Law Times

Page 8 OctOber 20, 2014 • Law Times www.lawtimesnews.com New ways to lose an inheritance emerging Recent decisions, legislation altering landscape for estates matters By JuDy vAn RhIJn For Law Times hether it's by a time limit, the severing of a joint tenancy or an exercise in public policy, there are numerous new ways to lose an inheritance. It's a significant issue given recent case law and legislative proposals that dare to look beyond the will and rearrange what the testator sought to bequeath. One of the newest enemies to a claim under a will is time itself. In Leibel v. Leibel, the Superior Court applied the two-year limi- tation period to dismiss an appli- cation seeking a declaration that a will was invalid on the basis of incapacity and undue inf luence. "Lawyers are still grappling with the 2002 legislation," says Ameena Sultan of Whaley Es- tate Litigation. "There has been real confu- sion, especially in the estate con- text. This is a strong decision that steers the law in a clearer di- rection. It states that there is an end point at which beneficiaries can no longer make a claim. It can't go on ad infinitum as long as there are assets." In this case, the beneficiary had been compliant with the winding up of the estate after receiving assets and failing to object until two years down the road. "His behaviour was quite startling," says Sultan. "It was clear he knew every- thing he needed to know at an early stage and he went along with it. But even with less stark facts, even if he'd been silent, my interpretation is that the limita- tion period would still kick in." Given that previous cases have already clarified that limi- tation periods apply to equitable claims such as constructive trusts and unjust enrichment, the decision crystallizes that is- sue. "It establishes that all claims to do with an estate should be brought within the two-year pe- riod," says Sultan. There have also been new in- stances of judicial interference based on public policy. It has long been the case that the court can overturn domestic contracts that purport to prevent claims on an estate if the parties didn't execute them properly. It can also strike clauses in the will itself as being against public policy in situations where the beneficiaries lose their entitlement if they challenge the estate or it places repugnant con- ditions on gifts, such as requiring illegal acts, restraining marriage or restricting the alienation of property. Now there's a new public poli- cy angle following the case of Mc- Corkill v. Streed, Executor of the Estate of Harry Robert McCorkill this spring. In it, the Court of Queen's Bench of New Bruns- wick struck down an uncondi- tional gift not because a clause was repugnant but because the beneficiary was repugnant. The testator had left his en- tire estate to an American-based white supremacist organiza- tion. After a review of extensive evidence, the court found the group's purposes, activities, and publications are "disgusting, re- pugnant and revolting," violating Canadian and international laws against the public incitement of hatred. It found no meaningful distinction between gifts with repugnant conditions and those to organizations that have repug- nant purposes where the group's reason for being is contrary to public policy in Canada. Another new development in the public policy area comes in the form of federal legislation that focuses on the inheritance rights of those who murder their spouse or parents. In September, bill C-591 passed second reading and moved to the committee on human resources, skills, and so- cial development and the status of persons with disabilities. It purports to prevent people who murder their spouses or parents from collecting survi- vor's benefits, including the al- lowance of the survivor as well as the Canada pension plan death, orphan, and survivor benefits. It represents an extension of the principle of ex turpi causa — the idea that criminals shouldn't benefit from their crimes — that already provides that a murderer may not benefit from the victim under common law and can't take under a will or collect on life insurance proceeds. On another front, a Supreme Court of British Columbia case has highlighted the problems that can arise when someone uses a joint tenancy as an estate-plan- ning tool. In Semenoff Estate v. Bridgeman, a mother transferred her interest in her land to her four children as joint tenants. After her death, one of her sons resided in the home for many years. When he died, his share went to the oth- er joint tenants instead of passing through his estate to his children as he had hoped. Estates lawyer Charles Ticker suggests the 1.5-per-cent estate administration tax has caused many people to try to find ways to avoid it. "A little knowledge is sometimes a bad thing. People use joint tenancy as a self-help remedy and don't get legal advice. Putting the kids' names on the house so that you won't have to probate it sounds good, but typically I ad- vise people not to do it." He points out that not only does the transfer affect the cap- ital gains tax exemption on pri- mary places of residence, it also exposes the property to claims and creditors and leads to a loss of control over the property. He also cites the Supreme Court decision in Pecore v. Pecore that found that where there's a gra- tuitous gift from a parent to an adult child, there's a presump- tion that it's not a joint tenancy but a resulting trust. "If there are other siblings or difficulties, you can end up with a big fight." LT Lawyers are still grappling with limitation period issues in estates matters, says Ameena Sultan. Focus on Trusts & Estates Law Estate Planning Will & Trust Planning Incapacity Planning Trust & Estate Administration Estate Litigation Legal Opinion Work Advice to Executors, Trustees & Beneficiaries O'Sullivan Estate Lawyers Professional Corporation Ernst & Young Tower, Toronto-Dominion Centre 222 Bay Street, Suite 1410, P.O. Box 68, Toronto on m5k 1e7 w w w.osullivanlaw.com Tel 416 -363 - 3336 Fax 416 -363- 9570 Untitled-1 1 2014-10-14 10:35 AM W

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