All About Estates

Popping the Question: Will You be My Fiduciary?

closeAuthor: Elaine Blades Name: Elaine Blades
Email: elaine.blades@scotiaprivateclient.com
Site: http://www.scotiaprivateclient.com
About: Scotia Private Client Group is focused on helping affluent clients build, preserve and transfer their wealth. We create integrated wealth management solutions that incorporate investment management, estate and trust services and private banking.See Authors Posts (43)

Spring is (finally) in the air and wedding season is upon us. With that bucolic backdrop, I stumbled upon a timely article Popping the Question: Will You be My Bridesmaid?  The article discusses how choosing appropriate bridal party members “can sometimes be a hard task for couples” and how you should “consider it an as an honor if you are asked…”. The types of duties bridesmaids, groomsmen, the maid of honor and the best man can expect, are detailed.

Needless to say, the article has nothing to do with “estates”, per se. Nonetheless, I was struck by how most of the (common sense) advice applies equally to the roles of “executor”, “trustee”, “attorney” or “guardian for children”.

We’re told that choosing the appropriate bridesmaids and groomsmen can be a hard task – sometimes complicated by family dynamics. So too can choosing the appropriate executor/trustee/attorney (“fiduciary”). Being asked to be part of a bridal party is generally considered “an honor”. So too is being named as a fiduciary. The role of bridesmaid/groomsmen entails a number of duties and responsibilities – many of a sensitive or personal nature – and can represent a major time commitment. So too does acting as a fiduciary.

Potential bridal party members are encouraged to “seriously consider all that goes into being a bridal party member”, before accepting the role. I would encourage all potential fiduciaries to do the same. Potential bridal party candidates are encouraged to say up front if they don’t think they’ll be able to handle the job, rather than disappoint down the road. I would encourage all potential fiduciaries to do the same.

When considering “what’s involved”, potential fiduciaries should focus not only the list of duties and responsibilities, but also reflect on concerns such as the potential for family conflict and personal liability. Much better to decline the role (or seek professional guidance navigating the duties) than fail to live up to expectations down the road.

So, if preparing/updating your Will and Powers of Attorney is on your spring “to do” list, you are strongly encouraged to choose your executor/attorney wisely – giving due thought to what the role will entail – and to pop the question with your proposed candidate(s). If the question is popped to you, you’re encouraged to look beyond the honor and realistically consider whether you are able and willing to handle the role and meet all expectations.

Whether planning your nuptials or your estate, this common sense approach can help ensure success.

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Tags: Elaine Blades, estate planning, Executors

Posted in Estate Planning, Executors, Power of Attorney

Family Relationships and Constructive Trusts

closeAuthor: Diane Vieira Name: Diane Vieira
Email: dvieira@devrieslitigation.com
Site: http://www.devrieslitigation.com
About: Diane has practiced in the area of estate, trust and capacity litigation since she was called to the Ontario Bar in 2006. She obtained her law degree from Queen’s University after completing an Honours Bachelor of Arts degree from the University of Toronto. She is a member of the executive of the Trusts & Estates Section of the Ontario Bar Association and a member of the Toronto Lawyers Association.See Authors Posts (28)

In Thomas v. Wales, the plaintiff sought an order vesting title of a property and business (a scrap yard) to him.  He claimed both were promised to him by his parents.  Relying on Soulos v. Korkontzilas, the plaintiff submitted the court should impose a constructive trust on the property as he worked at the scrap yard and otherwise assisted his parents in return for their promise that the scrap yard would be conveyed to him.

The plaintiff’s mother claimed neither she nor her deceased husband ever made that promise to their son, the plaintiff, and it was the deceased’s intention to treat all his children in the same manner and not to gift the business or property to their son alone.

In a detailed, well thought out decision, Justice Whalen summarizes the case law regarding constructive trust claims, including the court’s interpretation of the test as set out in Pettkuss v. Becker.  On a balance of probabilities, the court found that if even if a promise had been made to the plaintiff, it was too vague to be relied on.  Moreover, the court found no evidence of unjust enrichment or a corresponding deprivation to warrant the remedy of a constructive trust.

The court characterized the relationship between the plaintiff and his parents as one of mutual enrichment, in which neither party was dependant on the other.  The court found no evidence of a fiduciary type of relationship in which the parents took advantage of their son.

What the plaintiff characterized as evidence of a relationship requiring an equitable remedy, the court found to be a normal family relationship with a son assisting his parents.

“It is difficult to regard family dynamics and activities of this kind involving any of the trust-like relationships traditionally supervised by the courts for the greater social good.  In fact, such supervision might be dangerous as family generosity and interaction might then be construed to imply a more general legal obligation.  This is the responsibility of legislatures, which have enacted family law measures defining the boundaries of rights and obligations in the family context.”

This case is a reminder that even within a family, any agreements in respect of transferring a business or property should be well documented to avoid estate litigation after death.

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Tags: constructive trust, de VRIES LITIGATION, equitable, family relationship, mutual enrichment

Posted in Estate Litigation, Family Conflict, Trusts

JOINT SPOUSAL TRUSTS AND LEGAL DIVORCE

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 (51)

Mr M has settled an irrevocable trust which qualifies as a joint spousal trust (or common-law partner trusts) pursuant to the applicable sections of the Income Tax Act governing trusts. The main beneficiaries of the trust are Mr. M and Mrs. W, both of whom are Canadian residents. The trust stipulates while either Mr. M or Mrs. W is alive, no one other Mr. M or Mrs. W may receive any of the capital or income of the trust.

What happens if Mr. M and Mrs. M obtain a divorce: Does the trust continue for tax purposes upon divorce? The good news is that the Canada Revenue Agency has confirmed that the trust does continue for tax purposes, in the same way a spousal trust continues after divorce or annulment. Deemed disposition of the trust would only apply on the later of the death of Mr. M and Mrs. W.

If you are in a jurisdiction where an equalization payment payable to Mr. M or Mrs. W is based on the relative value of assets and liabilities of each party at date of marriage and date of separation, this is particularly good news as the trust does not automacaly need to be wound up (although it may be for equalization purposes). In jurisdictions where spouses are required to actually split their assets and liabilities, some creativity will be needed to keep the trust in place but at least the taxing authority will not get in the way if the trust is left untouched.

Thanks for reading.

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Posted in Estate Administration, Estate Litigation, Estate Planning, Executors, Family Conflict, Investments, Joint Tenancy, Trusts, Wills