Toronto Estate Litigation Lawyer

Author: htE@55Viw

  • Court Finds That Aiding an Executor in Mismanaging an Estate is Enough to Assign Liability

    Court Finds That Aiding an Executor in Mismanaging an Estate is Enough to Assign Liability

    Having a valid will in place at the time of one’s death is incredibly important. Naming a trusted individual or individuals to act as executor of the estate is just as important, as this role carries a great degree of responsibility.

    In the recent decision of Humphreys-Saude v. Pavao, a mother was named as executor of her son’s estate, however, the testator’s daughter accused the family of improperly spending money from the estate and failing to distribute it in accordance with her father’s will.

    Lottery winnings left to daughter

    The testator in this case passed away in November 2019. At the time of his death, he lived in an apartment which he rented with his elderly mother, who he appointed as the executor of his estate. The testator was survived by my mother, his sister (the “respondent”), and his daughter. The testator was described as a man with “modest means”, though he won $77,777 through an instant lottery in 2019.

    In his will, the testator left the entirety of his estate to his daughter, the primary asset of which was his bank account which had a balance of approximately $57,548 at the date of his death. However, at the time the parties went to trial, the bank account had a remaining balance of $37,249. The $20,000 which had been depleted was the subject of the dispute between the parties.

    The testator’s daughter told the court that she had discovered that she had been named the sole beneficiary of her father’s estate from someone other than the executor. However, when she sought further information about the details of the estate, she was told by the executor that she “would not disclose anything.”

    Testator’s bank account was missing money

    The daughter retained a lawyer to help her obtain information regarding her father’s estate. After weeks of negotiations, a statement for the father’s bank account was obtained, however, the statement showed that $20,000 had been withdrawn from the account after her father’s passing. At this time, the bank account was not frozen as the executor had not advised the bank that the testator had died.

    When asked where the money had gone, the testator provided a list of expenses she insisted that the estate had incurred, including a $10,000 debt to the testator. The testator also wrote a note with the accounting statement that said “The day (the testator) died the police confiscated his cell phone cash and a bag of white powder, maybe you should go to the police to get it back so you can sell it.”

    Multiple withdrawals and debit transactions after the testator’s death

    After reviewing the accounting and the note, the testator’s daughter took steps to successfully install her mother as the new estate trustee. With the new trustee in place, a subsequent review of the bank records showed that a total of $13,300 had been withdrawn over a series of 16 transactions since the testator’s death.

    Additionally, the debit card tied to the account had been used 24 times between December 2, 2019 and January 10, 2020 to make a total of $6,559.09 in purchases.

    Further, a CPP death benefit cheque of $2,500 was issued to the estate and deposited into an account owned by the executor.

    Accounting provided by executor insufficient

    The Court found that the accounting provided by the respondent and executor was insufficient and confirmed that there was no documentation which provided justification for the cash withdrawals made from the account, or the alleged $10,000 debt to the testator’s mother.

    By the time the parties went to trial, the executor had passed away, and the respondent told the court that she had nothing to do with the estate management. However, the Court found that she had routinely driven the executor to the bank and was aware that the executor was using the testator’s bank card to withdraw cash and make purchases. In response, the respondent stated that she was acting on the instruction of the executor and did not spend any of the money herself.

    Court finds testator’s sister liable for mismanaged funds

    The court found that the respondent was liable for the funds which had been spent between the testator’s death and trial. The respondent was considered a “stranger to the trust,” meaning that she had no official role in the estate, either as a beneficiary or an executor.

    There are three ways in which a stranger to a trust may be found liable for a breach of the trust. The first is a doctrine known as a “trustee de son tort” which states that “a stranger to the trust may be liable for breach of trust where the stranger takes it upon herself to act as a trustee and to possess and administer trust property if she commits a breach of trust while so acting.” The second is through “knowing assistance” in which a stranger to the trust assists someone in the mismanagement of it. Finally, a stranger to a trust may be held liable if they knowingly receive trust property improperly.

    In this case, the respondent was found to be liable for knowing assistance due to her knowledge of the trust relationship as well as a breach of that trust. The court found that the respondent and the estate of the testator’s mother were jointly and severally responsible to the applicant with each being found to be liable for an amount just over $12,000. The court found that the estate of the testator’s mother was also responsible to the applicant for further debit purchases made after the death of the testator.

    Contact Derfel Estate Law in Toronto for Advice on Estate Management

    At Derfel Estate Law, our team of estate lawyers  have experience in providing skilled advocacy for clients involved in a variety of estate and trust disputes, including Will challenges and issues related to executors or trustees. Please don’t hesitate to contact us if you think an estate to which you are a party is being mismanaged. We are conveniently located in Toronto and proudly serve clients throughout the Greater Toronto Area and Ontario. To schedule a confidential consultation, contact us online or by phone at 416-847-3580.

  • What Happens to One Party’s Inheritance When a Couple Separates?

    What Happens to One Party’s Inheritance When a Couple Separates?

    What happens to one party’s inheritance when a couple separates? The answer depends on how the inheritance entered the relationship, and how it was spent, if at all. If one spouse receives an inheritance during the marriage and retains it, it will most often be excluded from the division of property upon separation.

    In the case of O’Connor v. O’Conner, the Ontario Superior Court of Justice provides us with further insight into how the courts might approach such situations. This decision highlights the importance of not only having an estate plan, but also, things to consider when a party to a relationship receives a large sum of money.

    Wife receives inheritance from late aunt

    The parties were married in 1986 and separated in 2015. The parties had two children together, both of whom were adults and were living with the mother in the matrimonial home after the separation. The wife was 58 years old and unemployed at the time of the trial. Her only form of income was Canada Pension Plan disability benefits while she underwent cancer treatment. In 2021, the wife’s income tax return listed her annual income as $24,000.

    The husband had worked a variety of jobs and had a red seal certificate. After being terminated by his employer, he opened a sheet metal business with two business partners.

    Following the separation, the husband claimed that the wife owed him an equalization payment totaling ,132, which includes a portion of the wife’s inheritance from her late aunt’s estate. The wife sought confirmation from the Court that her inheritance money would remain her property, exempt from division.

    Husband says he should get a cut of the inheritance, but the wife says it belongs to her

    The husband relied on a 2013 case where the court held that funds which were received by one party as an inheritance, but were co-mingled with family funds, voided the inheritance from being excluded from a division of family property.

    In the O’Connor case, the children also received smaller sums of money from the wife’s late aunt. The husband stated that the combined inheritances were placed into a joint account and were used for expenses beyond savings or for the benefit of the children. The husband went on to say that the wife’s funds were deposited into a $USD bank account that was held in joint names of the husband and wife.

    Argument over whether inheritance should be included in equalization payment

    The wife agreed that she owed the husband an equalization payment, but argued that he was only entitled to $48,969, which excluded the inheritance. The wife relied on the traditional rule that inheritance funds are generally excluded from family property asset division.

    The wife responded to the father’s evidence that her share of the inheritance was placed into a joint account, and stated that this was only done with the intent of ensuring the right of survivorship to the funds in the event of her death. As for the intermingling of funds, the wife stated that her money was kept separate from the rest of the family funds with the single exception of using some of the money to help pay for a family trip to Disney World.

    How is inheritance division determined?

    The Court confirmed that the starting point in determining this issue was section 4(2) of the Family Law Act, which states that:

    “The value of the following property that a spouse owns on the valuation date does not form part of the spouse’s net family property:

    Property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.”

    Despite the wife’s inheritance funds being placed in a joint account, the Court found that this was only for estate planning purposes, as outlined by the wife. The Court went on to detail that while the husband could have managed the funds, he never deposited money into the account, nor did he use funds from it. This wasn’t uncommon for the couple, though, as the Court determined that the wife controlled the family finances. Further, the Court determined that the Disney trip was the only expense to come from the account.

    Court rejects husband’s argument to include inheritance

    Based on the evidence, the Court agreed with the wife’s statement that the only reason the inheritance was placed into a joint account was for estate planning purposes to ensure that the husband would benefit from the right of survivorship if she were to pass away.

    This finding was supported by both the Family Law Act and a 2007 Supreme Court of Canada decision from Pecore v. Pecore which states that when it comes to gratuitous transfers of money between spouses, where the transferee provides no consideration, the onus is on the transferee to demonstrate that the funds were intended to be a gift.

    In this case, the husband received the funds when his name was added on the account, making him the transferee. Since he provided no consideration for the funds, he was required to prove that the money was intended to be a gift, which he failed to do. The Court confirmed that the Disney trip alone does not provide sufficient evidence, as this was a one off event. As a result, the inheritance funds were determined to be the exclusive property of the wife and were not subject to property division.

    Contact the Toronto Estate Planning Lawyers at Derfel Estate Law

    At Derfel Estate Law, our lawyers understand the complexities surrounding inheritances received through the estate administration process. It is important for anyone who receives an inheritance, regardless of how much, to understand how to manage those funds and make decisions which will protect their inheritance from potential issues down the road. Whether you have questions about a recent inheritance, or have questions regarding estate litigation generally, our team can help. To discuss your circumstances with a member of our estate team, please reach out to us online or call us at 416-847-3580.

  • A Guide on Passing of Accounts in Ontario (Part 1)

    A Guide on Passing of Accounts in Ontario (Part 1)

    Despite what some people might think, estate administration does not always happen instantly. When someone passes away, distributing the estate can take months. And, if passing of accounts is required, it can add additional time, money, and complexity to the estate administration process.

    Passing of accounts is a court audit of the executor’s actions regarding the estate. This article will provide a brief overview of the general process.

    The Executor’s Duty to Account

    When creating an estate plan, one or more individuals are appointed as an executor who will carry out estate administration as set out in the will and accompanying documents. An executor has a fiduciary duty to act honestly and in good faith for the estate’s beneficiaries. As the executor is responsible for identifying the deceased’s assets, paying estate debts, and distributing the estate to the beneficiaries in accordance with the will, the executor also has a “duty to account” to the beneficiaries by proving that these steps have been followed in accordance with the will or trust.

    Outside of the executor capacity, the duty to account can occur in situations including substitute decision-makers and trustees. Regardless of the title and situation, it is essential to understand the obligations required by each role to ensure it is fulfilled appropriately.

    What is Passing of Accounts?

    In Ontario, passing of accounts is the process of obtaining the court’s approval of the executor’s accounts. The executor will be required to show that they have fulfilled the obligations of the estate with respect to paying debts, accounting for expenses incurred, and distributing assets of the estate to beneficiaries, in addition to justifying an executor’s commission, if claimed.

    By applying to pass the accounts before the court, this allows all parties the opportunity to review the executor’s actions before the estate is closed with the court.

    Who Can Request Passing of Accounts?

    There are three main reasons for initiating passing of accounts. An executor may voluntarily apply to the court for a passing of accounts, particularly in the event that there is a dispute between any of the involved parties.

    A beneficiary may apply to the court for a passing of accounts if they are dissatisfied with the executor’s handling of the estate, for example, if they allege improper distribution of the estate’s assets.

    Finally, passing of accounts may be required by law or statute. This may be applicable in instances where a beneficiary to the estate is a minor or there are questions of legal mental capacity.

    What Does the Process Look Like?

    Passing of accounts can be a complex and time-consuming matter, however, if an executor maintains detailed and organized records throughout the duration of the administration, the process may be much easier.

    Regardless of how an application is brought before the court, it is expected that the executor will provide detailed documentation, in a satisfactory manner, outlining the estate assets and debts, in addition to estate receipts, bank statements, cheques, deposits, professional expenditures, asset distribution, reimbursement, and any other estate debits or credits.

    Required Documents and Forms

    The executor will be required to prepare and file several sets of documents with the court. The executor will either file the Notice of Application to Pass Accounts by their own volition or in response to a court order. In the latter scenario,, a beneficiary who desires to initiate a passing of accounts must apply to the court for an order compelling the executor to pass their accounts.

    Application to Pass Accounts

    The first step in the process is to file the Application to Pass Accounts. In support of this Application, the executor will need to provide supporting documentation for the courts’ review, including:

    • A Notice of Application to Pass Accounts;
    • Estate accounts and supporting financial documents;
    • An affidavit sworn by the executor(s);
    • A copy of the Certificate of Appointment of Estate Trustee; and
    • A draft order.

    A filing fee for the Application to Pass Accounts will be charged when the documents are submitted to the court. After the documents have been filed, the executor must then serve the documents on each individual who has an interest in the estate, in a manner which is satisfactory to the court.

    In the Notice of Application to Pass Accounts, the executor will be required to identify a desired hearing date whereby the court will review the documentation before making a final determination on the accounts and issuing a subsequent order on the status of the accounts. If the executor was only required to serve the documents on individuals within Ontario, the Notice of Application will need to be served at least 60 days before the hearing date. If the executor is serving any individuals outside of Ontario, they will need to be served at least 75 days before the hearing date.

    Responses to an Application to Pass Accounts

    After the beneficiaries have been served, they are provided with the opportunity to challenge the executor’s accounts. This can include challenging specific expenses incurred by the estate (such as legal fees) or inquiring about missing income (for instance, if the executor has not accounted for rental income from a property owned by the estate). If a beneficiary wishes to challenge anything related to the accounts, this will become a contested hearing.

    A beneficiary who chooses to contest any of the accounts will be required to file a Notice of Objection to Accounts, which will put the executor on notice, which must be filed at least 35 days before the scheduled hearing date.

    Withdrawing Objections

    It is possible to resolve disputes or concerns before the hearing. If this occurs, a beneficiary may withdraw their Notice of Objection by filing a Notice of Withdrawal of Objection at least 15 days before the hearing.

    What Happens Next?

    Part 2 of this guide will expand on what happens after the documents in support of the Application to Pass Accounts have been submitted to the court.

    Contact Toronto Estate Lawyers at Derfel Estate Law For Assistance With Passing of Accounts

    At Derfel Estate Law, our experienced team of estate lawyers understand how complex probate and estate matters can be. Our lawyers regularly provide clients with assistance in preparing the passing of accounts in probate matters. Our estate team provides support to clients in their role as executor and trustee by helping to prepare and file the required documents and representing parties at hearings before the court. Contact us by phone at 416-847-3580 or contact us online to schedule a consultation and find out how we can assist you.

  • Court of Appeal Overturns Decision of Will Interpretation Using Contract Law Principles

    Court of Appeal Overturns Decision of Will Interpretation Using Contract Law Principles

    Wills are not often thought of as contracts, but they are often viewed as one. While there is no question that having a properly drafted will is one way to lessen the possibility of estate litigation, if contention does arise, courts will interpret the language used in the will to assist in determining the intention of the testator.

    The recent decision of VanSickle Estate v. VanSickle from the Ontario Court of Appeal illustrates how the courts apply principles of contract law when determining the intention of a testator. In this case, the Testator’s will was contested based on one small phrase which carried significant meaning.

    Siblings contest farming business being given to just one of them

    Prior to the decision in Vansickle Estate, the matter of Fletcher and Vansickle v. Vansickle, was brought before the Superior Court of Justice when the estate trustees sought direction on how to interpret a clause which allowed one of the Testator’s children, (referred to as “H.V.”) to purchase the farm from the estate. The Testator and her late husband had operated the farm for years, but it was never their main source of income. However, from approximately 1993 until the time of the trial, H.V. rented the farm parcel from his mother, following the father’s death, and subcontracted the farm related work to third parties, who paid rent to him for their use of the farm and then sold their own crops. H.V.’s siblings argued that the option to purchase the farm had lapsed given this shift.

    The Court in Fletcher and Vansickle found that the clause in question was ineffective, one reason being that at the time the Testator’s will was drafted, family members were working on the farm. The Court found that the Testator intended the clause to refer to an active farming business involving the cultivation of crops and/or raising of livestock. Therefore, the Court determined that the Testator did not intend to give H.V. the opportunity to be a landlord of the property, which was valued at approximately $85,000. Commentary from the Court stated that “business” was to be construed as to:

    “Mean the bare rental of farmland would be inconsistent with the qualifying phrase ‘carried on by me.’ Renting land, with no accompanying obligations such as for maintenance or repair, and no benefits beyond fixed rent, such as to share in profits, does not, in my view, require ‘carrying on’, and I find that the Testator did not intend the simple rental of land to come within the ambit of the phrase ‘farming business carried on by me.’”

    Decision appealed to Court of Appeal

    H.V. was not satisfied with the decision and appealed to the Court of Appeal. The Court began its analysis by indicating that the standard of review of a lower court’s will interpretation is performed using the same principles as are in contract law. This means that the will is interpreted in light of all the circumstances when determining the Testator’s subjective intention.

    The Court of Appeal stated that the trial judge made an extricable error of law in failing to defer to the Succession Law Reform Act which states:

    “Except when a contrary intention appears by the will, a will speaks and takes effect as if it had been made immediately before the death of the testator with respect to…the property of the testator.”

    While the application judge had found that the Testator did not intended for H.V. to become a landlord, the Court of Appeal suggested that instead of considering the Testator’s intent at the time the will was drafted, it should instead be determined in a review of the will as if it had been drafted in present day.

    Will interpretation guided by contract law principles

    The Court of Appeal stated that despite the farm being rented at the time of her death, this still constituted a farming business. After all, the Testator earned rental income which was reported in her income tax returns, where she also indicated that the farm would continue to be used as a farm the next year. Based on these factors, it was held that there was sufficient evidence to establish that the Testator was indeed carrying on a farm business at the time of the death.

    The Court then turned its eye to determining whether there was any verbiage contained within the will to indicate that the Testator instead intended for a farm purchase to only take place if it was going to be used as a farm with H.V. performing the farming duties. The application judge had placed heavy emphasis on the phrase “the farming business carried on by me” as written in the will, but the Court of Appeal did not deem this sufficient to lead to a finding which would prevent H.V. from purchasing the farm. Based on a lack of ambiguous language, or any indication that the Testator had meant something different than the plain language, there was nothing to suggest that H.V. should not have the opportunity to purchase the farm.

    Derfel Estate Law Provides Trusted Will Interpretation & Estate Administration Advice

    Estate litigation can involve complex issues and heightened emotions. Derfel Estate Law is a Toronto-based boutique estate litigation law firm serving clients throughout Ontario. Our experienced estate litigation lawyers provide support and guidance on all aspects of estate disputes and estate administration and probate matters. Our lawyers understand the difficulties parties might come up against in an estate matter, particularly in a will challenge. To find out how we can help, call our office us at 416-847-3580 or contact us online to schedule a consultation.

  • Are Inheritances and Estate Settlements Taxable?

    Are Inheritances and Estate Settlements Taxable?

    Whether you’re preparing your will or amid an estate dispute, you might be wondering about the financial implications of inheritance or estate disputes-for example, are estate settlements taxable? Or, what taxes do I need to pay before distributing estate assets? This article will provide some general information about how inheritance and settlements are treated for tax purposes. In reading this article, however, remember that tax law is a complicated area, and you should never make any serious tax-related decisions without consulting your lawyer or accountant first.

    Are inheritances taxable in Ontario?

    According to the Canada Revenue Agency (CRA), most gifts and inheritances are not taxable as income. So, if you’re a beneficiary of an estate in Ontario, you will generally not be expected to pay taxes on any money you receive from the estate.

    Additionally, most amounts received from a life insurance policy are not taxable.

    Does the estate need to pay taxes?

    When a will-maker dies, their executor is responsible for filing a final tax return to the CRA. The executor will file a final return that reports all of the deceased’s income from January 1 of the year of death to the date of death. To that end, there may be tax owing on the estate, but any taxes owed should be paid before estate assets are distributed to the beneficiaries.

    Beyond the final return, the executor has the option to also file three optional returns:

    1. Return for rights or things:

    This tax return addresses (if applicable) amounts that were owing to the deceased at their time of death and that, had the person not died, would have been included in their income (such as salary, old age security benefits, unpaid dividends, etc.)

    1. Return for a partner or proprietor:

    This tax return addresses situations where a deceased person was a partner in or owned a business with a fiscal year that did not start or end on the same dates as the calendar year. If the will-maker died after the end of their business’s fiscal period but before the end of the calendar year in which the fiscal period ended, they can either report the business income on their final return or file a return for a partner or proprietor in addition to their final return.

    1. Return for income from a graduated rate estate:

    A graduated rate estate is a testamentary trust that arises from the death of a person on or after December 31, 2015, and no more than 36 months after the person’s death. Graduated rate estates must meet certain requirements and, if those requirements are met, benefit from graduated tax rates for the first 36 months after the person’s death and flexibility in claiming donation tax credits.

    How much tax will the estate need to pay?

    The estate will need to pay any income tax owing after filing the final return.

    In addition, the estate will need to pay estate administration tax (EAT). The estate administration tax taxes the value of the assets the estate holds on the date of the will-maker’s death (as opposed to income earned by the will-maker) if the executor is applying for probate. The estate administration tax is paid as a deposit when applying for probate and, once a probate certificate is issued, the deposit is paid towards the estate administration tax.

    You do not need to pay estate administration tax if the estate is valued at ,000 or less. Above the $50,000 threshold, the estate administration tax is calculated at $15.00 for every $1,000 (or part thereof) of the estate’s value.

    The value of an estate for the purposes of the estate administration tax is based on the value of real estate, bank accounts, investments, vehicles, and all other property (including goods, intangible property, business interests, and insurance).

    So, for example, if you have an estate worth 0,000, the estate administration tax is calculated as follows:

    • First $50,000: $0.00
    • Remaining $450,000: 450×15= $6,750.00

    Note that this calculation only applies if you applied for probate after January 1, 2020; different calculations apply for probate applications before that date.

    For more information about the estate administration tax, review this guide from the Government of Ontario.

    Are settlements and judgments taxable in Ontario?

    Settlements (where the parties agree to a particular amount of damages without going through a formal trial) and court judgments (where the court awards damages to a party) are treated the same for tax purposes. However, payments to an individual for a settlement or a court judgment may or may not be taxable, depending on the circumstances.

    The taxability of a settlement or court judgment is governed by the “surrogatum principle”. The surrogatum principle stands for the idea that a settlement or court judgment is meant to replace or compensate for something and, as such, is taxed the same way as the thing that it is meant to replace. So, for example, if you were to sue for loss of employment income due to wrongful dismissal, the settlement amount would replace the lost income and would be taxable. On the other hand, if you were to sue for injuries sustained in a motor vehicle accident, the damages you received as compensation for your injuries would not be taxable.

    Are estate settlements taxable in Ontario?

    Applying the “surrogatum” principle, estate settlements and court judgments will typically be non-taxable, as gifts and inheritances are not taxable. However, remember that income earned on gifts and inheritance is taxable. If you, for example, invest your inheritance money, any income earned as a result would be taxable.

    Further considerations for inheritance, estate settlements, and taxability

    While we have provided a high-level outline of tax considerations for estates and estate settlements above, it’s important to always consult with your lawyer and, when appropriate, an accountant for comprehensive information on estate tax liabilities and their implications. Whether you are preparing a will, acting as executor, or contesting an estate in court, be sure to consult with the appropriate specialists to ensure you have a full understanding of any potential tax liability you might face.

    Contact the Estate Litigation Lawyers at Derfel Estate Law for Advice on Probate and Estate Administration Matters

    At Derfel Estate Law, our experienced estate litigation lawyers are here to guide you through every step of the estate litigation process. Our practice focuses on all aspects of estate disputes, as well as estate administration and probate. Call us at 416-847-3580 or contact us online to speak with one of our knowledgeable estate lawyers.

  • The Importance of Clarity in Creating a New Will

    The Importance of Clarity in Creating a New Will

    Creating a Will is one of the most critical steps to take when preparing for what happens to your estate. Preparing a valid Will is the best way to ensure that your assets will be distributed amongst your family, loved ones, friends, or charities as you see fit. Without a Will, if you die, your estate will be distributed according to the Succession Law Reform Act, which may not reflect your actual intentions.

    The recent decision of Re: Pearce Estate from the Ontario Superior Court of Justice shows that it’s essential to be very precise when creating or replacing a Will. A failure to do so can leave a lot of ambiguity in place, making it difficult for the courts to decipher the testator’s intentions.

    Applicant’s status as trustee uncertain under Will

    The applicant believed he had the right to be the executor of the deceased’s estate, valued at approximately $1.8 million. He submitted a document to the Court titled “Outline of the Will of [the Deceased]”. He sought to have it probated as her last Will and testament.

    The purported Will was not written in a legal style. Rather than having entire paragraphs, it was written in point form. However, it did contain some of the essential elements of a Will, particularly as it was signed by the deceased and two witnesses. One of the witnesses signed affidavits stating they saw it signed and did serve as a witness.

    The Will named the applicant as “trustee”. However, as the deceased had also established a trust, it was unclear whether the applicant was meant to be trustee of the trust or the estate. The estate’s solicitor told the court that he believed the deceased had intended to name the applicant as the estate’s trustee (or the executor). The solicitor noted that the deceased was unfamiliar with legal language and may not have been familiar with the role of trustees in various capacities or that there could be two trustees associated with the estate.

    Legal requirements when updating or replacing an existing Will

    The requirements for a valid Will in Ontario are set out under the Succession Law Reform Act. The Act states a Will must be in writing and signed by the testator (or someone in their presence and at their direction). Additionally, two witnesses must sign stating that the testator signed the Will. There are some limited exceptions to these rules, such as holographic Wills.

    If a testator is updating or replacing their existing Will, there are strict requirements under the Succession Law Reform Act to be followed. One of these is that the Will must contain language declaring an intent to revoke previous Wills.

    In Re: Pearce Estate, the deceased did not include any language stating that her previous Will was to be revoked. Neither the witness who signed the new Will nor the solicitor for the estate was able to offer any evidence of the deceased’s intentions. While the solicitor told the Court he believed the deceased intended the applicant to be named executor of the estate, he could not share any information on what led to this belief.

    Document determined to be an outline, not a Will

    The Court determined that, on the face of things, the document seemed to be an outline for preparing a new Will. The Court recognized that the deceased might not have had time to consult her lawyer or have a formal Will drawn up. Perhaps she had intended to convert the outline into a Will, which could be why she signed the document. However, the Court noted these scenarios were hypothetical as none of the witnesses could offer any evidence of the deceased’s intentions.

    Additionally, the document contained no language stating that the outline is intended to form a Will. The Court stated:

    “Nor is there any evidence of the content of those wills and how they might differ from the outline. There is ambiguity as to whether the preparation of a new will and the revocation of the previous will was a future intention or whether the testator intended this document to carry those intentions into effect.”

    The Court stated that the estate’s value requires additional evidence for an outline to be accepted as a Will intended to replace existing Wills. Rather than dismissing the matter altogether, the Court adjourned the hearing. The parties were requested to return with additional witnesses and any previous Wills, so the Court could examine them and compare them to the outline.

    Contact Derfel Estate Law in Toronto for Skilled Representation in Will Disputes

    Derfel Estate Law is a boutique estate litigation law firm located in Toronto and serving clients throughout Ontario. Our experienced and professional estate litigation lawyers focus on all aspects of estate disputes, including Will challenges and issues involving executors and trustees. We represent all parties involved in estate litigation matters, including beneficiaries, guardians, executors, and trustees. To schedule a confidential consultation, contact us online or call 416-847-3580.

  • Handwritten “Agreement to Transfer Property” Is Not a Valid Will

    Handwritten “Agreement to Transfer Property” Is Not a Valid Will


    The Court noted that the applicant would be the appropriate person to apply to be the trustee of the deceased’s estate. However, given that the document was not found to be a valid holographic Will in Ontario and the applicant had not proven that he made an adequate search for another Will, the Court adjourned the application. The adjournment was intended to provide the applicant with an opportunity to see whether another Will could be found or to confirm that a Will was not found despite a careful search.

    Contact Derfel Estate Law for Experienced Representation in Estate Litigation

    The McKenzie case demonstrates the importance of speaking to a lawyer when preparing your Will. While it may be tempting to save costs by creating a Will without the assistance of a professional, it can result in serious consequences (and costs) for your beneficiaries down the line.

    At Derfel Estate Law, our experienced team of estate lawyers provides skilled advocacy for clients involved in a variety of estate and trust disputes, including Will challenges and issues related to executors or trustees. We are conveniently located in Toronto and proudly serve clients throughout the Greater Toronto Area and Ontario. To schedule a confidential consultation, contact us online or by phone at 416-847-3580.

  • Navigating the Complexities of Guardianship of Mentally Incapable: What You Need to Know

    Navigating the Complexities of Guardianship of Mentally Incapable: What You Need to Know

    In Ontario, an individual may be appointed a substitute decision-maker called a “guardian” if they become unable to manage their own affairs due to mental incapacity. Different types of guardianship are available, each of which carries its own responsibilities and consequences.

    Guardianships can be highly emotional and complex legal matters. In this two-part series, we explore some of the most common questions about the concept of guardianship as it relates to mentally incapacitated adults in Ontario.

    Frequently Asked Questions About Guardianship of Mentally Incapable Adults

    What is Guardianship?

    Guardianship is a court-ordered power for a person to make decisions about another person’s life, such as their health/medical care, property, or finances. It is a form of substitute decision-making commonly used to care for a person who has lost the ability to make their own decisions due to mental incapacity.

    In Ontario, guardianship of mentally incapable individuals is governed by the Substitute Decisions Act.

    What is Mental Incapacity?

    Mental incapacity refers to a person’s inability to make their own decisions due to mental illness, age, or other disability. If a person cannot understand the information needed or the consequences of making a decision, they lack the mental capacity to make that decision.

    What Types of Guardianship Are Available in Ontario?

    In the context of mentally incapacitated adults, two types of guardianship are available in Ontario: guardianship of property and guardianship of the person.

    Questions About Guardianship of Property

    What is Guardianship of Property in Ontario?

    Guardianship of property allows the guardian to make financial decisions on behalf of a mentally incapable adult. A guardian of property may be a person or a trust corporation.

    What is a Guardian of Property Responsible For?

    In Ontario, a guardian of property handles all of a mentally incapable person’s property, including their finances, bank accounts, real estate, and other assets. They handle the person’s banking, direct their income, administer their pension money, apply for any benefits they are entitled to, pay their bills, and buy goods and services as needed.

    A guardian of property cannot make any decisions relating to the person’s estate planning (including Wills) or their health/personal care. In most situations, the guardian of property is also restricted from dealing with property that is bequeathed to someone in the mentally incapable person’s Will.

    How is a Guardian of Property Appointed?

    A guardian of property in Ontario is appointed by one of two bodies: the Office of the Public Guardian and Trustee or the Ontario Superior Court of Justice.

    If the person who will be the subject of the guardianship has been found mentally incapable (usually through a medical or professional assessment), the potential guardian can apply to the Court to have a judge grant the guardianship by court order. The Court may impose certain conditions upon the guardianship, such as a requirement to pass accounts.

    However, the person may already be under guardianship with the Office of the Public Guardian and Trustee (OPGT). If this is the case, the potential guardian must apply to the OPGT to replace the OPGT as guardian. The only people who may apply to the OPGT to replace it as guardian are the mentally incapable person’s spouse, partner, or relative.

    What Happens if the Office of the Public Guardian & Trustee is Already Guardian?

    If the Office of the Public Guardian and Trustee (OPGT) is already the guardian of property for the mentally incapable person, anyone who wants to take over guardianship must apply directly to the OPGT. Only the mentally incapable person’s spouse, relative, or partner can do so.

    The person applying to replace the OPGT as guardian must complete a Management Plan that explains, in detail, how they intend to manage the mentally incapable person’s property. The OPGT then reviews the plan and decides if it is suitable. The OPGT may also impose conditions upon the guardianship.

    What Duties Are Owed by Guardians of Property?

    The Office of the Public Guardian and Trustee has created a guide explaining all duties owed by guardians of property. Some examples include:

    • Keeping the mentally incapable person’s accounts and finances completely separate from the guardian’s own;
    • Taking compensation for the guardian’s services only to the extent that it is legally permitted;
    • Considering the personal comfort and well-being of the mentally incapable person in executing any financial transaction or decision for them;
    • Managing the mentally incapable person’s property to accommodate their personal care preferences (for example, by paying for their chosen location of residence, if they can afford it). This doesn’t apply if accommodating their preferences would cause negative financial consequences that heavily outweigh the personal care considerations;
    • Informing the mentally incapable person of the guardian’s powers and duties to the extent that they can understand;
    • Encouraging the person to participate, to the best of their abilities, in decisions about their property;
    • Consulting with the mentally incapable person’s family members, friends, and those providing their personal care;
    • Acting in accordance with the property management plan; and
    • Making reasonable efforts to retain any gifts set out in the mentally incapable person’s Will so they may be passed on to the beneficiary when the person dies.

    Contact Derfel Estate Law in Toronto for Trusted Guardianship Advice

    The professional estate and guardianship lawyers at Derfel Estate Law help clients protect the financial, health, and personal interests of their loved ones. We provide strategic and compassionate advice that protects all relevant parties throughout the process and eases clients’ concerns. We also offer estate probate and administration services and advocate for clients in estate litigation, including trustee and executor disputes, Will challenges, and passing of accounts. To schedule a confidential consultation, contact us online or call 416-847-3580.

  • Challenging a Power of Attorney for Lack of Capacity

    Challenging a Power of Attorney for Lack of Capacity

    A power of attorney transfers decision-making authority about your legal and financial affairs to another individual. It can be used to allow a family member or friend to make decisions about your health or personal property. Sometimes, disputes arise over the validity of a power of attorney, the decisions made by attorneys, and other related matters. For example, a party may allege that the person who granted a power of attorney did not possess the requisite capacity to do so.

    This article introduces powers of attorney and the types of disputes that may result when things go wrong. We also look at a recent Ontario Superior Court of Justice decision, in which a daughter argued that her mother did not have capacity and was unduly influenced in the preparation of her powers of attorney for property and personal care.

    What is a power of attorney?

    A power of attorney can help ensure that your financial well-being and health care are protected in the event of your future incapacity. They are also helpful in other circumstances, for example, when you are travelling and need someone to sign a contract for you.

    There are two types of power of attorney that a grantor (the person executing a power of attorney) can grant:

    1. Power of attorney for personal care: The chosen attorney is given authority to make decisions about your health in the event of your incapacity.
    2. Power of attorney for property: Your attorney can make decisions concerning your property, home, possessions and finances.

    Can you challenge a power of attorney?

    Given the extensive powers over essential aspects of the grantor’s life, disputes sometimes arise, including relating to:

    • Whether a power of attorney is valid;
    • If multiple powers of attorney exist, which power of attorney governs a particular situation;
    • Decisions made or actions taken by an attorney;
    • Compensation for attorneys; and
    • The passing of accounts.

    Notably, individuals only have the right to grant power of attorney while they remain legally capable of doing so. A grantor must also have capacity if they want to revoke or change an existing power of attorney.

    Mother with neurodegenerative disease executed powers of attorney

    In Zagorac v. Zagorac, a dispute erupted between a brother and sister over their 69-year-old mother’s powers of attorney. She suffers from corticobasal syndrome, a rare neurodegenerative disease whose symptoms are similar to Alzheimer’s symptoms. The daughter had always lived at home and cared for her mother. The son lived with his wife and children.

    In 2015, the mother executed a Will along with powers of attorney, appointing her son as her power of attorney for property and all children as joint powers of attorney for personal care. In 2017, the son noticed an increase in her mother’s spending and was concerned that his sister might be mismanaging her assets.

    Son sought decision-making authority for property

    In 2019, the son applied to the court for a declaration that his mother was incapable of managing property and personal care and that a person must make such decisions on her behalf. In response, his sister changed her mother’s bank password, phone number and house locks. She also took her mother to a lawyer and obtained powers of attorney for property and personal care, which appointed the daughter as the sole attorney.

    The son argued that the 2019 powers of attorney were invalid due to his mother’s incapacity and that the 2015 powers of attorney were valid. While the daughter agreed that the 2019 documents were invalid, she argued that her mother did not have capacity and was unduly influenced to make the 2015 powers of attorney.

    Mother underwent court-ordered capacity assessment

    The court ordered that the mother undergo a capacity assessment, which concluded that the mother was incapable of managing her property and personal care. It also found that the last time she was likely able to appoint an attorney was in 2015.

    The mother’s health care workers advised that she was no longer safe at home and must be moved to long-term care. However, her daughter opposed her mother living anywhere but at home.

    Court critical of daughter’s attempt to use “mother’s capacity as a shield”

    The Court was highly critical of the daughter’s conduct, stating she “used her mother’s alleged capacity as a shield for taking nonsensical positions in this litigation”. The judge found that the mother was overwhelmingly influenced by her daughter, including in relation to the making of the 2019 powers of attorney.

    The Court explained that the lawyer who prepared the 2015 powers of attorney had kept comprehensive notes, revealing that the daughter was upset when she found out that her brother had been named the sole attorney for property and decided that the documents should be changed.

    Daughter’s undue influence began after initial powers of attorney signed

    The Court found that the daughter’s allegation that her mother was pressured into signing something that she did not understand was without foundation. Instead, the Court determined that while the mother was not under any undue influence in 2015, her daughter did begin to influence her in 2016.

    Based on a range of evidence, including the doctor’s capacity assessment and lawyer’s notes, the Court found that the mother had the capacity to execute powers of attorney in 2015. As a result, the 2015 powers of attorney were declared valid, giving the son decision-making authority concerning his mother’s property.

    For Proactive Advice on Powers of Attorney, Contact Derfel Estate Law in Toronto

    Given an attorney’s significant power and responsibility, it is not uncommon for disputes to arise. The knowledgeable team of estate lawyers at Derfel Estate Law helps you protect the financial, health, and personal interests of your loved ones. We provide strategic and compassionate advice and ensure all parties are protected throughout the process. To schedule a confidential consultation, contact us online or by phone at 416-847-3580.

  • Family Property at Centre of Trust Dispute

    Family Property at Centre of Trust Dispute

    In the recent case of Gill v. Gill before the Ontario Superior Court of Justice, a woman and her husband’s estate were involved in a trust dispute regarding the ownership of a property shared with her late husband’s brother.

    A family dispute initiates the sale of a property

    In Gill v. Gill, a first-generation Canadian family pooled their resources to purchase multiple properties. Amarjit and Karnail were brothers who first arrived in Canada in 1992. Their mother, Chand, was their Indian village’s matriarch who oversaw these purchases, although she remained in India.

    In 1999, Amarjit married Kuldeep. Kuldeep moved to Canada to live with her new husband. Together with their nephew Sidhu, Amarjit and Karnail purchased a property as tenants-in-common in 2001. Each had an equal interest in the property and contributed $4,000 towards its down payment. All bills, from the mortgage to utility bills, were paid equally by each. Eventually, Sidhu married as well. His wife and Chand moved into the home.

    Kuldeep and Sidhu’s wife did not get along. As a result, Chand suggested that one couple buy the other out of the property. A real estate agent valued the property to this end and prepared sale documents. Sidhu and his wife were to purchase Amarjit and Karnail’s interests. Amarjit and Karnail planned to use this towards a property for themselves, Kuldeep, and Chand.

    Ownership of the property called into question as one owner passes away

    The dispute at the heart of the legal proceedings in Gill arose over the ownership of the property. Title was divided between Amarjit, Kuldeep, and Karnail, so they all owned a one-third interest as tenants-in-common. Karnail had contributed $10,000 towards the deposit. However, Armarjit and Kuldeep understood this to be a loan so he could live with them temporarily, free of charge. Karnail allegedly did not contribute to the upkeep of the home. He relied on Amarjit and Kuldeep to get around and for reading, as he was illiterate.

    The matriarch, Chand, passed away in 2014. In 2017, Karnail was asked to leave the property after his alcohol dependence began affecting the living situation. Amarjit returned to India that same year, and although he and Kuldeep were still together, he never returned to Canada. Instead, Kuldeep’s mother moved in.

    In September 2017, Karnail asked Amarjit and Kuldeep to purchase his interest in the property. They refused. By summer 2019, Karnail retained counsel and demanded that the house be sold. At this point, there was considerable equity in the property.

    Amarjit passed away in March 2021. Kuldeep was named Estate Trustee and represented both her own interests and that of the estate in the litigation.

    Was one family member holding the property in trust for the others?

    The main issue before the Ontario Superior Court of Justice was who had ownership of the property. The title indicated that Karnail had a one-third interest in the property as tenant-in-common. Kuldeep and Amarjit’s estate were required to demonstrate that Karnail held his title in trust for them. Kuldeep and the estate based their argument on two different types of trusts: resulting and constructive trusts.

    Resulting Trust

    A resulting trust occurs when a property’s title is in the name of a person who did not provide any value (consideration) in exchange for the property. As a result, that person is obliged to hold the property in trust for the original title owner and must return the property if requested.

    In this case, the Court found there was no resulting trust. Karnail had contributed $10,000 towards the purchase of the property, nearly one-third of the required deposit. In exchange for this sum, he was registered as tenant-in-common with Amarjit and Kuldeep.

    Constructive Trust

    A constructive trust is a type of remedy that is available one party is deemed to have been unjustly enriched. Unjust enrichment occurs when one party benefits at the expense of another. As per the Supreme Court of Canada, the wronged party must establish three things to prove unjust enrichment has occurred: “an enrichment of or benefit to the defendant, a corresponding deprivation of the plaintiff, and the absence of a juristic reason for the enrichment.”

    If unjust enrichment is established, a court can order that the plaintiff is entitled to a constructive trust. This trust can be used as either a proprietary remedy or monetary compensation.

    Court finds no unjust enrichment to form basis for constructive trust

    In considering whether a constructive trust existed, the Court easily found that Karnail had been enriched “to the extent that he owns one-third of the Property as it is currently registered on title.” The Court needed to decide further if the enrichment was something justifying the court’s intervention.

    The Court found that Karnail had continued to contribute to the property through the years in the following ways:

    • Kuldeep and Amarjit tried to arrange to buy Karnail out of the property in 2019. They likely would not have done so if they did not believe he had an ongoing and legitimate interest in the property.
    • Karnail must have signed all mortgage renewal documents through the years as an owner. He also took on substantial risk by being a named person responsible for the mortgage.
    • There had been a tenant residing in the basement. Amarjit and Kuldeep collected rent but did not share it with Karnail. As he never received his one-third share of the rent owing to him, the Court inferred that Karnail contributed this share to the household.
    • Additionally, Kuldeep had communicated with Karnail over the years about the cost of upkeep for the house. For instance, Karnail contributed $1,500 towards a new paint job for the house. Sidhu claimed to have taken Karnail to the bank specifically to get money for Kuldeep.

    All parties declared tenants-in-common of property

    On the balance of probabilities, Karnail had been contributing to the property. Therefore, as no unjust enrichment was found, there could be no constructive trust.

    In the end, all parties (including the estate) were named one-third owners of the property as tenants-in-common. They were given the opportunity to purchase one another’s interests within 28 days from the date of the order. If no agreement could be reached by that time, the property would be sold by order of the Court.

    Contact Derfel Estate Law for Experienced Representation in Trust Disputes

    At Derfel Estate Law, our experienced team of estate lawyers provides skilled advocacy for clients involved in a variety of estate and trust disputes, including Will challenges and issues related to executors or trustees. We are conveniently located in Toronto and proudly serve clients throughout the Greater Toronto Area and Ontario. To schedule a confidential consultation, contact us online or by phone at 416-847-3580.