Will Substitutes Flashcards
Why do people use will substitutes?
Need to probate things like real property, can be expensive
Inter vivos gifts
Comply with 3 common law rules: intention, acceptance, delivery
Giftos mortis causa
- Death bed gifts, gifts made in contemplation of death given on death.
- Very hard to prove.
- Delivery standard more relaxed.
- Revocable til donor loses capacity
- Automatically revocable if recovers
Deeds and inter vivos trusts
- When conveying real property has to be done via deed, a piece of paper that looks like a will.
- “Grant conveys to A for life and then to B in fee simple”
- Once formally executed grantor loses all interest
- Grant= inter vivos gift
Contrast deed with will
- Deed, once executed it vests. Will, once executed does not vest til they die.
- Deed irrevocable once perfected, will revocable til death
What are the parties in a trust
- Settler (initial owner)
- Trustee (person with whom legal ownership rests)
- Beneficiary (equitable interest, trustee holds for their benefit_
Tenancy in common
Each tenant owns their respective half, and when one dies, their half goes to their estate. (law presumes this)
Joint tenancy
When one of the JTs dies, the deceased’s ownership interest passes to the other owner immediately upon death, very effective will substitute. There’s no probate fees or capital gains taxes, and it doesn’t go to the state.
Joint bank accounts
Presume right of survivorship
Hansen Est v Hansen
Facts: married couple negotiating divorce, man dies before finalized. Wife claims house they owned in JT that man left to daughters his portion in will. Had to prove JT had been severed
Ratio: a will can’t sever, have to prove it was before he died. Ways to sever: convey your interest, mutual agreement, or by course of dealings
Resulting Trust
- People take as JTs, even though only one party has invested in the property.
- While legally the law of survivorship has operated you are presumed to be holding a portion of that in trust for their inheritants
Resulting trust is a…
Presumption that can be rebutted
When does presumption of resulting trust occur?
- When person gratuitously places someone else on title with them (other JT did not contribute)
- Business partners have this presumption
- Anyone who is not related
Exception for married spouses for resulting trust
For legally married spouses, the presumption will NOT apply. The policy rationale being that people want to provide for their spouses.
Pecore v Pecore (Bank Accounts)
- Gratuitous transfers with adult children= presumption of resulting trust
- Minor children= presumption of advancement
- Look at surrounding factors to determine if presumption can be rebutted.
Presumption of Advancement
- Flip side of resulting trust
- Presumes that the gratuitous transfer was a gift, you were intended to have title to it in both law and equity.
Any property not mentioned in a will is
Residue
Jansen v Neils Estate
To rebut MJ’s argument, IN & R proved that T intended to gift the property to them. The codicil made it clear that T didn’t want the property to be part of the estate. T also actively made a JT w/ R & IN upon buying the property. T had sound legal advice. R & IN were successful.
What happens if estate is beneficiary of life insurance?
- Vulnerable to creditors
- Make beneficiary someone other than estate for this reason
Retirement plan beneficiaries act
Takes rules from insurance delegations and applies them to all manners of retirement plans and things like insurance
How to designate someone as beneficiary for insurance?
- Through plan itself
- Through will but have to identify the plan
What if you named them beneficiary of insurance in will but will deemed invalid?
Designation still stands if properly designated
How to revoke designation in first will?
1) A change in the plan itself
2) A new will (automatically revokes previous wills)
3) Express revocation of entire will
Revocation of a designation by instrument only
If the initial designation was done on the plan you can revoke that through the will (have to specifically identify)
Does revocation of a designation in a will serve to revive prior revocation?
No, does not revive designation in insurance plan
How to override designation in valid insurance policy?
New will has to specify the plan and the designation that it is revoking sufficiently
What about if will is designating a policy in first instance?
It needs to at least generally identify what the plan is (see that they are making the designation in the will)
When trying to figure out what policy governs estate as yourself a few questions (arises with more than one designation generally)
o First: where is the designation? (Will? Policy?)
o If in both: when were designations made? First? Last?—even if something came subsequently may not be enough depending on where it is *most recent is usually the one we follow but can be more complex/trickier than that
Laczova Estate v Madonna Haus
Facts: Had registered savings plans with beneficiaries listed. Also listed plan generally in her will included in a list to be liquidated and distributed to 22 beneficiaries.
Ratio: No express revocation in the will. Must specifically revoke a specific plan. Designation has to be precise enough.
Rehel Estate v Methot
Facts: Ex wife beneficiary under external instrument wrote new will, directing accounts to be cashed specifying RRSP at certain bank and use of proceeds.
Ratio: specific enough, provided detailed instruction on what to do.
Why do people do will substitutes?
Because if something is passed through estate it is vulnerable to creditors
Exemption to protection from creditors
If valid family law claims it can be clawed back
Amherst Crane Rentals v Perring
Succession Law Reform Act found to have the same protection from creditors found in the Insurance Act
Multiple wills
- Another way to avoid probate fees
- Have things that need probate separately, charged based on size of estate
Sophisticated Trusts
Richer you are cheaper to live
