One of the realities of estate litigation is that it often involves families finding themselves at odds over what should happen to the estate of their loved ones. In some cases, the children of the deceased are involved, but of course, many people choose to not have children or can’t have children. In those cases, extended family members might find themselves involved in an estate dispute. In a recent decision issued by the Ontario Superior Court of Justice, the court heard from the extended families of a married couple who had both passed away by the time the matter made its way to court (though, the wife was alive when the motion was originally made).
Wife Passes Away Prior to Trial
While the husband and wife named in the matter were deceased at the time of the trial, they were both alive when the events triggering it occurred. The wife was born in 1938 and at the time the application was commenced, she was living in a long-term care home and suffered from dementia. The application was filed by extended family on her side. They alleged that the husband (represented by people from his side of the family) breached his fiduciary duty when he sold the marital home and kept the proceeds to himself. The husband had passed away when the application was filed, and his estate was named as the defendant in the suit.
Husband sells Matrimonial Home and Keeps Proceeds of the Sale
The husband and wife were married in 1973. They purchased the family home three years later as joint tenants. They had no children while together and never separated. However, they each had siblings, some of whom had children of their own. When the mother’s health concerns first arose, she continued to live at home with her husband, and signed a Continuing Power of Attorney, appointing the husband as her attorney for property.
When the mother’s health problems worsened a year after her diagnosis and the signing of the Power of Attorney, the father was not able to take care of her medical needs, which were complex. In November 2012, the wife was moved into a long-term care facility. She was diagnosed with Parkinson’s Disease, Alzheimer’s Dementia, and Type II Diabetes among other things.
Just one month after the wife moved into the long-term care facility, the husband severed the joint tenancy and changed it so they each owned a 50% share of the home as tenants in common. His decision to do this is interesting, as we will see later, because it indicated that he intended for the wife to have a share of ownership of the home, despite his actions down the road.
The husband moved into a long-term care facility himself in 2014. Just about a year-and-a-half after the wife left the family home. In March of that year, he sold the house for the sum of $700,000. He signed all the documents for himself as well as in the capacity of the wife’s attorney for property. The net closing funds amounted to $649,996 and were paid entirely to him. It was noted that he also received a refund of $10,450 from the real estate agent. Following the sale of the home, the funds were initially transferred into a joint account held by the husband and wife. However, that same day, $500,000 was transferred to an account in his name, while $100,000 was transferred to another joint account owned by the husband and wife.
Husband Passes Away leaving the entirety of his Estate to his Siblings
The husband died in July 2015. In his will, which was drafted the summer before, he made no provisions for the wife. Instead, he divided his estate evenly between his siblings (or their children if the sibling was deceased). The court stated that money held in joint accounts between the husband and wife stayed there, but the money in the husband’s bank accounts were distributed by the executor of the estate (sooner than they should have been).
Following the husband’s death. The extended family of the wife grew concerned that there might not be enough money in her accounts to provide her with the care she needed, including the costs associated with living in an assisted-care facility. Additionally, the family was aware that the home had been sold and thought the amount of money available to the wife was lower than it should have been considering the couple’s home had been sold the year before. They were also concerned that no provisions were left to the wife in the husband’s will.
The wife passed away in 2020 due to COVID-19. Her family alleged that the husband owed a fiduciary duty to his wife and breached it when he sold the house without directing any of the proceeds to her. The sought to collect the wife’s share of the home sale in order for it to be distributed to the estate.
Did the husband owe a Fiduciary Duty to his Wife in his Capacity as her Power of Attorney?
The court found it was clear that under the Substitutes Decision Act, the husband owed a fiduciary duty to the wife the moment he became her attorney for property. While serving in that role he was prohibited from using the power for his own benefit without the wife’s consent. When he received the proceeds from the sale of the house. The court stated he appeared to intend to see that the wife received half of the proceeds from the sale, but that the money ultimately stayed in the hands of the estate.
The court ordered that the estate of the husband pay the estate of the wife the money that she should have originally received from the sale of the house.
Contact Derfel Estate Law for assistance with Will Challenges, Powers of Attorney or Executor Disputes
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