Archive for September, 2012

September 28, 2012

Interesting Article on Estate Tax and U.S. Real Estate

 

http://www.theglobeandmail.com/globe-investor/personal-finance/taxes/buying-us-real-estate-beware-the-dreaded-estate-tax/article4570771/

September 26, 2012

Aragona v. Aragona – An Update

In March, I commented on the Ontario Superior Court of Ontario decision in Aragona v. Aragona, where a son of a woman suffering from Alzheimer’s disease was appointed in 1999 as guardian over her property.  Among other abuses, the guardian was found to have withdrawn and deposited to his own bank account approximately $122,000 without documentation or a reasonable explanation for the withdrawals.  The guardian was also unable to explain most of the expenditures for certain legal fees paid for with his mother’s funds. 

The Court found the guardian’s behaviour to be abusive, stating:

“I am constrained to say that the conduct of Beniamino Aragona has been shocking.  He has literally helped himself to many thousands of dollars from his mother’s estate, at a time when his mother had Alzheimer’s disease and was unable to look after her own affairs.  Beniamino Aragona treated the money in the estate as if it was his own.”

After taking into account the improper withdrawals, adding the legal fees improperly charged to the mother, and deducting amounts properly charged to the estate, the Court ordered the son to pay to the estate a total of over $132,000.

The Court likewise denied the son’s request for compensation in its entirety.  In addition, the Court rejected the guardian’s claim for costs of the application to pass accounts and in fact ordered that the guardian pay the costs of the passing personally.

The case was appealed and a decision rendered by the Ontario Court of Appeal on September 26, 2012.  The Court of Appeal upheld the lower court decision with the exception of a small contingent allowance for recovery of some legal fees paid in the interest of the estate.

One ground of appeal raised by the guardian was that he had not received a fair hearing because the respondent, his brother, had taken the position through counsel that he was not challenging disbursements on the application to pass accounts.  While arguments were raised about whether the disbursements were or were not challenged, the Court found that, regardless, the fiduciary obligation of a guardian of property under s. 32 of the Substitute Decisions Act, 1992 to act “with honesty and due care and attention” required a guardian to be in a position at all times to prove the legitimacy of disbursements made on behalf of the estate.  Therefore, regardless of whether objections have been raised in a passing of accounts, a guardian (and a trustee or executor) should remain diligent at all times regarding its accounting and always be prepared to justify accounts.

September 21, 2012

Today is World Alzheimer’s Day

A day on which Alzheimer’s organizations around the world work to raise awareness about Alzheimer’s and dementia.

See http://www.alzheimer.ca/

September 19, 2012

More Seniors Facing Divorce

While estate planning gets most of the ink, Canadian statistics remind us that divorce is increasingly affecting seniors.  It should not come as a surprise, as people live longer and boomers enter their senior years.

http://www.theglobeandmail.com/news/politics/rising-grey-divorce-rates-create-financial-havoc-for-seniors/article4553219/

September 13, 2012

“Optimal Aging” – a Field of Study

With the increase in the median age of western countries, it makes sense that the study of aging and aging well will be increasingly supported by donor funding, as indicated in this article concerning a gift to McMaster University for inter-disciplinary research on optimal aging.

http://www.theglobeandmail.com/news/national/with-10-million-gift-mcmaster-embarks-on-study-of-optimal-aging/article4525683/

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September 11, 2012

What is the Status of a General Power of Appointment in a Will?

A recent British Columbia case has considered the validity of a general power of appointment in a will.  The Court conducted a thorough review of the law in this area, concluding that a general power of appointment is not void as a delegation of testamentary power but amounts to a disposition of a testator’s property directly to his or her executor.

In Pearson Estate v. Pearson, the British Columbia Supreme Court considered wording in a will whereby the testator appointed her son, Ronald, as executor.  Should Ronald predecease her, the testator appointed as executrix her granddaughter, Krista (not a daughter of Ronald).  The only dispositive portion of the will stated “I devise all the residue of my estate to be distributed as seen appropriate by my executor”.  The will then went on to state, in apparent contradiction,  “Beneficiary of this my will is my son Ronald Wesley Pearson”.

Ronald predeceased the testator and Krista was therefore appointed as executrix.  She took the position that under the general power of appointment, she was entitled to the benefit of the estate.  Ronald’s children took the position that the general power of appointment was void as infringing a rule against delegation by a testator of her power of disposition by will.  Alternatively, they took the position that the intention of the will was that Ronald should benefit and, as his issue, the gift to Ronald does not fail as a result of his predeceasing the testator, but passes to them.

The Court reviewed over a century of case law and commentary in Canada and other Commonwealth countries regarding the validity of a general power of appointment to an executor.  The Court concluded that there is no rule preventing a testator from giving such power to an executor provided such is not void for uncertainty.  As a result, a general power of appointment is considered to be equivalent to the testator devising his or her property directly to the executrix, therefore to Krista, subject to any contrary intention in the will.

Ronald’s children contended that a contrary intention did exist in that the will stated that Ronald was to be the beneficiary of the will.  They took the position that this indicated an intention to benefit Ronald and that, as he had predeceased the testator, the intended devise did not lapse but by statute fell to his issue.  The Court noted that the statutory rule that a gift to a predeceasing beneficiary leaving issue should not fail is subject to a contrary intention.  Here, the Court found such an intention.  It allowed extrinsic evidence as to the intention of the testator on grounds that the will was ambiguous.  The Court held that the testator intended that her estate devolve to Ronald under the general power of appointment but, if Ronald predeceased her, the estate should devolve to Krista under the same power.  The beneficiary provision was found to be redundant as concerns Ronald and not intended to bestow an additional benefit on him (and thus his issue).

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