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

November 12, 2021

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

November 4, 2021

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

October 28, 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

October 8, 2021

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

October 5, 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

September 3, 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

August 27, 2021

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.

B.C. Case Comment: Court Admits Unsigned Will After Will-Maker Dies Before Signing Document

August 20, 2021

It is not uncommon for people to make changes to their estate plan in the final stages of their life, whether they are ill or elderly.  Sometimes there is urgency – death may be imminent.  On occasion, someone may start to make these changes, but may die before the changes have been finalized.  What happens when it is known that someone wants to make certain changes to their estate plan, starts the process to make those changes, but does not complete the changes (for example by taking the final step of signing a new will)?

This was the case in the recent B.C. Supreme Court decision of Bishop Estate v. Sheardown 2021 BCSC 1571. In Bishop Estate, the deceased had given instructions to a lawyer to prepare her will, she reviewed the draft will, and she made a few minor clarifications.  All that remained was to have the will signed and witnessed.  Unfortunately, as a result of the COVID-19 pandemic, the deceased cancelled her appointment with her lawyer to execute her new will.  She then died without ever signing her new will.

The deceased had a previous will, which named her now-deceased husband as beneficiary, or in the alternative the Kelowna General Hospital Foundation.  Under the new, unsigned will, the primary beneficiaries were the deceased’s nephew and niece-in-law.

A will must meet certain requirements to be valid, including the requirement that the will be in writing, signed by the will-maker in the presence of at least two witnesses.

However, in B.C. a court may cure deficiencies in an otherwise invalid will, and order it to be effective.  It must be established that the invalid document is (1) authentic, and (2) represents the deceased’s deliberate or fixed and final intentions regarding the disposal of her property upon death.  This is a fact specific inquiry.  I have previously discussed other cases that apply the test here.

In Bishop Estate, the Court considered the background as to why the the deceased was making changes to her estate plan in 2020.  Since the prior will was made in 2014, the deceased’s husband had died, and her nephew and his wife (the new beneficiaries) had moved to Kamloops and had become a regular part of her life.  The deceased gave detailed and specific instructions to her lawyer that she wanted to name her nephew and his wife as beneficiaries and remove the Kelowna General Hospital Foundation.

The Court concluded that the unsigned will represented the deceased’s fixed and final intentions.  The Deceased cancelled her appointment with her lawyer to sign her will because she could not leave her care facility and attend at the lawyer’s office in person as a result of the pandemic.  The Hospital Foundation argued that the deceased could have signed her will remotely, which will-makers were allowed to do as a result of the COVID-19 pandemic.  They argued that the deceased did not proceed with this option because she may have changed her mind about making a new will.  The Court did not accept this argument.  There was no evidence that the deceased was aware of this option, and the failure to execute the will remotely did not undermine her new testamentary intentions.

The Court ordered that the unsigned will was fully effective and determined how the deceased’s estate would be distributed.

B.C. Case Comment: No Claim in Unjust Enrichment Arising from Contribution to Family Business

August 13, 2021

I am often contacted by the child of a deceased parent who strongly believes that they have not been treated fairly in that parent’s will (or one of their siblings is making this claim against them).  The death of a parent often brings up long-held perceptions of favoritism, unfairness and lack of appreciation. It is not unusual for a child to seek to revisit events going back years or even decades. This commonly results in wills variation claims and other estate litigation.

One “historical” claim that is sometimes brought is a claim relating to unpaid contributions to a family business. Children are often expected to contribute time and efforts to a family business with no remuneration (but they receive room and board). When those children are not treated fairly under their parents’ wills, they seek to go back and revisit the issue of the unpaid services that they provided.

This was the case in the recent B.C. Supreme Court decision of Tang v. Tom 2021 BCSC 1399. In Tang, the plaintiffs sought a variation of their mother’s will, which failed to treat her five children equally.

One of the plaintiffs (Linda) also brought a claim in unjust enrichment with respect to her work at her parents’ grocery store between 1971 and 1981. She described her assistance to her parents as “extraordinary efforts.”

The family came to Vancouver in the 1960s, when the children ranged in age from eight to 17. The family (parents and children) worked extremely hard to improve their standard of life. The Court described their work ethic as “remarkable”. The parents purchased a small grocery store with an attached home and the family moved there in 1971. All of the children except one worked part-time at the store until it was sold in 1981. None of them were paid for their work. The children also worked various other jobs, and contributed their paycheques to the “family pot” of income to pay expenses. The children received pocket money, vehicles to commute to school, and payment of most of their living and school expenses.

Linda argued that she was a pivotal figure in the success of the grocery store business. The Court held that while Linda may have made significant contribution to the store (which at times may have been greater than the contribution of her younger siblings), she tended to exaggerate the scope and scale of her contribution, while minimizing the contributions of her siblings.

The Court had to consider whether Linda’s historic contributions to the family business constituted unjust enrichment. In order to satisfy the requirements for a claim in unjust enrichment, a plaintiff must show: (1) an enrichment of the defendant (in this case her mother/her mother’s estate), (2) a corresponding deprivation of the plaintiff, and (3) an absence of juristic reason for the enrichment.

A claim in unjust enrichment can be difficult to establish in the context of a family business, as there will often be mutual benefits to family members as they function as a common unit. This was the case in Tang. The Court concluded that while the contributions by the children (and in particular Linda) may have been significant (i.e. there was enrichment), the benefits to the children (housing, food, other amenities, etc…) were also significant. As a result, Linda failed to establish a legal claim against her mother’s estate for unjust enrichment.

Linda did have a moral claim to a portion of the estate, as did her siblings, as a result of their contributions to the family business and the common family unit. However, she did not have a legal claim in unjust enrichment distinct from that of her siblings.

The deceased left an estate which included real property assessed at approximately $1.7M, and personal property (bank and investment accounts) worth approximately $775,000. Her will left her real property to two of her children (neither of which was Linda) who provided a greater degree of care in the last three years of her life. The will divided her personal property equally between her five children.

The Court varied the Will to order specific gifts of $300,000 to each of the children who provided care in the three years of the deceased’s life, with the remainder of be divided equally between the five children. This would recognize the contributions of the children when the family was a joint economic unit (which included the acquisition of the real property), but also take into account the “significant sacrifices” made by the of the two children who provided end of life care.

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

July 30, 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 the considerations for a beneficiary if they are asked to sign a release before they receive a distribution from the estate: https://hullandhull.com/2021/07/if-you-have-valid-concerns-dont-sign-a-beneficiary-release/
  2. Janis Ko at Onyx Law discusses an important case in which the B.C. Courts recognized a third legal parent in polyamorous relationships: https://onyxlaw.ca/bc-court-recognizes-third-legal-parent-in-polyamorous-relationship/
  3. James Jacuta at Hull & Hull LLP (in Ontario) writes about the British Columbia Unclaimed Property Society, which returns unclaimed funds to individuals in B.C.: https://hullandhull.com/2021/07/thousands-have-unclaimed-funds-waiting-for-them/
  4. Trevor Todd at Disinherited.com discusses the test for a beneficiary to obtain standing to bring a claim on behalf of an estate, in the context of a reason B.C. Supreme Court decision: https://disinherited.com/uncategorized/s-151-wesa-leave-to-bring-action-on-behalf-of-estate/

Happy reading!