Posts tagged ‘beneficiaries’

February 1, 2016

David Bowie’s Will

According to reports, aside from what appear to be a couple of generous bequests (what is Possum Inc.?), David Bowie, or should I say David Robert Jones, has left most of his real estate and 50% of the residue of his estate to his wife Iman.  25% of the residue will go to each of his two children (one real estate property goes to David and Iman’s daughter).  I suggest litigation should be unlikely with this division but …

Here is The Guardian’s story.

Here is the New York Post’s story.

Bowie fans will know that he took the stage name “Bowie” because in the early years another Brit named David Jones was enjoying great (if fleeting) fame with The Monkees.

September 4, 2015

More Trouble with Pension Benefits After Death

In a previous post, we looked at the issue of the definition of a “spouse” under the Pension Benefits Act where a deceased had divorced and was living in a common law relationship with another partner.  One of the key takeaways from the case was the importance of designating beneficiaries under pension plans so that the intentions of the pensioner are clear.  The importance of designation was emphasized again in the recent Nova Scotia Court of appeal case of MacEachen v. Minnikin.

In that case, under a separation agreement spouse number 2 was to be designated as beneficiary under the deceased’s Canada Post pension and he was not to change that designation before such time as he might remarry.  If he did not remarry, spouse number 2 would remain as beneficiary.  If the pensioner did remarry, spouse number 2 agreed under the separation agreement that “she will execute any and all necessary documents in order to release her as a beneficiary in the aforementioned plan”.

As you might guess, the pensioner did remarry but took no action to either change the beneficiary designation with the plan administrator or to require spouse number 2 to execute any document(s) to release her as a beneficiary.  Following the pensioner’s death, spouse number 3 brought an action seeking entitlement to survivorship benefits under the pension on the basis of unjust enrichment.  Both the Court at first instance and the Court of Appeal found in favour of spouse number 2.  On a legal analysis, spouse number 3 was not able to establish the elements of “unjust enrichment”.  However, for our purposes, it is the factual findings of the court that illustrate the lesson from this case.

With respect to the separation agreement, the Court found that the provision dealing with a release of spouse number 2 as beneficiary did not act to create a change of beneficiary but required further action (i.e. the deceased doing something to get that release in writing).  Furthermore, under the separation agreement the pensioner retained control over when a beneficiary change would be requested under the plan.  He also knew that he would be required to advise the plan administrator in writing of a change of beneficiary.  The pensioner had taken steps to change beneficiary designations under an insurance policy so presumably had turned his mind to beneficiary issues in some manner.  Given these findings, the Court was loathe to make a finding that would overturn the written beneficiary designation under the plan.

Could a tighter drafting of the separation agreement have changed the outcome of this case; for example stating clearly that upon the pensioner remarrying, spouse number 2 is deemed to have released any interest in the pension? – perhaps.  The obvious answer though it is that, for estate planning purposes, all potential assets must be addressed in their own context and parties cannot rely on other contracts to govern entitlement.

July 14, 2015

Penny Wise or Pound Foolish?

As a litigator, I see a lot of the downside to do-it-yourself estate planning.  The recent Ontario Court of Appeal decision in Foley v. McIntyre is a good example.  At issue were certain inter vivos (ie. before death) gifts of proceeds of savings bonds by a father to one of his two children.  While there may have been other reasons for the gifts, the decision appears to indicate that the primary reason for passing on funds before death was to avoid probate and any applicable estate taxes.  Avoiding probate may have valid estate planning objectives.  However, as in this case, consideration should be given to the potential for such gifts to be attacked.  Here, the gifts were left open to a claim by the non-recipient child under the doctrine of resulting trust.  Under this doctrine, the law presumes that on a transfer of money from a parent to a child, the child holds the funds in trust for the parent.  To rebut the presumption, the donee child is required to lead evidence that indeed the parent intended to bestow a gift.  If the gifting parent is now dead, that may not be so easy.

While the trial judge and the Court of Appeal found that there was sufficient evidence to rebut the presumption of resulting trust, I suggest that there were danger signs.  For example, the donee child also held power of attorney.  As well, two of the gifts were made after the parent had suffered a second stroke and was hospitalized.  Fortunately for the donee child, the parent had provided written instructions to his financial advisor regarding the gifts and the trial judge accepted the evidence of a geriatric psychiatrist who found the parent to be competent with respect to his finances (although not with respect to personal care) and rejected the evidence of an expert saying the opposite.

What is also interesting about this case is that the parent’s will left the savings bonds to the donnee child in any event.  Had he left the bonds in his estate, the resulting trust claim could not have been raised.  I suggest that the savings in probate fees and estate taxes were more than offset by the litigation costs incurred in fighting over the gifts made to avoid probate.

Now there may have been other very good reasons for the father in this case to make the gifts that he did.  Perhaps he wanted to see the good that the money could do before he died.  If that was the case – more power to him.  If however, avoiding probate is the only reason for gifting before death, a little professional advice will go a long way.

January 31, 2013

Speaking from Beyond the Grave

The Court of Appeal for Ontario recently dealt with one of the last remaining anomalies to the modern rules of evidence – the statutory requirement for “corroboration” of evidence in an action involving a deceased person.

While in Ontario this rule is embodied in section 13 of the Evidence Act, a similar rule is enacted in many common-law jurisdictions. Section 13 of the Ontario Act states:

In an action by or against the heirs, next of kin, executors, administrators or assigns of a deceased person, an opposite or interested party shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.

In Brisco Estate v. Canadian Premier Life Insurance Company, the Court was not dealing directly with an estate action but an action against a life insurer by the beneficiaries of a policy owned by the deceased. At issue was whether the deceased had or had not canceled the policy prior to his death. The beneficiaries sought to rely on certain hearsay evidence of the deceased, through the beneficiaries, with respect to the deceased’s intentions regarding his life insurance policies. At issue was whether the hearsay evidence was (1) subject to s. 13 of the Evidence Act and (2) if so, whether the evidence was sufficiently corroborated.

The Court went through an interesting analysis of the rationale for s. 13. It noted that the rule is an anomaly to the common-law rules of evidence and is among the last requiring that evidence be corroborated. The Court noted that “[m]ost statutory and common law requirements have fallen away in the last thirty to forty years, including requirements for corroboration of the evidence of children, rape victims and accomplices”. The Court went on to review the purpose for the rule and the possible dangers that may arise from its application:

The purpose of the rule is to guard against fraud in an action against the estate by a party to a transaction with the deceased. This objective is based on the fact that only the survivor’s testimony is available. Section 13, however, is drawn in broad terms to capture not only those who bring an action against the estate, but those bringing an action on behalf of the estate. And, as in this case, the rule potentially captures a case where the court does have the testimony of the deceased, albeit in the form of hearsay. In this latter case, the primary danger lies in the witnesses’ possible perjury, but they are available for cross-examination.

Given the exceptional nature of the rule and its potentially broad application, the Court in this case restrained the rule, stating:

Given its anomalous place in the modern law of evidence, especially in a case such as this, I see no reason to give s. 13 a broad interpretation when considering its application nor a narrow interpretation when considering the scope of evidence capable of corroborating the evidence of the interested party.

In this particular case, the Court determined that section 13 does not apply, finding that “s. 13 is limited to circumstances in which the interested party claims as an heir, next of kin, executor, administrator or assignee and not simply because, coincidentally, the person happens to fall within one of these categories. In this case, the Brisco children do not claim as next of kin or heirs but under a contractual right as beneficiaries of an insurance policy”. The Court therefore clearly restricted the application of section 13 to actions involving an estate itself and the rights of those claiming in the estate.

The Court also seemed anxious to give wide breadth to the type of evidence available to corroborate evidence to which section 13 might apply. In particular, it agreed that corroborating evidence can include an accumulation of circumstantial evidence, notwithstanding that each item or piece of evidence viewed in isolation may not be corroborative.

Given the Court’s generally negative view of s. 13 in this case, is it possible that the section may not be too far from the grave itself?