Month: December 2020

What I’m Reading: Interesting Estate Litigation Articles for December 2020

December 31, 2020

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

  1. The suspension of limitation periods in B.C. as a result of Covid-19 ends on March 25, 2021. Stan Rule discussed some of the implications for estate litigation: http://rulelaw.blogspot.com/2020/12/suspension-of-limitation-periods-in.html
  2. WEL Partners (Toronto) published a series of posts on elder law this month, identifying potential scams and available resources. A post on a concerning case of elder abuse reported in the media can be found here: https://welpartners.com/blog/2020/12/elder-law-series-woman-with-power-of-attorney-takes-thousands-from-97-year-old-with-dementia/. A post with various resources for victims of elder abuse (or their concerned family members) can be found here: https://welpartners.com/blog/2020/12/elder-law-series-stay-safe-resources-should-you-or-your-loved-ones-become-a-victim-of-elder-abuse/
  3. Ian Hull and Daniel Enright of Hull & Hull LLP (in Ontario) discussed the Slayer Rule – a general rule of public policy that forbids a criminal from profiting from his or her own wrongdoing: https://hullandhull.com/2020/12/murder-insurance-money-and-the-slayer-rule/
  4. Ian Hull and Daniel Enright also wrote about an interesting case in which new homeowners found $600,000 in cash hidden in their house, presumably left there by the previous (and now deceased) owner. The personal representative of the estate of the deceased prior owner sought the return of the monies to the estate. The judge refused to grant summary judgment, concluding that more evidence was required to determine the matter. This means that the unusual case may return to the courts in the future. The post can be found here: https://hullandhull.com/2020/11/finders-and-keepers-and-the-hidden-half-million-dollars/

Happy reading, and Happy New Year.

The Final Hurdle: Passing of Accounts and Determining the Executor’s Fee

December 17, 2020

Once contentious estate claims have been determined, such as challenges to the validity of a will or wills variation claims, there is one final hurdle for the executor: the passing of accounts and determination of the executor’s fee.

The B.C. Trustee Act provides that a personal representative is entitled to remuneration to a maximum of five percent of the gross aggregate value, including capital and income, of all of the estate at the date of the passing.  An executor is also entitled to a fee for annual care and management of the estate which must not exceed 0.4% of the average market value of the estate assets.

In determining the fee payable, the court will consider the magnitude of the trust or estate, the care and responsibility involved, the time occupied in administering the trust or estate, the skill and ability displayed, and finally, the success achieved in the result. The fee is to be determined based upon the reasonable value of the services rendered, subject to the five percent cap.

If the beneficiaries do not consent to the form of accounts and the fee sought by the executor, then the executor must seek the approval of the court.

If there have been contentious court proceedings relating to an estate, there may be lingering resentment or continued conflict when the matter proceeds to the final passing of accounts. This gives the parties one last thing to fight about.

This was the case in the recent decision of In the Matter of the Estate of Nehar Singh Litt, deceased 2020 BCSC 1921. In Litt, the executor was one of six beneficiaries, all of whom are siblings. The deceased had left each of his four daughters $150,000. The residue of the estate (the total estate was valued at $9 million) was left to his two sons. The daughters brought a wills variation claim, and the court divided the estate 60% in favor of the daughters, and 40% in favor of the sons. I previously wrote on this decision in a post found here. The judgment in the wills variation matter can be found here.

The executor sought to pass his accounts, and he sought total remuneration of $654,449.34 for both parents’ estates.  The court observed that there was “considerable animus” between the executor and his siblings, and so it was not surprising that the executor was not able to obtain the consent of the beneficiaries to the fee that he sought and a hearing was required.  The court heard evidence and reviewed each factor over a three day hearing. Although the executor displayed skill and ability in handling the estate, and achieved success overall in maximizing the estate’s assets and income over a period of three years, the court held that the remuneration sought was excessive, and reduced the executor’s fee to $400,000.

Case Comment: The Importance of Putting Agreements with Family Members in Writing

December 8, 2020

Contracts between family members are enforceable if the parties intended to create legal relations, just like any other contract. The problem is that communications in the family context are often no more than statements of intent or wishes, which do not rise to the level of a binding agreement. Arrangements between family members are often more casual, and may not be reduced to writing. The “agreement” may also be more akin to a gratuitous promise, where only one party is truly receiving a benefit form the “deal”. All of this creates problems when it comes time to try to enforce an alleged agreement with a family member.

The B.C. Supreme Court case of Siemens v. Munroe, 2020 BCSC 1862 is a recent example of this. In Siemens, a 31 year old son alleged that his mother breached an agreement that he would receive an interest in property registered in his mother’s name. The mother had approached her son and proposed that she move into a suite in her residence, and allow her son and his family to move into the main floor of the house. The mother would keep the equity she had built up in the property, and the mother and son would share the costs of the mortgage and utilities. Subject to the mother’s equity, the son would become a 50% owner in the residence.

The agreement was never reduced to writing.

The parties proceeded with the agreement. The son and his family moved in, and the son paid his share of the mortgage payments and utilities. However, there were difficulties adding the son’s name to title. The son became frustrated, and the relationship between mother and son deteriorated. The son sent a series of “unfortunate and hurtful” text messages to his mother.

First, the Court considered whether there was a binding agreement between the parties and concluded that there was no such agreement.   A promise that was made because of the familial relation of the parties, or out of “natural love and affection” cannot form the basis of a contract. There must be actual consideration exchanged between the parties. While both the son and the mother suggested they were entering into the arrangement to assist the other, the Court observed that the son really benefited more from the arrangement. His family got a larger home, for less than the cost of their smaller condominium, and they were able to rent and later sell their condominium.  There was also not sufficient certainty on all of the terms of the agreement to create a binding contract.

However, the son was entitled to a 50% interest in the property (after deducting the mother’s prior equity), on the basis of unjust enrichment. The mother was enriched through the son’s contribution to the mortgage payments.

The mother consistently (including at trial) acknowledged that subject to her equity she still considered her son to have a 50% interest in the property. Her statement that she was morally bound by the arrangements did not create a contract between the parties. However, it was an important factor when considering an equitable claim in unjust enrichment, where the court will look at the parties’ reasonable expectations.

A theme throughout the judgment was the emotional toll that this has taken on the relationship between the mother and son. The judge notes at the beginning of her reasons that the case cried out for a creative solution that the parties could unfortunately not reach. She deliberately refrained from repeating the text messages sent by the son to her mother in her reasons, “as doing so would serve no useful purpose.”

It can be awkward to insist that that arrangements with your own family members be reduced to writing, and we have an tendency to avoid uncomfortable discussions. This case is a good reminder that the failure to have those conversations up front may result in greater discomfort (and a lawsuit) down the road.