What I’m Reading: Interesting Estate Litigation Articles for November 2021

The following is a roundup of noteworthy articles published this month on estate litigation and related issues:

  1. Sydney Osmar at Hull & Hull LLP (in Ontario) discusses a recent Ontario case on the production of medical records in the context of an estate litigation claim which may be statute barred due to the expiration of a limitation period: https://hullandhull.com/2021/11/production-of-medical-records-balancing-privacy-and-fact-finding/
  2. Sandy Abley at Onyx Law discusses the importance of reviewing and updating direct beneficiary designations: https://onyxlaw.ca/beneficiary-designations-review-regularly-and-update-as-needed/
  3. CBC reports on a claim by a widow that her husband was duped by a company into selling their home for below market value shortly before his death.  The widow has commenced a lawsuit alleging that the company took advantage of (1) her husband’s diminished capacity in the late stages of his illness, and (2) her lack of involvement in the couple’s finances.  The defendants have not yet filed their statement(s) of defence and they did not provide any comment for the article: https://www.cbc.ca/news/canada/toronto/widow-alleges-dying-husband-duped-1.6266577
  4. Paul Trudelle (also at Hull & Hull LLP) writes about an Ontario decision which is another reminder of the problems that frequently arise when you prepare an at-home “fill in the blanks” will: https://hullandhull.com/2021/11/what-did-he-mean-what-did-he-say-interpretation-issues/

Happy reading!

B.C. Case Comment: Person Occupying Estate Property May be Required to Pay Occupational Rent

I am often asked by clients (whether they are the executor of an estate or a beneficiary) whether a person occupying real property which was owned by the deceased and has become an estate asset must pay rent for staying in that property.

Where an estate holds real property, there will usually be a period of time before the executor or administrator is ready or able to deal with the property, whether they intend to transfer the property to the beneficiary(ies) or sell the property and distribute the sales proceeds.

This issue is straightforward where, for example, one spouse dies, and the surviving spouse is the sole beneficiary of the estate and sole occupier of the property. The surviving spouse would not pay rent to occupy the property, because any rent would ultimately go back to that spouse as the beneficiary of the estate.

However, matters are usually not that straightforward. For example, a common scenario is the death of a parent, and one of their children resides in their property (or seeks to move into the property after the parent’s death). The property will eventually be sold so that the proceeds can be distributed between the deceased’s children, but in the meantime one of the children gets the additional benefit of getting to live in the property.

Another example is where the deceased was the sole occupier of the property, and rather than leave the property vacant someone moves in. This may be one of the beneficiaries, or even the executor.

The issue may be further complicated if the person occupying the property is paying expenses relating to the property (which would otherwise be payable by the estate), or if they allege that they are occupying the property for the benefit of the estate (so that it doesn’t remain vacant).

Where someone occupies and has the benefit of property belonging to the estate, they may be required to pay occupational rent to the estate. This may take the form of a debt payable to the estate, or a set-off from their share of the estate.  The concept of occupation rent is tied to unjust enrichment, as well as trespass. To permit someone to use estate assets results in an enrichment, to the detriment of the estate. Occupational rent will be considered where there is a claim of unjust enrichment and it is just and equitable to impose the remedy.

The issue of occupational rent was recently considered by the B.C. Supreme Court in In the Matter of the Estate of Euphemia Reagh, Deceased, 2021 BCSC 1807.  In Reagh, the deceased made a will dividing her estate equally amongst her four children. One of the children (“Randy”) was named as executor.

Randy and his family lived in the basement suite of the Deceased’s residence in Burnaby for 12 years prior to the Deceased’s death. The year before her death, the Deceased moved into a care facility, but returned to the Burnaby property after a short period of time. Upon her return, Randy and his family were now occupying the main floor. Randy claimed he paid his mother $1,000 per month in rent while she was alive, and he paid this amount for the first 12 months after her death.

After her death, there was a dispute concerning the appropriate rent to be paid. For a period of time (until the property was sold), Randy increased the amount paid for rent to $2,150 per month. Randy maintained the property, and claimed it as his principal residence, saving the estate $50,000 in taxes after its sale.

The Court agreed that $1,000/month in rent was too little. While there was an email discussing rent of $3,000, there was no confirmation that this was agreed to, and so no agreement was established. While the evidence of market rent before the court was “less than perfect”, the court was satisfied that $2,000/month in rent was more appropriate. Although the court was flexible in this case, a party who is making a claim for occupational rent should bring evidence as to the appropriate amount of occupational rent (i.e. market value).

It was just and equitable in this case that the executor pay occupational rent at market value. The executor was ordered to pay $12,000 (the difference between the $1,000 paid and the $2,000 rent which was appropriate, for 12 months).

This case serves as a reminder that executors (or others) cannot expect to occupy estate property rent-free, or for below market rent. If they try to do so, then the remedy of occupational rent may be available.

B.C. Case Comment: Court Resolves Dispute Over Sentimental Item to Avoid Further Estate Litigation

When an estate is being distributed, it is not uncommon for disputes to arise over sentimental objects that belonged to the deceased, often of low or no monetary value.  On occasion, a dispute over a sentimental family heirloom may be the only truly contentious issue between the beneficiaries.  Parties may agree on the distribution of the majority of the estate (i.e. the monies, real estate, etc…), but refuse to budge on certain of the deceased’s personal possessions.  In some cases, parties may become entrenched in their positions on the distribution of a sentimental object, and that hostility may result in a much larger (more expensive) dispute over the estate.

This could have been the case in the recent B.C. Supreme Court decision in Rhodes v. Myers 2021 BCSC 2043.  In Rhodes, a will-maker made a will dividing her estate into four equal shares, with each share to be given to one of her four adult children. Two of the children were named as co-executors of the estate.

There were disputes and disagreements between the children prior to their mother’s death, which only intensified after her death.  One of the co-executors sought the removal of the other co-executor (“Donald”).  Donald consented to the relief sought, including his removal, on the condition that his brother (“Allan”) receive the deceased’s bolt ring.

The ring was made by the deceased’s husband out of a bolt. The deceased never took it off. The Court observed that it clearly had “tremendous sentimental value to the children, but no monetary value”. The bolt ring was identified by the Court as the “sticking point” in the children being able to resolve the estate issues.

The petitioner (the other co-executor, “Patti”) claimed that the deceased gave her the ring sometime in the last months of her life.

The Court held that since the ring was an asset of the estate, they had jurisdiction to deal with it, and dealing with it now may enable the court to move forward with concluding the estate without further litigation. This is consistent with the object of the Supreme Court Civil Rules of securing the just, speedy and inexpensive determination of every proceeding on its merits. The bolt ring, which has no monetary value, should be dealt with now, if it will avoid further proceedings later.

The Court considered the circumstances of the ring in detail, and concluded that the deceased intended the ring to go to Allan, and that this was well-known to all four siblings. The deceased lacked the capacity to gift the ring in the last months of her life. In this regard, the Court held that a geriatric consultation assessment was compelling. As a result, the ring was an asset of the estate, and Patti was directed to distribute it to Allan in accordance with the Deceased’s wishes.

In settling the issue of who was to receive the ring at this early stage, the Court likely assisted the parties in avoiding further time consuming and expensive estate litigation.

B.C. Case Comment: Court Refuses to Remove Sister as Trustee of Brother’s Trust

What can you do when you want to provide for your children equally, but you are concerned that one or more of your children may not be able to handle their share of your estate? If a parent has these concerns, they may decide to put a share of their estate in trust (often in a trust set out in the will itself). However, the parent must decide who will act as trustee and manage that money on behalf of their child.

One option which may seem attractive initially is to make another child the trustee. However, the result is that one sibling is in control of the other sibling’s share of the estate.   This often leads to tension, disputes, and ultimately litigation.

This was the case in the recent B.C. Supreme Court decision of Parsons v. Zaranski 2021 BCSC 2092. In Parsons, the Deceased had three children. He left his estate to his three children in equal shares, but he left one son’s share in a trust. His daughter was named as trustee of this trust. The trust was discretionary, with so much of the income and capital to be paid as the trustee decides is advisable for the care, maintenance, and education and benefit of the beneficiary during his lifetime.

Unsurprisingly, disputes arose. The beneficiary sought to remove and replace his sister as trustee. His complaints fell within the following categories;

  1. Failure to report on the activities of the trust;
  2. Failure to provide adequate funds during the beneficiary’s times of need; and
  3. Making an improper investment with trust funds from which she may derive a personal gain

The overarching concern for the court on an application to remove a trustee is whether the trustee’s conduct is putting the assets of the trust or the purposes of the trust in jeopardy. Conflict or friction between the trustee and the beneficiaries, without more, is insufficient to justify removal. The decision to remove a trustee must not be undertaken lightly, and should only be done in the clearest of cases and when it is necessary to protect the beneficiaries or the purpose of the trust.

The Court dismissed the application to remove the sister as trustee.

First, the Court found that the sister provided regular and complete reporting to her brother.

Second, the Court held that the sister responded appropriately to her brother’s requests for assistance. The case is a reminder that the exercise of discretion by a trustee pursuant to the terms of a trust is entitled to deference. In Parsons, the Court put it this way (at para. 78): “I am satisfied that Tammy could, in exercising her discretion, have paid more to William through the years, but I am also satisfied that she could have paid less.”

Finally, while the Court had some concerns about an investment made by the trustee with trust funds (it was an “error in judgment”), it was made in good faith and the trust was never at risk because the trustee would have reimbursed the trust if the investment had failed.

This case is a cautionary tale of the animosity, resentment and tension which you may create by putting one child in charge of another child’s trust. However, it also serves as a reminder to beneficiaries that animosity, resentment and tension is usually not enough, on its own, to remove a sibling as your trustee.

B.C. Case Comment Update: Alleged Victim of Elder Abuse Still Not Forced to Undergo Further Mental Capacity Assessment

I previously wrote about the B.C. Supreme Court decision in Hambleton (Litigation Guardian of) v. Hambleton 2021 BCSC 1155. In Hambleton, the Court refused to grant an order sought by a daughter that her mother attend a more extensive medical capacity evaluation. My previous post on the decision can be found here: https://www.bcestatelitigation.ca/case-comment/b-c-case-comment-alleged-victim-of-elder-abuse-not-forced-to-undergo-further-mental-capacity-assessment/

The daughter took the position that her mother suffered from severe dementia, and that she lacked capacity to make decisions regarding her financial affairs and was subject to undue influence by her other daughter. The mother retained her own lawyer and applied to strike the action which was brought in her name by her daughter (and to remove her daughter as litigation guardian).

The Court was satisfied that a less extensive assessment of the mother was adequate. It is an invasion of an individual’s rights to require them to undergo a mental capacity assessment, and the court should not make such an order without sufficient evidentiary basis for doing so. In this case, the mother had obtained an assessment to address the Court’s concern about capacity, and requiring her to undergo a further mental capacity assessment would not be appropriate.

The daughter appealed the result. The appeal has not yet been heard. However, pending the appeal the daughter applied for a stay of proceedings – an order that nothing happen in the underlying litigation until the appeal has been heard.

The Court of Appeal dismissed the application for a stay of proceeding.  The reasons can be found here: https://www.bccourts.ca/jdb-txt/ca/21/03/2021BCCA0377.htm.

The Court observed that the merits of appeal were “extremely low.” The order of the court below was a discretionary one, entitled to deference. It also would not bind the judge who ultimately would hear the application to remove the daughter as litigation guardian.

The Court also looked at irreparable harm and the balance of convenience. These factors favored the mother. She was currently a party to litigation that she wanted no part of, brought ostensibly on her behalf of by her daughter, who she does not want to represent her as litigation guardian. The mother’s personal autonomy was in the balance, and she was over 90 years old. To order a stay and keep the mother in the ligation until this issue was determined would cause her “much harm.”

This decision is another example of the courts protecting personal autonomy and the presumption of capability.

What I’m Reading: Interesting Estate Litigation Articles for October 2021

The following is a roundup of noteworthy articles published this month on estate litigation and related issues:

  1. Suzana Popovic-Montag at Hull & Hull LLP (in Ontario) discusses an Ontario case in which the will-maker included an option to purchase in their will: https://hullandhull.com/2021/10/options-to-purchase-and-wills/
  2. Natalie Kodsi at WEL Partners (Toronto) discusses the reluctance of the courts to remove a named executor, with reference to a recent Ontario court decision: https://welpartners.com/blog/2021/10/larmon-v-munro-the-courts-reluctance-in-removing-a-named-estate-trustee/
  3. The Globe and Mail recently published an article on why digital assets ought to be included in your estate plan: https://www.theglobeandmail.com/investing/globe-advisor/article-why-your-digital-footprint-needs-to-part-of-your-will/
  4. Douglas Todd recently published an opinion piece in the Vancouver Sun addressing the large-scale transfer of inter-generational wealth that is happening in Canada: https://vancouversun.com/opinion/columnists/douglas-todd-canadas-bank-of-mom-and-dad-returning-us-to-19th-century-inheritance-culture

Happy reading!

B.C. to Allow Electronic Wills and Remote Witnessing of Wills

The Wills, Estates and Amendment Act, 2020 will significantly change how a person may make a will in British Columbia, effective December 1, 2021.

Previously, a will had to meet all of the following requirements in order to be valid in British Columbia:

  1. It had to be in writing;
  2. It had to be signed at the end by the will-maker, or the signature at the end had be acknowledged by the will-maker as his or hers, in the presence of two or more witnesses present at the same time, and
  3. It had to be signed by two or more of the witnesses in the presence of the will-maker.

The amendments will allow for the execution of electronic wills, which are wills that:

  1. Are recorded or stored electronically, which means in a digital or other intangible form by electronic, magnetic, or optical means or by any other similar means;
  2. Can be read by a person; and
  3. Are capable of being reproduced in a visible form.

This means that as of December 1, 2021, a person can prepare and electronically sign a will, with no physical paper copy having to exist.  The amendments allow for the use of an electronic signature, and for the execution of the will to be witnessed electronically (i.e. remotely, by video).

In order to amend an electronic will, a new will must be made.

The amendments reflect some of the temporary measures implemented during the Covid-19 pandemic by way of ministerial orders, to allow for remote execution of wills. According to the Canadian Bar Association (B.C. Branch), these new changes are intended to respond to concerns raised by the public and the legal profession about a lack of flexibility in the rules regarding wills.

These changes certainly will provide greater flexibility and ability to the public to make wills, both during and outside of a pandemic.  However, as electronic wills become more common, problems may arise.

The possible existence of an electronic will creates uncertainty as to what document is actually the last will of a deceased person. Is there a more recent will stored on the deceased’s phone, tablet or laptop? Is there a document found somewhere in the deceased’s email inbox or in the cloud? Hopefully one of the witnesses to an electronic will would come forward and notify others of the existence of the document, but this may not always happen.   Moving forward, what will the expectation be on personal representatives or others to conduct searches of the deceased’s electronic devices, email inboxes, etc… for possible electronic wills?

We currently have a voluntary wills registry in B.C., which allows a will-maker to register a record of where to find the original copy of their will upon death. When dealing with an electronic will, there is no original physical copy of the document. In any event, the registry is not mandatory. This may create further uncertainty, especially when there is a physical will registered with the wills registry, but the possibility of a subsequent electronic will somewhere in the digital world that has not been registered.

If you choose to make an electronic will, you should at minimum make clear to the named executor that the document exists, and where it can be found (and ideally provide them with a copy).

What I’m Reading: Interesting Estate Litigation Articles for September 2021

The following is a roundup of noteworthy articles published this month on estate litigation and related issues:

  1. Ian Hull at Hull & Hull LLP (in Ontario) discusses the potential drawbacks of naming multiple co-executors in your will (who must work together): https://hullandhull.com/2021/09/should-you-have-co-executors-for-your-will/
  2. Stan Rule at Sabey Rule discusses a recent B.C. Court of Appeal decision which held that a creditor who has registered a judgment against real property held in the name of the debtor cannot enforce the judgment in respect of a beneficial interest of another person in the property, even if that interest is not registered: http://rulelaw.blogspot.com/2021/09/chichak-v-chichak.html
  3. Tyler Lin at de Vries Litigation LLP (Ontario) considers whether secret recordings are effective in litigation: https://devrieslitigation.com/can-secret-recordings-be-effective-evidence-in-litigation/
  4. Albert Oosterhoff at WEL Partners (Toronto) discusses the rights of beneficiaries to obtain information from trustees: https://welpartners.com/blog/2021/09/information-trustees-must-disclose-to-beneficiaries-the-joint-interest-exception/
  5. Paul Trudelle at Hull & Hull LLP (in Ontario) discusses an Alberta case in which it was ordered that no further steps could be taken without leave of the court in what amounted to frivolous estate litigation: https://hullandhull.com/2021/09/when-enough-is-enough-ending-estate-claims/

Happy reading!

What I’m Reading: Interesting Estate Litigation Articles for August 2021

The following is a roundup of noteworthy articles published this month on estate litigation and related issues:

  1. Sanaya Mistry at Hull & Hull LLP (in Ontario) writes about a recent Ontario decision involving guardianship of an elderly person and validity of powers of attorney in a pair of posts, one of which has a useful discussion on the admissibility of audio recordings: https://hullandhull.com/2021/08/are-audio-recordings-admissible/ and https://hullandhull.com/2021/08/considerations-for-determining-the-validity-of-powers-of-attorney-and-appointing-guardians-for-property-and-personal-care/
  2. James Steele at Robertson Stromberg (Saskatchewan) notes that every irregularity in a will does not amount to lack of capacity or undue influence of the will-maker, in the context of a recent Saskatchewan decision: https://skestatelaw.ca/2021/08/25/saskatchewan-estate-litigation-update-fraser-v-mountstephen-2021-skqb-192/
  3. Stephen Mulrain at Miller Thomson discusses what happens when there is a dispute over how to handle a deceased’s remains: https://www.millerthomson.com/en/blog/mt-estate-litigation-blog/thoughts-on-final-resting-places/
  4. Arielle Di Iulio (also at Hull & Hull LLP, Toronto) discusses an interesting Federal Court decision, in which a claimant sought to claim the CPP survivor’s pension on two separate occasions, and argued that the inability to due so would infringe upon her charter rights: https://hullandhull.com/2021/08/survivors-pension-rights-of-the-twice-widowed-woman/

Happy reading!

Repost: B.C. Court upholds $1.4M bequest to SPCA

My colleague, Georgia Barnard, (bio found here) posted on our firm blog about a recent estate litigation case.  The post can be found here.

In Henderson v. Myler 2012 BCSC 1649 (reasons for judgment found here), the B.C. Supreme Court considered whether a handwritten note was effective and changed the distribution of an estate as set out in a prior will.  The prior will provided that the SPCA would receive the residue of the estate (approximately $1.4 million).  The note provided that the SPCA would only receive $100,000.  The Court concluded that the note was not effective, and so the SPCA received the $1.4 million residue pursuant to the prior will.

A CBC news article on this decision can be found here.

As Georgia notes in her post, it is important to immediately prepare a new will or codicil if your wishes for your estate change.