, it will take away from gifts and support for their loved ones, who they also wish to benefit as part of their estate plan. But according to CAGP and the CAGP Foundation, leaving even 1% of one’s estate to charity can still “have an enormous impact on your cause, while still leaving 99% of your estate to your family…You don’t have to choose between your loved ones and the causes you care about when planning your Will.” The Will Power website has a helpful legacy calculator, which can help with visualizing what it means to leave a gift to charity, and still be in a position to benefit your loved ones.

Some people may think that they need to have a very large estate to be able to make a meaningful gift to charity. But regardless of the size of the gift, it can still make a difference. Will Power estimates that if only 3.5% more ordinary Canadians included a gift in their Will in the coming decade, the result would be $40 billion in gifts to charitable causes.

Another aspect of charitable giving to consider is the tax benefit of doing so. Depending on the nature of your assets at the time of your passing, and any estate planning steps, there could be significant taxes payable on death. Making a testamentary gift to a cause that is important to you could result in a reduction of the amount of taxes to be paid.

For more information, and helpful links, you can check out this press release from Will Power.

Thanks for reading,

Rebecca Rauws

 

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15 Jul

What kind of Evidence is needed in an Uncontested Guardianship Application?

Rebecca Kennedy Guardianship Tags: , , , , , , , , , , 0 Comments

Guardianship litigation can be messy and upsetting to those involved in such proceedings, particularly when there are multiple family members fighting over who should act as guardian.

It is also possible for a guardianship application to be brought on an uncontested basis, meaning that no one is opposing the appointment of the proposed guardian. That being said, given that the appointment of a guardian is a serious restriction on a person’s liberty, the courts do not take guardianship appointments lightly, and still have strict requirements for evidence, even in uncontested guardianships.

Pursuant to s. 22(1) of the Substitute Decisions Act, 1992 (the “SDA”), and s. 55(1) of the SDA, the court may appoint a guardian of property and/or personal care for a person who is incapable of managing property and/or personal care if, as a result of that incapacity it is necessary for decisions to be made on his or her behalf by a person authorized to do so.

Least Restrictive Course of Action

Sections 22(3) and 55(2) of the SDA provide an important restriction on the court’s ability to appoint a guardian, requiring that a court not appoint a guardian if it is satisfied that the need for decisions to be made will be met by an alternative course of action that is less restrictive of the person’s decision-making rights than the appointment of a guardian.

In particular, if a person has made a power of attorney for property or personal care naming the individual(s) who they wish to make decisions on their behalf in the event of their incapacity, the court may be reluctant to appoint a guardian and override the person’s own choice of a substitute decision-maker. Accordingly, a guardianship application should include evidence as to whether the alleged incapable person has executed powers of attorney, and what efforts the applicant has made to determine whether powers of attorney exist.

It is also important to remember that even if a person is incapable of managing their property or personal care, he or she may still be capable of making a power of attorney in this regard. Allowing a person to name their own substitute decision maker will of course be less restrictive of his or her decision-making rights than the court imposing a guardian on him or her. Accordingly, a person’s capacity to make powers of attorney should always be considered in the context of a guardianship application, and evidence in this regard should be provided to the court.

Furthermore, if a person is capable of naming his or her own attorney by executing powers of attorney, it may be possible to avoid the costs of a guardianship application, which can be significant.

A Finding of Incapacity is Required

There is also a statutory requirement in s. 58(1) of the SDA that the court make a finding of incapacity in order to appoint a guardian. The court will require evidence in support of a finding of incapacity. Most frequently, this will take the form of a capacity assessment by a trained capacity assessor.

Sometimes applicants are hesitant to obtain a capacity assessment of an alleged incapable person, either due to the cost of the assessment, fear of upsetting the person, or some other reason. While these concerns are understandable, it is important that the court be provided with evidence sufficient to allow it to make the finding of incapacity. Otherwise, it will not be able to appoint a guardian. The cost of the capacity assessment will almost certainly be less than the cost of bringing a guardianship application, only to be unsuccessful when the court is unwilling to appoint a guardian without adequate evidence to satisfy it as to incapacity.

A capacity assessment is also useful as it may reveal that an alleged incapable person does have some level of capacity. As noted above, a person may be capable of executing a power of attorney, even if he or she is incapable of managing his or her own property or personal care. In that case, a guardianship application may be able to be avoided altogether.

Thanks for reading,

Rebecca Rauws

 

These other blog posts may also be of interest to you:

13 Jul

British Columbia & Wills Variation: Who is Entitled to Dependant’s Support?

Rebecca Kennedy Support After Death Tags: , , , , , , , , , , , , , , 0 Comments

In Ontario, the Succession Law Reform Act, R.S.O. 1990, c. S.26 allows a deceased person’s dependants, to whom the deceased has not made adequate provision for his or her proper support, to seek an order for support to be made to the dependant out of the deceased’s estate. In order to qualify as a “dependant”, a person must be a spouse, parent, child, or sibling of the deceased “to whom the deceased was providing support or was under a legal obligation to provide support immediately before his or her death.” There are therefore several conditions for a person to be able to obtain an order for dependant’s support:

  1. they must have one of the required relationships with the deceased (spouse, parent, child, or sibling);
  2. the deceased must have been providing them with support, or have a legal obligation to provide support, immediately before the deceased’s death; and
  3. any provision made for the person in the deceased’s Will (if any) must be inadequate.

British Columbia deals with dependant’s support differently than Ontario. In B.C.’s Wills, Estates and Succession Act, S.B.C. 2009, c 13, s. 60 provides that if a testator does not make adequate provision for the proper maintenance and support of his or her spouse or children in his or her Will, the court may order the provision that it thinks adequate, just, and equitable in the circumstances for the spouse or children out of the testator’s estate. Unlike the Ontario law, it is not a requirement that the testator had been providing support to his or her spouse or children prior to death. This difference is significant because in Ontario, independent adult children are typically not able to obtain dependant’s relief as they do not meet the requirements of a “dependant”. In BC case law, there is also a greater emphasis on a testator’s moral duty to his or her dependant’s than there is in Ontario.

The BC Supreme Court decision in Jung v Poole Estate, 2021 BCSC 623 provides an example of how the difference in the law in Ontario vs. B.C. can result in vastly different outcomes.  In Jung v Poole, the testator was survived by his two twin daughters, Courtney and Chelsea. Courtney and Chelsea’s mother had been dating the testator when she became pregnant. The testator suggested an abortion but the mother chose to keep the twins, and raised them as a single mother without any involvement or financial assistance from the testator. The mother died when the twins were 4 years old, and a custody battle ensued between the testator and the twins’ grandmother on their mother’s side, on the one hand, and a couple who were friends of the mother’s and whom the mother had named in her Will to be the twins’ joint guardians, on the other hand. The testator expressed a desire to be involved in raising the twins at that time.

Ultimately, the court determined that the couple chosen by the mother to be the twins’ guardians would become the twins’ custodial parents. The testator and the grandmother were allowed specific and generous parenting time, access, and consultations regarding major areas of the twins’ lives. However, the testator never exercised any of these rights and, with the exception of one attempt to contact the twins the year after the custody decision, ceased to have any involvement in their lives.

The testator executed two Wills after the custody decision, both of which disinherited the twins. In one Will the testator referred to the twins as his illegitimate children, and in the other he explained that one of his reasons for disinheriting them was that they had not made efforts to contact him.

As stated by the court, if the court concludes that the testator owed a moral obligation to the twins and did not make adequate provision for their proper maintenance and support, the court has the authority to vary the testator’s Will to make the provision for them that, in its view, is adequate, just and equitable in the circumstances.

The court did ultimately conclude that the testator abandoned the twins from the outset, as well as after the custody battle, and had a strong moral obligation to them, which he failed to meet during his lifetime. As a result, the court varied the testator’s Will to provide 35% to each of Courtney and Chelsea, and 15% to each of the two friends of the testator who had been named as estate trustees and sole beneficiaries of his estate. The court was of the view that the testator had blamed the twins for the decision in the custody battle, even though that was beyond the twins’ control, and also blamed them for the lack of relationship, notwithstanding what the court found were valid and rational reasons given by the twins in this regard (including that they were hurt that the testator had wanted their mother to abort them, and the testator’s actions during their lives made it clear to them that he did not want them in his life).

It is unlikely that the same decision would have been reached had this situation occurred in Ontario. The fact that the twins were independent adults, and that the testator had not been providing them with support, nor under a legal obligation to provide them with support, immediately before his death, would likely have resulted in a decision that the twins were not entitled to support, regardless of the unfortunate circumstances between the twins and the testator.

Thanks for reading,

Rebecca Rauws

 

These other blog posts and podcast episodes may also be of interest:

12 Jul

When is a Matter Truly Urgent?

Rebecca Kennedy Litigation Tags: , , , , , , , , , , , 0 Comments

During the COVID-19 pandemic, our Courts have unfortunately, but necessarily, been impacted. As a result, the Courts have, at times, had to restrict the matters that may be heard to only those that are urgent, as defined by the Notices to the Profession that have been published by the Court. For instance, the Consolidated Notice to the Profession, Litigants, Accused Persons, Public and the Media lists a number of matters that are to be considered urgent. With respect to civil and commercial list matters, this includes “urgent and time-sensitive motions and applications in civil and commercial list matters, where immediate and significant financial repercussions may result if there is no judicial hearing.” Discretion is also granted to allow the Court to decline to hear any particular matter described in the Notice as being urgent, if appropriate, or to allow a hearing that the Court deems necessary and appropriate to be heard on an urgent basis.

Despite the Notices from the Court, there may still be confusion amongst parties as to whether their matter qualifies as “urgent” or not. As The Honourable Justice Myers stated in the recent decision of Nicholas v. Ogniewicz, 2021 ONSC 4442, “Self-induced urgency is not ‘urgent’.”

In Nicholas v Ogniewicz, the issue was that there had been an agreement of purchase and sale with respect to real property, which provided that the purchaser would submit requisitions two weeks prior to closing. Unfortunately, the requisitions submitted by the purchaser were extensive, and as noted in the decision, it was apparent that several of the requisitions could not be physically accomplished before the closing date.

A week after the requisitions were received, the vendor asked for an urgent hearing date, pursuant to the Notice to Profession – Toronto, Toronto Expansion Protocol for Court Hearings during Covid-19 Pandemic, to resolve the validity of the requisitions.

Justice Myers described the current state of the civil list in Toronto as follows:

The civil list in Toronto is building a backlog of motion and application hearings. It is currently suffering unacceptably long timeouts for civil motions and applications due to the effects of the pandemic and a lack of resources. Truly urgent matters are being heard on an urgent basis. But no judge is sitting around waiting for them to come in. They are heard at a cost to other cases waiting in the queue or to case conferences that the judge may have to defer, or to parties waiting for the release of the judge’s reserved decisions that the judge was writing in her non-sitting time.

In the court’s view, in this particular case the time-sensitivity present was self-induced by both sides. It was also noted that no one was at risk of physical injury, the property was not about to suffer irremediable waste, no confidential information was at risk of disclosure or misuse, and no business was at risk of imminent failure or irreparable harm unless misconduct is urgently prevented. Ultimately, the court determined that the matter was not urgent as set out in the Notice to the Profession, and there was no basis for it to jump the queue.

Although there may be a light at the end of the pandemic tunnel, we must all still be mindful of the long-lasting consequences, including the heavy backlog that continues to exist, and will likely continue to exist for some time, in our courts.

Thanks for reading,

Rebecca Rauws

 

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22 Apr

What is the Purpose of Section 3 Counsel Under the Substitute Decisions Act, 1992?

Rebecca Kennedy Capacity Tags: , , , , , , , , , , 0 Comments

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, [2008] 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,

Rebecca Rauws

 

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20 Apr

What Evidence is needed to Rebut the Presumption of Resulting Trust?

Rebecca Kennedy Estate Litigation Tags: , , , , , , , , , , , , , 0 Comments

When a parent transfers assets to an adult child, the rebuttable presumption of resulting trust will apply to that transfer. Unless the child can rebut the presumption, it will be presumed that the child was holding the transferred assets in trust for the parent.

But what kind of evidence will be needed to rebut the presumption? Ideally there would be some kind of documentation made contemporaneously with the transfer to support the parent’s intention. If the documentation is lacking, there may be evidentiary issues where the parent has passed away or is incapable, and is not able to give evidence as to his or her intention at the time of the transfer.

In the recent decision of Pandke Estate v Lauzon, 2021 ONSC 123, the court considered two cheques paid by a mother, Carol, to her adult son and daughter-in-law, Steven and Marnee, in the amounts of $35,000.00 and $90,000.00, respectively, shortly before her death. The court reviewed the evidence in determining whether the presumption of resulting trust was rebutted, or whether Carol had intended the cheques to be gifts.

Carol was diagnosed with terminal pancreatic cancer in 2017, and died about a month following her diagnosis. At the time that she was diagnosed, she lived with her husband, William, to whom she had been married since 1992. Following her diagnosis, it was decided that Carol would move in with Steven and Marnee, as William was not physically capable of providing her the care that she would require. Shortly after moving in with Steven and Marnee, Carol provided a cheque in the amount of $35,000.00, payable to Marnee, with a note on the cheque stating that it was “For Rent”. Four days later Carol provided another cheque payable to Steven, in the amount of $90,000.00, with the note on the cheque stating “Medical Expenses”. The total value of the two cheques constituted the majority of Carol’s liquid assets. William, who was the sole beneficiary of Carol’s estate, challenged these payments following Carol’s death.

The court found that the $35,000.00 payment was intended to be a gift by Carol to Steven and Marnee. Part of the evidence on which the court’s conclusion in this regard was based was Marnee’s hearsay evidence of what Carol had told her about why she was making the payment, being that Steven had left his job to care for Carol and she did not want him to suffer financially as a result. The court found that Marnee’s hearsay evidence could be admitted, notwithstanding that it was hearsay, on the basis that it fell within a traditional exception to the hearsay rule (that the statement is adduced to demonstrate the intentions or state of mind of the declarant at the time the statement was made) and under the principled approach to hearsay evidence as it met the necessity and reliability requirements. The court also found that Marnee’s evidence was corroborated by independent evidence.

However, with respect to the $90,000.00 payment, the court found that there was insufficient evidence to rebut the presumption of resulting trust. Although the court admitted Steven’s evidence of statements made by Carol to him as to her state of mind at the time the cheque was signed, the court also raised other concerns with Steven’s evidence. For instance, the reference to “Medical Expenses” noted on the cheque was concerning, as there were no medical expenses, and the court wondered why Carol would not have simply indicated that it was a gift if that is what she intended it to be. The court was also not convinced by a statement that Steven said was made by Carol that she was making the payment because she did not want Steven to suffer financially because he had left work to care for her, given that only a few days before Carol had made the $35,000.00 payment, which paid off Steven’s truck loan, line of credit, and left around $15,000.00 cash to spare. There was also no corroborating evidence of Carol’s intention to gift the $90,000.00 amount to Steven. As a result, Steven held the $90,000.00 in trust for Carol’s estate.

Unfortunately, it is often the case that payments to adult children are challenged after the parent has died. Unless the parent has taken special care to document his or her intention in making the payment, the intention can be difficult to determine with any degree of certainty. Accordingly, a parent making a gift to an adult child should consider seeking legal advice as to the best way to document such a transfer in order to ensure that their intentions will be upheld. From the opposite perspective, if a parent wants to make a transfer on the basis that their adult child will hold the asset in trust for him or her, or his or her estate, the parent should also consider seeking legal advice to ensure that this is properly documented in order to reduce the chance of issues arising in this regard after his or her death.

Thanks for reading,

Rebecca Rauws

 

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19 Apr

Evening with Honourable Estates List Judges – Some Highlights

Rebecca Kennedy Continuing Legal Education Tags: , , , , , , , , 0 Comments

Just over a week ago I had the privilege to attend the OBA’s annual evening with the judges of the Toronto Estates List. Unfortunately, due to the pandemic, the event was held virtually this year, but it was nonetheless very interesting and informative and I’m sure everyone appreciated the judges sharing their time. I take this opportunity to mention a few of the topics discussed.

  1. New Technology Implemented by the Court

The Estates List judges shared with event attendees that the new technology that has recently been adopted by the Court is here to stay. It was suggested that counsel invest the time to learn how the CaseLines system works and get comfortable with it, as it is intended that CaseLines will be in use going forward. The use of sync.com is already being phased out, and mainly CaseLines will be used in the future. This is expected to be the case even when we are able to return to in-person hearings.

  1. New Model Orders

We have previously blogged about the model orders that have recently been added to the Estates List Practice Direction. At the event, the judges emphasized that the model orders are an excellent resource and should be used going forward.

  1. Availability of Case Conferences

The Estates List judges clarified that case conferences continue to be available. It was suggested that before parties take steps to gear up for a contested motion, if they are not able to solve the matter on their own, they should consider scheduling a 30 minute case conference, and try to work it out with the assistance of one of the members of the Estates List Bench. This may allow matters to be resolved more quickly, thus freeing up court resources for other matters, and in a way that is more cost-effective for the parties.

  1. The Court’s Workload

Between January and March of this year, the Estates List heard between 400-500 matters, which is close to the number of matters that would be heard in a regular year. The number of matters being heard in writing has almost doubled from the norm, with the Estates list having heard almost 900 matters in writing so far this year, compared with around 1500 in a whole year in normal times. It is clear that the Estates List continues to operate effectively notwithstanding the lack of in-person attendances.

I understand that the event was recorded and will be available for later viewing. I encourage anyone who missed the event to check out the recording and take advantage of the advice and tips from the Bench.

Thanks for reading,

Rebecca Rauws

 

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25 Mar

Pour Over Clauses – Incorporation by Reference

Stuart Clark Estate Planning Tags: , , , , , , , , , , 0 Comments

I have blogged this week about the general availability of “pour over clauses” and whether you can leave a bequest in a Will to an already existing inter vivos trust. In my blog yesterday I discussed “facts of independent significance” as one of the potential arguments that has been raised to attempt to uphold “pour over clauses”, and how the concept was rejected by the British Columbia Court of Appeal in Quinn Estate v. Rydland, 2019 BCCA 91. In today’s blog I will discuss another argument that was raised in Quinn Estate to try to uphold pour over clauses; the doctrine of “incorporation by reference”.

The doctrine of incorporation by reference at its most basic allows a Will to refer to a separate document which provides for dispositive provisions, with such a separate document being “incorporated” into the Will to be carried out by the executor as part of the administration of the Will. The most common example of incorporation by reference would be a memorandum directing who is to receive various personal items from the testator, with the Will directing the executor to distribute the personal items in accordance with the terms of the separate memorandum.

The general test for whether a document can be incorporated by reference into a Will is:

  1. It must be clear that the testator in the Will referred to some document then in existence; and
  2. the document in question must be beyond doubt the document referred to.

When incorporation by reference is raised as part of an attempt to uphold a pour over clause it appears to be the argument that so long as the inter vivos trust was in existence at the time the Will was signed, and the trust is clearly identified by the Will, that it should be able to meet the test for incorporation by reference such that the “pour over clause” can be saved.

In Quinn Estate the court ultimately rejects the attempt to save the pour over clause under the doctrine of incorporation by reference, appearing to emphasize there is a fundamental flaw in the attempt to incorporate a trust by reference into a Will insofar as it does not appear to be the testator’s intention to actually incorporate the terms of the trust into the Will, but rather simply to make a distribution to the separate trust. When something is “incorporated by reference” into a Will it means exactly that, insofar as the terms of the separate document are said to be incorporated into the Will and read as a single document. This concept appears fundamentally at odds with any attempt to make a bequest to an already existing trust under a pour over clause, as the testator never likely intended to have the terms of the trust incorporated into the Will to be administered by the executor as part of the Will, but rather to have the executor make a bequest to the trust to be administered separately from the estate. In emphasizing this point the British Columbia Court of Appeal in Quinn Estate states:

“Strictly speaking, resorting to incorporation by reference to incorporate the original trust document into the will belies the essential nature of a pour-over clause: here it is perfectly clear that the will-maker had no intention of incorporating the trust into his will. He rather demonstrated the obvious intention of making a gift to the trust.”

As my blogs this week have shown, any attempt to leave a bequest in a Will to an already existing inter vivos trust using a “pour over clause” is highly problematic.

Thank you for reading.

Stuart Clark

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