IS PRINTING YOUR NAME A SIGNATURE

IS PRINTING YOUR NAME A SIGNATURE
Date: 22 Dec, 2021

Is printing your name the equivalent of signing a Will for the purpose of creating a valid Will?   This blog article must be looked at taking into account the substantial compliance rules that will be in effect in Ontario as of January 1, 2022.  Substantial compliance means as long as the court believes that a document is an accurate reflection of the willmakers intention then it may very well be deemed to be valid by the court.  In simple language, minor errors can be fixed by the court. That has not been the law up until now.

In the 2021 decision in BMO Trust v. Cosgrove, a highly experienced Wills and Estates judge, Madame Justice Dietrich held that printing one’s name is not a signature. Section 4 of the Succession Law Reform Act specifically requires a signature and where it must be placed. It also requires the two witnesses to subscribe to their names. It is interesting that the Act used a different verb, to “subscribe” rather than “sign” for the witnesses as opposed to the willmaker. Subscribe has many different definitions and can be referred to as a simple synonym for signing. Why endure the uncertainty and the legal fees when one simply has to follow the basic rules set out in the Succession Law Reform Act. Again, your lawyer will know this. Trying to do a Will yourself is clearly an exercise in being penny-wise and pound-foolish.

NON-RESIDENT BENEFICIARIES

NON-RESIDENT BENEFICIARIES
Date: 21 Dec, 2021

We are neither tax lawyers nor accounts, however, it is important that we point out to our clients who are the estate trustees aka executors, that they retain the services of a qualified accountant as quickly as possible.

It is not uncommon to have an estate with foreign beneficiaries. Beneficiaries who live in another country and are deemed to be a non-resident for tax purposes, are an important factor in driving an estate trustee to retain the services of a qualified accountant at the earliest opportunity. The Income Tax Act has very strict rules dealing with the taxation of income within an estate where there are non-resident beneficiaries. This can apply even if the income is not being distributed to the non-residents.

Income paid to a non-resident beneficiary is subject to a domestic 25% withholding tax and it is the responsibility of the estate trustee aka executor to hold this money and remit the tax to the Receiver General in addition to all the other filing responsibilities of the estate trustee.

If the assets of the estate meet the definition of taxable Canadian property, there may also be an obligation to withhold 25% of the value of the capital interest of the non-Canadian resident beneficiary in the estate, unless a certificate of compliance is obtained under Section 116 of the Income Tax Act.   This cannot be understated.

If a non-resident beneficiary lives in a country that has an inheritance tax, the beneficiary might very well find themselves subject to tax on the inheritance that they get.  This is, in addition, the tax that is levied against the deceased in Canada.  In essence, this becomes a form of double taxation.

There is yet another treacherous detail that requires the services of a highly qualified estate accountant. A US citizen or long-term green card holder or an individual deemed to live in the United Kingdom as their domicile, are faced with additional inheritance taxes and obligations. We generally ask at the outset of an estate whether any of the beneficiaries are non-residents of Canada. This is extremely important.  This simply reemphasizes the theme of this blog article, an estate trustee needs to retain the services of a qualified accountant at the earliest opportunity and not to delay.

WHY YOU SHOULD NOT DEPOSIT YOUR WILL BEFORE DEATH WITH THE COURT

WHY YOU SHOULD NOT DEPOSIT YOUR WILL BEFORE DEATH WITH THE COURT
Date: 21 Oct, 2021

Pursuant to Section 2 of the Estates Act, the office of the local Registrar of the Superior Court of Justice is a place where you may deposit your Will for safekeeping. Rule 74.0 of the Rules of Civil Procedure provides further details of the process by which a Will may be deposited and held by the court. The good news is that the Registrar holds these Wills for a 125 years or more.  So short of having a biblical lifespan, one’s original Will will indeed be available.

However for reasons, we will now discuss, it is not a process that our office recommends. It makes changing a Will much more difficult and it is a relatively laborious task to retrieve the Will from the court in contrast to storing it with the lawyer that drafted that Will. The Court’s filing and storage process is incredibly archaic and no notation is made of the date of birth or any other specific identifiers for an individual who has a relatively common name. The only person that can deposit the Will with the court is by and large the testator i.e. the willmaker or someone authorized in writing by the testator.

When one applies for probate, a request is made to the central Registry, to determine whether or not there is a Will on deposit. As long as the name is relatively similar to the name of the deceased,  the application for probate is rejected until one can prove that the deceased is different from the individual whose Will is on deposit anywhere in the province of Ontario.

Our office far prefers that you leave your Wills with our office or alternatively, store them in a safety deposit box and provide details of its location to your estate trustee. Our firm levies no fee for storage of Wills.

EXECUTOR MUST ENSURE HOME INSURER KNOWS OF DEATH

dale
Date: 20 May, 2021

At the outset of every estate, we warn our client/executors to investigate the home insurance status of the property formerly occupied by the deceased.

Sometimes the deceased will have been the last person living in the home and it is now vacant. It is crucial that the executors in writing advise the insurers of the death of testator (the person who made the Will) and the occupation status of the home. Most home insurance policies have a vacancy exclusion clause. Namely, if no one is living in the home there is no insurance coverage.

Insurance companies generally will provide insurance coverage to an estate either in return for a higher premium or if arrangements are made for regular inspections of the property.

Not only must the notice to the insurer be made in writing, the insurer’s written confirmation of ongoing home coverage is crucial.

If you are an executor and fail to attend to this detail, you may very well be personally liable if the estate suffers any loss due to an absence of insurance.

In the recent Ontario Superior Court decision of Gregson v. CAA Insurance, the Court summarily granted judgement in favour of the insurer. In that case, the homeowner became mentally incapable and was eventually transferred into a retirement home where she died. The home had been vacant for a significant period of time and a loss was suffered due to water damage. When the deceased’s estate trustee attempted to make a claim, it was denied based upon the vacancy exclusion found within the insurance policy. This case simply brings home a long-standing rule that insurer’s first reaction upon receiving a claim is to attempt to determine whether or not there is coverage or there is a method by which they can deny such coverage.

Again, we repeat, this is an important obligation of an executor/estate trustee.

TRUST TAX RETURN NOT NEEDED as part of The Full Monty

dale
Date: 14 May, 2021

A common strategy that our firm has been recommending to our clients, is one we call the “Full Monty” which is a comprehensive approach to adding the names of trusted children to the assets of elderly testators.

In English, if one is closer to the end of their life, a facet of estate planning may involve the addition of your adult children’s names as an owner of your assets including your home or as the beneficiary of a liquid asset.

This is not as simple as simply adding the names of the children as it is fraught with many difficulties that are canvassed in other blogs.  I recommend one read our article A STRATEGY TO ELIMINATE OR REDUCE PROBATE TAX.

One example of the strategy is to add adult children as owners to the family home.  This must be accompanied by a comprehensive trust agreement, which confirms repeatedly that there is no change in beneficial ownership and that the owners remain so long as they are alive, the trust beneficiaries namely the parents.    Even upon the death of both parents, the asset, such as the home, is to be administered in accordance with the Secondary Will.

The question has arisen, is this a Trust under the Income Tax Act and as such does the Trust need to file income tax returns.

The answer lies in the Income Tax Act itself section 104(1).  So long as there is no change in beneficial ownership or disposition and the trust is simply an arrangement in which the trustees act solely as agents for all the beneficiaries, then there is no need for tax returns to be filed or income declared.

Simply put, if the formal change of ownership creates simple trustees with no rights whatsoever, in other words, mere placeholders and they are bound to act completely in accordance with the instructions of the beneficiaries then this is not a trust which is subject to income tax nor the necessity to file separate income tax returns.

REVOLUTIONARY CHANGES IN THE LAWS REGARDING WILLS IN ONTARIO – PART 3 WILLS NO LONGER REVOKED BY MARRIAGE

REVOLUTIONARY CHANGES IN THE LAWS REGARDING WILLS IN ONTARIO - PART 3
Date: 13 May, 2021

Amongst the elderly and vulnerable there is a serious problem known as predatory marriages. The common scenario is that an elderly widow or widower marries someone generally much younger while not really understanding what or why they are doing it. The motivation of the predatory spouse is that when the elderly spouse dies, often with no Will at all, the predatory spouse will have acquired a substantial interest in their late husband/wife’s estate. The mental capacity test for marriage is far far lower than the capacity required to make a Will. The new Accelerating Access to Justice Act, once it is finally proclaimed, will eliminate an existing provision of the Succession Law Reform Act. That provision now states that any Will is revoked by a subsequent marriage unless that Will contains magic words stating that this Will is made in contemplation of my marriage to…. Plainly put imagine the following common scenario. Predatory gold digger marries an elderly person whose existing will is cancelled automatically by marriage, and the gold digger gets a huge share of the elderly person’s estate upon their death. Note that this amendment will not be retroactive and only applies to deaths that occur after the proclamation of the law.

NEW RULES WITH RESPECT TO SMALL ESTATES

NEW RULES WITH RESPECT TO SMALL ESTATES
Date: 13 May, 2021

Effective February 12, 2021, the laws with respect to “small” estates have changed dramatically. The law is so new that while it is effective February 12, 2021, it has only recently been enacted. This is part of the Accelerating Access to Justice Act. This is done by amendments to the Rules of Civil Procedure, specifically rule 74.1. The concept is to make estates having a total value of less than $150,000.00 simpler and easier to administer. Actually using the process will determine whether or not this goal will be realized. One must remember that the estate tax applies after the first $50,000.00. The forms are available online, however, they still require the involvement of a lawyer as the Application needs to be commissioned. Another debate is whether or not one can use this process for just the assets governed by the primary Will. A primary Will is part of a very complicated estate planning process in which efforts are made to eliminate the need for probate. It is far too early to indicate whether or not this indeed will be effective, but it is important for all concerned to keep this provision in mind.

REVOLUTIONARY CHANGES IN THE LAWS REGARDING WILLS IN ONTARIO  – PART 2 HOW TO FIX A WILL AFTER DEATH

Law
Date: 07 May, 2021

A number of other Provinces have substantial compliance laws.  In other words, a Judge, after the fact and after the maker of the Will – the testator – has passed away, the ability to fix errors in the Will.  I am not speaking of the process of rectification that is discussed in another blog.  A prime example of rectification is when the client told the lawyer to include something in the Will and solely as a result of the error of the lawyer, that provision was not made.  Under those circumstances, the court may rectify that error.

The substantial compliance provision that we are discussing now is remedying an error in the formal process.  The court will be given the power once the Accelerating Access to Justice Act receives royal proclamation, which is not likely to occur until 2022,  to declare a Will to be valid even though some formalities were not observed.  An example would be if only one witness signed or if the witness simply printed their name and forgot to attach their signature.  In those circumstances, the persons putting forward the Will can ask the court to declare the Will as being valid so long as the court believes that the Will does accurately set out the testamentary intention of the deceased.  Again, in plain English, the concept is that there may have been a slight formal “screwup”, but this document put forward as a Will indeed does accurately reflect what the maker of the Will meant it to say.  Please note that the absence of a wet signature, in other words, pen actually hitting paper,  is not an error that can be remedied under this proposed provision.  Also this will not be a retroactive law.  In other words, whenever the law receives royal proclamation, it only applies to Wills made after that date.

REVOLUTIONARY CHANGES IN THE LAWS REGARDING WILLS IN ONTARIO

law
Date: 06 May, 2021

As we had touched on in an earlier blog, one of the ramifications of COVID-19 has been to trigger changes to the way courts and laws are applied throughout the Province.  One of the areas that are being updated under the Accelerating Access to Justice Act is the laws with respect to Wills.  The changes specifically are being made to the Succession Law Reform Act and the Substitute Decisions Act.

Once the plague hit the world, the Government of Ontario acted relatively quickly and enacted emergency regulations as of April 7, 2020.  One of those regulations permitted for the first time witnessing of Wills through an audio-visual platform, such as ZOOM or SKYPE.  The regulations were soon clarified to allow virtual signings to be done in counterpart.  In other words, the client at one end of the process signed one set and the lawyer and the other witness signed an identical copy at the same time.

These rules are about to become a permanent fixture of the law of Ontario.  One must note that for remote witnessing to be valid, at least one of the witnesses must be a lawyer or a licenced paralegal.  The law will be retroactive to April 7, 2020.  The new Act refers to contemporaneous execution, which has been interpreted to mean that the Wills must be in counterpart.  That reqires the process as we discussed above and not circulating the same copy to be signed on separate dates.

While the Act has received royal assent, it still needs the final step by the Government to activate it, namely a royal proclamation.  That should happen relatively shortly.  One should note that the law specifically does not permit digital signatures.  What is called for is what is referred to as a wet signature.  Literally ink on paper.  This author does not disagree with that requirement. The signing of a Will is still a very formulaic process and attention to detail and ensuring that a Will is properly signed is one of the components of creating a valid Will.  In another blog, we will discuss possible remedies.

UNDUE INFLUENCE

Date: 08 Feb, 2021

Another common method of attacking the validity of a Will is an allegation of undue influence.  For a claim of undue influence to be effective, one would need to prove that the intent of the person making the Will had been overwhelmed and replaced by the person exerting the undue influence.  Imagine the scenario of a caregiver forcing an elderly person in their care to change their Will and leave all to themselves in the place of the person’s children.  The starting point for the law in this area is the decision of the eminent estate lawyer and later judge, Justice Cullity.  He set out the test in his seminal decision of Scott v. Cousins.  Undue influence is not simply influenced or persuasion.  In essence, it must go beyond that and reach the level of coercion.  In other words, it is not simply influenced or even persuasion, such as by a child attempting to convince a parent to divide up their estate in one fashion or another.  That is not the point.  As discussed originally in the 1885 English case of Wingrove v. Wingrove, the concept is only when the will of the person who is making the Will is coerced into doing that which he or she does not desire to do, that is what amounts to undue influence.  There is a presumption in favour of undue influence that arises out of certain family relationships and that applies to various transactions that take place during the testator’s life, (see the blog articles on the presumption of resulting trust) but they play no part in the law of wills.  The persons against whom such presumption arises in those transactions are typically those that a testator might naturally wish to share in their estate.  As an example, adding one child to the parent’s bank account, will likely not be held to be a valid transfer or gift.  But leaving that child all or part of an estate in a will is not subject to attack so easily.

Such persons are entitled to press what they think are their proper moral claims.  Undue influence is not simply bad influence but must amount to coercion.  Persuasion and advice do not amount to undue influence, so long as the free will of the testator to accept or reject is not lost.  Appeals to the affection or ties of the relative, or seeking gratitude for past services or even pity all may be fairly pressed upon the testator.  The testator may be led, but not driven and the testator’s Will must be the product of their own desires, not the record of what someone else wants.  There is no undue influence unless the testator if they could speak would say, this is not my wish, but I must do it.

The onus of proving undue influence rests on the person alleging the undue influence, all of which is to be proven on the balance of probabilities.  The influence imposed by some other person on the deceased must be so overpowering that the document reflects the Will of the influencer and not of the deceased.  A tall order, but there are certain circumstances that give rise to a presumption that undue influence may very well exist.

Not a simple test, and to prosecute such an attack requires experience and finesse based on evidence.