25 Will Drafting Tips

25 Tips for Drafting a Will | Disinherited Estate Litigation Vancouver

1. Take your time. Be cautious. Seriously consider charging your actual time on a Wills file. If your client objects, then educate the client about the amount of time needed to prepare a Will so as to ensure that the client’s lifetime accumulated wealth will pass to his or her chosen heirs.

2. When the Will is ready for execution, read it through a number of different times, each time assuming a different scenario involving contingencies relevant to the Will.

3. Do not be a dabbler. If you do not routinely draw Wills, then consider not doing them at all.

4. Use a checklist when taking instructions. The Law Society Practice Checklist Manuals are an excellent start, and can be modified to suit you . I always use it when I cross-examine a lawyer or Notary. It usually makes them look incompetent if they have not followed a checklist.

5. Get all the necessary information about your client’s personal circumstances , including special situations such as a disabled child. It is essential to obtain complete information about the client’s estate, including details about the nature in value of each asset, its location, and how it is registered.

6. Review copies of earlier Wills, insurance policies, separation agreements, marriage contracts, or any other documents that may affect the client’s estate.

7. Take the necessary time to satisfy your responsibility to ensure that the client understands what the Will says, what it means, and that the client approves its contents. It is essential to go through the Will clause by clause with the client. The lawyer should attend upon the client to make sure that the Will is properly executed. If this is not possible, the lawyer has a duty to make sure that when the original of the Will is sent out for signature, it is accompanied with a very clear letter of instructions on how to execute the Will. You have a further obligation to subsequently ensure that the Will is in fact executed and is put in safekeeping.

8. It is essential to keep very careful notes of Will’s instructions and all communications with Will’s clients. If there is a mistake or an ambiguity and the drafting, it may be these notes that will determine the construction that the court will put on the Will. Notes are especially crucial if there are any unusual circumstances surrounding the Will. A few examples of this might include elderly or infirm testators, blindness or deafness, poor language skills, deathbed Wills, or testators whose Wills might be subject to challenge all the basis of undue influence or lack of capacity.

9. Utilize good legal assistants, but do not place too much reliance on them. Ultimately you cannot delegate your own responsibility to ensure that the Will are prepared correctly.

10. Always file a Wills Notice with the Division of Vital Statistics. Although it is not mandatory, you should do so, particularly in light of the development of liability in favour of disappointed beneficiaries.

11. Maintain a Wills index with the name and address of the testator, the filing number of the Will file, the name of the executor, the date of execution of the Will, and the Will’s location.

12. Deliver a final letter to the client confirming the location of the Will, the date that it was signed, and reminding the client to review the Will from time to time. It is also essential to make the client aware that marriage revokes the Will and that divorce may affect the validity of some of the provisions of the Will.

13. Probe the testator’s mind to ensure that there is sufficient mental capacity to prepare a Will. If there is any doubt, a medical opinion should be obtained.

14. Always take instructions in the absence of potential beneficiaries or executors.

15. Record detailed reasons why any person who would be an appropriate object of the testator’s bounty is being omitted from the Will, and then consider the preparation of a detailed memorandum to the Will in conjunction with your notes.

16. Try not do codicils. It is too easy to make a mistake.

17. Do not use the words issue, per stirpes, per capita. instead use common words that everyone understands such as children and grandchildren

18. If a charity is a beneficiary in a Will, then it is imperative to do two things:

(i) understand the structure of the charity, and obtain the testator’s instructions on which part of the charity her or she wishes to benefit; and

(ii) ensure that the name of the charity is correct. The easiest way of understanding the structure of the charity and finding out its proper name is to telephone the charitable organization and explain your inquiry relates to a gift made by Will, and to speak with a person authorized to give you the information. See also each year’s Canadian Donor’s Guide for assistance. Make sure the charity is permitted by Revenue Canada to issue a tax receipt as a recognized charity.

19. Only sign one original, and make it clear that a copy is, in fact, a copy.

20. Use memorandums to explain why certain beneficiaries are not being provided for, such as in a Wills Variation situation. Set out the reasons in detail, and try to ensure that the reasons set out are factually accurate, and not merely vindictive and mean spirited.

21. Do not under any circumstances attempt to prepare a Will that is “over your head” or that you should not be preparing due to restrictions on your practice, i.e., Notaries doing Wills with discretionary trust provisions. “If in doubt, refer it out” should be your motto.

22. Try to use percentages, rather than specific amounts when drafting bequests to various beneficiaries and ensure that the percentages add up to 100.

23. Ensure that the executors have sufficient powers to carry out their job. For example, if the testator has a business, then include powers to operate the business, such as the power to order inventory. Otherwise the trustee may only be able to operate the business much like a receiver, unless appointed special powers by the court, on application.

24. Do not include an RRSP designation clause, or revocation of an RRSP clause in a Will.

25. Stress to clients that wills are the corner stone of basic estate planning, should be taken seriously, reviewed from time to time and kept in a safe place such a safety deposit box and registered with a filed wills notice

Executor Denied Remuneration for Critical Behaviour

Executor Denied Remuneration for Critical Behaviour - Disinherited

Re the Estate of Lillian Lowe 2002 BCSC 813 is an example of where the executors claim for fees was denied entirely by the court for inter alia her critical failure to supervise the professionals that she retained.

The general principles relating to remuneration of executors were not disputed. Executors should be fairly compensated for the work that they undertake -Baker v Baker (1995) BCJ 1039.
Executors are required simply to do their best to manage the affairs of the estate as one would expect a person of ordinary prudence to do. Parish v Parish estate (1999) 26 ETR (sd) 276 BCSC.

In the Lowe decision, the matter of the executors fees was referred to the registrar to hold an inquiry, determine the facts, and report them to the judge, so that the judge could hold a hearing and determine what is the appropriate executor’s fees to order, if any, after taking into account the factors set out in the relevant relevant legislation.

The court, however, has authority to interfere with the findings of the registrar and vary the recommendation of the registrar as it sees fit. Larson v Larson (1993) 80 BCLR (2d) 303.

The court is not hearing an appeal from the registrar’s conclusions and recommendations, the report is to be considered, but even if there is no error in law or principle discovered in the report, the discretion as to awarding fees and the imposition of costs is the courts alone- Morgan v Edwards estate (2001) 86 BCLR (3d) 19 BCCA.

In the Lowe decision the executor was a lawyer and the court found that she failed to administer the assets of the estate properly, including:

  1. despite repeated requests by the beneficiaries for a copy of the will, no copy was received for a period of one and a half years;
  2. unacceptable delays were involved in obtaining an order presuming the death of the deceased, that resulted in loss of orphans benefits under the Canada pension plan;
  3. the executor did not provide a proper accounting despite requests that she do so. The court application was required to produce the accounting which resulted in the beneficiaries incurring legal fees;
  4. there was a delay in obtaining bonds in the name of the deceased from the safety deposit box of over three years;
  5. the account of the executor’s first fees does not provide any detail. It only showed fees calculated on a percentage basis, and no time records were ever produced;
  6. the executor charged the maximum 5% on the capital of the estate;
  7. executor refused to produce revenue Canada notices of assessment until she was ordered to do so by the court. There was apparently no valid basis for her refusal and the documents contained relevant information.

The court found that the executor failed to supervise the activities and monitor the work done by the professionals that she employed Wagner v Van Cleeff (1991) 5 OR (3d) 477.

Loan or Gift In the Family Context?

Loan or Gift In the Family Context?

It is often very difficult to distinguish between loans and gifts in the family context.

This has become a particularly common problem in recent years with the dramatic increase in the value of properties, and parents attempting to this assist their child and partner in the financing of a residence.

The problem arises, typically when the child and his or her partner separate and dispute whether monies advanced by parents were loans or gifts. The parents typically never gave it a moments thought when the monies were advanced, other than in the back of their minds, they likely expected to be repaid if their child and partner separated.

Rarely are such transactions properly documented, and thus litigation can arise as to whether the monies advanced were a loan or a gift.

Several factors were addressed in Kuo v Chu 2009 BCCA 405 at paragraph 9, where the Court of Appeal adopted the factors described in Locke v Locke 2000 BCSC 1300 as applicable to the question of whether a loan or gift was intended:

1) Whether there were any contemporaneous documents evidencing a loan;
2) whether the manner for repayment is specified;
3) whether there is security held for the loan;
4) whether there are advances to one child and not others, or advances of unequal amounts to various children;
5) whether there are has been any demand for payment before the separation of the parties;
6) whether there was any expectation, or likelihood of repayment.

The two aforesaid cases were recently followed in Zellweger v Zellweger 2018 BCSC 1227.

In R.(MF) v R (BP) 2010 BCSC 1063 , the court concluded that no loan was made in circumstances where there was no contemporaneous documents are promissory notes produce to explain why money had been advanced. The repayment was never discussed with the wife, no security was given, no demand was ever made before separation, and no money was repaid to the husband’s father.

Subject to Financing Conditions

Subject to Financing Conditions

The BC Court of Appeal upheld the trial judge in Gordon Nelson Inc v Cameron 2018 BCCA 304 when it refused to imply a term in a real estate contract that the purchaser use “best efforts” to find suitable financing to remove the condition for its benefit to complete the purchase of a certain real estate contract.

The Court of Appeal agreed with the trial judge that the contract require only an “honest effort” to find suitable financing, an obligation, she concluded that the purchaser had satisfied when it refused to complete the transaction.

The vendor had refused to return the deposit and the court ordered that it be returned to the purchaser.

The court agreed with the purchaser that by seeking to have a best efforts term implied in relation to the financing condition, the vendors were seeking to have the court rewrite the contract in a manner that is contrary to the express terms in the addendum.

The subject to financing term in question was:

“Subject to purchaser being able to arrange satisfactory financing on or before Friday, May 31, 1985 at 6 PM. The subject is for the benefit of the purchaser, and shall be removed in writing on or before 6 PM, May 31, otherwise this offer is null and void”

The appeal court stated that it is not the function of the courts to set interim agreements aside for uncertainty because they contain a clause that is not precisely expressed. If such a clause has an ascertainable meaning, then the court should strive to find it. As long as an agreement is not being constructed by the court, to the surprise of the parties, authorities to one of them, the court should try to retain and give effect to the agreement of the parties have created themselves.

The court referred to MJB Enterprises LTD v people’s food market LTD ( 1979) BCCA 11 BCLR 130, which said the following about the word satisfactory financing:

“Such a meeting could of been expressed as financing satisfactory to him, that is to the purchaser, and that means turns the interim agreement into an option. There is no mutuality of intention to support that construction.

In the result, the judge concluded that the case law did not support a general proposition that regardless of the express terms of the contract, a best efforts term must always be implied in relation to subject conditions. The appeal court agreed with the trial judge that the respondent was under only an obligation to use “honest efforts” to arrange satisfactory financing, which is a different matter from best efforts.

The court stated that the most that can be said as a general proposition is that the principle of good faith imposes a general duty of honest performance and all contracts, and whether it implies anything further depends on the language in context of the contract itself—Bhasin v Htynew 2014 SCC 71 at paragraphs 89 and 93.

The appeal court agreed that the judge was correct to treat the contractual obligation as defined by the express language of the contract. It was not a case about implying a contractual term in the absence of a term being expressly stipulated in the contract. To imply a term in these circumstances would be impermissibly to construct an agreement for the parties, contrary to the agreement. The objectively made.

The trial judge was correct to conclude that in any event, implying a term was not necessary to give the contract business efficacy. Making an honest effort to find suitable financing and honestly, concluding having tested the market, that suitable financing was not available is an efficacious business arrangement.

The judge found the purchaser honestly concluded that the market would not provide suitable financing further searching for financing would be pointless.

Executor Remuneration

Executor Remuneration | Disinherited Estate Litigation Vancouver

Re Mikaloff 2018 BCSC 756 reviews the criteria relating to the appropriate amount of executor remuneration on a passing of accounts application.

The deceased died in 2015 and directed that her will be distributed among nine beneficiaries equally.

The main asset was a Vancouver home, and following a challenge to the validity of her will and a wills variation application by a beneficiary, the matter came before the registrar to fix the amount of executors remuneration.

The executor claimed 4.5% of the capital and .4% of the average annual value of the assets is a care and management fee.

The register, observe that 5% is the maximum that can be charged for an entire administration of an estate, and in the present case, although the vast majority of the work in administering the estate had been completed, the administration was not complete.

An award of 4.5% at this time would undoubtedly equate with the 5% maximum by the time of the final passing of the accounts.

The value of the estate was $1.7 million, and the fact that the property had to be secured and maintain while the two estate actions render course, with the executor traveling to Vancouver from Victoria each month for 14 months, and the fact that the executor was required to instruct counsel and the two actions but did not appear in court, the registrar awarded the executor C of 3% and a care and management fee of .4%.

 

Legal Principles

The legal principles applicable to determining entitlement of an executor to remuneration is summarized in Re Chau Estate 2016 BCSC 2541 at paragraphs 14 – 16 and 18 – 19:

Section 88 of the Trustee Act governs that a personal representative or administrator is entitled to remuneration to a maximum of 5% of the gross aggregate value, including capital and income of all of the assets of the estate of the date of passing.

Section 88 (3) states that a person is entitled to an allowance under subsection 1, and may apply annually to the Supreme Court for a care and management fee and the court may allow a fee not exceeding .4% of the average market value of the estate assets.

The criteria to be considered in determining the appropriate amount of remuneration are set out in a number of cases, the leading of which is Re Toronto General Trust Corporation v. Central Ontario Railway Company(1905) OWR 350 at 354:

The criteria are:

  • the magnitude of the trust,
  • the care and responsibility involved,
  • the time occupied in administering the trust,
  • the skill and ability displayed,
  • and finally the success achieved

In the final result remuneration does not need to be fixed as a percentage of the gross aggregate value of the estate. It may be calculated as a lump sum, provided it does not exceed 5% of the total value of the estate Re Turley Estate ( 1955) 16 WWR 72 (BCSC)

The factors to be considered in awarding the annual care and  management fee are set out in Re Pedlar (1982) 34 BCLR 185 (SC) at paragraphs 14 and 15:

“each application must be decided upon its own facts. Some of the important factors to be taken into consideration in determining whether any care and management fee should be allowed and, if allowed, the extent of such care and management fee, not exceeding .4% of the average market value of the assets of the estate bracket include the following:

a) The value of the estate assets being administered;
b) the nature of the estate assets being administered – such as an active business, farm, real property held for investment or appreciation, a portfolio investments in the type of such investments
c) the degree of responsibility imposed upon the trustee with the terms of the will or other instrument, including the length or duration of the trust
d) the time expended by the trustee and the care and  management of the estate;
e) the degree of ability exhibited by the trustee in the care and  management of the estate
f) the success or failure of the trustee and the care and  management of the estate
g) whether or not some extraordinary service has been rendered by the trustee in the care and  management of the estate

The foregoing list of factors is not intended to be exhaustive, it has been derive, primarily from a consideration of the Ontario Court of Appeal decisions In re Mortimer 1936 OR 438 and Re Smith (1953) OR 185.

The court recognizes that there may be other factors deserving of consideration depending upon the circumstances involved in a particular application.

Wills Variation – Interim Distribution Ordered

Court Ordered Interim Distribution in Wills Variation Claims

There is both court authority and statutory authority allowing the court to exercise its discretion to release a part of the testator’s estate as an interim distribution in a wills variation action.

Section 66 WESA allows the court the power to release a part of the testator’s estate from the effect of a variation order.

In Hecht v Hecht (1990) 39 ETR 165 BCSC , the court held that a legacy under a will can be paid notwithstanding a pending claim for variation when the risk of the variation order will encroach upon the funds needed to satisfy the legacy is remote.

At paragraph 42, the factors to be considered by the court when deciding whether to exercise its discretion to release part of an estate from the effect of a variation order include:

A. The amount of the benefits sought to be distributed as compared to the value of the estate
B. the claimant the beneficiaries on the testator
C. the need of the beneficiaries for money;
D. the consent of the residuary beneficiary to the proposed distribution

Davis v. Burns 2016 BCSC 1982, also allowed an interim distribution to a beneficiary under a wills variation action, where the court specifically exercised its inherent jurisdiction to do so. The court ordered that more than 50% of his potential residual share, despite the objection of another residuary beneficiary, citing lack of prejudice, since the distribution only amounted to 10% of the total value of $2,500,000.

The court followed the criteria previously set out in Hecht.

In Davis, the court held that, having regard to the plaintiff’s financial need in the amount of the benefits to be distributed from the estate, the distribution to the plaintiff would not prejudice the estate or the executor’s duties.

Executor/Trustee Removal: The Law Summarized

Executor/Trustee Removal: The Law Summarized

1. Feeney’s The Canadian Law of Wills, 4th ed. (Markham: LexisNexis, 2000) at 8.17 states:

An executor has a duty to settle the affairs of the estate and to distribute in accordance with the terms of the Will. A power granted to an executor exists within the context of the executor’s duty to settle the affairs of the estate and to distribute.

2. A power to retain an asset does not override the executor’s duty to settle the affairs of the estate and to distribute, per Justice Middleton in Sievert, Re (1921), 67 D.L.R. 199 (Ont. C.A.) at p. 200.

3. In Ketcham v. Walton 2012 BCSC 175 at para. 10, Mr. Justice Wong stated: “The basic principle of an executor’s duty to specified potential beneficiaries of the will is neutrality.” He quoted Mr. Justice Bouck in Quirico v. Pepper Estate (1999) 22 BCTC 82 (BCSC) at para. 15, as follows:

The primary duty of an executor is to preserve the assets of the estate, pay the debts and distribute the balance to the beneficiaries entitled under the will, or in accordance with any other order made under the Wills Variation Act. An executor should not pick sides between the beneficiaries and use estate funds to finance litigation on their behalf under the Wills Variation Act. It is a matter of indifference to the executor as to how the estate should be divided. He or she need only comply with the terms of the will or any variation of it made by a court.

4. The statutory authority to remove a trustee and appoint a replacement for that trustee is set out in ss. 30 and 31 of the Trustee Act, R.S.B.C. 1996, c. 464:

30. A trustee or receiver appointed by any court may be removed and a trustee, trustees or receiver substituted in place of him or her, at any time on application to the court by any trust beneficiary who is not under legal disability, with the consent and approval of a majority in interest and number of the trust beneficiaries who are also not under legal disability.

31. If it is expedient to appoint a new trustee and it is found inexpedient, difficult or impractical to do so without the assistance of the court, it is lawful for the court to make an order appointing a new trustee or trustees, whether there is an existing trustee or not at the time of making the order, and either in substitution for, or in addition to any existing trustees.

5. In Miles v. Vince, 2014 BCCA 289 at paras. 84-85, Madam Justice Levine, for the Court, considered the bases upon which a court might remove a trustee, as follows:

[84] What circumstances justify the removal of a trustee? In Letterstedt v. Broers (1884), L.R. App. Cas. 371 (J.C.P.C.), the court established guidelines justifying the removal of a trustee (at 385-389):

“1. If the Court is satisfied that the continuance of the trustee would prevent the trusts being properly executed, the trustee might be removed. It must always be borne in mind that trustees exist for the benefit of those to whom the creator of the trust has given the trust estate.

2. The acts or omissions must be such as to endanger the trust property or to show a want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity.

3. In exercising the delicate jurisdiction of removing trustees, the Court’s main guide must be the welfare of the beneficiaries. It is not possible to lay down any more definite rule in a matter that is so “essentially dependent on details often of great nicety.” The Court must proceed to look carefully into the circumstances of the case.

4. Where a trustee is asked to resign, and if it appears clear that the continuance of the trustee would be detrimental to the execution of the trusts, even if for no other reason than that human infirmity would prevent those beneficially interested, or those who act for them, from working in harmony with the trustee, and if there is no reason to the contrary from the intentions of the framer of the trust to give this trustee a benefit or otherwise, the trustee is always advised by his own counsel to resign.”

6. In deciding whether to remove an estate trustee, “the court’s main guide should be the welfare of the beneficiaries”: see Crawford v. Jardine, [1997] O.J. No. 5041 (Ont. Ct. (Gen. Div.)), citing Letterstedt v. Broers, ibid, at 385-387, and Anderson, Re, (1928), 35 O.W.N. 7 at 8 (Ont. H.C.).

7. A court may intervene by removing a trustee where it finds that the conduct of the named trustees has endangered the trust property, or has shown a want of honesty, or of proper capacity to execute the duties of the office, or of reasonable fidelity (Conroy v. Stokes, [1952] 4 D.L.R. 124).

8. An executor may be removed where the executor’s actions are not in the best interests of the beneficiaries (McKay v. Howlett et at, 2003 BCCA 555).

9. An executor may be removed where the executor’s duties are found to be in conflict with his or her personal interests or estate assets had been endangered by the executor’s conduct and the executor had benefitted at the expense of the estate (Hall v. Hall, (1983) 45 B.C.L.R. 154 (S.C.); Veitch Estate, 2007 BCSC 952).

10. Even in the absence of misconduct, a trustee may be removed by the Court where the proper administration of a trust is threatened, and where the trustee in question has shown a want of proper capacity to execute the duties. (Re: Consiglio Trusts (No. 1) [1973] 3 O.R. 326; Letterstedt v. Broers, ibid; Conroy v. Stokes, ibid).

11. The principles to be applied in applications for the removal of executors are the same as for those for removal of trustees. (Powers v. Powers Estate, [1988] N.J. No. 19 (S.C.N.T.D.)).

12. A trustee may be removed if he or she fails to communicate promptly with trust beneficiaries or fails to file trust tax returns (Loftus v. Clarke Estate, 2001 BCSC 1136); or if there is a concern that the trustee has not made a proper accounting of business that he or she had conducted on behalf of the trust or evidence that he or she was treating the assets of the trust as his or her own personal assets (Hayne v. Moncrieff, 2012 ABCA 264).

13. In matters involving an executor’s misconduct the beneficiary may obtain an award of special costs against him or her (Loftus v, Clarke Estate, ibid).

14. “Even a ‘perceived’ conflict of interest between an executor’s personal interests and her duty to act in the interests of the beneficiaries of the will can be sufficient to warrant her removal.” Yeh Estate (Re), 2016 BCSC 1550 at para. 17, quoting Ching Estate (Re), 2016 BCSC 1111, at para. 22.

15. In Re Becker (1986), 1986 CanLII 2596 (ON SC), 57 O.R. (2d) 495 (Ont. S.C.), (sub nom. Stadelmier v. Hoffman), the Court found the executor should be passed over because there was a conflict as a result of the fact the executor could not attack the gift and transfer of properties to him while at the same time maintaining in his personal capacity that the transfers were proper. The court summarized the findings at 500:

In considering the fitness of the respondent to act as an executor I have considered also the duties of an executor in a general way. One duty of an executor is to bring in the estate for distribution among the beneficiaries. If it is perceived, on good grounds, that that important duty is compromised by a personal conflict of interest because the executor will be asked to sue himself to recover what may be a large part of the estate property, he must be passed over. That consideration is particularly important when the action against the executor is for a very significant amount in respect to the size of the estate.

Apportioning Court Costs

Apportioning Court Costs | Disinherited Vancouver Estate Litigation

PKMB v DHL 2018 BCSC 1039 dealt with the apportionment of court costs where both the plaintiff and the defendant achieved some success.

Rule 14 –1 ( 15) permits the court to award costs:

The court may award costs

  1. of a proceeding
  2. that relate to some particular application, step or matter in or related to the proceeding, or
  3. except so far as they relate to some particular application, step or matter in or related to the proceeding

and in awarding those costs the court may fix the amount of costs, including the amount of disbursements.

In Sutherland  v Canada AG 2008 BCCA 27 at para. 26,  the Court of Appeal held at paragraph 31 to the test for apportionment of costs in of the predecessor rule was:

  • the party seeking apportionment must establish that there are separate in discrete issues upon which the ultimately unsuccessful party succeeded at trial
  • there must be a basis in which the trial judge can identify the time attributable to the trial of these separate issues;
  • it must be shown that apportionment would affect a just result.

In determining how to apportion costs the two approaches were explained in Waterhouse v. Fedor

( 1987) 13 BCLR (2d) 186 at 190

The court agreed that the two methods may be used in determining the degree of success. One method involves the judge assessing a percentage figure to the relative success of the parties. The other method involves determining the number of days spent in trial on unsuccessful issues in proportion to the time spent unsuccessful issues. Either way, the relative success of the parties is determined in each party is entitled to that portion of his own costs, which are then set off against the other, and the difference, if any, is paid to the party in whose favor the difference lies.

The apportioning of caution not be a part of regular litigation and should be confined to relatively rare cases: Lewis v. Lehigh Northwest Cement limited 2009 BC CA 424 at paragraph 36