Toronto Estates and Trusts Monitor

On Wednesday I blogged about the decision of the Ontario Superior Court of Justice in the McDougall Estate.  The case involved a handwritten will and codicil made by the deceased that was difficult to decipher.  A dispute arose between the estate trustee and the residual beneficiary about whether the will authorized the estate trustee to make a charitable gift.   Ultimately, van Rensburg J. found that although the deceased had intended that a charitable gift be made, the gift failed because the deceased had failed to specify the amount. 

Given that the estate trustee had already made the $10,000 donation, an issue arose as to what recourse the residual beneficiary of the estate had.  The beneficiary argued that as the donation had been improper, the estate trustee ought to be required to repay it (as well as the travel expenses incurred delivering the funds to the charity).  The estate trustee took the position that notwithstanding that she had made the donation in error, she had acted reasonably and in good faith and ought not to be held personally liable. 

Section 35 of the Trustee Act provides the court with the authority to relieve a trustee from liability for an improper act if it is satisfied that the trustee acted reasonably and honestly.  Additionally, the common law also allows the court to excuse a trustee from liability for an innocent mistake made in good faith. 

Here, van Rensburg J. found that notwithstanding the court determined that the gift to charity was not valid, the estate trustee’s interpretation of the will had not been unreasonable.  Additionally, she pointed to the fact that although the estate trustee had erred, she had derived no personal benefit from the error.  Ultimately, van Rensburg J. found that the circumstances were such that the trustee ought to be excused from liability and not required to repay the estate for the donated funds.

Last week brought us the sad news that Trouble, the millionaire Maltese, has taken her final journey to the dog show in the sky.  For the uninitiated, Trouble was the beloved dog of Leona Helmsley. 

Helmsley died in 2007 leaving a will with some news-making provisions.  She excluded her two grandsons but left her beloved Trouble a trust fund worth some $12 million.  Her grandsons later challenged the will and a sympathetic judge reduced Trouble’s trust to $2 million – still, not bad for, well, a dog!

Unfortunately, Trouble’s post-Helmsley life was not entirely happy.  Despite the fact that Trouble wasn’t involved in convincing Helmsley to leave the will she did (at least, one hopes), she nevertheless ended up being the object of much resentment.  After the terms of the will became public, the poor dog was subject to 20 - 30 death threats!

Helmsley’s brothers apparently refused to care for her so Trouble traveled by private jet to Florida (under the pseudonym “Bubbles”) and was cared for by Carl Lekic, the general manager of the Sarasota-based Helmsley Sandcastle Hotel. 

While residing in Florida, Trouble’s annual expenses were approximately $190,000.  This included $100,000 for security; $8,000 for grooming; $1,200 for food; and between $2,500 and $18,000 for health care – poor Trouble had kidney, er, troubles. 

Although Trouble’s death just came to light last week, apparently she died on December 13.  She was 12 at the time.  Her remains were cremated and are currently being “privately retained”. 

Helmsley’s will specified that Trouble’s remains be buried along with Helmsley, although it is not yet clear whether this will occur.  Pursuant to the terms of Helmsley’s will, the remaining capital of the trust is to be reverted to the Leona M. and Harry B. Helmsley Charitable Trust for charitable purposes.    

It’s not uncommon for people to want to benefit charities in their wills.  While sometimes it can be as easy as simply leaving a bequest, many charities have formal planned giving programs designed to facilitate gifts to their organizations.  Given the unprecedented intergenerational transfer of wealth that is occurring and that is expected to continue occurring for several decades, many charities can be expected to reap the benefits.         

CharityVillage.com and Give Green Canada recently released the International Gift Planning Survey, which aimed to assess the readiness of charities and non-profit organizations to respond to increased opportunities for legacy fundraising.  The survey involved more than 900 gift planning professionals from 25 different countries (with most respondents coming from North America). 

The survey results indicated that 88% of respondents had budgetary resources in their organization allocated to bequest fundraising.  The age of the programs varied.  34% reported that their organization’s planned giving program was more than 15 years old while 31% reported that their organization’s program had existed for five years or less. 

The efforts of those with planned giving programs in place appear to be yielding positive results.  36% of respondents said their organizations had seen an increase in the number of bequests they received since 2005, with 77% of respondents indicating that their organization’s average bequest size was more than $25,000 and 36% indicating that it was more than $50,000. 

The most frequently listed secret to a successful planned giving program was saying “thank you” to donors.  Other frequently successful enabling conditions were devoting a dedicated staff and budgetary resources to the giving program, actively marketing the program, and creating and engaging with a “legacy circle” of donors. 

The most commonly named barrier to a successful program was a lack of human resources in the organization.  Another stumbling block that arose was competition from short-term revenue generation sources within the organization. 

These days, it seems like billionaires everywhere are promising to give their wealth away.  However, it’s important to remember that life changing donations can come in any amount. 

In December 1933, an individual using the pseudonym “B. Virdot” placed an advertisement in The Repository, a newspaper in Canton, Ohio.  In it, he offered modest cash gifts to families in need.  He asked that those who were interested write describing their financial troubles and how they would spend the money and he promised to keep their identities secret. 

The offer came at a particularly opportune time for some – it was in the midst of the Great Depression and Canton, an industrial town which then had about 105,000 residents, was struggling.  Approximately 150 people received cheques, most for about $5. 

The donor’s identity remained secret past his death until 2008 when his grandson, Ted Gup, was sorting through his papers and came across one addressed to “B. Virdot”.  As it turned out, “B. Virdot” was actually Samuel J. Stone, who had escaped persecution as a Jew and an impoverished life in Romania, immigrating to the United States and eventually building a successful chain of clothing stores. 

Mr. Gup has since used the letters and interviews with the descendants of some of the letter writers as the basis for the recently published book, “A Secret Gift.”  The book is an account of Mr. Stone’s life as well as the letters that were sent to him and the backgrounds and outcomes of the senders. 

I hope everyone enjoyed a wonderful Christmas! 

I am pleased to announce the launch of my new blog.  I hope to update it often, so make sure to come back frequently to see what’s new. 

If you feel like sharing the content, the share link will allow you to post the blog on various social media sites, such as LinkedIn, Facebook, and Twitter or email it to others. 

I’m always happy to hear from my readers, so if you have any questions, comments, or topics you would like me to blog about, please feel free to email me using the enquiry form on the contact page.  

Have a great day!

Megan F. Connolly