Best Laid Plans Awry: Estate Planning problems on Incapacity and Death

Daniel Grice: daniel@integralaw.ca
Estate Planning Problems on Incapacity and Death
Daniel Grice, JD
Best Laid Plans Awry

What is in the estate?
Your Will covers your “estate”
Property, accounts
Location of assets may determine which laws apply
What is not included
RRSPs/RRIFs/insurance if beneﬁciaries named
Joint property/accounts with spouse
What ‘may’ be included
Property joint with a child
Presumption of trust (Pecore)

RRIF/RRSP/TFSAs/Insurance
Beneﬁts
Probate proof investments
Tax Rollovers (RRSP/RIFS)
Spouses
Disabled beneﬁciaries (RDSPs)

RRIF/RRSP/Insurance
Planning Concerns - Taxes
Funds to beneﬁciaries but taxes to estate
Government may trace RRSP/RIFs for unpaid taxes
Yes in Kuchta v. The Queen, 2015 TCC 289
Joint/several liability
Tax tracing may not apply to insurance proceeds
See: Higgins v. The Queen, 2013 TCC 194
Segregated funds typically considered insurance
When tax obligation arose may be an issue

RRIF/RRSP/Insurance
Planning considerations
Do all beneficiaries receive evenly?
Will beneficiaries voluntarily pay taxes?
Are there other funds available to estate?
Young beneficiaries:
May want a separate discretionary trust
beneficiary designation

RRIF/RRSP/Insurance
Beware of double gifts
WESA removed presumption of
advancement
Ensure speciﬁc gift amounts are not
doubled up.
Percentages are always better

Joint Accounts / Joint Property
Beneﬁts
Probate proof accounts
Property can be quickly sold
PTT Exemption on principal residence
under 0.5 hectares
Presumptions (Pecore)
Child added to property without
consideration is considered trustee

Planning Concerns
Child’s creditor / liability concern
Abuse of role by child
Disputes over presumptions
Avoid adding non-residents
Taxes / principal residence
Gifts may be taxed

Bare Trust Agreements
No transfer of beneﬁcial interest
Trustee to hold funds for beneﬁciaries
Distribute on death
Trustee required to remove self on
settlor’s request
Declare Trust on Transfer (PTT)

Cowper-Smith v. Morgan
Cowper-Smith v. Morgan, 2017 SCC 61
Property moved into joint ownership with
daughter
Trust document signed in favour of daughter
Daughter made promises to brother to sell her
portion of home to him prior to her interest.
"Equity enforces promises that the law does
not”

Proprietary estoppel
(1) a representation or assurance is made to the claimant, on the
basis of which the claimant expects that he will enjoy some right
or beneﬁt over property;
(2) the claimant relies on that expectation by doing or refraining
from doing something and his reliance is reasonable in all of the
circumstances; and
(3) the claimant suffers a detriment as a result of his reasonable
reliance, such that it would be unfair or unjust for the party
responsible for the representation or assurance to go back on her
word and insist on her strict legal rights.

Proprietary estoppel
It is not necessary that the party responsible for the expectation own an
interest in the property at the time of the claimant’s reliance — when the
party responsible for the expectation has or acquires sufﬁcient interest in the
property, proprietary estoppel will attach to that interest and protect the
equity.
(2) the claimant relies on that expectation by doing or refraining from doing
something and his reliance is reasonable in all of the circumstances; and
(3) the claimant suffers a detriment as a result of his reasonable reliance,
such that it would be unfair or unjust for the party responsible for the
representation or assurance to go back on her word and insist on her
strict legal rights.

Problems on Incapacity
Merged or gifted joint property
Incapable person on title
Mom and Dad move in with kids
No power of attorney
Power of Attorney but mortgage
Lender unwilling to use POA

Problems on Incapacity
Incapacity concerns
Power of Attorney for all owners
May consider gifting powers
Consider conditions under which
attorneys can gift or transfer assets
Remove diminishing capacity owner

Incapacity
Power of Attorney - Unique uses
Possible to set up trust (not real property)
Power of Attorney limits gifting and transferring
property to attorney
Unless express consent on document
Section 27 Property Law Act
Must be used for the donor’s beneﬁt and not
the attorneys’ beneﬁt

Power of Attorney - Trust Planning
Easingwood v. Cockroft, 2013 BCCA 182
Power of Attorney broad enough to settle
an irrevocable inter vivos trust.
Follow the Will as far as dispositions.
Act in conformity with intentions
Must be current, and not take effect on
death

Power of Attorney - Trust Planning
The key question is in which direction the best interests of
the principal lie. Here, the principal was a man of business
who had executed a will that complied fully with the terms of a
marriage agreement. The trust, in turn, is entirely consistent
with the marriage agreement, the will, and business prudence,
and the trust secured the principal’s assets for his use
during his lifetime. It would be a ﬁction to say the attorneys
were acting in breach of their duty to their principal in the
creation of the trust, when it conforms to all the
arrangements the principal had made.

Committeeship
POAs = only for principals beneﬁt
Committeeship
Patient Property Act. s18
“A committee must exercise the committee's
powers for the beneﬁt of the patient and the
patient's family”
Limited gifting/support/transferring power

Committeeship
The test - Walsh (Re), 2015 BCSC 1992 (CanLII)
Whether a reasonable and prudent businessperson
would view the gift as beneﬁcial to the patient and
his family, given the circumstances that are known at
the time and the possibilities that might arise in future.
paramount importance should be given to the patient’s
own interest, present and future.
Requires a compelling reason. (ie. Necessity, but not
necessarily)

Committeeship
Not approved
Large cash gifts to children [Walsh, 2015 BCSC 1992]
Large wedding gifts to siblings [Anand (Re), 2018
BCSC 34]
Gifts to children and spouse to reduce US taxes.
(Bradley Estate, 2000 BCCA 78)
Permitted
Estate Freeze at 89. O'Hagan v. O'Hagan, 2000 BCCA
79
Gifts intended by parent. (Bradley)

Will issues
Executors
Residency of executors

Also residency of Power of Attorney

Farm Property
Trust planning for may lose roll-over
beneﬁt

Gifts must be fully vested within 3 years

Will issues
Unfair (unequal?) distribution
Subject to variation by spouse or children

List reasonable and coherent reasons in
Will or by a supplementary aﬃdavit.

Second marriages
Irrevocable trust clause

Joint executors

Problem Wills
Homemade or do it yourself
No disposition clause.

Wrong trust age using online kits.

Unclear terms

Interpretation of Wills
Killam v. Killam, 2018 BCCA 64 /

Smith v. Smith Estate, 2010 BCCA 106

“Four Corners” Try First
What does the will say,

Use unless the will is ambiguity/uncertainty,

Arm Chair interpretation
Contemporaneous surrounding circumstances

subjective intentions of the testator

Interpretation of Wills
Killam v. Killam, 2018 BCCA 64
The “four corners” approach provides that the intention of the
testator is to be gleaned from the will itself, and surrounding
circumstances are only to be taken into account if the testator’s
intention cannot be established from the will.
The “armchair” approach requires the court to put itself in the
position of the testator at the time the testamentary document was
written and to consider the contemporaneous surrounding
circumstances in order to ascertain the subjective intentions of the
testator.
Implicit in the “four corners” approach is recourse to the “armchair”
approach if the testator’s intent cannot be made out from the text
of the will alone.

Testamentary Intentions s.58
Estate of Young, 2015 BCSC 182
Hadley Estate (Re), 2017 BCCA 311
is the document authentic?
does it represents the deceased's testamentary
intentions?
What must be shown
deliberate or ﬁxed and ﬁnal expression of
intention
more than expression of like

Estate of Young, 2015 BCSC 182
Does a document represents the deceased's testamentary
intentions?
Factors may include:
the presence of the deceased's signature,
the deceased's handwriting,
witness signatures,
revocation of previous wills,
funeral arrangements,
speciﬁc bequests and the
title of the document
..further is departs from formalities, the harder it gets.

Thanks
Daniel Grice, JD
Integra Law Group
101 - 2776 Bourquin Cres. W, Abbotsford
daniel@integralaw.ca
604.859.7187

Best Laid Plans Awry: Estate Planning problems on Incapacity and Death

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Best Laid Plans Awry: Estate Planning problems on Incapacity and Death