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Estates bar navigates competing decisions

|Written By Anita Balakrishnan
Estates bar navigates competing decisions
Jordan Atin says the disputed language in the wills aims to provide trustees flexibility and save taxes on an estate.

An Ontario Superior Court of Justice judge last week granted the appointment of estate trustees for a will, going against a recent decision by his colleague.

Lawyers say the new decision means that the estates bar is stuck between diverging judicial viewpoints within the same level of court on the validity of primary and secondary wills.

The Nov. 13 decision, Panda Estate (Re), 2018 ONSC 6734, involves the estate trustees of a will requesting a certificate of appointment. The judge, Justice Michael Penny, granted the application, breaking from a September 2018 decision by Justice Sean Dunphy that invalidated a similar set of wills.

“The situation you have now in the law is that the law is unsettled on this point. You actually have precedent going each way. You have a situation in which one judge has said, ‘These primary and secondary wills may fail,’” says Patrick Aulis, principal lawyer at Aulis Law Firm PC in Toronto, who acted on the Panda case for the applicants, Asok Panda and Sunita Rajak.

Lawyers say the pair of diverging decisions raises a legal question that could affect thousands of wills, if a will is a type of trust.

Dunphy’s September decision said a will is a form of trust.

“As with any trust, a valid will must satisfy the ‘three certainties:’ certainty of intent to create the trust, certainty as to the subject-matter or property committed to the trust and certainty as to the objects of the trust or the purposes to which the property is to be applied.”

Penny said in the Panda decision that he disagrees with the assertion that a will is a form of trust.

“No authority was cited for this proposition,” wrote Penny. “A will is a unique instrument. A will shares some of the attributes of a contract and some of the attributes of a trust but it is neither; a will is its own, unique creature of the law.”

In particular, the confusion surrounds certain types of wills that were thrust into question by Dunphy earlier this year due to their use of language called a basket clause.

Basket clauses, and a similar type of clause called disclaimer clauses, have the purpose of providing as much flexibility as possible in apportioning the assets that don’t need probate into a secondary will and, therefore, saving as much probate tax as possible, says Jordan Atin, counsel at Hull & Hull LLP, who was not involved in the case.

“A basket clause basically says, ‘Look, if I don’t need probate for this asset, then put it in the secondary will and don’t pay tax on it,’” Atin says.

“This disclaimer clause says, ‘I’m going to list all the assets that go into the secondary will because they are all the assets that don’t need probate, but if I’m wrong, and one of these assets do need probate, just have it fall back into the primary estate.’”

The use of basket clauses in Ontario has existed since 1998, but Milne Estate (Re), 2018 ONSC 4174, released by Dunphy in September, said a will using a basket clause was invalid because it failed to “describe with certainty” any property that is subject to the will.

Rather, the wills in the Milne case, which is being appealed, left the discretion to the trustees.

The Panda wills used “similar language” to the Milne wills, Penny wrote, although Aulis says the Panda wills did not have the same type of discretion granted to trustees.

In the Panda primary and secondary wills, the estate trustees and the beneficiaries were the same in both wills.

The secondary estate included shares in two companies that did not require probate as well as “any other assets for which my Trustees determine a grant of authority by a court of competent jurisdiction in not required for the transfer, disposition or realization thereof,” Penny’s decision said.

The secondary will also authorizes the trustees to “disclaim any property which would otherwise form part of the secondary estate within 90 days following the death of the testator” where “any property so disclaimed is to form part of the primary estate to be dealt with under the primary will.”

Penny wrote in the Nov. 13 decision that the will’s estate trustees in the Panda case applied for a Certificate of Appointment of Estate Trustee in response to an endorsement by Dunphy, who had rejected the trustees pending a further motion.

But Penny wrote that Dunphy’s assertion in Milne Estate (Re), 2018 ONSC 4174 was “incorrect as a matter of law.”

Penny wrote that there were “substantive issues” with Dunphy’s decision. First, Penny wrote in Panda, there was a procedural issue as to whether it was appropriate to probe the way a will is constructed in an unopposed application that focuses on the validity of the document itself (such as, Atin says, getting the correct signatures in place).

Penny also said there was an issue with whether the will must meet the “three certainties” trust test, as well as the issue of who should be able to decide whether to seek probate for certain assets.

Aulis says that while wills usually form trusts when they crystallize upon the death of the testator, it’s not always the case, such as when an estate is bankrupt.

Atin says there are wills that deal with issues that are unrelated to creating a trust for their property, such as instructions for the treatment of their remains or appointing guardians for young children.

Stephen O’Donohue, principal at O’Donohue & O’Donohue Barristers & Solicitors in Toronto, says his understanding of the law is in line with Penny’s decision, but he says he still awaits the clarification from the Divisional Court on the Milne appeal.

“I think [Panda] is an excellent decision,” says O’Donohue, who was not involved in the case. “We are dealing with a very narrow concept: Do executors have the power to make this determination after the testator has died? I’m of the view that yes, they do have that power.”

Until the Divisional Court weighs in, Atin says, neither Penny nor Dunphy’s decision is binding on other cases within the same level of the Ontario Superior Court of Justice.

“A lot of primary and secondary wills have the same sort of basket clause that says the trustee has discretion, so a lot of them are vulnerable — most of them are vulnerable,” says Aulis. “Ultimately, we are all sitting around waiting for the appeal. . . . Most estate practitioners are hoping that the Milne case is overturned; probably that’s quite likely.”

  • elder fraud

    juien brunelle
    a trusts entity is its own being its not you mush like corporation this is a unic tax entity under public scrutiny ... with its own regulation codes for a tax retum to the public.... Now the collector is collecting fraud tax for the public good when waccko attorneys run embezzilment tax filling on you as you sit in the manner...... they process your personal tax and victimize you..... To understand this you signed all property to a new tax entity before the attorney work-order..... here is the scammmm.... a trustee can apply for trust number..... wrong.... your appointed to trust number and the assets presented to you and successor who appoints your substitute trustee if you fail;;;; attorney work ordered....... you ordered an entity your now flat broke till your account is setup for a trustee appointment to run discretionary orders to be stamp transactions out for you... you get to start or get substituted by your successor.... a limited power of attorney over you till your dead and fills your shoes... to render taxable testamentary dispositions under the entity a lifetime or can be electable base on the trust deed.. its not owned by trustee its own by the permit holders who donated the assets or you cant be substituted as the saliva comes out you of your mouth filling your personal tax fill return by scam attorney ... to fully ripe you off with pro-bait court.... your transaction are not before the public trust are they??????? yet you pay huge tax.... yet own nothing.... the tax is collected under the trust..... victim 1 victim 2 are benefactors no trust deed registered and under income tax 160 snack eye ..... victim 3 the public collecting blood tax from elderly who was being robbed and her benefactors.... a trustee is court appointment to stamp out transaction under and order statement ..... time to time events on year to your binding transaction records before the public trust entity........ a 3 way sign off ..... keys ....... under stand the fraud yet when attorney hides you records process by his bank under his name entity and rant for probate rights. to appoint an executor to your trust deed they just chuck-out
  • elder fraud

    juien brunelle
    when you sign a joint trust bond to create a company of trust your personal tax right are supended this where the scam attorneys do they fake a the trust deed as service trust an keep fiing personal tax yet you revoke both your will making powers and testamentary disposition powers to rev canada into the following trust number under the pubic trust.... basiclic you just need the did submit to the tax man with a court order ... i ran an objection notice them ,, your 7 year to late to appoint a substitute trustee rev 160..... they transfers to you yet nothing is done.... a lemon trust duded its called embezzlement filing....old people are sent to the manner and they keep filing your personal tax nothing is record and they need the pro-bait your last will Finnish the scam and even then they will not submit it or face an audit because it trust deed contract..... fraud..... can rev canada claim its honest tax received for h pubic on a suspend tax account,,,from a contract that needs a clearance certificate... no..... rev 160 the attorney never transferred and tax debt i on him for a public trust account not paid.... its owned by trust number entity for the pubic by the pubic as an entity to retain a tax return...... as your no longer able to produce one......
  • elder fraud

    julien brunelle
    when dealing with joint wills.... I revoke my wills and and a testamentary disposition ... thee are old people heading into the manner ...... all property is sent into trust..... done before an attorney it actual just one will under conditions both spouse want respected...... they both get their own version the attorney opens trust number with rev Canada.... then transfers all property to it with trust number bank account..... the real frauds is committed by attorneys.... who take control yet render no document and treat it s assets as attorney slush fund...... last testamentary fraud... yet thy both revoke that right.... you cant probate a last testamentary.... if revoke is used.... it its govern by the trust deed under tax number an entity... they goat the elders along till their dead and force a pro-bait ranting on will is no longer valid.... elder fraud a will is work order its can b executed before or after your death... when you revoke will making and testamentary dispositions .... your no long doing taxes or buying or sell assets..... your appointed as trustees and if your unable or un willing to process your documents correctly before your successor your substituted .... your in the manor

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