Percentage Awards In Wills Variation Claims Favoured

Percentage Awards In Wills Variation Claims Favoured

The Courts prefer to use percentage awards in wills variation claims rather than specific sums. One of the major reason is the fluctuation in value of  some assets over time.

The recent dramatic rise in lower mainland property values has presented a mild dilemma to practitioners and courts in dealing with the valuation date of an asset for wills variation purposes.

Suffice to say, there is currently a conflict in the decisions of the court, whereby some courts have valued the asset as of the date of death for trial purposes, while other courts have valued the asset as of the date of trial in making awards under the wills variation act, now included in WESA.

Many times the court simply “side-steps” the issue by making an award on a  percentage basis, which has the effect in most instances of requiring the property be sold, and divided on the basis of the percentages awarded to each claimant/ beneficiary.

In many instances, the major asset of an estate is a former principal residence and if the property is to be sold so that the various claimants/beneficiaries can be satisfied, then it makes sense that the property is sold at fair market value, which has the effect of determining the value of the asset as of the date of trial. The BC Court of Appeal also agreed that percentages are the best way to express a wills variation award:

The BC Court of Appeal in Graham v. Chalmers, 2010 BCCA 13 dealt with the issue of valuation of the estate at the time of trial, and offered some commentary as to the difficulty of making variation orders in the face of potentially fluctuating estate values.  The court concluded that the best approach would be to express variation orders in terms of percentages of the estate.  Its relevant comments were as follows:

42 ​The trial judge varied the Will by providing a lump sum of $100,000 to each of the grandchildren and directing that the remainder of the estate of approximately $800,000 be divided equally between Janet Graham and Sandi Chalmers. The order was obviously premised on the increase in value of the estate between the date of Mrs. Graham’s death to the trial date. The variation of $100,000 to each of the grandchildren would otherwise not be logical in the context of the value of the estate at the testatrix’s death and the court’s finding that adequate provision had not been made for Janet Graham. Although there are practical reasons for expressing the division in this manner in this case (where the estate has been liquidated and is held in trust), there are pitfalls in doing so. There may be cases in which the estate is made up of unliquid assets the value of which may fluctuate between the date of death, the trial date, and distribution of the estate. In those cases, it is preferable to express the order in terms of percentages, except of course, in respect of specific bequests that are not disturbed by the variation. The potential difficulty that might arise is that the specific bequest directed by the variation order could, in extreme circumstances of a precipitous decline in the value of the residue, eliminate the intended gift to residual beneficiaries.

43     I therefore consider that the preferable expression of the variation in this case should be in percentages of the residue, which also accords with Mrs. Graham’s testamentary wishes.  [Emphasis added.]

I note that the Court of Appeal did not hold that it was an error by the trial judge to consider the value of the estate at the time of trial.  In any event, however, the higher court preferred to resolve the question of changed value by expressing its variation of the will in terms of percentages rather than fixed numbers.  

Tippett v. Tippett Estate, 2015 BCSC 291. is another recent example of a trial decision that allows a wills variation claims in the form of an order expressed in percentages ( see my blog on Tippett dated September 2,2015 entitled ” Spousal Wills Variation Claims”.

See also McBride v Voth 2010 BCSC 443 one of the leading cases in wills variation where Trevor Todd won the case and the only asset, the home, was ordered sold, the life interest to one child cancelled,  and the sale proceeds divided on a percentage basis amongst three siblings.

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