One of the unfortunate realities of estate planning is that no matter how carefully one plans for their eventual death and what will happen to their property, there is always the possibility that family or even friends will feel that someone else has taken advantage of the deceased, or that they were not provided for as expected in an estate plan. Valuable family property, such as cottages passed down from one generation to another, are sometimes at the heart of such disputes and can lead to costly litigation, as we see in a recent decision from the Ontario Superior Court of Justice.
Testator deals with most property before death
The deceased in this case (the “testator”) had four children. One of them, including the applicant, “BM.” The testator had appointed her son-in-law, “THT” as estate trustee. The issue arose from BM’s request of a full accounting of the testator’s bank records, medical records, distribution of property, and more. THT says that none of that is necessary.
The testator appointed THT as the sole executor of her estate when she created her will in 2004. At the time of her death, there was no need for probate because there were no real property assets within the estate. The testator had lived on her own before her death, and she disposed of her cottage, which was given to two of her children, as well as her house, which she sold. THT said that probate was not necessary since both the home and the cottage were sold well before the death of the testator and that her TFSA had a named beneficiary, which meant it fell outside of the estate. Despite this, BM claimed there may have been issues of undue influence and capacity.
What details did the executor provide?
THT provided a “fulsome accounting” of the testator’s assets, using a proper court format, in lieu of a formal passing of accounts. He said he had attempted a passing of accounts, but was advised that a Certificate of Appointment would be required for this, which was not necessary because of the size of the estate and the costs that the process would incur. THT also told BM that the TFSA had a named beneficiary, but did not advise her that all of the estate assets were held jointly with surviving individuals. THT said there was no obligation to notify BM about the TFSA, and he did so by accident. However, BM refused to accept that the TFSA was not a part of the estate.
The court noted it is “beyond dispute” that an executor has an obligation to fully and fairly report the assets of an estate to its beneficiaries. In this case, the court found THT provided a detailed accounting of the assets of the estate and that there was no formal obligation to submit the estate to Probate, stating,
“I find that as at the date of this Application, the Respondent has administered and accounted for the Estate in a full and complete manner, while bearing in mind the following: evidence of the Testator’s ongoing capacity throughout all times relevant to this Application; the lack of joint property being held by the Testator as at the date of her death, therefore leading to a presumption of a resulting trust; the fact that the disposition of the cottage was not purely gratuitous; the fact that the TFSA passed directly outside of the Estate via the named beneficiaries thereof; and given the length of time between the disposition of the cottage property and the date of death.”
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