The Lawyers Weekly - June 10, 2011

The role of the executor has always been complex, and that hasn’t changed. The composition of a typical estate also remains the same, with perhaps a house, vehicles, household contents and some financial assets. What has changed is the environment in which the executor must perform his or her duties, which has become more fraught with risk than ever. Another related change is the recent availability of errors and omissions insurance for the nonprofessional executor and the estate.

Conflicts with beneficiaries generally involve errors—or the perception of errors—in any or all of the following areas in the

IAN
HULL
administration of an estate:
n Preferential or prejudicial
treatment of certain benefici-
aries resulting in a loss of
entitlement by another bene-
ficiary;
n;Timing issues related to the
sale of real property or various
types of financial instruments
that result in diminished value
of the asset;
n Allegations of conflict of
interest on the part of the exec-
utor whether the executor is also
a beneficiary, or not; and
n;Failure to valuate, or improper
valuation of assets.

Butterworths®

Ontario Insurance Law & Commentary, 2011/2012 Edition

with a mutual fund investment or stock portfolio knows that a significant portion of an estate can quickly evaporate.

We are all aware that society in general is more litigious today than in the past. Individuals no longer look at a lawsuit as a dispute resolution of last resort. The proportion of people who use litigation to reach a divorce settlement is an obvious testament to this trend.

This is compounded by the fact that beneficiaries today have almost-instant online access to information about investment practices, real estate trends, beneficiary rights and just about anything else in which they may be interested. This newfound knowledge brings with it a host of expectations from the beneficiaries that today’s executors must manage.

New Edition!
Consulting Editor: Michael S. Teitelbaum
Factors leading to
increased risk for executors

The “modern family” is now often characterized by second marriages and the blended families that accompany them. In this context, relationships between beneficiaries tend to be more complex. According to Human Resources and Skills Development Canada, over one-third of marriages in Canada are expected to end in divorce before the 25th anniversary. Traditional families make up just 34.6 per cent of all families, compared to 55 per cent in 1981.

In the past, real estate was a safe choice, financial investments were stable and Guaranteed Investment Certificates always seemed to grow six per cent annually. In the past decade, however, it has become evident that real estate and financial instruments are more susceptible to external influences, more volatile in nature—and thus more sensitive to timing—than previously experienced. Anyone

Insuring for personal liability
and defense costs

A new insurance product can provide executors with risk protection. ERAssure — exclusively available with the counsel of a lawyer—is errors and omissions insurance available for the estate and the executor client. ERAssure insures executor clients for the costs of defense and indemnity for damages awarded against them that arise out of errors and omissions committed during the administration of an estate.

ERAssure is available for
estates of up to $5 million in
assets. ERAssure premiums
depend on the estimated value
and complexity of the estate,
type of assets, number and quali-
fication of executors and the
amount of coverage. For a typ-
ical estate valued at less than $1
million, the approximate cost
would be $1,700 for a three-year
term. ERAssure policy provi-
sions include:
n;Claims-made liability coverage
with a single occurrence and
aggregate limit applicable over
the term of the policy;
n;A three-year term that will
cover the typical time frame
required by most executors to
deal with the assets of the estate;
n;First dollar coverage for legal
expenses and indemnity without
deductible;
n;Coverage limits that are sim-
ilar to estate asset values with a
minimum coverage limit of
$500,000 and a maximum
coverage limit of $5 million.

$70 + tax

Approx. 780 Pages Softcover | June 2011 | Annual

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Your One-Stop Legal Guide for Non-Automobile Insurance Law
in Ontario
This concise guide to insurance law in Ontario is designed for
insurance law practitioners, in-house counsel, insurance companies
and professionals. The commentary, prepared by Michael S.
Teitelbaum of Hughes Amys LLP, provides an overview of the
principles and key issues in liability, property and life insurance plus
an annotated review of selected key provisions of the Insurance Act.
Other features include the full text of the Act and related legislation.
Ian Hull co-founded Hull &
Hull with his father, Rodney
Hull, in 1998. He also maintains
a mediation practice through
Hull Estate Mediation Inc. He is
a lecturer at the Ontario Bar
Admission Course and guest lec-
turer for the Canadian Bar Asso-
ciation and the Law Society of
Upper Canada.
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on guard for operational protocols
Key factor: perception of coverage by insureds
Unintended
Continued From Page 10
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noted that the trial judge found
Ecclesiastical was not entitled to
premiums for coverage in June
because it did not tell Kouri there
would be a cost for the 30-day
extension. “Even if it had,” she
said, “the trial judge found that
Ecclesiastical had been negligent
in not determining the issue of
renewal in a timely way, and that
Kouri had as a result suffered
damages equivalent to the pre-
miums paid on account of the
purported renewal.”
The appeal court disagreed.
“What’s interesting is that the
formal renewal was done without
the knowledge of the insurance
company. When the campground
owners received the renewal cer-
tificates, they would have thought
they were bound by insurance
coverage,” said McKillop.
Indeed, noted Gomery, “the
key factor was the perception
the insureds had that they were
covered.”
In his decision, Justice Rus-
sell Juriansz stated that, “The
issue is not Kouri’s authority
under its contract with [the
broker], but its ostensible
authority from the point of view
of the insureds. Whether Kouri
breached its contract is a differ-
ent question from whether the
insureds could rely on the cer-
tificates of insurance.

“On the other hand, if the court’s reasoning is it’s the insureds’ perception [that matters], then what difference does it make what the facts are?

“I don’t think the court had to
do that to get to the conclusion it
reached,” she added. “You could
have resolved this solely on the
language of s. 402. Clearly this was
an issue of principle for the court.”
The decision was not surpris-
ing, said McKillop. “They applied
s. 402 and determined this was a
deemed trust.”
Whether the decision will res-
onate beyond the unusual situa-
tion explored in Kouri remains
to be seen. “We’re waiting for the
other shoe to drop in terms of
whether this will have an impact,”
said Gomery. n