Estates & Wills & Trusts

'Vicious' dispute sees family members fight over wealth

By Rob Lamberti, AdvocateDaily.com Contributor

A recent case in the Ontario Superior Court shows how wealth can tear a family apart, Toronto wills and estates lawyer Matthias Duensing writes in The Lawyer's Daily.

The dispute involved a "particularly vicious case involving three siblings, their elderly mother, a sophisticated game-playing spouse" and a housing developer, writes Duensing, principal of Duensing Law.

It centred on the mother's 10 per cent share of valuable land in Oakville, he says, while the developer held the other 90 per cent.

The court heard the children's father intended for each of them to hold a third of the mother's share, Duensing says. The oldest son claimed a larger share of an unrelated family business to reflect his efforts in managing the family's properties, prompting his siblings to fight his bigger portion in a case currently before the courts, he writes.

Duensing notes the oldest son sold his share of the land to the developer. In turn, the daughter’s husband encouraged his wife and his other brother-in-law to also sell their percentage, believing they could get more than their brother received. To that end, writes Duensing, he convinced his wife, brother-in-law and their mother to sue the developer for $400 million.

The daughter, to avoid tax issues in the U.S. where she was living, denied ownership in the land and dropped her claim against the developer, leaving the youngest brother and the mother as the sole plaintiffs, he writes.

Duensing says in order to avoid losing her share of the land, the daughter and her husband had her mother "sign a new will in 2014 which left the one-third interest entirely to" the daughter. Blank cheques were signed so that the couple "could withdraw income generated from the one-third interest at will," he writes.

By late 2016, the mother was declared unable to manage her property and her sons took over its management as joint powers of attorney, says Duensing. When the sons tried using income generated by the sister's share of the property to pay for caring for their mother, the daughter and her husband used the signed blank cheques and emptied the accounts before the brothers could use it all.

The brothers, in their capacity as joint powers of attorney, asked the Ontario Superior Court to provide a declaration that their sister renounced her ownership interest in her share of the property and that their mother was the legal and beneficial owner of what was previously their sister's share of the land, writes Duensing. They also requested an order requiring their sister and her husband to account for the money they withdrew from their mother's account, he says.

Duensing notes the sister counterclaimed, seeking an order showing she owned the funds as a gift from their mother, that her brothers need to account for the money they withdrew from income generated by her share of the land, and a declaration that "the monies held in the accounts are being held in trust for or as a testamentary gift" for the sister "and as such, the brothers could not distribute or dispose of the property under s. 35.1 of the Substitute Decisions Act (SDA)."

The court found that as of 2014, the sister, with “prior planning, expressed intention, and deliberate conduct” renounced her one-third interest in the land because of American tax issues and the interest consequently reverted back to her mother, Duensing writes.

The money the mother gave to her daughter could be seen as inter vivos gifts, but the court said the daughter could not claim future gifts against all the money in her mother's account. The court found that the signed blank cheques did not constitute a gift of the monies in the account, Duensing writes.

Further, following her loss of capacity, the mother could no longer make any future gifts to her daughter, nor did the court allow the daughter to use the 2014 will or s. 35.1 of the SDA, as s. 35.1(2) of the Act states prohibition against disposition does not apply to testamentary gifts of money, he says.

The court also ordered the daughter and her husband to pay back what they withdrew from the mother's account after she no longer had capacity, Duensing notes.

To Read More Matthias Duensing Posts Click Here