Wills and Estates Law Section
About the Section
No one is getting any younger and demographic forecasts suggest this is one practice area more practitioners are pursuing. This popular Section offers up-to-date news of common law and frequent legislative changes affecting the establishment and administration of wills, trusts and estates, including mental incompetency matters and taxation issues. Meet and exchange ideas and information with some of the top practitioners in the field.
Click here to get information on the corresponding CBA National Section
Section Executive
Co-Chair
Peter Glowacki
Thompson Dorfman Sweatman LLP
2200-201 Portage Ave
Winnipeg, MB R3B 3L3
Phone: 934-2572
Fax: 934-0572
pjg@tdslaw.com |
Co-chair
John Delaney
Inkster Christie Hughes
700 – 444 St Mary Avenue
Winnipeg, MB R3C 3T1
Phone: 947-6801 x224
Fax: 947-6800
jdelaney@inksterchristie.ca
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Vice-Chair
Caroline Kiva
Pitblado LLP
2500-360 Main St
Winnipeg, MB R3C 4H6
Phone: 956-3573
Fax: 957-0227
kiva@pitblado.com |
Member-at-Large
Marvin Giesbrecht
College of Physicians & Surgeons of Manitoba
1000-1661 Portage Ave
Winnipeg, MB R3J 3T7
Phone: 774-4344
Fax: 774-0750
mgiesbrecht@odgb.mb.ca |
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Upcoming Section Events
Check back soon.
Past Section Events
May 11, 2012, 12:00 Noon (The Law Society Classroom): Planning for Disabled Beneficiaries
November 28, 2011, 12:00 Noon (Thompson Dorfman Sweatman LLP): Changing Dynamics for Estate Trustees
June 16, 2011, 12:00 Noon (Pony Corral): Executive Committee Meeting & Election of Executive
June 1, 2011, 12:00 Noon (Law Society Classroom): Assorted International Issues for Wills and Estates
March 25, 2011, 12:00 Noon (Law Society Classroom): Children’s Trusts and the Role of The Public Trustee
October 1, 2010, 12:00 Noon (Law Society Classroom, 219 Kennedy St) The Wonders of Testamentary Trusts - the Under-utilized Planning Tool
June 2, 2010, 12:00 Noon (Law Society Classroom, 219 Kennedy St) Executors' Fees and Legal Fees on Estates
Section Reports
2009/2010
2010/2011
Articles Posted Include:
2011 Mid-Winter CPD - Removing Personal Representatives – A Manitoba Perspective – Dana Nelko
This paper examines the law relating to the removal/replacement of personal representatives and trustees in Manitoba. The author begins with a discussion of the removal and replacement of trustees outside of court intervention and then gives an overview of court applications.
Executor Compensation by John Delaney, June 2010
This PowerPoint presentation outlines the Trustee Acts of each Canadian province with particular reference to the reasonable remuneration that an executor can expect for their care and management of an estate.
Cottage Succession Planning by John E.S. Poyser
This article was presented at the November 19, 2007 section meeting. Mr. Poyser begins by discussing the important building blocks in cottage succession planning: Capital Gains, The Principle Residence Exemption, Probate Fees, Adjusted Cost Base and Fair Market Value, Rights of Use, and a clear articulated vision of the future discussed with the family. Mr. Poyser then proceeds to a discussion on the pros and cons of transferring the property to their children immediately. He discusses a transfer into joint tenancy (most commonly used by people transferring the property themselves), and transferring the property into the name of the children outright. Mr. Poyser also briefly describes some dangers to be avoided in the transfer documents themselves. Next, Mr. Poyser discusses the pros and cons of transferring the property into a corporation or trust including the loss of the principle residence exception in the corporation scenario (this exemption is maintained under a trust although with some hardships to the beneficiaries). Finally, Mr. Poyser very briefly discusses the option of transferring the cottage to the children in a will, which results in probate and the risk of having the property sold if the other assets are not enough to cover these taxes and fees.
Select Estate Planning Issues for Non-Residents by Leilani J. Kagan
This article was presented as a CLE at a joint meeting of the Wills and Estates and Tax law sections on March 24, 2006. Ms Kagan begins by discussing issues relating to the distribution of property to non-resident beneficiaries from Canadian-resident trusts. She considers part XIII of The Income Tax Act relating to tax on income paid by a Canadian resident to a non-Canadian resident. This rule applies to all money paid by the trust, no matter the source of the income. There are ways of avoiding this rule which Ms. Kagan explains including having income capitalized in one tax year and then paid to the non-resident in the next tax year. Next, Ms Kagan discusses issues relating to the emigration of Canadian residents and the deemed disposition of the person’s property other than some types of “taxable Canadian property” and “excluded rights and interests.” Taxable Canadian property is an exception due to the fact that property subject to deemed departure rules is not generally subject to tax after a person emigrates, so the accrued gains must be taxed before the person leaves the country. However, if the person holds an interest in a trust this rule only applies to the person’s personal property not the trust’s property so long as the trust does not cease to be a resident of Canada upon the individual emigrating. If the trust does cease to be a resident of Canada due to the trustee emigrating then the deemed disposition rules apply. Ms. Kagan then discusses the use of discretionary trusts and section 94 issues relating to non-resident trusts and their possible use as an avoidance of significant taxes paid upon death in certain jurisdictions. In order for the trust to be a resident of Canada the majority of the trustees must be resident in Canada. This trust would be subject to tax under The Income Tax Act on its worldwide income. Ms. Kagan includes a list of items required on the trust deed, in addition to those typically listed. She then describes a “protector” and their role in providing a measure of control over the trustees and the administration of the trust where it is unadvisable for the settlor to exercise control over the assets. The protector essentially acts as an agent of the settlor. Ms. Kagan then discusses some issues and considerations relating to the appointment of a protector in order to ensure the non-resident’s estate plan is not affected, as well as listing some powers to be provided to a protector in the trust deed. Ms Kagan then discusses considerations of section 94 in circumstances where a Canadian resident wants to establish an off-shore trust for asset. Section 94 is an anti-avoidance provision which may deem the trust to be a resident of Canada for tax purposes. If it is not deemed to be a resident of Canada than the income of the trust is not subject to Canadian tax law, however the disbursements of capital will be taxable in the hands of the beneficiary. Ms. Kagan then discusses issues relating to U.S. estate and gift taxes. She explains the difference between the class implications for the three types of U.S. taxpayers. She also discusses the “Small Estate Exemption” as a way of avoiding the U.S. estate tax. Finally, Ms. Kagan briefly discusses the use of single-purpose corporations as a way of avoiding U.S. estate taxes. She indicates that due to recent changes in CRA administrative policy there may be less benefit and a trust may be better suited to this purpose.
International Issues in Wills and Estates by Jacob Giesbrecht
This paper addresses some of the issues that arise when a testator’s affairs touch on foreign assets or individuals. The issues discussed are The International Wills Convention, The International Trusts Act, multiple wills, bonds for foreign executors, resealing of foreign grants, and avoiding foreign succession taxes. Included at the end of the article are a sample certificate conforming to the Convention on International Wills, a copy of a checklist used by one of the members of Mr. Giesbrecht’s firm in the preparation and execution of an international will, and a listing of countries in which the International Convention on Wills is in force.
What Do You Say To a Disappointed Beneficiary by Marvin Giesbrecht
This paper on dealing with a beneficiary who feels that they are not receiving their proper entitlement from an estate was presented as a CLE at the 2008 Mid-Winter meeting. It is divided into three parts based on broad categories of concerns that are generally raised by the disappointed beneficiary. The first broad category that is discussed is the beneficiary feeling no action is being taken on the estate. Mr. Giesbrecht explains that many times the issue is that the client doesn’t realize how slowly the process moves, or they have a false sense of what they are entitled to receive. He then goes into some other reasons they may feel no action is being taken in more detail, with possible explanations the solicitor can give the client and, if available, legal remedies to the issue. The second broad category that is discussed is based on the client not being happy with what he or she is receiving from the estate. Mr. Giesbrecht explains that many times there is no recourse for an issue such as this since the testator is entitled to make whatever will he or she wants. He states that many times these individuals are grown children whose parents left a large portion of their estate to charity, in which case there is usually no remedy. Mr. Giesbrecht does discuss situations where the law requires an individual be provided for to a certain extent such as in the case of a spouse, a dependant. He briefly discusses the issues of improper execution, undue influence, or lack of capacity. No entitlement under intestacy, and the possible use of the Dependants Relief Act, is considered next. Next he discusses the issue of understated assets and the use of Queen’s Bench Rules 74.06.1 and 74.06.2 to compel an executor to provide information on assets beyond what has been produced as well as the possibility of applying to have the executor replaced under The Trustee Act. Finally, Mr. Giesbrecht discusses the issue of unfilled promises or expectations and the ability of the court to grant entitlement to part of an estate based on a contract or if it finds that relief is required on equitable grounds. The third and final category from which concerns generally arise is based on the client’s feeling that the personal representative is not administering the estate properly. Mr. Giesbrecht points out that the court is generally reluctant to replace an executor and instead prefers to deal with issues through an accounting. However, under certain circumstances the court may be willing to replace an executor such as when an improper document has been filed with the court. If this is the case a caveat requiring the client be notified of all proceedings on the estate can be filed under s.38 of the Surrogate Practice Act and under Rule 75 of the Queen’s Bench Rules. Mr. Giesbrecht then discusses improper administration of the estate and the ability to have an accounting be performed in front of a master under section 43 of the Surrogate Practice Act. A third issue under this category is a conflict between the personal representative and the beneficiary. Mr. Giesbrecht explains that there is not usually any recourse unless the executor’s actions have become a detriment to the estate, at which time an application to replace the executor can be filed under The Trustee Act. A fourth issue that arises under this category is the mismanagement of estate assets. However, Mr. Giesbrecht states the personal representative has a lot of leeway in judgment and it is hard to prove negligence. In the case of an executor running an estate business or farm Mr. Giesbrecht recommends an accounting should be sought early and often to ensure the proper operation of the business. Finally, Mr. Giesbrecht suggests that if an executor does not provide an accounting in a reasonable time then one should be sought from the court.
Whose Fault Is It?: Disappointed Beneficiaries v. The Lawyer – Cynthia Hiebert-Simkin
This paper on the changing attitude on the duty of care owed by a lawyer to a third party beneficiary was presented as a CLE at the 2008 Mid-Winter meeting. Ms. Hiebert-Simkin begins by giving an overview of the development of a duty owed by lawyers to third-party beneficiaries of a will. Historically, based on Donoghue v. Stevenson there would not be any duty owed. However, the courts have found that a duty is owed by the lawyer to a testator to carry out his or her instructions in the drafting and execution of a will, and if this duty is breached, and a beneficiary suffers a loss as a result, the beneficiary may sue. Ms. Hiebert-Simkin points out that the burden of proof in cases such as this rests on the plaintiff. She then goes into different scenarios where this duty has arisen. The scenario Ms. Hiebert-Simkin discusses is where the lawyer has failed to promptly prepare a will. She points out that the courts have not stated a specific time-line but instead have let the circumstances of each case dictate the proper timeline. So, if the testator’s health is failing the turn around time is quite short. However, Ms. Hiebert-Simkin points out that liability cannot arise due to the delay or inaction of the testator. She then discusses a lawyer’s duty to beneficiaries under a previous will. The court has found that where a lawyer is taking instruction from a testator there is no justification for imposing a duty to a third party beneficiary under a previous will. Ms. Hiebert-Simkin then discusses the scenario where a lawyer has failed to make them self aware of the testator’s financial situation. In these cases the court has found that the lawyer is liable for losses incurred by the estate due to their negligence in failing to ensure the testator’s intentions could be given effect. Another issue that Ms. Hiebert-Simkin discusses is a lawyer’s liability for refusing to prepare a will due to a lack of testamentary capacity. The court has found that if a lawyer refuses to accept a retainer due to a belief there is a lack of testamentary capacity they should not be found liable. The court has also stated, in obiter, that it was questionable whether a lawyer was under legal obligation to accept a retainer even if they believed the testator had the required testamentary capacity. The final issue Ms. Hiebert-Simkin discusses is the case where a lawyer acts for both the estate and spouse. The court found that it was possible to act as counsel for both, but that they must inform the surviving spouse of all potential conflicts and all rights as if they were representing only that spouse. They further stated that many times it will be hard to balance the interests of both and meet the duty. Ms. Hiebert-Simkin finishes by offering practice tips for lawyers practicing in this area.
Undue Influence: Free Will vs. Manipulation, Coercion, and Abuse of Power by J. Edward (Ted) Crane
This paper on undue influence in the creation of a will was presented as a CLE at the 2008 Mid-Winter meeting. Mr. Crane begins with a brief introduction of undue influence. Mr. Crane then proceeds to a discussion of process and the use of caveat and notice of application. He argues that if you are representing a client contesting a will that has not been probated you should immediately file a caveat which must be renewed annually. If you are representing a client who wishes to have the will remain valid he suggests you still file a Request for Probate triggering a 30 day notice to the caveator. Mr. Crane then points out that Notices of Application, supported by affidavit evidence, are filed, pursuant to QB Rule 14.05(2) after a challenge to a will has been put forward. He states that the application can then proceed based on the affidavit evidence or the court can order a trial under QB Rule 38.09. Next, Mr. Crane argues that before a Notice of Application is filed a lawyer must consider the law and the evidence that will be put forward as part of the application. He uses Beard J’s comments from Dmytrow to support the idea that an affidavit supporting a Notice of Application must include sufficient evidence to establish the specific nature of the relationship between the testator and beneficiary and the specific details of the transaction giving rise to the presumption of undue influence and thus shifting the burden to the beneficiary to prove there was no undue influence. Mr. Crane argues that another method of shifting the burden is through the use of suspicious circumstances using the test established by the Supreme Court of Canada in Volt. Mr. Crane then proceeds to a brief discussion of three themes that tend to arise in case law where the court has found undue influence. The first of these is the cases where the beneficiary is in a dominant relationship over the testator. Mr. Crane argues that in cases such as this the burden shift to the beneficiary who must show that the testator either came to the decision on their own or they had full, free and informed thought about it. The second theme is where the beneficiary is involved in making the will. He states that the involvement could be through such means as giving instructions, participation in the drafting of the document, or attendance or involvement in the execution of the document. Mr. Crane then provides case law examples showing a resultant in burden to the beneficiary. The third, and final, theme of undue influence that Mr. Crane discusses involve those cases where outright coercion can be proven and support by evidence. Mr. Crane finishes stating that before a challenge and Notice of Application are filed an investigation into the relationship and nature of the transaction must be undertaken so as to ensure there is sufficient evidence to support an argument of undue influence and a shifting of the burden of proof.
2006 Mid-Winter CLE - Estate Fees and Costs
Legal Fees in Estate Administration Matters: How to Prevent Litigation over legal Fees, by Peter Glowacki
This paper on preventing litigation over solicitor costs in estate matters was presented at the 2006 MBA Mid Winter by Peter Glowacki. Mr. Glowacki first pointed out the confusion surrounding appropriate estate fees and some of the causes. He reviewed the relevant Queen’s Bench Rules and the problems it created for lawyers by not raising the tariff in thirty years, despite increased complications in estate matters and inflation. Because the tariff was based on a percentage of the aggregate value of the estate Mr. Glowacki discussed the definition of aggregate value and the onus of correcting fees calculated based on an erroneous aggregate value. He recommended that a solicitor keep detailed accurate records of work and advice, as it would be used to determine fees departing from the tariffs. Mr. Glowacki addressed the complication arising from the sometimes dual roles of estate solicitors as lawyer and executor and recommended that time records be kept of time spent fulfilling each duty separately. The Court held that a lawyer taking on executor duties (though not the named executor) was entitled to additional compensation from the executor’s compensation or the executor personally but warned instructions had to be written to receive compensation. Mr. Glowacki clarified that a lawyer for a personal representative could only accept fees above the tariffs if the beneficiaries of the estate consented and explained where the Queen’s Bench Rules provided for additional compensation. Mr. Glowacki explained the procedure for submitting a request for additional compensation to the Court and emphasized that the solicitor must be prepared to justify it. He addressed the view the Law Society had taken on these tariffs and cases where lawyers charging above the tariff without informed, mature, written beneficiary consent were disciplined. He criticized the Law Society’s directives for not adding anything to the direction already given by the Queen’s Bench Rules and simply directing that all lawyers should document that their clients were aware of fees above the tariff amount. He concluded with three main points to consider when determining fees: Refer to the relevant Queen’s Bench Rules, Practice Directives and Chapters from the Code of Professional Conduct, get a signed retainer agreement from the client, and keep accurate, detailed time records.
Keeping the Law Society Away: Passing of Accounts - The Litigator's Perspective, by Ralph Neuman
This paper on estate legal fees was presented at the 2006 MBA Mid Winter by Ralph Neuman. Mr. Neuman first noted that most estate matters were dealt with informally but listed three scenarios where there must be a formal accounting. He identified three reasons why an accounting could be contested. Mr. Neuman examined the Queen’s Bench Rule governing legal fees that a personal representative’s lawyer was allowed to claim. He cited authority stating that a solicitor was not allowed to pre-take even the tariff amount allowed for legal costs. He noted cases where the Court had penalized lawyers for making errors in judgment. Mr. Neuman clarified that costs would only be reduced when a personal representative was a lawyer who personally did the work but not when another lawyer in the same firm did the work. He pointed to a case setting out the appropriate executor fees to be charged by the lawyer acting as executor. Mr. Neuman then examined the personal representative’s fees in general. He recommended having the personal representative or a professional accountant organize the accounts because it was unlikely the lawyer would be remunerated for it. Mr. Neuman also advised that every effort be made to address any concerns regarding the accounting as early as possible and that the solicitor requesting costs apart from the tariff be well prepared to justify the departure. He concluded by addressing the possible conflicts an estate lawyer may face and possible solutions.
Legal Fees in Estate Matters: How to Keep the Law Society Away, by Senior Master Rick Lee
These speaking notes, on the Court’s view of solicitor costs claimed above the tariffs were presented at the 2005 MBA Mid Winter by Senior Master Rick Lee. Master Lee first advised lawyers to strictly follow the tariffs set out and acknowledged that confusion surrounded what work was being done on behalf of the legal requirements of the estate and what work was the responsibility of the administrator. He then reviewed recent cases in Manitoba that dealt with the issue of compensation for solicitors in estate matters. Master Lee identified a conflict of interest when acting for a personal representative who was also a beneficiary. He set out the questions that he recommended every solicitor ask him or herself before requesting additional costs above the tariff.
2007 Mid-Winter CLE - Joint Ownership: Estate Planning Tool vs. Estate Administration Nightmare
Estate Planning Tool or Estate Administration Nightmare, by Sharon Tod
This view of joint ownership as an administration nightmare was presented at the 2007 MBA Mid Winter Conference by Sharon L. Tod. Ms Tod gave the case of Pecore as an example of where savings in probate were lost in litigation. The testator opened a mutual fund account and transferred investments into joint ownership with his daughter. For tax purposes he retained beneficial ownership. The widower instructed his lawyer that the investments were to be transferred to his daughter upon his death and named the daughter and her husband as the residual beneficiaries. The investments formed the majority of the estate so the will was not probated but the son-in-law upon separation from the daughter brought an action for a 50% share in the jointly held assets claiming they were part of the estate. The Court of Appeal reviewed the presumption of resulting trust and advancement. The presumption of advancement rebutted the presumption of a resulting trust because a gift was made from a father to his child. The Court stated that these presumptions only were used when there was doubt as to the testator’s intention. The following factors were to be considered when assessing the testator’s intentions: bank documents, amount transferred, timing of the transfer, statements and conduct of the transferor in relation to the transfer, nature of the relationship between the transferor and transferee, relevant pattern of conduct by the transferor, exclusion of an obvious recipient of the transfer, whether the transfer was imprudent and any other relevant factors. In Pecore the Court found an intention of a gift to the daughter was supported by the following: the transfers were over several years and after the daughter became a named beneficiary of an RRSP and insurance, the will was amended to name the daughter and son-in-law as residuary beneficiaries after the transfers to joint ownership, the instructions to the lawyer, the testator’s understanding of joint ownership as he held assets in joint ownership with his wife who had pre-deceased him, the testator sought legal, accounting and investment advice, the daughter had withdrawn money for personal use, and the testator and his daughter were close. The Court decided the testator’s intentions were clear and the presumptions therefore irrelevant. The joint assets belonged to the daughter alone. The Court ignored the testator’s instructions to his banks that he still held beneficial interest and the transfers were not a gift because it was obviously an issue of tax avoidance for the tax department to deal with. The Pecore estate did end up paying taxes to satisfy that liability. Ms Tod points out that this must be another consideration when weighing the choices of ease of transfer and avoidance of probate costs versus tax consequences of a transfer to joint ownership. In the Saylor case, one daughter held bank accounts in joint ownership with the testator. To determine the testator’s intentions the Court looked at the following factors: the testator remained in control, claimed all interest on his taxes, all monies were the testator’s, the daughter only withdrew amounts at the direction of the testator, and there was discussion that the joint ownership would be removed if the testator remarried. The bank documents were ignored because the bank did not discuss the consequences of joint ownership with it’s customers and a joint bank account could be set up on-line without discussion as to the relationship between the joint parties. Ms Tod advised that administrators would have to investigate into the testator’s intentions whenever joint assets were involved. Another issue she raised was whether joint assets without transfer of beneficial ownership should be listed on a Request for Probate.
Estate Planning Tool or Estate Administration Nightmare, by Peter Glowacki
Peter J. Glowacki presented his impression of joint ownership as an estate planning tool at the 2007 MBA Mid Winter Conference. Mr. Glowacki explained that in Pecore it was found that the testator intended a transfer to joint ownership to be a gift and in Saylor the court presumed a resulting trust even though the factual situations were similar. In Pecore the assets held in joint ownership by the testator and his daughter formed the majority of the estate so the will was not probated but the son-in-law upon separation from the daughter brought an action for a 50% share in the jointly held assets claiming they were part of the estate. The son-in-law and the daughter were the residuary beneficiaries. The son-in-law argued that the granddaughter had been given a specific bequest that would be impossible to satisfy if the joint assets were not included in the residue of the estate but the court decided the testator was not required to leave enough in the residue to cover this expense and that it was up to the daughter to fulfill the bequest. The following factors were considered when assessing the testator’s intentions in creating joint ownership between him and his daughter: bank documents, amount transferred, timing of the transfer, statements and conduct of the transferor in relation to the transfer, state of the relationship between the transferor and transferee, relevant pattern of conduct by the transferor, exclusion of an obvious recipient of the transfer, whether the transfer was imprudent and any other relevant factors. The Court decided the testator’s intentions were clear and the presumptions therefore irrelevant. The joint assets belonged to the daughter alone. In Saylor the Court found the daughter was given joint ownership because it was a convenient way for her to administer the testator’s finances. The Trial Judge found that there was no gift but there was a resulting trust and that the daughter had breached her fiduciary duty by failing to account for the joint accounts. The finding of a breach of fiduciary duty was overturned upon appeal. The Court found the bank documentation only concerned the survivor’s right to the account from the bank but did not concern the estate’s right to the account from the survivor. The Court ignored the fact that as in Pecore the daughter was also given power of attorney so that joint ownership was an unnecessary tool to allow them to administer the estates and in both cases the testators retained control of the assets. Mr. Glowacki quoted from Jeans v. Cooke that the evidence of intention ought to be clear, cogent and contemporaneous to contradict apparent expressed intention. He stated that the standard of proof was a balance of probabilities on whether a gift was intended. Equity would not presume a gift and placed the burden of proof on the alleged donee. The presumption of advancement was an exception to the presumption of a resulting trust where a gift was unproven, and applied to gifts from fathers to children or wives and could apply to gifts from mothers with the evolution of the common law. Mr. Glowacki discussed the need for presumptions to maintain certainty in planning estates. Joint ownership was used to ensure the right of survivorship would take place and observed that they may require additional documentation when the documents creating joint ownership should be prima facie evidence of the intention in modern times when people understand the consequences of putting an asset into joint legal title. He counseled that a client wishing to create joint ownership to avoid probate fees should be advised of the tax consequences, if the co-owner was not a spouse, and of other potential consequences such that the joint owner could withdraw all money or that the asset may be claimed by creditors of the joint owner.
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