Art. 67 71(?) for the Transitional Provisions on Trusts

Introduction

Book 3 of the CCQ and important areas of spill-over in the code e.g. the family patrimony, matrimonial regimes, nominating a tutor for a will, property institutions and so on (see handout list) and in statutes like pension legislation and taxation legislation.

Transitional rules are also frequently used in this area of the law e.g. a will drafted or a gift given under the old code or a death occurring prior to 1994.

Art. 37 of the transitional provisions governs when the succession opens (i.e. death) and art. 40 says to look at the date the will or gift was signed.

Art. 67 – 71(?) for the transitional provisions on trusts.

Common context in which a.1820 arises is a person on a death bed who rights a check and hands it to someone.

 Could be for payment of a natural obligation (Pesant v. Pesant)

Sabados-Derkach c. Sabados

b/c donor was gravely ill w/ cancer, presumption that gift is MC (made “in contemplation of death”)

this presumption, which comes from Pesant c. Pesant, is rebuttable, but was not rebutted in this case

Note: even if had, lacking necessary form to be valid gift IV (blank cheque e no immed. delivery...)

Topic 1 – Legal Institution and Actors

I. Successions (devolution because of death)

A. Intestate

 Established by law when a person dies without a will. It is sometimes called “legal succession” because it is a default or legal regime operating with suppletive law and presumed intention.

 The inheritors are referred to as the “heirs” (héritiers)

 The actors are: the deceased, the heirs and the interposed liquidator (under the old law the testamentary executor) (arts 776 +).

 By virtue of art. 625, the heirs are seized or step into the shoes of the deceased.

 Spouse gets 1/3 and children get 2/3 (children preferred to wife).

B. Testate

 Here the succession is contained in a testamentary act (a will, a gift mortis causa or a marriage contract).

 The inheritors here are called “legatees” (légataires), by particular, general or universal title.

 The actors are: the testator or testatrix, the legatees and the interposed liquidator (arts 776 +).

 Art. 704 gives the 4 elements of a will:

(i)a unilateral juridical act (no acceptance needed);

(ii)revocable as an expression of one person’s will (hence a prohibition against joint wills in art 704(2) and the art. 706 prohibition against renouncing your right to revoke your will);

(iii)a formalistic act (despite erosions in that area);

(iv)liberality in which the testator is freely and gratuitously giving upon death.

 The CCLC used the language of “heir” and it was not always clear whether that applied to the testate or intestate situation. The designation for both heirs and legatees is now “successors.”

 A succession can be both in intestate and in testate. If there’s a portion of the property not disposed of in the will (i.e. no residual clause) intestacy rules will apply.

 Under the characterization chart in Topic 1 the first organ donation form is not a will because it is lacking the required form for a will (it is not a holograph will, notarial will or a lawyer/witness will under art. 712). The giving of the property in exchange for taking care of the testator was held to be a valid holograph will (though it might look like there was no liberality because of the condition attached and that it was not in contemplation of death). A court said that the Veilleux document was not a holograph will because there was no testamentary intention (art. 714), just a promise (seems crazy but the jurisprudence on this is all over the place, depending on the circumstances etc.).

II Gifts Inter Vivos

 Art. 1806 is for both gifts IV and MC and art. 1807 is for gifts IV specifically, saying that the donor must be divested (become the debtor of the donee). The donor cannot give and hold back at the same time.

 Art. 1807(2) says that the transfer or delivery can be delayed and this does not prevent the donor from being divested. However, art 1808 says that a gift conditional on the death of the donor is a gift MC.

 Art. 1824 requires that a gift be made in notorial form (if not don manuel)

 Under the characterization chart, none of these are gifts IV because they are deficient for form. The organ donor card is not a contract either and the person giving in exchange for taking care of her is not being immediately divested.

 Both the gift IV and the gift are species of liberalities i.e. are gratuitous and subject to formalities. A gift is however a contract and is as a consequence bilateral rather than unilateral. It was easier to see the similarities in the CCLC where gift and will appeared together. However, gifts in the CCQ are in the book on Obligations as a species of contract. This makes it harder now to look for something called “The Principles of Liberalities.”

III Substitutions

 The substitution must be embodied in a gift or a will. There are at least 2 successive liberalities here and there is a charge to deliver the property over (after a stipulated time or at death).

 The 3 actors here are: The donor or testator, the institute (grevé) and the substitute (appelé). The institute is the “owner” of the property that the donor or testator has given her, but it is a separate patrimony intended for the substitute. The substitute’s right derives from the donor or the testator, not from the institute.

 The substitution can only exist for 3 ranks – hence the donor or testator can give two “ownerships” (i.e. two substitutes in total – in which case the substitute becomes the institute for the second substitute).

 The institute acts like a fiduciary with respect to the property (under the CCLC there was a distinction between vulgar substitution and fiduciary substitution, where the former was like a default). Under the CCQ, the institute may alienate (could not under the former law – indeed a stipulation of inalienability was so characteristic of this institution that the presence of one would make the rules on substitution kick in); however, a fund must be created for the substitute with the funds. The donor or testator can refine the terms so that the institute can do more (but then must do an inventory, take out insurance, be prudent etc.).

 This mechanism would be used for things like keeping a farm in a family. However, they are very rarely encountered in modern urban practice (now that there is the trust).

 A substitution could be found to exist even if the word usufruct was used (designating 2 concurrent ownerships rather than 2 successive ones).

IV Trusts

 The 3 actors here are: the settlor, the trustee and the beneficiary.

 Under the CCLC (981a +) the trust was confined to creation in a gift or will in the personal rather than commercial context. Under the CCQ (1260 +) it is expanded to purposes not just beneficiaries – patrimony by appropriation in which no one has a real right. This is now an extremely flexible device – discretionary trusts, asset protection trusts to keep assets safe from creditors, living trusts to circumvent probate proceedings (though not an issue here). The gratuitous trust (IV and MC) – maybe a new form of liberality.

V. Gifts MC

 This is described as a hybrid institution because it is like a gift (insofar as it is a contract) and it a will (insofar as the donee takes like a legatee on death).

 Art. 1806 says that gifts may be IV or MC. Whereas a gift IV requires actual divestment (even if transfer or delivery is subject to a term) as per art. 1807, a gift MC

 1808: conditional on death

 In principle are null BUT 2 exceptions: 1) marriage K; 2) will

 1841 are revocable unless otherwise stipulated (opposite of CCLC)

 Trans Rule #106: the NEW CODE applies – often comes up with marriage Ks

 In marriage K: institutional K and valid disposition; for donee: same as legatee (expectation at most); same recourses as for will; until death of donor has no rights

Remillard v. Couture (p.6)

 Gifts made in contemplation of death are different from a gift which only uses the date of death of the donor as the point of time at which a condition or term thereof will be fulfilled. Hence, a gift in contemplation of death must be made because of death and conditional upon death, not merely coincidental with it.

 A will is a gift in contemplation of death because death itself will inevitably cause a situation whereby the person, who up to that moment enjoyed full ownership, will be forcibly divested of all his possessions and they will stand waiting for a new possessor to come and take them.

 Gift in contemplation of death cannot become effective until death has occurred.

Pesant v. Pesant (p.6)

 Donation MC is that whose effect is subordinated by the death of the donor, which up to that moment has no effect, and by virtue of which the donee does not acquire any rights before the death of the donor.

Lindsay-Hogg v. Ministere du Revenu du Quebec (p.10)

 Substitution had as its goal, generally speaking, to conserve the patrimony, to maintain the inheritance within the family.

 To make a substitution, the testator in effect writes the will of the middle person with regard to those goods. This was not done in this case.

 Toute la jurisdrudence est à l’effet que, lorsqu’il y a ambiguité, nous ne devons pas tellement nous rattacher à la lettre, au sens propre des termes utilisés, mais que nous devons de préférence rechercher l’esprit du testateur ou de l’auteur après avoir scruté l’ensemble du document sous l’étude.

 Testator did not create usufruct.

I.Transmission and Transfer of Assets

Topic 2 – Transmission upon Death

Rosenbush v. Rosenbush

 Renunciation. Shares of remaining successors increase

 in this case intestacy rules applied: wife gets 1/3, son gets 2/3, but son renounces e should his 2/3 accrue to wife or to 2nd order of intestate successors?

 since renouncing successor = deemed never to have been successor (647), it is as if only one 1st order successor (wife) exists e she gets 2/3, 2nd order (brothers) get 1/3 (672) e solves surv. spouse problem

 however, son retracts his renun. Cannot get wife’s acquired rights, so he only gets 1/3 that would have gone to 2nd order (bros)

 Right of Option

 CCLC gave 3 options to successor: (1) acceptance pure & simple, (2) acceptance by benefit of inventory, (3) renunciation; whereas CCQ gives only 2 options: (1) acceptance or (2) renunciation, although in practice can accept w/ or w/out formalities

 632: successor has 6 mths to decide = deliberation (if cred. exist, best to exercise option ASAP to avoid liability for ct costs)

 635: successors of successor who dies before exercising his option have 6 mths from death of latter

Right of Option Arts 630 et seq.

• Art. 630(1) says that every successor has the right to accept or renounce the succession – i.e. no forced heirship
• Art. 630(2) says that the option is indivisible but if a successor is called in several ways there is a separate option for each e.g. if are given a general legacy and a particular legacy can accept one and not the other. However, one cannot be a universal legatee and take some things (e.g. cash) and not others (e.g. a run-down building).
• The standard period of deliberation set out in art. 632 is 6 months.

• Example: A dies July 1, 1998 leaving everything to B and failing B to C. B dies Nov 30, 1998 without having exercised his option. C’s right of option begins to run from the date of B’s death i.e. she has until May 30, 1999.[1]

• Art. 633 says that a successor who does not renounce within the 6 months is presumed to have accepted (as long as he knows about the heirship).
• Art. 635(2) if an heir renounces their share accrues to co-heirs.

Acceptance:

• Art 637 says that acceptance can be express, tacit or by law.

An acceptance by law would be the failure to renounce in art. 633 or the presumed acceptance for minors, incapacitated persons and absent persons in art. 638 unless there is a renunciation. Exempting the liquidator from making an inventory or mingling property of the succession with personal property is a deemed acceptance (art. 639) or knowing that the liquidator is not doing making the inventory and not taking any steps (art. 640). Paying the debts of the estate would be interpreted as acceptance. Transferring successoral rights will be interpreted as having implied a prior acceptance (art. 641). Art. 642 says that mere conservative acts and acts of supervision and provisional administration or a necessary act in exceptional circumstance to preserve the succession (e.g. changing the locks to prevent waste or damage to the property) do not entail acceptance. Dealing with private papers, clothing, memorabillia or an acceptance of a burial cite are okay (art. 643). MPR says that accepting insurance benefits or pension benefits are also okay.

• Art. 645 says that acceptance confirms the transmission which took place by operation of law at the time of death.[2]

• Acceptance is irrevocable unless under art. 835 the person can show that new circumstances have substantially changed the extent of his obligation e.g. the discovery of new facts like a creditor he could not have known about before.

• There cannot be a conditional acceptance.

Renunciation:

• Unlike acceptance which can lack a formal, explicit nature, renunciation must be both express and abide by formalities –recorded in notorial form en minute or by a judicial decision (art. 646).
• Renunciation can also operate by law (art. 646). So, for instance, abstracting or concealing property from the succession is interpreted as a renunciation (art. 651) or not coming forward for 10 years (art. 650)
• Art. 647 says that a person who renounces is deemed never to have been a successor.

• Renunciations are revocable for 10 years if not accepted by someone else (art. 649).
• Creditors are given 1 year in which to attack a renunciation for being based on fraudulent grounds (art. 652).

Rosenbush is a case which presents the problem of the surviving spouse. Here we have an intestacy situation where the deceased died and the property went 1/3 wife and 2/3 son. The son renounced and the issue is whether his 2/3 share goes to the wife devolves to the deceased’s surviving brothers. The court chose the brothers. Arts. 670 and 671 make it clear that the spouse is not preferred.

2) Debt Liability

625(2) - debt liability imposed on Hs, not PLs, unless prop. in estate to which Hs = entitled insuff. (739)

780 = corollary of 625(2): operates in respect of both cred. of succ. + cred. of H or PL

625(2): debt liability of Hs limited to value of prop. taken by them so long as formalities = observed: (1) making inventory (cf. 799-801), (2) publishing notices, (3) doing accting, (4) publishing notice of accting

this limitation “under ben. of inventory”, excpetion under CCLC, has become rule under CCQ

Liquidation Arts 776 et seq

 Liquidation

 link to rules on admin. of prop. of another, indivision

 objectives: protect Hs + deceased’s creditors

 776: Legis. gives list of core (T cannot exempt), yet non-exhaustive stages as defin.; non-observance of these stages leads to liability for lqdtr + Hs

 recall: separation of patrim (625, 780)

 777: legal seisin of lqdtr extends temp. to all prop. (except pers. effects), subj. to T’s modifications (778)

 779: derogation only poss. where (1) succ. = “manifestly solvent” + (2) all Hs agree (they then become liable for debts beyond value of prop. they take)

 express stipulation by T prevents derogation (some argue even naming of lqdtr in will suffices); similarly, 638 implicitly prevents derog. for minors, protected adults

835 = disputed: authors say should be ob. to publish notice so as to notify potential cred.

 Liquidator

 present in all succ. (test. or intest.)

 Hs = seised of prop. from death, owners by accpetance, but lqdtr’s action causes de facto transmission

 785: where not named, devolves of right to Hs, even intestate (best to get power of attorney)

 several lqdtrs can be named (e.g., parts of est. assigned to pers. of particular expertise)

 subject to 2 regimes: liquidation + admin. of prop. of another

 often becomes trustee (smooth passage, no legal change required)

 role = continuous until end of lqdtn or actually replaced by ct (e.g., for negligence): 791

 784: optional excpet for sole H

790: no ob. to take out insur., although often good idea of dealing w/ another juris. where it = necessary

 789: remuneration now possible, unless lqdtr = H

 appointment: must have legal capacity + if legal person, must be trust comp (783); if not provided for by T, heirs become lqdtr or choose by majority vote (785); term. used not important (786); ct can appoint in exceptional cases (788, 792)

 797: if several, must act in concert (cf. 1335, 1336)

 delegation of specific acts, not general delegation, is possible: 1337

 CCLC did not allow resignation w/out ct authorization, but 1357, 1359 CCQ make it much easier

 powers: 802 gives simple administration, but generally will gives full admin. (1306-7) (see handout)

 Payment of Debts and Particular Legacies

pay only certain + exigible debts (“successoral” + “deceased’s”) that have not been prescribed (e.g., if not due, Hs pay proportionately when deadline arrives, rather than lqdtr)

 to raise funds to pay debts when insuff., cf. 813, 814, 825, 828

 after all debts paid, pay PLs, as function of solvency of succ.: (1) manifestly solvent (808), (2) not manifestly solvent (810), or (3) insolvent (811, 812) (see handout)

 recourse against lqdtr (815), Hs if lqdtr showed due diligence (816)

 end of lqdtn: 819-822: de facto (all debts paid), de jure (discharge of lqdtr: 819(2), 820-22)

 Partition

 indivision, but primary rule that no ob. to remain in indivision: 1030

 admin. = governed by 1025 ff.

 continuance by agreement of Hs (1012), by T (837), by ct (842 + specific ex. of 839-41, 843-45)

 836: partition occurs when lqdtr = discharged, in accordance w/ proposal drawn up by him (838)

 867 ff.: general rule on return has been reversed: no return unless express stipulation in will

 modalities: immov. should not be split (852), should be amicable (853), otherwise by expert + drawing lots (854); preferential allotments possible (855-56, 858)

 effects = retroactive declar. of ownership: each H deemed to be owner of his and only his share from moment of death (884) (as opposed to partition in general which is seen as transmissive of ownership)

Topic 3 – Limitations on Freedom of Willing

These support provisions were introduced in 1980 and they provide for a 6 month window of time in which those who was need to may make a claim on the estate of the deceased.

Art. 913 of the French Civil Code limits the freedom of a testamentary disposition for a deceased person by requiring that they set aside a reserve for spouses and dependent children (a portion of the estate depending on how many children etc.). The idea of freedom of willing comes from English law. Art. 913 is a re-surfacing of the old French 298 coutume de Paris which similarly imposes obligations rather than guarantees freedom.