Month: February 2021

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

February 26, 2021

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

  1. Stan Rule at Sabey Rule discusses the use of multiple wills in British Columbia to minimize probate fees, and identifies potential pitfalls to avoid:  http://rulelaw.blogspot.com/2021/02/using-two-wills-to-minimize-british.html
  2. Janis Ko at Onyx Law posted two articles on the use of mutual wills in British Columbia:  https://onyxlaw.ca/mutual-wills-clear-evidence-needed-for-binding-agreement-not-to-revoke-a-will/ and https://onyxlaw.ca/mutual-wills-clear-evidence-needed-for-binding-agreement-not-to-revoke-a-will-2/
  3. Garrett Horracks at Hull & Hull LLP (in Ontario) writes about the “prudent investor rule” which applies to trustees managing trust assets, in the context of the recent GameStop share fluctuation.  Part 2 can be found here:  https://hullandhull.com/2021/02/the-gamestop-saga-part-ii-prudent-investing/
  4. James Steele at Robertson Stromberg in Saskatchewan discusses a recent decision of the Saskatchewan Court of Queen’s Bench, in which the court refused to summarily cure what appeared to be relatively minor deficiencies in a testamentary document because there were greater concerns about whether the document reflected the deceased’s testamentary intentions:  https://skestatelaw.ca/2021/02/05/estate-litigation-update-thorne-v-thorne/
  5.  Rebecca Rauws at Hull & Hull LLP comments on a recent Ontario decision which found that a gift in a will was void for uncertainty:  https://hullandhull.com/2021/02/estate-interest-void-for-uncertainty/

Happy Reading!

Estates in the News: Larry King’s Will Contested and a $5 Million Bequest to a Dog

February 19, 2021

There have been two interesting estate-related stories in the news this week.

Larry King’s Widow Contests his Will

First, the widow of TV host Larry King has gone to court to contest a handwritten will that purportedly leaves Mr. King’s$2 Million estate to his five children. She alleges that one of his children exerted undue influence on him, that he was “of questionable mental capacity” when the will was signed, and that he made a previous will in 2015 in which she was named executor.

Larry King had filed for divorce in 2019, but his widow claims that he was not actually pursing the divorce, and in fact they were working toward a possible reconciliation.

More can be read here: https://www.bbc.com/news/entertainment-arts-56095825 and https://people.com/tv/larry-kings-widow-shawn-contests-his-will/

If this case arose in British Columbia, Mr. King’s widow would have various remedies, some of which would depend upon whether she was a “spouse” at his death. She could argue that the will was invalid as a result of undue influence or lack of capacity. If the handwritten will was valid, then she could seek to vary the will to make provision for her only if she was Mr. King’s spouse at the date of death. The separation may have terminated her standing as a “spouse”. However, if they began to live together again for at least 90 days and the primary purpose for doing so was to reconcile, then she would have regained her standing as “spouse” and could seek to vary the will. If she was not a “spouse” at death, then she could bring a family law claim against Mr. King’s estate (or continue the divorce proceedings that were ongoing at his death).

Dog Inherits $5 Million

A businessman in Nashville who died last year stipulated in his will that upon his death his assets, worth an estimated $5 Million, would be transferred into a trust for the benefit of his 8-year-old border collie, Lulu. The will names a friend as Lulu’s official caretaker, and the funds are to be used to pay Lulu’s reasonable expenses. It is unclear who will receive the remaining monies upon Lulu’s death.

More can be read here: https://www.cnn.com/2021/02/13/us/dog-border-collie-lulu-5-million-dollar-trust-owner-trnd/index.html and https://people.com/pets/man-leaves-5-million-to-his-dog-in-will/

In British Columbia, will-makers have the autonomy to distribute their estate by will as they see fit.  If they want to make an “unconventional” bequest or provision in a will, then that is their choice to make. However, there are potential avenues to challenge such a bequest. There may be a challenge to the validity of the will, on the basis that the will-maker lacked capacity, did not understand what they were doing, or was unduly influenced. A child or spouse (if there is one) may also bring a claim to vary the will on the basis that it does not make adequate provision for them.

Misconduct by Person Holding Power of Attorney may Constitute a Criminal Offence

February 12, 2021

We are often contacted by clients with concerns about misconduct by a person holding a power of attorney. We may be contacted by the person who granted the power of attorney (the “donor”) or a family member of the donor who has discovered the abuse under the power of attorney (either during the donor’s lifetime, or after their death).

These clients are upset when they discover what has happened, and often they ask the same questions:

  • “Isn’t this criminal?”
  • “Should I also go to the police?”
  • “Shouldn’t this person be in jail for what they’ve done?”

We assist with obtaining civil remedies against the attorney, including recovery of property that has been taken and damages for breach of fiduciary duty. However, it should be kept in mind that theft by a person holding a power of attorney is also an offence under the Criminal Code of Canada.

Section 331 provides as follows:

Theft by person holding power of attorney

331 Every one commits theft who, being entrusted, whether solely or jointly with another person, with a power of attorney for the sale, mortgage, pledge or other disposition of real or personal property, fraudulently sells, mortgages, pledges or otherwise disposes of the property or any part of it, or fraudulently converts the proceeds of a sale, mortgage, pledge or other disposition of the property, or any part of the proceeds, to a purpose other than that for which he was entrusted by the power of attorney.

Misconduct by a person holding a power of attorney may also fall within general Criminal Code provisions relating to theft and fraud.

There are key differences between moving forward with civil proceedings and criminal proceedings. In a civil claim for breach of fiduciary duty you must prove your claim on a balance of probabilities, while a criminal conviction must be established on the higher standard of beyond reasonable doubt. In civil proceedings, a plaintiff may also be able to rely upon rules which reverse the onus of proof for breach of fiduciary duty in certain circumstances.

People have been convicted and imprisoned for misconduct using a power of attorney. Here are few examples:

In R. v. Kaziuk 2011 ONCJ 851, the victim was 86 years of age at the time of the offences. The accused was her son, who she named as her power of attorney. At one point, the victim was “well off financially”, she owned her own properties mortgage-free and she had significant savings in her account. Then she signed a power of attorney naming her son as her attorney. The son used the power of attorney to register mortgages on his mother’s properties, as collateral for his own personal loan (to cover his own mortgage against his own home).

As a result of the son’s conduct, his mother lost her car and her savings, and she was evicted from her property when the banks seized her properties as a result of the fraudulent mortgages registered against title without her consent and knowledge. She lost everything and ended up living in a homeless shelter.

The son was 57 years old, and blamed his “financial misfortunes” and depression. He was convicted of theft exceeding $5,000 and fraud exceeding $5,000. The judge also held that the offence under s. 331 (theft by person holding power of attorney) had been proven. The judge described this as a “despicable breach of [his mother’s] love and trust. The son was sentenced to 10 years’ imprisonment, which was reduced to 8 years on appeal. There were aggravating factors, including a finding that the son was incapable of feeling empathy and had no conscience.

In R. v. Hooyer 2016 ONCA 44, the victim suffered from dementia and resided in a long-term care facility. The accused had known the victim since the accused was a child. After the victim’s wife died, the accused assumed control over the victim’s property, moving into his home, dissipating his assets, and diverting nearly $400,000 for his own use. He did not attend to the victim’s care, and did not see the victim for several years. He failed to pay the bill for the care facility, which resulted in a downgrade of the victim’s accommodation. The accused argued that he honestly believed he was authorized to use the money for his own purposes. At trial we was convicted of fraud and theft, and he was sentenced to imprisonment of two years less a day and six months to be served concurrently, and restitution of the monies that he took.

Finally, in R. v. Banoub 2019 ONCJ 681, the offender was the power of attorney for her mother, who suffered form dementia and lived in a care facility. Over a period of four years, the offender depleted the monies in the mother’s bank accounts and investments by $161,000. She spent the monies on gambling, living expenses, and a trip. The offender was sentenced to six months’ imprisonment and three years’ probation.

The above cases confirm that misconduct under a power of attorney is a serious matter and may amount to a criminal offense resulting in imprisonment.

B.C. Court Orders Medical Assessment to Determine Capacity of Elderly Person who Opposes Elder Abuse Lawsuit Brought on his Behalf

February 5, 2021

When cases of elder abuse arise, it is often a loved one who discovers alleged financial abuse, improprieties, or undue influence. But the loved one does not have standing to bring their own claim to recover assets for the rightful owner. The elderly person (the victim) must bring their own claim. Sometimes this creates difficulties. This person may lack capacity, or they may still be under the influence of the perpetrator of the fraud or otherwise unwilling to bring legal proceedings. What if a person is unable or unwilling to bring a proper and valid claim to recover their own property?

A proceeding can be filed and pursued on the person’s behalf by a litigation guardian, but only if the person is under a legal disability. A proceeding brought by or against a person under a legal disability must be started or defended by a litigation guardian – someone who agrees to conduct the litigation on behalf of the person with the legal disability. The test for a “legal disability” is whether the person is capable to instruct counsel and to exercise judgment in relation to the claims in issue and possible settlement as reasonable person would be expected to do. A person is presumed capable unless proven otherwise. If the person is capable, then they are the appropriate person to bring their own legal proceedings, unless there is a power of attorney or some other authority that would permit a third party to handle proceedings on their behalf.

What if you have knowledge of a case of financial abuse against a person under a legal disability, but the “victim”  does not want to bring a claim, and does not agree that they suffer from a legal disability? This was the issue in Stanford v. Murad 2021 BCSC 130, a decision of the B.C. Supreme Court released last week.

Mr. Stanford is 89 years old, and has two adult children who are the primary persons who will inherit their father’s estate upon his death. Mr. Stanford suffered from psychiatric disorders, including depression, for decades. He also suffers from other serious health issues and is unable to care for himself. In 2013, Mr. Stanford appointed his son-in-law as attorney-in-fact and executor of his will, and asked him to manage his affairs.

Mr. Stanford met the defendant in 2015, and they eventually moved in together. It is unclear whether they actually married, but Mr. Stanford was very dependent on the defendant. His daughter and her husband (Mr. Stanford’s son-in-law) allege that the defendant isolates Mr. Stanford and prevents them from seeing and communicating with him, that she is abusive, and that she is taking financial advantage of him. They allege that Mr. Stanford lacked capacity to take various steps, including appointing the defendant as his new power of attorney, adding her as a joint owner of various assets (including real property) and transferring monies to the defendant.

The daughter and son-in-law caused a lawsuit to be filed on behalf of Mr. Stanford, with the son-in-law as litigation guardian, seeking an accounting and tracing of all property transferred to the defendant.

Mr. Stanford sought to set the appointment of his son-in-law as litigation guardian. He does not agree that he is under a legal disability, and he does not want his son-in-law challenging the transfers and other arrangements that he has made with the defendant.  In other words, he denies that he is a victim of elder abuse, and he says that he has the capacity to make that decision.

The Court held that the evidence raised significant concerns about whether Mr. Stanford is under a legal disability. The Court ordered that Mr. Stanford attend a medical examination conducted by a doctor chosen by the son-in-law for the purpose of providing an opinion to the Court regarding whether Mr. Stanford is capable of instructing counsel and exercising judgment in relation to the claims and possible settlement.

If upon reviewing the medical opinion the Court determines that Mr. Stanford has the requisite level of capacity, then he can make the decision not to move forward with court proceedings against the defendant.  While Mr. Stanford remains capable, his daughter and son-in-law will not have standing to advocate and protect his assets by way of court proceedings brought on his behalf.