The case involves a lawsuit by Diane Holliday against the estate of the late Ramadan Guney. Mr. Guney was a wealthy Turkish-Cypriot businessman who owned among other assets, Brookwood Cemetery, the largest cemetery in the UK and one of the largest in Europe. He died at age 74 in 2006 leaving a fortune estimated at £28million.

Ms. Holliday, age 50, sued the estate for support claiming that the deceased was the father of her now 12 year old son and that she had had a relationship with Mr. Guney for 8 years. The claim was brought under the Inheritance ( Provision for Family and Dependants ) Act 1975.

In the proceeding, Ms. Holliday was seeking an order that the estate make “reasonable financial provision” for her and son. The claim is similar to a claim available to a spouse and child under Part V of the Ontario Succession Law Reform Act for support.

Mr. Guney had 6 children from a prior marriage. The children vehemently opposed any payment to Ms. Holliday and her son. One of the siblings, Erkin Guney was actually charged with hiring a hit man to murder Ms. Holliday, but he was acquitted of the charge.

In another bizarre twist, the siblings claimed that their father had been murdered and decided to have his body exhumed.

Ms. Holliday claimed she met the late Mr. Guney at the funeral of Dodi Fayed ( who died in a car crash with Princess Diana in 1997). Mr. Fayed’s funeral happened to take place at the cemetery owned by Mr. Guney.

What was Ms. Holliday doing at Dodi Fayed’s funeral? Well, in 1998 Ms. Holliday claimed that she had a relationship with Dodi Fayed as well and that Dodi Fayed was the father of her daughter. That claim was never proved.

In the current case, the siblings claimed that their father could not have fathered Ms. Holliday’s son as they maintained their father had a vasectomy 30 years before the boy’s birth. One would have thought that would have been a pretty good defence- but the judge ruled against the siblings and he criticized them for their “despicable behaviour” in the court proceedings.

The judge ordered that Ms. Holliday be awarded ownership of Brookwood Cemetery said to be worth between £700,000 and £1.2million as well as other properties including the home she shared with the deceased. In addition, Ms. Holliday was awarded £60,000 a year for support for her and her son.

Sounds like more than a “reasonable financial provision”.

The siblings  have sought leave to appeal and a decision should be rendered on their application in July.

The Court case which has dragged on for over six years has resulted in legal fees in excess of £500000.

Have a great Victoria Day Weekend!

Nothing beats eating Cherry Garcia and listening to the mellow licks of Jerry Garcia and the Grateful Dead.

Unfortunately, the administration of Garcia’s estate was far from mellow.

Garcia died On August 9, 1995 at the young age of 53 of a heart attack just as he was almost finished his treatment at a drug rehab centre.

He left a will and an estate that became mired in messy estate litigation. Several lawsuits involving the estate continued on for about 13 years! Unfortunately, Garcia did not seek expert legal advice before making his will.

Jerry’s executor was his third wife , Deborah Koons Garcia.

The estate was worth about $ 15 million and within months of his death, his executor was facing claims estimated at $ 50 million!

One of the largest claims was made by Garcia’s second wife Carolyn Adams who claimed that Garcia had agreed to pay her $ 5million for support at the rate of $ 250,000 per year. She and Garcia made up their own one page separation agreement without legal advice. Garcia signed the agreement approximately 18 months before his death so that he could get a divorce and marry Deborah.

The problem was that the estate did not have that kind of cash to settle with Carolyn. Carolyn took the estate to Court and won. Deborah appealed and the parties eventually settled for about $ 1.2 million.

A claim was also made by one of Garcia’s daughters Keelan Garcia who felt she wasn’t left enough in the will.  She settled with the estate in 2008 for undisclosed cash and an interest in the Cherry Garcia trademark.

One of the most interesting claims involved Garcia’s guitar maker Doug Erwin. He was the only non- family member named in the will. Garcia left his four guitars to him. However, Garcia’s band siblings in the Grateful Dead claimed that the guitars belonged to the band and not to Garcia personally ( ed. I knew I could make this into a sibling estate dispute). Erwin sued and settled for two of the guitars. At auction, the guitars fetched almost $ 1.8 million!  Erwin then tried to get the estate to pay the taxes arising from the sale. He was unsuccessful in getting reimbursed for the taxes. In Canada, the estate would have had a tax liability based on the increased value of the guitars .

Deborah Koons Garcia turned out to be a pretty astute executor . She was able to pare down $ 50 million dollars of claims to $700,000 according to the 2003 documentary  ”Can’t Take It With You.”( see video link below)

The estate is now generating millions in royalties from sales of ice cream, ties and other merchandise- way more than the money generated by the music.

The Jerry Garcia estate fights underscore the need to get professional advice when making your estate plan. With a proper estate plan and expert advice, many of the expensive and protracted legal fights could have been avoided.

To learn more about the Jerry Garcia estate disputes check out this video:

In an earlier blog, I have written about how large gifts can lead to a sibling estate fights. In order for a gift to be valid, the person making the gift (the donor) must have capacity to make the gift. Furthermore, the donor must have intended the transfer of property to be a true gift.

If there has been no consideration given by the recipient of the gift (the donee) to the donor, the law presumes a resulting trust.

Rothstein, J. in the Supreme Court of Canada decision of Pecore wrote:

A resulting trust arises when title to property is in one party’s name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner.

In other words, if the gift is challenged, the recipient is going to have some explaining to do!

To have the capacity to make a gift, the donor must understand the nature of the gift and the ability to understand the specific effect of the gift in the circumstances.

Capacity tests used by the Court will vary depending on the size of the gift and its relationship to the total value of the donor’s property. So if the gift is very large or represents almost the entire value of the person’s property, the Courts will rely on the higher test of testamentary capacity- that is, did the donor understand what they owned, the potential beneficiaries of their estate and the potential claims that could be made by their beneficiaries.

As well, the Courts will look to determine whether the donor was unduly influenced in making the gift. For example, did the elderly parent make the gift because he or she felt pressured to help a child who might otherwise abandon him or her.

The recent case of Sutherland v Dorland is an example of the expensive and protracted estate fight that can occur when siblings fight over what one sibling claims is a gift and the other sibling claims is being held in trust for the estate of the donor because the donor lacked capacity to make the gift or was unduly influenced by the donee.

The case involved the estate of Eileen Fountain who died on November 29, 2005 at the age of 90. She had two daughters: the plaintiff Julie Sutherland and the defendant Marilyn Dorland. Ms. Sutherland as committee of the estate sued her sister for just over $150,000.00 .This amount represented the total of cheques written by the deceased to the defendant daughter over a period of four years. The trial took place over 4 days between August and November 2010 and judgment was not released until April 27, 2012! This case underscores the delays and expense that can occur when these types of disputes fall into the judicial process.

The judge held that Marilyn, because she gave no consideration for the “gifts”, had to rebut the presumption of resulting trust. Marilyn could not explain the reasons for most of the “gifts”. The challenged gifts represented almost all or a significant part of the estate that would have otherwise been available for distribution. As a result, Marilyn faced a heavy onus to satisfy the court of the legitimacy of the gifts.

In the end, Marilyn was ordered to pay back $ 130,000.00. However, based on a close reading of the decision, Marilyn might not have had the resources to repay the gifts.

To prevent gifts from being challenged, the recipient may very well want to have the gift carefully documented including the reason for the gift. If there is any chance of the gift being challenged by a sibling who does not receive a similar gift, the recipient may want to have the parent undergo a capacity assessment if there is any possible question of incapacity or undue influence.

Recipients be warned. Any gift which is extremely large in relation to the parent’s estate is going to be very closely scrutinized by the other siblings and the Court.

I had a case once where one of the kids went around the house putting post- it stickies on the pieces of furniture he wanted on Mom’s death. The problem was that he was putting those stickies on at a family dinner at Mom’s apartment while Mom was still alive!

It is a good idea to have a conversation with your family while you are alive to discuss the division of your personal property. You may think that your daughter Sally really wants that china casserole when she’s never had the heart to tell you she can’t stand it!

Of course, it is not always possible or advisable to list specific gifts of every piece of jewellery or art you own in your will. Sometimes I have clients attach a memorandum of their wishes. But once again, the parents’ view as to what is fair and equitable may not be shared by their children.

I often find it simpler to insert a clause in the will that the personal items are to be divided as the children agree and failing agreement, the disputed items are to be sold and the cash divided in accordance with the provisions of the will. The threat of a sale can get siblings to reach an agreement when they realize that the disputed items will be sold if they fail to agree.

In many cases, disputes arise as to what stuff there is to divide. Accusations are often made that items were discarded or given away. Therefore, an executor needs to make an inventory of what is in the estate before dealing with any of the property.

It is also helpful to make an inventory of your stuff and values while you are still alive.

A recent article I came across by Mitch Lipka refers to free software and apps that you can download, including What You Own, Know Your Stuff and Allstate Digital Locker or purchase such as Home Inventory ($ 3.99 for Android and $ 4.99 for iPhone).

Dividing possessions after a loved one has died can be very difficult. The family is grieving and there are often conflicting feelings of guilt versus desiring a cherished family heirloom so soon after experiencing the loss of a loved one.

However, I have also come across situations where a beneficiary has helped himself or herself to items without consulting his or her siblings. This often leads to an expensive and drawn out legal fight. That’s why having a detailed inventory is essential.

Of course, it is difficult to come up with a method for dividing items that will be totally fair. There are no set legal rules, but it is very helpful if the family can come up with a system for dividing the personal items.

One technique I have seen used is to divide the items into set lots of approximate equal value and have the siblings draw lots as to who will get to pick first. The siblings pick in order and then the order is reversed for the next round of choosing and so on.

It may be helpful to recruit a close family friend to act as a mediator to assist the parties in dividing the items.

Family photographs and videos are always cherished. In almost every estate fight that I have settled at mediation, the sibling who does not have access to the family photos and videos usually requests copies. With the availability of digital transfer services, it is now possible to scan old photographs onto a CD or DVD. Now with everyone using digital cameras, it is much simpler to transfer photos and videos. The cost of transferring old photos can be shared.

It is not always possible to avoid a sibling fight when it comes time to dividing personal items. Here are some resources I have come across that may be helpful.

Articles:

How to divide possessions after the death of a loved one by Lauren Macy Roberts

Dividing up family heirlooms by Marie Suszynski

Your Money- How to deal with inheriting Grandma’s things by Mitch Lipka

Books:

How to Divide Your Family’s Estate and Heirlooms Peacefully and Sensibly by Julie Hall

The Boomer Burden also by Julie Hall

A recent decision of the Court of Appeal for Saskatchewan in the case of Figley v. Figley is an example where a poor choice of executor can cause the family not only grief but tremendous legal expense.

The facts of the case are somewhat complex but can be summarized as follows. Raymond Figley (the Father) farmed in Saskatchewan. He and his wife had eight children: Jim, Knighton, Merv, Stan, Ron, Gene, Rod and Bonny. The farm grew and in 1969, Figley Farms Ltd. was incorporated and the farming assets were transferred to it.

Father left the farm and moved to Saskatoon in 1971 to be close to his son Merv who had been injured in a bad accident. The parents separated in 1974.

Two of the sons, Ron and Stan remained on the farm and did the necessary work to keep it going. Ron and Stan stated that father orally agreed in 1980 that in return for their work and services, Figley Farms Ltd. would be theirs when the Father died.

In 1997, the Father pressured Ron and Stan to sign written purchase agreements for the land or he threatened to sell it. Ron refused but Stan entered into an agreement with the Father to purchase some land. The deal was never closed.

Father died in October 2007 and his last will dated just a few weeks before his death appointed son Gene as his sole executor. The other siblings claimed that during the last months of their father’s life, Gene worked to alienate the Father from them and from each other.

After the Father died, several legal proceedings were commenced including a will challenge and an application that Gene be removed as executor and the Public Trustee appointed to administer the estate.

At the initial hearing, the judge dismissed the application to remove Gene as executor. The Court of Appeal reversed that decision and ordered Gene be removed as executor and the Public Trustee appointed in his place.

In finding that Gene should be removed from his position because he lacked the good faith and fidelity required of an executor, the Court referred to the following factors:

1. Gene had displayed intense ill feelings towards his family which was recorded in some emails attached to affidavits filed with the Court;
2. Gene accused his siblings of stealing money from their father;
3. In 2007 ( claiming to be acting on the Father’s instructions) Gene spread soil sterilant on Ron’s lawn, killing the grass and causing health problems for Ron;
4. On at least 5 separate occasions in September 2007, Gene told one of his brothers, Jim that he was going “to screw Ron” and that the day before the Father died , Gene had said  “I am going to f…ck Ron over”;
5. Gene did not advise his siblings when their Father became gravely ill and they did not have a chance to be at the Father’s bedside or to be with him when he died;
6. When the Father died, Gene took complete control of the funeral arrangements, a step his siblings found very disturbing ( interestingly the Court did not comment that an executor named in a will has the sole right to make funeral arrangements- perhaps the Court was troubled about Gene’s lack of good faith) ;
7. Gene refused to show his siblings the will;
8. Gene told a sibling that he was going through Father’s records and that he had “worn out a shredder and still had 38 boxes to go.” Such records may have been relevant to the ongoing litigation between Ron and Stan and the estate over ownership of the farm;
9. One month after Father’s death, Gene published a notice to creditors in respect of the Father’s estate in the Saskatoon paper giving creditors one month to file claims without giving personal notice to Ron and Stan, both of whom he obviously knew would have major claims to advance against the estate if they had seen the terms of the will ;
10. Gene had failed to provide an accounting for his dealings as power of attorney as had been previously ordered by the Court.

While it is not unusual in estate disputes to observe hard feelings between the executor and the beneficiaries, the Court found that more than hard feelings were involved here . Rather, there was an intention on the part of Gene to “punish” his siblings, particularly Ron and Stan.

The Court held that the difficulties in this estate giving rise to the appeal were directly linked to the Father’s failure, inability or lack of capacity to foresee the problems which would arise if Gene was appointed sole executor. In view of Gene’s  limited financial resources, the Court ordered the appellants to have their reasonable solicitor and client costs paid from the estate.

Interestingly, the conduct displayed by the executor towards his siblings in this case is not that unusual. I regularly come across it in my practice.

This case will be added ammunition to rely upon when seeking an Order  to remove executors who go beyond “hard feelings” and act in bad faith with punitive intent towards their siblings.

Margaret Fawson had three brothers. She made a will disinheriting two of her brothers, Jim and Frank.

Margaret asked a friend to recommend a good lawyer because she wanted to make a will that would withstand any challenge by her brothers.

By all outward appearances, Margaret seemed normal. She had a good government job and socialized with friends.

Margaret blamed her brothers for putting their late mother in a nursing home and she accused them of wanting to take their mother’s money. She never forgave them for the role they played and therefore, she wanted them out of her will. None of Margaret’s co-workers or friends thought anything of this. They took Margaret at her word.

Margaret never accepted that her mother had dementia even when the diagnosis was without question. When her mother died, she insisted on an autopsy because she believed her mother had been murdered. The autopsy disclosed that the cause of death to be complications of dementia and probable Alzheimer disease.

Margaret’s thinking when it came to her brothers was mistaken and not based on fact. She really had no reason to blame them for what happened to their mother.

Jim and Frank argued that Margaret’s will could not stand because she was delusional when she made the decision to leave them out of the will.

I must say if Jim and Frank had come into my office, I would have been hesitant to take on the case. The decision does not mention the extent of the estate, but it appears to have been somewhat modest.

Jim and Frank relied on the medical and nursing home records of their late mother to prove their sister’s delusions! Indeed, the mother’s records were filled with instances of Margaret acting in a bizarre fashion when interacting with the nursing home staff for example making requests that she be allowed to take her mother on outings when it was clear beyond doubt that her mother was in no condition to leave the home.

A forensic psychiatrist gave a retrospective assessment that opined that Margaret was suffering from a delusional disorder. However, she also stated that her opinion was speculative at best. She said it was possible Margaret’s delusions impacted on her testamentary capacity but ultimately it was for the judge to decide.

The judge ruled that Margaret’s delusions affected her testamentary capacity and ruled the will invalid. The judge also noted that there is a difference between delusions and errors in judgment.

The case points out that a lawyer taking instructions must carefully review family dynamics with the client who is making a will. If the client says that she wants to leave out a relative the lawyer should ask probing questions to determine the client’s reasons. It is difficult to see how the drafting lawyer in this case could have realized that Margaret’s thinking was delusional. After all, it is not unusual for siblings to not get along.

Perhaps this case is unique to its particular set of facts or maybe it opens the door to creative litigants to build a case challenging a testator’s mistaken and delusional beliefs about them.

In earlier blogs , I have written about the ongoing family fight involving the Rinehart family of Hancock Mining in Australia and the Samsung family feud in South Korea. Both of these family fights involve companies worth billions of dollars.

While one may not think of a Church ministry as a business, the Crystal Cathedral Ministry in California appears to be the latest victim of sibling rivalry. The Crystal Ministry was founded over 50 years ago by the Rev. Robert H. Schuller  in a California drive- in theater. The ministry eventually became one of America’s “megachurches” with up to 10,000 members at one point.  Rev. Schuller became a TV fixture preaching on the “ Hour Of Power” from the $ 18million Crystal Cathedral Church.

Unfortunately, Rev. Schuller who is now 85 , developed  dementia  and had to step down in 2006 when he turned over the reins to his only son Robert A. Schuller. However, Robert Jr.’s  sisters and his brothers-in law , some of whom were board members, did not get along with Robert Jr.  He accused them of manipulating his father who had diminished mental capacity. Robert Jr. decided to leave the ministry in 2008.

The Crystal Cathedral Ministry suffered financially and the megachurch building was recently sold in bankruptcy proceedings to the Catholic church. According to an interview given by Robert Jr. in the Washington Post, it was sibling rivalry that led to the demise of the church. He also pointed out the lack of an independent board of directors.

This sad tale of a failed “family business” underscores the need for proper succession planning for the family business. The business owner needs to consult outside advisers such as lawyers, accountants and insurance specialists. As well, the business owner should consider appointing non-family members to sit on the board and/or management team. If the succession plan is to work, it is important for all siblings to be involved in the process whether they are involved in the business or not. A family business meeting chaired by a mediator can assist the business owner and all family members to draft a plan that will avoid a sibling fight that could potentially destroy the business.

More and more, I am seeing siblings getting involved in fights over powers of attorney granted by their parents. Judges are becoming increasingly concerned with this type of litigation and are openly expressing their exasperation. Judges in these types of cases will base their ruling on the best interests of the elderly person who is at the centre of the dispute.

The ultimate question the Courts have to deal with is- who is to pay for the expensive litigation? In Ontario, the loser will usually be called upon to pay costs. However, where the litigation involves a fight over an elderly person who is still alive, the Courts are not inclined to allow costs to be paid out of the elderly person’s assets.

The high cost of power of attorney litigation and the need for reform has been the subject of judicial comment and criticism.

In a 2010 Ontario case called Re Baranek Estate, Justice Brown wrote:

“The so-called “battle of competing powers of attorney” is emerging as a growing area of litigation. This is a most unhealthy development. I suspect that when the Legislature passed the Substitute Decisions Act back in 1992 it intended to put in place a legal framework which would protect the affairs of the vulnerable elderly, not spawn a new breed of litigation which would see the hard-earned money of the vulnerable being exposed to claims for the payment of legal fees incurred by those whom they had appointed to protect their interests. In so commenting I am not passing judgment, one way or the other, on the conduct of Mr. Coon or Ms. Biegun. I am signaling that the inter-attorney litigation which erupted in this case is symptomatic of a much larger problem which, as Ontario’s population ages, risks turning into a very serious social issue. Indeed, I think the time may have arrived for the Legislature of this province to look into this problem of litigation involving competing powers of attorney, especially involving subsequent powers of attorney made during the latter periods of a person’s life when they are vulnerable to pressure, in order to see whether new protections are required to ensure that the assets of the vulnerable are used for one purpose only – the satisfaction of the needs of the vulnerable elderly while they are alive.”

The recent decision of Justice P.J. Flynn of the Ontario Superior Court of Justice in the case of Smith v. Ahonpa is an example of a judge’s exasperation with siblings who use the Courts as an arena to battle their differences without considering the well-being of the elderly parent.

Justice Flynn observed:

“Sometimes the court can’t do much after it has cursed the parties by calling for a pox on both their houses.”

In Ahonpa, the parties, who were brother and sister, were fighting over who should be managing their incapable father’s modest estate of approximately $ 58,000. The parties most likely spent more than that on legal fees fighting with each other.

The Court appointed the Public Guardian and Trustee as guardian to manage the parent’s affairs. The Court was very critical of both siblings but found the applicant Bonnie Smith the main culprit who “escalated the costs of the litigation beyond belief”.

The Judge refused to allow any costs to the parties to be paid out of the parent’s assets (other a modest amount for the capacity assessment). Each party had to bear their own costs and Ms. Smith as an indication of the Court’s displeasure with her actions was ordered to pay her brother $ 10,000.00 towards his claimed costs of almost $ 47,000.00!

The Judge stated that parties in estate litigation involving an incapable person should not expect as a matter of course that their legal costs will be borne by the estate of the incapable person. There must be a sense of proportionality in the costs claimed and the conduct of the parties will also be considered in determining costs.

Thanks to my hero B.B.King for inspiring the title to this blog post.

The fight may be a will challenge disputing the validity of the will based on:

• Lack of testamentary capacity on the part of the testator ( the person making the will)
• The testator’s lack of knowledge or approval of the contents of the will
• Undue influence exerted by someone trying to benefit under the will
• Suspicious circumstances surrounding the execution of the will
• Improper execution of the will

Sometimes, the dispute is not about the validity of the will but rather involves questions arising out of the interpretation of the will. If the parties cannot agree, lengthy and expensive court proceedings are necessary to obtain a judge’s opinion as to what the testator intended.

The best way to avoid an estate fight over a will is to have a lawyer who is skilled and experienced in drafting wills prepare the document. A good estates lawyer will spend the necessary time with the client and make copious notes as evidence of the client’s wishes and capacity and reasons for making specific bequests. If the will is challenged, the lawyer’s notes are available as evidence of the testator’s intentions and capacity. These notes and the evidence of the drafting lawyer can be very helpful in defending against a will challenge.

Unfortunately, many clients do not appreciate the time and effort that is involved in drafting a proper will. They view wills as a commodity and shop around for the cheapest price. This is a mistake. A will is probably the most important legal document you will ever sign.

What should a proper will cost? It depends on the size and complexity of the estate but a recent excellent article by John Poyser suggests that $ 1200.00 is not unreasonable for a proper job to be done. Alas, many clients do not see the value or appreciate the work involved and they retain lawyers who are prepared to treat wills as “loss leaders” or worse, the clients go and purchase a will kit for $ 29.95. These individuals may do such a poor job that they end up causing the estates thousands of dollars in estate disputes.

Mr. Poyser writes:

“ Tax and probate rules have become more complicated. Disputes over estates burn money that would otherwise go to the family. Courts have been very clear over the past decade or two: Lawyers are responsible for avoiding those disputes by being very, very careful when doing wills. Even in a simple situation, a lawyer should spend a minimum of an hour or two face to face with the client.”

So, if you want to avoid an expensive sibling fight over an estate, do your research and retain a lawyer with expertise in drafting wills and be prepared to pay for a proper will.

South Korea’s richest family is embroiled in a huge sibling estate fight according to a recent story in the Wall Street Journal.

The chair of Samsung Electronics Lee Kun- hee is being sued in two separate actions by his eldest brother Lee Maeng- hee and his elder sister Lee Sook- hee for 714 billion South Korean won and 196 billion won respectively ( a total of approximately
$ 810 million) . Lee Kun-Hee is the richest man in South Korea, according to the 2010 Forbes Rich List, with a personal fortune of $7.2 billion.

The dispute centers around shares in Samsung Life, a public company. Samsung Life is one of several affiliates that has holdings in Samsung Electronics, the largest company in Asia by revenue.

The siblings’ father Lee Byung-chull founded Samsung in 1938. When he died in 1987, his third son, the defendant Lee Kun- hee took over as Chairman of the Samsung empire. The lawsuit filed by his older brother alleges that their late father placed shares and assets in a trust in the name of non-heirs and that these assets should have been divided among the heirs in accordance with South Korean law. The Plaintiffs are alleging that their younger brother secretly hid these assets from them.

According to the WSJ, some industry watchers believe the seeds for the fights were planted decades ago when the siblings’ father ignored Confucian tradition that holds family fortunes and businesses should pass first to the eldest son.

The dispute between the sibling heirs to the Samsung empire underscores the importance of succession planning and discussing your estate plan with your children.