The Ontario government is considering changes to many aspects of estate law, in response to a need for modernization, as well as the COVID-19 pandemic.
On August 6th, Attorney General Doug Downey held a town hall with the estates bar, facilitated by the Ontario Bar Association, to solicit feedback from practitioners on the changes being contemplated.
The list of topics for discussion was extensive and it is unknown how many of these changes will be pursued, and on what timeline this may occur. However, it is important that practitioners be aware of the proposals and be kept apprised of steps by the Attorney General's office in moving forward.
Virtual Witnessing of Wills and Powers of Attorney
Early in the COVID-19 pandemic, to address the risks of in-person meetings, the provincial government enacted an emergency Order in Council, permitting the execution of Wills and Powers of Attorney to be witnessed virtually during the state of emergency, where at least one of the witnesses was a licensed lawyer or paralegal.1 The Order was recently extended to August 23rd, and may be further extended by the government.2
At the town hall, the Attorney General raised the question of whether the emergency order should be made permanent, modified or lifted. It was noted that other provinces, such as British Columbia, are already converting their ministerial orders into permanent law.
Some participants expressed that this was a necessary change, given the increased reliance on technology in society. Others felt the remote signing of Wills should end so that lawyers can more effectively satisfy their obligations to the testator. With respect to Wills witnessed virtually, but in counterpart, questions were raised about the effect of a partial destruction or loss of a counterpart, as well as whether a full copy of each counterpart would need to be probated, or merely the copy signed by the testator plus the signature pages of the witnesses.
Participants agreed that now is the time to focus on changes in this area, and these changes should go beyond simply keeping or removing the COVID-19 orders. Given that virtual executions have started, it would be difficult to repeal this convenient and flexible option. However, both procedural and substantive issues would need to be considered, such as the format of an affidavit of execution, and the evidentiary issues that would arise with respect to proving the Will.
Holograph Wills
As part of the above-discussion, it was noted that virtual witnessing of Wills and Powers of Attorney may exclude many individuals, such as those who have limited internet access or basic technology skills. Suggestions were made to expand the availability of holograph Wills, which are Wills prepared and signed entirely in the testator's handwriting.
Value of a "small estate" in the new amendments to the Estates Act
The second main topic focused on the value of a "small estate" in the recent amendments to the Estates Act. The legislation, once in effect, would waive the requirement of a bond for "small estates" and would permit a simplified probate procedure to be set by the government for "small estates".
Currently, there is no tax levied, under the Estates Administration Tax Act, on probated estates that are less than $50,000. The question arose as to whether the two concepts and values need to be linked.
As well, suggestions as to the value of a "small estate" were made in the range of $100,000 to $150,000, however it was acknowledged that what is considered a "small" estate value in the GTA could be very different from the rest of Ontario.
It was made clear by the Attorney General that the simplified procedure would not be a mandatory procedure, but would rather be an optional procedure, not only where the net value of the estate is less than a certain amount, but also where the estate itself is fairly uncomplicated. It was also pointed out that the protections afforded by the probate process to estate trustees and beneficiaries should be safe-guarded.
Limitation on degree of consanguinity for inheritance on intestacy
The current scheme of inheritance on intestacy is based on degree of consanguinity (or "kinship") with the deceased, which extends to the most remote surviving members of the deceased's blood line. Only where there is no next-of-kin alive, will estate assets in Ontario become the property of the Crown.3
The Attorney General indicated that his office is considering limits on the degree of consanguinity that would be applied on intestacy, in order to simplify the administration of intestate estates. For example, automatic inheritance could be limited to the deceased's first cousin, once removed. More remote next-of-kin would require a court application or could seek relief from forfeiture under the Escheats Act.
There is no doubt that this restriction would reduce the burden on estate trustees to search for remote heirs. However, a concern was raised that this may increase litigation. As well, concerns about the exclusion of common law spouses on intestacy were raised, with a suggestion that legislative amendments be considered to protect their interests in the same, or similar, manner in which married spouses are protected.
Value of preferential share
Discussion segued into the topic of the "preferential share", which is the base amount that a married spouse is entitled to receive from the estate on intestacy. The preferential share is currently set by regulation at $200,000, with any additional share of the estate being dependent on whether there are children, grandchildren or other issue of the deceased.4
The preferential share was last fixed in 1995, and the question was raised by the Attorney General as to whether this amount should be increased. It was noted that the cost of living has gone up by 60% since 1995, which would make the appropriate number approximately $320,000 today. An alternative proposed was to allow the amount to be indexed to inflation, so that the number can be updated on a regular basis.
Rectification and validation of Wills
With respect to the formal requirements of valid Wills under the Succession Law Reform Act, Ontario has a "strict compliance" scheme, which means that a Will that fails to meet the requirements is invalid, with no ability for the courts to validate the Will. The question was raised as to whether Ontario should move to "substantial compliance", and allow judges the power to validate these Wills, where it is appropriate to do so. It was noted that any new legislation should account for the difference between validating a provision, such as if a witness was missing, and rectifying a provision, where the Will contains an error.
Revocation of a Will on marriage
The last main topic was whether the government should repeal section 16 of the Succession Law Reform Act, which revokes a Will on marriage. Numerous participants agreed that this should be repealed since this provision potentially increases predatory marriages. It was also suggested that the Family Law Act provides sufficient rights to spouses and that this provision is not necessary. It was noted that there had been no consensus on this issue by the Ontario Bar Association's old working group on this matter.
Conclusion
This first town hall with the Attorney General was an opportunity for the estates bar to be introduced to all of the changes being contemplated by the Ontario government. At the town hall, the Attorney General indicated that comments and suggestions could be sent to his attention at Doug.downey@ontario.ca, as well as to the Ontario Bar Association's Trusts and Estates Law section.5
As stated earlier in this article, it is not clear how many of these proposed amendments will be pursued in the foreseeable future. Some changes are more likely than others to be put into effect.
For example, the concept of a "small estate" was discussed in detail in a 2015 report by the Law Commission of Ontario6, and, as mentioned above, steps have already been taken to apply this concept to estate administration tax. It appears that the development of a simplified procedure and the fixing of a value for "small estates" will be a priority for the government.
As well, given the steps already taken by the government with respect to virtual witnessing of Wills and Powers of Attorney during the COVID-19 pandemic, it is likely that legislative amendments will be proposed in this area.
Certain other proposed changes are relatively new concepts and, to date, have not been subject to the same level of attention and scrutiny by either the government or the estates bar. Any one of the proposed changes will have significant impact on estate law in the future and will need very thorough analysis of both procedural and substantive issues.
It is hoped that this first round of consultation will be followed by other similar opportunities for the estates bar to make comments and suggestions, and to be kept apprised of progress on the proposed amendments.
Footnotes
1. To view the Order in Council, please see https://files.ontario.ca/solgen-oic_wills_powers-of_attorney.pdf. For additional information on virtual witnessing, see https://www.pallettvalo.com/whats-trending/how-to-virtually-execute-wills-and-powers-of-attorney-during-the-covid-19-pandemic/.
2. O. Reg. 129/20: https://www.ontario.ca/laws/regulation/200129.
3. Section 47(7) of the Succession Law Reform Act and the Escheats Act, 2015.
4. Section 45(1) of the Succession Law Reform Act and O. Reg. 54/95.
5. By letter dated August 5th, sent out by to various entities, the Attorney General identified the changes being considered and sought input by August 23rd. https://yorklaw.ca/resources/Documents/Estate%20Act%20-%20Consultations.pdf
6. https://www.lco-cdo.org/en/our-current-projects/simplified-procedures-for-small-estates/simplified-procedures-for-small-estates-final-report/law-commission-of-ontario-releases-final-report-on-simplified-procedures-for-small-estates/
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