How to make a group gift like Coach Dean Smith’s

Recent media reports state that Dean Smith, coach of the University of North Carolina Tar Heels basketball team, left a gift of $200 to each former letterman player that he coached. One of the players posted a copy of the letter and cheque on Twitter and it went viral.

Occasionally our clients wish to do something similar, for example business owners wanting to leave gifts to employees of their company. Such gifts tend to leave a significant emotional impact regardless of their amount, in part because they are usually unexpected.

Here are a few comments and suggestions for BC residents thinking about implementing a group gift in their estate plan:

  1. Take care to clearly define the group of recipients. Coach Smith specified that his bequest was to each varsity basketball letterman he coached. If a gift is made to employees as a group, it should specify for example whether it is employees at the time of death only or at some other date, and whether it is all employees, or some subset (e.g. full-time).
  2. Making the gift in a will means that on death, all recipients will need to be given formal notice of the application for administration and a copy of the will which you may prefer to keep more private. This adds a significant administrative burden. Also, if the will is challenged for any reason, including a wills variation claim by a spouse or child, the beneficiaries may have to wait a very long time to receive their gifts.
  3. One way to avoid the above hassles involved with making a group gift in a will is to instead leave the total amount of the gift to a trusted individual and give that individual written wishes to in turn make the gifts to group members. However, you have to understand and accept that this is not a binding legal arrangement.
  4. Another option is to cause the gift to be paid from an inter vivos trust that you create during your lifetime, or from the proceeds of a life insurance policy. These vehicles can be kept more private and do not require the same level of disclosure that a will does.

If you may want to do something like this, talk to your advisors.

Garner v. Garner – Can you obtain a court ordered visitation schedule with an elderly parent?

Several years ago, the B.C. Court of Appeal, in Temoin v. Martin, 2012 BCCA 250 [Temoin] discussed the application of a time-honoured principle that English and subsequently Canadian courts had established and which became known as the Court’s parens patriae jurisdiction. Historically, the parens patriae doctrine (which literally means “parent of the country”) vested the Court with the authority to make orders in the best interests of children that were in need of protection. Temoin clarified that the Court’s powers under the parens patriae jurisdiction can also be invoked to make orders necessary for the protection of elderly individuals that have not been formally declared incompetent or incapable of managing their affairs. In Temoin, the Court held that in appropriate circumstances it could make an order compelling an elderly individual to submit to a medical capacity assessment. We provide a detailed discussion of the factual background and the Court’s decision in Temoin in our 2012 blog post discussing “Court Ordered Examinations to Determine Incapacity in British Columbia”.

Since 2012, the Temoin decision has received very little judicial consideration. However, a recent decision of the BC Supreme Court, Garner v. Garner, 2015 BCSC 109 [Garner], provides an interesting illustration of how lawyers, relying on the Temoin decision, may seek to expand even further the circumstances in which the Court’s protective powers may be invoked in relation to elderly individuals.

In Garner, the plaintiffs invoked the Court’s parens patriae jurisdiction for the purpose of fixing a visitation schedule with their 90-year old mother, Mrs. Garner. Mrs. Garner was suffering from dementia and, due to her health, was living with her daughter. Mrs. Garner also had three sons. As the siblings were unable to agree on a visitation schedule, the sons sought a court order granting them specific visitation rights with their mother.

The evidence showed that Mrs. Garner was well cared for and that she experienced considerable anxiety during visits with her sons, which adversely affected her health. Due to her anxiety, Mrs. Garner herself advised her doctor that she did not want any more visits with her sons. After reviewing the Temoin decision, the Court determined that its parens patriae jurisdiction must only be exercised for the protection of the individual on behalf of whom the protection of the Court is sought, not for the benefit of any other party. In this case, the medical evidence indicated that it would not be in Mrs. Garner’s best interests to grant the visitation rights sought by her sons. Furthermore, there was no evidence indicating that the sons’ inability to visit their mother in the fashion and frequency with which they desired had caused or would cause Mrs. Garner any harm. As such, the orders sought were simply not necessary for Mrs. Garner’s protection.

The Garner decision draws a distinction between the Court’s power to protect persons who are otherwise, by reason of infirmity, unable to protect themselves, and the Court’s ability to dictate what those persons may do with their time where there is no presence or apprehension of injury to person or property. It is clear that the Court’s protective powers cannot be invoked to infringe the autonomy of vulnerable adults if the court is of the view that the primary beneficiary of the order sought would be a third party.

Young Estate (Re) v. Szabo – Is there sufficient evidence that a gift was intended?

When an individual makes a gratuitous transfer of money or property (other than to a spouse or dependent child), the law presumes that the transfer is not intended as a gift.  Instead, the law presumes that the money or property is held in trust by the recipient.  This concept is called the presumption of a resulting trust.  In any given case, the presumption may be rebutted by evidence of the person’s intention to gift the money or property at issue.

A recent decision of the British Columbia Supreme Court, Young Estate (Re) v. Szabo, 2015 BCSC 388 [“Young Estate”] illustrates the evidence the Court will consider in determining whether the presumption of resulting trust has been rebutted.  The issue in Young Estate was whether a $100,000 cheque given by the deceased, Ms. Young, to the defendant, Mr. Szabo, was held on a resulting trust or, rather, intended to be a gift.

Ms. Young was a 50 year old single mother.  In the spring of 2010, she became friends with a neighbour, Mr. Szabo.  In February 2011, Mr. Szabo was injured at work and, as he had no family or friends in town, Ms. Young offered to take him in and care for him.  While living with Ms. Young, Mr. Szabo assisted with her 9 year old son (helped him with homework and drove him to soccer) and otherwise helped out around the house.   Although sharing a roof, Mr. Szabo and Ms. Young remained good friends – and nothing more.

In the spring of 2011, the two decided to sell their respective properties and purchase a larger, waterfront home together.  They began searching for properties, engaged a real estate agent, and prepared listing agreements for their condominiums.  As Mr. Szabo had significant credit card debt, he discussed the need to reduce his debt with Ms. Young.  On October 6, 2011, a few weeks prior to Mr. Szabo’s birthday, Ms. Young borrowed $100,000 from her bank using a line a credit secured against one of her properties and made out a cheque to Mr. Szabo for the same amount.  Later that day, Ms. Young gave the cheque to Mr. Szabo, who deposited it in his personal account and used the funds to pay off his $53,000 credit card debt.

On October 29, 2011, Ms. Young was found unconscious in her bedroom and passed away in the hospital two days later, without a will.  The administrator of Ms. Young’s estate brought an action against Mr. Szabo for the return of the $100,000 to the estate.  Mr. Szabo argued that the cheque was a gift and relied on the following evidence to prove Ms. Young’s donative intent:

  • Ms. Young held over $100,000 in securities;
  • When she presented him with the cheque, she told him “Happy Birthday”, “I want you to succeed” and “I hope this eases your burden”;
  • He used the funds to pay his credit card debt, as per Ms. Young’s wishes;
  • Certain notes showed that Ms. Young was grateful for his assistance with her son and that she held him in high regard;
  • He helped Ms. Young around her unit;
  • He did not conceal the fact that Ms. Young had given him the funds; and
  • Ms. Young told him that the cheque was a gift and that she was a generous person that helped out friends in the past.

After discussing the relevant case law, the Court held the following:

  • It is the intention of the donor that governs, not the intention or understanding of the recipient or anyone else;
  • Both direct and circumstantial evidence of the circumstances in which the transfer was made must be weighed in order to determine the intention of the donor and the effect of the presumption; and
  • Only when the transferor’s actual intention cannot be ascertained does the presumption tip the scales in favour of the donor or their estate.

After considering all the evidence, the Court concluded that the presumption of resulting trust applied and that, as a result, the $100,000 was property of the estate.  The facts considered by the Court in support of the decision included that:

  • Mr. Szabo’s evidence was unreliable because his memory of his interactions with Ms. Young was impacted by the pain medication he was taking for his work injury;
  • Ms. Young was focused on purchasing real estate;
  • The two were never in a romantic relationship – they were friends involved in a joint venture to buy real estate where each party’s financial contribution would define their ownership in the property;
  • Mr. Szabo initially told Ms. Young’s sister that he held a real estate deposit for Ms. Young;
  • The $100,000 represented a substantial portion of Ms. Young’s net worth;
  • Ms. Young borrowed the funds and it was unlikely that someone in her position would borrow such a large sum to gift to a friend;
  • Ms. Young had a young son whose father provided no financial support;
  • Mr. Szabo paid rent during at least a portion of his stay with Ms. Young; and
  • Following Ms. Young’s death, Mr. Szabo told the real estate agent that he might be asked some questions and that he should state that he did not know anything.

The totality of the circumstances in which the cheque was given to Mr. Szabo suggested that it was not intended as a gift.  Therefore, on the facts of this case, there was a resulting trust.

Thank you to Alexandra Andrisoi for her assistance with this blog post!