We have made note this week of the fact that a beneficiary designation is subject to considerably less legal formality than a Will. The fact that many Canadians do not have Wills often means that the designation of a beneficiary is the primary means by which an individual engages in estate planning. This is particularly true of those in their thirties or forties whose largest assets will often be RRSPs or life insurance policies. We have noted that such estate planning has the benefit of clearly directing assets to the intended beneficiary without the need for obtaining probate of a Will.
Certainly, non-legal professionals such as financial advisors will frequently highlight the benefits to their clients of structuring their affairs in such a way as to minimize estate administration tax. Lawyers, as well, will recommend such benefits, mindful of the pitfalls associated when a beneficiary does not act as intended. For instance, where an individual designates a beneficiary of an asset, not for that person’s personal benefit but rather, to distribute in accordance with a Will or some other written or verbal instructions (ie. a secret trust), the issue of trust becomes paramount.
What if the beneficiary does not distribute the asset as the deceased intended but keeps it for herself? For the litigation lawyer, it may be a serious challenge to prove a breach of trust on behalf of disappointed beneficiaries. The designated beneficiary can simply take the position that she has received all right, title and interest in the asset. If the designated beneficiary is herself named executor of the deceased’s estate, there may well be some legitimate questions as to whether she was expected to distribute the asset in accordance with the Will. The designation, if contained in the Will, may ideally clarify whether the asset is to be subject to the terms of the Will.
Have a great weekend and we’ll be back on Tuesday, David. ——–
BREACH OF FIDUCIARY DUTY BY THE WILL MAKER – EXECUTOR AND TRUSTEE’S ROLE – CONCLUDING THOUGHTS – WHAT TO DO ABOUT ABUSE CLAIMS? – PART VI
While a claim for damages against the assets of an estate for breach of parental fiduciary duty may be rare and fraught with evidentiary problems, it is clearly founded on the strong common law principals of fiduciary duty and the overall concept is supported by the Supreme Court of Canada. Given the nature of these claims, a case of this type can be persuasive and can present a compelling problem for any executor of an estate.
The head of damages has been identified by the Supreme Court of Canada and it really is a question of quantum. In the right circumstances, combined with a proper and legitimate will challenge, a claim of this nature can change the overall dynamics of any estate litigation matter. At the very minimum, it may have a salutary effect on the considerations of the executor and beneficiaries.
Nonetheless, given the evidentiary frailties of these types of claims, one must be careful not to embark on such an action without careful consideration of the cost consequences. In this regard, see Fox v. Fox Estate (1994), 5 E.T.R. (2d) 174 (Ont. Gen. Div.), (1996) 10 E.T.R. (2d) 229 (Ont. C.A.), Application for Leave to Appeal to the Supreme Court of Canada submitted September 13, 1996 and refused January, 1997; Schnurr, B.A., "Estate Litigation – Who Pays the Costs?" , 11 E.T.J. 52; and Hull, I.M., "Costs in Estate Litigation", 18 E.T.R. (2d) 218.
We hope this review of this interesting area of fiduciary duties has been helpful.
All the best, Suzana and Ian. ——–
BREACH OF FIDUCIARY DUTY BY THE WILL MAKER – EXECUTOR AND TRUSTEE’S ROLE – LIMITATION ISSUES? – Part IV
As to the question of fiduciary duty between parent and child, the Supreme Court of Canada in M.(K.) v. M.(H.) held that the relationship of parent and child is fiduciary in nature and that incest was a breach of the parent’s fiduciary duty to protect the child’s well being and health.
It is perhaps the most compelling defence available to counsel defending a parent in such cases that the claim has been brought outside of the conventionally recognized limitation periods.
A significant portion of the decision in M.(K.) v. M.(H.) was devoted to the question of the limitation defences raised by the parent.
In contrast, counsel for the child argued that incest was a separate and distinct tort which was not subject to any limitation period; that incest constituted a breach of fiduciary duty by a parent and is not subject to any limitation period; and if a limitation period applies, the cause of action does not accrue until it is reasonably discoverable. Furthermore, it was argued that the child was of unsound mind pursuant to section 47 of the Limitations Act; that the tort is continuous in nature and the limitation period does not begin to run until the child is no longer subjected to parental authority and conditioning; and that the equitable doctrine of fraudulent concealment operates to postpone the limitation period.
The limitation defence failed and the Supreme Court of Canada held that the tort claim, although subject to limitations legislation, does not accrue until the child is reasonably capable of discovering the wrongful nature of the parent’s acts and the nexus between those acts and her injuries. Furthermore, that the discovery took place only when the child entered therapy and the lawsuit was commenced promptly thereafter.
All the best, Suzana and Ian. ——–
BREACH OF FIDUCIARY DUTY BY THE WILL MAKER – EXECUTOR AND TRUSTEE’S ROLE – WHAT TO DO ABOUT ABUSE CLAIMS? – PART II
A claim for breach of the parent/child fiduciary relationship can have an impact in the context of claims in estate litigation matters.
As is sometimes the case, parents may choose to treat their children unequally under the provisions of their will. In these kinds of circumstances, a disgruntled child may challenge the validity of the will and so become a party to estate litigation.
A further claim against the assets of the estate for breach of parental fiduciary duty may be a useful avenue for a child to pursue against the estate of a parent.
As has been known to happen, a parent may have a long-standing bias against one child or another, which is reflected in an unequal distribution of his or her estate. This long-standing bias may have been as a result of an estrangement as between the parent and the particular child. The reasons for the estrangement are usually numerous and it can be difficult to pinpoint precisely the actual reason for the unequal treatment of the child.Often, the estrangement between parent and child dates back many years and, in some situations, the breakdown of the relationship ties closely to the child leaving home at an early age and then not pursuing any meaningful contact with his or her parent.
In our view, when dealing with these kinds of cases, a careful inquiry must be undertaken into the circumstances of the estrangement, dating even back to childhood.
More to come on this interesting topic in a future blog …
All the best, Suzana and Ian. ——–
BREACH OF FIDUCIARY DUTY BY THE WILL MAKER – EXECUTOR AND TRUSTEE’S ROLE – WHAT TO DO ABOUT ABUSE CLAIMS? – PART I
In Cummings v. Cummings, the Court of Appeal affirmed the decision made by the application judge at first instance.
In coming to this conclusion, the Court of Appeal was strongly influenced by the concepts set out in the decision of the Supreme Court of Canada in Tataryn v. Tataryn Estate ( 2 S.C.R. 807 (S.C.C.)).
The decision in the Tataryn case held that moral considerations were applicable to a determination as to the amount of a dependant’s support award in the context of the British Columbia statute (The Wills Variation Act, R.S.B.C. 1979, c. 435).
Until the Cummings v. Cummings decision, the approach to quantifying dependant’s relief claims in Ontario was to essentially ignore the Tataryn moral considerations approach. This was as a result of the fact that the Tataryn decision was an appeal from the British Columbia Court of Appeal and was in respect to section 2(1) of the Wills Variation Act, which included substantially different wording than that of the SLRA. The Wills Variation Act assists dependants where there is a will which does not "in the Court’s opinion, make adequate provision for the proper maintenance and support of the testator’s wife, husband or children".
It is this language that has allowed the British Columbia Courts to approach the whole question of quantifying dependant’s relief on a very different basis and on a moral conviction approach. The language in the Wills Variation Act is broadly drafted and essentially allows the Court to do what it thinks is adequate, just and equitable in the circumstances.
With the Cummings v. Cummings decision essentially embracing the decision of Tataryn, a very different approach must be considered in respect of quantifying dependant’s relief claims in Ontario.
We hope this case gives you an idea of the application of the basics legal definitions and terms.
All the best, Suzana and Ian. ——–
Some of those persons that may make dependant’s relief claims include:
(a) the deceased’s wife or husband;
(b) a brother or sister of the deceased;
(c) a former wife or husband of the deceased;
(d) a child or grandchild of the deceased; and
(e) a person treated by the deceased as a child of the family in relation to any marriage of the deceased.
The limits set out by the legislators on testamentary power are not firmly entrenched; however, there is still a struggle between the choice of providing a reasonable level of support for dependants and the enforcement of a moral duty of a deceased to divide his or her estate amongst his or her dependants. As for the powers of the Court to make an order for support, section 58(1) of the Succession Law Reform Act provides as follows:
- 58. (1) Where a deceased, whether testate or intestate, has not made adequate provision for the proper support of his dependants or any of them, the Court, on application, may order that such provision as it considers adequate be made out of the estate of the deceased for the proper support of the dependants or any of them.
Some preliminary considerations include:
(a) support claims are paid out of testate or intestate estates;
(b) "proper support" is truly a term of art and we will explore it in future blogs;
(c) the "Court" means the Superior Court of Justice;
(d) the claim must be made on Application;
(e) much like "proper support", "adequate provision" is a term of art that needs careful consideration; and
(f) the claim may be paid out of the assets of the estate, meaning estate assets in the usual sense plus any "clawed back" assets referred to in section 72.