Whaley Estate Litigation Newsletter

Whaley Estate Litigation Newsletter No.2  May 2011




Welcome to our second firm newsletter.  We appreciated all the feedback from our Premiere Edition and look forward to ongoing discussions as we continue to develop this newsletter and our blog.


We invite contributions of topical relevance to be included in our monthly newsletter and on our blog site.  Please direct your feedback, comments or inquiries to:  newsletter@whaleyestatelitigation.com



Kimberly A. Whaley
Whaley Estate Litigation

Award of Excellence in Trusts and Estates Law

It is with great personal and professional privilege that Whaley Estate Litigation congratulates Mary MacGregor, lawyer and friend at Dickson MacGregor Appell LLP, on being awarded the distinguished Ontario Bar Association Award of Excellence in Trusts and Estates.

Mary MacGregor will be presented with this honour at the year-end Ontario Bar Association Estates and Trusts Section Dinner to be held on May 31, 2011 at the Distillery District. 

Our congratulations to you, Mary MacGregor, on an award well deserved.

WEL will join Mary for a toast at the Distillery District on May 31.

News at WEL

AmeenaMs. Ameena Sultan, our associate will be returning from maternity leave on June 1, 2011, and it is with great anticipation that we welcome Ameena back.  Our clients and firm have missed her.

Estate And Trust Tax Tips And Traps From Brian Wilson, Our Mediation Partner 

The Income Tax Act provides that every trust is required to file an income tax return within 90 days from the end of its taxation year.  Many trustees choose not to file returns where there is no tax payable by the trust.  This is not correct.  There is published CRA policy which provides in effect that where total income is $500 or less, a return is not required.  In addition, there are several other specific events stated in the CRA policy that require a return to be filed even if there is no income or tax payable.  An example is where a property is transferred out of the trust to ensure that the 21 year deemed disposition rules does not apply to property in the trust. 

It is also important to note that until a tax return is filed, the tax year will always remain open for possible assessment by CRA.

Taxpayers should consult their advisors to assess the requirement to file a trust return and the risks of not doing so.

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We continually add articles and posts to our blog and will post update notices via Twitter and on LinkedIn.  If you would like to follow blog via our RSS feeds here is the link: 


The Society Of Trusts And Estates Practitioners, (Toronto) Program Held On April 5, 2011

On April 5, 2011, Kimberly Whaley and Suzana Popovic-Montag chaired a program inviting the Office of the Children's Lawyer, the Children's Lawyer herself, Ms. Lucy McSweeney, and the Deputy Director of Property Rights, Ms. Linda Waxman; as well as the Public Guardian and Trustee for the Province of Ontario, Deputy Public Guardian and Trustee and general counsel, Ms. Laurie Redden, to speak to STEP members on the role and requirements of these two offices as it pertains to the practice of estates and trusts. 

It was also our pleasure and opportunity to meet the Accountant of the Superior Court of Justice, Mr. Steven R. Adams, who attended the panel for questions. 

The program was informative with some tips not commonly known and traps of procedural importance. 

Accordingly, there were a few estate and trust related items of interest which we learned, and we in turn, wanted to share with you:

The Children's Lawyer represents the legal interests of children at the request of the Court and pursuant to statute or the Rules of Civil Procedure.

The Office has two distinct legal departments:

  1. Personal Rights; and
  2. Property Rights

Ms. McSweeney and Ms. Waxman presented a Powerpoint presentation, and from that and their talk, we thought the following 15 items would be of particular assistance:

  1. Pursuant to Rule 74.04(4) and (5) and Rule 74.05(3), the Children's Lawyer is to be served with a Notice of Application for a Certificate of Appointment of Estate Trustee, if there is a minor, unborn or unascertained interest in the estate.
  2. The Children's Lawyer automatically represents minor respondents in a proceeding against their interest in a trust or estate, unless the Court orders otherwise pursuant to rule 7.03(2).  The Children's Lawyer, therefore, responds to claims on behalf of minors, unborn or unascertained beneficiaries such as: 
    1. Variation of Trust; 
    2. Applications to Pass Accounts;
    3. Removal of Trustees;
    4. Will Challenges;
    5. Will Interpretations;
    6. Applications for Directions;
    7. Dependant Relief Claims;
    8. Sale / Encumbrance of minor's real estate; and
    9. Guardianship Applications brought in respect of a minor's property.
  3. The Children's Lawyer may initiate a proceeding on behalf of a minor pursuant to Rule 7.02(2) which permits the Children's Lawyer to act as Litigation Guardian for a minor plaintiff or applicant. 
  4. The Children's Lawyer's office does not administer estates, even if the sole beneficiary is a minor.
  5. The Children's Lawyer's office does not act as guardian of property, nor does it hold funds belonging to a minor. 
  6. Unlike custody, a parent is not automatically the "guardian" of his/her own child's property.
  7. A parent or custodian cannot receive property belonging to a minor if it has a value in excess of $10,000.00, absent authority pursuant to the Children's Law Reform Act, R.S.O. 1990, Chapter C.12, section 51.
  8. If a minor's property has a value of less than $10,000.00, the person under a duty to deliver it to the minor may deliver it to:
    1. A parent with whom the child resides;
    2. A person who has custody of a child; or
    3. The child, if the child has a legal obligation to support another person pursuant to section 51(1.1) of the Children's Law Reform Act.
  9. A person who receives the minor's property has the same responsibility as a guardian for the care and management of the property pursuant to section 51(4) of the Children's Law Reform Act.
  10. Where there is no designated Trustee and a minor is named as the designated beneficiary of life insurance proceeds, there is a presumption that those proceeds will be paid into Court pursuant to section 220(1) of the Insurance Act, R.S.O. 1990, Chapter I.8.  The Children's Lawyer must be notified of the payment and be provided with an affidavit which is used to pay the funds into the Accountant of the Court pursuant to section 220(3) of the Insurance Act.
  11. A minor can be registered as the owner of real property in Ontario.
  12. The sale of a minor's vested interest in land or real property is governed by the provisions of the Children's Law Reform Act.  The sale of a minor's unvested interest in land is governed by the Estates Administration Act, R.S.O. 1990, Chapter E.22. The Children's Lawyer's office publishes a guide to practice and procedure with respect to the sale of land, please contact the office of the Children's Lawyer.  
  13. The Children's Lawyer does not necessarily advocate the prudency of an investment in an RESP for a minor.  The concern being that an RESP with assets belonging to a minor is subject to the ownership by the subscriber, often the parent. 

The subscriber may seek RESP contributions at any time, or indeed roll the RESP into the subscriber's RRSP.

RESP contributions may be considered property of the subscriber upon marriage breakdown and subject to equalization.

RESP funds are not creditor-proof in the event of the subscriber's bankruptcy. 

Upon the death of the subscriber, RESP funds may be considered an asset of the subscriber's estate and subject to creditor claims. 

Finally, if an RESP has been established for a minor who does not attend post-secondary education, the savings grant is returned to the government; any interest may be lost; or the subscriber may designate another child as beneficiary.  

The Office of the Public Guardian and Trustee operates the Accountant of the Ontario Superior Court of Justice

  1. Funds held by the Accountant of the Superior Court of Justice on behalf of the minors, are secure and earn interest at competitive rates.  The funds held will be paid out to the minor when the age of 18 has been attained, unless a Will, Court Order, etc. establishes a different or other distribution date. 
  2. Minors' funds are paid to the Accountant of the Superior Court of Justice by the following methods:
    1. Payment into Court may be required by Court Order, in which case the Order must contain information required by Rule 59.03(5) of the Rules of Civil Procedure;
    2. Payment of life insurance proceeds into Court may be mandatory under section 220 of the Insurance Act;
    3. A person holding funds due to a child may pay the funds into Court pursuant to section 36(6) of the Trustee Act, R.S.O. 1990, Chapter T.23. 

How to find out more about the Office of the Children's Lawyer:

Office of the Children's Lawyer (English) 

Office of the Children's Lawyer (French)

The Public Guardian and Trustee for the Province of Ontario

The role of the Public Guardian and Trustee is as follows:

  1. To act as guardian of property and personal care of last resort for incapable adults under the Substitute Decisions Act, 1992, S.O. 1992, Chapter 30;
  2. Conduct investigations into allegations of risk of serious adverse effects to incapable adults under the Substitute Decisions Act;
  3. Review and comment upon private applications to the Superior Court of Justice for Guardianship for the Substitute Decisions Act;
  4. Make treatment and long-term care placement decisions under the Healthcare Consent Act, 1996, R.O. 1996, Chapter 2, Schedule A;
  5. Administer estates of deceased persons who die in Ontario without a Will and without known next-of-kin in Ontario under the Crown Administration of Estates Act, R.S.O. 1990, chapter C. 47;
  6. Perform the functions of the Accountant of the Superior Court of Justice;
  7. Act as litigation guardian of last resort of incapable adults in litigation under the Rules of Civil Procedure, the Family Law rules and the rules of Small Claims Court;
  8. Provide reports to the Court under Rule 7.08(5) on settlements affecting adult parties under disability;
  9. Administer perpetual care trusts of some cemeteries under the Cemeteries Act (Revised), R.S.O. 1990, Chapter C.4;
  10. Pursuant to the Escheats Act, R.S.O. 1990, Chapter E.20, the Public Guardian and Trustee is permitted to take possession of corporate property forfeit to the Crown under the Business Corporations Act, R.S.O. 1990, Chapter B.16 or property escheating to the Crown under the Succession Law Reform Act, R.S.O. 1990, Chapter S.26 or other legislation; and
  11. Monitor the use of charitable property in Ontario to ensure protection of the public interest under the Charities Accounting Act, R.S.O. 1990, Chapter C.10 and other statutes. 
What's new?  Insurance for estate and estate trustee's - what are your thoughts?

WEL recently reviewed the information on the following website: 


It appears that ERAssure provide errors and omissions insurance for estates and Estate Trustees in respect of personal liability and defense costs arising out of litigation relating to estate administration including insurance of the following risks:

  1. Liability arising out of neglect in the administration of an estate; and
  2. Defense costs associated with defending an action based on such negligence, whether actual or alleged.

There are a number of limitations and exclusions referenced in the ERAssure information.

This appears to be a relatively new insurance and it is unknown to WEL to what extent this insurance is offered by other insurers as yet. 

WEL has no direct information on those who have used such insurance. 

Case Review: Are Beneficiary Designations Testamentary and Can an Attorney under a Continuing Power of Attorney for Property Designate a Beneficiary of Life Insurance?

Re Moss (Bankrupt), 2010 MBCA 39 Link to case on CanLii 

In the April 29, 2010 decision of the Court of Appeal of Manitoba, the Appeal Court addressed the appeals with respect to the question of the validity of the execution of six (6) Notice of Change of Beneficiary Forms to life insurance policies. 


The issue raised: whether the Life Insurance Policy Designation Forms were validly executed by the insured, Eliza Moscovici, the mother of the Respondent, Danny Moss, pursuant to The Insurance Act, C.C.S.M., c. 140.  The Respondent Danny Moss, a bankrupt, and former beneficiary of the six policies, contented that his daughter Carrie Moss was the beneficiary, the forms having been validly executed either under Power of Attorney, or by Eliza Moscovici, with the assistance of Danny Moss.


The Appellants, Keith G. Collins Ltd., the trustee in bankruptcy for Danny Moss' estate and BMO Nesbitt Burns Inc. (BMO), who alleged that the forms purportedly executed by Eliza and forwarded to and acted upon by the insurers following Eliza's death were void ab initio as they were not signed by Eliza as required by law.


The Appellants alleged that the trial judge erred in concluding that the forms were validly executed by Danny alone, notwithstanding that Danny and his wife testified to the contrary and had withdrawn defenses that could allow the trial judge to reach such a conclusion.


The appellants sought a declaration that the monies paid to Carrie were the property of Danny pursuant to The Bankruptcy and Insolvency Act. 


"In his initial reasons, the judge set out the issues as he understood them (2009 MBQB 21, 235 Man.R. (2d) 286 at paras. 21-23): Based on the pleadings, evidence, and submissions of counsel, the central factual issues to be determined in these actions are:


1. Did Eliza personally sign all (or any) of the six "Notice of Change of Beneficiary" forms dated April 26, 1996, either without assistance or guided/assisted by Mr. Moss as testified to by Mr. and Mrs. Moss at trial?

In answering this question, there is absolutely no evidence (testimony or documents) to suggest that Eliza personally signed any of these forms without any assistance from anyone.

2. If, as the Trustee and BMO assert, Mr. Moss did not guide or assist Eliza's hand in affixing the signatures to each of these forms, did Mr. Moss sign Eliza's name to these forms?

The Trustee and BMO assert and have the onus of proving, on the civil standard of proof, that Eliza did not sign any of these forms and that Mr. Moss either forged (in the criminal sense) or, alternatively, having regard to the plea in para. 8 of the statement of defense filed in Docket No. BK 97-01-49147, was unauthorized to sign Eliza's name to these forms and did so in furtherance of his plan to defeat his legitimate creditors.  ....

As I understand the position of the Trustee and BMO, whether the evidence establishes "forgery" (in the criminal sense) of Eliza's signature on these forms by Mr. Moss, or Eliza, either expressly or implicitly, authorized Mr. Moss to sign her name on her behalf to these forms (either in her presence or otherwise), any such signing by Mr. Moss (even if it was authorized by Eliza) is insufficient in law to validly change the name of a beneficiary in a life insurance policy having regard to the provisions of the Insurance Act, C.C.S.M., c. I-40 (the "Insurance Act").  ...."

The judge then came to the following conclusions (at paras. 60-61)

I would repeat my conclusions and references to the evidence as set out in paras. 56 and 57, supra. I am satisfied by a totality of the evidence and on a civil standard of proof that when Mr. Moss signed Eliza's name to the six Change of Beneficiary forms in question, he was authorized by her to do so, impliedly, if not expressly, by virtue of the general power of attorney that he held from her at that time (Ex. 1, Vol. 1, Tab. 19), dated September 1, 1995. Moreover, as concluded by the opinions of Ms. Ibrahim and Mr. Purdy, which I accept, it is clear that Mr. Moss had been signing Eliza's name on numerous documents over the years. Most, if not all, of these signatures had legal significance and legal consequences.  ....

I am satisfied that in applying for the insurance and in subsequently executing and delivering the Change of Beneficiary forms to the insurers, Mr. Moss was acting as Eliza's agent (even if I were to disregard the specific power of attorney which he held from and after September 21, 1995, supra).  ....

He then went on to find that the signing by Danny of the forms was not in breach of the Act and commented as follows on the case of Prudential Ins. Co. of America v. Johnson,176 So. 625 (U.S. La. Ct. App. 1937), which the appellants were relying on to advance their position (at para. 68):

On appeal, the Appellants reiterated the position that they took before the judge on a reconsideration motion. They alleged that the judge erred in law in finding that the forms were valid in light of the findings that Eliza did not sign them, which was a finding that was contrary to the evidence of Danny Moss and his wife and gave effect to the defences that they had withdrawn before trial.  The Appellants also argued the decision was contrary to the provisions of The Insurance Act, and that the judge erred by taking the position that it was incumbent on the appellants to prove that the forms had been executed fraudulently. 


The Appeal Court found that the trial judge failed to recognize the fact that specific and key aspects of the respondent's defence had been withdrawn.  The material misapprehension of the evidence was found to be an error considered to be palpable and over-riding.


Given this error, the Appeal Court concluded that the judge erred in his conclusions and disposition of the matter. Moreover, the trial judge's findings that "Danny and Eliza's authority to sign the forms was flawed, firstly because of the withdrawn defences, and secondly because a general Power of Attorney as conceded by the Respondents themselves during the course of oral argument, is insufficient to vest the requisite authority to do so under the provisions of The Insurance Act. None of the Powers of Attorney that Danny was granted, permitted the designation or the alteration of beneficiaries in a policy of insurance. See Desharnais v. Toronto Dominion Bank, 2001 BCSC 1695 (CanLII), 2001 BCSC 1695, 42 E.T.R. (2d) 192."  Link to case on CanLii


The power granted must have been a specific one, and that was not the case.


The Appeal Court came to the conclusion that the Appellants discharged the onus of proving their case as there was no evidence accepted by the trial judge that the forms were signed by Eliza with Danny's assistance and, in fact, the trial judge strongly rejected such evidence.


Accordingly, the appeal was allowed and the Court of Appeal granted the declaration and relief sought by the Appellants. The Appellants were awarded costs of the appeal and the trial, but not on a solicitor-client basis.


The Ontario Substitute Decisions Act, 1992, S.O. 1992, c.30, does not authorize attorneys acting pursuant to a Continuing Power of Attorney for Property to make a Will, which for the purposes of such legislation and the Ontario Succession Law Reform Act, R.S.O. 1990, c. S.26, is defined to include any testamentary disposition, and it is not statutorily within the scope of an attorney's power to change a beneficiary designation which constitutes a testamentary disposition.


An analysis of the relevant Manitoba legislation has not been undertaken in a review of this case.


There is an implication, however, from this case and the authority relied upon, as referenced in the case, that a Power of Attorney document providing for a specific power to designate can validly make such a designation, but how does this obiter comment accord with our Ontario legislation - the Substitute Decisions Act and the companion provisions of the Succession Law Reform Act? How can a power granted by Power of Attorney document do something to alter that which the Attorney itself cannot do under the governing legislation?


This case arguably only adds to the ongoing confusion in this complex area of law.


Moreover, in 2009, our Ontario Court of Appeal in the Richardson Estate v. Mew, addressed the issue of a designation of a beneficiary under a life insurance policy as being akin to a testamentary disposition and the court concluded as follows: 

I do not understand Ms. Ferguson to suggest that she was entitled to change the beneficiary designation, cancel the Policy or cease paying the premiums during the time that Mr. Richardson was still capable of managing his property. To the extent that she makes such an argument, I would reject it.  Given that there is no evidence that Mr. Richardson instructed her to do any of those things, if she had so acted, she would have been in breach of her duty to carry out the donor's instructions.  Furthermore, changing the beneficiary designation to herself would have contravened the prohibition against using the Power for her own benefit, as Mr. Richardson had not expressly consented to such a change.       

After Mr. Richardson became incapable, as has been noted, Ms. Ferguson owed him an even higher duty of loyalty when exercising the Power.  As a fiduciary in a role rising to that of a trustee, she was bound to use the Power only for Mr. Richardson's benefit and any exercise of the Power had to be done with honesty, integrity and in good faith.  There is nothing in the record to suggest that a change in the beneficiary designation, cancellation of the Policy or a cessation of the premium payments would have been for Mr. Richardson's benefit. 

 In conclusion, I see no basis on which to find that it would be an injustice for Ms. Mew to take the death benefit.  Further, there is a juristic reason for Ms. Mew's enrichment - she was the named beneficiary of the Policy.  That designation was never changed and the evidence did not satisfy the motion judge that there were exceptional circumstances justifying a change in the beneficiary designation.  Consequently, there is no basis on which to impose a constructive trust on the death benefit.     


In respect of the beneficiary designation, the motion judge found that the best evidence of Mr. Richardson's intention was that he did not change the beneficiary designation after February 28, 1995, (despite having amended the Separation Agreement twice thereafter), and he continued to pay the premiums on the Policy after that date.  The premium payments made after February 28, 1995, included a period of time before Mr. Richardson was diagnosed with Alzheimer's disease.  The record amply supports the motion judge's finding on this matter.  The motion judge also correctly articulated and applied the legal principles that govern rectification. 

Richardson Estate v. Mew 2009 ONCA 403 (CanLII)

Link to case on CanLii


Richardson Estate (Re), 2008 CanLII 63218 (ON S.C.)

Link to case on CanLii

Upcoming WEL Events

Kimberly A. Whaley will be speaking:

May 16, 2011  -  Bnai Brith Seminar: Financial Predators and the Elderly -- Banton vs. Banton in a Mock Court FormatLink to Bnai Brith website

 May 18, 2011 -  STEP Ottawa Seminar - Advocating the Rights of Older Clients.   Link to STEP Website

 May 18 through May 21, 2011  -  The National Academy of Elder Law Attorneys:  Elder and Special Needs Law Annual National Conference,  Las Vegas, Nevada.  Link to NAELA website.

May 31, 2011  -  St. Michael's Hospital (along with Mark Handelman) on Powers of Attorney.

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This newsletter is intended for the purposes of providing information only and is to be used only for the purposes of guidance.  This newsletter is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.


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Tel: (416) 925-7400 
Fax: (416) 925-7464

Kimberly A. Whaley
C.S., TEP.
(416) 355-3250

Mark Handelman
(416) 355-3254

Ameena Sultan
(416) 355-3258

Amy Cull
(416) 355-3256

Deborah Stade
(416) 355-3252

Bibi Minoo
(416) 355-3251

Joanne Brigmantas
(416) 355-3255

Marcela Okumura
(416) 355-3253

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