Wills, Trust & Estate Administration questions and answers

Transcription

1 OCTOBER 11, 2011 Wills, Trust & Estate Administration questions and answers 1. Presumption of Revocation and Lost Wills The answer to Question A3 in the Sample Exam is given as True. This seems to contradict the presumption of revocation as outlined in Chapter 3 at (page 3-15). My question is: under what circumstances for a lost will would the courts apply the presumption of revocation and under what circumstances would probate be approved? : It would be a question of fact depending on the circumstances and the court would have to determine if the will was merely lost, in which case a lost will can be proven and probated, or whether the presumption of revocation applies. See not only , but also Effect of Separation and Divorce and Powers of Attorney for Property On the effect of separation and divorce, the text on page 1-22 indicates that the attorney appointment does not cease upon divorce or separation if the appointment is made under the Power of Attorney Act (in BC). But my reading of the BC Power of Attorney Act (excerpt below) seems to indicate the contrary. Please clarify. : BC s laws are undergoing major reform in the wills, trusts, estates and substitute decision making areas. The Power of Attorney Act, RSBC 1996, c 370 you cite has been in force since September 1, The materials are effective as of September 2010, and cannot reflect subsequent changes until the next update. Except to the extent you are notified, students will not be examinable on changes not reflected in the materials, but of course in your own practice you are expected to keep abreast of any changes relevant in your jurisdiction. 1

2 3. Choice of Law Rules for Succession of Property in and Intestacy in For succession and intestacy on and Should this state that the law of domicile governs for movables and the law of situs governs immovables? : Yes. The sections should read: Law Governing Succession of Property Estate Distribution With respect to matters of succession relating to distribution of property to beneficiaries, including intestate distribution, capacity to make a Will, and dependants relief, these matters are governed by the law of the last domicile of the deceased for moveable property and by the law of the situs of immovable property. Generally these are also the rules under which forced heirship rules of foreign countries may apply Intestate Distribution within Canadian Provinces and Territories For the purposes of intestate distribution within Canadian jurisdictions, the law of domicile will apply to movables and the law of situs will apply to immovables. The example in and the summary table in Figure 4.1, Choice of Law Rules, are correct. 4. Conflict of Laws and Choice of Law Rules: Valid Wills in Canada; Rights to Dependants Relief on Intestacy in B.C.; Rights to Matrimonial Property on Death What happens when someone dies intestate in a province of domicile but has a valid will in another province where his real property is located? For example, John Smith moved to BC from Manitoba and died shortly after the move without having made a will in BC. He had a Will in Manitoba. He solely owns a house in Manitoba and a non-registered brokerage account. Could his Will in Manitoba be probated in Manitoba for the house? And would his nonregistered investment acct be governed under intestacy rules in BC? Or would the BC Court grant probate with his Manitoba Will to deal with his non-registered acct? If he has a common law spouse, she wouldn t be able to apply for dependents relief under BC Wills Variation Act (in relation to his brokerage acct) because there s no BC Will; instead she would have to rely on the distribution under BC intestacy rule. Is this correct? The common law spouse would also be eligible to apply for property division rights at death for the house; is this correct? 2

3 : You have raised an issue not covered in the course with respect to conflict of laws. You have asked: Is a Will that is not valid in the jurisdiction of domicile at the time of death nevertheless recognized as valid, if it was valid under the laws of the jurisdiction of domicile at the time it was made? The answer is beyond the scope of the course. If the Will was a valid under Manitoba law, it would normally be valid under B.C. law as the formalities for a conventional Will are the same. However, the situation you describe could occur under current law in B.C. if the Will was a holograph Will which is not recognized in B.C. but would be recognized in Manitoba. However, B.C. may recognize a holograph Will made outside B.C. with respect to movables see Where there is an intestacy there is no dependants relief in B.C., and only the intestate distribution is available. Note that there must be a Will in order for the Wills Variation Act to apply. The question about conflict of laws and matrimonial property rights on death is not covered in the materials, and would have to be answered province by province. There is no division of matrimonial property in B.C. on death but there is in Manitoba. If the couple is domiciled in B.C. and the property is in Manitoba, one would have to determine the applicable choice of law rule for rights to matrimonial property on death. 5. Differences between Powers of Attorney for Property, and Powers of Attorney for Personal Care or Personal Directives Former may be exercised during capacity, latter may not. Chapter 2, Question 3 Please explain the True answer. : A personal care directive is different from a power of attorney because the former may only come into force when the maker becomes incapacitated to the point where he/she cannot take care of himself/herself. This question was intended to point out the difference between substitute decisions for property, which, except in Quebec, can be made even if the person is capable of making financial decisions, and a power of attorney or personal directive for personal care or health care decisions, which can only be made if the person is incapable of making such decisions himself/herself.. 3

4 However the statement as worded is false, as the person may be capable of making personal care and/or health care decisions even if unable to take care of himself/herself. 6. Questions about the Application of Provincial Law A number of questions have been received relating to the specific application of provincial law. The materials do not attempt to provide the details of provincial law for every topic. Provincial differences are noted in the materials for the benefit of all students, not just those working in the particular jurisdiction. However, the materials do not attempt to identify all the unique aspects of the laws of each province. For the purposes of the course, any provincial details not included in the material are not examinable. However, provincial differences may be examinable to the extent that they are included in the material and would impact estate planning in Canada from a cross-canada perspective. For example, if property is located outside the province of residence or domicile but within Canada, the student is responsible for knowing how the laws of another province relating to probate, succession, and probate fees, may apply, but only to the extent that they are included in the materials. The student is directed to read the Preface where the policy with respect to provincial detail and multi-jurisdictional responsibility is outlined. 7. Jointly Held Property and Probate Fees Where there is a Resulting Trust and the Surviving Joint Owner holds the Property on Trust for the Estate of the Deceased Original Owner/Transferor Chapter 3, page 3-21, paragraph states that joint ownership of bank accounts between a parent and adult child may enable the property to bypass the probate process. Since there is a presumption of a resulting trust then, failing evidence to rebut this presumption, the adult child holds the interest in trust for the estate. Is not this beneficial interest in the bank account an asset of the estate which should be listed on the Application for Probate? Yes. See 9.3.1, , and The use of jointly held property with a right of survivorship will work to save probate where the presumption of resulting trust applies only if probate is not required at all. 8. Where Jointly Held Property is Included in the Estate Page 4-17, paragraph 4.4.2, page 8-15, paragraph and page 9-10, paragraph indicate that jointly owned property is to be included in the value of the estate for probate purposes. Can 4

5 you advise how this would be dealt with in Alberta as we do not normally include joint assets on the Schedule of Assets and Liabilities contained in the Application for Probate. In every common law province, jointly held property may be property of the estate, and should be listed as such on the application for probate, and will be potentially subject to probate fees, if: there has been a gratuitous transfer into joint names with a right of survivorship, and the presumption of resulting trust applies in the province, and the presumption of resulting trust has not been rebutted. While the presumption of advancement has been altered by provincial law, it is not usual for any province to have abolished the presumption of resulting trust (there may be one province in Atlantic Canada that has done so for certain purposes). However if the law of resulting trust has been abolished by statute in the particular province, then all jointly held property with a right of survivorship would pass outside the estate and not be subject to either the terms of the Will or probate fees. Jointly held property with a right of survivorship is subject to three possible characterizations: A. There is true joint ownership during the lifetime of the joint owners where all enjoy legal and beneficial benefits of ownership and on death of one joint owner, the legal and beneficial ownership is assumed, by operation of law, by the surviving joint owner or owners. This may occur where the joint owners have contributed jointly to the purchase or acquisition of the property or it can occur where there is a gratuitous transfer into joint names from the original owner into the names of the owner and additional persons and there was an intention to make an immediate gift of the property. The intention to make an immediate gift must be documented, or otherwise proven in order that the presumption of resulting trust be rebutted or C will apply. B. There has been a gift of survivorship, where there is a gratuitous transfer, and the original owner/transferor retains 100% of the benefits of ownership during his or her lifetime, but on death, it is intended that the ownership of the property pass to the surviving joint owner or owners by operation of law. In this case, the property does not form part of the assets of the estate of the original owner/transferor. The intention for this result must be documented or otherwise proven in order to rebut the presumption of resulting trust, or C will apply. This is a new concept of joint ownership created by the Supreme Court of Canada and discussed in the materials in Chapter 9 at C. There is no true ownership of the jointly held property by joint owners, either during the lifetime of the original owner/transferor or after death of the original owner/transferor because there was a gratuitous transfer to which the presumption of resulting trust applies. On the death of the original owner/transferor, the property remains the property of his or her estate and the surviving joint owner holds the property on trust for the estate. 5

6 For both B and C to apply there must have been a gratuitous transfer. A may or may not apply to a gratuitous transfer. Where there is a gratuitous transfer: the presumption of resulting trust will apply, unless the presumption of advancement applies, and in either case such presumptions can be rebutted the presumption of resulting trust must be rebutted by specific evidence of the transferor s intention as a result of the Pecore and Madsen decisions. The presumptions of resulting trust and advancement may be altered by provincial law in any event 9. Lapse Page 3-25 states that where there is a gift to a named beneficiary if he survives me with no alternate beneficiary the doctrine of lapse will apply. If there is simply a gift to a named beneficiary (i.e. to A ) and no alternate beneficiary, does the doctrine of lapse likewise apply if A predeceases the testator? Yes. Normally the gift would lapse if there is no alternate gift, assuming that anti-lapse does not apply. However, in drafting Wills the practice is to add clarification by adding the words if she [or he] survives me. 10. Multiple Spouses Chapter 5, Question 1(f) Please clarify. Does this mean that: (a) both spouse and CL partner have rights on intestacy and both would be entitled to receive a share in the same estate; or (b) that they both have rights on intestacy but both would not receive a share in respect of the same estate? See and Where there is a surviving spouse and under provincial law that spouse qualifies on an intestacy (i.e. under provincial law the spouse has not been disqualified because of a breakdown of the relationship) there may also be a common law spouse who qualifies, if a common law spouse is entitled to an intestate distribution under the laws of that particular province. The chart in the appendix summarizing the rights of the common law spouse on intestacy would have to be examined in the light of the particular provincial law outlined in to see how this might apply. For example, in Manitoba the intestate could have been separated from a spouse who qualifies for intestate distribution and also a common law spouse may qualify for the purposes of intestate succession. There is only one estate. 6

7 11. Availability of Registered Plans and Insurance to Satisfy a Claim by a Dependant Chapter 6, Question 2(d) indicates that RRSP proceeds may be available for satisfaction of a dependant relief claim in some provinces. Chapter 9, page 9-10, paragraph indicates that RRSPs and RRIFs that pass by beneficiary designation are protected from creditors of the deceased. Can you please clarify? The laws of some provinces specifically provide for how insurance and registered plans are to be included in the property available for a claim for dependants relief. This would be a specific statutory exception to the general rule relating to protection from creditors. The specific laws of each province are beyond the scope of the course. 12. Equalization payment for Calculation of Patrimony Chapter 7, page 7-8 It appears that the Payment Required (one half the difference) in Figure 7.1 should be $23,000 and not $13,000. : Yes one half the difference is $23,000 not $13, Probate Fees and Probate Fee Planning and the Laws of a Particular Province Probate fee planning is not a priority in Alberta due to maximum probate fees being only $400. How should a student deal with the probate fee planning issue for exam purposes? My understanding is that we are to answer the questions on the exam based on the law in our jurisdiction. You may be asked questions that require you to understand what is required in another jurisdiction with respect to the estate of an individual who is resident or domiciled in your jurisdiction. If an individual has beneficiaries outside the province, or property outside the province, you are responsible for the consequences of the law of other provinces with respect to that situation to the extent it is covered in the materials, or laws of another province might be relevant for an individual who is moving to or from that other province. For example, if an individual has a child who is resident in the province of Quebec, it might be relevant that there are limited rights under the law of Quebec for a common law spouse in Quebec, or that property in Quebec cannot be held jointly with a right of survivorship. If there is real property located outside the province, probate practice and probate fees in that other province may be relevant. See the comments in the Preface to the materials, and item #6 above. 7

8 With respect specifically to the question about probate fee planning, while Chapter 8 deals with probate fee planning, many of the topics are relevant for all jurisdictions whether probate fee planning is an issue in the province or not. These include identifying what property passes through the estate and what property passes outside the estate, jointly held property and the presumptions of resulting trust and advancement, alter ego trusts, and beneficiary designations. The student is also responsible for understanding probate fees, probate fee planning, and probate practice for immovable property i.e. real property located outside the province. 14. What is Examinable Re the Province of Quebec? With respect to Quebec, are we also responsible to know the portion in italics relating to Quebec in Chapter 11 or only the portion in Chapter 7? The portion in italics in Chapter 11 dealing with Quebec is more detailed than would be examinable for students not residing in Quebec, and students from outside Quebec are only examinable to the extent of the detail in Chapter 7. 8