Boilerplate Blues


Written on September 18, 2014 – 5:49 am | by Elaine Blades

Most clauses in a Will are (or should be) clear on their face.  That being said, certain standard clauses  – even when drafted in plain English – may be opaque to the layperson.   The “persons born outside marriage” clause is a good example of a provision which begs an explanation. 

In Ontario, the concept of illegitimacy was abolished in 1978.  The Succession Law Reform Act explicitly eliminates the distinction between persons born within and outside marriage for the purposes of succession under either intestacy or a Will.  Moreover, pursuant to the Estates Administration Act, a personal representative is required to “make reasonable inquiries for persons who may be entitled by virtue of a relationship traced through a birth outside marriage”.  In the case of a class gift (i.e. a gift to a group such as “my grandchildren” or my “nieces and nephews”) a personal representative is required to make said reasonable inquiries in order to determine just who belongs to the group.  Efforts may include searching records of the Registrar General relating to parentage.  In other words, the estate trustee may not simply go ahead and distribute to the children born within the marriage of the testator’s son and daughter-in-law, as the son may have fathered other children outside of the marriage.  Any such “other children” may very well be entitled to share in this class gift  and the personal repesentative who fails to make reasonable inquiries to identify them, may well find themselves personally liable for their loss.

As such, where a Will contains a class gift, the solicitor may advise including a “persons born outside marriage” clause*.   This recommendation is not based on some moral bias.  Instead, the clause should be recommended in order to protect the estate trustee and relieve them from having to make these “reasonable inquiries”.   The clause should not however be considered “boilerplate” and included as a matter of course; particularly with approximately one-quarter of children in Canada being born to unmarried couples, many of whom do not subsequently marry.  A testator may very well want to benefit grandchildren who were born outside marriage.    Where such grandchildren are not specifically named in the Will, but are instead denoted by way of a class, inclusion of the “persons born outside marriage” clause would result in their disinheritance.  With A prudent solicitor will ensure all clauses – including the so-called “boilerplate” – make sense in the situation and are reviewed with and approved by the testator.

*sample cause

Unless otherwise specifically provided any reference in this my Will to a person in terms of a relationship to another person determined by blood or marriage shall not include a person born outside marriage, nor a person who comes within the description traced through another person who is born outside marriage, provided that any person who is born outside marriage but whose parents subsequently married one another shall not be regarded as a person being born outside marriage but shall be regarded as having been born in lawful wedlock to his or her parents, provided that any person who is or has been legally adopted shall be regarded as having been born in lawful wedlock to the adopting parent.

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    How to Get Other Pockets to the Table: Adding Parties And Dependant’s Support


    Written on September 17, 2014 – 9:05 am | by Angelique Moss

    Can individuals who may have an obligation to support a person making a dependant’s support claim against an estate be added as parties to the support claim? That was the question before the court in Brash v. Zyma. The short answer? Yes.

    In 2012, Charles Douglas Brash died. At the time of his death, he had been married to Dorothy Brash since 1990. When they married, Dorothy had four adult children, had been widowed for 15 years, and was living in modest, rent geared to income accommodation. She was 67 at the date of the marriage; Charles was 61.

    Unfortunately, shortly after they married, Dorothy developed Parkinson’s disease. In 2012, she moved into an assisted living facility while Charles remained in the home that he owned.

    When Charles died, he left Dorothy approximately $13,000 in a joint bank account as well as 10% of the value of his house (this worked out to be approximately $8,800).  Dorothy, who was by then 90 years old and in poor health, brought a claim for equalization pursuant to the Family Law Act instead of taking her entitlement under Charles’ Will. She also brought a dependant’s support claim against Charles’ estate. The shortfall between her income and monthly expenses was approximately $500 – $1000 per month. Her savings amounted to approximately $60,000 in a joint bank account with one of her children.

    The respondents to Dorothy’s application for dependant’s support were the estate trustees and beneficiaries of Charles’ estate. They brought a motion to have the three surviving adult children of Dorothy added as respondents to her application, on the grounds that Dorothy had the ability to claim support from them pursuant to section 32 of the Family Law Act. They also suggested that (as the judge expressed it) that “this whole exercise is being managed by the applicant’s children on behalf of their elderly mother and is nothing more than an effort by them to transfer a larger portion of the late Mr. Brash’s estate to them.”

    The judge hearing the motion found that s. 35(5) of the Family Law Act (FLA) provides that on a respondent’s motion, the court may add as a party another person who may have an obligation to provide support to the same dependant.  Had the claim for support had been brought within an action (i.e. had Charles been alive and Dorothy had made a claim for support), then the court found that s. 33(b) of the FLA would have given the respondents (defendants) the right to claim over against Dorothy’s children by adding them as third parties. The court accordingly found that it “would be an odd situation indeed if substantive rights could be defeated depending upon whether the proceeding was an application [as was necessarily the case with a dependant's support application pursuant to part V of the Succession Law Reform Act] or action.”   The court noted that there was no similar provision under part V of the SLRA to add persons from whom the applicant/dependant might have a right to claim support.

    The court cited the common law position that all necessary parties should be before the court in order to allow the court to properly adjudicate a matter on the merits.  The court also referenced Baddeley v. Baddeley, 71 OR (2d) 318 (Ont.H.C.J.) in support of a finding that, in the case of an application for support under the provisions of the FLA, the only threshold condition which must be met in order for a respondent/defendant to require that a party be added to the claim is that the party sought to be added may have an obligation to provide support to the same dependant.

    On the grounds that the adult children of Dorothy may have an obligation to provide her with support, the judge ordered that they be added as parties to her application in order to determine what, if any, obligation they have to support her.

    Angelique Moss

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      POWERS OF ATTORNEY AND ALTER EGO TRUSTS


      Written on September 16, 2014 – 7:00 am | by Steven Frye

      My fellow bloggers and I have written in the past about the ins and outs of legitimate probate fee avoidance arrangements available to a testator. These arrangements include an intervivos transfer of assets such as alter-ego trusts. Care and advice must be taken to ensure that the transfer of assets qualify for tax deferral under the Income Tax Act (“ITA”) to avoid the triggering of income taxes.

      Recently the Canada Revenue Agency (“CRA”) was asked to confirm that if an Attorney under Power of Attorney creates an alter ego trust for the benefit of the testator, would the transfer of property be a qualifying transfer under the ITA?

      In its response to the question, CRA reviewed some recent case law (British Columbia, Nova Scotia and Ontario) and noted that in reference to the BC case, it did not stand for the general proposition that an Attorney may create such trusts for the grantor of a Power of Attorney for Property. The CRA refers to the judges’ conclusion that the creation of an inter vivos trust under a valid power of attorney is possible, “provided the trust created does not otherwise step into territory prohibited by other general principles of law or statutory prohibitions”.

      The CRA concludes that the issue of whether a proposed trust to be created by an Attorney would be a qualifying transfer under the ITA involves questions of law. The CRA would expect that, first and foremost, an Attorney that is contemplating the creation of an alter ego trust would seek the affirmation of the applicable court that the particular terms of the Power of Attorney for Property provide for such a power and that the terms of the proposed trust conform with the terms of the existing will and any other relevant agreements.

      Thanks for reading

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