The following summary is for information purposes and very important to all Ontario residents, for Simple Wills and Powers of Attorney for Personal Care/Health and for Property are required in Ontario and if you fail to have such documents prepared, then it is a most costly exercise to have your property and/or estate left and administered by spouse or family members.

For example, a Last Will and Testament is prepared in the event of death of the person executing the will, i.e. the testator; in such a Will, the testator would name his or her spouse or family member, one or two persons to act as the Estate Trustee/Executor to manage the estate and distribute the assets of the Testator after his or her death. You may wish to name an alternative person if the first named Estate Trustee/Executor cannot act or predeceases you. Normally after payment of debts and funeral expenses, then a bequest is left of all the property of the Testator i.e. the residue of the estate after payment of debts, funeral expenses and no need to list the type of property either real estate or investments, furnishings etc. Such residue of the Testator is then left/bequeathed to his or her spouse, then if the spouse did not survive, or predeceased the Testator would normally leave the residue of the estate to the children referred to as issue per stirpes, meaning that the children if underage would be left the property, and an age of responsibility when such children should receive their share of the Testator’s estate is then inserted, such as l8, 2l, 23, 25 years or other age. The Estate Trustee is authorized to hold that child’s share and invest such proceeds and use it for the care, maintenance, education/tuition of the child, and then when the child reaches the age as selected by the parent, the child would get the monies remaining in trust. If such child predeceased the parent, the “per stirpes” expression would apply and if for example there were 3 children, one died and left 2 children, i.e. grandchildren, such grandchildren would get their father/mother’s share of the grandparent’s estate being l/3rd share and other 2 children would get their l/3rd share each. There are other clauses, such as appointment of guardian to get custody and raise children under the age of majority, common accident clause if no one survived, a Family Law Act clause so that if one of the children received share in their parent’s estate, this share or bequest would not be shared with their spouse or claimed as a Family Asset under the Family Law Act of Ontario.

If you fail to have a will, then it is a costly exercise to appoint an estate trustee, usually a member of the family with possible insurance bonds. The will with the powers of attorney documents can be amended at any time, but clients are warned that if one spouse died, the other survived, and the children are no longer dependents, i.e. they are no longer in school and working, then the surviving spouse can revoke the will and cut out the children as beneficiaries and leave the estate to a third party. This can be protected if the spouses have a marriage contract. There are other issues such as cohabitation with common law spouses and property and other issues need protect just as in a Marriage Contract and that would be contained in a Cohabitation Agreement under terms of the Family Law Act of Ontario. All clients should know that if they remarry, a pre-existing will is revoked and such domestic contract under such Act is recommended.

For Powers of Attorney under the l995 Substitute Decisions , the parties should name the spouse as their prime attorney and name alternates or substitutes for the spouse in the event that the spouse cannot act or predeceased the person giving the power of attorney, i.e. the donor.It is also important not to designate your estate but rather your spouse, and then even your children or other relation as a contingent beneficiary under any life insurance, pension, or RRSP’s or RRIF’s if such institutions permit so as to avoid the large cost of probating a will.

There are 2 separate forms of powers of attorney, one for personal care or health, whereby the appointed attorney or substitute is authorized to make personal care, health decisions, consents to operations, blood transfusions, decisions as to where the donor wishes to reside or is institutionalized, if the donor suffers from a mental disability e.g. Alzheimer’s disease. This personal care power of attorney form also includes the living will clause which can be broadened but generally states that the donor does not wish any medical procedures or extraordinary prolongation of life, or resuscitation in the event that there is no brain activity.

Property power of attorney is important in Ontario whereby the donor would name the spouse and as substitute for the spouse, 2 persons/children/relations acting jointly to handle and administer the donor’s property, since if the donor or person granting the power of attorney becomes disabled, then the Office of the Public Guardian and Trustee of the Ontario Government will in most cases assume control of the donor’s property, house, bank accounts, during such person’s disability.

The costs for such wills and powers of attorney are set out in our website and we would be pleased to meet with any parties wishing such documents prepared.

By: Elliott Dale

A Henson Trust is a methodology by which a person making a Will (the testator) makes provisions for a disabled beneficiary, usually a child, without jeopardizing the beneficiaries’ ongoing government assistance. The most common scenario is a disabled child who is receiving monies under the Ontario Disability Support Plan (ODSP). The ODSP program will reduce its benefits dollar for dollar, if the recipient receives a benefit over a prescribed limit under a Will. Namely the problem was how to leave money to a beneficiary receiving disability benefits without barring them from receiving those ongoing benefits or suffering a corresponding reduction. The Henson Trust, named after a 1987 Ontario Divisional Court case, created an approved arrangement now commonly referred to as a Henson Trust and found in many Wills.

A Henson Trust is the creation of a completely discretionary trust, in the hands of the executors of one’s Will. It gives those executors complete and utter discretion to distribute as much of the income and capital of the estate or an amount set aside for one particular beneficiary as they see fit. It is that absolute discretion during the lifetime of the beneficiary that allows the Henson Trust to be characterized as never actually being received by the disabled beneficiary.

More simply put, it never belongs to the disabled beneficiary because it is distributed only if and when the executor wants to. If it is not within the disabled beneficiary’s control, it is not theirs and therefore does not interfere with the beneficiary’s receipt of ODSP or any government plan.The challenge of course is very carefully choosing an executor who will act as the trustee/administrator of the Henson Trust.

Not only must one very carefully choose an executor that one has absolute faith in, but the testator must keep one eye very carefully on the age of the executor/trustee. Often the partial or complete solution is naming a sibling of the disabled beneficiary as the executor. The risk of course is naming one of the executor’s siblings as the trustee of the Henson Trust only to find that person becoming disabled or dying long before the end of life of the disabled beneficiary.

In large estates, the solution, in the absence of such family members or a trusted executor, can be the appointment of a corporate trustee.Discuss this issue with your lawyer who is experienced in the drafting of Wills and understanding the interrelationship between a Henson Trust and the receipt of ODSP benefits.

By: Fred Streiman

Under the Succession Law Reform Act, a deceased is forced to make adequate provision for their dependents upon their death. Section 58 of the Succession Law Reform Act states:

Where a deceased.has not made adequate provision for the proper support of his dependents,the court.may order such (support) as it considers adequate

Dependents means the spouse, the parent, a child or a sibling of the deceased whom the deceased was providing support or was under a legal obligation to provide support immediate before his or her death.

A spouse includes the same definition as can be found in the Family Law Act, namely a common law partner with whom the deceased had lived continuously for no less than three years or in a relationship of some permanence and had a child together.

It is important to note that any such application must be made within six months from the date that the deceased’s Will is probated.

The court has the ability to look at many different factors in determining what is appropriate but in the end, common sense is suppose to prevail. The court has wide latitude in making almost any kind of an Order. It can order a lump sum, periodic payments, payments to third parties or even mortgages against property.One also should note that you cannot contract out of this right. It does not matter what a separation agreement states, this right cannot be extinguished or bartered away.

It is important to note that what forms part of the deceased’s estate is quite wide and wider than what one would have thought have. Assets that the deceased held as joint tenants forms part of the assets. Life insurance proceeds is another common example. The court can freeze any money that it believes forms part of that estate from being administered or distributed.Recently, the Superior Court of Justice in Ontario also injected a component of a moral obligation over and above that of simple dependency. Justice Di Tomaso in the Stevens v. Fisher case, held that a common law spouse who arranged no coverage and left nothing in their old Will to their common law spouse of eleven years, had clearly not made adequate provision for their dependent. Not only that, for eleven years, the common law spouse had been a devoted caregiver and wife. There was an old insurance policy for $84,000.00 which the deceased had named as a beneficiary his previous common law spouse.

The court was not impressed and ordered virtually all of the insurance policy left by the deceased be paid to Ms. Stevens, the devoted common law spouse of eleven years.It may very well be that the deceased simply forgot to do a new Will and to change the beneficiary of his insurance policy.These claims are complex and require the assistance of a lawyer experienced in estate litigation. The lawyers at Dale Streiman Law LLP would be pleased to assist in any claims following under this interesting legal umbrella.

By: Fred Streiman

Succession planning is a field of law that deals with wills, probate and estate planning after a person dies. This field of law is largely governed by the Succession Law Reform Act in Ontario but there are a number of other factors that should be considered. One very important consideration is tax, specifically capital gains tax. This is a tax on the increase in value of a capital asset, such as a cottage, while it was owned. When a person is left property in a will, and they are not the deceased’s spouse, capital gains must be paid. The rate on inclusion for tax purposes has changed over the years, but it is safe to say that this tax bill can be large. This is especially true for the family cottage.

There is a common scenario in this type of case. A family cottage was purchased for a few thousand dollars decades ago. Over the years the price has ballooned to hundreds of thousands of dollars or maybe more. This appreciation in value attracts a large tax bill which could force the beneficiaries to sell the family cottage in order to pay it off. This defeats the purposes of passing on the family cottage to the next generation. However, it does not have to be this way. With proper succession planning the testator (person making the will) can arrange their affairs in a way that significantly lowers the tax liabilities that the property will attract.

As an example, there are two simple techniques for lowering capital gains obligations that the beneficiaries will owe on the cottage. The first is to gift the cottage to them now. This will attract an immediate capital gains tax which will be lower than the future tax (assuming rates stay the same and property values continue to increase). The second is to take out insurance through a life insurance policy that will cover the expected tax liabilities when the estate is settled.

These are just two examples of the ways that tax implications can effect succession planning. A blog post cannot fully address all the issues surrounding the interplay between tax law and succession planning. Every situation is different and there may be better solutions for you. The lawyers at Dale Streiman Law LLP can help customize a succession plan perfectly tailored to your needs.

By: Fred Streiman and Stephen Duffy

There are a number of reasons why a party would want to remove or replace an estate trustee. In this blog post I want to canvas the important elements that the court will look at when an application for a appointment of a new trustee is brought. I will also look at some of the possible grounds past cases have used as justification for replacing an estate trustee.

The first thing to note is that the courts are very reluctant to interfere with a testator’s intentions. The court will respect the fact that the deceased wanted that specific person to act as their estate trustee. However, there are certain reasons that will cause the court to intervene. The authority to do so comes from the Trustees Act and from the residual power of the court at common law (Judge made law). A co-trustee, beneficiary or any person interested in the estate of the deceased can bring an application to the court to have the trustee removed.

When considering an application to remove an estate trustee, the court will consider four things. First, the court should not lightly interfere with the testator’s decision. Second, there needs to be clear evidence of necessity. Third, the main consideration is the welfare of the beneficiaries. Fourth, the acts or omissions of the estate trustee must endanger the administration of the trust itself. This last consideration sets a very high bar for the applicant to meet. The estate trustee can always argue that they were acting reasonably and honestly. There is no obligation for the estate trustee to be perfect.

The court has repeatedly refused to set a clear point at which they will step in and remove the estate trustee. The facts of each case will determine the outcomes and the major consideration is always the welfare of the beneficiaries. In the past, successful applications have been made when the estate trustee failed to act at all, did not act in good faith, was unwilling to carry out the terms of the will, was unable to act as trustee because of incapacity or had a conflict of interest with the trust. This list is not exhaustive but it sets out some of the basic grounds for a successful application to remove an estate trustee.

If you have questions about estates and the conduct of an estate trustee, contact the lawyers at Dale Streiman Law LLP. They are experts in wills and estates and estate litigation. They can evaluate your claim and help you resolve the problem efficiently and effectively.

Elder abuse targets some of the most vulnerable members of Canadian society. The abuse does not have to be physical; finance abuse is also a very serious threat to seniors. When this is combined with predatory marriage, Canadian seniors face real threats to the personal safety, financial security and the legacy that they intent do leave behind. Luckily, the courts have a number of tools at their disposal to counteract this form of abuse. In this blog post I want to canvas several ways in which the courts can combat financial and estate abuse.

The case of Juzumas v Baron provides an interesting case study on how the court can correct the wrongs perpetrated through predatory marriage. The facts of the case show a pattern of abuse towards an elderly Lithuanian Canadian, Mr. Juzumas. He was targeted by Ms. Baron and her son through conduct that Justice Lang characterized as reprehensible. Ms. Baron initially provided housekeeping services for free to Mr. Juzumas. As things progressed, she increasingly took control of Mr. Juzumas life. She began taking $800 a month in fees for the housekeeping services. This moved up to $1200 over time. The two eventually married, not out of mutual affection, but because she wanted to secure a survivor’s pension. The two never lived together and Ms. Baron verbally abused her husband regularly. When she discovered he had executed a will that would have denied her his largest asset, the house, she became furious. She orchestrated a transfer of the house to her son. Mr. Juzumas did not speak English, did not understand the transfer, and seemed genuinely surprised when he was told about it sometime after it was executed. Ms. Baron completely dominant Mr. Juzumas and he was dependent upon her, largely because he was terrified of ending up in a nursing home.

The court utilized the contract law doctrines of unconscionability and undue influence to render the transfer of the house unenforceable. The court also said there was evidence of non est factum (not my deed or not my deal) and that there was a lack of consideration (no money was given for the house). The facts of this case show that it was not just a bad deal that Mr. Juzumas wanted out of, there was serious wrong doing that made the contract unenforceable.

Ms. Baron also made a claim for quantum meruit, which is basically a claim for compensation for work that you have already done. In this case, Ms. Baron claimed that the months of housekeeping deserved compensation. The judge rejected this claim on several grounds. Firstly, there was never an agreement that she be paid. Secondly, she took compensation at $800 and then $1200 for most of the time. Thirdly, and most importantly, she cannot claim this type of relief because she is a wrong doer. As the judge put it, she does not have clean hands, her reprehensible behavior disqualifies her from any compensation she may have been owed.

Finally, Ms Baron also made claims to the house based on family law principles. She claimed the house was a matrimonial home, the value of which is subject to the equalization process. The judge rejected this claim on the basis that she never slept in the home, let alone ordinarily occupied it, therefore it was not a matrimonial home. The fact that it is not a matrimonial home means that Mr. Juzumas could deduct the value of the home at the date of marriage from the value of the home at separation for his net family property calculation. Ms Baron would have been able to claim a portion of the appreciation in value of the home through the equalization process. However, the judge found that the parties were validly married and separated all within the same day. Therefore, there was no appreciation in the value of the house to divide. The judge very skillfully used the family law to deny Ms. Baron any claim to Ms. Juzumas’ property.

This case provides a rare bright spot in the area of financial abuse of elderly Ontarians. The court was able to utilize the principles of contract law, family law and equity to deny Ms. Baron any compensation that she tried to take through her reprehensible behavior. This case involved a number of different fields of law. There were family law, contract law, wills and estates law and real estate law elements overlaid on top of a clear case of elder abuse. The interplay between these fields can be complex and requires significant expertise to sort through. The lawyers at Dale Streiman Law LLP have been leaders in these fields for decades. They have expertise on these issues and have successfully served client throughout southern Ontario.

By: Fred Streiman & Stephen Duffy

Succession planning is a field of law that deals with wills, probate and estate planning after a person dies. This field of law is largely governed by the Succession Law Reform Act in Ontario but there are a number of other factors that should be considered. One very important consideration is tax, specifically capital gains tax. This is a tax on the increase in value of a capital asset, such as a cottage, while it was owned. When a person is left property in a will, and they are not the deceased’s spouse, capital gains must be paid. The rate on inclusion for tax purposes has changed over the years, but it is safe to say that this tax bill can be large. This is especially true for the family cottage.

There is a common scenario in this type of case. A family cottage was purchased for a few thousand dollars decades ago. Over the years the price has ballooned to hundreds of thousands of dollars or maybe more. This appreciation in value attracts a large tax bill which could force the beneficiaries to sell the family cottage in order to pay it off. This defeats the purposes of passing on the family cottage to the next generation. However, it does not have to be this way. With proper succession planning the testator (person making the will) can arrange their affairs in a way that significantly lowers the tax liabilities that the property will attract.

As an example, there are two simple techniques for lowering capital gains obligations that the beneficiaries will owe on the cottage. The first is to gift the cottage to them now. This will attract an immediate capital gains tax which will be lower than the future tax (assuming rates stay the same and property values continue to increase). The second is to take out insurance through a life insurance policy that will cover the expected tax liabilities when the estate is settled.

These are just two examples of the ways that tax implications can effect succession planning. A blog post cannot fully address all the issues surrounding the interplay between tax law and succession planning. Every situation is different and there may be better solutions for you. The lawyers at Dale Streiman Law LLP can help customize a succession plan perfectly tailored to your needs.

By: Fred Streiman and Stephen Duffy

In a previous blog post[1], I discussed the role of estate trustees and the consequences they face when they fail to live up to their fiduciary duty. The estate trustee is responsible for carrying out the last wishes of a person who died. Their fiduciary duty imposes responsibilities to look after the estate in a trust worthy manner with an eye to the interests of the beneficiaries. This is even more important when the estate trustee is looking after the estate for the benefit of children. This is the scenario that existed in Walling v Walling where the deceased appointed his brother as trustee over his estate. The deceased’s sons were minors at the time, therefore the will required the estate trustee to look after the estate until the youngest boy reached 21, at which point the trustee was obligated to turn over the estate to the boys. Unfortunately, this never happened and the children were forced to bring legal action to recover their father’s estate.

This case is important because it highlights the court’s power to impose significant penalties, even penalties that go beyond what the plaintiff is asking for, when the facts demand it. Punitive damages are a special type of money award that the courts can give. Typically, damages are awarded for specific harm, punitive damages are different though. They are designed as a punishment for conduct that the court deems particularly offensive to society. Their use is fairly rare in Canada but they will be used when the facts show a clear need.

This case warranted punitive damages because the trustee was exclusively responsible for a severe harm done to the children. By denying them their inheritances, the estate trustee made it difficult financially and limited their post secondary education opportunities. Furthermore, the trustees actions in excluding the children from their father’s funeral and denying them any significant sentimental mementos were particularly offensive. He was in a position of power and trust and he broke that trust to exploit the vulnerable children. The judge looked at the facts and award $100,000 in punitive damages. This was double the amount requested by the boys. The judge said it was warranted because a lower award would not properly reflect the court’s abhorrence of this type of conduct. Additionally, the judge was to use this award as a clear deterrent to others who may try similar actions in the future.

In litigation, there are rarely any certainties about the outcome the judge will provide. The court’s focus is upon justice and the judge’s decision will bear that in mind. In situations where a judge thinks a large amount is required they can go beyond what the parties have requested. Doubling punative damages in this case was warranted because of the specific effects that the estate’s actions had upon the children. This is certainly a rare occurrence, but it happens with enough regularity that people should take note of it.

The lawyers at Dale Streiman Law have practiced estate litigation for decades and are experts in all facets of estates law. They can help resolve any estate disputes in a timely and cost effective manner.

An estate trustee is often called by the more traditional name of executor (male) or executrix (female). Their role is to carry out the terms of the last will and testament of the testator (the person who made the will). Estate trustees can be left with significant responsibilities in relation to the testators estate. Because their role is carried out after the individual has already passed away, the estate trustees relationship to the estate is characterized by a high degree of trust. This type of relationship is called a fiduciary relationship.

In Canadian law, the word fiduciary is often used to distinguish something as a special relationship. These relationships are common in Canada and some of the most prominent examples are the relationship between parent and child, corporate director to corporation, and business partner to business partner. Fiduciary law is a large area of law that covers topics ranging from aboriginal rights to corporate law. Within the estate planning context, a fiduciary relationship exists between estate trustee and the estate itself. The estate trustee is important in carrying out the final wishes of the deceased. For this reason, the law takes any breach of a trustees responsibilities very seriously.

Two cases from the Ontario Superior Court of Justice illustrate how the court is willing to punish rogue trustees that fall below the high standard the law sets. In Zimmerman v McMichael Estate[i], the estate trustee, Adam Zimmerman, used the estate of the late McMichaels (of The McMichael Art Gallery) as a personal bank account. He depleted the estate of millions of dollars through questionable expense claims. Mr. Zimmerman repeatedly failed to keep proper records for his expense. Nor could he provide sufficient answers to questions concerning expenses billed for steak dinners, mens clothing and sailing trips in Bermuda. His conduct fell well below the standard that a trustee owes. Therefore, Mr. Zimmerman was not owed any compensation for his time as trustee and he was required to repay nearly a million dollars to the estate as well as all the legal costs.

In The Estate of Paul Penna[ii], Barry Landen showed a similar level of neglect for his duties as estate trustee. He was eventually sentenced to 14 months incarceration for contempt of court. The saga began soon after the death of Paul Penna, who left Mr. Landen in charge of his $24,000,000 estate. Mr. Landen used the money to finance a lavish lifestyle complete with a house in Forest Hill and season tickets to the Toronto Maple Leafs. When his deceit was exposed he repeatedly refused to comply with court orders designed to protect the estates assets. Justice Greer eventually found Mr. Landen in contempt of court and ordered that he be imprisoned for 14 months.

The court in these two cases sent a stern warning to estate trustees and anyone owing a fiduciary duty. At all times, they must ensure that:

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• They carry out their duties with honesty and due care and attention.
• They personally carry out the responsibilities which have been delegated to them
• They ensure that they do not have a conflicting interest with their duties
• They are not obligated to be perfect but they must act in the best interest of their beneficiaries. Failure to do so can result in strict punishments.

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If you have a question about an estate trustee, rogue fiduciaries or the responsibilities of an executor, contact Dale Streiman Law LLP. They have decades of experience that makes them experts in all facets of estate law.