Assent and Partial Distribution of Estate Assets

Partial distribution of  estate assets as per wills variation act  and assent and partial distribution Assent

The Reznik v Matty  2013 BCSC 1346 decision previously blogged the last few days, the Court  in a wills variation action, allowed an interim distribution of $10,000 each to 3 of the 4 residual beneficiaries of their father’s estate, who had died more than 12 years previously without a full distribution of the estate assets, using the law relating to assent.

The estate held significant assets, and at the time of hearing most of them were listed for sale and in 2009 there had been a previous interim distribution to each of the 4 beneficiaries of $25,000 each. They now sought a further distribution and the Court awarded them another $10,000 each.

The will had a standard clause empowering the trustee to  invest the estate assets ” for such length of time as my Trustee may deem advisable”.

The 3  Petitioner’s argued that the “executor’s year” gives an executor one year to distribute the assets of an estate, and that the Court has general or inherent jurisdiction to do so.

The respondent argued there was no such court authority.

After examining the jurisdiction of the Court and the powers of an executor/trustee, both blogged about earlier this week, the Court then went on to discuss the not well known legal concept of assent, the portion of which is as follows:

Assent

[37]    An assent has been described as “an acknowledgment by a personal representative that an asset is no longer required for the payment of the debt, funeral expenses or general legacies”: Williams, Mortimer and Sunnucks, Executors, Administrators and Probate (London: Sweet and Maxwell, 2013) at 1411.

[38]     Assent may be compelled where assent is withheld without just cause. On the subject of

assent, Halsbury’s Laws of England, 5th ed., Vol. 103 (Markham: LexisNexis, 2010) at 1141 states (in part):

The bequest of a legacy, whether general or specific, transfers only an inchoate property to the legatee: the executor’s assent is necessary to render it complete and perfect. The right is one which devolves on the legatee’s personal representatives should he die before the assent is given. In the case of a release of a debt by will the executor’s assent is necessary, as the release in effect amounts to a legacy of the debt.

The necessity for assent by an executor applies to residuary bequests, and to interests arising under a partial intestacy, and an executor may assent to part of a residuary gift without assenting to the whole.

The assent of one of several representatives to a bequest of pure personalty is sufficient, even though the bequest is to himself.

An executor may be compelled bv the legatee to assent should he refuse to do so without just cause.

[My emphasis]

[39]     W.J. Williams, The Law Relating to Assents (London: Butterworth, 1947) at 20 states that “at common law the legatee could compel the executor to assent if he refused to do so without just cause”.

[40]    Although not necessary for the case at bar, it may be noted that, with respect to real estate, the Estate Administration Act, R.S.B.C. 1996, c. 122 [EAA] has specific provisions relating to assent. Assent may also effectively be compelled (i.e., a conveyance of real estate ordered). Section 79 of the EAA provides:

79 (1)  At any time after the death of the owner of real estate, the person’s personal representatives may

(a)   by instrument attested and proved as provided in the Land Title Act, assent to a devise contained in the person’s will, or

(b)   convey the real estate to any person entitled to it as heir, devisee or otherwise.

(2)   The personal representative may make the assent or conveyance under subsection (1), either subject to a charge for the payment of any money which the personal representatives are liable to pay, or without the charge.

(3)   On the assent or conveyance under subsection (1), subject to a charge for all the money, if any, which the personal representatives are liable to pay, all liabilities of the personal representatives in respect of the land cease, except as to acts done or contracts entered into by them before the assent or conveyance.

(4)   At any time after the end of one year from the death of the owner of any real estate, if the person’s personal representatives have failed on the request of the person entitled to the real estate to convey the real estate to that person, on the application of that person and after notice to the personal representatives, the court may order that the conveyance be made.

(5)   The production of an attested and proved assent by the personal representatives of a deceased owner of registered real estate authorizes the registrar of land titles to register the person named in the assent as owner of the real estate.

[My emphasis]

[41]    Historically, realty passed directly to the heir-at-law or devisee and did not vest in the personal representative (see Snell’s Equity, 32nd ed. (London: Sweet and Maxwell, 2010) at 949 and Jowitt’s Dictionary of English Law, 3rd ed., at 170). For this reason, a provision such as s. 79 of the EAA may have been thought by the legislature to be necessary (Land Transfer Act, (60 & 61) Vict, c.65, s. 3).

[42]    In my view, s. 79(4) of the EAA is intended to reflect equitable discretion. If, for example, the personal representative becomes vested with real estate (“Blackacre”) upon the testator’s death, and Blackacre is or may still be required to satisfy the debts or other obligations of the estate (after the executor’s year has passed), then a beneficiary’s application under s. 79(4) to have Blackacre conveyed to him or her would be dismissed by the court. If the estate had sufficient assets without Blackacre to satisfy the debt and other obligations of the Estate, then the court, absent some other compelling reason, would order the conveyancing to the beneficiary be made.

[43]    Conceptually and practically, the distribution of a small portion of an estate is not different from a court-ordered conveyance of Blackacre under s. 79(4). The question really becomes: is the executor protected from potential liability?

[44]    In the circumstances of this case, where the administration of the Estate has taken already over a decade and there is significant value and liquidity, the executor’s assent should be compelled.

[45]    The respondent presented no evidence that the Estate’s assets and liabilities (including those of PIE) were materially different from those shown in the statements prepared up to February 28,2010. In practical terms, there has been a presentation of accounts up to the date of the hearing.

[46]    With respect to an argument that an assent of part of the residue of an estate cannot occur as a matter of law, I note Justice North in Austin v. Beddoe (1893), 41 W.R. 619 (Ch. Div.) stated:

Then it is said that as a matter of law they could not assent. In my opinion they could. In the first place, it is said this was a bequest of residue, and not a specific or pecuniary bequest. It was a bequest of certain estates with respect to which the executor has certain duties. He is to pay the debts and liabilities out of it. He may have to pay legacies out it before the property can get to the residuary legatee, but the property does not vest in the legatee without his assent. With his assent it does. It was said there is a distinction between a residuary bequest and any other bequest. I find no trace of it, and no authority has been cited to me in which there is the slightest trace of any distinction between the two. In my opinion the necessity for assent to a bequest of residue is the same as the necessity for assent to a bequest of a specific chattel or chattels in order that it may vest in the legatee, but when it does vest in him, no doubt he then has the legal estate and can dispose of it.

[47]    North J. in Austin also considered the argument that outstanding liabilities should prevent assent of part of the residue. He stated:

Then, further, it is suggested that it is not reasonable to suppose the executors would have assented here, when there are outstanding liabilities. I do not see anything unreasonable in that. No doubt, if there were shown to be very large outstanding liabilities, and the question was whether assent had been given with respect to the only remaining available asset, there would be something in it. But there is nothing in it. There is no improbability in the inferring an assent because there are outstanding liabilities, unless you see the executor would be prejudiced by giving his assent, and it is impossible to say that, unless the other assets with respect to which he has not assented are clearly insufficient to meet the liabilities.

[48]    In the case at bar, a distribution of $40,000 ($ 10,000 of which would go to the executor), represents a small portion of the residue and would leave the Estate with liquidity (approximately $56,000 held in the Estate proper and approximately $44,000 held by PIE). As noted above, there are no significant outstanding or anticipated costs. The respondent executor has not shown just cause for his refusal to distribute the sought distribution of $15,000 – $20,000 for each residuary beneficiary.

[49]    In Beddoe there was one residual beneficiary. Certainly, where there is more than one residual beneficiary, an assent could have the effect of favouring one beneficiary over another. On the facts at bar, there are four equal beneficiaries with each receiving an identical distribution. In such circumstances, possible prejudice does not arise.

Trevor Todd

Trevor Todd is one of the province’s most esteemed estate litigation lawyers. He has spent more than 40 years helping the disinherited contest wills and transfers – and win. From his Kerrisdale office, which looks more like an eclectic art gallery than a lawyer’s office, Trevor empowers claimants and restores dignity to families across BC. He is a mentor to young entrepreneurs and an art buff who supports starving artists the world over. He has an eye for talent and a heart for giving back.

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