Category: Estate Planning

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Estate Litigation Estate Planning

Can a Power Of Attorney Dispose of Property That is a Testamentary Gift?

photo of keys in door lock representing the sale of property by a power of attorney

Generally, a Power of Attorney confers significant authority and power to the appointed individual. In the recent case of McKenzie v Morgan, the Ontario Superior Court of Justice (the “Court”) considered whether the Applicant, who was the power of attorney for property and personal care for “RM”, could sell one of RM’s properties. The property in question, referred to as the “Springdale Property,” was subject to a life leasehold interest in favour of the Respondent set out in RM’s Last Will and Testament.

Power of attorney for property seeks to sell father’s property

RM, at the time of the decision, was 85 years old and was diagnosed with dementia. The Applicant, “DM”, is one of RM’s five children. The Respondent (“WM”) is RM’s sister-in-law (and the Applicant’s aunt) and was romantically involved with RM after their respective partners passed away. While the Applicant contests that they are common law spouses, there was evidence that RM and the Respondent were a couple and represented themselves as a couple.

In regard to the property in question, the Court noted that the sale of a property would normally be within the Applicant’s power as RM’s attorney for property under the Substitute Decisions Act.

Property subject to a life leasehold interest

RM executed a Last Will and Testament a few years before the litigation, which contained the following provisions regarding the Springdale Property:

“I GIVE all my property wheresoever situate, including any property over which I may have a general Power of Appointment, to my trustees upon the following trusts, namely,

…

(b) to permit [WM] to continue to reside at my home at … Barrie, Ontario, for the rest of her life, or until she chooses to move out, pursuant to the terms of a Residential Rental Agreement dated April 2, 2018. Upon [WM] moving out of the property, or dying, the house will form part of the reside (sic) of my estate and be dealt with as part thereof.”

The Court noted that this effectively gave WM a life leasehold interest in the Springdale Property.

Respondent sought to reside at the property; refuses to cooperate with sale

The Applicant listed the Springdale Property for sale without notice to or consultation with the Respondent. However, the Respondent refused to cooperate with the sale of the home, which resulted in the Applicant commencing this Application. The Applicant ultimately sought an order permitting her to sell the Springdale Property and evict the Respondent.

Sections 36 and 35.1 of the Substitute Decisions Act prohibit a power of attorney, or guardian, for property from disposing of property that is the subject of a specific testamentary gift unless:

  1. “it is necessary to comply with the guardian’s duties, or
  2. it is a gift of property to the person entitled to receive it under the Will, and the gift is permitted under section 37 of that same legislation.”

In determining whether the Applicant could dispose of property that is the subject of a testamentary gift – which the Court found that the Springdale Property was – the Court first looked at the duties of powers of attorneys generally, and the anti-ademption provisions of the Substitute Decisions Act.

Duties of power of attorney for property

The primary duty of a power of attorney is to act as a fiduciary, as detailed in section 32 of the Substitute Decisions Act. This duty encompasses acting diligently and honestly, with integrity and good faith, for the incapable person’s benefit. This also includes managing property in a manner that is consistent with other decisions concerning the incapable person’s personal care, as well as encouraging the incapable person to participate in decisions about property, as they are able.

If a power of attorney is not receiving compensation for managing the incapable person’s property, then they shall still exercise the degree of care, diligence, and skill that a person of ordinary prudence would exercise in their own affairs. On the other hand, if the power of attorney is receiving compensation, then they shall exercise the care, diligence, and skill that a person in the business of managing others’ property would exercise.

Anti-ademption provisions of the Substitute Decisions Act

Under ordinary circumstances, when a Last Will and Testament contains a bequest that is not among the testator’s assets when the testator dies, then the gift has “adeemed” which means that it has failed and it cannot be bequeathed. Section 36 of the Substitute Decisions Act, however, outlines various consequences that may arise if a power of attorney disposes of property that is subject to a specific testamentary gift. Specifically, the provision states that:

“anyone who would have acquired a right to the property on the death of the incapable person is entitled to receive from the residue of the estate the equivalent of a corresponding right in the proceeds of the disposition of the property, without interest.”

Court finds sale of property is not necessary

The Applicant claimed that she needed to sell the Springdale Property in order to support RM, describing details of RM’s assets, debts, expenses, and income. She highlighted that he currently had a shortfall of about $150,000 per year.

However, the Court did not accept the Applicant’s evidence in this regard, having “no confidence in [the Applicant’s] financial assessment and forecasting.” One concern cited by the Court was the Applicant’s attempt to sell the Springdale Property without consulting with other family members, despite knowing that it was the subject of a specific testamentary gift, and incurring legal fees that she expected RM to pay, while knowing that he cannot do so without selling an asset. The Court also found that information related to RM’s expenses was estimated, appeared “inflated or exaggerated,” and was “not supported by the documentation.”

Ultimately, the Court questioned and doubted the Applicant’s credibility and her reliability, while also noting the Applicant’s clear dislike for the Respondent. It was due to these evidentiary and credibility issues that the Court determined that it could not conclude that the sale of the Springdale Property was necessary for the Applicant to fulfill her duties as power of attorney. Her claim was dismissed without prejudice and with the right to renew it with further and better evidence.

Contact the Lawyers at Bader Law in Mississauga & Oakville for Trusted Advice on Will and Estate Matters

The knowledgeable wills and estates lawyers at Bader Law help individuals, families and business owners plan for the future by providing comprehensive estate planning solutions in Mississauga, Oakville, and throughout the Greater Toronto Area. From drafting a will, preparing a power of attorney, or selling assets, our lawyers will work closely with you to ensure your needs are met. We also represent estate trustees and beneficiaries in a variety of probate matters. To discuss your estate concerns with a member of our team, contact us online or by phone at (289) 652-9092 to learn how we can help you.

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Estate Litigation Estate Planning

Are Foster Children Entitled to a Deceased Parent’s Estate?

Intestacy can be a complicated and emotional affair, made only more so if the testator dies without a will. In these situations, the rights of foster children and their entitlement to claim a share of a deceased person’s estate can raise questions and concerns. This blog post will delve into the intricacies of inheritance laws, exploring the rights foster children may or may not possess when it comes to a deceased individual’s estate by examining a recent case decided on this topic in Ontario.

Intestacy in Ontario

The Succession Law Reform Act, commonly referred to as the “SLRA”, is the central piece of legislation governing the distribution of estates in Ontario. Primarily, the Succession Law Reform Act outlines rules for the distribution of assets when an individual passes away without a valid will. It establishes a default order of succession, prioritizing spouses, children, siblings, and other close relatives in the absence of specific testamentary instructions. Specifically, the Succession Law Reform Act states:

(4) Where a person dies intestate in respect of property and there is no surviving spouse, issue or parent, the property shall be distributed among the surviving brothers and sisters of the intestate equally, and if any brother or sister predeceases the intestate, the share of the deceased brother or sister shall be distributed among his or her children equally.

This provision was applicable in Estate of Sydney Monteith v. Monteith et al, where the dispute revolved around whether a foster child of the deceased’s parents was considered a sister to the deceased.

Foster Child Claim’s Entitlement to Share of Estate

In the case of Estate of Sydney Monteith v. Monteith et al, an adopted individual died without a will and had no spouse or surviving children. The adoptive parents of the deceased had also fostered one of the respondents, along with 136 other children. This respondent was never formally adopted, but maintained a close relationship with one of her foster parents. This relationship was close enough to the point where the parent often referred to this respondent as his “daughter,” and he named her his Attorney for Property, a co-executor, and beneficiary of his will.

Since the deceased did not have a will, his estate was distributed by the Succession Law Reform Act such that his siblings or their children received equal portions of the estate. The respondent child referred to above claimed that since her adoptive parent treated her as his daughter, she must be considered the deceased’s sister per the Succession Law Reform Act.

The applicant and other respondents disagreed and argued that she had no legal entitlement to share in the estate as a surviving sister.

Who is Considered a “Child” in Ontario’s Intestacy Law?

The Judge in the above case examined the definition of child in various relevant legislation and in particular, the Children’s Law Reform Act (also referred to as the “CLRA”), which states:

4 (1) A person is the child of his or her parents.

(2) A parent of a child is,

(a)  a person who is a parent of the child under sections 6 to 13, except in the case of an adopted child;

(b)  in the case of an adopted child, a parent of the child as provided for under section 217 or 218 of the Child, Youth and Family Services Act, 2017.

(3) The relationship of parent and child set out in subsections (1) and (2) shall be followed in determining the kindred relationships that flow from it.

(4) For greater certainty, this section applies for all purposes of the law of Ontario. 

In this case, the Judge wrote that, per this definition, it is immediately apparent that the respondent was not a child of her foster parent; he was not her birth parent, and he did not officially adopt her (unlike the other respondents). The Judge also noted that the Children’s Law Reform Act includes a definition of “adopted child,” which requires an adoptive order.

Court Determines Respondent is Not a Child of Her Foster Parent

The Judge conceded that while the law considers children to include individuals “whom a parent has demonstrated a settled intention to treat as a child of his or her family,” such as in the case of the Family Law Act, the legislation includes exceptions for foster children. The Judge agreed that the purpose of this exception was to not burden or disincentivize adoptive parents with the threat of a multitude of estate claims.

Ultimately, the Judge found that the respondent was not a child of her foster parent and, thus, not a sister of the deceased. This case provides clarity regarding the rights of foster children and highlights the fact that if foster children are not adopted, they will generally not be considered to be children of their foster parents. This case also serves as a reminder about the importance of having a will and illustrates the potential issues that can arise when someone dies intestate.

Contact the Estate Planning Lawyers at Bader Law for Assistance Drafting a Will

At Bader Law, our talented estate planning lawyers have considerable experience providing insight and legal guidance on the estate planning process. We work closely with individuals to prepare their estate documents, and we also help estate trustees and beneficiaries throughout the entire probate process. We represent individuals, families and business owners throughout Oakville, Mississauga and throughout the Greater Toronto Area prepare comprehensive estate plans to ensure their needs are met. We advise clients on best practices in both simple and complex estate matters to ensure they have a plan in place to protect their interests and minimize their estate tax obligations. Contact us online or by phone at (289) 652-9092 to learn how we can assist you.

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Estate Litigation Estate Planning Real Estate

Joint Tenancy and Avoiding Probate Fees

There are a variety of legal approaches that parties can use to avoid paying fees associated with property transfers, typically as a result of the death of a loved one. One such approach is using joint tenancy as an estate planning mechanism to avoid the payment of probate fees. However, this method does not come without its own risks and considerations, as demonstrated by a recent decision from the Ontario Superior Court of Justice.

Joint Tenancy or Tenants in Common?

An important concept discussed in the case of Jackson v. Rosenberg is that of joint tenancy and its relation to tenancy in common, which are two distinct forms of property ownership.

In a joint tenancy, co-owners share an undivided interest in the property, and upon the death of one owner, their share automatically passes to the surviving joint tenant(s). This process is known as the right of survivorship, ensuring a seamless transfer of ownership without the need for probate.

On the other hand, a tenancy in common involves individual ownership of specific, separate shares within the property. Each tenant in common is free to transfer their share independently, without the constraint of the right of survivorship. This structure allows for greater flexibility in estate planning, as tenants in common can distribute their ownership as they see fit among heirs or third parties.

Parties Become Joint Tenants

In Jackson v. Rosenberg, two individuals were registered as joint tenants to avoid paying the Estate Administration Tax. Still, they subsequently got into a dispute over the ownership of the property. Mr. Jackson was Ms. Rosenberg’s uncle’s longtime partner. When the uncle passed away, Mr. Jackson was named as the sole beneficiary of his estate. Mr. Jackson purchased the property in question (the “Port Hope Property”) with the proceeds from the sale of the assets he acquired as part of the uncle’s will. For a time, Mr. Jackson was the sole registered and beneficial owner of the Port Hope Property.

Mr. Jackson eventually transferred the property from himself as sole owner to himself and Ms. Rosenberg as joint tenants, as he intended to leave whatever value remained in the Port Hope Property to Ms. Rosenberg upon his death. Had he used a will to bequeath his interest in the property, Ms. Rosenberg would have had to pay probate fees, so he chose to approach the property transfer through joint tenancy. He also signed a document that indicated that the transfer was a “gift” made for nominal consideration.

After several years, Ms. Rosenberg and her husband informed Mr. Jackson that they intended to upgrade the house for its eventual sale during his lifetime since Ms. Rosenberg had the right to do so as a joint tenant. This was not what Mr. Jackson intended, and he became worried that he would be kicked out of his home. Soon after, Mr. Jackson took steps to sever the joint tenancy. When the matter came before the Court, the Court was asked to determine whether Mr. Jackson’s transfer of the property was a resulting trust rather than a gift, and whether the beneficial ownership would be retained by Mr. Jackson.

Judge Finds Intent to Gift Right of Survivorship, Not Beneficial Interest

The Court found that the evidence before it clearly indicated that Mr. Jackson intended to gift the right of survivorship to Ms. Rosenberg and that there was no intent to have her control the property prior to his death. The judge examined the law on resulting trusts to determine the legal effect of this gift and noted that due to the gratuitous transfer, the presumption of resulting trust applies, therefore, the onus was on Ms. Rosenberg to demonstrate that this transfer was a gift.

The Court found that the facts supported this presumption as Mr. Jackson even signed a document that evidenced his intent during this transfer. However, the judge specified that Mr. Jackson intended to gift the right of survivorship to Ms. Rosenberg, and not to give her control of the property. This intention did not affect the status of the gift, which means the gift was made and cannot be revoked.

However, there is the caveat that the right of survivorship is “a gift of whatever remains at the death of the transferor, not what existed at the date of the transfer.” In other words, Mr. Jackson had the right to do as he pleased with the property during his lifetime, and Ms. Rosenberg had the right to whatever was left. The judge used the example of having a right of survivorship in a joint account; the surviving individual has the right to receive the funds upon death, but the other individual has the right to drain the account beforehand.

Case Serves as “Cautionary Tale”

Although Mr. Jackson could not revoke the gift, he could still sever the joint tenancy, as it was his inherent power to do so. The judge found that Mr. Jackson severed the joint tenancy when he transferred his share of the joint tenancy to himself, ending Ms. Rosenberg’s right of survivorship.

As warned by the judge, this case serves as a “cautionary tale” of using this property title tactic. The parties paid more in legal fees fighting a dispute than the amount they would have saved on probate fees. As such, parties must weigh the potential risks and benefits before entering into a joint tenancy, especially when it is used as an estate planning strategy.

Contact Bader Law in Mississauga for Estate Planning Advice and Drafting Assistance

The trusted estate planning lawyers at Bader Law can help with a wide range of wills and estate matters, including drafting a will, updating a will, as well as probate and estate administration, to ensure that your loved ones are cared for in the event of your passing. Our compassionate team will ensure your unique needs are met and a strategic estate plan is in place so that you can put your mind at ease. Contact us by phone at (289) 652-9092 or reach out to us online to learn how we can assist you with your estate plan.

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Estate Planning

Statutory Limitations and Special Considerations When Making a Will

It is easy to postpone estate planning for far too long, but November beckons us to prioritize a crucial aspect of our future. It can be overwhelming, intimidating and time-consuming, however, drafting a will is an important task every person should complete sooner rather than later.

This blog aims to demystify estate planning and emphasize some high-level priorities when drafting a will. “Make a Will Month” is a call to action and an opportunity to become familiar with your estate needs and the important factors to consider when drafting a will. Specifically, Ontario laws may limit a testator’s freedom with respect to the distribution of the assets in their will. These statutes provide essential rules one must consider when drafting a will.

Succession Law Reform Act and Dependent Support

The Succession Law Reform Act (also referred to as the “SLRA”) governs the distribution of a deceased person’s estate when there is no valid will. It outlines rules for intestate succession and determines how assets will be distributed among surviving family members. The Succession Law Reform Act prioritizes the spouse, followed by children and then other relatives. If no immediate family exists, the estate may go to the government. The Succession Law Reform Act aims to provide a systematic and fair process for the distribution of assets in the absence of a will, ensuring a structured approach to intestate succession in the province of Ontario.

Protection for Financial Dependents

Specifically, Part V of the Succession Law Reform Act operates to protect the deceased’s financial dependents from an inadequate provision of assets by the deceased. This section applies whether the deceased died with a will or intestate. In other words, a claim can be made under this section for dependent support, regardless of whether a will was drafted. To do so, three criteria must be satisfied, specifically:

  1. The individual claiming dependent support must stand in the right of relationship to the deceased, i.e., married or common-law spouse, parent, grandparent, child, grandchild, or sibling of the deceased;
  2. Prior to death, the deceased must have been providing support to the individual claiming support or must have had a legal obligation to do so; and
  3. The deceased did not make adequate provision to do so.

Ontario courts consider the ambit of “adequate provision” heavily, and the factors for which an adequate provision has not been made will be determined by factors such as budgetary needs, family lifestyle, and moral considerations.

The important takeaway is that the drafter must consider the needs of their dependents before drafting the will. Otherwise, the dependent may be able to claim under the Succession Law Reform Act for additional support. Such a claim could cause financial stress on the estate and emotional stress on the family.

Family Law Act and Matrimonial Property

The Family Law Act (also referred to as the “FLA”) addresses family-related legal matters. It governs marriage, divorce, property division, spousal and child support, and custody arrangements in Ontario. The Family Law Act also promotes fair resolution and children’s best interests in family disputes, emphasizes equal responsibilities, and recognizes the importance of spousal and child support.

In the event of a spouse’s death, the surviving spouse has the option to choose to receive their entitlements contained within the will, or they may elect to receive an “equalization payment” under the Family Law Act. If the surviving spouse chooses the latter, the will entitlement is forfeited, and the will is administered as if the surviving spouse had predeceased the testator. It is important to note that this right can be waived by contract.

The Impact of an Equalization Claim

The operation of the equalization claim is a paramount consideration when drafting a will. Individuals should consider whether they wish to include certain assets in the will, as it can have significant consequences on the estate. Depending on the value of the equalization payment in each case, the inheritance subsequently passed to the children of the deceased may be exposed to an equalization claim by a respective spouse. However, there are a variety of strategies to avoid this risk, such as:

  1. The general principle that gifts and inheritance received during the marriage are excluded from the calculation of a recipient spouse’s net family property.
  2. The income derived from such gifts and inheritance is also excluded if the donor expresses this intention.
  3. If the gift or inheritance is received prior to the marriage, the value at the marriage date will represent a deduction in calculating the child’s net family property at a later time.
  4. There is always the option to establish a testamentary trust for the child to provide greater protection of the assets.

The specific strategies require careful consideration with expert legal counsel. Either way, effective estate planning requires scrutiny of how the equalization payment can affect the assets distributed by the will.

Contact Bader Law in Mississauga for Assistance Preparing a Comprehensive Estate Plan

The trusted estate lawyers at Bader Law can help with a wide range of wills and estate matters, including drafting a will, updating a will, and assisting with probate guidance and estate administration. With care and compassion, our team of estate planning and administration lawyers will ensure your will meets the needs of you and your loved ones. Contact us by phone at (289) 652-9092 or reach us online to discuss your estate needs.

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Estate Litigation Estate Planning

The Importance of Interpretation: Trustee Powers and Beneficiaries’ Interests

A common theme highlighted throughout our previous estate planning blog posts is the importance of defining an estate trustee’s responsibilities and powers. Well-drafted wills can prevent costly litigation, and even where litigation is necessary, a properly prepared will can assist the court in its interpretation so that the trustor’s intentions and final wishes are fulfilled.

In a recent case before the Ontario Superior Court, an estate trustee brought a motion to prevent a beneficiary from impeding a property sale. In this case, there were competing interests and therefore interpretation of the will was paramount.

Property Vesting in the Estate Administration Act

The Estate Administration Act (also referred to as the “ESA”) is a vital legal framework governing the management and distribution of a deceased individual’s assets and estate. This legislation plays a crucial role in the distribution and settlement of estates, providing a structured and transparent process for both executors and beneficiaries.

The Estate Administration Act also includes provisions that determine property ownership. Specifically, section 9 outlines the process for dealing with real property (land) that has not been distributed to beneficiaries by the deceased person’s representative within three years after their death. If a property is registered under the Land Titles Act or governed by specific sections of the Registry Act, it will automatically transfer to the beneficiaries after a three-year period. However, the personal representative can prevent this automatic transfer by registering a caution in the land registry office. If a caution is registered, the property will not transfer for three years from the registration date.

Nevertheless, section 10 limits the operation of this clause by stipulating that “[n]othing in section 9 derogates from any right possessed by an executor or administrator with the will annexed under a will or the Trustee Act or from any right possessed by a trustee under a will.” This ensures that the legislation does not interfere with the testator’s right to empower their trustee to sell property how the testator sees fit.

Estate Trustee Brings Motion to Vacate Caution

In Marcy v. Marcy, an independent third-party estate trustee brought an urgent motion before the court in response to one of the beneficiaries attempting to prevent the sale of their deceased mother’s property.

The deceased passed away in 2015. The estate trustee had sold the deceased’s house on behalf of the estate and was supposed to close on October 4, 2023, however the respondent, “BM,” an heir to the estate, registered a caution on the title. The estate trustee also sought an order to prevent the respondent from interfering with the closing.

During the motion hearing, the respondent argued that section 9 of the Estate Administration Act was operative as title to the deceased’s property vested in him and his brother since it was more than three years since his mother had passed. The three-year deadline was also completed before the current trustee was appointed. As such, the respondent submitted that the estate trustee did not have a right to sell the property, and the registration of the caution was “reasonable.”

Court Prevents Action to Interfere with Property Sale

The Court disagreed with the respondent’s submissions. Justice Meyers was influenced by the case of Michele v. Di Michele, which dealt with the interpretation of section 9 of the Estate Administration Act. Justice Meyers quoted the decision, which stated:

“Section 9 (and its predecessors) was not enacted to limit the powers given to an estate trustee under a will. Rather, it was intended to give estate trustees additional powers, but only to the extent that the additional powers do not conflict with the provisions of the will. The intention of the deceased, as expressed in his or her will, is always paramount.”

Justice Meyers examined the testator’s intentions through the provisions of the will. The will allowed the estate trustee to “sell, call in and convert into money the whole or any part of [the] estate…in such manner and on such terms…as [the] Trustees in their absolute discretion deem advisable and in so doing to postpone the sale or conversion of any part of the same indefinitely or for such period as [the] Trustees deem advisable…” This clause is unequivocal and falls under the exception of section 10, which prevents the Estate Administration Act from limiting the scope of the testator’s power to enable the trustee to dispose of the property as they see fit.

The Importance of Clear Will Drafting

As demonstrated, the primary principle of having a testator be able to dispose of their assets as they see fit (and, by extension, empowering their trustees to do so on their behalf) is aided by the clear construction of the will. The clause in this case was unambiguous and the estate trustee had the absolute discretion to sell or convert any part of the estate. Further, it was this language that enabled the court to prevent “irreparable harm” to the estate. Thus, if you are considering drafting or updating your will, it is important to work with an experienced estate planning lawyer who can ensure that the provisions contained within your estate planning documents, including your will, allow your intentions to be clearly defined.

Contact Bader Law in Mississauga for Estate Planning Advice and Drafting Assistance

The trusted estate planning lawyers at Bader Law can help with a wide range of wills and estate matters, including drafting a will, updating a will, as well as probate and estate administration, to ensure that your loved ones are cared for in the event of your passing. With care and compassion, our estate planning and estate administration lawyers will ensure your will meets all of your needs. Contact us by phone at (289) 652-9092 or reach us online to learn how we can assist you with your estate plan.

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Estate Planning

Is a Trust Right for You?

Trustees are often at the center of an individual’s succession planning. Trustees also have the responsibility of managing and distributing assets of the estate. In Ontario, establishing a trust is a way in which individuals and families can be provided with a sense of security and peace of mind in the event that the unexpected happens. While the concept of trusts may sound complex, this valuable financial instrument can be a straightforward and effective way to manage assets, protect your wealth, and ensure your loved ones are taken care of in the future.

Whether you’re a parent looking to safeguard your children’s future, a business owner seeking to protect your assets, or someone who wants to take control of their financial legacy, creating a trust is an option that offers various benefits regardless of your circumstances. This blog post will provide a high-level overview of the use of trusts and the responsibilities of trustees in the context of estate planning and administration in Ontario.

What is a Trust?

Originating from the English common law, a trust is a legal arrangement where one party (a trustor) transfers assets, such as money, property, or investments to another party (a trustee) for the benefit of specific individuals or entities (a beneficiary). It is not a legal entity, but rather a legal relationship whereby the trustee has certain obligations to the beneficiary or beneficiaries. However, it must be emphasized that the trustees are not agents to the beneficiaries; instead, they act as principals in their transactions with third parties, subject to fiduciary duties.

A trust may arise either intentionally (also referred to as an “express trust”) or by operation of law (also referred to as a “constructive trust” or “resulting trust”). In estate law, express trusts are the mechanism by which the trustor can ensure that their assets are safeguarded and managed according to their wishes after death.

Express Trusts and Wills

In order to determine whether a trust is valid, it is necessary to examine whether the trust has the “three certainties,” specifically the:

  1. Certainty of Intention – This certainty requires clear evidence that the trustor intended to create a trust. As such, when drafting a will, its language must be imperative and transparent regarding the trustee’s intention to create a trust.
  2. Certainty of Subject Matter – This certainty demands that the assets or property involved in the trust are explicitly identified and described. The will must clearly describe the property subject to the trust.
  3. Certainty of Objects: This certainty pertains to the trust’s beneficiaries or “objects.” The beneficiaries must be clearly defined or ascertainable. If not referred to specifically by name in the will, the beneficiaries must be referred to by class, such a description must be sufficiently precise to determine who fits in the class.

These requirements are crucial for any trustor to follow. Otherwise, the trust they may have intended to form may not be valid.

Essential Duties of Trustees

The common law has developed several basic duties that all trustees must follow in order to satisfy their duties, which includes the:

  1. Duty of Care – The standard that a trustee must perform their duties is that of a reasonable and prudent business person conducting their own business affairs.
  2. Duty to Act Personally – Trustees generally cannot delegate their duties. They have been specifically named in the trust document or will, so it is their duty to dispense. This does not prevent a trustee from seeking advice, but the ultimate decision must be made by them.
  3. Duty to Avoid Conflict of Interest – Trustees must act for the benefit of the beneficiary or beneficiaries, which includes avoiding any conflict of interest.

These duties can be modified by any applicable legislation, which can impose stricter requirements and standards. The will may also create more stringent duties. As such, the above duties can be used as a guide to avoid inadvertent breaches, however, a careful examination of the will and the context of the circumstances is essential to understand the full scope of the trustee’s duties.

Common Uses of Trusts in the Estate Planning

As a result of its characteristics, the trust is a highly useful legal tool in estate planning. The following are some common uses of trusts in estate planning:

  1. Managing Property for Minors – Legally, minors cannot own and manage property. The trust can be used so that the property that would typically be inherited upon the death of a parent can be kept and executed on the child’s behalf until they reach the appropriate age.
  2. Tapering Control of Assets – The trust can provide financial freedom for beneficiaries while postponing the granting of control over the entire estate.
  3. Providing Care – The trust allows assets to be set aside and used to tend to the care of individuals who are incapacitated and cannot manage their affairs.
  4. Spousal Care – The trust can provide for the care and maintenance of a spouse during their lifetime.
  5. Tax Planning – The trust can provide some control over an individual’s assets to prevent adverse tax consequences on the beneficiaries.

The trust is a very flexible and valuable tool in estate planning. If you are thinking of establishing a trust, it is important you are advised by lawyers with experience in understanding the operation of trusts in Ontario.

Contact Bader Law in Mississauga for Estate Planning Services and Advice on Setting Up a Trust

The trusted estate lawyers at Bader Law can help with a wide range of wills and estate matters, including drafting a will, updating a will, and establishing a trust to ensure that your loved ones are cared for in the event of your passing. With care and compassion, our team of estate planning and administration lawyers will ensure your will and other estate planning documents meet the needs of you and your loved ones. Contact us by phone at (289) 652-9092 or reach us online to schedule a confidential consultation with a member of our team.

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Estate Planning Wills & Estates

Testamentary Appointments and Succession Planning for Children

Generally, an individual will prepare a will to ensure that their family is taken care of after their passing. However, not everyone might understand that there are special considerations for the testator’s children when they are still minors at the time of the testator’s death. Therefore, accounting for these nuances in the law is an important step in planning for the distribution of a testator’s assets and guardianship of their children. Responsible planning safeguards the testator’s children’s well-being and honors their wishes and legacy. This blog will outline important considerations for making testamentary appointments for decision-making responsibility of a child and guardianship of their property.

The Intersection of Estate Law and the CLRA

Passed in 1990, the Children’s Law Reform Act is a legal framework that focuses on protecting the well-being of children in Ontario regarding family law matters. It covers custody and access arrangements, guardianship rights, child support guidelines, enforcement of court orders, child protection services, adoption procedures, parentage determination, and name changes. It provides essential legal guidelines to ensure children’s welfare and security in various family-related situations and important rules related to estate planning for children.

Granting Decision-Making Responsibility for Minors

The provisions of the Children’s Law Reform Act stipulate that the parents of a child are equally entitled to decision-making responsibility. This responsibility can be lost through a court order, but if it is not, the parent has the right to bestow the statutory right to decision-making responsibility to another individual.

Where the testator chooses to do so, the Children’s Law Reform Act prescribes specific rules that must be followed. According to section 61(4), the testamentary appointment for decision-making responsibility is only effective where:

  1. The testator is the sole individual having decision-making responsibility concerning the child on the day immediately prior to the day the appointment is to take effect, or
  2. The testator has decision-making responsibility with another person, and they both die simultaneously or in circumstances that render it uncertain who survived the other.

In the first scenario, the testamentary appointment would be ineffective if the child has a sole living parent. This would also be true if a parent had lost their decision-making responsibility through an order of the court and attempted to appoint a decision-maker.

The second scenario is relevant only where one person having decision-making responsibility has made a testamentary appointment. However, section 61(5) further adds that in this scenario, only common appointments will be effective, i.e., both parents (or individuals with decision-making responsibility) appoint the same individual(s). Otherwise, no appointments will be effective in a common disaster.

Temporary Testamentary Appointment

One of the key principles codified in the Children’s Law Reform Act is that the best interests of the child prevail, extending to any testamentary appointment and decision-making authority is a temporary right and can be forfeited if required. This is evidenced by section 61(7) of the Children’s Law Reform Act, which states that a testamentary appointment expires after 90 days from the date the appointment becomes effective. Even so, the appointed individual does have recourse to extend the appointment. The same section allows that individual to apply to the court for a “more permanent” appointment, where the court will exercise its discretion, considering the child’s best interests.

Property of a Minor

Neither the parent nor the person appointed with decision-making responsibility has an inherent right to possess or control property or assets belonging to the child. In order to do so, an application must be submitted to the court to be appointed as a “guardian” of the child’s property.

Applications for guardianship are governed by section 47 of the Children’s Law Reform Act, where any person, including a parent, can apply. Again, the child’s best interests would be considered, and the Children’s Lawyer could oppose such an application. If the guardianship is granted, the child’s property may be paid to the guardian.

The guardian will also be entitled to make a testamentary appointment with respect to the guardianship. In other words, the right can be passed on to another individual, similar to the right to decision-making responsibility. The same restrictions apply to decision-making authority as stated above. Furthermore, guardianship is also temporary, subject to the same 90-day period, and the same rules regarding requesting a more permanent appointment.

However, section 61(8) of the Children’s Law Reform Act provides that any person can apply to become a guardian of the child’s property at any time.

Contact Bader Law for Trusted Advice Regarding Testamentary Appointments

The skilled will and estate lawyers Bader Law have extensive experience providing insight and legal guidance on the estate planning process, including for making testamentary appointments. Our team works closely with clients throughout Mississauga and the Greater Toronto Area to help them develop tailored strategies for both simple and complex estate planning and probate matters. We advise clients on best practices in both simple and complex estate matters to ensure they have a plan in place to protect their interests and minimize their estate tax obligations. To schedule a confidential consultation with a one of our lawyers, contact us online or at (289) 652-9092.

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Estate Planning

Understanding Powers of Attorney in Ontario

Powers of attorney are intricately mixed into Ontario’s current law regarding wills and estates. A power of attorney is a legal document that authorizes an agent to act on the principal’s behalf in legal, financial, or personal matters. Understanding the limitations of different types of powers of attorney is essential to ensure appropriate decision-making, protect the principal’s interests, prevent misuse, comply with legal requirements, facilitate smooth transitions, and uphold the principal’s wishes.

This blog post will briefly outline the differences between the different types of powers of attorney, their creation, form, execution, and termination.

The Substitute Decisions Act

In the 1970s, the Ontario government reformed the law concerning powers of attorney under the Substitute Decisions Act. The Substitute Decisions Act created a framework for two types of powers of attorney: personal and property. It defines the process of appointing substitute decision-makers, their authority to make decisions, and their duties, ensuring that the best interests of the incapacitated individuals are upheld. It also aims to provide a structured approach to managing the affairs and welfare of those unable to do so independently while incorporating safeguards to prevent abuse or neglect of their rights.

Powers of Attorney for Property

A power of attorney for property is a continuing power of attorney, which means that the agent’s authority continues even if the principal becomes incapacitated or unable to make decisions independently. However, the document must state that it is a continuing power of attorney, and the principal’s intention to enter into a continuing power of attorney must be expressed for the power of attorney to be valid.

Scope of Authority

The Substitute Decisions Act specifically outlines the scope of the agent’s authority for a power of attorney, providing that the agent can do “anything in respect of property that the grantor could do if capable, except make a will.” The scope is extensive, but can be limited by the principal’s specifications in the power of attorney. It is not uncommon for the agent’s authority to be confined to specific property or to begin after a particular time or event, such as the principal being deemed mentally incapacitated.

Drafting a Power of Attorney for Property

The Substitute Decisions Act does not require the document to be in any specific form as long as it satisfies the requirements referred to above (i.e., the express provision of a continuing power of attorney for property). However, there are important considerations for drafting this document if two or more agents are appointed. Clear language must define the role of each agent, and if there is to be more than two, there must be a straightforward decision-making process.

It is important to note that powers of attorney must be executed in the presence of two witnesses, which cannot include the agent or their partner, the principal’s partner or child, a person whose property is under guardianship and a person under the age of 18.

Although these requirements are explicit in the legislation, the Act also grants the courts the power to look past any informalities as long as it is in the interests of the principal and their dependents to do so. Even so, it is important to follow these requirements to avoid the risk of a power of attorney for property being found invalid.

Termination

The Substitute Decisions Act provides certain situations where the power of attorney for property is terminated, including when:

  • The principal is incapable of managing property, or resigns, unless a substitute is provided for in the document,
  • A court appoints a guardian,
  • A new document is signed, unless the document includes provisions for multiple powers of attorney, or
  • The principal revokes the power of attorney.

Personal Power of Attorney

This power of attorney involves appointing an agent to make decisions regarding the principal’s “personal care”, which can include “health care, nutrition, shelter, clothing, hygiene or safety.”

Capacity to Give Power of Attorney

Due to the personal consequences involved, the Substitute Decisions Act limits when a principal can give a power of attorney. The Substitute Decisions Act expressly requires that the principal “has the ability to understand whether the proposed attorney has a genuine concern for the person’s welfare” and “appreciates that the person may need to have the proposed attorney make decisions for the person.” Even so, the Substitute Decisions Act prohibits anyone under the age of 16 from making decisions under this power of attorney.

Limitations on the Agent’s Authority

Unlike a power of attorney for property, a personal power of attorney is not exercisable at any time. Instead, it is only enacted when the principal becomes incapacitated. To prevent any confusion over the agent’s authority, the legislation contains safeguards regarding when a decision can be made. Expressly, it permits decisions in two circumstances:

  • when the Health Care Consent Act enables the agent to act, or
  • where the agent reasonably believes the principal is incapable of making the decision, unless there is a more stringent test set out in the power of attorney.

Contact Bader Law for Comprehensive Advice on Powers of Attorney and Estate Planning

Our experienced estate planning lawyers at Bader Law understand the intricate nuances and questions which can arise relating to the different types of powers of attorney, which is why we work closely with each client to understand their circumstances and ensure that their needs are met. With a keen eye for detail and a commitment to safeguarding your interests, our firm is dedicated to crafting power of attorney documents that reflect your wishes accurately. We also provide assistance with other legal matters involving employment law, real estate, and corporate law disputes. Contact us online or at (289) 652-9092 to schedule a confidential consultation with a member of our team.

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Estate Planning

November is Make a Will Month in Ontario – Have You Made Yours?

The month of November marks ‘Make a Will Month’ in Ontario, a public awareness campaign to educate Ontarians about the importance of making a will. By way of background, a will is a legal document that outlines an individual’s wishes in the event of their death. It delineates how you wish your assets, property, or any other possessions to be distributed. A will may also appoint an executor and name guardians for any dependents.

While some people attempt to create their own will, legal counsel can be vital in ensuring that a will is legally binding.

What Makes a Legal Will in Ontario?

In general, pursuant to the Succession Law Reform Act, for a typical will to be formally valid, it must meet the following requirements:

  • The will must be created by the person making the will (the “testator”) who is of sound mind and over the age of majority in Ontario (18 years old)
  • The will must be signed by the testator and two witnesses who do not benefit under the will (this may now be done remotely)
  • The witnesses and testator must sign the last page of the will

Sometimes, a person creates a handwritten will, known as a holograph will, which has different legal requirements. To be legally binding, a holograph will must meet the following criteria:

  • There must be evidence that the testator actually created the will, which can be proved through the use of witnesses, friends, other handwritten documents that verify the identity or other methods
  • The testator must have had the intellectual capacity to write the will, although there is a presumption that a testator had such capacity unless there is evidence to the contrary
  • The testator must be expressing a wish to direct the distribution of his estate to beneficiaries

With a holograph will, it is important that every word be written in the testator’s handwriting.

What Happens if You Die Without a Will?

If a person dies without a will in Ontario, it is known as dying intestate. Where an individual dies intestate, their estate is distributed among living relatives pursuant to the Succession Law Reform Act, typically in the following order:

  • If the deceased has a spouse but no children, the entire estate goes to the spouse
  • If the deceased has a spouse and children, the spouse will get the first $200,000 and the remainder is divided equally between the children and spouse
  • If the deceased does not have a spouse but does have children, the estate is divided equally between the children. If any of the deceased’s children have died, their children (the deceased’s grandchildren) get their share
  • If the deceased does not have a spouse, children or grandchildren, the estate is divided equally between the deceased’s living parents

In the event the deceased has no surviving next of kin, their estate goes to the Crown.

Given this statutorily mandated hierarchy, dying intestate can leave a common-law spouse or any other non-relative loved ones vulnerable as they may not receive any part of the estate. Depending on the makeup and circumstances of the deceased’s family, dying intestate can further result in complications, delays, and extra cost in the distribution of the estate.

Where a person dies intestate, an application must also be made to the court for a person to be appointed as an estate administrator in accordance with the requirements under the Rules of Civil Procedure and with the necessary security required under the Estates Act.

Creating a Will Allows the Appointment of a Trusted Executor

Another benefit of creating a valid will is the ability to appoint a trusted executor (also known as an Estate Trustee) to administer the estate. A single person can be appointed as executor or several people can be appointed to act jointly, independently or in substitution for one another. As an executor has total control of the estate after you pass away, it is important to appoint the appropriate person.

In the vast majority of cases, people name their spouse (if any) as the primary executor as the spouse is also typically the person to whom most, if not all, assets are left. Where a person does not have a spouse but has children, then most often one or more of those children will be named as the executors. There are, however, many circumstances where a spouse or children are not available or are not appropriate executors in which case another person can be appointed.

Making Changes to a Will

Once a will is created, it is still possible to change it at any time. A life event such as a marriage, separation, divorce, the birth or adoption of a child, may necessitate a change in beneficiaries and the distribution of assets in a will.

As noted above, while online wills and will kits are available, the value of having a will created with the assistance of a professional cannot be overstated. Whether or not an estate has complicated assets, a lawyer can ensure that a will is legally binding so that the estate is distributed as efficiently and cost-effectively as possible. A lawyer can assist in including customized clauses and control the timing and amounts for distribution of the capital by the inclusion of a trust in a will if some beneficiaries are minors or persons with a disability. A lawyer can further aid in appointing an appropriate executor and can further assist in minimizing costs and taxes, including estate administration taxes.

Contact Bader Law in Mississauga for Estate Planning Services Including Making a Will and Will Review

The trusted estate lawyers at Bader Law can help with a wide range of wills and estate matters, including drafting a will, updating a will, as well as probate and estate administration, to ensure that your loved ones are cared for in the event of your passing. With care and compassion, our team of estate planning and administration lawyers will ensure your will meets the needs of you and your loved ones. Contact us by phone at (289) 652-9092 or reach us online to discuss your estate needs.