DAmico Family Wealth Management Group Of RBC Dominion

D'Amico Family Wealth Management Group Of RBC Dominion Securities. Presents Lucie Lanctuit and Stephan H. Trihey from Miller Thomson, Lawyers “Liquidators and trustees: duties and how conflicts can arise” Angelo D’Amico FCSI, CIM, CPA, CMA, CGA, CSWP Vice President - Portfolio Manager Christiana Kavadas B. Comm. Associate Tel: (514) 878 -5196 Email: angelo. damico@rbc. com Tel: (514) 878 -5056 Email: Christiana. kavadas@rbc. com Dario Falso Associate Daniel Marro Marketing Assistant Tel: (514) 878 -5049 daniel. marro@rbc. com Email: dario. falso@rbc. com Web : http: //www. damicofamilywealthmanagementgroup. ca October 12 th, 2017

WELCOME VANCOUVER CALGARY EDMONTON SASKATOON REGINA LONDON KITCHENER-WATERLOO GUELPH TORONTO VAUGHAN MARKHAM MONTRÉAL

LIQUIDATORS AND TRUSTEES: Duties and how conflicts can arise VANCOUVER CALGARY EDMONTON SASKATOON REGINA LONDON KITCHENER-WATERLOO GUELPH TORONTO VAUGHAN MARKHAM MONTRÉAL

Mtre Stephan H. Trihey, Partner Thursday, 12, 2017 Mtre Lucie Lanctuit, Associate 4

Liquidators Designation of the liquidator • The heirs act as liquidators unless otherwise provided by a testamentary provision • The majority of the heirs may designate the liquidator • A testator may designate one or several liquidators 5

Liquidators Duties • Take care of the liquidation of a succession • The liquidation of a succession consists in identifying and calling in the successors, determining the content of the succession, recovering the claims, paying the debts, paying the legacies by particular title, rendering an account and delivering the property. • Make an inventory • Administrate the property of the succession • Ascertain whether the deceased made a will -> if so, causes the will to be probated and takes all the necessary steps for its execution • Render an annual account of management to the heirs, creditors and legatees by particular title who have not been paid 6

Trustees Establishment of a trust • A trust is established: o by contract; o by will; or o by law o where authorized by law, it may also be established by judgment. 7

Trustees Types of trusts • Personal trust: constituted gratuitously for the purpose of securing a benefit for a determinate or determinable person. • Private trust: its object is the erection, maintenance or preservation of corporeal property or the use of property appropriated to a specific use, whether for the indirect benefit of a person or in his memory, or for some other private purpose o A trust constituted by onerous title for the purpose, in particular, of allowing the making of profit by means of investments, providing for retirement or procuring another benefit for the settlor or for the persons he designates or for the members of a partnership, company or association, or for employees or holders of securities, is also a private trust. • Social trust: constituted for a purpose of general interest, such as a cultural, educational, philanthropic, religious or scientific purpose. Ø It does not have the making of profit or the operation of an enterprise as its essential object. 8

Trustees Appointment of trustees • The settlor may appoint one or several trustees or provide the mode of their appointment. • The settlor or the beneficiary may be a trustee but he shall act jointly with a trustee who is neither the settlor nor a beneficiary. 9

Trustees Administration • A trustee has the control and the exclusive administration of the trust patrimony, and the titles relating to the property of which it is composed are drawn up in his name. • He has the exercise of all the rights pertaining to the patrimony and may take any proper measure to secure its appropriation. Constituting act= first source of obligations of the trustees. Supervision • The administration of a trust is subject to the supervision of the settlor or of his heirs, if he has died, and of the beneficiary, even a future beneficiary. • In cases provided for by law, the administration of a private or social trust is subject, according to its object and purpose, to the supervision of the persons or bodies designated by law. 10

Trustees – legal action • The settlor, the beneficiary or any other interested person may take action against the trustee to compel him to perform his obligations or to perform any act which is necessary in the interest of the trust, to enjoin him to abstain from any action harmful to the trust or to have him removed. • He may also impugn any acts performed by the trustee in fraud of the trust patrimony or the rights of the beneficiary. 11

Conflicts Katz, ès qualités Liquidateur v. Naimer, EYB 1998 -07599 (C. S. ) : "Stanley did indeed consider himself the “King of the Castle” as far as the Estate was concerned! However, at this time in our history, even the King is subject to the laws of the Nation!” Appeal: Alcar Holdings Inc. c. Naimer, EYB 2000 -20406 (CA); Katz v. Naimer, C. A. 500 -09 -007003 -981 12

Conflicts Miller (Estate of), 2013 QCCA 250: "[69] I appreciate that Scott replaced Miriam as an Executor and Trustee in 1998 with the approval of Patricia. That did not relieve him, however, from his legal obligation of neutrality between Patricia and Daniel in the circumstances presented when they each sought to invoke Article Seventeenth. [70] Whether or not Scott's decision to acquiesce to his father's desire to become owner of the Zahler Property and the Zahler House was a reasonable one is beside the point. It is not the reasonableness of the decision that determines whether a conflict exists, but the circumstances that require the decision to be made in the first place. Those circumstances are such that Scott, even in the best of good faith, could not act with the required impartiality and independence from his father. After all, he grew up and lived in the Zahler House with his parents. I would have undoubtedly reached the same conclusion if one of Patricia's children had been named to replace Miriam as an Executor and Trustee, and that child had favoured the interest of Patricia over Daniel insofar as the application of Article Seventeenth is concerned. [71] I do not mean to suggest that Scott is always in a conflict of interest with respect to the administration of the Estate of his grandfather. The conflict arises, however, when he has to choose, as he was called upon to do so here, between his father and his aunt. ” 13

Conflicts Sawyer c. S. Teller Ltd. , 2012 QCCS 5416: • A case where family relationships and interests of shareholders are intertwined • Conflict of interest of the trustees • The court does not look well upon the trustees’ interference into the beneficiaries’ personal lives 14

Conflicts Desjardins c. Desjardins, 2008 QCCS 4577: • Trustees and liquidators have to act in the interest of the beneficiaries: "[443] Au premier chef, Pierre doit agir dans l'intérêt des bénéficiaires du testament. Cela inclut le bénéficiaire des revenus, Mme Piché, et les bénéficiaires du capital, ses frères et sœur. [444] Ce faisant, il ne peut assurément agir dans l'intérêt d'une autre personne. Il doit en tout temps donner préséance à l’intérêt des bénéficiaires et ne pas se placer dans une situation où il serait appelé à devoir choisir entre cet intérêt et celui d’un tiers. " 15

Conflicts Desjardins c. Desjardins, 2008 QCCS 4577 (continued): • The trustee and liquidator was in a situation of conflict of interest between his duties towards the beneficiaries and his own personal interest: « [466] Pierre s'est placé et continue de se placer dans des situations de conflit d'intérêts effectif entre ses devoirs envers les bénéficiaires et ses intérêts personnels. À vrai dire, il semble incapable de faire la distinction entre les deux. […] [474] Les faits qui précèdent montrent qu'en toute vraisemblance, Pierre exerce et a exercé ses fonctions de fiduciaire et de liquidateur avec un objectif ultime qui n’a rien à voir avec ses devoirs : celui de permettre à un tiers compétiteur d'acquérir les actions de ses frères et sœur, ce qui lui aurait conféré, ainsi qu’à son fils Guy, des avantages considérables. [475] Non seulement est-ce le cas, mais la preuve à l'audience montre qu'à cet objectif ultime se greffe aussi celui de s'assurer que l'héritage de Mme Piché, dont Pierre et Guy sont les seuls bénéficiaires, soit le plus substantiel possible. » 16

QUESTIONS ? Mtre Stephan H. Trihey Thursday October 12, 2017 Mtre Lucie Lanctuit 17

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