Tag: weisberg

02 Apr

The Ups and Downs of Estate Trustee Compensation

Noah Weisberg Executors and Trustees, Passing of Accounts, Trustees Tags: , , , , , , , , 0 Comments

When is it appropriate for a court to reduce estate trustee compensation?  The Supreme Court of Nova Scotia addressed this issue in Atlantic Jewish Foundation v Leventhal Estate (“AJF”).

Before getting into the AJF decision, it is worthwhile to include the caveat that determination of estate trustee compensation in Ontario (a summary of which can be found in my paper here) differs somewhat as compared to Nova Scotia.  Nonetheless, both provinces use 5% of the value of the estate, subject to the discretion of the court, as the starting point in determining the quantum of compensation.  As such, AJF remains informative in Ontario.

The deceased left a Will naming his friend, who was also a lawyer, as his Estate Trustee.  AJF was named as the residuary beneficiary.  The Will was silent as to estate trustee compensation.  As the estate was valued at over $15 million, the Estate Trustee sought compensation in the approximate amount of $896,000, being 5% of the gross adjusted value of the estate.  AJF maintained that the amount was excessive and proposed compensation in the amount of $300,000.

In determining how much compensation the Estate Trustee should be entitled to, and applying an approach similar to Ontario’s ‘five factors’, the court made the following observations: the level of responsibility is often greater for higher value estates; the increasing level of responsibility does not necessarily rise in direct proportion to the size of the estate; the Estate Trustee arranged and supervised the funeral and burial, which was mainly handled by telephone; the Estate Trustee acted promptly in selling the house; many of the assets were already in the form of cash, and the Estate Trustee knew the banks the deceased used; the Estate Trustee was diligent, wise and prudent and had to be a hands-on executor; the Estate Trustee made no mistakes; a large part of the estate was made up of investments that were readily converted into cash for distribution; and, the estate was larger rather than complex.

The court noted that 5% should be reserved for estates where there are complicating features that require more than wise and careful planning to maximize the value of the estate.  Therefore, the court awarded compensation in the amount of $450,000, being slightly more than 50% of the maximum amount that could be awarded.  A larger amount of compensation would have the effect of reading into the Will a bequest to the Estate Trustee that the deceased did not intend to make.

Noah Weisberg

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03 Jan

Can a Non-Party Attend and Assist Counsel at an Examination?

Noah Weisberg Litigation Tags: , , , , , 0 Comments

The Rules of Civil Procedure govern examinations for discovery.  Silent though, is when a non-party will be permitted to attend an examination for discovery and assist counsel.  The answer can be found in case law.

An examination for discovery is not a public hearing, and as such non-parties cannot simply show up like they can at court.  Instead, the party seeking the non-party’s attendance and assistance must either get the consent of counsel or permission from the court.

Master Dash in Poulton v. A&P Properties Ltd., set out the following governing principles:

  1. since a cross-examination on an affidavit is not a public hearing, a non-party may attend to assist a party only on the consent of the other side or on the order of the court;
  2. the onus is on the party seeking such an order to prove entitlement to it;
  3. the non-party should not be a witness at the subsequent trial;
  4. the attendance of the non-party must not disrupt the examination process;
  5. the non-party must not take the role of witness or assist the witness is answering questions; and
  6. a court in exercising its jurisdiction as to whether to allow the presence of a non-party must do so having regard to both substantive fairness to the parties and the appearance of fairness.

While every case will turn on the specific facts, it appears that generally speaking experts may attend to assist with technical and complex evidence (although they cannot later be an expert witness at trial), as well as a resource person or expert assistant who is familiar with a file in a document-intensive case.

Noah Weisberg

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31 Dec

The Top Estate & Trust Cases from 2018

Noah Weisberg General Interest, New Media Observations, News & Events, Trustees, Wills Tags: , , , , , , , , , , 0 Comments

It is nearly a new year.  It is during this time that we reflect on the past year, make goals for the upcoming year, and come across all sorts of ‘best of’ and ‘most popular’ rankings.

As such, I herewith present the most popular estate and trust cases from 2018, as decided solely by me (and without regard to any actual data):

  • Moore v Sweet – the Supreme Court of Canada provided clarification regarding the juristic reason competent of the test for unjust enrichment, as well as confirmed the circumstances in which a constructive trust remedy is appropriate in the context of unjust enrichment.
  • Re Milne Estate & Re Panda – In Re Milne (currently under appeal), the Superior Court of Justice found that multiple Wills were invalid where so-called ‘allocation clauses’ (also referred to as basket clauses) in the Wills provided the Estate Trustees with the discretion to determine which estate assets fell under which Will. Conversely, in Re Panda, the Superior Court of Justice declined to follow Re Milne and probated the Will notwithstanding the presence of an allocation clause.  The Superior Court of Justice also addressed the roles of the court as either the ‘court of probate’ or ‘court of construction’ and whether a Will is a trust that is subject to the three certainties.
  • Wall v Shaw – the Court of Appeal (sitting as the Divisional Court) held that there is no limitation period to objecting to accounts in an Application to Pass Accounts. The Court reasoned that a notice of objection does not commence a ‘proceeding’ for the purposes of section 4 of the Limitations Act.
  • Seguin v Pearson – the Ontario Court of Appeal reiterated the different tests for undue influence that apply in the inter vivos and the testamentary context.
  • Valard Construction Ltd. v. Bird Construction Co. – the Supreme Court of Canada found that a trustee had a fiduciary duty to disclose the terms of a trust (here, it was a bond) to the beneficiary, notwithstanding the fact that the express terms of the trust did not stipulate this requirement.

 

 

Thanks for reading!
Noah Weisberg

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25 Oct

‘Passing’ on your Points

Noah Weisberg Beneficiary Designations, Estate Planning Tags: , , , , , , , , , 0 Comments

As an avid Seinfeld fan, I recently watched the episode where Elaine Benes kept on eating submarine sandwiches just so she could collect enough points to earn a free sub.  Spoiler alert: Elaine lost the loyalty card before redeeming the free sub.  Unfortunately, many estates fail to take advantage of these rewards and end up just like Elaine.

It is estimated that in the US alone, three trillion frequent flyer miles are given annually.  Notwithstanding this dizzying number of points, in Ontario there is no law addressing if, and how, points can be transferred upon death.  Airlines are left to create their own procedure and standards.

There is a helpful resource, here, which sets out the policies of the major US frequent flyer programs in plain english.  The CBC offers similar information for Canadian frequent flyer programs here.  While some airlines permit the transfer of points, many discount their value.  Some even refuse to allow there to be a transfer altogether.

As discussed in my previous blog, Anthony Bourdain included his frequent flyer miles in his will.  Given the suspected value of these points, this estate planning decision makes sense.

In considering an estate plan, a testator should, first, decide whether to choose airlines based on the ability to transfer points.  Second, if a testator has amassed significant points, and they are transferrable, make sure to include them in a will.

Noah Weisberg

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23 Oct

Can a Guardian Settle a Trust?

Noah Weisberg Capacity, Estate Planning, Ethical Issues, Guardianship, Power of Attorney Tags: , , , , , , , , , , , 0 Comments

Does an attorney, or guardian, have the power to change a grantor’s estate plan?

According to section 31(1) of the Substitute Decisions Act, a guardian of property (or attorney for property) has the power to do on the incapable person’s behalf anything in respect of property that the person could do if capable, except make a will.

The statute, however, is deceptively simple.  Can a guardian transfer property into joint tenancy?  Can a guardian sever a joint tenancy?  Can a guardian change a beneficiary designation on a RRSP, RRIF or insurance policy?  Can an inter vivos trust be established or an estate freeze undertaken to save taxes?  There are numerous cases which have tested these issues.

For instance, in Banton v Banton, Justice Cullity found that although the grantor’s attorneys had the authority to create an irrevocable inter vivos trust, they nonetheless breached their fiduciary obligations owing to the grantor, in creating the trust.

The irrevocable trust provided for income and capital at the trustee’s discretion for the grantor’s benefit during his lifetime and a gift over of capital to the grantor’s children, who were also the attorneys.  The scheme of distribution of the irrevocable trust was the same as provided for in the grantor’s will.   However, the court found that the fact that the remainder interest passed automatically to the grantor’s issue defeated the grantor’s power to revoke his will by marriage and would deprive his common law spouse of potential rights under Parts II and V of the Succession Law Reform Act and Part I of the Family Law Act.  The court found that the gift of the remainder of the interest went beyond what was required to protect the grantor’s assets.

Justice Cullity stated:

“I do not share the view that there is an inviolable rule that it is improper for attorneys under a continuing power of attorney to take title to the donor‘s assets either by themselves or jointly with the donor .  This must depend upon whether it is reasonable in the circumstances to do so to protect or advance the interest, or otherwise benefit, the donor.”

Noah Weisberg

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22 Oct

Fiduciary Accounts – Yes, Form Matters

Noah Weisberg Executors and Trustees, Guardianship, Passing of Accounts, Power of Attorney Tags: , , , , , , , , 0 Comments

In the Estate of Divina Damm the Court answers the following question – what form of accounts must a guardian of property use when filing an application to pass accounts?

The facts in Re Damm Estate are not remarkable.  A guardian of property commenced an application to pass accounts in accordance with Rule 74.18 of the Rules of Civil Procedure seeking court approval of her accounts.  No objections arose with respect to the accounts, such that the guardian proceeded to file the application ‘over the counter’ as an unopposed application to pass accounts.

Notwithstanding that there were no objections, the Court refused to approve the accounts.  The Court was concerned with the lack of detail and itemization in the entries, as well as the failure to comply with Rule 74.17.  The judge tried to “…link all numbers listed in the draft judgment with information presented in the accounts but [was] unable to do so – because the accounts are not in proper form”.

Interestingly, the judge considered whether smaller estates should be permitted to file accounts in a simple format, but noted that it was for the Legislature and the Rules Committee to consider.

Accordingly, the Court directed the guardian to re-serve and re-file the accounts prepared in compliance with Rule 74.17.

Noah Weisberg

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16 Aug

When Might a Solicitor be Negligent in Preparing a Will?

Noah Weisberg Capacity, Litigation Tags: , , , , , , , , , 0 Comments

Solicitors preparing Wills need to be mindful of the obligations they owe to a testator.  The seminal Court of Appeal decision in Hall v Bennett Estate provides a helpful refresher of the steps a solicitor should consider to ensure best practices are followed.

According to the Court, it is well established that a “solicitor who undertakes to prepare a will has the duty to use reasonable skill, care and competence in carrying out the testator’s intentions. This duty includes the obligation to inquire into and substantiate the testator’s capacity to make a will”.

Testing for capacity is fundamental – a solicitor has a duty to make inquiries into the testamentary capacity of the testator.

Should the solicitor have any doubt as to capacity, Justice Cullity in Scott v Cousins, famously states that “…careful solicitors who are in doubt on the question of capacity, will not play God – or even judge – and will supervise the execution of the will while taking, and retaining, comprehensive notes of their observations on the question”.

The Court of Appeal proceeds to summarize an article written by M.M. Litman & G.B. Robertson outlining errors made by solicitors in the preparation of a Will, leading to negligence claims,  including failing to:

  • obtain a mental status examination;
  • interview the testator in sufficient depth;
  • properly record or maintain notes; and
  • test for capacity.

As such, notes from a drafting solicitor should ensure that all of these are addressed.

In certain instances, although narrow, a duty of care might also be owed to a disappointed beneficiary.  A two part test is applied as set out by the Supreme Court of Canada in Cooper v. Hobart.

While claims for negligence by testators and disappointed beneficiaries cannot be stopped, a file with detailed notes can go a long way in defending such a claim.

Noah Weisberg

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14 Aug

Anthony Bourdain’s Estate

Noah Weisberg Estate Planning, In the News Tags: , , , , , , , , , 0 Comments

For all that is known about chef Anthony Bourdain’s colourful lifestyle, the estate plan he left behind is surprisingly comprehensive.

It has been reported that Bourdain left behind both a Last Will and Testament and a separate Trust.

Bourdain’s Will leaves the residue of his estate to his minor daughter, Ariane.  The residue has been valued at approximately $1.2 million, and consists of savings, cash, brokerage accounts, personal property, and intangible property including royalties and residuals.  In the event that Bourdain survived his daughter, the residue was to pass to his daughter’s nanny.

Bourdain appointed his estranged wife as estate trustee.  This makes sense given that Ariane is the daughter of the marriage and that the mother will likely have her daughter’s best interests in mind while the estate is administered.  Bourdain was also mindful to include in his Will other assets – personal and household effects, including frequent flyer miles.  Given the amount of travelling Bourdain did, it was shrewd of him to specifically include this in his Will.

A separate trust was also settled, apparently containing most of his wealth.  Again, his estranged wife is named as trustee, with Ariane as beneficiary receiving money from the trust when she turns 25, 30, and 35.  Presumably, Bourdain settled a trust to avoid the payment of taxes and the publicity associated with probate – another sign of a well thought out estate plan.

While so many celebrities succumb to poor estate planning, it is refreshing that in addition to teaching us about cooking, travelling, eating, and so much more, Bourdain also taught us about the importance of a thorough estate plan.

 

Noah Weisberg

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13 Aug

Post-Nuptial Agreements

Noah Weisberg Estate Planning Tags: , , , , , , , 0 Comments

Kanye West’s 2005 smash-hit, Gold Digger, includes lyrics that, “if you ain’t no punk; holla, ‘we want prenup! We want prenup!’; It’s somethin’ that you need to have”.  Certainly, an individual entering into marriage with prior wealth, should consider a prenuptial agreement.  What should spouses do though who do not have a prenuptial agreement and receive wealth after marriage?

Unlike a prenuptial agreement, a post-nuptial agreement, as its name suggests, is entered into after marriage.  Post-nuptial agreements are gaining in popularity amongst spouses who inherit property as a beneficiary of an estate or are pulled into the family business on the death of the parent.

Post-nuptial agreements are also being utilized as an estate planning protective measure.

Like a prenuptial agreement, a post-nuptial sets out how the assets of a married couple are to be distributed in the event of death or divorce, and can be as detailed as including the jurisdiction of the divorce and social media rules.

Entering into a post-nuptial agreement shouldn’t necessarily be viewed in a negative light.  The process of going through a post-nuptial agreement can be a cathartic experience for couples – it is an opportunity to look at assets and debts, air grievances, and discuss important parameters in a marriage such as payments to children from a prior marriage.

Given that marriage brings about special legal rights and obligations, those considering a post-nuptial agreement should consider speaking with a professional.

Noah Weisberg

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15 Mar

When Can an Estate Trustee Withhold an Inheritance?

Noah Weisberg Beneficiary Designations, Estate & Trust, Executors and Trustees, Joint Accounts, Litigation, Trustees, Wills Tags: , , , , , , , , , , 0 Comments

Is an Estate Trustee allowed to withhold an inheritance?  What if the inheritance is a specific bequest and the Estate has claims against the beneficiary?  These questions were considered in June Brayford v Brayford.

I will do my best to simplify the facts.  The testator named his two sons as Estate Trustees.  His Last Will left a specific bequest, the proceeds of a CIBC account, to his wife (from a second marriage).  The residue passed to the Estate Trustees.  While the testator was still alive, a joint account was set up with his wife (an investment account with Desjardins Financial and Edward Jones).

After the testator‘s passing, the Estate Trustees took issue when the wife withdrew funds from the joint account, believing that the funds should have fallen into the residue.  They alleged that the testator lacked the capacity to set up a joint account, and that the wife (who was also the testator’s guardian for property and personal care) breached her fiduciary duty by the setting up of the joint account.  In response, the Estate Trustees refused to pay the specific bequest.

Two claims arose – the wife demanded payment of the specific bequest and the Estate Trustees claimed an equitable set off of the specific bequest pending the resolution of the joint account assets.

The Court first considered the right of retainer as set out in Cherry v. Boultbee (41 ER 171), which sets out the right that an estate trustee has of keeping out of the share of an inheritance, a debt owing to the estate by the beneficiary.  The court noted an exception to this right though – when the inheritance is a specific bequest.  It is this exception that the wife relied on to compel the payment of the specific bequest.

The Estate Trustees claimed an equitable set-off.  They wanted to withhold the payment of the specific bequest until the claim against the wife regarding the joint account was heard.

The Court looked to Olympia for the procedure to be followed when considering a claim for both right of retainer and set-off.  It was held that given that the two claims were so closely connected, that it would be unjust to allow the wife to enforce the payment of the specific bequest without taking into account the claim by the Estate Trustees regarding the joint account.  So, the Estate Trustees were allowed to hold off on paying the specific bequest, pending the outcome of their claim regarding the joint account.

Noah Weisberg

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