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Tuesday, February 20, 2018

Calgary's Reverend Elvis in trademark dispute with Presley's estate

When you take on the role as the executor of an estate, you take it on for life. That is, unless a court tells you otherwise. You might think that once the estate has been distributed and the Releases signed, that's the end of the work, but that's not the case in every estate.

Recently it came to light that a minister in Calgary, known to his congregation as "Reverend Elvis" who works at a church he calls "Your Grace Land" is in a legal struggle with the estate of the late Elvis Presley. The executors of the estate allege that Reverend Elvis is using Presley's likeness and music with his Elvis-themed sermons, his church that evokes the name of Elvis' famous Graceland home in Memphis, and the use of Elvis' name. Click here to read a news story about this.

Good luck with that, Reverend Elvis. I thought it interesting (and not at all helpful to his legal defense) that he tells reporters how much he loves and respects Elvis Presley. I'm pretty sure the fact that you like the person you're copying doesn't mean it's okay to use his image, music, lyrics, and images without permission.

In any event, I'm not here to speculate about the success or failure of that lawsuit. I'm here to point out how the executors of the estate have a duty to safeguard the assets of the estate for their lifetime.  Of course we're not all Elvis Presley and we don't have people imitating us to draw crowds, but the principle is the same. Even after the dust of the estate has settled, if anything comes to light years later, it's still up to the executors to look after it.

If you're the executor for the estate of any person who produces creative work - music, literature, film, paintings, choreography, photography, sculpture, photography, etc - you will always be responsible for deciding who may use, publish, or reproduce those works.

Tuesday, February 13, 2018

Neighbour denied $100,000 after deceased's cheque bounced

Have you ever wondered what would happen if a person wrote you a cheque but then that person died before the cheque went through? Would the cheque be valid? Would the deceased person's estate have to pay? Would the court uphold your right to receive the funds? Read on to see what the court decided when this happened in Ontario recently.

A woman named Maria Markgraf had received care and assistance from her neighbour, Arlindo Teixeira, for years. Mr. Teixeira had driven Ms Markgraf to appointments, picked up groceries, and fixed things around her house. In recognition of this care and attention, Ms. Markgraf changed her will to include a bequest for $100,000 to Mr. Teixeira.

In addition, Ms. Markgraf wrote a cheque to Mr. Teixeira for $100,000 and told him to take it to the bank right away. The next day Mr. Teixeira took the cheque to Ms. Markgraf's bank. The bank said they had to investigate before cashing it and returned it to him. They didn't reveal to Mr. Teixeira that the account had only $82,000 but Ms. Markgraf also had $200,000 in other investments.

Six days later, Ms Markgraf died. The bank froze her accounts. Mr Teixeira deposited the cheque into his own bank but it was returned because the accounts were frozen. After that. Mr Teixeira tried to deal with Ms Markgraf's estate to recover the $100,000 cheque. He lost the case at trial. He appealed it and lost at that level of court too.

So why would the court say that the cheque for $100,000 could not be honoured? There were a couple of important points. One is that Mr Teixeira helped Ms. Markgraf out of kindness, expecting no reward for it. In other words, there was no contract in place for him to provide care or assistance. Mr Teixeira could not claim the cheque as payment for his time and effort. This means that the cheque had to be classified as a gift.

The second point arose when the court looked at the legal definition of a gift. In order to be a legal gift, the transaction had to meet all 3 criteria for a gift, namely the essential elements of a gift as being: (a) the donor’s intention to make a gift; (b) acceptance of the gift by the donee; and (c) delivery of the gift to the donee.

In this case, the court determined that the first two elements were met, but the third was not. The gift was not delivered and could not be delivered. Although Mr Teixeira received a cheque, the court said that was simply a pledge to pay, and not the gift itself. The gift couldn't be given because there wasn't enough money in the account. The court said that she couldn't give what she didn't have. There was sufficient money in other investments but the bank had no way of transferring money between accounts without direct instructions from Ms Markgraf.

So Mr Teixeira ended up without his $100,000. To add insult to injury, he was ordered to pay $15,000 towards the legal costs incurred by the opposing party.

The judgment doesn't say whether the will stood up as being valid and whether Mr Teixeira still received his bequest under the will.

If you'd like to read the case of Teixeira v. Markgraf Estate in full, click here

Monday, February 12, 2018

What's with executors giving personal items to non-beneficiaries?

What is it with executors who give away the deceased's personal and household items to people who are not beneficiaries of the will? This week I've had several calls from family members who are upset and angry at executors who have given the deceased's car to their son and jewelry to their daughter and half a dozen other things.

Executors, stop it! These are not yours to give away! If you want to give your son a car, buy one yourself. You cannot give away estate assets to people who are not in the will. You wouldn't just take your neighbour's car or your boss's car to give away; why would you take one from your siblings?

I'm not sure why, but some executors seem to be able to convince themselves that personal and household items are somehow not part of the estate or they don't matter. Or perhaps they think that nobody will notice. But you had better believe that beneficiaries know and care when Mom or Dad's items are given away to the wrong people.

Let's clarify the rules. Executors must give the estate to the people named in the will. By law, they are trustees for those people. The household and personal items (cars, jewelry, furniture, paintings, photos, appliances, collections, books, clothing, dishes, computer, snowmobiles, etc) are all part of the estate.

If an executor gives away items to the wrong people, the executor should expect that beneficiaries will be upset and sue them. And those beneficiaries will win. The executor will be held personally responsible for the items given to the wrong people. This means the executor will have to pay for legal fees to defend himself in court, legal fees for the people who won the lawsuit against him, and the cost of the missing item as well.

Doesn't seem worth it, does it?

How much detail should be in an executor's accounts?

I often hear from clients and blog readers who want to talk about an accounting received from an executor on the wind-up of an estate. Sometimes there are complaints but most of the time it's really an open-ended question: how much detail should there be? The following question recently received from a reader is a good example:

"The executors accounts are vague, for example saying cheque as a disbursement but not saying what for. Accountant fees but no billable hours or reasoning. Also it was said that there was more in the estate than the accounts are showing. No balances to bank accounts or receipts are provided."

Disbursements with no explanation whatsoever are not acceptable. The point of the accounting is to provide information.  If the executor knows what the disbursement is for, the explanation must be included. If the executor doesn't know what it was for, then there are bigger problems. The executor needs to own up to the fact that the money is missing.

Typically when the beneficiaries of an estate receive an accounting from an executor, it is a summary of the records kept on the estate. At that point, there would not be copies of bank statements, receipts, or the accountant's bill attached. The use of summary documents is standard procedure and usually it is sufficient.

However, if you are a residuary beneficiary and this is not sufficient, you are entitled to make reasonable inquiries to obtain more detailed information. The key here is "reasonable". Whether a question is reasonable will always depend on the circumstances. Let's look at the accountant's fees as an example. If you know the accountant prepared a tax return for the estate and the amount shown as payment to the accountant seems about right, is there any need to know the billable hour applied? The answer to that might be depend on whether this is the only questionable item on the accounting or whether the accounting is full of mistakes and gaps. Also, if the amount paid to the accountant seems much too high for the services you believe were rendered, then it makes sense to find out more about what the accountant did for the estate.

An executor is obligated to respond to reasonable questions and requests for details. After all, the money in the estate belongs to the beneficiaries and they have every right to know how the executor dealt with their money.

An executor is not obligated to continue to answer questions if he or she has already provided the information that was requested and if the executor simply has nothing else to add. While certainly there are executors who provide weak or even false accounts, there are also unreasonable beneficiaries who make the executors' lives miserable for no good reason by harassing them with continual accusations and questions.

Reasonableness cuts both ways.

Be careful about relying on second-hand information. You  mentioned in your question that "it was said there was more in the account". You didn't mention who said that or how this person would be privy to the deceased's financial information. If you feel that it was a reliable source, you are within your rights to ask to see a bank statement for the day the deceased passed away. Perhaps you could ask the person with the knowledge of a bigger bank balance to prove it. Just be careful of making unfounded accusations against the executor because once you do that, the job of getting along with each other becomes a thousand times harder.

If the executor and the beneficiaries are not happy with the accounting and they reach an impasse, the usual recourse is for one side or the other to apply to pass the executor's accounts through the courts. It's unfortunate when it gets that far because most of the time the parties really should have been able to resolve it between them without needing a judge to referee. Instead, the parties, who are usually family members, end up facing off across a courtroom, slinging mud, spending their money, and ruining their family relationship.

Tuesday, February 6, 2018

The court might be starting to get fed up with too many weak estate challenges - at least I hope so.

Estate litigation hasn't changed that much over the years. Many of our laws, rules, and processes have been in place for a very long time. Lately, however, there just might have been an important shift - or at least the beginning of one - in how things are done.

In the estate of Neuberger Estate v York, the Ontario Court of Appeal didn't seem to like the fact that pretty much anyone could file a Notice of Objection that would bring the informal probate process to a halt while piles of personal and financial information about the deceased is provided to those challenging the will. When the Notice of Objection is filed, an executor would have to go through the courts either to get rid of the objector's claim or to prove the will is valid. Either choice involves time, money, and delays for the estate. This system exists so that people with legitimate concerns about estates have a method of having those concerns brought to the attention of a judge. In Neuberger, the court thought that too many people were filing Notices of Objection when those people did not really have enough evidence for a court challenge.

The court said that in order for a will challenge to go ahead, the person filing the Notice of Objection must first meet a standard of a "minimal evidentiary threshold". This means the person who wants to contest the will must have some minimum amount of reliable evidence available for his challenge. The person must be able to show the court that there is some good reason for the challenge before he can be allowed to proceed with the gathering of information and resulting challenge.

In a way, it seems unbelievable that such rule was not already in effect. We do have some similar protections, such as the requirement to show that there is a genuine issue for trial before certain contests (such as undue influence) may proceed to trial. However, by the time we get to chambers to argue the question of whether there is a triable issue, there has already been considerable delay of the estate, legal fees racked up, and plenty of private estate information divulged to all parties. In other words, there are plenty of people taking advantage of the current (old) system to take advantage and cause all kinds of unjustified legal trouble for an estate. In my opinion, it's a system that is more vulnerable to abuse than it needs to be.

Now the courts are working with the phrase "minimal evidentiary threshold" to try to set some guidelines as to what that threshold might be. The judge in Neuberger said that each case would turn on its own facts, but still we in the legal profession want certainty so that we can provide effective legal advice to our clients.

The application of the phrase so far seems to point to the courts denying individuals who want to contest a will the chance to go on what the judge has called "intrusive, expansive, expensive, slow, standard form fishing expeditions", even though such expeditions have traditionally been the automatic response. The courts suggested looking at solutions more tailored to individual cases including mediation and case management.

I talk to people every day who want to challenge wills because they don't like what they contain. There isn't always a good legal reason for the challenge. They don't like being told that their case is not strong and often want to plow ahead anyway. I hope this type of response from judges will deter those who really don't have a case from using the courts and free up court resources for those who really need them.

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