On June 9, 2016, the Supreme Court of Canada rendered its decisions in applications for leave to appeal two recent cases that have been closely watched by the estates bar.
The Supreme Court has dismissed both applications for leave to appeal the recent appellate decisions, which considered a court’s ability to intervene and set aside a Will or a bequest under a Will for violating public policy.
In Spence v BMO Trust Company, 2016 ONCA 196, the Deceased made a Will that disinherited one of his daughters, Verolin. Although the Will was not discriminatory on its face, Verolin sought a declaration from the lower court that the Will was void and relied on extrinsic affidavit evidence to argue that the Deceased had disinherited Verolin for racist reasons.
The lower court accepted the extrinsic evidence and held that the Will was invalid on the basis of public policy. However, the Ontario Court of Appeal allowed the appeal of the BMO Trust Company, holding that the Will was clear on its face and did not offend public policy. You can read and hear more about the Court of Appeal’s decision, which now stands as the final judgment in this case, on our blog and podcast.
The Supreme Court has also denied leave to appeal the New Brunswick Court of Appeal’s decision in Canadian Association for Free Expression v Streed et al, 2015 NBCA 50 (more commonly referred to as the McCorkill decision).
In McCorkill, the testator left the residue of his Estate to the National Alliance, a white supremacist organization based out of the United States. Much like Spence, there was no discriminatory language on the face of the Will. However, the lower court set aside the bequest to the National Alliance because the purposes and activities of the beneficiary organization were contrary to public policy. The lower court’s decision was upheld on appeal to the New Brunswick Court of Appeal. We have previously written about the McCorkill decision here, here and here.
Spence and the McCorkill are not the only two recent cases where a Will has been challenged for being discriminatory. My colleague Noah Weisberg has reported on a claim in British Columbia where a testator is alleged to have disinherited his daughter on the basis of her sexual orientation.
Thank you for reading,
Umair Abdul Qadir
I recently came across an article published in the Toronto Star with a headline sure to catch the attention of any estates lawyer: How Ontario disinherits children in second marriages.
In the article, the author details what they believe to be the lack of awareness that many people have regarding the legal effect that a second marriage may have upon their estate plan. In outlining such concerns, the author provides the following eye-catching statement:
“Here’s a little-known fact: A second marriage invalidates your will – automatically disinheriting your children”.
While the first part of this sentence is true (subject to certain exceptions, a Will is automatically revoked upon marriage by section 16 of the Succession Law Reform Act), the second part is not necessarily true, insofar as, just because a Will is revoked upon marriage, it does not necessarily follow that the Deceased’s children would be “disinherited” by such an action. It should also be noted that the automatic revocation of a Will upon marriage by section 16 of the Succession Law Reform Act does not only apply to second marriages, but any marriage which the testator may enter into after the Will was executed.
With respect to the statement that the second marriage has the effect of “disinheriting” your children, if the Deceased should not have executed a further Last Will and Testament following their marriage, they will have died intestate. In Ontario, intestate estates are governed by Part II of the Succession Law Reform Act, which provides that, should the Deceased have died leaving a surviving married spouse and children, the first $200,000.00 of their estate is to go to the surviving spouse as a “preferential share”, with whatever remains after the payment of the preferential share being distributed to the spouse and children in accordance with specified allotments. If the Deceased should only have had one child, whatever remains after the preferential share would be distributed 50% to the spouse and 50% to the child. If the Deceased should have had two or more children, 1/3 would be distributed to the surviving spouse, with the remaining 2/3 being equally distributed to the Deceased’s children. To this effect, so long as the Deceased’s estate is valued at greater than $200,000.00, the Deceased’s children would not be “disinherited” by the marriage per se, although they could of course have stood to inherit a greater amount had the Deceased executed a new Will.
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The nature of a will is that it is revocable, meaning that testators can change their mind, cause their will to no longer be in effect, and make a new will at any time. However, just as there are requirements for executing a will, there are specific rules in place that govern how a will may be revoked.
In Ontario, a will can only be revoked in certain ways. Under section 15 of the Succession Law Reform Act, RSO 1990, c S.26 (SLRA), a will or part of a will is revoked only by (a) marriage; (b) another will; (c) a writing declaring an intention to revoke, and made in accordance with the requirements of making a will; or (d) burning, tearing or otherwise destroying the will by the testator with the intention of revoking it. Accordingly, testators cannot simply decide that they no longer wish their will to govern their estate without any further action. They must take the step of executing a later will, destroying the will, or putting it in writing in the correct format that they wish to revoke. Many people are not aware that marriage revokes a will, so clients should always be advised of this in order to prevent any possible inadvertent revocation.
However, revocation of a will may not be the final word. Revival and republication exist to bring a revoked will back into effect. Revival is the restoring of a revoked will. Pursuant to section 19 of the SLRA, a revoked will can only be revived by a will or codicil that shows intention to give effect to the will or part that was revoked, or by re-execution of the revoked will with the required formalities, if any. The intention to revive a revoked will must appear on the face of the instrument purporting to revive it, and simply describing a later codicil as being a codicil to an existing will is not sufficient. If a will has been destroyed, it can only be revived by re-execution of a draft or copy or by a codicil referring to a draft or copy.
As opposed to revival, which restores a revoked will, republication, on the other hand, confirms a valid will. Republication occurs when a testator re-executes a will for the express purpose of republishing it or by making a codicil to the will. Essentially, republishing a will shifts the date of the will, so it is as if the testator had made a new will, with the exact same dispositions, at a later date. Republication must be in the form of a codicil to an existing will, or a document that makes specific reference to the will being republished as an existing testamentary document.
These may seem like simple concepts, but it is important to keep the basic rules in mind, as well as the sources of such rules, in order to properly advise clients and pre-empt easily avoidable issues as much as possible.
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Cornelius Gurlitt passed away in May 2014, aged 81, and is well known amongst the art community for his vast collection of famous works of art ranging from Chagall to Picasso. A recent article in the Guardian highlights the storied controversy surrounding Gurlitt’s estate and the steps taken to comply with his Will.
Much of Gurlitt’s famed art collection was passed down to him by his parents and grandparents who allegedly obtained much of the artwork by Nazi theft during World War II. In 2012, during a tax investigation, German customs officials discovered over 1,000 pieces of art worth an estimated 1 billion euros.
According to the Wall Street Journal, while on his deathbed, Gurlitt apparently signed a Will bequeathing his estate (including the artwork) to a small museum in Bern, Switzerland, the Kunstmuseum Bern, on the condition that the museum take steps to determine which works had been stolen by the Nazis and to return those pieces of art to their rightful heirs. Apparently the choice of a foreign institution was made on the basis that Gurlitt felt the German government had treated him unjustly.
It appears that in the event the museum declined the collection, it would pass to Gurlitt’s distant relatives. Concern arose that in the event these relatives beneficially received the artwork, it would be difficult to ensure they complied with Gurlitt’s instructions for restitution. As such, pundits urged the museum to take on the task to ensure that the research into the artwork was done professionally and responsibly.
The museum has since accepted the artwork, with sorrow, and is showcasing Gurlitt’s pieces in conjunction with a second museum in Bonn, Germany, the Budeskunsthalle. Although the showcasing in Bonn seems contrary to Gurlitt’s request for a foreign museum, the museum is nonetheless following Gurlitt’s most prominent wish to ensure stolen artwork is returned.
Proceedings were commenced by the distant relatives to challenge the Last Will on the basis that Gurlitt was not of sound mind when drafting the Will. A successful Will challenge would result in the artwork passing to them. The proceeding was dismissed by a German Judge, while an appeal remains pending.
I find Estates intertwined with famed art to be an enjoyable topic to research and read, as per my prior blog about the 2015 movie, Woman in Gold. Perhaps though, it’s just an excuse to admire such beautiful artwork, with Gurlitt’s collection being one of the best.
Earlier this week, I blogged about the Ontario Court of Appeal decision in Neuberger v. York, 2016 ONCA 191, and the first lesson from this case. The second lesson from this case is that the doctrine of estoppel is not permitted to bar challenges to the validity of wills.
As a short recap of the facts from my prior blog, the late Chaim Neuberger was Edie’s father. Edie and, her sister, Myra, were the named Estate Trustees of the 2010 Wills. Between the death of Edie’s father on September 25, 2012, and the commencement of Edie’s challenge of the validity of the 2010 Wills on December 19, 2013, Edie was found by the lower court to have taken steps as an Estate Trustee. Such steps were, for example, the payment of taxes and the redemption of preference shares. This led the lower court to apply the doctrine of estoppel by representation to stop Edie from challenging the 2010 Wills (see Neuberger v. York, 2014 ONSC 6706).
On this point, the Court of Appeal disagreed. The Court of Appeal unanimously took the view that estoppel by representation and estoppel by convention do not lie to bar a challenge to the validity of a will (at paragraph 103).
The Hon. Justice Gillese found that the test for estoppel, as articulated by the Supreme Court of Canada in Canadian Superior Oil Ltd. v. Paddon-Hughes Development Co.,  S.C.R. 932, is not applicable in probate matters. Canadian Superior Oil was found to deal with promissory estoppel in the context of a private lease agreement between two individuals, which is “fundamentally different than is the question of the validity of a will” (at paragraphs 104 to 108).
As a matter of public policy, the Hon. Justice Gillese stated as follows (at paragraph 118):
“estoppel is animated by the goal of creating transactional certainty between private parties in civil disputes. A will, however, is more than a private document. As explained above, a dispute about a will’s validity engages interests that go beyond those of the parties to the dispute and extend to the testator and the public. Once a testamentary instrument is probated, it speaks to society at large. Probate is an in rem pronouncement that the instrument represents the testator’s true testamentary intentions and that the estate trustee has lawful authority to administer the estate. Because of this, the court has a responsibility to ensure that only wills that meet the hallmarks of validity are probated. It owes that duty to the testators, whose deaths preclude them from protecting their own interests, to those with a legitimate interest in the estate, and to the public at large. If the doctrine of estoppel were available to bar a party from having the validity of a will determined, the court’s ability to discharge that responsibility would be in jeopardy.”
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According to the News Release, the Finding Your Way program is a “multicultural safety campaign that helps people with dementia stay safe and active, while helping to prevent the risk of wandering and going missing.” It notes that the program’s training services will be enhanced this year to include both first-responders as well as supportive housing and retirement home staff.
The Finding Your Way program is specifically focused on addressing and preventing individuals with dementia from going missing and states that 60% of people with dementia related memory problems become lost at some point. Their website provides some resources, including checklists for What to do when a person with dementia goes missing and What to do when reuniting after a missing incident. They also provide some suggestions of ways to reduce the risks associated with dementia. The first suggestion is to stay safe at home, by considering the best living arrangements for someone with dementia and ensuring that individuals with dementia maintain their health. The second suggestion is to be a part of the community while reducing the risk of becoming lost by carrying identification at all times, ensuring that someone knows where the senior with dementia is going, and dressing appropriately for the weather. The third suggestion encourages getting around in the community by urging seniors with dementia to get to know their neighbours and professionals in the neighbourhood (i.e. pharmacists, grocers, bankers), as well as participating in social activities.
The Alzheimer Society of Ontario’s website provides some “Dementia numbers in Canada” stating that in 2011, 14.9 per cent of Canadians 65 and older were living with Alzheimer’s disease and other dementias, with the figure expecting to increase. It also notes that one in five Canadians aged 45 and older provides some form of care to seniors living with long-term health problems. In 2011, family caregivers spent over 444 million unpaid hours looking after someone with cognitive impairment, including dementia. It is clear that dementia affects a great deal of people in Canada and in Ontario.
The Minister Responsible for Seniors Affairs stated in the News Release that “[o]ur communities have an important role to play in helping keep people with dementia safe, and this funding will help the Alzheimer Society of Ontario to deliver these resources to even more Ontarians.”
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David Bowie’s Last Will and Testament was filed last Friday in Manhattan’s Surrogate’s Court.
The Bowie Estate is purported to be worth $100 million. Bowie’s wife, Iman, will receive one-half of the Estate, in addition to their SoHo apartment, in a trust managed by a “pair of New York lawyers” according to Vanity Fair. As reported by Page Six, the executors of the Bowie Estate, William Zysblat and Patrick “Paddy” Grafton Green, will pay Iman income from the trust four times a year. Iman will also have the right to seek additional funds paid to her in support of her “health, education and maintenance”.
Bowie’s son, Duncan Bowie, will receive one-quarter of the assets of the Estate outright.
Bowie’s daughter, Lexi Bowie, who is presently 15 years old, will receive the remaining quarter of the Bowie Estate when she turns 25 years of age. Lexi will also inherit Bowie’s vacation home in up-state New York at that time.
Various members of Bowie’s staff were also provided with sizeable cash bequests.
In addition to carrying out Bowie’s estate plan, the executors of the Bowie Estate were directed to transport Bowie’s remains to Bali so that he may be cremated in Bali in accordance with the Buddhist rituals of the country. While recognizing the potential difficulties in carrying out this task, Bowie’s Will also allows for his cremation to take place elsewhere, and for his ashes to be scattered in Bali.
In Ontario, there is no legal requirement for an estate trustee to follow the directions of the testator as it relates to manner and place of the burial. Such wishes are merely precatory.
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A recent decision of the Ontario Superior Court of Justice considers life insurance as a Succession Law Reform Act (“SLRA”) s. 72 asset, and the circumstances in which a beneficiary or estate trustee will be ordered to make a support payment personally.
In Bormans v Estate of Bormans et al, 2016 ONSC 428, the Applicant (“Gabriele“), made a claim for dependant’s support under Part V of the SLRA. Gabriele had been married to John Bormans (the “Deceased”) for 38 years, until their divorce in 2010. They had two children together, Jessica and Amanda.
The court order granting Gabriele and the Deceased’s divorce provided for spousal support payments of $500 per month from the Deceased to Gabriele. At the time of the divorce, the Deceased made a warranty to Gabriele that she was the beneficiary of his group life insurance policy which secured his support payments on his death. This term was not included in the court order.
After the Deceased’s death in March 2014, Gabriele enquired of the Deceased’s group life insurance company and was advised that the employer had terminated that coverage. After making a claim in writing for support under the SLRA, Gabriele learned that Jessica had received $70,000 in insurance proceeds as the beneficiary of a separate insurance policy on the Deceased’s life. Jessica was also named as estate trustee in the Deceased’s Will.
Prior to being served with Gabriele’s application for dependant’s support, Jessica had spent a portion of the insurance proceeds. However, she continued to spend the proceeds after she had been served with Gabriele’s application, despite her obligation under s. 67(1) of the SLRA, not to make any distribution of the deceased’s estate.
Usually, if the beneficiary named in a life insurance policy is someone other than the estate, the proceeds pass outside of the estate. However, according to s. 72 of the SLRA, such assets can be deemed part of the estate for the purpose of ascertaining the value of the estate and for funding an order for support of dependants. Therefore, according to s. 72(1)(f) and (f.1), the court found that the life insurance proceeds paid to Jessica were to be deemed part of the Deceased’s estate.
The court found that Gabriele was a dependant of the Deceased under s. 57 of the SLRA and that Jessica was not a dependant. The quantum of support to which Gabriele was entitled was held to be $40,000. Although less than the full amount of the life insurance policy, the court held that the portion of the proceeds spent by Jessica personally prior to notice of Gabriele’s application was not deemed to be available to fund the dependant’s support, nor were the amounts expended for the purpose of her obligations as estate trustee. However, because Jessica was the beneficiary of the funds, and had failed to comply with her obligations as estate trustee under s. 67(1), she was required to personally pay the award of $40,000 to Gabriele.
Thanks for reading.
I recently tweeted an article from the Wall Street Journal entitled Five Steps to Prepare for a Decline in Your Financial Cognitive Ability. The article points out that, although we easily consult health-care providers with respect to our physical health, we may have more difficulty recognizing our limitations and changes in our financial health. As we live longer lives, the likelihood of mental and cognitive decline increases, and accordingly, the need for a plan with respect to how to cope with such a decline increases as well.
During the holidays, many of us host and attend family gatherings, which may provide a good opportunity to discuss your plans and wishes with your loved ones, at a time when everyone is together in a relaxed, low-pressure environment. While such conversations are not always easy, they are a necessity to ensure that your wishes will be carried out, and that your family will not be stressed in attempting to discern exactly what your wishes are.
The first of the five steps suggested in the article is to talk to your spouse to ensure that both parties are in agreement with respect to your financial plan. The second suggestion is to organize your finances as clearly and simply as possible. If your finances are spread out over several banks or institutions, consider consolidating accounts. At the very least, it may be wise to create an inventory of all accounts, investments, and assets so everything can be easily located and accounted for.
The next step is to review your Will and your Power of Attorney for Property, or if you do not yet have either of these documents, arrange to have them prepared by a lawyer. With respect to your Will, ensure that you have clearly thought out your choice of executor, the bequests to beneficiaries, and anyone you may be leaving out. With respect to your Power of Attorney, of course, the most vital element is that you choose a trustworthy Attorney.
The fourth suggestion is to assign roles to your family members. This involves asking the individual if they would be willing to assume the role you have selected, and communicating within your family with respect to who will be responsible for which tasks. By having this conversation in advance, and explaining the reason for your choices, you may be able to avoid any surprised or hurt feelings at a later date, based on who has, or has not, been selected for a particular role.
The last suggestion included in the article is to seek professional assistance and advice from a lawyer and/or a financial professional. They can help you feel comfortable with the planning you have put in place and give you, and your family, peace of mind.
Thanks for reading.
As Christmas Eve is just hours away, it seems fitting to focus today’s blog on family holiday traditions and estates. One such tradition has been in the Ford (not the ex-Toronto mayoral) family for the past 137 years. Yes, this is a blog about a fruitcake. Not to be confused with a Panettone, but a fruitcake baked by Fidelia Ford in 1878 that has since passed through her issue over three generations.
In 1878 Ms. Ford baked a fruitcake that would age for a year and be eaten during the next holiday season. However, Ms. Ford passed away prior and her surviving children considered the fruitcake as the most immediate link to their mother. In fact, the Ford family genealogy states that “…there wasn’t anyone to bake another, so they decided to keep it out of respect for her memory”. As such, they kept the fruitcake in her honour.
It does not appear that Ms. Ford’s Last Will left any specific instructions as to the preservation or management to the custodians of this decadent asset. Steadfastly, the fruitcake has been stored in a glass dish with only one significant intrusion when an Uncle Amos attempted to eat the fruitcake in 1964. This would of course have arisen many years after the fruitcake would have deemed to have been disposed of in accordance with the twenty one year rule against perpetuities.
Lately however, according to a recent article in The Globe & Mail the fruitcake family tradition seems uncertain as Ms. Ford’s issue seem not to want it. Like so many atypical testamentary dispositions, the author of the article states that “an heirloom for one generation becomes a headache for the next. Tradition becomes chore”.
Alas, many hours on google has left me none the wiser as to whether any testamentary trusts have been settled for the benefit of a fruitcake…or any other food for that matter. I am also none the wiser as to whether Ms. Ford’s fruitcake would have fallen into her residue or distributed according to the personal property provisions in her Will (assuming she had one).
While I cannot admit to liking fruitcake, especially the antiquated varietal, Ms. Ford’s story provides a pleasant holiday reminder to enjoy family and traditions that bring family together. And, because this is an estates blog – to ensure that all assets are addressed, including those with sentimental value, in your testamentary documents.