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Dear
,
We are proud to provide you with our monthly update of news, events, and the law. Thank you for your continued support and business. We look forward to a busy fall. Enjoy the read!
Kim
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1. MONEY & FAMILY LAW, JULY 2019
Mike Marra's article 'Marriage Contracts on Death' was published in the July 2019, Issue 34-7 of Money & Family Law.
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| 2. 2020 EDITION OF BEST LAWYER
Professor Albert Oosterhoff, John Poyser and Kimberly Whaley were selected by their peers for inclusion in the 14th Edition of The Best Lawyers in Canada 2020 for their work in Trusts and Estates. Kimberly has been recognized since 2009.
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3. WEL PARTNERS PRESENTS DEPENDANTS' SUPPORT
Professor Albert Oosterhoff, Kimberly Whaley, Mike Marra, Matthew Rendely, Daniel Paperny, Marian Passmore and Alexander Swabuk presented our recent publication 'Whaley Estate Litigation Partners on Dependants' Support' to our colleagues at RBC Wealth Management, TD Wealth Private Client, CIBC Trust, MD Financial, Scotia Wealth.
Last Chance for our recent WEL on Dependants' Support book:
If you would like to receive a hard copy of our book, we invite you to contact Blossom Pangowish, Office Coordinator at blossom@welpartners.com
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WEL Congratulates Ellen Kratzer who was recently named as Chair of STEP USA. Congratulations Ellen on your new position!
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(i)
FAMILY LAW ACT DISCLOSURE OBLIGATIONS FOR ESTATE TRUSTEES
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By Mike Marra
Acting as an estate trustee can be an involved and lengthy affair in some circumstances, especially if the estate is faced with litigation or an ongoing dispute. Family Law Act ("FLA") claims by a surviving spouse pose unique challenges for an Estate Trustee.
Family Law Act (FLA) Elections
Under the FLA, the surviving married spouse is entitled to an equalization of net family property calculated in the same way as if the spouses had separated. That surviving spouse has the statutory right to decide to accept the bequests under the deceased's will (or under the intestacy provisions of the Succession Law Reform Act (SLRA) if there is no will) or accept an equalization of net family property in accordance with the scheme under Part 1 of the FLA.
Section 4 of the FLA defines "net family property" ("NFP") and "property" as follows:
"net family property" means the value of all the property, except property described in subsection (2), that a spouse owns on the valuation date, after deducting,
(a)
the spouse's debts and other liabilities, and
(b) the value of property, other than a matrimonial home, that the spouse owned on the date of the marriage, after deducting the spouse's debts and other liabilities, other than debts or liabilities related directly to the acquisition or significant improvement of a matrimonial home, calculated as of the date of the marriage;
"property" means any interest, present or future, vested or contingent, in real or personal property and includes,
(a)
property over which a spouse has, alone or in conjunction with another person, a power of appointment exercisable in favour of himself or herself,
(b)
property disposed of by a spouse but over which the spouse has, alone or in conjunction with another person, a power to revoke the disposition or a power to consume or dispose of the property, and
(c) in the case of a spouse's rights under a pension plan, the imputed value, for family law purposes, of the spouse's interest in the plan, as determined in accordance with section 10.1, for the period beginning with the date of the marriage and ending on the valuation date;
Excluded property is defined in section 4(2) of the FLA as follows:
(2) The value of the following property that a spouse owns on the valuation date does not form part of the spouse's net family property:
- Property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.
- Income from property referred to in paragraph 1, if the donor or testator has expressly stated that it is to be excluded from the spouse's net family property.
- Damages or a right to damages for personal injuries, nervous shock, mental distress or loss of guidance, care and companionship, or the part of a settlement that represents those damages.
- Proceeds or a right to proceeds of a policy of life insurance, as defined under the Insurance Act, that are payable on the death of the life insured.
- Property, other than a matrimonial home, into which property referred to in paragraphs 1 to 4 can be traced.
- Property that the spouses have agreed by a domestic contract is not to be included in the spouse's net family property.
- Unadjusted pensionable earnings under the Canada Pension Plan. R.S.O. 1990, c. F.3, s. 4 (2); 2004, c. 31, Sched. 38, s. 2 (1); 2009, c. 11, s. 22 (5).
This is obviously a complex calculation process. The problem for an Estate Trustee is that the surviving spouse is required to elect within six months of the date of death. If the surviving spouse does not elect within the six month period, he or she will be deemed to take under the will (or SLRA).
In order to make an informed decision, the surviving spouse must receive disclosure of the estate assets and debts, and for FLA purposes, disclosure of the deceased's assets and debts as of the date of marriage. It is the obligation of the Estate Trustee to provide this disclosure to the surviving spouse.
This disclosure obligation requires an identification and valuation of the assets and debts together with best evidence supporting documentation, including appraisals and possibly business valuations. In the case of old accounts, private corporations or since disposed of assets this obligations can be onerous, time consuming and costly. In complex family law cases the disclosure exchange process for FLA purposes can take many months, if not years.
Unless the estate is typical husband & wife will situation, the Estate Trustee must commence the task of asset and debt identification for the date of marriage and death at the earliest possible juncture. The six month time period for election can be extended by way of a motion under section 2 (8) of the FLA. That motion must be brought by the surviving spouse and should be consented to by the Estate Trustee unless all required financial disclosure has been provided well before the six month deadline. The principles for granting the extension are set out in Aquilina
v. Aquilina
, 2018 ONSC 3607 (CanLII).
It is critical for counsel for the Estate Trustee to inquire if there are any Domestic Contracts in existence between the deceased and the surviving spouse. The Domestic Contract likely does not eliminate the requirement to disclose but advice should be taken from an experienced family law lawyer on this question.
In the event that the surviving spouse is an Estate Trustee, independent counsel should be retained and resignation (or renunciation) should occur due to the obvious conflict.
Rule 13 of the Family Law Rules specify the mandatory financial disclosure requirements for equalization cases. Although not binding on Estate Court matters, these rules serve as a useful guide for NFP disclosure. In particular, Rule 13 (3.3) requires the following preliminary information to be supplied to the other party:
- The statement issued closest to the valuation date for each bank account or other account in a financial institution, pension, registered retirement or other savings plan, and any other savings or investments in which the party had an interest on that date.
- A copy of an application or request made by the party to obtain a valuation of his or her own pension benefits, deferred pension or pension, as the case may be, if any, as of the valuation date.
- A copy of the Municipal Property Assessment Corporation's assessment of any real property in Ontario in which the party had a right or interest on the valuation date, for the year in which that date occurred.
- If the party owned a life insurance policy on the valuation date, the statement issued closest to that date showing the face amount and cash surrender value, if any, of the policy, and the named beneficiary.
- If the party had an interest in a sole proprietorship or was self-employed on the valuation date, for each of the three years preceding that date,
- the financial statements of the party's business or professional practice, other than a partnership, and
- a copy of every personal income tax return filed by the party, including any materials that were filed with the return.
- If the party was a partner in a partnership on the valuation date, a copy of the partnership agreement and, for each of the three years preceding the valuation date,
- a copy of every personal income tax return filed by the party, including any materials that were filed with the return, and
- the financial statements of the partnership.
- If the party had an interest in a corporation on the valuation date, documentation showing the number and types of shares of the corporation and any other interests in the corporation that were owned by the party on that date.
- If the corporation in which a party had an interest was privately held, for each of the three years preceding the valuation date,
- the financial statements for the corporation and its subsidiaries, and
- if the interest was a majority interest, a copy of every income tax return filed by the corporation.
- If the party was a beneficiary under a trust on the valuation date, a copy of the trust settlement agreement and the trust's financial statements for each of the three years preceding that date.
- Documentation showing the value, on the valuation date, of any property not referred to in paragraphs 1 to 9 in which the party had an interest on that date.
- Documentation that supports a claim, if any, for an exclusion under subsection 4 (2) of the Family Law Act.
- The statements or invoices issued closest to the valuation date in relation to any mortgage, line of credit, credit card balance or other debt owed by the party on that date.
- Any available documentation showing the value, on the date of marriage, of property that the party owned or in which he or she had an interest on that date, and the amount of any debts owed by the party on that date. O. Reg. 69/15, s. 3 (2).
Estate administration lawyers are strongly encouraged to retain an experienced family law lawyer to provide advice with respect to the disclosure obligations and calculation of net family property in these situations.
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(ii)
WEBB v. BELWAY: PROPER AND ADEQUATE SUPPORT FOR A COMMON LAW SPOUSE WHEN ADEQUATE PROVISIONS NOT MADE
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By Sareh (Lua) Ebrahimi
In the case of Webb v Belway[1], the Court was asked to determine what constituted proper and adequate support in circumstances where the deceased failed to make adequate support provisions for a common law spouse, in terms of section 58 of the Succession Law Reform Act ("the SLRA").
Brief background:
Mr. Belway (the "Deceased"), died intestate on October 21, 2017, at the age of 82 years. He had suffered a stroke six moths before his death, which left him incapable of managing his finances and property.
He left behind his daughter Rachel ("the Daughter") and Ms. Webb ("common law spouse") of 26 years.
Following his incapacity, the common law spouse commenced to act on the Power of Attorney for Property and Power of Attorney for Personal Care ("POA's") that were granted to her by the Deceased on February 5, 2016.
The common law spouse effectively transferred $570,455.76 from the Deceased's accounts and investments, either directly or indirectly, for her own benefit.
Since the Deceased died intestate, The daughter, was the sole heir of his estate (valued approximately at $2,851,125,77). The common law spouse brought a claim for dependant's support against the Deceased's estate.
The Parties Positions:
The common law spouse's position was that she was entitled to one half of the estate (valued approximately $1,425,562.88), this amount being sufficient to satisfy her future needs and the Deceased's legal and moral obligations toward her. She wanted the transfer of the farmhouse property, valued at approximately $580,000.00, an order that she keeps all funds received to date of approximately $570,455.75 and an additional cash payment of $275,107.14.
[2]
The daughter argued that due to the common law spouse's egregious behaviour which is be discussed below, she should receive no further assets than the amounts she had transferred to herself while the Deceased was incapable, be it either money or property, from the estate.
[
3]
The daughter admitted that the common law spouse was the Deceased's common law spouse for the purpose of dependant's support, however, her claim for dependant support should be limited to the amounts she transferred to herself.
The issues:
The court had to determine whether:
a)
The common law spouse received sufficient support from the estate, given her transfers from Mr. Belway's accounts and investments to herself, while acting as his Power of Attorney?
b)
If not, what further support, or property, should the common law spouse receive?
[4]
Analysis:
The court looked at the relevant sections of the SLRA (Sections 58 and 62), its authority to award relief where it considers it appropriate, the non-exhaustive list of circumstances that it must consider in determining the amount and duration, if any, of support.
[5]
It considered that the common law spouse's personal circumstances, she is 73 years of age, has not had a job outside of the farm since 1991, is not employed, is the Deceased's only dependent as well as her finances and the payments she was receiving from the government.
The court took into consideration that the common law spouse looked after the Deceased during their relationship, she looked after the household and did some work on the farm, she took a more active role on the farm in 2012 when the Deceased's health started to deteriorate.
The court further looked at case law dealing with dependant support claims. When considering support, the court should not only consider a needs-based or economic analysis, but also consider the moral or ethical obligations of the Deceased with regard to all dependents, that the common law spouse was the only one financially dependant on the Deceased, the moral obligation owed to his independent daughter, and the Deceased's intentions, if any.
[6]
Furthermore, the court looked at the common law spouse's conduct in transferring the funds out of the Deceased's bank account into her own account for her own benefit, for a brief period she isolated the daughter from her father following his stoke. The court was not persuaded that the common law spouse's conduct was financially driven and that it not so egregious as to negate her moral and economic claims against the estate.
[7]
Expert Evidence and actuarial reports to estimate the common law spouse's present value of future living expenses was also considered by the court.
[8]
The daughter's report provided for the common law spouse moving into a nursing home at age 90, thus reducing living expenses. It further assumed that the common law spouse would occupy a deluxe studio apartment, or a large studio apartment until she moved into a retirement residence.
Madam Justice Hélène C. Desormeau, in considering the length of the relationship and the size of the estate, stated "... I do not find it is reasonable to expect the the common law spouse to reside in a studio apartment, or to suggest she will reside in a nursing home at 90 years of age".
[9]
She went on to state "The estate is suitably sizable to afford the common law spouse with sufficient financial independence to permit her to maintain her dignity. In these circumstances, the common law spouse financial independence is achieved in providing her the means to eventually reside in a one bedroom residence. Based on same, I accept the GML report, and find it is more likely than not that the common law spouse will have a shortfall for the cost of her future living expenses if she were only to receive the assets already in her possession."
[10]
Decision:
The court determined that the common law spouse had met her onus on a balance of probabilities, that the estate had not adequately provided for her, and that the assets she had already received were insufficient to meet the estates obligations towards her.
[11]
Having considered all the circumstances, the common law spouse was awarded the relief she sought, which amounted to one half of the estate, quantified at approximately $1,425,562.88. She was awarded the farm property that her and the Deceased were living in, the funds that she had transferred to herself ($570,455.75), as well as the sum of $275,105.14 subject to some adjustments.
Conclusion:
Dependant support claims are difficult to determine, as there is no formula to quantify the support award. The Court has a broad discretion to determine what constitutes proper and adequate support having regard to the factors listed in section 62 of the SLRA.
[1]
Webb v. Belway, 2019 ONSC 4602 (CanLII)
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Administration of Estates
September 10, 2019
Chair: Kimberly Whaley and Tim Grieve
STEP Toronto
Case Law and Legal Update
September 11, 2019
Speaker: Kimberly Whaley and Sareh (Lua) Ebrahimi
Ontario Bar Association Elder Law Passport Series Program
Capacity for Lawyers: Handling Client Capacity in a Legal Retainer
September 18, 2019
Chair: Kimberly Whaley
GTA Accountants and GTA Finance Network
Elder Abuse
October 3, 2019
Speaker: Kimberly Whaley
Law Society of Ontario
22nd Estates and Trusts Summit (Day One)
October 16, 2019
Speaker: Kimberly Whaley
Toronto Police Seminar
Civil and Criminal Remedies, Elder Abuse
November 1, 2019
Speaker: Matthew Rendely and Daniel Paperny
Summit on Aging: Keeping Me Safe - Capacity, Risk & Medical Assistance in Dying (MAID) - Peterborough, Ontario
November 6, 2019
Speaker: Kimberly Whaley
2019 Isaac Pitblado Lectures - Winnipeg, Manitoba
Predatory Marriages
November 8, 2019
Speaker: Kimberly Whaley and Albert Oosterhoff
CCEL BC
Bridging the Gap, Elder Law for Everyone
Elder Abuse, Civil and Criminal Remedies
November 14-15, 2019
Speaker: Kimberly Whaley
Toronto Police Seminar
Civil and Criminal Remedies, Elder Abuse
December 6, 2019
Speaker: Alex Swabuk and Bryan Gilmartin
Ontario Bar Association Elder Law Passport Series Program
Capacity for Lawyers: Elder and Family Law Matters
December 10, 2019
Speaker: Michael Marra
Institute 2020 Elder Law Section Program
Rights and Limitations on an Attorney Under a Power of Attorney
February 2020
Chairs: Kimberly Whaley and Albert Oosterhoff
Ontario Bar Association Elder Law Passport Series Program
Capacity for Lawyers: Elder and Real Estate Matters
February 26, 2020
Speaker: Matthew Rendely
Ontario Bar Association Elder Law Passport Series Program
Capacity for Lawyers: Elder and Corporate Client Matters
March 18, 2020
Speaker: Kimberly Whaley
http://www.cbapd.org/details_en.aspx?id=ON_ON20ELD02T
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V. IN CASE YOU MISSED IT - RECENT BLOG POSTS
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