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I practise in the area of estate litigation and am often reminded of the importance of having a clearly drafted Will.
A good recent example comes from the decision in Poole v Dailey, 2020 SKQB 226.
The deceased had left his estate between his two children, Brian and Patricia, on the below terms:
Further, provided that my said daughter takes physical possession of the said residential property within three months from the date of my death and occupies that property as her residence, then I direct that the said residential property and all contents shall be transferred to my said daughter, to be hers absolutely, subject only to any mortgage which may be registered against the property at the date of my death.
The issue before the Court in Poole was thus: Had Patricia taken physical possession of the Regina Beach home, within 3 months of Earl’s death on August 1, 2015?
Regrettably, the Will did not define in black and white terms, what would trigger a finding of “occupancy” or “residency”.
A trial was held. The parties each called evidence to support their own position. Brian argued that Patricia had not resided in the home within 3 months. He relied on:
However, the Court did not find that Brian had qualified himself as an expert witness, for the purpose of introducing expert testimony.
Patricia in turn argued that she had in fact resided in the home within 3 months. She relied on the below:
Ultimately, the Court, therefore, found that Patricia had in fact occupied the Regina Beach home, as prescribed by the will. As such, Patricia Dailey was entitled to absolute title of the property.
Poole offers a practical lesson on the importance of having a carefully defined Will. Here, the costly proceeding could perhaps have been avoided had the Will defined what exact criteria would constitute “occupancy” or “residency”.
The Court’s ruling on costs:
Interestingly, the Court in Poole did not award Patricia her legal costs out of the Estate. The Court held that the proceeding was intended to advance Patricia’s personal interests in the estate. As such, Patricia’s legal fees should not be borne by the estate.
This finding may attract comment. Traditionally, in estate matters, legal fees for successful parties have often been awarded out of the estate. Moreover, they are often paid on the “solicitor client” scale (meaning dollar for dollar costs). The reasoning has traditionally been that the estate should bear the cost of any proceeding aimed at determining the true intention of the deceased, or, of any proceeding caused by an ambiguity for which the deceased was responsible. Such traditional reasoning would have appeared to apply equally in Poole.
It is too early to tell if the costs aspect of Poole may be an outlier decision, or, if it signals a broader departure in Saskatchewan from the prior approach to legal costs in estate matters.
Contacting a Lawyer on this Subject
James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or j.steele@rslaw.com. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.
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The recent decision in Hayes v Swift, 2021 SKQB 132 offers a reminder that beneficiaries should ensure they have real evidence of executor wrongdoing before they bring a court application against an executor.
Facts:
The testator, Bernard William Hayes, had passed away, and his will made specific gifts for his son and two grandchildren These parties were the applicants.
The testator was married to the executor, Ann Swift, when he died. The will provided that Ann received the residue of estate. Letters probate were issued, and the executor duly provided each beneficiary with their specific bequests under will. Ann had shipped the testator’s son several boxes of woodworking tools at a cost of $1,496.25 to the estate. However, the son maintained that there were more tools in the estate. Ann claimed that she had provided all that she had found.
The applicants, who had no lawyer to represent them, applied in court for relief, including for an order directing the executor to deliver woodworking tools. The applicants also sought an accounting from the executor.
Outcome:
The application was dismissed. The Court held that the executor had not wrongly withheld woodworking tools. The executor had identified a box of miscellaneous hand tools which may be considered woodworking tools, but the Court held that the obligation to arrange for and pay the cost of transporting items was on the son. The executor had already incurred $1,496.25 in shipping to send bequeathed woodworking tools to the son. Here, the appraised value of the remaining tools was $2,700, and the cost to ship those tools was approximately $2,000. In considering the shipping costs already incurred by the estate, and the value of the remaining tools, any further expense to the estate would be unduly high in the circumstances. The Court held that if there remained woodworking tools that the son claimed to be entitled to, the son was responsible for the cost of shipping and transportation.
The beneficiaries sought a more detailed inventory of any tools in the estate. However, the Court held that the applicants had not shown that the executor had deliberately withheld any tools from the beneficiaries. The Court refused to order a more detailed inventory;
[64] There is no evidence presented by the applicants, beyond speculation, that the inventory provided by the executor prior to and through this application is incomplete as it relates to any tools, including woodworking tools.
Refusal by the Court to order an accounting:
The applicants had also sought an accounting from the executor. The court dismissed this application. The Court held that the applicants had not shown cause as to why an accounting should be ordered. The Court held that the grandchildren had already received their specific bequests and thus had no further interest in the estate.
The Court held that the executor had properly established a $100,000 trust for the testator’s son, and had duly made all payments required by the will. Thus, the Court held there was no practical purpose for ordering an accounting, as the only remaining property in the estate went to the executor herself.
The Court held that it would be an exercise in futility to require the sole residual beneficiary, the executor, to provide an accounting in this circumstance:
[71] In this case, the applicants have not shown cause as to why this Court should order an accounting. Each of Jeremy Hayes and Amanda Campbell have received their $10,000.00 bequest and they have no further interest in the estate. The executor has established the $100,000.00 trust for Mr. Hayes and made the payments required under the Will. I see no practical purpose for which the applicants seek an accounting when there is a sole residual beneficiary and the financial bequests have been satisfied.
…
[75] It would be an exercise in futility to require the sole residual beneficiary, in her role as executor, to provide an inventory or accounting of an estate to which she now has sole entitlement. The applicants have no further interest in the estate.
Conclusion:
The decision in Hayes v Swift was critical of the unreasonable demands made by the self-represented beneficiaries.
It is not uncommon to see situations in which beneficiaries – some who are well-intentioned, some who are not – seem to wrongly believe that the executor is hiding things from them. In cases where the executor provides all reasonable information, but the beneficiaries are never satisfied, misguided court applications by beneficiaries can arise.
Hayes v Swift shows that courts will readily criticize beneficiaries who pursue meritless concerns all the way to court, incurring expense for all concerned. The Court in Hayes v Swift specifically suggested that the beneficiaries should have sought legal advice, which would have prevented them from acting in a misguided manner:
[85] The applicants’ approach is entirely consistent with the concerns repeatedly identified by this Court when a party receives “legal advice” from a non-party who is completely unfamiliar with the practice of law and who seeks to intervene in a legal proceeding in an uninformed manner. For a party to choose to rely on the “legal advice” of a non-party is to risk incurring costs when this “representation” is misguided and unreasonable.
Moreover, the Court in Hayes awarded costs to the executor, payable personally by the applicants, in the amount of $2200. If the costs were not paid, the beneficiary would not have the opportunity to receive any further tools. This is a stern warning that the Court was not pleased with the behaviour of the beneficiaries.
Contacting a Lawyer on this Subject
James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or j.steele@rslaw.com. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.
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The recent decision in Whelan v Chaszewski, 2021 SKQB 286 offers guidance for a situation in which two competing parties want to be appointed to administer an estate. The lesson from Whelan is that a court will not generally appoint a party who has a potential conflict of interest in the Estate (that is, a conflict between their interest personally, and their interest as a neutral administrator)
Introduction:
Michelle Whelan and Peter Chaszewski applied to be appointed as administrators of the Estate of their father Michael Chaszewski. Michelle and Peter also sought an order against their adoptive brother, David Chaszewski, including an inquiry into David’s actions relating to the estate since 2015, and an order evicting David from the mobile home owned by the Estate.
David in turn applied for his own order appointing him as administrator of the Estate.
Background:
The facts may be summarized as follows:
Court’s decision:
The most important issue before the Court was who would be appointed as administrators of the Estate.
The Court first identified the test which governed the appointment of an administrator where there were competing applications. The Court adopted the following test:
The court recognized that there were some factors which favored David’s application to be appointed administrator. David had stepped in and began administering the estate when no one else was doing so. He had information about the Estate. In addition, David lived in the jurisdiction where the assets are located.
However, the court decided not to appoint David. The Court held that the key consideration was the ability to convert the assets of the Estate to the advantage of the beneficiaries – including by making the appropriate necessary distributions. The Residence is by far the largest asset of the Estate. It belonged to all those who are beneficially entitled to the Estate.
The Court held that David was not focused on the best interests of the Estate. The Court found the below facts:
As such, David was in a conflict-of-interest position which compromised his ability to be neutral. He should therefore not be administrator.
Accounting:
The Court also ordered that David provide an accounting. It noted that David had had de facto control over the Estate since Michael’s death in March of 2015. His dealings with Estate property are entirely within his knowledge, and for this reason, it is appropriate that he provide a formal accounting of his actions.
Lesson:
Whelan reminds beneficiaries that they cannot take the law into their own hands. Here, David had no right to simply “move into” the home after the deceased died. David needed first to obtain the agreement of all beneficiaries. Because David unilaterally moved in and then became potentially indebted to the Estate for rent, David was in a conflicted position as a potential administrator.
Contacting a Lawyer on this Subject
James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or j.steele@rslaw.com. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.
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The recent decision in Vance (Re), 2021 SKQB 320, reminds us of the importance of keeping our wills updated.
The application in Vance was brought by De-Anna Lynn Bailey, in relation to the estate of her nephew, James Benjamin Gilbert Vance (“Deceased”).
Background
To understand the outcome in Vance, we need to understand the effect of s. 17 of the s. 17 of The Wills Act, 1996, SS 1996, c W-14.1. S. 17 was only recently repealed. Before March 2020 the provision provided as follows:
17(1) A will is revoked when:
Revocation by marriage was a historical principle of law. Previously, the law felt that, entering into a spousal relationship, either by cohabiting or formal act of marriage, was a significant step that changed the legal landscape of the person involved. As a result, the legislature had concluded that any prior testamentary disposition will not be considered valid in the face of the new spousal reality.
In Vance, the factual situation meant that the prior will made by the Deceased had been revoked by his common law relationship. The chronology ran as follows:
Thus, the issue in Vance was primarily whether the amendment to s. 17 was retroactive, and whether the amendment could “revive” the 2004 Will.
Decision in Vance:
As the court held “the issue here is whether the amendments to the Act were retroactive, with the result that the 2004 will was never revoked at all or was revived.” (para 7)
Vance held that, regrettably for De-Anna Lynn Bailey, the repeal to s. 17 was not retroactive. The Court relied on the principle that when a legislature changes the law, that change will “only apply retroactively where the legislature has clearly indicated that it has weighed the benefits of retroactivity with its potential unfairness or disruption.”
The Court in Vance was being asked to turn back time and revive the Deceased’s 2004 will long after it has been deemed revoked. As the amendment to s. 17 was not retroactive, the Court did not have the power to do this. Simply put, the legislature did not explicitly indicate that the repeal to s. 17 was to operate retroactively.
Lessons:
Vance shows us that the amendment to s. 17 is not retroactive. While the result in Vance was legally correct, it was a harsh (and unfair) blow to De-Anna Lynn Bailey, who understandably felt that the Deceased truly wished her to inherit his estate.
Most non-lawyers are not aware of the issue of revocation by marriage. There was no evidence referenced in this decision, showing that the Deceased knew that his spousal relationship in 2014 had operated to revoke his 2004 will. As a result, the Deceased likely wished De-Anna Lynn Bailey to receive his property. Because of the technicality of revocation by marriage, this did not occur, and the intentions of the Deceased were not given effect to.
Vance is a reminder that all persons should have an updated will. Here, if the Deceased had kept his will updated after the ending of his relationship with Christina Laturnas, there would have been an updated testamentary document in place, reflecting his actual intentions. This is in no way to cast blame on the Deceased, as there are likely millions of Canadians who have a will which is out of date. Nevertheless, as Vance shows, the alternative may be a harsh one.
Contacting a Lawyer on this Subject
James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or j.steele@rslaw.com. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.
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The answer is no, probably not. If a payor is seeking to quit their job simply to avoid paying child support, this is likely a non-starter.
However, if a payor’s reduction in income falls within one of the reasonable exceptions, and evidence supporting this is provided, a payor may avoid having income imputed to them for the purposes of support.
However, if a child support payor’s choice to quit their job thereby reducing their income, does not fit within an exception, the payor risks the Court imputing income to them for the purposes of support if they are found to be intentionally underemployed or unemployed.
The Federal Child Support Guidelines prescribes at section 19 that the Court has discretion to impute income where a parent is intentionally under-employed or unemployed.
The Algner v Algner, 2008 SKQB 132 decision of Madam Justice Ryan-Froslie (as she was then) remains the leading decision on this issue and has clearly set out the guiding principles respecting the imputation of income.
That case notes that a parent has an obligation to seek employment commensurate with their ability to earn income, and as a general rule, a parent cannot avoid his or her child support obligations by a self-induced reduction of income. However, parents are entitled to make employment or career changes that may impact their ability to pay child support so long as the decision is reasonable in the circumstances.
The first stage of the analysis is determining whether the payor is intentionally under-employed, and then, to determine whether any of the exceptions as set out at section 19(1)(a) of the Guidelines are applicable, namely, whether the under-employment or unemployment is required by reason of:
(i) the needs of a child of the marriage;
(ii) the needs of any child under the age of majority;
(iii) the reasonable educational needs of the spouse; or
(iv) the reasonable health needs of a spouse.
If the Court determines that a parent is intentionally under-employed, the onus then shifts to the parent earning less than they are capable of to demonstrate that their choice was reasonable in the circumstances. The Court does not need to first find that the parent is intentionally avoiding their child support obligation, only that it was a voluntary choice to become under-employed or unemployed.
A number of scenarios could be considered to fall within the exceptions when parties voluntarily leave their employment.
Given the limited scope of this article, I will touch on the health and reasonable educational needs exceptions.
If a health reason, namely the reasonable health needs of a spouse is being relied upon to justify a reduction in income and lower support, the Court needs to be satisfied that a career change is reasonable and require cogent evidence from a medical specialist establishing that the payor cannot do the work they did prior to quitting their employment.
It is critical that a medical specialist provide this evidence, as the Court in Clement v Bridges, 2013 SKQB 356 gave little weight to a chiropractor’s opinion as to whether the payor could continue to work on oil rigs, indicating that chiropractors are not medical doctors, nor are they qualified medical specialists and income was imputed to the payor.
The Court considered the reasonable educational needs exception in the Hinz v Hinz, 2017 SKQB 248 and D.A. v S.A., 2017 SKQB 108 decisions. In these cases, the Court found that a parent who decided to further their education despite having secure, fulltime employment with respectable income, that the practical implication on employment choices and salary was remote and modest. Accordingly, in finding the educational pursuit was not necessary nor reasonable for a parent to reduce their income to pursue this opportunity when there were child support obligations, the Court imputed income to the payors.
Accordingly, there is a wide array of facts that may support a reduction in income, provided it is reasonable and evidence in support is furnished. If you are the recipient of support or the payor of support and seek to reduce your obligations, I recommend you seek legal advice with respect to your family law matter.
Contacting a Lawyer on this Subject
Siobhan Morgan’s primary focus rests on family law and wills and estates. For more information on this subject, contact Siobhan at 1 306 933 1308.
The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations.
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A creditor bearing down on you, or an impending bankruptcy, brings many concerns and unknowns. You may have a family farm, a collectible such as an antique car or other assets that you wish to protect from your creditors. In order to save those assets, you may think it is prudent to transfer those assets to a spouse, family member or close family friend. However, these types of approaches are not as straightforward as they sound and can come with pitfalls where the transfer is not properly completed.
Before attempting to protect your assets, a few helpful tips should be remembered.
This is the most important rule to remember. If you have a quarter section of land or an antique car, you cannot simply gift it away to a family member before assigning into bankruptcy. All transfers when you are, or are about to be, insolvent will be subject to scrutiny. The Fraudulent Preferences Act requires that all transfers to a non-arm’s length party (think someone you know better than an acquaintance) require the transfer to be for fair market value.
In order to do so, it is generally advisable to obtain a valuation from an arm’s length third party, such as an auctioneer. Having these objective benchmarks will allow you to show to your creditors, and the Court if necessary, that the transfer was within reason.
However, just because you have transferred the asset for fair market value does not mean you are out of the woods. The cash you receive for those assets needs to be accounted for, as your creditors may be entitled to a share of those funds as well. If you are planning a transfer, you should consult with your legal advisors as to if those funds should be held in a segregated trust account, paid directly to creditors or otherwise.
Among other things, you will want to make sure you account for your secured creditors who may have a security interest in the asset you have sold.
Just as important to consider is the fact that the transfer may be unnecessary. There are various pieces of legislation that provide bankrupt parties with exemptions, meaning certain assets cannot be seized. This is especially true for farmers, who, provided they have a plan to continue actively farming, may be able to retain many of their farming assets.
It may be that the transfer is unnecessary, and you are not only incurring extra work and expense, but you are also raising the suspicions of your creditors. A careful evaluation of whether or not the asset is even capable of seizure should be done before you begin to decide where and how to transfer it.
Of course, before any transfer of this nature is undertaken, you should consult with both your legal professional and/or your insolvency professional to ensure you are acting in accordance with the law. Transfers prior to an insolvency will raise red flags for any creditor, so you will make sure the reward outweighs the risks and difficulties you will face.
Should you have questions, please contact Robertson Stromberg today to begin the process.
Contact a Lawyer on this subject.
Direct: (306) 933-1373
Main: (306) 652-7575
Fax: (306) 652-2445
Email: t.kusch@rslaw.com
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