All About Estates

Deceased Suffered from Schizophrenia, But Still Capable of Making a Will

closeAuthor: Angela Casey Name: Angela Casey
Email: acasey@devrieslitigation.com
Site: http://www.devrieslitigation.com
About: Angela has extensive experience with capacity litigation, power of attorney disputes, dependant support claims, will challenges, and applications to pass accounts, vary trusts, and for the Court’s advice and direction. She has appeared before the Ontario Court of Appeal, the Ontario Superior Court of Justice, the Ontario Divisional Court, and several administrative tribunals. Angela has authored a number of articles on estate related topics, including trustee’s privilege, powers of attorney and passing of account applications. She has also published case comments in OBA’s Deadbeat and the Estates and Trusts Pensions Journal.See Authors Posts (18)

A recent Manitoba case serves as a reminder that simply because a person suffers from a mental illness does not necessarily mean that she lacks the requisite capacity to make a will.

Although Ann Ogilvie suffered from schizophrenia for more than 50 years, she was capable of making a will, found Justice Greenberg of the Queen’s Bench of Manitoba in Hoffman v. Heinrichs.

Ann’s illness was found to be a suspicious circumstance, thereby shifting the onus of proving testamentary capacity on the beneficiary seeking to uphold the will.  The will challenger presented evidence that the testator suffered from delusions, behaved in a flat and unresponsive manner, and had been hospitalized from time to time for her condition. A treating physician’s letter to a relative approximately 10 months before the will was executed said that placement in a nursing home was indicated for Ann on a long term basis.

However, the Court found, “one cannot draw any conclusions regarding capacity simply from the fact that a person suffers schizophrenia, especially when the person is being treated. Whether Ann had testamentary capacity must be determined on the basis of the evidence as to her abilities at the time the will was executed.”

The challenger also argued that Ann lacked sufficient knowledge of her assets to meet the test for testamentary capacity.  Although she knew that she owned farm land and bonds, she did not know the value of either of those two assets.  In the circumstances of this case, however, it was not critical that Ann know the exact value of her assets because whatever their worth, she wished to leave everything to her twin brother.

Once again, the drafting solicitor’s notes were an invaluable tool in proving the will.  Although the solicitor had no actual memory of meeting with the testator 30 years earlier, the solicitor’s contemporaneous memo was critical to establishing that the testator had sufficient testamentary capacity to make the will.  In the trial judge’s words, “[w]hile the applicant argues that the fact that [the drafting lawyer] prepared a memorandum indicates a concern about Ann’s capacity, I accept [the drafting lawyer’s] evidence that she prepared the memorandum because Ann was excluding her siblings from her will and that might generate a challenge to it. As it turns out, this was prescient on her part”.

Thanks for reading,

Angela

Share and Enjoy

• 
• 
• 
• 
• 
• 
• 

• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 

Posted in Estate Planning

principal residence exemption and excess land

closeAuthor: Steven Frye Name: Steven Frye
Email: sfrye@cooksonwalker.on.ca
Site: http://www.cooksonwalker.on.ca
About: Cookson Walker LLP is a firm of professional advisors providing a comprehensive suite of services to a diverse client base. Our experienced and skilled team can provide personal and corporate solutions to maximize growth potential, wealth and value.See Authors Posts (52)

Sometime ago I wrote about the availability of the principal residence exemption to trusts for example a cottage trust under certain circumstances.

Did you know there is a limit to how much land you can include in a principal residence exemption?

Normally an exemption would include land of up to one-half hectare, roughly 1.25 acres. If the land exceeds that size, you must demonstrate that the excess land is “necessary for the use and enjoyment of the housing unit as a residence”. Generally, you would have to rely on municipal bylaws restrictions regarding the severance of land to make your case that the land cannot be severed. Using a lifestyle defense for the excess land will not normally work. Any sort of commercial activity on the excess land would certainly weaken your case in this regard as well.

If you cannot make case for the excess land as part of your principal residence, the excess land will not qualify for the principal residence exemption and it will necessary to calculate the gain on the non-qualifying portion separately and to pay tax on it.

And it gets worse. There may be HST implications to the excess land. The applicable rule in the Excise Tax Act if engaged may apply to deem that the principal residence and the excess land are separate supplies. The effect of deeming the excess land to be a separate supply may be such that, while the supply of the principal residence is an exempt supply, the supply of the excess land could be taxable i.e. subject to the applicable rate of HST.

Thanks for reading

Share and Enjoy

• 
• 
• 
• 
• 
• 
• 

• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 

Posted in Estate Administration, Estate Litigation, Estate Planning, Executors, Investments, Trusts, Wills

The May Long Weekend

closeAuthor: Corina Weigl Name: Corina Weigl
Email: cweigl@fasken.com
Site: http://www.fasken.com
About: Corina Weigl and Laura West are partners in the Trusts, Wills, Estates and Charities group of Fasken Martineau DuMoulin LLP, a leading international law firm with over 650 lawyers and 9 offices worldwide that offers comprehensive estate planning, estate administration, personal tax planning, charitable giving and estate litigation services.See Authors Posts (57)

So it’s officially here – the first long weekend of the season; the start of the cottage season.  What does this mean?  It’s the right time to start thinking about some of the considerations related to dealing with the family cottage. 

In this blog I want to chat about the income tax considerations that should be thought about when planning for the cottage. 

Unlike in other jurisdictions, like the United States, in Canada we don’t have a gift or estate tax regime; we have an income tax regime.  This, however, doesn’t mean we aren’t taxed on transfers structured as a gift or when we die – we are. 

A gift is treated as a disposition for income tax purposes.  This means that if the value of the cottage is more than what you paid for it, together with the cost of capital costs you can prove you paid for, you will realize a capital gain, fifty percent of which will be included in your income. If your cottage qualifies as your “principal residence” you may be able to shelter the capital gain with a special exemption for principal residences.  You will, however, want to be sure you want to use the exemption for your cottage because once you use it up for one property, you don’t get to use it again. 

You might think you’d like to get some money from one of your children but you don’t want them to have to pay full value.  Think again before giving one of your kids the benefit of buying the cottage at a discount.  The problem here is you will still be taxed as if you received full value for the cottage.  Unfortunately the starting value for the child you sell to will be what they paid you. This means double taxes will, at some point in the future, be paid. 

For example, if your cost was a hundred thousand and the value was three hundred thousand but you sell for a hundred fifty thousand, you will be taxed as if you received three hundred thousand.  Unfortunately the starting cost for your child will only be one hundred and fifty thousand which means when they later sell for, say three hundred thousand, they will be taxed on the same capital gain over their cost of one hundred and fifty thousand. 

The point here is – sometimes a gift horse gives back…to CRA. 

You also need to think about the taxes that will arise when you die.  In particular, when you die you are deemed to sell the family cottage.  Again, if the value is higher than what you paid plus your capital costs, income taxes will be owing.  If the cottage is to left to one child, you need to think about (i) who should pay the tax liability – your estate or the child, (ii) if your estate, is there the liquidity and who ultimately bears the tax liability as a beneficiary of your estate – the child who gets the cottage or other beneficiaries of your estate. 

So as you make your way north this weekend and start to fire-up the BBQ for that first rack of ribs, I hope the foregoing gives you some food for thought.  Happy start to the cottage season. 

Corina Weigl

Share and Enjoy

• 
• 
• 
• 
• 
• 
• 

• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 

Tags: Corina S Weigl, estate planning, Fasken Martineau

Posted in Estate Planning, Family Conflict