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Category: Dependant Support

Personal Liability of Estate Trustees in Dependant Support Claims

Personal Liability of Estate Trustees in Dependant Support Claims

As a fiduciary for an estate, an estate trustee must comply with various legislation including the Succession Law Reform Act (SLRA) when disbursing estate assets and managing the estate. When dealing with a person who may be a dependant of the estate, and who may bring a Dependant Support Claim, estate trustees must adhere to s. 60 of the SLRA, failing which, they could be held personally liable. This article will consider the extent of an executor’s personal liability under s. 67(3) and remedies available to dependents should an executor disburse estate assets before a claim is heard.

What is a Dependant Support Claim?

A Dependant Support Claim is a claim initiated by an application against the estate of the deceased with whom the applicant is a legally recognized dependant of pursuant to s. 57 of the SLRA. A legally recognized dependant is defined as a spouse (common law or ex-spouse), parent, child/grandchild, or sibling of the deceased to whom the deceased was providing support to or was under a legal obligation to provide support to, immediately before their death. A Dependent Support Claim can be used in the following situations:

  1. If the deceased died with a will and did not leave adequate support for the dependant; or,
  2. If the deceased died without a will and the dependent is: a) not entitled to relief from the laws of intestacy (i.e. common law spouses); b) the dependant is further down the line of succession and requires support from the estate.

Limitation periods under SLRA: Six months

 It’s important to remember that the general limitation period of two years does not apply to the timing of bringing a Dependant Support Claims.

Section 61 of the SLRA contains the limitation period. A claimant has six months from the granting of probate to bring a claim. The exception to this period is that a court may consider an application made at any time as to any portion of the estate which remains undistributed at the date of the application (61(1)).

An estate trustee must then comply with s. 67(1) which stays the distribution of the estate after service of notice upon them, until the court has disposed with the Dependant Support Application. The exception here is that an estate trustee may continue to make reasonable advances for support to dependants who are beneficiaries of the estate (67(2)).

Now, this is where things get interesting. Pursuant to s. 67(3), if an estate trustee distributes any portion of the estate in violation of ss. (1), and support is ordered by the court to be made out of the estate, the estate trustee is personally liable to pay the amount of the distribution.

Awareness of an impending claim can initiate personal liability

Executors can be held personally liable if they distribute the estate, to the dependant’s detriment, before the expiry of the six-month limitation period.

In Dentinger (Re), [1981] O.J. No. 303, the executors were aware that the dependant intended to make a claim under the SLRA, yet distributed nearly all of the estate’s assets shortly after probate and before the application was made. The executrices were advised within six weeks of probate being granted that the dependant intended to make a claim for relief under the SLRA. Within a further three weeks, the executrices rapidly conveyed all the real property in the estate to themselves and two other residuary beneficiaries. The Ontario Superior Court held the executors personally liable and ordered them to make a payment directly to the dependant.

Estate trustees can be held personally liable

Executors have a duty not to distribute the estate before the expiry of the limitation period if there is a possibility of a Dependant Support Claim, and if they do so, they do so at their own peril.

The leading authority on this issue is Gilles v. Althouse et al., [1976] 1 S.C.R. 353, where the Supreme Court of Canada considered Saskatchewan’s mirror legislation to the SLRA, The Dependants’ Relief Act of Saskatchewan. The estate had been fully distributed, and the Saskatchewan Court of Appeal had concluded for that reason that no order for maintenance could be made. The Supreme Court rejected the argument that executors were free to proceed with distribution until they had notice of an application for relief.

They unanimously found that at least until expiry of the six-month period, the applicant was a potential applicant under The Dependants’ Relief Act. She did not effectively disclaim any rights which she might have under that Act. The court opined that the true meaning and effect of the SLRA is to afford an applicant the opportunity to obtain an order against the entire estate, but if they delay and make an application after the six-month limitation period, the claim can only be against the portion of the estate which remains undistributed. However, if the executors have “distributed the estate in a manner contrary to the terms of the will as so varied, they will be under a duty to account.” (54).

The SLRA creates a “temporal window” which is commenced by the granting of probate. It is within this temporal window that the applicant must apply. Estate assets distributed after the temporal window has closed will not be subject to the applicant’s claim.

Should an executor distribute estate assets before a claim is heard, dependents may apply for relief through the clawback provision. Section 72 of the SLRA permits the court to “claw back” certain assets deemed to be part of the estate and subject to the application for support.

Non-arm’s length party can still incur personal liability

 Executors will be held personally liable even if the estate trustee and dependant are non-arm’s length parties. In Gefen v. Gefen 2015 ONSC 7577, the estate trustee, the deceased’s spouse, distributed the estate to herself before the expiry of the six-month limitation period in the SLRA. The Superior Court found that the deceased’s son qualified as a dependant and was entitled to monthly payments. He was entitled to claim against the entirety of the estate as he brought his claim within the limitation period. However, the estate trustee had already distributed the estate assets. The court ruled that the estate trustee had distributed the estate at her own peril since she had not waited for the limitation period and that she was responsible for making the payments that otherwise would have been payable out of the estate itself, had she not made those distributions.

Responsibility for estate practitioners

 Estate practitioners must be prudent in advising estate trustees of their personal liability in mishandling estate assets by distributing assets before the expiry of a limitation period. If an estate trustee has knowledge of a possible dependant and/or an impending Dependant Support Claim, they could be held personally liable to repay these funds in addition to other potential penalties if they distribute estate assets within the six-month limitation period following probate. They must also be aware that estate assets may be clawed back should a judge deem them to be a part of the estate.

Bill 245 and predatory marriages in estate law

Bill 245 and predatory marriages in estate law

On March 2, 2021, Bill 245, the Accelerating Access  to  Justice  Act, passed  its  second  reading  in the Ontario legislature. There remains to be a third reading before the Act can receive royal assent, but from reading the Hansard debates, it is optimistic that Bill 245 will become law.

As wills, trusts and estates practitioners it is important to note these changes to the legislation – in particular, the change in legislation regarding wills and the marital status of the testator.

Marital status and the SLRA

Schedule 9 of Bill 245 has proposed amendments to the Succession Law Reform Act (SLRA).

The following are the proposed changes to be made to the sections in the SLRA relating to marital status:

  • It is proposed that 16, where a will is revoked by the marriage of the testator, is repealed.
  • An addition is proposed for 17 to add other instances  where  a  testator’s will shall be construed  as if  the  former  spouse had predeceased  the testator. Most notably, the proposal  for  s.  17  is to  include  spousal separation between married spouses to be construed as if the spouse had predeceased the testat or.
  • Following the theme of separation, the proposed addition of 43. 1 adds that intestacy rules do not apply in respect of any or all property if the person and the spouse are separated at the time of the person’s death.

The changes reflect the name of the bill as accessibility to justice is accelerated through the proposed amendments. This accessibility to justice is most notable in the proposed s. 16 revocation .

How changes promote accelerated access to justice

 Current Section 16:

Revocation by marriage 16 A will is revoked by the marriage of the testator except where,

  • there is a declaration in the will that it is made in contemplation of the marriage;
  • the spouse of the testator elects to take under the will, by an instrument in writing signed by the spouse and filed within one year after the testator’s death in the office of the Estate Registrar for Ontario; or
  • the will is made in exercise of a power of appointment of property which would not in default of the appointment pass to the heir, executor or administrator of the testator or to the persons entitled to the estate of the testator if he or she died intest ate .

As some estate litigation practitioners may have experienced, an unfortunate situation can occur

when an elderly testator marries a significantly younger spouse. Unless there was a declaration in contemplation of marriage, the elderly testator’s previous will is revoked, leaving the beneficiaries a difficult journey to regain their inheritance, and almost always at a cost. Unless a new will is created, the new younger spouse jumps to the front of the line and if a new will is actually created, it may be the case that the new will is borne from coercion or undue influence. This was the case in Banton v. Banton [1998] O.J. No. 3528.

Problems with current law as in Banton v. Banton

Banton is a classic example of predatory marriage. In Banton, 88-year-old George Banton met a 31- year-old woman named Muna Yassin, and they had”… formed a friendship, which quickly developed into a close attachment … .” After surgery for one of his many physical ailments, Banton’s doctor assessed and issued a Certificate of I ncompetence. Shortly after the declaration of incompetence, Banton, with Yassin, withdrew $10,000 from his bank account and attempted to cash more of his cheques.

When his children discovered the withdrawal and attempted withdrawals, they, as Banton’s attorneys for property, put everything  in a trust to protect his assets. The trust was created similar to Banton’s will executed in 1991. After the withdrawals were stopped, Yassin married Banton and he made a will that left everything to her.

Based on the evidence, the court found Banton’s will that left everything to Yassin to be invalid because he was incapable and it was procured through undue influence. Unfortunately for the children, the court found that the marriage was valid.

Predatory marriages

A problem with respect to capacity  is the  lower standard  required  for the  capacity  to  marry  as compared to the capacity to make a will or appoint a power  of attorney.  The act of marriage  may  be simple to understand and carry a lower bar for capacity (although when is love ever that simple), but there are still consequences to  marriage  that invoke  financial  repercussions  in  some  instances,  as seen above.

For individuals with less time – such as the elderly – marriage is extremely problematic as marriage more than likely revokes a will. For people with more time in their lives to  make a new  will, this is not as big of a problem as compared to older individuals (but everyone should endeavour to have a will

– see our previous article: Estate COVID problems part two: The importance of a will).

It is because of the revocation in s. 16 that makes the elderly extremely vulnerable to predatory marriages due to factors that include, but are not  limited to,  the deterioration  of the mind and body and loneliness . The elderly become likely targets  for  parasites  that  need to  only  come into a  senior’s life for a short period of time to steal a large amount of money from rightful beneficiaries. Yassin was married to Banton for just over a year and a half.

Why the new law is better than status quo

If the revocation by marriage is repealed, then the Banton estate would not have lost money to a predatory marriage. They would have been successful in the will challenge, and Banton would not have died intestate. He would have died subject to his true testamentary intention as in his previous will where he was capable. His five children and 18 grandchildren would not have given up a part of their inheritance to an outsider.

From the Hansard, MPP Robert Bailey addressed the floor and advocated for Bill 245. He stated the bill’s intent to combat predatory marriages through the s. 16 amendment “the proposed changes in Bill 245 that will benefit seniors who may enter predatory marriages.”

This amendment may not rid Ontario of predatory marriages, but it is a good place to start .

Lawyers Care about Long-Term Care

This article was originally published by The Lawyer’s Daily (www.thelawyersdaily.ca), part of LexisNexis Canada Inc.

Lawyers Care about Long-Term Care

There has never been a time where a light has shone so brightly on long-term care homes (LTC), and it is not a pretty picture. The COVID-19 pandemic has exposed the system’s struggle to meet the most essential needs of residents. At a time where the situation is going from desperate to dire, the Ontario Bar Association’s Elder Law Section has established a COVID-19 Working Group (Working Group) to closely examine the important legal issues facing vulnerable older Ontarians through the pandemic.

As one of the newest additions to the OBA, the Elder Law section was established in 2017 with a goal of furthering the interests of older adults and the legal practitioners who serve them. With a particular focus on the situation in LTC, the objectives of the Working Group include advocating for improvements to laws and regulations impacting LTC to better protect their vulnerable populations. It is time to better this system.

It is widely recognized that there are issues with regulation, supervision and accountability which directly impact the well-being of residents in LTC. These issues, while not new, have been thrust into the spotlight by the pandemic. Lawyers practising in the emerging field of elder law have a critical role to play by sharing the frontline experience of the bar and assisting government in identifying practical and useful legislative and regulatory reform to respond to the impacts of the pandemic on the older population, particularly those in LTC.

In July, the Elder Law section delivered a letter to the minister of long-term care and minister of seniors and accessibility, advocating for immediate implementation of the following recommendations:

  1. Ensuring compliance with the Residents’ Bill of Rights;
  2. Resuming unannounced annual Resident Quality Inspectors in all LTCs;
  3. Safeguarding residents’ right to give informed consent or refusal to treatment and the delivery of personal assistance services;
  4. Accelerating the completion of the LTC rebuild program; and
  5. Ensuring sufficient life safety measures are installed in LTCs.

We are looking forward to hosting a panel discussion on Dec. 9, 2020, on Safety in Long-Term Care: Making Sense of the Gillese Report and Government Response, and welcoming Ontario Justice Eileen Gillese herself as one of our presenters. Our work on a submission to the Long-Term Care COVID-19 Commission (the commission) also continues.

The issues plaguing LTC are wide-ranging and include:

  • There is evidence of overcrowding, understaffing, shortage of personal protective equipment (PPEs), outdated facilities, poor regulation and lack of job security and funding provided by the provincial and federal government in LTC.
  • The challenge with the upsurge of COVID-19 cases is that Canada and the Ministry of Long-Term Care for Ontario do not have consistent standards or policies in place for nursing homes.
  • While health-care providers have an obligation to care for their patients, they are unable to do so due to untimely interventions, minimal guidance and poor procedures.

The commission’s first interim recommendations, released on Oct. 23, 2020, are aimed primarily at increasing staffing, strengthening health-care sector relationship and collaboration and improving infection prevention and control measures.

As the second wave of COVID-19 continues to surge in Ontario, we must pull together to do the work that needs to be done to protect our vulnerable senior population. This is an issue that impacts many Ontarians today, and it will affect many more people in the future. The OBA’s Elder Law COVID-19 Working Group will continue to advocate for the legal changes necessary to achieve this goal. For more information, visit oba.org/sections/elder-law.

Hot Topics: My Common Law Spouse Died – Now What?

 

 

 

 

 

 

 

My Common Law Spouse Died – Now What?

By: Kim Gale and Gabriela Caracas

The concept of marriage has evolved significantly throughout existing generations. Fewer people now feel that commitment must be showcased through those two simple words: “I Do”. One thing that is for certain, however: a marriage is a legal contract, and with this contract comes certain obligations, including the requirement to provide for your spouse upon death. More specifically, if your married spouse died without a will, the Ontario Succession Law Reform Act (SLRA) dictates that you are guaranteed a preferential share of your spouse’s estate, which is now set at $200,000. 

Unfortunately, this isn’t the case for common law spouses. A common law spouse does not fall within the definition of a “spouse” under the SLRA.  This comes as a surprise to many, given that more individuals are opting not to get married. 

So, what happens if your common law spouse dies? Are you entitled to anything? 

The short answer is – it depends. If your common law spouse drafted a will naming you as a beneficiary, then the answer is likely yes! You will receive an inheritance as directed by your spouse in their will as long as the document is valid. 

But what if your common law spouse never drafted a will, or what if they didn’t leave you with adequate support? This is where things become tricky. Unlike a married spouse, the common law spouse does not have automatic property rights and will not naturally inherit their partner’s property. Fortunately, there are legal solutions to this issue. 

One solution, the most utilized route, is for the surviving spouse to file what is called a dependant’s support claim with the court. In order to succeed with your Application to the court, you will have to demonstrate to the judge that (1) you were dependant, and (2) that your partner did not adequately provide for you after they passed away. 

Adequate support can come in many forms, including a lump sum payment, periodic payments, title to properties, or a combination of such options. In reaching a decision, the court will consider many things, including, but not limited, to: 

  • Your current assets and means;
  • What assets and means you may have in the future;
  • Your capacity to contribute to your own support;
  • Your age and physical/mental health;
  • Your needs;
  • The proximity and duration of your relationship with your partner;
  • The length of time of cohabitation;
  • Any contributions you may have made to the deceased’s welfare;
  • Whether your partner has the legal obligation to provide for another dependant;
  • The circumstances of your partner at the time of death and any agreement between yourself and your partner. 

Remember the law evolves as slow as a snail, and it does not provide bulletproof protection for common law spouses. It is important you understand the difference between married and common law. 

It is important you contact a lawyer to better understand your rights.

Gabriela Caracas is an Associate at Fogler, Rubinoff LLP who practices litigation and is growing her practice in estate litigation. 

The Wife and the Mistress – Can they both be Dependants?

What happens when a man is married, but is in another relationship? Can their mistress be considered a dependant (in addition to their wife)?

The wife and the mistress

In the case of Prelorentzos v. Havaris (2015) the deceased had died at the age of 71 leaving behind his wife with whom he had separated from but never divorced. During the time of his separation, he lived with a woman named Helen whom he initially took in as an act of kindness as she had nowhere else to live. Helen claimed that she lived with him in the same household for about 9 years and that she was a common law spouse of the deceased.

The court noted that the only missing link in this case was whether Helen and the deceased had cohabited. The deceased’s wife claimed that even though they lived together, it was merely a brother-sister type relationship. The wife claims that the deceased always intended to resume his relationship with her and  this is why they never got divorced.

Moral Considerations are important

Justice Grace quoted Cummings v. Cummings (2004) and Tataryn v. Tataryn Estate (1994) and concluded in paragraph 233 that “moral considerations are important in this case.”

[111]   When faced with such an application the court is required to consider the interests of all dependants even if some of them seek no relief.   As Blair J.A. said in Cummings v. Cummings (2004) at para. 27:

When judging whether a deceased has made adequate provision for the proper support of his or her dependants and, if not, what order should be made under the [SLRA], a court must examine the claims of all dependants, whether based on need or on legal or ethical obligations.  This is so by reason of the dictates of the common law and the provisions of ss. 57 through 62 of the Act.

…..

[231]   Non-financial considerations must also be considered.  Blair J.A. used the phrase “moral and ethical obligations” in Cummings, supra at para. 27.  At para. 40 of that decision, Blair J.A. addressed the need to consider such matters in proceedings under Part V of the SLRA.  He wrote:

In my view these questions have been resolved by the decision of the Supreme Court of Canada in Tataryn v. Tataryn Estate…There, the court held that a deceased’s moral duty towards his or her dependants is a relevant consideration on a dependants’ relief application, and that judges are not limited to conducting a needs-based economic analysis in determining what disposition to make.  In doing so, it rejected the argument that the “judicious father and husband” test should be replaced with a needs-based analysis: see para. 23.  I see no reason why the principles of Tataryn should not apply equally in Ontario, even though they were enunciated in the context of the British Columbia Wills Variation Act…in which the language is somewhat different from that of the Succession Law Reform Act.

The court decided that even though sufficient evidence was missing, Helen was still deemed to be the deceased’s common law spouse (by a very thin margin). Therefore, Helen was be entitled to support and was awarded $30,000.

Case Dependant

In this case, the court did not focus on the fact that the deceased already had a wife. Rather, the court was concerned with the moral obligations of the deceased to provide support to Helen. It is evident that even though Helen was a “mistress” she was still deemed to be a common law spouse.

Judges are continually defining the limit and scope of dependants and who shall be considered to be a dependant still varies from case to case.

 

Online Romance & Dependant Support

Who is a dependant?

As opposed to the English law principle laid down by Cockburn CJ in Banks v. Goodfellow (1870) LR 5 QB 549 that a testator enjoys absolute freedom in giving out his estate to any person of his choice, Part V of Succession Law Relief Act (the “SLRA”) makes a provision for dependants to claim support from the estate of the testator, even if they were given something (but not enough or “adequate” support).

Part V of the SLRA was introduced to protect dependants, including individuals in a common law relationship or a parent who was the responsibility of the deceased so that they do not become deprived of their wealth.

Section 58 of the SLRA states that if a person dies (either testate or intestate) without making appropriate provision for the support of his dependants, the dependant may (themselves or through their parents) apply to the court for support. The court shall thereafter order support to be paid from the estate of the deceased to the dependant.

However, who is considered to be a dependant for the purpose of the Act? Section 57 of SLRA states that the spouse, parent, child, brother or sister of the deceased whom the deceased was providing support (or under any legal obligation to provide support) immediately before his death shall be considered his dependants.

Online Romance

Definition of “Spouse”

There have been several cases where courts define the scope of what it means to be a ‘dependant’.

In Stajduhar v. Kerzner 2017 ONSC 4954, Branislava Stajduhar contended that she was a dependant of Jeffrey Kerzner, deceased, merely because she was in an online romantic relationship with him. She had claimed to have been committed to him since August 2009 until his death (December 31, 2016).

The issue was whether Ms. Stajduhar met the definition of a ‘spouse.’

The SLRA defines spouse to include the definition of “spouse” from the Family Law Act (the “FLA”). In s. 29 of the FLA,  “spouse” is defined as including “either of two persons who are not married to each other and have cohabited… continuously for a period of not less than three years.”

Further, the SLRA defines cohabit to mean to “live together in a conjugal relationship, whether inside or outside marriage.”

Ms. Stajduhar claimed that she was in a committed relationship with Mr. Kerzner and that she was being supported by him until the time of his death.

Place of Residence

Justice Dunphy denied Ms. Stajduhar’s claim due to the fact that she was not living with the deceased and that the relationship was not continuous. Justice Dunphy found no clear evidence that they cohabited. His honour defined a residence to mean a “readily identifiable…place where both are ordinarily to be found most of the time when they are at ‘home.'”

This case is helpful to show what the court will (and will not) consider when looking at a relationship and a dependant support application. It is evident that living together is crucial.

While love can be found online, there are other parameters set out in the SLA which judges will take into consideration when determining support, such as the deceased providing support immediately before death, being a couple, living together, and having a continuous relationship for not less than three years.