he recent case of Re Assaly deals with a unique intersection between estates and bankruptcy law and squarely addresses the law of assent.
In this case, the estate trustee paid funds in trust to counsel for a bankrupt beneficiary and adult child of the deceased (the “Bankrupt”), on the condition that the Bankrupt would provide a letter of credit in favour of the estate before the funds could be released. This arrangement was made pursuant to minutes of settlement executed in 2008, which resolved two proceedings brought by the Bankrupt against the estate. However, the letter of credit was never provided and the Bankrupt’s lawyer ultimately paid the money into court.
The estate trustee and the trustee in bankruptcy for the Bankrupt then brought motions for the funds to be paid out. While this case considered a variety of issues, this blog focuses upon a specific question considered by the court; namely, whether the funds should be paid back to the estate because the estate trustee never “assented” to the transfer of the funds to the Bankrupt.
The Bankrupt’s position on the motion was that before he declared bankruptcy, he assigned his interest in the funds to a charitable foundation named after his deceased father in Florida (the “Charitable Foundation”), for the benefit of his children, and thus, the funds should be paid out to the Charitable Foundation accordingly. Conversely, the estate’s position was that the Bankrupt did not have any interest in the funds to assign because the estate trustee never assented to the transfer of the funds to him. As such, no transfer occurred and the funds continued to belong to the estate.
As paragraph 40 of its decision, the court notes (quoting Professor Oosterhoff), “An assent is a statement or act of a personal representative by which he indicates that certain property that forms part of the assets of the estate is not, or is no longer needed to discharge the estate’s debts, funeral expenses, or general pecuniary legacies. The effect of the assent is to release the property to the beneficiary to whom it was left in the will. This suggests, therefore, that until the assent is given, the beneficiary’s title is incomplete. And this is, indeed so. For the personal representative holds the complete, unfragmented title to the estate to permit him property to administer it. Thus, the beneficiaries do not have access to the property the testator left to them in her will until the persona [sic] representative gives his assent or transfers the property to them. ”
The court went on to find that in this case, the estate trustee transferred the funds to the Bankrupt on the condition that the Bankrupt provide a letter of credit within 3 days as security for a potential claim against the estate, which letter of credit was not provided. As such, “The Estate Trustee never unconditionally transferred…the remaining share that he was to receive his father’s will. The Estate Trustee imposed a condition that a letter of credit be provided as security for the Estate before the Funds were released…” The Bankrupt simply failed to fulfill the condition.
The court therefore concluded that the estate trustee never assented to the transfer of the funds to the Bankrupt and as a result, the funds remained the property of the estate. Accordingly, at no time did the Bankrupt have any interest in the funds, such that they could be assigned to the Charitable Foundation. It follows that the funds could not be paid out to the Charitable Foundation on the motion.
This case provides a concise overview of the law of assent and demonstrates that a beneficiary’s right to his or her share in an estate is not absolute.