Archive for June, 2015

June 29, 2015

An Unfortunate Sign of the Times

Bankruptcies of seniors on the rise.  As reported by the CBC.

June 1, 2015

Dangers of Fraud/Forgery in Wills

I came across an interesting case recently from the Ontario Superior Court of Justice that should be a warning for everyone involved in the administration of wills.

In Paton Estate v. Ontario Lottery and Gaming Commission (“OLG”), two estates sued OLG for damages resulting from a loss of assets defrauded from the estates and gambled away in casinos operated by OLG.  The proceeding before the court was a motion to dismiss the action as disclosing no reasonable cause of action.  The motion succeeded and the action was dismissed as the court found that no duty at law exists in a casino to prevent problem gamblers from losing money.

What was striking about the case though was how the funds appear to have been stolen from the estate.  The fraudster was a clerk in the office of a lawyer assisting with real estate transactions and the administration of estates. Her actions are well known locally but primarily related to fraudulent real estate transactions, for which she was ultimately convicted on criminal charges.  On the facts as related in this action, she forged the name of at least one testator on a  will naming her as estate trustee.  She managed to sell two properties and gain access to $1,500,000.  Apparently, she also defrauded other estates amassing estate losses of over $4,000,000.  This was an extreme case and there was admitted professional misconduct by the overseeing (or rather not overseeing) lawyer for which he was disciplined.  Nonetheless, the case illustrates that estates are not immune from the frauds that have plagued real estate and mortgage lending lawyers for years.

While oversight of the clerk was clearly lacking and the lesson for lawyers is obvious, less obvious is the question of the care that should be taken by a prospective estate trustee to guard against potential frauds of this type.  I do not know many of the facts of this particular situation so make no comment on the actions of anyone involved with the estates.  It would appear though that the fraudster had to apply for and obtain a certificate of appointment of estate trustee before selling the estate properties.  Obtaining the appointment, listing and selling the properties takes time.  If a person knows that she or he has been named in the will as estate trustee and has accepted that role, what can they do to avoid potential fraud?

While the named trustee is entitled to rely on counsel representing the estate, his or her duty to the estate may require that she or he make reasonable inquiries of counsel regarding the status of the appointment and procedures going forward.  If it does not appear that progress is being made, or instructions do not appear to have been followed, closer examination of the actions of counsel may be required.  While it is unlikely that a prospective estate trustee will be able to root out a good fraudster, care should be taken at all steps of the administration process to reduce the risk.