B.C. Law Institute Report on New Probate Rules

The British Columbia Law Institute has published its Report on New Probate Rules. The Report includes recommended draft provisions for the Supreme Court Civil Rules that dovetail with the new Wills, Estates and Succession Act (the new Act has been passed, but is not yet in effect as of the date of this post).

The approach taken in the Report is outlined in the Executive Summary as follows:

The Project Committee’s approach to reform of the probate rules was fourfold. First,there would be an attempt to design an optimal procedure instead of simply improving on the existing one. Second,aspects of probate procedure that have outlived their usefulness would no longer be retained simply for historical reasons. Third, in recognition of the fact that unrepresented persons initiate much probate business, procedures would be simplified where possible. The revised probate rules would provide more explicit guidance than Rules 61 and 62 now do. Fourth, differences between procedures in probate matters and general civil procedure as remodelled under the new Civil Rules would be harmonized to the extent possible.

Brewster v. Lenzi

Peter Lenzi and Lena Lenzi owned a condominium together. They were married, and it was the second marriage for each of them. They owned the condominium as joint tenants, meaning that on the death of one, the title passed to the survivor.

They made wills together. Mr. Lenzi’s will had a provision that if he outlived Mrs. Lenzi (in which case he would own the condominium as the survivor), a one-half interest would go to Lena Lenzi’s niece and nephew on his death. Similarly, Mrs. Lenzi’s will provided that if she outlived her husband, a half-interest would go to his daughter, Lorraine Brewster, on Mrs. Lenzi’s death.

Peter Lenzi passed away before his wife. Mrs. Lenzi arranged through a lawyer to have the condominium transferred into her name as the survivor. Ms. Brewster was the executor of Mr. Lenzi’s will. When Mrs. Lenzi’s lawyer transferred the title to the condominium into Mrs. Lenzi’s sole name, he wrote to Ms. Brewster’s lawyer and advised that Mrs. Lenzi and Mr. Lenzi intended that the survivor of them would leave a half-interest to the intended beneficiary of the first to die. He further advised that Mrs. Lenzi intended to honour that arrangement by leaving a half-interest in the condominium to Ms. Brewster.

Mrs. Lenzi later changed her mind, and made a new will in which she did not make any provision for Ms. Brewster. Somehow Ms. Brewster found out about the will.

Ms. Brewster sued Mrs. Lenzi, alleging that Mrs. Lenzi and Mr. Lenzi had a mutual will agreement, and that Mrs. Lenzi was bound by that agreement.

Mr. Justice Bracken in Brewster v. Lenzi, 2010 BCSC 1488, agreed with Ms. Brewster. He found that Mr. and Mrs. Lenzi had made a mutual wills agreement with each other, and Mrs. Lenzi broke the agreement by making the new will. He imposed a constructive trust on a half-interest in the condominium in favour of Ms. Brewster. On Mrs. Lenzi’s death, Ms. Brewster will be entitled to the half-interest in the condominium.

This case is unusual in a couple of respects. First, most mutual will claims are brought after the death of the surviving spouse. In this case, Ms. Brewster found out about Mrs. Lenzi’s will before Mrs. Lenzi’s death, and brought the suit during her lifetime.

Secondly, in most successful mutual will cases, there is an express written agreement between the spouses (usually spouses, but you can make a mutual will agreement with someone who is not your spouse). The agreement may either be set out in the wills, or in a separate written agreement, signed by both spouses. The fact that spouses make mirror image wills (wills in which each provides that if he or she outlives the other part of the estate will go to beneficiaries related to or chosen by one spouse and part to beneficiaries related to or chosen by the other spouse) is not sufficient to prove a mutual wills agreement.

If Mrs. Lenzi had not instructed her lawyer to send a letter to Ms. Brewster’s lawyer acknowledging the agreement, I think it would have been very difficult for Ms. Brewster to prove that her father and Mrs. Lenzi had a mutual will agreement that bound Mrs. Lenzi to keep Ms. Brewster as a beneficiary of a half-interest in the condominium.

United States Court House, Los Angeles

I took these photographs of the United States Court House in downtown L.A. in 2009. Here is the wikipedia description of this courthouse.

Re Hall Estate

When executors and trustees account for their handling of estates, they need to be prepared to explain large expenditures.

In a recent decision in British Columbia, Re Hall Estate, 2010 BCSC 1510, Master Baker declined to pass an executor’s accounts without further explanation from the executor of almost $96,000 in accounting fees.

The executor of Gordon Hall’s will was Mr. Hall’s accountant, John Sims. Gordon Hall died on May 19th, 2007. In his will, he left half of his estate to the Salvation Army, and the other half to such charities as his executor appointed.

Before Mr. Hall died, he became incompetent to manage his affairs. Mr. Sims was appointed by the court as his committee (or adult guardian). As committee, Mr. Sims had passed his accounts before the Public Guardian and Trustee of British Columbia up to February 27, 2005. But after Mr. Hall’s death, the Public Guardian and Trustee is no longer involved in approving a committee’s accounts, Instead a committee may get approval of the accounts from the executor or administrator of the deceased’s person’s estate, or where the committee is also the executor, from the beneficiaries of the will.

The Salvation Army did not approve of Mr. Sims' accounts for acting as committee or executor. It was concerned with the amount of accounting fees, which were charged by Mr. Sims' accounting firms.

Master Baker was not satisfied that Mr. Sims had provided sufficient evidence to justify the accounting fees. He wrote at paragraphs 16 through 20:

[16] The evidence in respect of that expense has been minimal, almost negligible. Mr. Sims confirmed that the fees (with the exception, perhaps, of the accrued portion, above) have been paid. There were no exhibits filed to confirm the accounts or details of them. Three Ernst and Young accounts (May 25, 2007, August 21, 2007, and January 15, 2008, for $4,850.00, $13,600.00, and $9,000.00, respectively) found their way into the court file, attached to a copy of Exhibit 3, the PGT’s letter of March 3, 2006, although the invoices clearly had nothing to do with the letter. The invoice of August 21, 2007, as an example, is brief in the extreme. I can quote it in full: “To accounting and income tax services for the period May 19, 2007 (date of death) to August 17, 2007 and all other services as required - 13,600.00.” There is a handwritten notation on the invoice: “3 months x $4000/mo.” I have no idea who wrote the notation or why. I infer, however, that the invoices may well be typical of the accounting invoices paid. If so, there is a significant dearth of detail and information upon which one can base an assessment of the reasonableness of the accounts. I doubt, for example, that were the accounts for legal services, they would meet the requirements of s. 69(4) of the Legal Profession Act[3]:

A bill under subsection (1) is sufficient in form if it contains a reasonably descriptive statement of the services with a lump sum charge and a detailed statement of disbursements.

I assume that there are time records that would relate to and possibly explain these accounts but if they exist I haven’t seen them.

[17] One of the accounts concerns me for other reasons. The invoice of May 25th, 2007 states that the accounting fees are for services: “...including payment of accounts, investment of funds and all other services in regard to the affairs for the period ended May 18, 2007”.

[18] This concerns me because Mr. Sims seeks a fee, as committee, for, in part at least, those very services i.e. the payment of accounts and investment of funds. How can it be that both he, as committee, and the firm, as accountants, should be remunerated for the same services?

[19] Moreover there is the broader concern: the total accounting fees, whether they total $95,988.15 or $98,028.19 seem disproportionate given the entire estate was valued at $1,100,000.00, and given that after two years’ committeeship and the investment restriction imposed by the committeeship order (para. 4, above) the estate could not have been a complex one. The estate summary for February 28, 2005 to May 19, 2007, in fact, lists only two chequing accounts, a treasury bill, a RRIF, four GICs, the mortgage Mr. Hall held, a small account for his comfort money, and three other accounts (Genus and two Vancity accounts, one for cash and one for securities). Some of these, I understand, were essentially replacements for the others as funds were changed from one institution to the other, or re-invested. So, while Mr. Hall’s funds may have been greater than the average person’s I cannot see how their management, including tax reporting and arrangements, could justify these fees.

[20] It would also seem to me that given that the fees were charged in all instances by firms to which Mr. Sims belonged, it is incumbent on him to be explicit and thorough in justifying them.

In the result, Master Baker declined to pass the accounts, but ordered that Mr. Sims may re-submit the accounts and be given an opportunity to provide further evidence concerning the accounting fees.

Accidental Revocation of Foreign Will

It is fairly common—or at least not unusual—to have property in different countries. It is often a good idea to have separate wills governing property in separate jurisdictions. Each will is drawn by a lawyer familiar with the laws of his or her jurisdiction, and can tailor your will accordingly. On your death, the executor of each will can apply for a grant of probate for the will in the jurisdiction for which it is intended to apply.

But if you have more than one will, it is important that the wills be carefully coordinated. If you change one will covering assets in one country, make sure that you do not accidentally revoke a will you indent to keep in effect for your property in another country.

This is what happened in an Ontario case, Re Estate of Blanca Esther Robinson, 2010 ONSC 3484. Esther Robinson owned property in England, Spain and Canada. She had wills made in Spain and in Canada. In her Spanish will, which she made in 2002, she gave her companion, Dr. Rondel, a life interest in her flat in London England, and provided that subject to the life interest, her property in Spain and England would go to her sisters. The terms of the Spanish will were clear that it governed only the assets in Europe, and her Canadian will governed her assets in Canada.

In 2005, she instructed her lawyer to make changes to her will in Canada. He did so. The Canadian will had provisions for a number of different beneficiaries, including step-children, business associates, her brother-in-law, two nieces and one of her sisters. She later revised her Canadian Will again to provide a gift of $1 million to her companion.

Unfortunately, when she made a new Canadian Will in 2005, she did not tell her lawyer about the Spanish Will. He included fairly standard clauses in the Canadian Will revoking all previous wills, and providing that all of her assets “wheresoever situate” would go to her estate trustee to be distributed in accordance with the Canadian Will. The lawyer went through the new Canadian Will with her clause by clause, and she signed it.

The estate trustee applied for and received a grant of probate of the Canadian Will in Ontario before he found out about the Spanish Will. He then applied to court for directions as to whether the Canadian Will could be rectified delete the revocation clause.

Mr. Justice Belobaba found that Blanca Robinson probably did not intend to revoke the Spanish Will. But he held that the court did not have the authority under Ontario law to rectify the will in these circumstances, where the solicitor had not made a drafting error, and Ms. Robinson knew of and approved the clause, but was mistaken as to the legal effect of the clause.

Ms. Robinson had accidentally revoked her Spanish Will, eliminating the gifts of the English and Spanish properties to her companion and her sisters.

The lessons are that it is important to tell you lawyer if you have wills in other jurisdictions. Lawyers, in turn, need to pay close attention to the wording of wills that they draw when the wills are not intended to revoke wills dealing with property in other jurisdictions, or to affect property in other jurisdictions.