The Four Elements of a Will

ELEMENTS OF A WILL

 There are basically four elements of a will:

1) Intended to Have Disposing Effect

A Will must express the testator’s real donative intention. It will not be a valid Will if the testator merely writes a statement importing information about his or her future intentions regarding his or her Will. Another example is where undue influence has been exerted upon the testator. As the testator is not expressing his or her true intention, the Will should be invalid.

 

2) Intended Not to Take Effect until After Death and to Be Entirely Dependent on Death for its Operation

If at the time of the execution of the document, the document is legally effective to pass some immediate interest in the property, no matter how slight, the transaction will not be classified as testamentary. If the transaction is not testamentary, the property will not be included as part of the estate and will not be available for creditors. If a document is not executed as a Will, and appears to pass property to other persons on the death of the person who owned the property, the validity of the instrument is likely to be called into question as an attempt to make a Will and evade the consequences of a testamentary act. The fact that a document describes itself as a Will and is executed as a Will does not necessarily make it testamentary. The entire document will be rejected from probate if all of its dispositions are operative before death. However, a part of the document that is testamentary, because it has no operation at all until death, may be severed and admitted to probate.

 

3) Intended to Be Irrevocable

A Will is always revocable even when it is expressed to be irrevocable and even if the testator covenants not to revoke it.

Even a statute such as the Wills Variation Act, which allows a court to vary a Will, does not alter the revocable essence of a Will. When a Will is revoked in breach of a contract not to revoke it, the testator or the estate may be liable in damages or subject to some equitable remedy. Where the Will is a mutual Will, the promise not to revoke may give rise to a constructive trust that is irrevocable, in favour of the Will’s beneficiaries. The term “mutual Wills” refers to Wills that dispose of property belonging to two persons, usually a husband and wife, who have agreed to pool their property and to provide, by their Wills, for its disposition according to an agreed scheme. Persons who make mutual Wills usually agree not to alter or revoke them without the other’s consent, and it is out of this agreement not to revoke that a constructive trust may arise. The agreement not to revoke may be incorporated in the Will by recital or otherwise, or it may be established outside of the Will.

4) Executed in Accordance with the Wills Legislation of the Appropriate Jurisdiction. (See BC WIlls Act .)

Wills Variation-“Valid and Rational Reasons”

You will get nothing

Holvenstot v Holvestot Estate 2012 BCSC 923 is an excellent example of the wills variation claim brought by a disinherited son of the deceased.

The claim  was dismissed for some of the valid and rational reasons that the deceased stated as reasons for not having a moral obligation to provide for her son.

The deceased left a long list of complaints that she had with her son to support her reasons for his disinheritance, that included previous court transcripts where she told the court that she wanted to move away from her son and for him “not to bug her anymore”.

The plaintiff alleged  that the mother had a moral obligation to “make adequate provision” for him in her will.

He alleged that the size of the mother’s estate was adequate for such a provision, and no circumstances exist which would negate a moral obligation.

In particular, the plaintiff alleged in effect, that he did not commit any (or any significant) blameworthy conduct toward the mother, with the result that her reasons for disinheriting him are either untrue or not rationally connected to her decision to disinherit him.

Much of the judgment is spent by the court reviewing each of the reasons given by the deceased for disinheriting her son, with the court rejecting some reasons and upholding others.

The court found as a fact that, the plaintiff commenced an action against his mother to have her declared mentally incompetent. The action failed, and the mother was declared competent.

The mother was required to sue the plaintiff in order to prevent him from getting ownership of two acres of her land and to compel him to return items of her property.

All of this litigation cost the mother a considerable amount of money and caused her much emotional upset.

The court found the  reasons to be  true.

In my opinion, these reasons are rationally and logically connected to the mother’s decision to disinherit her son.

As I see it, a judicious parent, applying contemporary community standards in the circumstances existing at the time of the mother’s death, could reasonably have decided to disinherit the plaintiff, for these reasons alone.

Of course, there are several other reasons that I have found were true and were relied on by the mother. They only strengthen the conclusion that the court should defer to the mother’s decision to disinherit her son.

The general principles which apply in an action of this kind were set out by the Supreme Court of Canada in Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807. It was established that a testator may owe a legal obligation or a moral obligation to his or her independent adult child. A legal obligation will generally not arise unless the child contributed to the estate in some way. In the present case, it is conceded that the mother had no legal obligation to the plaintiff to make provision for him in her will.

In Tataryn v. Tataryn Estate at paragraph 31, in discussing a testator’s moral obligation, Madam Justice McLachlin stated in part, as follows:

…if the size of the estate permits and in the absence of circumstances which negate the existence of such an obligation [i.e., a moral obligation], some provision for such children should be made .

The circumstances which can negate the existence of a moral obligation include the reasons relied on by a testator, where those reasons are valid and rational. In Kelly v. Baker, the Court of Appeal defined the test for assessing reasons given by a testator in this way (at paragraph 58):

The law does not require that the reason expressed by the testator in her will, or elsewhere, for disinheriting the appellant be justifiable. It is sufficient if there are valid and rational reasons at the time of her death – valid in the sense of being based on fact; rational in the sense that there is a logical connection between the reasons and the act of disinheritance.

the decision of the Court of Appeal in Hall v. Hall, 2011 BCCA 354. At paragraph 43, speaking for the court, Madam Justice Neilson stated in part as follows:

[43]      … To succeed in his challenge to her will, Tony must establish these reasons were false or unwarranted: Bell v. Roy Estate …. In considering that proposition, it is not necessary to find the reasons were justifiable. It is enough if they were factually valid, and rational in the sense of having a logical connection to the act of disinheritance: Kelly v. Baker

[44) Having regard to this re-statement of the law in Hall v. Hall, I think it is questionable whether the reasoning in the earlier decisions of this court which I have discussed, should be followed. If I am wrong, then I would favour using the “judicious parent” test in deciding the issue of whether a “true” reason of a testator for disinheriting a spouse or child, is also rationally connected to the decision to disinherit. I would apply a test similar to that stated by Mr. Justice Sewell in paragraph 70 of LeVierge v. Whieldon (and not as stated by him in paragraph 61). That is, in deciding whether a testator’s reason is rationally connected to the decision to disinherit, it would be enough that a judicious parent could have made that decision, based on the reasons that existed. There should be no requirement that a judicious parent would have made the decision to disinherit in the same circumstances. In my view, if it were otherwise, the court would be deciding, in effect, whether the reasons were objectively “justifiable.”

Tataryn – The Leading Wills Variation Case in BC

In Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807 [Tataryn] the Supreme Court of Canada clarified the law of wills variations and held that a will may be varied under the WVA where there are legal or moral obligations to provide maintenance and support for a spouse or child.

 

In Tataryn, the testator husband and his wife had been married 43 years and, through their joint efforts, had amassed a home (in the testator’s name), a rental property and bank funds. There were two adult sons, J. and E. The testator disliked J. (for reasons that were not apparent). He feared that if he left his estate to his wife, she would pass it on to J. By his will, the testator gave E. full title to the rental property and created a discretionary trust dealing with the residue of the estate, including the home. Under the trust the wife was the beneficiary of a life interest in the home. E. was the trustee and residuary beneficiary taking full title to the home upon the wife’s death. J. received nothing under the will or the trust it created.

The trial judge in Tataryn revoked the bequest of the rental property to E. and granted the

wife a life interest in that property; directed that J. and E. each receive an immediate gift of $10,000 out of the residue of the estate. The trial judge also directed that when the wife died the residue of the estate, including the home and the rental property, was to be divided one-third to J. and two-thirds to E.

The wife’s appeal was dismissed by the British Columbia Court of Appeal: Tataryn v.

Tataryn Estate (1992), 74 B.C.L.R. (2d) 211 (C.A.).

The wife successfully appealed to the Supreme Court of Canada.

The court granted the sons an immediate gift of $10,000 each. The wife was granted title to the family home, a life interest in the rental property and the entire residue of the estate after payment of the immediate gifts to the sons. Upon the death of the wife, the sons were entitled to the rental property (one-third to J.; two-thirds to E.)

In Tataryn, McLachlin J. (as she then was) discussed the twin interests protected by the

WVA. McLachlin J. described the “main aim” as the “adequate, just and equitable provision for the spouses and children of testators” and that at the very least, that means preventing spouses and children from becoming a charge on the state (Tataryn at 815). However, said McLachlin J., it is equally

reasonable to suppose that the legislators were concerned with wives and children receiving a just and equitable share of the family wealth even in the absence of demonstrated need.

The second interest protected by the WVA is testamentary autonomy:

The Act did not remove the right of the legal owner of property to dispose of it upon death. Rather, it limited that right. The absolute testamentary autonomy of the 19th century was required to yield to the interests of spouses and children to the extent, and only to the extent, that this was necessary to provide the latter with what was “adequate, just and equitable in the circumstances” {Tataryn at 815).

[Emphasis in original]

The court went on to note that what is “adequate, just and equitable” must be judged by contemporary standards. Current standards require that both legal and moral societal norms be considered:

If the phrase “adequate, just and equitable” is viewed in light of current societal norms, much of the uncertainly disappears. Furthermore, two sorts of norms are available and both must be addressed. The first are the obligations which the law would impose on a person during his or her life were the question of provision for the claimant to arise. These might be described as legal obligations. The second type of norms are found in society’s reasonable expectations of what a judicious person would do in the circumstances, by reference to contemporary community standards. These might be called moral obligations, following the language traditionally used by the courts. Together, these two norms provide a guide to what is “adequate, just and equitable” in the circumstances of the case (Tataryn at 820-821).

With respect to variation on moral grounds, the court in Tataryn observed that dependent adult children are entitled to such consideration as the size of the estate and the testator’s other obligations may allow. With respect to independent adult children, the court said:

While the moral claim of independent adult children may be more tenuous, a large body of case law exists suggesting that, if the size of the estate permits and in the absence of circumstances which negate the existence of such an obligation, some provision for such children should be made… (Tataryn at 822-823) (emphasis added).

How are conflicting claims to be balanced against each other? Where the estate permits, all should be met. Where priorities must be considered, it seems to me that claims which would have been recognized during the testator’s life i.e., claims based upon not only moral obligation but legal obligations – should generally take precedence over moral claims. As between moral claims, some may be stronger than others. It falls to the court

to weigh the strength of each claim and assign to each its proper priority……. Any moral

duty should be assessed in the light of the deceased’s legitimate concerns which, where the assets of the estate permit, may go beyond providing for the surviving spouse and children (Tataryn at 823) (emphasis added).

I add this. In many cases, there will be a number of ways of dividing the assets which are adequate, just and equitable. In other words, there will be a wide range of options, any of which might be considered appropriate in the circumstances. Provided that the testator has chosen an option within this range, the will should not be disturbed. Only where the testator has chosen an option which falls below his or her obligations as defined by reference to legal and moral norms, should the court make an order which achieves the justice the testator failed to achieve. In the absence of other evidence a will should be seen as reflecting the means chosen by the testator to meet his legitimate concerns and provide for an ordered administration and distribution of his estate in the best interests of the persons and institutions closest to him. It is the exercise by the testator of his freedom to dispose of his property and is to be interfered with not lightly but only in so far as the statute requires. (Tataryn at 824) (emphasis added).

 

McLachlin J. concluded that the testator’s only legal obligation was to his wife. Further, the

wife had the highest moral claim on the testator. Both claims were very strong.

 

By contrast, the claims of the sons were not strong:

The remaining moral claims on the testator are those of the two grown and independent sons. The testator gave nothing to one, everything to the other, subject to his provision of money to Mrs. Tataryn. The moral claims of the sons cannot be put very high. There is no evidence that either contributed much to the estate (Tataryn at 825).

Pre-Nuptial Agreement Held to Be Bar to Wife’s Wills Variation Claim

Pre-Nuptial Agreement

Martinson v Anniko 2009 BCSC 14 is illustrative of where a marriage agreement  is ultimately  “fair”, it will be held to bar a spouse’s Wills Variation claim brought after the death of a spouse.  The Court was also critical of the steps taken by the surviving spouse in secretly severing the joint tenancy home, that she would ahve inherited had she not severed

The Plaintiff stood to inherit the entire matrimonial home but severed joint tenancy and gifted other monies received from the Testator to her daughters. These were her unilateral decisions and the court found there was no inequity on the part of the Testator.  

 

 The Testator and the Plaintiff marriedfor the second time  later in life.

During the period beginning immediately prior to their marriage and until the Testator’s death, the two signed four agreements regarding their respective property:

  1. a pre-nuptial agreement in 1985 stipulating that the property each brought to the marriage would remain separate;
  2. an amendment signed in 1986 stipulating that the 1985 agreement would have the force of law under s. 48 of the Family Relations Act (“FRA”), and would govern the ownership of respective assets in the event of divorce, death, or separation. The amendment also provided that the agreement as amended released both from any claim made by the other under either the Estate Administration Act (“EAA”) or the Wills Variation Act (“WVA”);
  3. a second amendment to the original 1985 agreement signed in 1988 stating that the couple’s residence in Victoria, BC was purchased with the sole assets of the Testator and was held in joint tenancy as a matrimonial home. The amendment also stated that the Plaintiff held her interest in the home in trust for the Testator, who was the sole beneficial owner. Finally, it provided that if the Testator predeceased the Plaintiff, the Plaintiff would hold the entire property in trust and would sell the property and pay the proceeds of sale to the Testator’s family;
  4. a third and final amendment to the original 1985 agreement made in 1995 that terminated the trust arrangement created in the second amendment and declared that the Plaintiff and the Testator held the matrimonial home as joint tenants.

The Testator made three Wills between 1996 and 2005, each providing something for the Plaintiff and her children from a prior marriage in recognition of s. 2 of the WVA.

The Testator’s final Will left nothing for the Plaintiff or her children from a prior marriage, but did provide a $50,000 bequest to the Plaintiff’s granddaughter.

The entire residue of the Testator’s estate went to his nephew, the Defendant.

The Testator noted in the Will that the Plaintiff would be provided with the matrimonial home, some jointly held investments, and would also receive some inter vivos gifts.

However, the Testator was unaware that the Plaintiff had already severed the joint tenancy on the matrimonial home and registered her half interest jointly in her and her children’s names. The Testator died and the Will, leaving the entire residue of his estate to his nephew.

The Plaintiff applied to vary the will but her claim was  dismissed.

 

The Court held that the Testator fulfilled his legal and moral obligations to the Plaintiff.

Marital agreements have the force of law under Section 65 of the Family Relations Act

 

The act also allowed  for the variation of marriage agreements where they were inequitable, but the court found no such inequity in the present case.

The successive Wills executed by the Testator between 1996 and 2005 made decreasing provision for the Plaintiff, with justifications citing the increase of value of the marital home, inter vivos gifts made by the Testator, and the growth in jointly-held investments.

Abandoned “Love Child” Fights Back

Austin v Les 2006 BCSC 2100 is a wills variation case where disinherited.com was the plaintiff’s counsel representing a 62-year-old daughter of the deceased person who was essentially given away to be raised by others.

Marg Austin was born at a time when it was socially unacceptable for a mother to be unwed.

The deceased went on to marry and live happily ever after pretending that she did not have an out of wedlock child.

The deceased and her husband adopted two girls and ultimately the deceased left her two girls to share equally in her substantial estate.

She left her abandoned daughter Marg the sum of $100.

disinherited.com was successful in obtaining an equal one third of the estate for Marg.

 

disinherited.com was recently contacted by a 77-year-old man whose mother recently passed away at about age 92.

Her obituary read that she left three children and referred to the  client as her brother.

The deceased had lived all her life under the façade that she did not have an out of wedlock child prior to her marriage.

When he was 15 he found out that his sister was in fact his mother.

The client has a birth certificate with the deceased’s name on it indicating that she is his mother, and this was acknowledged during her lifetime privately and amongst her three natural children, but the hurtful façade continued.

It reminded me that movie actor Jack Nicholson also learned that his sister was in fact his mother when he was a teenager.

Marg’s story was reported by the Vancouver Sun in a full page article on August 15,2009, section A10.

Independent Legal Advice and Rebutting A Presumption of Undue Influence?

legal advice

Independent Legal Advice

Modonese v Delac Estate 2011 BCSC 82 has a very interesting discussion on whether or not independent legal advice will rebut a presumption of undue influence where that presumption might exist.

The function of independent legal advice is to remove a taint that, if not removed, might invalidate a transaction.

The nature and circumstances will dictate what constitutes adequate independent legal advice for purposes of a given situation Cope v Hill , affmd ABCA 32 ,leave to appeal to SCC refused 2007 SCCA No.138.

The following exerpts are from Modonese:

 

[121]   In Stewart, Punnett J. followed Coish v. Walsh, 2001 NFCA 41, 203 Nfld. & P.E.I.R. 226 [Coish], where Wells C.J.N, addressed the issue of whether independent advice rebuts the presumption of undue influence as follows:

[23]     The trial judge also correctly set forth the law respecting the manner in which such a presumption may be rebutted. In particular, he identified, from the comments of Green J., in [Fowler Estate], factors to be taken into account in considering whether or not evidence of legal advice given to the granting party is sufficient to rebut the presumption. At paragraph 24 of [Fowler Estate], Green J. identified factors which may affect the character of legal advice to be as follows:

  1. Whether the party benefiting from the transaction is also present at the time the advice is given and/or at the time the documents are executed.
  2. Whether, though technically acting for the grantor, the lawyer was engaged by and took instructions from the person alleged to be exercising the influence.
  3. In a situation where the proposed transaction involves the transfer of all or substantially all of a person’s assets, whether the lawyer was aware of that fact and discussed the financial implications with the grantor.
  4. Whether the lawyer enquired as to whether the donor discussed the proposed transaction with other family members who might otherwise have benefited if the transaction did not take place.
  5. Whether the solicitor discussed with the grantor other options whereby she could achieve her objective with less risk to her.

In Cope, Rooke J. provided the following summary of the law concerning independent legal advice where an allegation of undue influence is raised:

210      The case law identifies two types of independent legal advice:

  1. advice as to understanding and voluntariness; and
  2. advice as to the merits of a transaction.

The two types may overlap such that advice as to understanding the nature and consequences of a transaction may well constitute, at least in part, advice as to the merits of the transaction.

211       Focusing on the first type of independent legal advice, in Gold, a majority of the
Court, per Sopinka J., observed that independent legal advice addresses two primary
concerns, namely, that a person understands a transaction and that a person enters into
a transaction freely and voluntarily. Sopinka J. stated at para. 85:

Whether or not someone requires independent legal advice will depend on two principal concerns: whether they understand what is proposed to them and whether they are free to decide according to their own will. The first is a function of information and intellect, while the second will depend, among other things, on whether there is undue influence.

212      Focusing on the second type of independent legal advice, in Corbeil, Kerans J.A.
reasoned at paras. 12-14:

I distinguish attendance on execution from advice about the wisdom of entering into the agreement. The term “independent legal advice” has a very specific meaning in law. The duty of advising counsel has been summarized in Halsbury’s Laws of England (4th Ed.), vol. 18, para. 343, at p. 157:

“The duty of the independent adviser is not merely to satisfy himself that the donor understands the effect of and wishes to make the gift, but to protect the donor from himself as well as from the influence of the donee.A solicitor who is called upon to advise the donor must satisfy himself that the gift is one that is right and proper in all the circumstances of the case, and if he cannot so satisfy himself he should advise his client not to proceed.”

213      However, the adequacy of independent legal advice, or primacy of one type of independent legal advice over the other, is a situation-specific inguiry. In refusing to give effect to a contractual waiver of maintenance in Brosseau, the Court, in distinguishing between the two types of independent legal advice, stated at paras. 22-23:

The term “independent advice” is not one of precision. It may cover the situation in which a lawyer explains, independently, the nature and consequences of an agreement… It may extend, as it does in cases of undue influence, to the need to give informed advice…

We doubt that any hard and fast rule can be laid down and the peculiar circumstances of this case are not appropriate for the formulation of such a rule, in any event.

Mr. Frohlich stressed the comment in In re Coomber; Coomber v. Coomber, [1911] 1 Ch. [723], to the effect that independent advice does not mean independent approval. Again, we agree. While we stress this is not a case of presumed undue influence …, we agree with what is said in Wright v. Carter (1902), 87 L.T. 624, at 634 that fit! is not enough for an independent solicitor to be called in merely “to carry out the proposal which had been previously settled”.

Bequests To a Non Existent Person

non existent person

Gertrud Eberwein ( Re Eberwein Estate 2012 BCSC 250) and her very deficient will, made a bequest to a non existent person.

Yesterday’s blog related to what happened to her bequest to a Charity that she had previously donated to, but no longer existed at the time of her death.

The Court reached the conclusion that the cy-pres doctrine could not apply as there was no general charitable intention to give, but instead the intention was to a specific charity that no longer existed, so the bequest lapsed and fell in the estate residue.

The issue today relates to a bequest made to a  Martina Dieter, a person who does not exist.

The issue was whether the name “Martina Dieter” was a misnomer for another person intended by Ms. Eberwein.

 

LEGAL PRINCIPLES INVOLVED

The court can presume that a testator did not intend to make a gift to a non-existent person 

The court may consider extrinsic evidence of Ms. Eberwein’s relationships at the time of the Will and other evidence which may shed light on what person she intended to benefit: Bemasconi v. Atkinson (1853), 10 Hare 345, 68 E.R. 959; In re Ofner, [1909]1Ch.60(C.A.).

The following passage from Charter v. Charter (1874) L.R. 7 H.L 364 at p. 377 is oft-cited:

The Court has a right to ascertain all the facts which were known to the testator at the time he made his will, and thus to place itself in the testator’s position, in order to ascertain the bearing and application of the language which he uses and in order to ascertain whether there exists any person or thing to which the whole description given in the will can be, reasonably and with sufficient certainty, applied.

 

    Where there is more than one possible person to whom the intended gift might equally apply, the issue is one of “equivocation” in the will. This permits the court to consider not only indirect extrinsic evidence, but also direct declarations of testamentary intention: Re Murray Estate, 2007 BCSC 1035 at paras. 9-11. 

 

The court then went into considerable detail in analyzing the deceased’s life,  relatives, friends, diaries, notes, and other extrinsic evidence that might shed light

on who was the intended beneficiary known as Martina. By piecing various pieces of evidence together the court found that the deceased had a motive to give a bequest to the Martina who is helping out a friend known as Ms. Sweitzer and who the deceased knew was the daughter of one of her first cousins, and

concluded that that person was the intended beneficiary.

Generally speaking the courts do not like to create an intestacy and will often go to great lengths to find what the court believes to be the intended beneficiary where there is a misnomer in the will.

Charity No Longer Exists, So Wills Bequest Lapses Into Residue

Wills Bequest Lapses Into Residue

Our previous blog related to the wills interpretation issues related to the Eberwein Estate 2012 BCSC 250.

One of the issues involved in the interpretation of this will related to a charitable gift to an organization called Aid to Animals In Distress.

The deceased had previously given small donations to this charity in 1998, 2000 and 2001 respectively.

The charity operated a cat shelter and the evidence was clear that the deceased clearly loved cats.

The deceased left an estate of nearly $10 million, and as previously blogged, left no children or spouse.

The problem however is that the deceased died in 2010 and this particular charity ceased to exist in 2007, prior to the making of the will in February 2010, one month before the death of the testatrix.

The legal question involved was whether or not the bequests to this charity, a cat shelter, was evidence of the general charitable intention such that, through the application of the cy-pres doctrine, another charity in the same field could be benefited?

Or alternatively, if there was no general charitable intent, did the gift lapse and fall into the residue of the estate.

 

The general principles involved are that where it is impossible to carry out a gift, but it can be shown that the donor or at a general charitable intent, the court has inherent jurisdiction to make an order for a cy-pres scheme, that is the property be applied in a way as close as possible to that scheme set out by the testatrix.

The court reviewed case law in favor of the proposition that if a will maker showed an intention to make a gift to a particular institution, but that institution is no longer in existence at the time of the testator’s death, the gift will fail.

The court also reviewed case law where the will maker named one charity in a will as the beneficiary the residue of the estate, where the court was able to construe a general intention despite the wrong naming of the charity that never even existed

In this particular case however, the will maker made nine separate bequests to nine identified charities covering a range of subject matters of which the named aid to animals in distress was only one.

It was not a misnomer but was a real charity to which she had donated in the past.

The court accordingly concluded that the deceased did not have a general charitable intent with respect to that gift, and accordingly that gift lapsed and form part of the residue of the estate

The Principles Relating to the Interpretation and Construct of Wills

Interpretation and Construction of Wills

The Estate of Gertrud Eberwein 2012 BCSC 250 is an excellent example of a wealthy person dying with a poorly drafted will that needs interpretation and construction by the court.

The deceased died in 2010 at age 85 years.

She did not have any children or spouse and left  an estate of $10 million.

Her will was to be distributed amongst family and friends scattered throughout the world as well as various charities, one of which was no longer in existence.

There were various issues of interpretation as many clauses in the will were either poorly drafted, vague, or the beneficiary could not be located or ceased to exist.

I will deal with how the court dealt with the charitable bequest issue in a subsequent blog.

 

The case gives a helpful summary of the various rules of interpretation and construction of wills relating to poorly drafted wills:

The goal in interpreting a will is to give effect to the testamentary intentions of the testatrix for the distribution of her estate:  Rondel v. Robinson Estate, 2011 ONCA 493, 337 D.L.R. (4th) 193, at para. 23.

The Ontario Superior Court of Justice in Re Kaptyn Estate, 2010 ONSC 4293, 102 O.R. (3d) 1, (“Kaptyn Estate”) helpfully summarized many of the principles relating to the interpretation and construction of wills:

a)              The court will seek to determine the actual intention of the testator, as opposed to an objective intent presumed by law (para. 31).

b)              Other cases interpreting words in other wills are of little assistance since the task is to interpret this testator’s subjective intentions (para. 32).

c)               There is a distinction between interpretation and construction of a will.  Interpretation seeks to determine the testator’s subjective intentions from the words used in light of the surrounding circumstances.  Rules of construction are a default process turned to by the courts when the testator’s actual intentions cannot be ascertained (para 34).

d)              The starting position of the court is the “armchair rule”, where the court puts itself in the place of the testator at the time when he made his will.  This allows consideration of some extrinsic evidence of the surrounding circumstances known to the testator as might bear on his intentions (para. 35).

e)              The authorities distinguish between admissible and inadmissible extrinsic evidence in interpreting a will (paras. 35-38):

i.                 “indirect extrinsic evidence” of the surrounding circumstances known to the testator at the time he made the will is generally admissible.  This includes evidence of such things such as the testator’s occupation and property and financial situation; his relationships with family and friends; and natural objects of his grant;

ii.                “direct extrinsic evidence” of the testator’s intentions is generally inadmissible.  This is so as to preserve the will itself as the primary evidence, and to avoid the situation of an “oral will” displacing the written form.  However, there is an exception where there is an “equivocation”, namely, where the will describes two or more persons or things equally well.  In that situation, the law will allow evidence of the testator’s intention.  Examples of inadmissible direct evidence are such things as notes or statements of the testator as to his intention, or instructions he gave his lawyer in preparing the will;

f)                the court will interpret the will viewed as a whole (para. 138);

g)              the court will prefer an interpretation that leads to a testacy, not an intestacy (para. 139); and,

h)              the court will not hesitate to correct obvious mistakes, including deleting or inserting words, where to do so accords with the testator’s intentions, or where not to do so would lead to an absurd result (para 140).

 

[18]         The proper approach of the court is to consider the language of the will in light of the surrounding circumstances together, rather than one first and then the other: Abram Estate v. Shankoff, 2007 BCSC 1368 at para. 77.

Disclaimer – “Thanks, But No Thanks”

disclaimer 2Disclaimer- Thanks, but No Thanks

What do you do when a formerly beloved relative dies, bequeathing to you a piece of swampland polluted by atomic waste?  Must you accept this “gift”?

The legal answer is clearly “No” so long as you disclaim the gift in a timely fashion before receiving any benefit or otherwise dealing with the property.

There may be many reasons an intended beneficiary decides not to accept a gift.  Our law permits an intended beneficiary to simply disclaim the gift.  The purported gift is then deemed to be void ab initio (from the beginning).  It becomes as if the gift had never been given.

There are rare exceptions to this right of disclaimer, largely limited to situations such as where a trustee has agreed to accept a conveyance of property.

In this article we will review some situations where beneficiaries have disclaimed inheritances and the resulting legal consequences.

Requirements of Legal Disclaimer

The legal requirements for disclaiming a gift are minimal.  A disclaimer  may be effected by contract, by deed, by writing or even informally through conduct.

The intended recipient of the gift need only renounce the interest, in effect, by saying “I will not be the owner of it“. The key is doing so before dealing with the property in any way.

The decision of Re Moss, (1977) 77 D.L.R. (3d) 314, is a good illustration of disclaimer by an informal act.

This case involved an elderly man chewing tobacco on the lawn of his local Kingdom Hall.   As a result of this impropriety, the Jehovah’s Witnesses excommunicated him and a short time later he died –without having changed his will leaving everything to his church.

The church elders considered this gift and soon voted to disclaim the inheritance on the basis that it would be improper for them to accept such a gift from an excommunicated member.

When challenged in court, the court upheld the disclaimer, concluding the actions of the church elders were sufficient to disclaim the gift.   Nothing more was required.

In doing so, the court cited Townson vs. Ticknell (1819) 3 B & Ald. 31, as the authority for the proposition that an estate cannot be forced upon a person.  Further it is not necessary to go to trouble or expense to demonstrate that a gift is not accepted.

Note however the crucial question of timing.  A disclaimer may be made only before the beneficiary has derived any benefit from the assets.  Once a benefit has been taken, then the disclaimer can no longer be made. A. R. Mellows, The Law of Succession, p. 508.

All or Nothing

Where there is a single undivided gift, the law requires the donee to either take the gift entirely or disclaim it entirely: the donee cannot take only part of the gift and disclaim the rest.

This principle is illustrated in the following cases:

1.    Guthrie v. Walrond (1883), L.R. 22 Ch.D 573.  “Here the intended gift was all my estate and effects in the island of Mauritius”. The court held that the donee must take all or nothing and could not pick and choose.

2.    Green V. Britten ( 1873) 42 L.J. Ch. 187.  This involved a gift of 6 leasehold villas together with an ornamental park. The court held that this was one entire gift and the recipient could not take the villas alone and leave the park.

Retroactive to the Date of Death

Once made, a disclaimer will be retroactive to the date of death of the deceased. A beneficiary who disclaims a gift is refusing to acquire the property of another.  Thus the effect of the disclaimer is that the property is never acquired.  Re Metcalfe (1972) 3 O.R. 598.

What Becomes of the Disclaimed Gift?

Disclaimed gifts, unless there is a gift over, will fall into the residue of the estate.  Where a gift of the residue is disclaimed, in the absence of a gift over then an intestacy results.   If no contrary intention appears in the will, the disclaimed residue will pass on an intestacy. Re Stuart (1964) 47 W.W.R. 500(check Cite)

In Re Backhouse (1931) W.N. 168 (Ch.), a specific legacy, once disclaimed, became part of the residue of the estate.

Where an intestacy occurs, the next of kin are to be determined, prima facie, as of the date of the testator’s death unless there is sufficient indication in the will to some other effect: McEachern v. Mittlestadt (1963) 46 W.W.R. 359.

Disclaimer Not a Fraudulent Conveyance

In Mulek v. Sembaliuk ( 1985) 2 W.W.R. 385,  a couple married and had four children.  Ten years later the husband’s father died leaving him an inheritance.   Following the death, the parties commenced divorce proceedings.   The husband ran up significant arrears of maintenance and alimony.

The husband disclaimed his interest in his father’s estate which prevented his wife and children from attaching these funds to satisfy the maintenance claim.

At trial the wife was granted an order setting aside the husband`s disclaimer on the basis that it was a fraudulent conveyance.

The Court of Appeal granted the husband’s appeal, holding that a disclaimer does not convey property, rather it avoids the gift being conveyed in the first place.  The husband had no obligation to accept the bequest, in spite of his obligation to support his dependants.   The husband did not convey property by disclaiming his interest thus this disclaimer could not be categorized as a fraudulent conveyance.

In the Bank of Nova Scotia v. Chan, 68 C. B. R. ( N.S.) 118,  five will beneficiaries were named as co defendants in an action brought by a judgment creditor of one beneficiary who disclaimed his interest.  The creditor alleged that the debtor defendant, by disclaiming his interest, had conveyed this interest with the intent to defeat or defraud creditors.

Once more the court held that a disclaimer of a beneficiary`s entitlement under a will is not a conveyance and therefore not covered by the Fraudulent Conveyances Act.

The court went on to say that should it be found that the defendant had received some form of kickback for giving up his interest, then that would be an assignment of interest rather than a proper disclaimer.  Such an assignment might very well be a fraudulent conveyance.

Acceleration

A disclaimer may result in the acceleration of subsequent interests, thus permitting future heirs to take immediately.

Blacks Law dictionary, revised 4th edition, 1968 defines acceleration as “the shortening of the time from vesting in possession of an expectant interest– hastening of the enjoyment of an estate which was otherwise postponed to a later period“

The recent decision Clarke v. Di Bella 2010  BCSC 505 is a good example of such an acceleration which effectively wound up a lengthy trust.

Mrs. Bushby died in July 2007, leaving a will and an estate valued at $600,000.  Her will created a trust with a life interest for her only niece with the residue divided equally among those of the daughter`s nieces/nephews alive at the time of her death.   The will also provided that if any of those nieces/nephews predeceased the this niece, and they themselves had children, then their children would receive their parent’s share.

The niece was middle aged and had 3 nieces/nephews who, at the time of the hearing,  were 28, 26 and 23 years of age.  None had any children of their own.

The niece and her 3 nieces/nephews brought an action jointly, in which the daughter sought to renounce her interest in the trust and to have the property vest immediately and absolutely in her nieces/nephews equally.

The application was opposed by the Public Guardian who took the position that the acceleration would improperly extinguish the contingent interests of unborn beneficiaries of the will.

The court set out four clear principles relating to acceleration:

a) acceleration is presumed unless there is an indication to the contrary;

b) in assessing whether there is any intention to the contrary, the court must look at both the instrument and the surrounding circumstances;

c) the instrument must be examined in its entirety, and clauses must not be examined in isolation; and

d) the intentions must be viewed, as nearly as is possible, from the perspective of the testator, applying an objective standard.

The court held that while it is clear that the testatrix intended to provide for her daughter, there is nothing to suggest that the daughter could not disclaim that benefit and provide immediately for the ultimate beneficiaries upon her death.

The court held that the aunt was free to disclaim her entitlement thus accelerating her nieces/nephews’ interests in the estate.   Each niece/nephew thus  inherited one third of the estate upon attaining the age of 25 years (the age stipulated by the testatrix).

Conclusion

Beneficiaries cannot be forced to accept gifts.  Beneficiaries have the right to refuse to accept gifts and may choose to do so for a wide variety of reasons.

The Clarke V. DiBella decision is an excellent example of the court  permitting the a beneficiary to disclaim her interest, in order to accelerate the passing of an absolute interest to her own children.