Estate Litigation

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DISINHERITING CHILDREN WHO MARRY OUTSIDE THE FAITH

October 3, 2010 in Applications for the Opinion and Direction of the Court, Capacity, Challenging the Validity of Wills, Estate Litigation, Executors / Trustees, Halacha and Estate Litigation, Public Policy & Estates, Wills by Charles Wagner

While I have previously addressed the legality of disinheriting intermarried children in both in the Tribune (http://bit.ly/9ADVJY ) and in the Ontario Lawyer’s Weekly (http://bit.ly/bv9Rjm) a recent case suggests another review is warranted.    In Re Estate of Max Feinberg (http://bit.ly/cb5CKo ) three Illinois courts reviewed what they called the Jewish Clause which stated: “A descendant of mine other than a child of mine who marries outside the Jewish faith (unless the spouse of such descendant has converted or converts within one year of the marriage to the Jewish faith) and his or her descendents shall be deemed to be deceased for all purposes of this instrument as of the date of such marriage.”

The court weighed testamentary freedom against the common law’s disdain for wills that restrain people from entering into an otherwise legal marriage.  The Illinois’ court of first instance and appellate court ruled that the Jewish Clause was invalid because it seriously interfered with the right of individuals to marry a person of their own choosing.  It was now up to the Supreme Court of Illinois. 

The Illinois Supreme Court held that the Jewish Clause was valid.  The test was whether the provision was capable of producing harm that its enforcement would be contrary to the public interest. The Illinois Supreme Court upheld the Jewish Clause because they placed a premium on the right of individuals to decide what happens to their assets after they die. They disagreed with the lower courts who suggested that the clause in question was a restraint of marriage.  

What is the position of other jurisdictions?  As Illinois’ Justice Greman, pointed out, “… In most states they allow this – not just with Jews but for Catholics and others.” So what about Ontario?  The Ontario Court of Appeal, in a non-binding aside (obiter), addressed this issue in the Fox Estate case (http://bit.ly/98b5gw).  Fox’s will gave the executor absolute discretion to use trust money for his grandchildren.  The executor removed all the money to disinherit her son because he married a non Jew.  At issue was whether the executor’s conduct was proper.  The judge commented, “….in response to a query from the bench, counsel in this case were not prepared to argue that any court would today uphold a condition in a will which provides that a beneficiary is to be disinherited if he or she marries outside of a particular religious faith”.

Given the treatment of this issue in the US, does that mean a Jewish Clause would be void in Ontario? Maybe – Maybe not. The fact that three Illinois courts came to different conclusions should tell you that this issue is complicated and this review should not be taken as legal advice. I receive calls about this and other similar issues all the time. Cases often turn on the specific facts.  If you have a legal question relating to something similar, you are best advised to seek out competent legal counsel to determine your best course of action.

Money Missing? Powers of Attorney, Executors and Adverse Inferences

September 21, 2010 in Applications for the Opinion and Direction of the Court, Estate Litigation, Executors / Trustees, Orders for Assistance, Passing of Accounts and Executor's Fees, Retirement and Removal of Trustees by Charles Wagner

Very often a parent appoints the favourite child to manage the parent’s property (“power of attorney”) or be the executor under the parent’s will.   Perhaps the child is honest but has no idea what obligations are involved with being an attorney for property or as an executor and fails to keep proper records.  Perhaps that child is very dishonest and the lack of records is simply his way to hide the improper use of his parent’s money. So what typically happens? 

The power of attorney or executor may put his money together with his parent’s money (intermingling).  Caregivers may be paid cash and there are no receipts.  Expenses (both appropriate and inappropriate) may be incurred and no records are kept.  All of the above scenarios, which may be very innocent, are problematic. 

There is both a common law and legislative duty to keep accounts of all transactions involving the parent’s property by the attorney for property (FN1) and the executor (FN2) if called upon by those with a financial interest to pass those accounts.  What this means is that The Executor/Attorney for Property prepares his records in a form acceptable to the court and a judge approves of the accounts.

Based on my experience in this area it seems as if the strict obligation to keep proper records is often “honoured in the breach”.  People sometimes just do not keep proper records.  So in the scenario I raised above let’s assume this favourite son is unfamiliar with the fiduciary duty (F3) to keep proper records and to show his records, if asked, to people with a financial interest in his mother’s affairs. So what happens if – like in many cases – the son has no records and cannot show where he spent mom’s money? The court’s often will draw on adverse inference and assume the son has used the money for his own purposes and not for his mother’s benefit.

In Zimmerman v. McMichael Estate (FN4) Justice Strathy provides a wonderful summary of the obligations to account and the risks for not doing so.  It is worthwhile for anyone interested in this area of law to review this case.  In part, His Honour explains,

  1. A trustee (FN4) must keep a complete record of his/her activities and be in a position at all times to prove that he/she administered the trust prudently and honestly. He/she must have the accounts ready and give full information.
  2. A trustee must make a proper accounting as a condition precedent to being awarded compensation.
  3. An adverse inference (FN5) may be drawn if the trustee fails to retain receipts supporting substantial cash withdrawals or expenses charged against the incapable person’s property and that attorney will be held personally liable for the unsubstantiated withdrawals. (FN 6).

 

The bottom line is that those people who take on the responsibility of being a power of attorney and or an executor should familiarize themselves with the obligations flowing from that position.  Some good sites to look at to start your research are listed below in the footnotes.  As well, I suggest you see the following:

  1. Executorship:  A Guide for Those Called Upon to Act as an Estate Trustee published by the Certified General Accounts of Ontario http://www.cga-ontario.org/assets/file/publication_executorship.pdf  
  2. Objections to Accounts  http://www.estatelawcanada.ca/category/passing-of-accounts-and-executors-fees/
  3. Elder Abuse in Ontario http://www.estatelawcanada.ca/category/court-appointed-guardians-of-property-and-of-person/
  4. Put Your Own Interests Aside – Poa http://www.cbwagnerlaw.com/articles/aside-interests.php

 

 _________________________________________________________________________________________

 FN1 Someone who is appointed as an attorney for property has a duty to keep proper records which includes a duty to obtain and keep receipts.  In Ontario that common law duty has been codified under the Substitute Decisions Act, 1992, S.O. 1992, c. 30 ( see sections 32(6)   Duties of guardian, Accounts;  33(1) Liability of guardian and  42; Passing of Accounts) as well as Accounts and Records of Attorneys and Guardians, O. Reg. 100/96

 FN2.  The RULES OF CIVIL PROCEDURE – R.R.O. 1990, Reg. 194 outlines how the accounts should be prepared.  Please see Rules 74.15 and 74.16.  Also see section 39 of the Estates Act and section 23(1) of the Trustee Act, R.S.O. 1990, c. T.23.  As well the LSUC has a very useful site indicating steps to be taken to pass accounts at http://rc.lsuc.on.ca/jsp/ht/passingAccounts.jsp#s9

 FN3.  A fiduciary duty describes a special obligation of a person placed in a position of responsibility or trust in which that person manages the assets or property of another person.  For example, a power of attorney and executor are both at common law and by statute viewed as fiduciaries.  So a person who is appointed as power of attorney has an obligation to act honestly, in good faith and strictly in the best interests of the person who granted that power of attorney.  The same is true for an executor who must act strictly in the best interests of the estate.  Please see 32(1) of the Substitute Decisions Act, 1992, S.O. 1992, c. 30

FN4.  A Trustee includes an executor under a will and these obligations apply equally to a power of attorney.

 FN5  Justice Strathy did not use the words “adverse inference”.  This phrase is my own based on his comments in paragraph 35 of the case.

 FN6  This can be found on line at http://www.canlii.org/en/on/onsc/doc/2010/2010onsc2947/2010onsc2947.pdf .   In paragraph 35 of his endorsement Justice Strathy refers to a number of cases to support his proposition including Lanthier v. Dufresne Estate, [2002] O.J. No 3397, [2002] O.T.C. 671 (S.C.J.) at paras. 52-57; Re Ronson, [2000] O.J. No 1294 (S.C.J.) at paras. 15-20.

Death Can Cheat a Creditor

June 30, 2010 in Claims Against Estate: Summary Procedure, Estate Litigation by Michelle Soer

A creditor may enforce a judgment for the payment or recovery of money by garnishment. Garnishment is a procedure whereby moneys owing to the debtor (garnishee) by a third person attach directly to the creditor (garnishor). Garnishment attaches to moneys held in a RRSP.[1] In life, there is little question that RRSP’s vest in the owner of the RRSP.[2] At death, section 2(1) of the Estates Administration Act states that any real and personal property of a person that vests in that person during life, is transferred to the personal representative of that person at death, regardless of whether the property is disposed of by will or any other testamentary disposition. [3]

In Amherst Crane Rentals Ltd. v. Perring, 2002 CarswellOnt 2362, the Deceased died in April 1998, leaving his wife as estate trustee and sole beneficiary of his estate. His wife was also designated the beneficiary of two RRSPs held by deceased, totaling about $115,700. The wife received the RRSPs in May, 1998. The estate made a voluntary assignment into bankruptcy in April, 1999. In October, 1999 the trustee in bankruptcy demanded payment of proceeds of RRSPs from wife. The wife refused and in November and December of 1999 the wife collapsed the RRSPs and paid the net proceeds into her bank account. The trustee in bankruptcy assigned its claim to a creditor.

The creditor then brought an application for a declaration that proceeds of RRSPs were held in trust for it.

The lower court dismissed the application and held that upon the death of an owner of RRSPs the proceeds of these RRSPs transfer to the designated beneficiary and not the estate. The Honourable Justice Cameron stated that the death of the owner of the RRSPs terminated a creditor’s right to claim interest from the RRSPs. Simply because the legislation does not specifically exempt RRSPs from creditor’s hand does not result in the conclusion that creditors have a claim to RRSP proceeds where there is a designated beneficiary.

The lower court referred to section 72 of the Succession Law Reform Act which deals with dependant’s relief. This section allows a court to include assets not normally considered estate property for the purposes of valuing the estate and to satisfy valid dependant support claims. The provision confirms the social policy that a deceased’s dependants deserve support and implies that an RRSP with a designated beneficiary would, absent the section, not be part of the estate of the deceased. If an RRSP is immediately considered part of the estate, section 72(1)(g) of the Succession Law Reform Act would be “meaningless.”[4] The Court of Appeal agreed with the lower court and dismissed the appeal.[5]

So what does all of this legal jargon mean for beneficiaries of a deceased’s estate?

In effect, the court has sidestepped the issue of priorities in the Bankruptcy and Insolvency Act in favour of beneficiaries. The court held that RRSPs do not form part of the estate of the deceased but flow directly to the designated beneficiary. Moreover, a creditor cannot seek payment of its debt directly from the beneficiary of the RRSPs as a creditor cannot claim any interest in proceeds that do not form part of the estate of a debtor.

The lower court and the court of appeal recognized that often times people designate their spouses as beneficiaries of their RRSPs as these are vehicles for tax-deferred savings over the years. This designation is frequently for the recognition of the unpaid work the surviving spouse has done to contribute to the deceased’s life. The court of appeal went further and stated that a spouse is not a volunteer beneficiary but rather “a spouse has given consideration or a quid pro quo during the lifetime of the other spouse, and in return, receives the RRSP proceeds for support after the death of the other spouse.”[6] Moreover, in many situations RRSPs are the only assets that a beneficiary may receive upon the death of a spouse or family member.[7] Life partners of the deceased have “provided support to their spouses with the expectation that they will be supported after the death of their spouses.”[8]

Stated in the words of the Honourable Justice Cameron: “Death terminates the creditor’s rights to claim the property. He is then too late.”[9]

[1] Frank Bennett, Bennett on Collections, 5th ed. (Toronto: Carswell, 2003) at 228.

[2] Amherst Crane Rentals Ltd. v. Perring, 2002 CarswellOnt 2362 (Ont. Sup. Ct.), para 8.

[3] R.S.O. 1990 c. E.22.

[4] Supra, note 2 at para 15.

[5] Amherst Crane Rentals Ltd. v. Perring, 2004 CanLII 18104 (ON C.A.).

[6] Ibid at para 30.

[7] Supra note 2 at para 25.

[8] Supra note 5 at para 33.

[9] Supra note 2 at para 29.



May An Executor Buy Estate Assets?

June 10, 2010 in Applications for the Opinion and Direction of the Court, Estate Litigation, Executors / Trustees, Orders for Assistance, Passing of Accounts and Executor's Fees, Retirement and Removal of Trustees, Uncategorized, Unjust Enrichment, Constructive Trust and Quantum Meruit Claims in Estates, Variation of Trusts by Charles Wagner | 4 comments

Executors often want to buy assets belonging to an estate. Beneficiaries often suspect the executors of wrong doing. So I often am asked whether it’s legal for an executor to buy an asset from the estate. The short answer is maybe, possibly, but not usually.

To demonstrate the problem let’s imagine that Ben just died. He and his brother Harry owned an apartment building. These brothers loved and trusted one another their whole lives. Ben never married and treated Harry’s wife like his own sister and Harry’s kids like his own children. Ben was appointed as the executor and estate trustee for his late brother’s estate. The beneficiaries of the estate are the deceased’s wife and two children. The only asset of the estate is 50% of the apartment building.

Ben gets two independent appraisals valuing the apartment building at $2 million. He offers the estate $1.5 million dollars for its ½ of the apartment building. Each of the beneficiaries gets independent legal advice approving the sale. So what do you think? Under these circumstances can Ben buy the estate asset eventhough he is the executor and estate trustee? Would you change your opinion if immediately thereafter Ben gets a call and someone offers to buy the apartment building for $4 million?

The general rule of thumb, as articulated by Professor Waters in his book Waters Law of trusts is that “It is a fundamental principle of every developed legal system that one who undertakes a task on behalf of another must act exclusively for the benefit of the other, putting his own interests completely aside. In the common law system this duty may be enforceable by way of an action by the principal upon the contract of agency, but the modes in which the rule can be breached are myriad, many of them in situations other than contract and therefore beyond the control of the law of contract. It was, in part, to meet such situations that Equity fashioned the rule that no one may allow his duty to conflict with his interest”.

Estate Trustees/Executors are considered fiduciaries. The common law is very clear that as fiduciaries have an exclusive duty of loyalty to the beneficiaries. If so, a court will wonder how could Ben negotiate a deal fairly when he represents the buyer (himself) and the seller (the estate)? That is why at common law, the fiduciary is absolutely forbidden from dealing with estate property for his own benefit regardless of how honest or fair the purchase may be. Nonetheless, despite that general rule of thumb, the courts have not always been consistent in how they apply this rule. While there is a consensus that the executor must act in a way that is in the best interests of the estate the courts differ on how strictly to apply the rule.

Some court decisions suggest that Ben could not buy the estate’s interest in the apartment building because even if he was being honest and even if he meant well he cannot possibly give the exclusive loyalty to the beneficiaries when he himself stands to make a profit. Those cases would suggest any such purchase is a breach of fiduciary duty and the deal can later be set aside even if the purchase was reasonable and the beneficiaries were not harmed. For a review of those cases I refer you to CED Trusts VI.4.(c).(ii) and WatersTrusts 18.II.

Other courts have considered the Fiduciary’s duty of loyalty as being intended to prevent actual harm to the beneficiaries. If there is no harm then these cases suggest there may be some flexibility that would permit the purchase. If Ben could show that the sale caused no harm to the beneficiaries and that his actions were reasonable his purchase may be allowed. For example, Ben might argue that he paid over market value because the apartment was worth more to him because he already owned ½ . Ben might say that the beneficiaries would not have gotten a price as high from anyone else. However, a disgruntled beneficiary might suggest that Ben did not disclose that he had an offer for $4 million dollars for the apartment.

While at common law, the fiduciary is absolutely forbidden from dealing with estate property for his own benefit regardless of his honesty and fairness of the purchase, there are infrequent circumstances that courts have allowed fiduciaries to buy trust property. Examples include Re Nathanson (1971), 18 D.L.R. (3de) 495 (N.S.T.D.) and Mochan v. Omega Oil & Gas Ltd, [1988] 1 S.C.R. 348 (S.C.C.). In these cases the courts approved of sales to a fiduciary. In one instance the trustee showed he unsuccessfully tried to find a buyer and the sale was in the best interests of the estate. In the other it was clear the price was fair and those to whom the fiduciary duty was owed consented to the sale with full knowledge.

Fiduciaries who wish to purchase trust property are well advised to make 100% full disclosure to beneficiaries and obtain their consent to the sale of trust property to the trustee. As well, it would be prudent to for all the beneficiaries to obtain independent legal advice. Furthermore, the purchase price should be somewhat more then fair market value. With all these arrows in his/her quiver the trustee might be well advised to seek preapproval of the sale from the court by bringing an application for the opinion, advice and direction of the court under Rule 14.05(3)(d), and under section 60 of the Trustee Act, R.S.O. 1990, c. T.23. It may happen that a judge will decline to hear the application because they might believe that preapproval of a sale is not the advice or opinion contemplated by the legislation. A judge might point out that if this offer to purchase came from a arms length third party no application for directions would have been made. One senior counsel suggested to me that there are other legal paths which might be a better option. But that – is for another time and another blog. The bottom line is that anyone faced with this issue, whether he/she be a trustee or a beneficiary, should not treat this blog as legal advice and is best advised to seek out a competent experienced lawyer to guide them.

When is Probate Not Needed

May 4, 2010 in Applications for the Opinion and Direction of the Court, Claims Against Estate: Summary Procedure, Elder Law, Estate Litigation, Executors / Trustees, Probate, Wills by Charles Wagner | 3 comments

It is important for people who wish to stop estate assets from being distributed to know that a certificate of appointment (“Probate”) is not  always necessary to effect the transfer of assets.  For example,

  1. When there is jointly-owned real property or bank accounts those assets pass to the surviving joint tenant by right of survivorship.  In this instance the only thing needed by the surviving joint tenant is to have a death certificate.  There may  still ways to prevent the transfer depending of the facts specific to the situation.
  2. Real Estate,  under certain circumstances, may be transferred under a will without probate.  See Bob Aaron’s article at http://www.thestar.com/article/248950 and the Memo to Land Registrars from Kate Muray dated October 30, 2000 at Registrar’s Memo where land registars are provided guidelines under what circumstances they are authorized to waive the requirement of a certificate of appointment of estate trustee when approving the transfer of property.
  3. Insurance Policies, RRSPs may designate a beneficiary and probate may not be necessary to access those funds.
  4. Shares in a private corporation.  In order to avoid probate fees sophisticated investors use multiple wills.  Since a great deal of wealth may be concentrated in the shares of these private corporations the testator may have made a separate will to deal with these shares and probate would not be necessary.  For those interested in this topic I refer you to the Granovsky Estate case.

For those who wish to stop the distribution of non probatable  assets it is important to know that more might be required then simply blocking probate by filing a notice of objection.  If the asset in question is real property then one should contact a lawyer and investigate the possibility of obtaining a certificate of pending litigation or caution against title.  If one seeks to stop the transfer of shares then one must go to court and seek judicial intervention.  Those who ignore these possibilities do so at their peril.

How to Apply for Probate In Ontario

May 4, 2010 in Challenging the Validity of Wills, Elder Law, Estate Litigation, Executors / Trustees, Orders for Assistance, Probate, Wills by Charles Wagner

The best step an estate trustee can take is to approach an experienced solicitor for assistance in obtaining probate.  The process will likely go far quicker and more efficiently.  For those who wish to educate themselves on how to obtain probate here are some sites that might prove useful:

  1. The Law Society of Upper Canada at http://rc.lsuc.on.ca/jsp/ht/prepareAppCertAppEstateTrusteeWithWill.jsp#s7
  2. Ministry of Attorney General – Where do I file an application for “Letters Probate”
  3. See RULES OF CIVIL PROCEDURE – R.R.O. 1990, Reg. 194 Rules 74.04, 74.05, 74.05.1, 74.06, 74.07, 74.08, 74.09
  4. sections 5-7  of the Estates Act, R.S.O. 1990, c. E.21
  5. Estates Administration Act
  6. Estate Administration Tax Act
  7. Succession Law Reform Act

Seduction, Marriage and Elder Abuse

April 11, 2010 in Capacity, Challenging the Validity of Wills, Dependant Support Claims, Elder Law, Estate Litigation, Executors / Trustees, Unjust Enrichment, Constructive Trust and Quantum Meruit Claims in Estates, Wills by Charles Wagner

Maurice Banton was an 88 year old father too unwell to live alone. His children moved him into a senior’s residence. Maurice meets Muna, a waitress working at the senior’s residence, and romance blooms. Did I forget to mention Muna was 50 years younger that Maurice?

This was the case of Banton v Banton (FN1) and its fact situation underscores the risk to the elderly being victimized by financial predators. Was Muna really after Maurice’s money? To quote the judge, “I have no doubt at all that this influence was deliberately exerted to enable her to obtain control and, ultimately, the ownership of his assets.”

Despite the protestations of his children, the young waitress woos the elder Mr. Banton and gets him to marry her. Unbeknownst to his children the young lady also contacts her lawyer and arranges for her new husband to make new wills which cut out his children. Why would a father who loved his children do such a thing? The court found that “It is the case of a lonely, depressed, terminally ill, severely disabled and cognitively impaired old man whose enfeebled condition made him an easy prey for a person like Muna with designs on his property.” Maurice suffered from the delusions that his children did not love him and only wanted his money. This insane delusion directly impacted on the decision to disinherit his children.

It was clear to the judge that the decision to give him money to his wife was not Mr. Banton’s. On the contrary, that decision was really the wife’s who imposed her will on him. The new Mrs. Banton played on her husband’s upset that his children sold his house and, contrary to his hope and expectation, they had put him into Lifestyles instead of allowing him to live with one of them. George Banton believed his unfounded allegation that his children were not interested in him and were only interested in his money. So does this mean Mrs. Banton gets nothing? Not so fast.

The court noted that while the man did not have the capacity to make a will, he did have the capacity to get married. Since the threshold for the capacity to marry was so low, the children’s attempt to annul it did not succeed. Apparently, even a man who is lonely, depressed, terminally ill, severely disabled and cognitively impaired had sufficient memory and understanding to continue to appreciate nature and responsibilities of marriage and that was sufficient to validate the marriage. Furthermore, in Canada, Ontario’s Succession Law Reform Act provides that a Will is revoked by the marriage of the testator so that despite the fact that Muna deliberately planned this charade it looked like Maurice’s previous Will was cancelled and the woman who schemed to obtain his property would succeed. Under the Succession Law Reform Act a spouse would inherit a preferential share of Maurice’s estate ($200,000.00) under an intestacy plus her distributive share. Fortunately for Maurice’s children, Justice Cullity found a way to do the right thing.

In this case, the children were fortunate that the judge found that the father’s residence was really held in trust for the children so it did not form part of the estate. Muna did not get much money. This time the children were lucky. Unfortunately, that is not always the case.

Anecdotally, as someone whose practice focuses in on estate litigation and elder abuse I see it happening more often. There is a very interesting paper (FN2) published by a Statistics Canada based on Statistics Canada sources. They report that “…overall, 7% of older adults experienced some form of emotional or financial abuse by an adult child, caregiver, spouse or common law spouse with whom they had contact in the five years prior to the survey. The vast majority of emotional and financial abuse was committed by spouses. Senior men (9%) were more likely than senior women (6%) to report being victims of emotional or financial abuse.” To measure financial abuse Statistics Canada and the Toronto Police Service (FN3) asked seniors certain questions which I have summarized below. If one suspects the answer is yes to more than half it’s time to seek out professional counsel for advice.

Has the alleged rogue
1.     tried to limit the elderly person’s contact with his family or friends?
2.     put the elderly person down or calls them names to make them feel bad?
3.     is jealous and doesn’t want the elderly person to talk to other men/women?
4.    Threatens to withdraw care or threatens the elderly persons or someone close to the elderly person?
5.    demands to know who the elderly person is with or speaks to at all times?
6.    damages or destroys the elderly person’s possession or property?
7.    prevents the elderly person from knowing or having access to the elderly person’s income or financial information?
8.    tries to compel the elderly person to relinquish control over finances?
9.    tries to force the elderly person to give up something of value?
10.  they try to force you the elderly person sign documents which were not understood or to change Last Will and Testament or try to obtain Power of Attorney over your finances?
11.   introduced a new lawyer into the situation which the elderly person never met before and has no knowledge of the elderly person’s history?

Do not consider this case review as legal advice. It is presented merely to demonstrate some of the disputes dealt with by this firm and its counsel and how one court dealt with some of the issues relating to elder abuse. It is important to remember that each case has a different set of facts which may give rise to additional and or different remedies or prevent the court from awarding the same type of relief. If you believe your fact situation is similar and litigation may be pending or has already begun, it is always prudent to contact a competent lawyer who will deal with the specific fact situation and legal issues particular to your case.

FN1 Banton v. Banton 1998 CarswellOnt 3423, 164 D.L.R. (4th) 176, 66 O.T.C. 161. Available on line at http://www.canlii.org/eliisa/highlight.do?text=banton+cullity&language=en&searchTitle=Search+all+CanLII+Databases&path=/en/on/onsc/doc/1998/1998canlii14926/1998canlii14926.html

FN2 http://www.statcan.gc.ca/pub/85f0033m/85f0033m2001008-eng.pdf
FN3 http://www.torontopolice.on.ca/crimeprevention/elderabuse.php

Elder Abuse in Ontario

March 25, 2010 in Court Appointed Guardians of Property and of Person, Elder Law, Estate Litigation, Executors / Trustees, Passing of Accounts and Executor's Fees, Retirement and Removal of Trustees, Unjust Enrichment, Constructive Trust and Quantum Meruit Claims in Estates by Charles Wagner | 11 comments

There may be as many as 150,000 seniors being victimized in Ontario.(FN1) The elder abuse can take many forms. One common form of elderly abuse is financial. The purpose behind this blog is to provide some information to people on the first steps they might consider when discovering the problem. Let’s first talk about signs of financial elder abuse.

According to the Toronto Police Service Website(FN2) these are some signs to watch out for:

  1. Has the Power of Attorney been changed?
  2. Is the elderly person suddenly short of money to pay for living expenses?
  3. Has the elderly person been brought to sign legal documents they say they don’t understand?

Another red flag of financial abuse of the elderly occurs when large gifts or transfers of money take place. It is normal for children to become joint account holders in order to help parents pay their bill. However, it is suspicious for large chunks of cash to be transferred out of the joint accounts as gifts or expenses unrelated to the real owner of the account. Often the powers of attorney say that their elderly parent gave them this money as a gift. That might be true – but then again one must ask if there was there pressure placed on an elderly vulnerable person to make that gift? The common law(FN3) and Ontario’s Substitute Decisions Act(FN4) makes it very clear that a Power of Attorney is a fiduciary. What that means is that the power of attorney has undertaken to do things on behalf of a potentially vulnerable person and must act exclusively for the benefit of that person putting his interests totally aside. Taking money from an elderly person who is relying on that power of attorney may go against that Power of Attorney’s duty to act diligently, with honesty and integrity, and in good faith for the donor’s benefit. (FN5)

Options if you suspect Elder Abuse In Financial Matters

  • Call the Police. The Toronto Police Services Unit has a web site(FN6) which describes their efforts. Their contact numbers for a non emergency is 416 808 7040. For an emergency it is 411. The problem is that while the provincial government recognizes that the financial abuse of the elderly is horribly wrong, it is not always viewed as a crime(FN7). Furthermore, the police will sometimes view accusations against a power of attorney as a family dispute not warranting police charges.
  • Call the Office of the Public Guardian and Trustee (FN8). In the context of my practice I have dealt with the Public Guardian and Trustee a lot. They are altruistic and genuinely interested in helping the elderly. The problem is that they are under resourced and view themselves as a last resort. If they are convinced that it is a very serious financial abuse of an elderly person they will investigate a report that a mentally incapable person has been victimized and apply to court to become the abused elderly persons Temporary Guardian of Property. To report this type of serious abuse you can call the OPGT at 416 327 6348.
  • Educate yourself on Elder Abuse  issues and get Legal Help. An excellent place to start is with the Advocacy Centre for the Elderly (ACE) a community based legal clinic for low income senior citizens. They have an excellent website which will be helpful (http://www.acelaw.ca/) and the lawyers at will talk to people on the phone and if more than a phone call is necessary they may make an appointment. Their phone number is 416-598-2656.
  • Hire a Lawyer and seek an accounting. Powers of Attorney have to keep records and receipts of all money they received on behalf of the person under their care(FN9). They also have keep records of the money spent. If you believe an elderly person is being financially abused write down all the facts you are relying upon to support that belief. The lawyer you hire will want to know:
  1. Who is the power of attorney for property?
  2. Who has control over the elderly person?
  3. What is your relationship to that elderly person?

This last point is very important because under the Substitute Decisions Act, the Power of Attorney must keep accounts of all transactions involving property. The courts take this duty very seriously. The court may, on application order that the attorney have to pass his accounts.

But who may apply to the court?  The elderly person in question, A dependant of the elderly person, The Public Guardian and Trustee,  The Children’s Lawyer, A judgment creditor of the elderly person and Any other person who seeks and obtains permission of the court to apply.

If a court has found that the power of attorney abused their position the court can remove him/her, appoint a new guardian of person. If that Power of Attorney has been unjustly enriched at the expense of the elderly person then the court may order restitution. Now it may be impossible to recover the asset taken in its original form and the court may provide a tracing order

If you need a lawyer it is always a good idea to ensure that the person you hire has expertise in the area. If you do not know someone like that you can contact the Lawyer Referral Service provided by the Law Society of Upper Canada at http://www.lsuc.on.ca/public/a/faqs—lawyer-referral-service/

It would be a mistake to treat this blog as substantive legal advice. For those considering commencing an application to compell an accounting, there is no substitute for hiring a competent lawyer whose own research, analysis and judgment should be canvassed.

Here are some resources which may be of assistance:

  1. Ontario Ministry of the Attorney General website. See the section on Elder abuse: http://www.attorneygeneral.jus.gov.on.ca/english/justice-ont/criminal_law.asp#elder
  2. Advocacy Centre for the Elderly: http://www.acelaw.ca/services.php
  3. Public Health Agency of Canada website. This discusses the financial abuse of the elderly and possible ways to stop it. http://www.phac-aspc.gc.ca/ncfv-cnivf/publications/agefinancialab-eng.php
  4. Ontario’s Seniors’ Secretariat http://www.culture.gov.on.ca/seniors/english/programs/elderabuse/

FN1  http://www.onpea.org/english/contactus/stategytocombatelderabuse.html

FN2  http://www.torontopolice.on.ca/communitymobilization/elderabuse.php

FN3  http://www.cbwagnerlaw.com/pdf/put_your_own_interests_aside.pdf

FN4  http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_92s30_e.htm

FN5 See section 32(1) of the Substitute Decisions Act which provides “A guardian of property is a fiduciary whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit.”

FN6  http://www.torontopolice.on.ca/communitymobilization/elderabuse.php

FN7   http://www.onpea.org/english/contactus/stategytocombatelderabuse.html Note that certain financial abuse can be a crime.  For example, theft, fraud, forgery and extortion are criminal offences.

FN8  See a very good article “Elder Abuse:  The Hidden Crime”  by ACE which is the Advocacy Centre for the Elderly and Community Legal Education Ontario (CLEO) at http://www.cleo.on.ca/english/pub/onpub/PDF/seniors/elderab.pdf

FN9  The duty to account is set out in the Substitute Decisions Act.  There are regulations which set out how these accounts must be maintained.  Please see ONTARIO REGULATION 100/96    ACCOUNTS AND RECORDS OF ATTORNEYS AND GUARDIANS http://www.e-laws.gov.on.ca/html/regs/english/elaws_regs_960100_e.htm

 

First Step in Will Challenge in Ontario

March 24, 2010 in Challenging the Validity of Wills, Estate Litigation, Executors / Trustees by Charles Wagner

The first step to challenging a Will in Ontario depends on whether probate been granted? Any person can go to the local court registrar and do a search to see if the court has granted a certificate of appointment which established the validity of the Will (Probate). If probate has not been granted then the person objecting to the will can file a form called “a Notice of Objection” with the court registrar. If probate has been granted then the person objecting to the will has to bring a motion for the return of the certificate of appointment.

Why is this first step so important? Once the Notice of Objection is filed and in effect the Court Registrar will not issue a certificate of appointment (Probate). It’s important to remember that the granting of probate tells the world that the Will in question is the last will and testament of the deceased and a valid document. It tells the world that the executor is in charge of the assets of the deceased. There is a risk that a dishonest or uninformed estate trustee, when granted Probate, can sell the assets of the estate to an innocent third party or even taken them out of the jurisdiction. This means that even if the will challenge is successful collecting on that judgment may be frustrated because the assets are already gone and possibly untraceable.

Even if the probate application is made in Toronto the person challenging the will can file his/her objection with their local court registrar because Ontario’s court system is linked. But be careful – it is not instantaneous. I have seen certificate of appointments being issued in one city after the filing of notices of objection in another city because they were not inputted into the system yet and the registrar did not know there was any objection. The best practice is to file the notice of objection with the court registrar where the application for probate has been started.

It’s important to remember that filing a Notice of Objection is only one important step in the litigation. The real first step for anyone challenging a will is to seek the advice of a lawyer familiar with the process. That lawyer can review the file and advise you if there is a worthwhile challenge to the will. Furthermore, filing a Notice of Objection is a relatively simple inexpensive step. But, if it is not done properly and as a result the court registrar issues a certificate of appointment. then a more costly process (a motion for the return of the certificate of appointment) will have to be taken.

It is also very important to know that estate assets may be at risk even if the person challenging the will files a notice of objection. Remember, the power of the estate trustee/executor to deal with estate assets comes from the Will itself – not the certificate of appointment. It’s just that there are certain institutions like banks and insurance companies who need to be certain that the documents being shown to them is really the last will and testament of the deceased. There are assets, like the shares in private corporations and real estate (under certain circumstances) that can be transferred without the estate trustee getting probate. An experience lawyer can guide you in how to go to court, freeze the other assets and challenge the will.

Some on line links that may be helpful

Rules 74.12(1) (b) and 75.03 – Objection to Issuing Certificate of Appointment. See http://www.e-laws.gov.on.ca/html/regs/english/elaws_regs_900194_e.htm

Notice of Objection Form 75.1. See http://www.ontariocourtforms.on.ca/english/civil

To Find Lawyers. See the Lawyer Referral Service provided by the Law Society of Upper Canada at http://www.lsuc.on.ca/public/a/faqs—lawyer-referral-service/

It would be a mistake to treat this blog as substantive legal advice. For those considering commencing an application to compell an accounting, there is no substitute for hiring a competent lawyer whose own research, analysis and judgment should be canvassed.

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