BC WILLS VARIATION ACT: Consideration of Benefits Passing Outside Estate

assets passing outside of estate

The British Columbia Wills Variation Act is the statute which permits an eligible claimant to contest a will. The class of claimants eligible to bring a wills variance claim includes any spouse, common-law spouse (f they cohabited for 2+ years) and any child of the Deceased, whether natural or adopted.

The B.C. Wills Variation Act permits a court to redistribute only those assets which would otherwise pass according to the terms of the Deceased’s last will, i.e. from the Deceased’s estate.

S. 2 of the Wills Variation Act reads, in part, as follows:

2. (1) if a testator dies leaving a will which does not, in the court’s opinion, make adequate provision for the proper maintenance and support of the testator’s wife, husband or children, the court may, “order” provision that it thinks adequate, just and equitable in the circumstances be made for the wife, husband or children.

There may be, however, have been other lifetime benefits to the claimant for example education or interest free loans to a child. There may also be assets passing outside of the estate–for example insurance proceeds, benefits under pension plans or assets held in joint tenancy. Benefits and assets such as these, passing outside of the will, cannot be redistributed by the court under the terms of Wills Variation Act.

Sometimes the benefits passing outside estate are greater than those assets passing under the terms of the will. This may result deliberately as a result of estate planning (for example, to minimize probate fees or to avoid a wills variance claim)

In other cases, however, these benefits may an unplanned result–for example if the deceased dies as a result of a fatal accident, there may accidental death benefits payable under an insurance policy.

Although benefits passing outside estate will cannot be redistributed under a wills variance claim, the courts can properly take such benefits into account in determining what provision is “adequate, just and equitable in the circumstances” under s. 2 of the B.C. Wills Variation Act.

Our courts, in determining the appropriate provision under the BC Wills Variation Act, maintain a broad view in determining what is a fair provision to the claimant. The courts will consider previous life time gifts by the Deceased and the value of all benefits arising as a result of the Deceased’s death, whether or not arising directly under the terms of the Deceased’s last will.

In Ryan v Delahaye Estate 2003 BCSC 1081, J. Daphne Smith concluded that inter vivos (life time) transfers and assets passing by right of survivorship pass outside the estate, and are therefore not subject to a wills variance claim. Nevertheless she ruled that the court can consider them when assessing, from the perspective of a judicious person, whether a parent has met his or her moral obligations to an adult child.

In this case Smith, J. considered that the Deceased parents had paid for their son’s education and made interest-free loans to him. The parents had not provided similar benefits to their daughter. Smith J. found that the 80/20 split in the will (lion’s share to the son) did not provide proper maintenance and support for the daughter. She ruled that an adequate, just and equitable distribution would give the daughter an equal share of the residue of the estate. Smith J. accordingly varied the will to divide the residue equally between the two children.

In Inch v. Stead Estate 2007 BCSC 1249, 36 E.T.R. (3d) 79. Mr. Justice Wilson considered the question of whether the court could consider property passing outside of the estate. In this case, the property in question was a term deposit in joint names with a right of survivorship.

69. It thus appears that, although transfers passing outside of the Will are not part of the estate, the effect of such gifts can be considered in determining to what extent, if any, the court should vary the distribution under the Will.

70. “I thus conclude that, although inter vivos dispositions, and assets passing as a result of a right of survivorship pass outside the estate, and are thus not subject to a claim under the Wills Variation Act, the court can consider them when assessing, from the perspective of a judicious person, in the circumstances, whether a parent has met her moral obligations to an adult child.”

This reasoning was applied in the later case of Viberg v. Viberg Estate, [2009] B.C.J. No. 38, 2009 BCSC 27, 44 E.T.R. (3d) 255,

In Viberg v. Viberg Estate , the Deceased had executed his will 26 years before his death. At that time he was married with young children. He and his wife separated in 1992 but remained on good terms, until his sudden death.

Upon the Deceased’s death, his entire estate passed under the will to his estranged wife. She also received a CPP pension and insurance benefits of $382,500 outside of the estate

The court specifically followed the reasoning of the Inch decision and held that because a substantial amount of life insurance was received by the wife on her estranged husband’s death, these monies should be considered when assessing, from the perspective of a judicious parent, whether the deceased had met his moral obligations to his adult children.

The two adult children argued that they should receive $100,000 each out of the estate of their late father. At paragraph 45 of the reasons for judgment, Justice Chamberlist stated in response “that submission would put the insurance proceeds that passed outside of the estate on the same footing as assets that passed within the estate.”

His Lordship continued “as I understand the law, the insurance proceeds and CPP benefits that passed should only be considered when assessing what (the deceased), as a judicious person, would have considered adequate, just and equitable for his adult children”.

The court divided the estate on the basis of that the estranged wife received an additional $149,000 from the estate, with the balance of $168,000 being equally divided among the children.

Conclusion

It seems to be well settled that, in considering wills variance claims, our courts will consider both inter vivos gifts and benefits arising outside of the Deceased’s will. The court will consider these other benefits in determining to what extent, if any, the court should allow the wills variance claim and vary the distribution of assets passing under the will.

Although the courts will consider gifts passing outside of the estate, there is still a very wide discretion as to what effect that ought to have. In other words just because one heir has received $ 100,000 outside of the estate does not mean that their estate share ought to be reduced by that amount.

From a practice point of view, lawyers bringing a wills variance claim should investigate all previous benefits given to the parties and any benefits arising as a result of the death to the Deceased, whether or not arising directly under the will. This may include insurance proceeds, pension benefits, property passing by right of survivorship, designated beneficiaries of pensions, and the like. That information and those records are clearly relevant to a wills variance clai under the BC Wills Variation Act.

The Use of DNA in Estate Litigation

DNA

DNA in Estate Litigation

The Deoxyribonucleic acid (DNA for short) is the genetic code found in the nucleus of each of our body cells and is increasingly used in estate litigation.

Because each person’s genetic code is unique, it is like a genetic “fingerprint”.

Initially DNA evidence was largely used only in criminal proceedings. There it has proven an extremely valuable investigative tool used both to prove the identity of the perpetrator and to eliminate potential suspects who are innocent of the crime.

Thus, at crime scenes, police members routinely collect any items which may contain traces of DNA and forward them for analysis by a forensic laboratory to determine if any identifiable DNA may be located. If present, a DNA profile is prepared and may be used in future to compare the profile with the DNA of any potential suspects.

These days, it is not at all unusual for the media to report that an accused has been convicted of a serious crime largely based on DNA evidence. Many so-called “cold” cases have been revisited and historic samples analysed for DNA resulting in convictions many years after the original crime was committed.

The corollary is that we have also been shocked to learn of wrongly convicted individuals, like David Milward, who have spent years in prison before being finally exonerated by DNA evidence.

DNA evidence is useful, however, far beyond criminal investigations. Because our DNA is a combination of the genes we inherit from each parent, it can be very helpful in civil disputes involving questions of paternity or other biological relationships. With increasing frequency DNA is being successfully used to determine an individual’s parentage.

Real Life Examples of DNA’s usefulness in Estate Ligitation

Our first exposure to the utility of DNA evidence in a civil case occurred in about 1991 when presented with a situation where a man had vanished on ferry trip from Vancouver to Victoria.

This deceased had left an estate valued at approximately $500,000. Because he died intestate, the proceeds of his estate were to pass to his surviving next-of-kin.

We represented the deceased’s five siblings who appeared, at first glance, to be his closest next-of-kin. The picture suddenly changed when a 28 year old woman came forward alleging that she was the deceased’s natural daughter. This woman was from the Northwest Territories where the deceased had indeed once lived however his siblings had never heard of her and she had little proof of paternity.

By way of proof this claimant had a few short written communications between the deceased and herself. The only so-called “acknowledgment” of paternity was comprised of a couple of payments the deceased had made on her behalf many years before. Although the claimant alleged that her mother had told the deceased was her father, the birth registration indicated “father not known”.

We succeeded in circumventing an expensive Court action by obtaining a Supreme Court order directing that the claimant and each sibling provide a sample for DNA analysis. Within a few weeks this scientific analysis determined that the probability was 99.99% that was deceased was indeed the claimant’s biological father. Given these conclusive scientific results, the case was resolved almost immediately.

We have used subsequently DNA in several cases to assist in determining the question of paternity. The results are sometimes surprising.

For example, a few years ago we were involved in another case where a man in his 50s was devastated to learn that his “father” was not really his father. Indeed his biological father was not the man who had raised him, but rather, a long standing “family friend”. As a result, this unfortunate man lacked any standing to bring an action under the Wills Variation Act to contest his “father’s” will. Thus he was effectively disinherited by the man who had raised him and acted as his father for his entire life.

Another interesting case involved the death of a businessman in his early fifties. This deceased died unexpectedly in a motor vehicle accident, leaving a widow and a young son.

Given that this deceased was well known in his local community, his death received some publicity. A few weeks later, a 35 year old woman consulted us, alleging the deceased was her father.

By way of background, the deceased had been in a rock band as a teenager. He had had casual sex with a young female fan and she became pregnant. He denied paternity of the infant and the young woman was left to raise the child alone. Thirty-five years later this child, now a grown woman, claimed that he was her father.

We agreed to act for her and immediately launched a court action claiming an interest in the estate, filing a caveat in the Probate Registry to suspend the application for appointment of the widow as the administrator of the estate. This “savvy”businessman had not executed a new will to replace his previous will which had been revoked by his marriage. Therefore he died intestate and his widow was seeking to administer the estate which included an active business.

In this case, the caveat was instrumental in obtaining a DNA sample. The widow consented to provide the deceased’s blood stained clothing worn at the time of his accidental death. She did so in order to facilitate her immediate appointment as administrator. DNA analysis of the blood confirmed that the deceased had indeed been the claimant’s biological father. This biological relation entitled the claimant, on the intestacy, to inherit a one third share of the residue of her father’s rather sizeable estate.

How Does DNA Testing Work?

Briefly, our DNA defines us. It is the genetic blueprint from which we are made, and determines our physical characteristics and our basic personality types. It also strongly influences our abilities, our habits, our dislikes and so forth. It is found in almost every cell in our body and influences everything that we do, feel and think. DNA is passed down through the generations and connects each of us to our biological family.

Each individual’s DNA is made up of 23 pairs of chromosomes, a combination of the chromosomes inherited from each parent at the time of conception. In essence, each of us is the result of the fusion of a single egg cell and a single sperm cell. Each parent contributes through her egg or his sperm, 23 chromosomes i.e. one half that parent’s own chromosomal pair.

When each egg or sperm cell is originally created in the mother or father’s body, each cell goes through a division process that takes it from the parent’s 23 chromosomal pairs to just 23 chromosomes (1 of each). The egg cell and the sperm cell each contribute their individual chromosomes so the new human embryo possesses 23 newly combined pairs of chromosomes.

Thus each individual has two versions of each of the inherited 23 chromosomes–one version from his or her mother and the other version from the father. This knowledge is the foundation of DNA testing for paternity.

To determine paternity, most laboratories will conduct the testing of 16 specific areas of each individual’s DNA sample. These areas are called “loci”. Each individual will have two readings for each DNA loci tested. Once testing is completed, the DNA loci are compared. For each loci, one number will match one of the mother’s numbers for that loci. The remaining loci must match the one of the biological father’s numbers for that loci.

In determining paternity, for every matched loci, a paternity index is calculated which reflects how frequently such a match occurs in a particular race population, at large. Should all the loci match, then these paternity indices are combined and a probability of paternity is calculated. That probability is the final percentage calculated. If there is a complete match, it is typically stated as a probability of paternity of 99.999 percent and higher.

If any single loci does not match, then naturally paternity is completely excluded.

Obviously, this testing is far more commonly used to determine paternity than maternity however the same process would apply for both determinations.

Advantages of DNA Analysis

Prior to DNA analysis forensic scientists were limited to comparing the blood groupings of the parties in question. Such analyses were of limited assistance in confirming parentage because the identification was tentative at best. The chances of paternity could at most be expressed as a probability of one per several thousand. The second generation of blood testing, HLA blood typing, improved the sophistication of the testing but not to the degree of DNA analyses.
DNA analyses has facilitated a much more sophisticated level of discrimination which enables scientists to provide probabilities in the order of 1 chance per billion.

As well, DNA analysis allows testing far beyond the scope of blood testing because DNA typically does not significantly degrade over time. Thus analysis may be made of samples many years old. Furthermore DNA is quite resistant to degradation by common environmental attacks such as weather. As a result, DNA testing can often be performed on samples that have been exposed to detergents, acids and bases, gasoline, salt and bacterial contamination.

Another distinct advantage of DNA testing is its sensitivity to testing. Indeed DNA is so sensitive that it permits small samples to be divided and submitted for testing by more than one laboratory. It thus reduces the possibility of error because testing may be conducted independently by more than laboratory. This helps to counter objections on the basis of inadequate laboratory processes.

DNA testing can be conducted with any sample containing nucleated cells. This would include cells such as hair, semen, urine and saliva. Naturally, however, one must prove that the appropriate person was the source of the sample and that the chain of continuity of the sample was maintained. Both of these elements must be established if the Court is to find that the test results relate to the person in question.

The Legal Basis for Comparing DNA Samples in Civil Proceedings in British Columbia

In British Columbia, Rule 30 of the Rules of Court states, in part, as follows:

“30(1) Where the physical or mental condition of a person is in issue in a proceeding, the Court may order that the person submit to examination by a medical practitioner or other qualified person. A Court may make such order respecting the examination and any expenses connected therewith as it thinks just, including an order that the result of the examination be put in writing and the copies be made available to interested parties.

30(4) Where the Court considers it necessary or expedient for the purposes of obtaining full information or evidence, it may order the production, inspection and preservation of any property, and authorize any samples to be taken or observations to be made or experiments to be conducted on or with the property.”

This section has been interpreted as giving the Supreme Court discretion to order the furnishing of blood samples. Such orders are most often granted in support proceedings and in affiliation proceedings (proceedings to determine the paternity or maternity) however such orders may be made in estate litigation.

An early British Columbia decision relying on this section to direct DNA samples be provided is Bowman v. Kovacs (1986) 10 B.C.L.R. (2d) 218 (C.A.),

In that case the Plaintiff, a married woman, believed another man “B” to be the father of her child. After her marriage ended in divorce she brought an action against “B” claiming child maintenance and applied for an order under Rule 30(1) requiring that “B” submit to blood testing.

The Chambers Judge had granted an order directing the Defendant “B” to provide a sample of blood for analysis. In this decision, the Court of Appeal upheld that order.

Subsequently the B.C. Supreme Court in C.(S.) v. M.(R.) (1989) 49 C.R.R. 290, upheld the validity of an order for blood under s. Rule 30(1). It ruled such an order did not infringe upon the Charter rights of the person compelled by the order to furnish the blood sample.

A few years later, the B.C. Court of Appeal confirmed an order that DNA blood samples be provided. In this case, D.(J.S) v. V. (W.L). (1995) 3 B.C.L.R. (3d) 380 (B.C.C.A.) at p. 381, the Court stated as follows:

“In summary, while there is no specific legislation in this Province governing the obtaining of samples for DNA testing to determine biological paternity, it has been clear since Bowman v. Kovacs (supra), that an Order may be made under Rule 30(1) requiring a person to provide the necessary samples for such testing, where biological paternity must be determined in order to resolve a disputed claim. Such an Order is discretionary and, in the absence of guiding legislation, the principles which are to be applied in the exercise of that discretion must be derived from the developing case law. Those principles include recognition that DNA profiling provides evidence of a highly reliable kind when determining biological parentage and that the interests of justice will generally be best served by obtaining such evidence that the truth may be ascertained.”

Statutory Presumption of Paternity

Section 95 (1) of the Family Relations Act states, in part, as follows:

“If a male person denies responsibility under Section 88(1) on the basis that he is not the father of the child, the Courts must, unless the contrary is proved on a balance of probabilities, presume that the male person is the father of the child in any case of the following circumstances:

(d) The person was cohabiting with the mother of the child in a relationship of some permanence at the time of the birth of the child, or the child is born within 300 days after the person and the mother ceased to cohabit.”

Thus, in applications for maintenance under the Family Relations Act, R.S.B.C. 1996, the Family Relations Act creates a statutory presumption of paternity if certain preconditions are fulfilled.

Lack of Presumption of Paternity under the Wills Variation Act

In contrast to the Family Relations Act, the Wills Variation Act contains no presumption of paternity. Therefore in Wills Variation Act claims, if there is any dispute as to the biological relationship, in order to justify any legal entitlement the Plaintiff must first establish the relationship on the balance of probabilities.

Clearly this makes DNA particularly useful in claims made under the Wills Variation Act. Indeed it is perhaps somewhat surprising how frequently a DNA analysis shows a lack of biological relationship!

Conclusion

DNA analysis is playing an increasingly important role in determining the question of biological relations in estate matters. Such testing is relatively inexpensive and expeditious. What is more, DNA comparison usually provides overwhelmingly conclusive results.

In some other Canadian provinces, such as Manitoba, the courts seem less disposed to order the production of blood for DNA analysis. In British Columbia, however, our courts have proved far more willing to expedite the settlement of disputes by facilitating such conclusive scientific testing.

Limitations for Wills Variation Claims

Time limitationsThere is a relatively short limitation period for wills variation claims brought under British Columbia`s Wills Variation Act.

Under WESA, a claimant must start any court action within 180 days  of the grant of probate to the executor of the impugned will. This allows for the timely distribution of the estate by enabling the executor to distribute the estate without fear of later claims.

At first glance, this the six month limitation period appears fixed with no discretion to extend that time limit. Neverthess, there are three notable exceptions where the statutory time limit may in fact be extended.

1. The Limitation Act Exception

The first exception occurs where another claimant has already made a BC Wills Variation Act claim in respect of the same estate within the prescribed six month limit. In such a case s. 4 of the Limitation Act permits an additional party to commence his or her action relating to the same estate even after the six-month limitation period.

As a practice note, it is extremely important for counsel to keep this exception in mind when seeking to settle any Wills Variation Act claim. Even though the six month limitation period has long since elapsed, in the absence of a court ratified settlement, other eligible claimants could still decide to make a late claim.

2. The Equitable Doctrine of Estoppel

The second exception involves the doctrine of estoppel which in some cases can effectively prevent a defendant from successfully pleading that a Wills Variation Act claim is statute-barred. This exception arises from the law of promissory estoppel.

Halsbury’s Laws of England defines promissory estoppel as follows: “when one party has, by his words or conduct, made to the other a clear and unequivocal promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to their previous legal relations subject to the qualification which he himself introduced.”

In British Columbia, this equitable defence of estoppel has been successfully raised as a shield to defeat the defendant’s argument that the plaintiff’s Wills Variation Act claim is statute barred.

This caselaw has stemmed from the case of Maracle v Travellers Indemnity Co. of Canada (1991) C.P.C. (2d) 213 (S.C.C.) which held that promissory estoppel may prevent a defendant from relying on a statutory limitation where a plaintiff can establish the following three conditions:

that the defendants made an unambiguous promise or assurance that they would not rely on the limitation period;
that the defendants intended to alter the legal relationship between the parties; and
that the plaintiff reasonably relied upon the representation of the defendants and thus did not commence an action within the prescribed time.
In British Columbia, the case of MacDonald v. MacDonald Estate (1996) 8 W.W.R. 160 first established that this defense of promissory estoppel could be used in respect of an otherwise statute barred action under the B.C. Wills Variation Act.

This case involved the will of mother who died leaving two sons. To one son she left one dollar. To the other son, her executor, she left a residence. The disinherited plaintiff son had received proper notice of the application for a grant of probate yet brought his action after the limitation period had elapsed The defendant sought to have the case dismissed on the basis that it was time barred by virtue of s. 3 of the British Columbia Wills Variation Act.

The plaintiff argued promissory estoppel. He alleged that even before their mother’s death, the defendant had told him of the disinheritance but assured him he would nevertheless share the estate equally between them. Those assurances continued after her death and the plaintiff thus did hundreds of hours of work on the home. This abruptly ended when the defendant reneged on the agreement two months after limitation period expired. The plaintiff argued that the defendant was estopped from relying on the limitation period.

Harvey, J. held that the doctrine of promissory estoppel does apply to statutory limitation under the B.C.Wills Variation Act, saying as follows:
In my opinion, the case and textual authority favours the position that estoppel is available as an argument whenever a limitation period is relied upon regardless of the source. It is admittedly easier to use the estoppel argument where the statute gives the court discretion to extend the limitation period. However, the absence of such statutory jurisdiction in the Wills Variation Act, in my opinion, does not preclude the court from exercising its equitable jurisdiction in considering the remedy of estoppel. [para. 54]

Harvey J.held that the requirements for promissory estoppel appeared to be met. He thus refused the application by the defendant to dismiss the case as being out of time. The plaintiff was permitted to proceed to trial.

This decision was cited with approval in the later decision of Chan v. Lee Estate 2004 BCCA 644. In this later case, the trial judge found that estoppel by conduct effectively extended the BC Wills Variation Act limitation period by preventing the defendants from pleading the action was statute barred.

This case involved a Chinese family where the deceased father gave his sons the lion’s share of his estate. His daughters brought their Wills Variation Act claim three years after probate had been granted. The sons opposed the claim on the basis it was out of time.

The trial judge found that the sons were estopped by their conduct concluding that it would be “wholly inequitable” to permit the sons to succeed with their defence that the daughters action was statute barred. This finding was upheld by the Court of Appeal.

Needless to say, such late claims are clearly precarious. For example, the court refused to accept the claim of estoppel in Westover v. Cairns 2004 BCSC 1572. In that case a child commenced a Wills Variation Act claim slightly out of time. The child had hired a lawyer shortly after probate issued and the court found that he had clearly contemplated a Wills Variation Act claim at that time. The court found nothing in the correspondence or conduct of the other beneficiaries to evidence an unambiguous promise that they would not rely upon the limitation period. Thus the claim was dismissed.

3. Lack of Proper Notice of Intention to Apply for Probate.

The third exception involves s. 112(1) of the Estate Administration Act RSBC. This section requires an applicant for a grant of probate or letters of administration to give notice of the intended application to all those eligible to make a claim under the British Columbia Wills Variation Act. This notice is clearly designed to afford potential Wills Variation Act claimants a reasonable time to consider their options.

Desbiens v. Bernacki 2008 BCSC 696 dealt with a case where the deceased’s children did not receive the notice as required under the Estate Administration Act.

The case involved a deceased who had left his four young children in the care of the Ontario Children’s Aid Society. Other than brief and occasional contact, he had almost no contact with his children for the rest of his life. He moved to British Columbia where he remarried in late 2003 dying shortly thereafter. By his will he appointed his lawyer as his executrix and left his estate to his widow.

In giving wills instructions to his lawyer, the deceased had explicitly denied having any children. It was thus only after death that the executrix lawyer learned of the children when she found the names and addresses of three children amongst his papers. She mailed the required notices to those addresses.

The children learned of the death long after the passage of the limitation period and commenced a Wills Variation Act claim. The executrix and widow sought to have the childrens’ claims dismissed as statute barred.

The plaintiff children argued that the executrix had failed to take reasonable steps to give them proper notice as required under the Estate Administration Act and the defendants were therefore estopped from invoking the limitation period in defence of the claim.

The court conducted a detailed analysis of the steps taken by the executrix in an effort to comply with the notice provisions in section 112 of the Estate Administration Act and ultimately agreed with the Plaintiffs’ position.

The court ruled that s. 112 requires the applicant to take at least reasonable steps to determine the correct addresses of the intended recipients. More is required than merely dropping an envelope into a mailbox. Here the accuracy of the addresses was questionable as they were for individuals who had long been out of touch with the testator. Therefore the court ruled the executrix was required to take some further reasonable steps to confirm that any notices sent would likely reach the intended recipients.

The court was critical that the executrix had not applied for an order under section 112(3) of the Estate Administration Act for directions by the court with regard to the notices to be sent. In particular the court noted that she had presented no evidence of any steps taken to verify the currency of the addresses in the address book or of any research to find the plaintiffs’ current addresses. The court found that all of the addresses were long outdated and that none of the four children received any notice.

Citing the case of Chan v. Lee, the court ruled in favour of the timeliness of the childrens’ claim. The court ruled that the executrix failure to take reasonable steps to determine the correct addresses was conduct which estopped or prevented the defendants from raising the limitation defence. Bracken, J. held that the plaintiffs claim should not be dismissed as statute barred but rather should proceed to trial.

Conclusion

In conclusion, we should emphasize the utmost importance of commencing Wills Variation claim in a prompt and timely manner. As a practical matter it is always far more difficult to effectively realize any judgment, once the horse is out of the barn. As well, in any wills claim brought after the six month limitationhas passed, it will be an extremely difficult to convince the court that the claim should proceed.

A Tribute to The BC Wills Variation Act

The question of a child’s ‘entitlement’ to share in a parent’s estate often provokes a very lively discussion. Many believe that a parent`s obligation ends once they have “fed, clothed, educated and sent the child on his or her way”. They argue that testators should be free to leave their inheritance as they see fit, subject of course to any claims by a surviving spouse.

The potential for inheritance conflicts has been growing with the increasing number of “blended families“. Today’s parents may have second or even third families. In such cases, for example, there may be differing perceptions of any obligation to provide an inheritance for younger children, as opposed to older more established children.

Thus it is common for people to criticize the BC Wills Variation Act as permitting the ‘malcontents’ to contest a will.

In a nutshell the British Columbia Wills Variation Act is the statute which permits a surviving spouse or childr to contest a will on the basis that it does not make adequate provision for the claimant. The class of eligible claimants includes the surviving spouse, common-law spouse, same-sex spouse and both the natural and adopted children of the deceased.

We hope to set out briefly the background to the BC Wills Variation Act and provide real life examples to illustrate the clear need for such legislation. As such, this article is intended as a tribute to the provisions of the B.C. Wills Variation Act.

Background

Any discussion of the BC Wills Variation Act requires an understanding of the common law we inherited from England as this common law underlies the legislation.

The English common law provided that when a person died, that person could leave his or her property to whomsoever he or she wished.

This ability to dispose of one’s estate is known as “testamentary autonomy” or “testamentary freedom”. It is legal doctrine which was developed by the English courts during a time (1700-1900) when little property was actually disposed of by will.

During that time, most wealth was made up of real property which was generally considered to be family property. Because it did not belong to the individual, it was not part of the estate to be disposed of by will upon death.

When the children of wealthy families married, their families often made marriage settlements which included conditions with respect to the ownership of the property and its passage upon death. Thus, property governed by a settlement was not part of an individual’s estate.

It was in this context that the English courts decided that a testator was free to decide the beneficiaries to inherit under his or her will.

Thus, the English law of succession left it to the discretion of testators to dispose of their estates as they saw fit . At common law, testators are not legally obliged to make provision for their spouse or children. There is no binding obligation to leave a set amount to their spouse or their children.

In modern estate law, however, this common law doctrine has been modified in many jurisdictions which have passed enactments to permit the spouse or children to make a claim against the estate where a deceased has not made adequate provision for them. Would-be heirs may claim against the deceased’s estate and ask the court, in effect, to rewrite the will to provide appropriately. In British Columbia, this enactment is known as the Wills Variation Act.

Unless there is a successful wills variation claim brought under the statute, however, the principle of testamentary freedom still prevails at common law in British Columbia.

It is noteworthy that this common law approach is in stark contrast to the rest of the world. In civil law countries (which includes most of the non-English speaking world including all of non-English Europe and its former colonies) a fixed portion of a deceased’s estate -often 50% to 75%- passes automatically to the surviving spouse and children. The testator can only dispose freely of a portion of his or her estate. The credo seems to be “you had them, you pay for them”.

Claims under the British Columbia Wills Variation Act

Most of us had the good fortune to be raised in happy, healthy families, however there is no licence to become a parent. Any experienced teacher, minister, doctor or other person serving the public will attest to the great number of dysfunctional families.

In our practice, many estrangement cases seem to involve a history of physically, emotionally and/or sexually abusive treatment by the parent or step-parent toward the child. Where the estrangement can be properly explained and put into perspective, then the adult child may well have a solid Wills Variation Act claim.

A common claim involves the children of abusive and alcoholic parents, generally fathers. A recurring theme is a father coming home drunk after work and generally terrorizing the family on an ongoing basis. Many children leave home at an early age, and bear a strong resentment against the abusive parent. Many children go on to repeat the same patterns. At best, they remain emotionally damaged..

Needless to say, abusive parents generally have little insight as to the effects of their actions. Thus the abuser when preparing his or her will, will typically disinherit the children on the basis that he has not heard from them for a lengthy period of time, and thus considers himself estranged from his children, and owes them nothing. The legal professional preparing a will often, unfortunately, simply accepts this statement as the truth of the matter.

Real Life Examples

1. One particularly extreme case we handled involved a lonely 71 year old widower who met up with a 41 year old escort “specializing in seniors”. She soon moved into his home, convinced him to make sizable financial gifts and isolated him from his own children.. They married shortly thereafter and the widower signed a new will disinheriting his three adult children, leaving everything to his new wife or alternatively her long estranged daughter (whom he never met). The new “wife” changed the home phone number and began running her seniors escort service out of the home.
This so-called marriage ended abruptly 3 months later when the gold digger beat her elderly husband to death, apparently while high on cocaine. In fact, she beat him so severely she broke every rib in his body. She was subsequently convicted of murder thus became disentitled, as a wrongdoer, from benefiting from her own crime by inheriting under the will. Her daughter, however, arguably continued to have a valid claim as the alternate beneficiary under the will.

2. This case involved a 40 year old woman S who had been adopted at age 7 by the Deceased and her husband. It seems that she was adopted as a servant more than a child as she was made to work long hours in the deceased’s puppy farm business. Each morning before school she got up at 4.30 am to feed and care for up to 100 dogs before taking a school bus to school.. She was severely beaten for any perceived misbehaviour or insubordination. In extreme situations, she was denied food. Mother wore the pants in the family and her father did not intervene on her behalf.

When S skipped school for the first time at age 16 (to help her friend prepare for the friend’s mother’s discharge from hospital) the deceased became exceedingly angry. S stayed away for a couple of days to let her mother cool down. When S phoned home her mother related that she had burned all of S’ possessions and would be putting S’s dog down. “You came into the house with nothing and you will leave with nothing”. This woman obliged her husband and other family members to disown S as well.

S was homeless and taken in by friends. With few options, she became pregnant and married a severely abusive man who continued to abuse her and the children for years before she left him. Their third child was born severely disabled child and she raised this son on her own for 24 years. This son cannot speak, still wears diapers, weighs 40-45 pounds and is catastrophically injured in every sense of the word.

Nevertheless S managed to get a university education by attending classes while her son was at daycare as a child. Once he became an adult however, this eligibility ended and she cared for him fulltime rather than putting her son into an institution. S had attempted to contact her adopted mother on several occasions, but was rebuffed at each turn. The Deceased died leaving an estate of approximately $250,000. Her will provided S with a bequest of $5,000 on the basis that they had been estranged for 25 years.

In this case a Wills Variation claim was made, however once the proper facts were brought to the attention of the executor and beneficiaries, the case was quickly settled on the basis of S receiving one-half of the net estate.

3. This case involved D, a 45 year old woman who, as an only child, who had been doted upon by her parents. D was of average intelligence however she had been physically disabled child from birth due to cerebral palsy. D lived at home with her overly protective parents until her late 30’s when she rebelled by leaving her parent’s home to marry her childhood sweetheart. This was done over her parents’ protests however before long they came to accept the marriage. They did however continue to try to control their daughter to some degree.

D was unable to work and by marrying, D lost her only source of income, her disability pension. By any objective standard, the husband was a good husband and provider however he worked as a school janitor so they had very little disposable income. The couple had been married for 8 years when D’s father and then mother died within a few months of each other.

D’s mother left a homemade will which provided the executor could pay off the mortgage on D’s townhouse ($100,000) and could pay her the sum of $1,000 per month until age 65. Thus D would not inherit the capital of her mother’s estate unless and until she reached age 65. If she died before 65 years, the residue would be divided amongst her 22 first cousins. The estate assets totaled in excess of $800,000.

D made a claim under the B.C. Wills Variation Act seeking to have the will varied so that she could receive the entire estate immediately. Her application was opposed by some of the alternate beneficiaries. They felt very strongly that their aunt’s wishes should be honoured and the will upheld.

At trial we tendered expert evidence from an occupational therapist, as to the substantial expenses required to allow D. to live a reasonably normal and comfortable life. The court relied on B.C. Wills Variation Act to give the entire $800,000 estate to D immediately.

Summary of Basic Principles The Clucas Decision

An excellent summary of the basic principles of the British Columbia Wills Variation Act is set out in Clucas v. Clucas Estate 29 E.T.R.(2d) 222.

Briefly those principles include the following:

The main object of the B.C. Wills Variation Act is to provide adequate, just and equitable provision for the testators surviving spouse and children.

The BC Wills Variation Act also protects the interest in testamentary freedom which is not to be interfered with lightly. In the absence of other evidence, a testator is presumed to know best how to meet his legitimate obligations and concerns.

The BC Wills Variation Act provides an objective standard by which to measure whether a testator has provided “adequate and proper maintenance and support” for his surviving spouse and children. Thus the court should examine the will keeping in mind society’s reasonable expectations of what a judicious parent would do in the circumstances.

In making a determination, the court must consider any legal obligations of the testator to the spouse and children, followed by the moral obligations to them.

Independent adult children have a more tenuous moral claim than any spouse or dependent adult children. If the size of the estate permits, however, parents should generally make some provision for adult independent children (unless there are circumstances which rule out such an obligation)

A testator may have a moral duty to adult children in a number of different circumstances including disability, legitimate expectation of inheritance, probable future difficulties of the child; the size of the estate and other legitimate claims.

This moral obligation by a testator may be negated by “valid and rational” reasons which justify disinheriting the child. In such a case, these reasons must be based on true facts and must be logically connected to the disinheritance

Although a needs/maintenance test is no longer the sole factor governing such claims, a consideration of needs is still relevant.

CONCLUSION

The purpose of this paper is to demonstrate that despite the frequent criticisms made of the British Columbia Wills Variation Act, that there are many circumstances where the Wills Variation Act allows the court to rewrite the will to ensure justice is done.

The Court of Appeal aptly summarized this in Gray v. Nantel 2002 BCCA 94. In allowing the wills variation claim of an estranged child, Chief Justice Finch stated:

“I cannot accept that a child so neglected for his first 18 years and then treated shabbily during a brief reconciliation can be said to forfeit the moral claim to a share in his father’s estate by abandoning any further effort to establish a relationship. The fault in this sad story lies with the father and, in my opinion, the onus to seek further reconciliation was on his shoulders. The testator gave the appellant virtually nothing in an emotional or material way; the will was his last opportunity to do right by his son” (emphasis added).

Proving Undue Influence In Wills

cat detectiveProving Undue Influence In Wills Has Improved Under WESA

Under s. 52 of the new WESA Legislation which came  in effect on April 1, 2014)), the onus of disproving undue influence has shifted to the person who has received the gift under the will where they are in positions of dependence or dominance.

52. In an action, if a person claims that a will or any provision of it resulted from another person

being in a position where the potential for dependence or domination of the will-maker was present, and
using that position to unduly influence the will-maker to make the will or the provision of it that is challenged
and establishes that the other person was in a position where the potential for dependence or domination of the will-maker was present, the party seeking to defend the will or the provision of it that is challenged or to uphold the gift has the onus of establishing that the person in the position where the potential for dependence or domination of the will-maker was present did not exercise undue influence over the will-maker with respect to the will of the provision of it that is challenged.

The current state of the law as enunciated in Vout v. Hay is that if the validity of a will is challenged on the ground of undue influence than the onus is upon the person alleging undue influence to prove that allegation.

There is a distinction to be borne in mind between producing suffic ient evidence to satisfy the Court that a suspicion raised by the circumstances surrounding the execution of the will have been dispelled and producing the evidence necessary to establish an allegation of undue influence. The former task lies upon the proponents of the will, the latter is a burden assumed by those who are attacking the will and can only be discharged by proof of the existence of an influence acting upon the mind of the testator of the kind described by Viscount Haldane in Craig v. Lamoureux [[1920] A.C. 349], at 357 where he says:

Undue influence, in order to render a will void, must be an influence which can justly be described by a person looking at the matter judicially to have caused the execution of a paper pretending to express a testator’s mind, but which really does not express his mind, but something else which he did not really mean.

The language of s. 52 seems to reflect the Supreme Court of Canada’s discussion of dominate relationships found in the decision of Geffen v. Goodman Estate.5 In that decision, which was a case dealing with an inter vivos trust, the Court stated:

What then is the nature of the relationship that must exist in order to give rise to a presumption of undue influence? Bearing in mind the decision in Morgan, its critics and the divergence in the jurisprudence which it spawned, it is my opinion that concepts such as “confidence” and “reliance” do not adequately capture the essence of relationships which may give rise to the presumption. I would respectfully agree with Lord Scarman that there are many confidential relationships that do not give rise to the presumption just as there are many non-confidential relationships that do. It seems to me rather that when one speaks of “influence” one is really referring to the ability of one person to dominate the will of another, whether through manipulation, coercion, or outright but subtle abuse of power. I disagree with the Court of Appeal’s decision in Goldswortby v. Brickell, supra, that it runs contrary to human experience to characterize relationships of trust or confidence as relationships of dominance. To dominate the will of another simply means to exercise a persuasive influence over him or her. The ability to exercise such influence may arise from a relationship of trust or confidence but it may arise from other relationships as well. The point is that there is nothing per se reprehensible about persons in a relationship of trust or confidence exerting influence, even undue influence, over their beneficiaries. It depends on their motivation and the objective they seek to achieve thereby.

Beware Badly Drafted Separation Agreements re Future Estate Claims

separation agreements

In my experience many matrimonial practitioners may well do a very good job in their respective field, but upon drafting separation agreements to finalize the marriage, many of the agreements are very poorly drafted with respect to inheritance issues between the spouses that may arise in later years.

For example while most separation agreements are drafted very well to prevent the former spouse from making a claim against the estate of the deceased, the agreements rarely provide that the former spouse does not have the right to receive the gift in the event that the spouses do not divorce, and failed to revise his or her will as is often the case.

Many spouses have each other’s as the named beneficiary of various insurance policies, and may well forget to change the designated beneficiary of that policy after the marital breakdown. A properly drawn agreement would prevent the former spouse from being the named beneficiary and receiving the funds from an insurance policy.

It must be noted that a separation agreement has no effect whatsoever on the terms and validity of a will, but it well may provide the legal framework for an executor to for example to not be legally obligated to make payment to the surviving spouse under the will and the surviving spouse is legally estopped from enforcing payment.

The separation agreement should have the following provisions with respect to estate issues:

The surviving spouse agrees that the estate of the deceased be distributed as if the surviving spouse had died first;
if the executor requests it, the former spouse will provide a disclaimer of any interest in the estate;
that the former spouse will make no claims against the estate of the deceased;
that the former spouse agrees to not receive any benefits as a result of the death of the deceased, whether by way of intestacy, will or trust
the surviving spouse will not accept any appointment of being the personal representative of the deceased.
The Ontario case of Makarchuk v Makarchuk 2011 ONSC 4633 ( Appeal to Court of Appeal dismissed January 23,2012, and leave to appeal to the SCC refused) isnillustrative of the problem.

The Makarchuks were married for over 40 years and separated, but did not divorce in 2003.

 

They signed a separation agreement in 2003 and the husband died 5 years later in 2008.
The last will of the deceased, a retired lawyer, was one he prepared himself and signed 5 months prior to signing the separation agreement.
The wife was appointed executor and sole beneficiary.
The separation agreement contained a release of all claims provision that stated inter alia:
” –the husband and the wife each release all rights which he or she has or may acquire under the laws of any jurisdiction in the estate of the other–”
The issue was whether the wife had released her entitlement to share as a beneficiary and executor of her late husband’s estate.
An adult son of the marriage said that the separation agreement “thrumped the will”, but the Courts disagreed and allowed the wife to inherit.
The Court found that the wording of the release in the separation agreement ,made only 5 months after the will, was not broad enough include rights acquired under the will- the release only speaks of “rights acquired under the law.”
Many clients and even some lawyers do not appreciate the legal distinction between a separation and divorce.
Under the provisions of the Divorce Act, s 16, had the parties being divorced the widow why would not have been allowed to inherit and would have been treated in law as if she had predeceased her husband.
Since they were merely divorced, and the provisions of the release in the separation agreement were not exact enough to preclude the widow from inheriting, the court concluded that the deceased had ample time to change his will had he wished to do so, and allowed his wife to inherit.

The Doctrine of Suspicious Circumstances

Suspicious circumstances

The Doctrine of Suspicious Circumstances-

From Laszlo v Lawton 2013 SCBC 305

[200] In Vout v. Hay, [1995] 2 S.C.R. 876 [Vouf\, the Supreme Court of Canada laid to rest the thread of confusion that had emerged in earlier decisions concerning the burden of proof and the interrelationship between the doctrine of suspicious circumstances and the issues of testamentary capacity, knowledge and approval, undue influence and fraud.

[201] Vout affirmed that the legal burden of proving due execution of the will and both testamentary capacity and that the testator knew and approved of the contents of the will is with the party propounding the impugned will. Put succinctly, the party seeking to uphold the will must prove that it was duly executed and is the product of a free and capable testator.

[202] In discharging its burden of proof, the propounder is aided by a rebuttable presumption. It is presumed that the testator possessed the requisite knowledge and approval and testamentary capacity where the will was duly executed in accordance with the statutory formalities after having been read by or to the testator, who appeared to understand it. Vout clarified that this presumption may be rebutted by evidence of well-grounded suspicions, known as “suspicious circumstances”, relating to one or more of the following circumstances: (1) surrounding the preparation of the will; (2) tending to call into question the capacity of the testator; or (3) tending to show that the free will of the testator was overborne by acts of coercion or fraud (para. 25).

[203] The presumption places an evidentiary burden on the party challenging the will to adduce or point to “some evidence which, if accepted, would tend to negative knowledge and approval or testamentary capacity”: Vout at para. 27.

[204] Where suspicious circumstances arise, the presumption is said to have been spent, meaning it does not apply and has no further role to play, and the propounder reassumes the legal burden of establishing both approval and capacity. Proving testamentary capacity as well as knowledge and approval of the will provisions, necessarily entails dispelling the suspicious circumstances that have been raised: see generally, Ostrander v. Black (1996), 12 E.T.R. (2d) 219 at 235 (Gen. Div.).

[205] The usual civil standard of proof, namely proof on a balance of probabilities, applies. That said, as a practical matter the extent of the proof required will be proportionate to the gravity of the suspicion, which will vary with the circumstances peculiar to each case: Vout at para. 24.

[206] A “general miasma of suspicion that something unsavoury may have occurred” will not be enough: Clark v. Nash (1989), 61 D.L.R. (4th), 409 at 425 (B.C.C.A.). In Maddess v. Racz, 2009 BCCA 39 at para. 31, the B.C. Court of Appeal reminded that merely “some evidence” was not sufficient and emphasized the stipulation in Vout that in order to elevate general suspicion to the threshold of suspicious circumstances, the evidence, if accepted, must tend to negative knowledge and approval or testamentary capacity.

[207] Suspicious circumstances have been found to exist in a wide array of situations and are not necessarily sinister in nature. There is no checklist of circumstantial factors that will invariably fit the classification. Commonly occurring themes include where a beneficiary is instrumental in the preparation of the will (especially where the beneficiary stands in a fiduciary position to the testator), or where the will favours “someone who has not previously been the object of [the testator’s] bounty and does not fall within the class of persons testators usually remember in their wills, that is to say their next of kin”: Longmuir v. Holland, 2000 BCCA 53, at para. 69 [Longmuir]; Heron Estate v. Lennox, 2000 BCSC 1553 at para. 67 [Heron Estate]. In Moore, N. Smith J. found the fact that the testatrix’s doctor had described her as no longer capable of managing her affairs and as suffering dementia around the time she made her will constituted a suspicious circumstance sufficient to rebut the presumption.

Wills Variation- “Valid and Rational” Reasons Required To Disinherit

A will makers reasons for disinheriting a child in his or her will must be valid and rational.

Fuller v Fuller 2008 BCSC 702 is a familiar scenario in estate litigation.

The will that states that no provision is being made for a child due to estrangement, and that the child was adequately provided for by generous gifts throughout the deceased’s lifetime, so as to satisfy any moral obligation to provide for an adult child.

Very often that same disinherited child had been abandoned by that parent during the child’s youth, not been adequately provided for, and the supposed gifts made during the lifetime are simply a lie or gross exaggeration.

That was the case in Fuller. It was only a $90,000 estate and the disinherited son was awarded 2/3, with the other 1/3 going to the named beneficiary, a non family member.

The deceased and the plaintiff’s mother separated when the plaintiff was 12. Both before and after the separation, the deceased and the plaintiff had a very limited relationship; prior to separation because the deceased worked out of town and was rarely home, and after separation because there was little or no access exercised by the deceased to the plaintiff, who resided after separation for the most part with his maternal grandparents. When the plaintiff was 19, the deceased contacted him and the two met on a couple of occasions over the next couple of years. The plaintiff invited the deceased to his wedding, which took place in February 1973, but the deceased did not attend. The deceased did not contact the plaintiff again until late 1974 when he arrived unannounced and asked to meet his grandson, the plaintiff’s son, who was born in March 1974. For approximately two weeks there was contact between the plaintiff and the deceased, and then contact ceased again. In 1977, the plaintiff’s daughter was born.

[6] In 1992, the plaintiff was contacted by his mother, who advised him that the deceased wished to visit and to reconnect with the family. The plaintiff, who was sceptical about welcoming the deceased back into his life, as a result of the deceased’s past conduct, hesitantly agreed. The deceased did visit, explained to the plaintiff that he had had a heart attack which had put his life into perspective, and said that he wanted to make it right with the plaintiff’s family in case he did not have much longer to live. The visit lasted approximately one week. Following that visit, the plaintiff and the deceased had regular telephone calls and rekindled their relationship.

The Will contained the following proviso:

I DECLARE that after careful and anxious thought I have decided not to make any provision in this my last will and testament for my only son Stephen Lee Fuller. I do so because, after having made gifts of considerable value to Stephen and his family, he has become estranged from me, and has, I believe, taken advantage of my generosity. I further declare that I am aware of the provisions of the Wills Variation Act, R.S.B.C. and of my obligations in law towards my son. I believe that I have provided adequately for my son through gifts made to him during my lifetime, and feel that I have no further obligation towards him. I accordingly instruct my executor to defend with vigour any application to vary the terms of this my last will and testament.

In this case, it is clear that absent valid and rational reasons for disinheritance, the deceased owed a moral duty to make provision for the plaintiff from his estate. There are no other persons to whom the testator owed a legal duty. The size of the estate is of sufficient size to permit provision for the plaintiff. With regard to the reasons for disinheritance, the starting point is the will itself, which expresses the reasons for disinheritance, as I quoted earlier, namely:

…after having made gifts of considerable value to Stephen and his family, he has become estranged from me, and has, I believe, taken advantage of my generosity.

And further:

I believe that I have provided adequately for my son through gifts made to him during my lifetime, and feel that I have no further obligation towards him.

[27] In Kelly v. Baker (1996), 15 E.T.R. (2d) 219 (B.C.C.A.), the Court of Appeal, at para. 58, said:

In deciding a claim under s.2(1) of the Act, the task of the court is to decide whether, at the date of the testator’s death, her will was consistent with the discharge by a good parent of her duties to her family…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 were 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.

[28] On the evidence before me, I do not accept that the deceased had valid and rational reasons for disinheriting the plaintiff. He, I find, had made, at the very best, modest gifts to the plaintiff, limited to the $7,000 or $8,000 down payment on the Bayview house and some modest renovation costs, and one-third interests in Lot 17 to the plaintiff and the plaintiff’s wife. With regard to the Bayview property, all was lost when the house was foreclosed on, and the plaintiff and his wife were left with a debt rather than an asset, at least part of which I find can be attributed to the deceased’s unilateral decision to leave the residence and stop his contributions towards household expenses. The gift of an interest in Lot 17 was reneged upon by the deceased, and indeed he retained counsel and commenced litigation against his only son to obtain return of that gift. Any estrangement, I am satisfied, was initiated by the deceased and not by the plaintiff. There is no evidence to support the assertion of the deceased in his Will that the plaintiff took advantage of his generosity.

[29] I conclude that the deceased owed a moral duty to make provision for the plaintiff, that the circumstances do not negate the existence of the duty, and that in disinheriting the plaintiff, the deceased failed to act as a judicious parent in the circumstances. The plaintiff is not a person of means. He clearly has adequate income at the present time, from work as a foster parent, a driver, and a security guard, but he has no real estate, he has only very modest investments, and he has a debt secured against his only vehicle, which debt exceeds the value of the vehicle. He rents accommodation, and he has health problems.

[30] Taking into account the aim of the Wills Variation Act, as well as the principle that testamentary autonomy should be interfered with only so far as the statute requires, what variation is appropriate in the circumstances? Under all of the circumstances of this case, I have concluded and I order that the plaintiff is entitled to two-thirds of the net estate of Frederick Fuller.

Don’t Bank On an Inheritance

Very nice, how much

Do not expect to receive an inheritance is the advice of most financial planners, as well as my own.

In the early 1990’2 I read a survey taken by the Vancouver Sun stating that 1/3 of BC residents expect to be disinherited. In my many years of handling estate disputes, I would estimate that this figure is largely accurate, and perhaps even on the low side, given the complexities of today’s families and extended families.

The following is reprinted from the National Post article October 27,2013:

We’ve become a nation of waiters. Not the type ready to serve you lunch but serious spenders bank on an inheritance to get us out of our financial jams.

Wills and estate lawyer Les Kotzer says “waiter” is the perfect term to describe the growing clientele streaming into his office in Thornhill, a wealthy suburb north of Toronto.

“I’m starting to hear about a lot of people who are depending on this mattress of their parents to fall back on,” said Mr. Kotzer, of Fish & Associates, who tells the story of seemingly wealthy clients who showed up his door and hopped out of an expensive sports car. “They’re flashing Rolex watches, diamond bracelets. I ask them where they live, it’s in an expensive area. I ask him ‘what do you do’. He’s not working. She’s a substitute school teacher.”

None of it makes sense. It turns out their home has a huge mortgage, the cars are leased and the couple are basically broke, deep in debt. Mr. Kotzer can’t figure out how these people will survive.

“Finally the wife jumps in and says ‘Harry won’t tell you anything about what he does, he’s a waiter.’ I said ‘what restaurant’ and she tells me ‘not that kind of waiter. He’s waiting for our inheritance. Once he gets it, we’ll pay off all our bills,’” said Mr. Kotzer, recalling the man’s mother was 93.

The long-held view that Baby Boomers are about to hit the jackpot is backed up by a now often-quoted study by Decima Research in 2006 that found about $1-trillion was expected to be passed on to the next generation over 20 years.

It’s unclear how much of that money has passed on since that study was done but anecdotal evidence suggests it has already found its way into the hands of some in the next generation — with realtors even suggesting it is behind the never-ending Canadian housing boom.

The inheritance theme is not one that appears to be disappearing. An HSBC Bank report released in September, 2013, found 39% of working people bank on an inheritance with the median value expected to be $77,213.

They’ll probably get their money because the same survey found 57% of fully retired people plan to leave some sort of inheritance with a median value of $175,541 given. Some of the gap between what people plan to leave and what they expect to receive might be explained by taxes that will be owed.

Another trend, clearly gaining steam, although it is hard to quantify, finds many Canadians giving away their fortune to the children in their lifetime, rather than waiting to die.

Children “Adopted Out” Cannot Inherit From The Natural Parent

 

The BC Court of Appeal decision of Clayton v Markolefas 2002 BCCA 435 stands for the proposition that a natural child of the testator, who has been adopted by another parent, is NOT entitled to inherit from the estate of his intestate natural parent.

Nor can he be eligible for a claim under the Wills Variation act provisions of what is now incorporated into WESA

[1] The petitioner appeals from a decision of Chief Justice Brenner dismissing, on a case stated under Rule 34, her petition claiming a share in the distribution of an intestate estate under s.84 of the Estate Administration Act, R.S.B.C., 1996:

If an intestate dies leaving issue, subject to the rights of the spouse, if any, the person’s estate must be distributed per stirpes among the issue.

Section 81 provides:

“issue” includes all lineal descendants of the ancestor.

The petition was dismissed on the ground that she is, as a matter of law, precluded from sharing in the estate.

[2] The petitioner claims to be “issue” of the intestate. For the purpose of stating a case, the parties have agreed that the intestate was her natural or birth father but that, in 1968, she was adopted by persons unrelated to her birth parents. The point of law raised by the stated case is:

Does the fact that the Petitioner was adopted in 1968 pursuant to the Adoption Act, RSBC 1960, c4, preclude or bar the Petitioner from claiming or sharing in the estate of Andre Markolefas, deceased, her natural father, who died intestate in 1998.

[3] The Adoption Act of 1960 became, in the 1979 revision, R.S.B.C. 1979, c. 4. There was no material change in the Adoption Act from 1960 until the 1979 Act was repealed and replaced by the Adoption Act, R.S.B.C. 1996, c. 5. It was settled law until 1996 that an adopted child was not “issue” of his or her natural parents for the purpose of intestate succession. The sole question is whether the 1996 amendment leads to a different result. The relevant provisions of the Estate Administration Act were in effect during the whole of the period from 1960 to 1996. There were no amendments to those sections in that period.

[4] The earliest case holding that there are no rights of intestate succession between an adopted child and his or her birth parent was Re Jensen (1964), 47 D.L.R. (2d) 630 (B.C.S.C.), a decision of Mr. Justice Branca. The reasoning in that case was approved and applied by this Court in Mernickle v. Westaway (1986), 1 B.C.L.R. (2d) 267. Those authorities rested entirely upon the effect of these provisions of the former Act:

11. (1) For all purposes an adopted child becomes on adoption the child of the adopting parent, and the adopting parent becomes the parent of the child, as if the child had been born to that parent in lawful wedlock.

(2) For all purposes an adopted child ceases on adoption to be the child of his existing parents (whether his natural parents or his adopting parents under a previous adoption), and the existing parents of the adopted child cease to be his parents.

(3) The relationship to one another of all persons (whether the adopted person, the adopting parents, the natural parents, or any other persons) shall be determined in accordance with subsections (1) and (2).

[5] The reasoning underlying the conclusion that an adopted child had no rights of intestate succession against a natural parent was stated thus by Seaton J.A. for the court. After quoting the three subsections quoted, supra, he said:

In my view, when subs. (2) says that an adopted child ceases on adoption to be the child of his existing parents, it uses the word “child” broadly. I do not think that one who is not the child of a person can be the issue of that person within the Estate Administration Act. I am influenced, too, in that interpretation by the introductory words “for all purposes”. They are broad. The thrust of these provisions is to move the child from one family to another family and make it a child of the new family and no longer a child of the old family.

The 1996 amendment of the Act was very extensive. In the present s. 37, which replaces s. 11 of the former Act, nothing remains of the language of s. 11(2) upon which the decision in Mernickle was primarily based. Nor do the words “for all purposes”, which supported the conclusion in Mernickle, appear.

[6] That being so, the Mernickle line of cases cannot be regarded as binding authority with respect to the question which has arisen between the parties. It must be decided upon the wording of the present Act and, in particular, s.37 which, like the former s.11, deals with the effect of an adoption order. Section 37 reads:

37 (1) When an adoption order is made,

(a) the child becomes the child of the adoptive parent,

(b) the adoptive parent becomes the parent of the child, and

(c) the birth parents cease to have any parental rights or obligations with respect to the child, except a birth parent who remains under subsection (2) a parent jointly with the adoptive parent.

(2) If the application for the adoption order was made by an adult to become a parent jointly with a birth parent of the child, then, for all purposes when the adoption order is made,

(a) the adult joins the birth parent as parent of the child, and

(b) the child’s other birth parent ceases to have any parental rights or obligations with respect to the child.

(3) If a child is adopted for a second or subsequent time, the adoption order has the same effect on the child, on the new adoptive parent and on the former adoptive parent as it does on the child, on the adoptive parent and on the birth parents or parent under subsections (1) and (2).

(4) Subsections (1) to (3) do not apply for the purposes of the laws relating to incest and the prohibited degrees of marriage.

(5) The family relationships of one person to another are to be determined in accordance with this section, unless this or another enactment specifically otherwise provides or distinguishes between persons related by birth and persons related by adoption.

(6) An adoption order does not affect an interest in property or a right of the adopted child that vested in the child before the date of the adoption order.

 

(7) An adoption order does not affect any aboriginal rights the child has.

It will be seen that s. 37(1) retains the concept that upon the making of the adoption order the child becomes the child of the adoptive parent and the adoptive parent becomes the parent of that child. It goes on to provide, subject to an exception which has no application here, that the birth parents cease to have any parental rights or obligations with respect to the child.

[7] Section 37(1)(c) is, in my view, all-important in relation to the present issue. Because the birth parents ceases to have any parental rights or obligations, it must follow that the child ceases to have any rights against the birth parents other than those defined in s. 37(6), i.e., rights which vested in the child before the date of the adoption order. The existence of s. 37(6) is inconsistent with a legislative intention to allow other rights of the child against the birth parent to survive the adoption order.

[8] Section 37(6) of the new Act, which provides that the family relationships of one person to another are to be determined in accordance with s.37, also has a clear bearing on the present issue. The question whether a person is “issue” of another person is a matter of family relationships. The clear effect of s.37(1) is that the adoptive child becomes the child of the adoptive parent. From that it follows that all parental obligations fall upon the adoptive parents. It can therefore be said of the present provisions, as Seaton J.A. said of s. 11 of the former Act:

The thrust of these provisions is to move the child from one family to another family and make it a child of the new family and no longer a child of the old family.

.

[11] The 1996 Act has effected many modifications of the law relating to adoption. Perhaps most importantly, it has modified the policy which underlay the previous Act which went so far in attempting to abolish any relationship or link between the birth parents and birth child that the child might never know that he or she was not related by blood to the adopting parents. The present Act, by such means as creating a birth father’s registry (s. 10) and making provision for openness and disclosure (Part 5), recognizes genetic reality and the human desire to know, for better or worse, to whom one is related by blood. But in respect of legal rights and obligations, the fundamental premise remains the same. For those purposes, the adoptive parents are the parents and the adopted child is their issue.

[12] Having reached that conclusion, I find it unnecessary to consider the policy considerations which were touched upon by the Chief Justice and which were strongly emphasized by Mr. Di Bella in pointing out the undesirable consequences which could flow from granting to adopted children a right of succession against their birth parents. As to that, I will say only that those matters would justify serious consideration were such a radical change in the law to be considered.

[13] I would dismiss the appeal.

“THE HONOURABLE MR. JUSTICE ESSON”