BASIC TERMINOLOGY

Administrator Person who administers an estate on an intestacy.

Bequest gift of personal property

Devise gift of real property

Estate The degree, quantity, nature and extent of a person’s interest in real or personal property.

Key issue in estate planning and administration: is this asset part of a client’s or deceased’s estate?

Estate Planning

The creation of a wealth management roadmap which efficiently meets “wealth redistribution objectives” and how to achieve them in the most efficient means possible either before or after death (contrast w/ “financial planning”)

Essential if estate involves significant assets or complex issues.

Helps a client:o Meet wealth redistribution objectiveso Reduce taxes and expenses to estateo Simplify and expedite the transfer of assets to heirs o Ensure their beneficiaries are protectedo Reduce the risk of estate litigation.

Executor The “office” of a man/woman appointed to carry out the intentions of the testator and administer his “estate”. More than one executor can be appointed under a will (e.g. co-executors and/or alternative executors).

Executor’s power emanates from a will and takes effect immediately upon death

Executor’s mandate commences immediately following death, unless he renounces

Executor must file probate application for “letters probate” to document that he has the authority to deal with the assets of the deceased (but note: duties of executor do not await probate).

First responsibility of executor is to identify, protect, and insure the deceased’s assets from date of death, for 2 main reasons:

(1) estate is a trust, and as executor you are a trustee, and thus owe a fiduciary duty to intended beneficiaries to secure, protect and insure the assets in deceased’s estate, and

(2) you have to attach as an exhibit to the affidavit in a probate application a “Statement of Assets, Liabilities and Distribution” that lists certain assets identified under the Probate Fee Act (see below).

Financial Planning

The creation of a financial roadmap which shows where a person is financially, where they want to go financially, and how to get there (contrast w/ “estate planning’)

Essentially concerned with efficient wealth creation, management and preservation, and lifestyle maintenance

1

Helps a client to:o Minimize taxes and maximize investment returnso Ensure more secure retirement yearso Assist with handling day-to-day finances o Increase savings and optimize wealth o Improve cash flow and balance income and expenseso Accumulate assets for personal goalso Cover dependents in case of death or disabilityo Determine insurance requirements (life, disability, property, etc.)

Holograph Will

A will written entirely by the testator or grantor with their own hand - signed but not witnessed.

Not recognized in BC (exception: s. 5 of Wills Act allows holograph wills for mariners). Most Cdn jurisdictions (except BC, NS, PEI) recognize them.

Intestacy If a person dies without a will or with a void will. Estate Administration Act applies

Joint Ownership

When two or more persons share legal and beneficial title in an asset (real or personal, tangible or intangible). When a joint tenant dies, his share of the title goes directly to the other joint tenant(s) (b/c of the right of survivorship), and not his estate.

2 main advantages of JT: (1) avoid probate fees (b/c asset never passes to personal rep - assuming beneficial title is jointly owned), (2) avoid Wills Variation Act, (3) capital gains taxes, (4) creditors’ claims

Lapses Where the disposition of one or more assets in a will fails. Occurs in several circumstances:

o Failure to name an executor in the willo Executor named in will predeceased testator or “renounces” the office of the

executor, and no alternative executor is nameso Named beneficiaries have predeceased the testator with no alternate

beneficiaries named Exception : s. 29 of Wills Act provides that dispositions to children

and siblings of testator that predecease testator, but who have children at time of testator, do not lapse but take effect as if original disposition was to them

o Will fails to distribute all of the testator’s assets and no residue clauseo Testamentary trusts settled by the will fail to provide for the distribution of

remaining assets once the trust ends (see p. 14)

Lapses may lead to a partial intestacy if there is no residual clause in the will (see s. 21 of Wills Act), or if lapse occurs in the residual gift itself, the residue will pass on intestacy (see Jones v. Public Trustee)

Legacy gift of cash or cash equivalent

Partial Intestacy

Deceased has a validly drafted and executed will, but there has been a lapseo See “lapses”o e.g. testator has not disposed of all of his assets, or one of his intended

beneficiaries has pre-deceased him leaving those assets remaining

Can be avoided with a broad residual clause, but note Jones v. Public Trustee. Property passing on partial intestacy administered by Estate Administration Act.

2

Power of Appointment

a power or authority conferred by one person by deed or will upon another (called the “donee”) to appoint, that is, to select and nominate, the person or persons who are to receive and enjoy an estate or an income therefrom or from a fund, after the testator’s death, or the donee’s death or after the termination of an existing right or interest. A power to appoint may be exercisable by deed or by will depending upon the terms established by the donor of the power, and is defined, generally, as power or authority given to a person to dispose of property, or interest therein, which is vested in the person other than the donee of the power.

E.g. “I GIVE, DEVISE AND BEQUEATH unto my Trustees all my estate, both real and personal of whatsoever nature and kind and whatsoever situate, and also any estate over which I may have any power of appointment or disposal at my death. . .”

Probate Probate confirms the validity of a will. Not all wills must be submitted for probate.

Wills will need to be submitted for probate whereo there are competing wills, o there is a challenge to validity of a will, specifically whether it expresses

testator’s intent (i.e. undue influence)o executor needs poof of authority where institutions holding assets or

involved in their transfer to beneficiaries insist on probate

Many transfers can occur without probate o e.g. small bank balances, personal ornaments, paintings, bicycles, clothing,

cash, coins, gold bars, furniture, electronics, books, collections, wine, etc.

Succession The devolution of title to property under the law of descent and distribution.

Note: although “succession” is often define in statute as the acquisition of title to property of one who dies without disposing of it by will, the word frequently has the broader meaning of the acquisition of rights upon the death of another.

Testator Person making the will

Trustee The individual or corporation that is appointed by the will to hold the estate assets in trust during the executor’s administration period and, perhaps, during the duration of any testamentary trusts settled by the will.

Executor and trustee usually same person, but they can be separate entities. Separate trustees can also be appointed by the estate and testamentary trusts

Will A written document prepared by a person during his/her lifetime, to take effect upon death, directing how his/her assets are to be distributed following death.

Note: will can also be used as a designation of a beneficiary under an insurance policy - if will found invalid, the designation of a beneficiary under insurance policy may still be valid (s. 50(1), s. 102(2), Insurance Act)

3

SUCCESSION PLANNING FOR SOLE PRACTITIONERS OR PROFESSIONALS

For Lawyers

B.C. Professional Conduct Handbook (Chp. 3, para. 3) states that a lawyer’s professional obligation to serve clients in a “conscientious, diligent and efficient manner”.

Arguably , this includes an obligation to take steps to protect clients’ interests in all circumstances, including death, serious illness, disability or incapacity.

E.g. see Law Society of BC - Practice Support “Succession Planning” and LSUC “Guide to Closing Your Practice - Plan ahead to protect yourself and your clients”

Matters to consider:o Who will attend to adjourn the court application in the morning?o What will happen to any unfinished work due tomorrow or next week?o Who will call clients booked to see you and see them throughout the next few weeks?o Who will contact clients about their unfinished files?o Who will complete the wills and conduct of ongoing files?o Who will manage trust accounts with clients’ funds on deposit?o Who will deal with staff?o Who will release with wills from the will vault?o Who will attend to the accounts payable that are coming due?o Who will issue accounts and follow-up on accounts receivable?o Etc.

Your lawyer/client should consider preparing:o Formal agreements w/ an “Assisting Lawyer”o Instruction letters to an assisting lawyero Limited power of attorney (but POA n/a if dead) providing for the continued practice of law

and arranging for: (1) access to and management of trust accounts, (2) the safeguarding, transfer and/or closing of files, and (3) the safeguarding and/or disposition of assets of both the practice and clients

o A will with an executor capable of working with “assisting lawyer” to deal with practice that authorizes the executor to enter into arrangements with the assisting lawyer to

protect clients and dispose of law practice that authorizes executor to give effect to any agreements made previously with the

“assisting lawyer” to sell the practice or deal with practice issues

Closing Down Your Law Practice - from Law Society of Upper Canada - 9.10 Wills

Lawyers who have custody of client (testator) wills and are able to locate clients or former clients should, in writing·

o advise clients that the practice is closing down or being sold o if the practice is being sold or transferred, should advise the client of the name(s), address,

and telephone number of the lawyer(s) who will take over the practice, and o ask for the client's instructions as to whether the will is to be transferred to the new lawyer

taking over the practice, to another lawyer as directed by the client, or to be returned to the client.

o If the will is to be delivered to a new lawyer or third party, the lawyer should obtain the client's executed direction as to whom the will is to be delivered.

4

Lawyers who have custody of client wills and are unable to obtain client instructions or directions, as in cases where the client cannot be located, should

o in the event a new lawyer has agreed to take custody of the will, and subject to any legal requirements to the contrary, transfer the wills to the new lawyer who shall preserve client wills in accordance with Rule 2.07, OR

o in the event the lawyer is unsure of the proper person to receive a client's will, then in accordance with Rule2.07(6), the lawyer shall apply to a tribunal of competent jurisdiction for direction and comply with the tribunal's order, OR

o the lawyer may retain custody of the clients' wills in compliance with Rule   2.07 , and o Lawyers should not deliver original wills to a client's last known address unless the lawyer is

certain that the client is present to accept it. o send a letter to the client's last known address advising the client where their will is to be

located in light of the practice closing down. o Notification of the location of original client wills (i.e. whether sent to new lawyer, kept by you,

etc.) should be made to the Trustee Services Department of The Law Society of Upper Canada at 416-947-3366 or toll free 1-800-668-7380 x3366.

Extract from Law Society of British Columbia – 2007 - Winding Up A Sole Practice: A Checklist

13. Decide whether you will store any original wills or transfer them to another lawyer. Remember that you will continue to be responsible for any original wills in your possession unless you can find another lawyer to take them. The Law Society will only store original wills in very exceptional circumstances.

14. Ideally, a new wills notice should be prepared and filed with Vital Statistics (www.vs.gov.bc.ca/) after consultation with the client, if possible, to note the new storage location of each original will. Vital Statistics charges a flat fee of $1,700 for any number in excess of 100 notices. An individual notice must be filed for each will, but preapproved computer generated notices will be accepted. Filing a notice with Vital Statistics is voluntary. However, notice to the Law Society under Rule 3-80 is mandatory.

15. In order to advise the public and clients you have not been able to reach, you may place an ad in the local newspaper that the practice will be closing as of a specific date and who may be contacted after that date about files or wills.

Other Professionals - re succession planning

Examples: dentists, doctors, actuaries, accountants, etc. Issues:

o Shouldn’t other sole professionals have similar responsibilities for succession planning? o If so, do there professional associations provide succession planning recommendations? o Are the considerations different from lawyers?

5

TRUST LAW AND FIDUCIARY RESPONSIBILITIES Trusts are central to succession and estate planning for 2 main reasons:

o 1) the estate is a trust (making the executor a trustee w/ corresponding fiduciary duties to the beneficiaries)

o 2) a will can create a testamentary trust - i.e. the will is a trust instrument.

Trusts

A trust is an obligation that binds a trustee to administer trust property under his control, donated by the settlor or testator for the benefit of beneficiaries

o Trustee holds legal and/or equitable title in the property for the purposes of managemento Beneficiary holds equitable or beneficial title in the property for the purpose of enjoyment

A beneficial interest can be vested (in interest or possession), contingent, future, discretionary and/or defeasible

Trusts created by a Settloro Express trusts can be created inter vivos in one of 2 ways: (1) by agreement (S to T for

benefit/use of B); or (2) by declaration (S declares himself to be T for benefit of B)

Trusts created by a Testatoro An express trust created by will is testamentary (not inter vivos) o e.g. Testator leaves property to T for benefit of B named in will

To have a valid trust, the trust property must vest in the trustee (i.e. constitution of the trust)

Statutory trusts o E.g. s. 43.1 of Pension Benefits Standards Act ER and EE pension contributions held by

ER prior to deposit w/ “pension trustee” are deemed to be held in trust by ER for plan members.

No consideration moving from beneficiary to settlor is required in trust

Writing requirements required where creating equitable interest in real property

Trust has no legal personalityo Trustee holds legal title to property (not trust)o Trustee contracts in own name as principalo Trustee does not contract or act as an agent of the trust

Trustee has unlimited liabilityo Trustee has unlimited liability to 3rd parties in Ko Trustee has a right to indemnity against trust assets and, perhaps, against beneficiaries

personally But note: in business trusts, beneficiaries typically excluded from liability

o 3rd parties cannot sue beneficiaries directlyo 3rd parties must sue trustee, who can then seek indemnity from beneficiaries personally

unless prevented by agreement

Fiduciary Duties

6

Origins of “Fiduciary”o Developed in Courts of Equity in context of trusts.o Now extends beyond trust situations to remedy perceived inequities.

Who is a fiduciary?o A person is a fiduciary based on the nature of their relationship with another person (Guerin)o Some relationships are generally recognized to give rise to a fiduciary (i.e. trustee-

beneficiary, solicitor-client, etc.) (Lac Minerals)o However, relationships with some or all of the following characteristics may be considered

fiduciary (Frame v Smith) 1) Fiduciary has scope for the exercise of some discretion or power 2) Fiduciary can unilaterally exercise that power or discretion so as to affect a

beneficiary’s legal or practical interests 3) Beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the

discretion or power (most imp. factor)

Fiduciary dutieso Duty to follow the terms of a trust instrument (e.g. will)o Duty to avoid conflicts of interest between trustee’s personal interests and those of the

beneficiarieso Duty to act prudently and in best interests of beneficiaries o Duty to hold an even hand between interests of beneficiaries belonging to different classes

Breach of trusto Trustee liable to beneficiary for damages arising from breach of trusto Trust instrument may alter some but not all trustee duties and relieve trustee from liability for

some but not all types of breach of trusto s. 96,Trustee Act: court may order discretionary relief for trustee liability if trustee acted

honestly and reasonably (see also ss. 15.1 to 15.6 for prudent investments)

Taxation, Revocation, Amendment and Termination of Trusts

Taxation of trustso General rule : trusts are taxed on a conduit or flow-through basis

Disposition of capital assets by settlor to trustee deemed to be at FMV Income flowing to beneficiaries is taxed in hands of beneficiaries Income retained in the trust is taxed in hands of trustee as separate individual (i.e. no

personal exemptions and higher taxation rates)o Trustee is required to file annual T-3 Return w/ CRA under Income Tax Act

Revocation of trustso Settlor can only revoke trust if such a right is reserved for in the trust instrument (but this has

tax consequences under the Income Tax Act)o An amendment to a trust instrument purporting to authorize the settlor to revoke a trust is void

Amending trust instrumentso Amendments to trust instruments require one or more of the following:

1) Provision authorizing amendments in trust instrument (overrides 2 and 3) 2) approval by all adult beneficiaries 3) approval by court for infant and unborn beneficiaries pursuant to Trust and

Settlement Variation Act

7

Termination of trustso Occurs once all trust property has been distributed by Trustee in accordance w/trust

instrumento Exception : Rule in Saunders v Vautier whereby all adult beneficiaries can ask a court to

terminate the trust, regardless of trust instrument provisionsPROBATE FEES AND APPLICATIONS

GENERAL: Applies to grant of probate applications (“letters probate”) by requiring personal representative

(executor) of estate to pay the BC government probate fees calculated based on the value of the estate (as defined in s. 1, Probate Fees Act).

Not all assets are included in the “value of the estate” - 2 main requirements: o (1) if real and tangible property, it must be situated in BC, or if intangible, deceased must

have been ordinarily resident in BC, and o (2) property passes to personal representative (i.e. not joint tenant or designated beneficiary).

Note: Insurance policy designations to “heirs”, “next of kin” or “estate” are deemed to be designation of the personal rep (s. 103, Insurance Act)

Also, no payment of probate fees if value of the estate is less than $25,000 (s. 2, Probate Fees Act)

Class Example: advise Mr. and Mrs. Jones on which assets will be included in probate application

Assets of Mr. Jones (unless specified

otherwise)Probate Fees Apply? Method of Avoiding Probate Fees

Mexico condo - $40,000

No.

(Only real property situated in BC is part of “value of the estate” under s.1 Probate Fees Act).

N/A

Victoria house (Mrs. Jones has title) - $650,000

Yes.

(Real property situated in BC)

Create joint tenancy in property so that once Mrs. Jones dies the house will pass to Mr. Jones, not her estate and personal rep. (but legal and beneficial title must be jointly owned: CLE BC article)

Sole bank account - $10,000

Yes.

(Intangible asset and deceased ordinarily resident in BC, and bank account would go to estate and pass to personal rep.)

Create joint bank account w/ Mrs. Jones so that once Mr. Jones dies, account goes to her and not the estate and personal rep.

Car - $33,000

Yes.

(Tangible asset located in BC, and car would go to estate and pass to personal rep upon death)

Create joint ownership in property so that once Mr. Jones dies, title to the car passes to Mrs. Jones and not the estate and personal rep. (but legal and beneficial title must be jointly owned: CLE BC article)

8

RRSP - $300,000

Yes

(Intangible asset and deceased ordinarily resident in BC, and bank account would go to estate and pass to personal rep.)

May avoid probate fees and taxes on estate by designating Mrs. Jones as a beneficiary. In general, upon death, RRSP goes directly to beneficiary, not the estate, which avoids probate fees. Further, RRSP is rolled onto Mrs. Jones’s RRSP on a tax-deferred basis, thereby avoiding significant taxes which would be otherwise payable by the deceased’s estate if RRSP was “cashed in” on death.

Tax-Free Savings Account - $10,000

Yes

(Intangible asset and deceased ordinarily resident in BC, and bank account would go to estate and pass to personal rep.)

May avoid probate fees and taxes on estate by designating Mrs. Jones as a beneficiary. In general, upon death, TFSA goes directly to beneficiary, not the estate, which avoids probate fees. (Assuming beneficiary is of age of majority, alive and competent)

Pension BC -$150,000

Yes.

(Intangible asset and deceased ordinarily resident in BC, and bank account would go to estate and pass to personal rep.)

May avoid probate fees and taxes on estate by designating Mrs. Jones as a beneficiary. In general, upon death, pension benefits go directly to beneficiary, not the estate, which avoids probate fees. (Assuming beneficiary is of age of majority, alive and competent)

Probate Fee Act, S.B.C. c. 4

1 Definitions

"grant" means a grant or ancillary grant of probate and administration;

"resealing" means a resealing under the Probate Recognition Act;

"value of the estate" means the gross value, as deposed to in a Statement of Assets, Liabilities and Distribution exhibited to the affidavit leading to a grant or to a resealing, as the case may be, of

(a) the real and tangible personal property of the deceased situated in British Columbia, and

(b) if the deceased was ordinarily resident in British Columbia immediately before the date of death, the intangible personal property of the deceased, wherever situated,

that passes to the personal representative at the date of death.

2(1) In addition to any fees payable under the Rules of Court to commence a proceeding to obtain the issue of a grant or a resealing and to any fees payable under the Rules of Court to file documents within that proceeding, a fee determined in accordance with this section must be paid to the government, before the issue of any grant or before any resealing, as the case may be, on behalf of the estate of a deceased by the personal representative of the deceased but is payable by that personal representative in his, her or its representative capacity only.

9

2(2) No fee is payable under this Act

(a) on a grant de bonis non, a cessate grant or a double probate, or

(b) if the value of the estate does not exceed $25   000 .

2(3) If the value of the estate exceeds $25   000 , whether disclosed to the court before or after the issue of the grant or before or after the resealing, as the case may be, the amount of fee payable is

(a) $6 for every $1 000 or part of $1 000 by which the value of the estate exceeds $25   000 but is not more than $50 000 [*0.006], plus

(b) $14 for every $1 000 or part of $1 000 by which the value of the estate exceeds $50   000 [*0.014]

2(4) If, after the issue of any grant or after any resealing, the personal representative learns of the existence of an asset of the deceased that was not disclosed in the Statement of Assets, Liabilities and Distribution exhibited to the affidavit leading to the grant or to the resealing, determines that the value attributed to an asset in that statement must be revised or determines that an asset was otherwise not properly disclosed, the personal representative must disclose to the court the existence and value of that asset and must pay to the government the difference between the fee paid before the issue of the grant or before the resealing and any greater fee that would have been payable under subsections (1) to (3) had the asset been disclosed or appropriately valued in the original Statement of Assets, Liabilities and Distribution.

10

SURVIVORSHIP AND THE BODY

A. PRESUMPTION OF DEATH

(i) The Current Law

Survivorship and Presumption of Death Act, R.S.B.C. 1996, c. 444

1 Definitions

"court" means the Supreme Court;"instrument" includes the Wills Act (note expanded defn in s. 7 Model Act)

"interested person" means

(a) any person who is or would be affected by an order made under this Act,(b) the next of kin of the person in respect of whom an order is made or for whom an order is applied, and(c) a person who holds property of the person in respect of whom an order is made or for whom an order is applied.

2(1) General Presumptions*

Where 2 or more die at the same time - or where it is uncertain who survived –

then for purposes of title to property, they are deemed to have died in order of seniority - younger deemed to survive older.

*s.2(2) - this is subject to s. 72 of the Insurance Act (Re Currie (BCSC, 1963) / Re Topliss say Insurance Act applies so proceeds go to general estate of insured, then apply s. 2(1) or s. 2(3) of SPDA vs. Re Law / Re Newstead (BCSC, 1951)

**Replaced by s. 8 of Model Act.

2(3) (Subject to contrary provision in an instrument) where an instrument (e.g. will) provides for the disposition of property to another person if the designated person: i) dies before another person; ii) dies at the same time as another person; or

iii) dies in circumstances that make it uncertain as to who died first: and the designated person in fact dies at the same time as the other person or in circumstances that make it uncertain who survived the other then for purposes of the disposition, the case for which the instrument provides is deemed to have occurred.

2(4) Similar to s. 2(3) but dealing with the death of the executor or personal representative

2(5) If a contract of accident insurance or of sickness insurance, or both, provides for the payment of money on the death by accident of the person insured and the person insured and a beneficiary

11

perish in the same disaster, it is presumed, in the absence of evidence to the contrary, that the beneficiary died first.

3(1) Presumption of Death

Court may make an order that a person is presumed dead for all purposes or specified purposes only (requires reasonable grounds: Re Cyr)

4 Duty of Personal Representative

Personal Representative of presumed deceased must cease dealing with estate if on reasonable grounds believes that person is actually alive - until further court order confirming death.

5 Status of Property if deceased later found alive

(1) Distributions under “s.3(1) order” are valid and final distributions as against the person presumed dead;(2) Subject to s. 5(1), a Court may make an order it considers appropriate regarding preservation and return of property of deceased later found alive.

6 Status of Property if Deceased in fact dead

Distributions made pursuant to s. 3(1) order are valid and a final distribution as against any other person who would otherwise be entitled if “s. 3(1) order” had not been made.

7 Appeals

Any interested person may appeal an order made under this Act to the Court of Appeal.

Insurance Act, R.S.B.C. 1996, c. 223

52 Beneficiary predeceasing life insured(1) If a beneficiary predeceases the person whose life is insured, and no disposition of the share of the deceased beneficiary in the insurance money is provided in the contract or by a declaration, the share is payable

(a) to the surviving beneficiary, or(b) if there is more than one surviving beneficiary, to the surviving beneficiaries in equal shares, or(c) if there is no surviving beneficiary, to the insured or the insured's personal representative.

(2) If 2 or more beneficiaries are designated otherwise than alternatively, but no division of the insurance money is made, the insurance money is payable to them in equal shares.

72 Simultaneous Deaths

Unless a contract or declaration otherwise provide

Where life insured and beneficiary die at the same time - or where uncertain who survived - insurance money is payable per s. 52(1) as if beneficiary had predeceased the life insured.

102 Beneficiary Designations(1) Insured may in contract or by declaration designate his personal representative or a

12

beneficiary to receive insurance money AND may revoke the designation by declaration(2) Designation in an instrument which is not a valid will is still valid as concerns the designation of beneficiaries(3) Designation in a will is revoked by a later designation(4) Revocation of a will revokes designation made in the will(5) If an instrument described in (2) is revoked, had it been a valid will, the designation thereunder is revoked.

103 Designations in favour of “heirs”, “next of kin” or “estate”, or similar wording, is deemed to be a designation of the personal representative.

104Akin to ss. 52 and 72 - for different insurance products (e.g. group insurance accidental death and dismemberment, annuities, etc.)

109Akin to ss. 52 and 72 - for different insurance products (e.g. group insurance, accidental death and dismemberment, annuities, etc.)

Re Law: as per Insurance Act, in common disaster w/ insured, beneficiary presumed to die first; Insurance Act takes precedence over seniority rule1) Re Law (1946, BCSC)

a) Factsi) The insured (with 3 policies), his wife and father were lost from a row boat. There was no

survivor from the boat and no one saw the boat capsize of the actual drowning. All parties died intestate.

ii) Wife had a daughter from previous relationship and the insured mother was his sole next-of-kin.

iii) By virtue of the (Survivorship Act) the husband, having been the elder of the two, is presumed to have died first.

iv) By virtue of the Insurance Act the wife, being the beneficiary named in the policies, is presumed to have died first.

b) Issuesi) Who gets the proceeds of the insurance policies? The daughter or the mother?

c) Decision (as per McFarlane J.)i) S. 123 of the Insurance Act governs and the wife, as beneficiary, is presumed to have died

first. ii) Thus, the proceeds from the policies go to the estate of the insured husband, not the wife,

and are to be distributed to the mother of the insured deceased,d) Comments

i) Approved in Re Newstead, 1951 BCSCii) But note that it was rejected in Re Currie, 1963 BCSC (which approved Re Topliss)

Re Topliss: Re Law was wrong; seniority rule takes precedence over Insurance Act1) Re Topliss and Topliss (1957 Ont. CA)

a) Factsi) Husband and wife died in common disaster in circumstances making it impossible to

determine who survived the other. Husband was the eldest of the two. They both had no children and died intestate.

ii) Three policies of life insurance on life of husband. Wife was named as beneficiary in each policy.

iii) Following death, insurance companies paid proceeds of policy to administrator of insured’s estate.

13

iv) Insurance Act provides that beneficiary is deemed to have died firstv) Survivorship Act provides that rule of seniority applies and that younger person is deemed to

have survived the older person. But this provision must be construed subject to Insurance Act.

vi) Trial judge held that proceeds were properly paid to administrator of husband’s estate and that they should be administered as an asset to be shared with estate of wife.

b) Issue i) Who owns proceeds of policies: estate of insured husband or estate of wife as beneficiary?

c) Decision - wife’s estate receives proceedsi) Insurance Act deems beneficiary wife to have predeceased, thus insurance money paid to

husband’s general estate and there is no further reference to Insurance Act.ii) On intestacy, Survivorship Act determined that the older husband predeceased wife and,

hence, wife’s estate receives proceeds from husband’s estate under intestacy laws.d) Comments

i) Followed in Re Currie, 1963 BCSC - which rejected Re Law (see above)

Re Cyr: order under s. 3 requires proof on balance of probabilities that person is dead1) Re Cyr (2006, BCSC)

a) Decision: no presumption of death order under s. 3i) in order to get an order of presumption of death, it has to be shown on a balance of

probabilities that a person is dead. ii) On the facts, the person in respect of whom the order is sought might have been murdered,

or might have decided to disappear

(ii) BILL 4 WESA Reforms

WESA – Div 2 Survivorship

1 “instrument” includes a testamentary instrument and other legal documents, but does not include an instrument, other than a will, to which the Insurance Act applies

5(1) (Fundamental Rule) – subject to contrary intention in an instrument and ss.72 and 109 of the Insurance Act, if 2 or more persons die simultaneously and cannot decide who died first – the rights to property are determined as if each had survived the other or others (ie. everyone else is predeceased)

Simultaneous Deaths of Joint Tenants of Joint Account Holders- Current law: generally, surviving joint holder takes property by virtue of survivorship

5(2) Where 2 or more holding property as joint tenants, or joint account holders, die at the same time, or where it is uncertain who survived, unless a contrary intention appears in and instrument, for the purposes of determining rights to property, they are deemed to have held the property or account as “tenants in common” with the other or others (ie. can dispose of their respective shares of the property by will, etc)

6 General Presumptions – simultaneous deaths – if an instrument provides for the disposition of property to another person if the person named in the instrument: i) dies before another person;ii) dies at the same time as another person; ORiii) dies in circumstances that make it uncertain as to who died first;

AND the named person in fact dies at the same time as the other person or in circumstances that make it uncertain who survived the other

14

THEN, for the purposes of the disposition, the event for which the instrument provides is deemed to have occurred

7 General Presumptions – substitute personal representative – if a Will provides for a substitute personal rep in the event that an executor named in the willi) dies before the will-maker,ii) dies at the same time as the will-maker, ORiii) dies in circumstances that make it uncertain which of them suvived the other

AND the name executor dies at the same time as the will-maker or in circumstances that make it uncertain which of them suvived the other,

THEN, for the purpose of the grant of probate or a small estate declaration, the event for which the will provides is conclusively deemed to have occurred

8 Posthumous births – descendants and relatives of an intestate conceived before the intestate’s death but born after and living for at least 5 days, inherit as if they had been born in the lifetime of the intestate and had survived the intestate

9(1) Survival of Beneficiaries – where conditional right of beneficiary to receive property is based on surviving another person

AND the beneficiary and the other person die at the same time, or where it is uncertain who survived

THEN, the beneficiary is deemed to have predeceased the other person

9(2) Multiple Beneficiaries – where 2 or more beneficiaries and survivor(s) of them are to receive property AND all die at the same time, or where uncertain who survived,

THEN, unless contrary intention appears in an instrument, property to be divided into as many equal shares as beneficiaries and shares are to be distributed respectively to those persons who would have take it the even that each of the beneficiaries had survived.

10(1) The 5 Day Survival Rule – a person is deemed to have predeceased a deceased person if they fail to survive them by 5 days (longer if required by an instrument) for all purposes of deceased’s property

10(2) The 5 Day Joint Tenant Rule – where 2 or more hold as joint tenants (or joint account holders)(a) 2 joint tenants: where you cannot determine if one survived by 5 days then half passes as if one survived by 5 days and other half passes as if the other survived by 5 days.(b) more than 3 joint tenants: divide into equal shares similar to s.9(2)

B. THE BODY

Criminal Code, R.S.C. 1985. C. C-46

182 Dead Body

Every one who

(a) neglects, without lawful excuse, to perform any duty that is imposed on him by law or that he undertakes with reference to the burial of a dead human body or human remains, or

(b) improperly or indecently interferes with or offers any indignity to a dead human body or

15

human remains, whether buried or not,

is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years.

Cremation, Internment and Funeral Services Act, S.B.C. 2004, c. 35

1 Definitions

"cremated remains" means human bone fragments left after human remains are cremated;

"human remains" means(a) a dead human body in any stage of decomposition, or(b) a body of a stillborn infant in any stage of decomposition,but does not include cremated remains;

4 Prohibitions on improper distributions on remains

Proper disposition of “human remains” – (a) interment in specified site, (b) or cremation in a crematorium, or (c) internment in or on crown land reserved under Land Act for internment purposes.

5 Control of disposition of human remains or cremated remains

(1) Designates who controls disposition of “human remains” or “cremated remains” based on hierarchy of person (if tie, order determined by agreement or, if that fails, based on seniority: s. 5(3)).

(a) the personal rep named in will

(b) the spouse;

(c) an adult child;

(d) an adult grandchild;

(e) if the deceased was a minor, a person who was a legal guardian of the person of the deceased at the date of death;

(f) a parent of the deceased;

(g) an adult sibling of the deceased;

(h) an adult nephew or niece of the deceased;

(i) an adult next of kin of the deceased, determined on the basis provided by sections 89 and 90 of the Estate Administration Act;

(j) the minister under the Employment and Assistance Act or, if the official administrator under the Estate Administration Act is administering the estate of the deceased under that Act, the official administrator;

(k) an adult person having a personal or kinship relationship with the deceased, other than those referred to in paragraphs (b) to (d) and (f) to (i).

*s. 5(4), (5) - person can override hierarchy and claim sole right to control disposition by applying to BCSC, but court must consider rights of all interested persons and give consideration to several factors:

(a) feelings of those related to deceased, (b) rules, practices and beliefs of religion of deceased,

16

(c) reasonable directions given by deceased, and (d) whether dispute concerns family hostility or capricious change of mind

*s. 5(6): Court order can override hierarchy based on s. 5(4) application (see Re Popp Estate)

6 Disposition to be in accordance w/ preference of deceased

Written preference of deceased can be binding – if.. (a) preference stated in a will or funeral service K(b) compliance w/preference complies w/ Human Tissue Gift Act(c) compliance w/preference would not be unreasonable or cause hardship

20 Intervention by court

Court intervention available to prevent disinterment or exhumation, but court must consider same factors as those set out in s. 5(5) plus one additional factor:

(c) any terms and conditions respecting exhumation or disinterment contained in a contract for the interment of the deceased,

Re Popp Estate: s. 5(6) - crt will consider presence of “family hostility” and “capricious change of mind”1) Re Popp Estate, 2001 BCSC

a) Factsi) Competing family wishes re location of cremation and urn of the deceasedii) Deceased feared “ground” or “water”iii) Deceased’s will silent on where to place remains following cremation (see s. 6 of CIFSA); nor

did she give a “reasonable direction” (see s. 5(5)(c) of CIFSA)iv) Deceased’s husband (executor under the will) plans regarding her remains held to be

“capricious” (wanted them at his parents’ gravesite) (i.e., irregular, unpredictable and unaccountable)

v) Court intervenes using s. 5(6) of CIFSA in favour of parents and siblings of deceasedb) Issuec) Decision - order granted

i) S. 51 of the Cemetery and Funeral Services Act (now s. 5(1) of the Cremation, Internment and Funeral Services Act) sets out the scheme for the control and disposition of human remains. (1) Does the request for disinterment involve “family hostility” [No. there is only

disagreement](2) Whether the person claiming interest is displaying a “capricious change of mind” [Yes.

The husband is. A person is entitled to exclusive control over disposition of remains as long as they do not act capriciously - see s. 5(5)(d)].

(3) Court must consider the rights of all those that may have an interest in the order [i.e. not just the spouse - see s. 20(2)]

Anatomy Act, R.S.B.C. 1996, c. 13

Trigger: Deals with unclaimed bodies found publicly exposed, in public or government supported institutions

2 Unclaimed bodies

17

A body must be placed immediately under the control of the minister if(a) within 48 hours after death or after being found, the body is not claimed by a relative, friend or person entitled to control the disposition of the body under section 5 of the Cremation, Interment and Funeral Services Act, and(b) a coroner authorizes the release of the body under the Coroners Act.

4(1) Use of unclaimed body for anatomical research

If body not claimed by person in s. 5 of CIFSA within 3 months of death, or being found, body may be used for science or learning

4(3) If no anatomical research, dispose under CIFSA

If not used for science or learning (or following such use) body must be disposed of in accordance with CIFSA.

7 Direction in will

Permits objection in will to prohibit use of body in accordance with Anatomy Act.

Human Tissues Gift Act, R.S.B.C. 1996, c. 211

2 Transplants lawfulA transplant from one living human body to another living human body may be done in accordance with this Act, but not otherwise.

3 Consent for transplant

3(1) Permits inter vivos gift of transplant human tissue – must be age 19, competent, free and informed.

3(2) Exception to s. 3(1) - consent given by a person who had not reached age 19, was not mentally competent to consent, or was not able to make a free and informed decision is valid for this Act if the person who acted on it had no reason to believe that the person who gave it had not reached age 19, was not mentally competent to consent, and was not able to make a free and informed decision, as the case may be.

3(3) Consent given under this section is full authority for a medical practitioner to(a) make any examination necessary to assure medical acceptability of the tissue specified, and(b) immediately remove that tissue from the body of the person who gave the consent.

3(4) If for any reason the tissue specified in the consent is not removed in the circumstances to which the consent relates, the consent is void.

4 Consent after Death

(1) Permits gift of body parts by deceased (age 19 or more) following death – need consent in writing and signed, or consent given orally with two witnesses during last illness.

(2) Despite s. 4(1), consent given by a person who had not reached age 19 is valid for this Act if the person who acted on it had no reason to believe that the person who gave it had not reached age 19.

18

(3) Consent given under s. 4(1) binding and is full authority for removal and use of body parts consented to.

(4) Cannot act on consent if reason to believe it was subsequently withdrawn, unless consent was contained in valid will of deceased.

5 Consent by spouse or others after death

Allows consent of spouse and others for use of body or parts after death in writing or orally w/ witnesses, but person cannot give consent if they have reason to believe person who died would have objected.

7 Determination at death

Procedures for determining death of donor: (1) need 2 medical practitioners, (2) medical practitioner cannot have conflict of interest to get tissue, and (3) practitioner making determination cannot take part in transplant procedure, and (4) exception: transplant of eyes for cornea transplant.

8 If transplant fails

If specified use for tissue that was consented to fails, subject matter of gift and body must be dealt w/ as if no consent was given.

10 Sale of tissue prohibited

A person must not buy, sell or otherwise deal in, directly or indirectly, for a valuable consideration, any tissue for a transplant, or any body or parts other than blood or a blood constituent, for therapeutic purposes, medical education or scientific research.

19

SOLICITORS’ RESPONSIBILITIES AND LIABILITIESRe Worrell: solicitor must exercise care in drafting a will to ensure it accurately reflects intentions of testator1) Re Worrell, (1969 Ont. Surrogate Ct.)

a) Facts: solicitor drafting will made several poor judgements, including: leaving a substantial portion of the estate of the testator to the person who consulted him (the beneficiary), drew the will with changes from the original instructions of the testator without consulting the testator, and handed the will over to the beneficiary that consulted him to have it executed.

b) Issue: i) What is the extent of a solicitor’s duty in drafting a will?

c) Decisioni) Solicitor should take instructions directly from the testator himself, rather than from 3rd parties,

particularly beneficiariesii) Where written instrument is given by a third party, the solicitor must satisfy himself thoroughly

that the instrument expresses the real testamentary intentions of a capable testator, prior to its execution

iii) A solicitor should not ask leading questions to an elderly testator in obtaining instructions for a will

iv) A solicitor should enquire as to the nature and extent of all the testator’s property in order to properly advise the testator and test his competency

v) Solicitor should keep full docket entries events related to drafting of will, particularly notes of the testator’s intentions

Whittingram: solicitor can owe duty of care to an intended beneficiary under a will 1) Whittingram v. Crease & Co. (1978, BCSC)

a) Factsi) Testator had 5 children. His will left practically all of his estate ($100K) to one of his sons, the

Plf. The will was prepared and executed by the Def-lawyer. The spouse of the Plf (sole beneficiary) signed the will as a witness, but under s. 11 of the Wills Act, this made the gift to the beneficiary void. As a result, the estate passed on intestacy, to be divided equally between the 5 children.

ii) Plf sued in negligence, claiming damages the dif btw the amount he would have received under the will and the amount received on intestacy.

b) Issuei) Was the Def lawyer negligent in doing what he did knowing the relationship btw the

beneficiary and the person asked to witness the will?ii) Sub-issue: does a solicitor owe a duty of care to beneficiaries in tort?

c) Decision (as per Atkins J.)i) A solicitor owes a contractual duty to a testator to use reasonable skill, care and diligence to

see to the execution and witnessing of the will to ensure that it is fully effective ii) A solicitor owes a duty of care to an intended beneficiary under a will when drafting and

preparing the execution of the will (1) Solicitor possesses specialized skill (2) Plf relied on solicitor(3) Reasonably foreseeable that if solicitor negligently performed duty, Plf would suffer loss

(Hedley Byrne and Haig v. Bamford)iii) Standard of care : Any lawyer who undertakes to supervise the execution of a will can

reasonably be expected to be familiar with all the comparatively simple provisions of the statute regulating the execution of wills (incl. those setting out the law in relation to gifts to witnesses and to the spouses of witnesses)

d) Comments

20

i) In assessing damages, Atkins reasoned that if the will had been valid, two of the children would have made claims under what is now the Wills Variation Act, R.S.B.C. 1996 and each of them would have been awarded 1/3 of the estate. Thus, Plf awarded dif btw 1/3 and 1/5.

PREPARING A WILL

1. Legal Drafting

Find a good drafting texto E.g. Legal Drafting by Robert C. Dicko Law Society of BC

Assume that client will never make another will o So account for everything in will - leave no asset or contingency untouched

The will only operates from date of death of testatoro We accept the testator as he is at death (i.e. assets, liabilities, spouse, parents, etc. existing

at death)o E.g. specific gifts promised in will that no longer exists are treated as if never promised at allo Recall, testator can deal with assets without restriction prior to deatho Also, must plan for eventualities, possibilities (e.g. heir may be born after death of testator)

The “KISS” drafting strategyo K eep It Simple Stupido But this is easier said than done due to the complexity of wills, varying types of property,

attempts to deal with possibilities or eventualities, tax considerations, etc.o Use KICCS method if too complex

If not KISS, than “KICCS”o K eep It Clear and Concise Stupid

Clear = unambiguous, understandable Concise = brief, precise, succinct

Will precedentso Starting point only - don’t over relyo Review carefully and understand context of precedento Precedents require adjustment and original drafting - esp. attestation clauses (p. 42)o Re-read and pay attention to details

2. Will Instructions

Listen carefullyo Linked to B.C. Professional Conduct Handbook (Chp. 3, Sub-para. 3(h)) which describes

a lawyer’s duty to prepare documents and perform legal tasks accurately o Accuracy in drafting wills will improve w/careful listening

Search for clues in client’s storyo Types and locations of assetso Types of debts and obligationso Jointly owned assetso Existence of trusts or other estate planningo Family heirlooms and other cherished assetso Family history and status of relationships

21

o Heirs and forgotten relativeso E.g. stepchildren were you previously married? Was current spouse previously married?

Any possible variation of will issues?

Concise notes and checklistso Use checklists as a reminder of certain things (see Law Society of BC checklist)o Notes will be part of client file and may be relevant in future litigation (see Re Worrell and

knowledge and approval req’t on p. 38)

Review facts from notes with client (and in front of witnesses)o Confirm fact summary w/client orally or in writingo Confirm spelling of names, dates, locations, etc.o Confirm key points: e.g. executor, alternatives, residual distribution, catastrophe clause

3. Components of a Will

*Note: in general, the form of a will is not as important as its substance, but the following checklist of components will ensure that you, the drafter, do not forget anything.

Commencement - Identification of Testatoro E.g. “This is the last will and testament of me, John Smith, of the City of Victoria, Province of

B.C., lawyer.”

Revocation Clauseo To avoid competing instruments, Testator revokes all prior wills, codicils, and testamentary

dispositions made prior to this willo BE CAREFULL not to make clause too broad and revoke wills for property in other

jurisdictions (if any) and beneficiary designations for registered retirement vehicles (e.g. RRSP) or life insurance policies

Testator’s Declarationso Statement of domicile or residence (if in doubt)o Will made in contemplation of marriage1 (see s. 15 of Wills Act)o Will disposing of assets in specific jurisdiction (i.e. “this will only applies to my assets in BC”)o Declaration that there is another will for disposing of assets in another jurisdiction

Appointment of Executor and Trusteeo Include alternate executor and trustee in case named executor/trustee predeceases testator

or renounces their “office”o E.g. “I Nominate, Constitute and Appoint my brother, X, of City, Province, to be the executor

and trustee of this my will, provided that if…”

Bequest of General Estateo Transfer of all testator’s property “wheresoever situate” to trustee to be held in trust in order

to satisfy debts and taxes; pay gifts, devises, bequests and legacies; satisfy capital requirements of testamentary trusts created by will; and pay out residual amounts to beneficiaries”

OR…

1 Note: “marriage” in this sense does not include CL relationships b/c: (1) exact date of CL relationship status is unknown, whereas in marriage a couple has an exact date they were granted a licence and registered with vital statistics; and (2) people can accidentally become CL partners.

22

o “to executor for his own use absolutely” means that executor is not holding assets in trust for beneficiaries, but for himself (after paying debts and taxes, of course)

Payment of Debts and Taxeso Executor is required by law to pay debts and taxes prior to distributing assetso Note : absence of this provision does not allow executor t forego payment of debts and taxeso Common provision

Distribution of Personal Effects (several ways to do this)o Specific gift in will (e.g. my gold watch to X)o By memo prepared prior to execution of will and incorporate into will by reference (see p. 44)

becomes binding on executor and cannot be amendedo By post-execution memo mentioned in will which sets out distribution scheme for personal

effects non-binding on executor and can be amended o By authorizing executor to distribute personal effects as he sees fit

Gifts and Legacieso Specific bequests of fixed sums of money or specific personal property should be listed with

sufficient clarity as to who, what or how mucho E.g. “I give to my mother, Jane Smith, of Victoria, B.C., the sum of one thousand dollars

($1,000) if she survives me

Trust for Children or Otherso Will may create a testamentary trust for the benefit of

children (who cannot receive gifts under a will) or persons with disabilities

o Trust can be with or without entitlement to capital in future

Residue Clauseo Residue = assets remaining after debts and taxes, personal effects, specific gifts and

legacies, and settlement of trusts o Residue often distributed to spouse or divided among surviving children or siblingso Note: gifts that fail and unused capital and income from testamentary trust may fall into

residue and be distributed according to residue clause

Catastrophe Clauseo Good to add in case of catastrophe that wipes out family w/ no survivors to inherito Common to see residue going to charity of choice in event that spouse has predeceased and

there are no surviving children or grandchildren

Powers of Trusteeso Common to expand trustee’s powers beyond that which exists at CL or under statute by

specifying specific powers for investments, carrying on business (e.g. appoint managers), selling property, etc.

o E.g. investments by trustees will be limited to those authorized in s. 15.1 Trustee Act unless will gives broader authorization

Guardians for Minor Childreno Appoint guardian(s) for minor children in event both parents have diedo Note: avoid appointing married couples in case of future marital breakdown

Attestation Clauseo Clause at the end of will (use precedents! - but tailor to specific circ - see p. 42)o Witnesses certify that the will has been executed by the testator in their presence

23

o Describes the manner in which the will has been executed e.g. “all witnesses and testator were present at same time and signed in presence of

each other…” e.g. “will was read over by testator who approved and acknowledged its contents”

o ensure that clause reflects any special circumstances (e.g. blind testator, signing w/mark)

Othero Funeral arrangements

HOLOGRAPH WILLS

Holograph will = a will written entirely in the handwriting of the testator and signed by testator but does not require the presence of a witness or other formality

Law in B.C. holograph wills not recognized exception: s. 5 of Wills Act dealing w/ wills written by mariners Also note proposed BCLI Report would grant judges “dispensing powers” (re dispense w/ formality in

will executions)o See s. 46(1) of Model Act- gives discretion to judge to order a writing to be effective as a

will, provided the court is satisfied that the writing embodies the intentions of the deceasedo Discretion available even where writing fails to meet some or all formal requirements under

Act

Bill 4 – WESA – Dispensing Power

Section 58 – has introduced a dispensing power which, in certain circumstances, allows a judge to disregard some of the formal requirements for the creation and execution of a Will or codicil.- Gives discretion to a judge to order a writing to be effective as a will provided the Court is satisfied that writing embodies the testamentary intentions of the deceased.

(1) In this section “record” includes data that (a) is recorded or stored electronically, (b) can be read by a person, AND (c) is capable of reproduction in a visible form

(2) The court may make an order under (3) if the court determines that a record represents: (a) the testamentary intentions of a deceased person, (b) the intention of a deceased person to revoke, alter or revive a will or testamentary disposition, OR (c) the intention of a deceased person to revoke, alter or revive a testamentary disposition contained in a document other than a Will

(3) Even though the making/revocation/alteration/revival of a Will does not comply with this Act, the court may, order that a record, doc, etc, be fully effective as though it had been made (a) as the will or part of the will of the deceased person, (b) as a revocation, alteration or revival of a will of the deceased person, OR (c) as the testamentary intention of the deceased person

(4) If an alteration to a Will makes a word or provision illegible and the court is satisfied that the alteration was not made in accordance with this Act, the court may reinstate the original word or provision if there is evidence to establish what the original word or provision was

Law in Other Cdn Jurisdictions

Most Cdn jurisdictions recognize holograph willso E.g. Ontario - s. 6 of Succession Law Reform Act, R.S.O. 1990, c. S.26

A few do not: BC, Nova Scotia and PEI

24

Policy concerns - Against holograph wills

o fraudulent wills, wills made in haste and w/o deliberation

Wills Act, R.S.B.C. 1996, c. 489

5

(1) A member of the Canadian Forces while placed on active service under the National Defence Act, or member of the naval, land or air force of any member of the British Commonwealth of Nations or any ally of Canada while on active service, or a mariner or seaman at sea or in the course of a voyage may, regardless of his or her age, dispose of his or her real and personal estate by will in writing, signed by the testator at its end or by some other person in the presence of and by the direction of the testator.

(2) If the will is signed by the testator, there is no necessity for the presence, attestation or subscription of any witness.

(3) If the will is signed by another person, the signature of that other person must be attested by the signature of at least one person, who must attest in the presence of the testator and of that other person.

41 A change of domicile of the testator occurring after a will is made does not render it invalid as regards the manner and formalities of its making or alter its construction.

42 Nothing in this Part precludes resort to the law of the place where the testator was domiciled at the time of making a will in aid of its construction as regards an interest in land or an interest in movables.

25

INTESTATE SUCCESSION

1. GENERAL SCHEME

Trigger: intestacy or partial intestacy (s. 96)

Rule: succession upon intestacy (complete or partial) is governed by the Estate Administration Act, and to a lesser degree, the Public Guardian and Trustee Act and the Law and Equity Act

Estate Administration Act, R.S.B.C. 1996, c. 122

74 Time of distribution of intestate estate

(1) – subject to (2) and (3) - must wait at least 1 year before distributing the surplus (i.e., residue) from an intestate estate

(2) – Exception – court order for dependant who is entitled to share in surplus from estate

(3) – Exception – estates administered by Public Guardian and Trustee* (“PG&T”) – if PG&T is satisfied it will not prejudice rights of creditors of intestate estate, discretion to PG&T to distribute surplus to anyone entitled at any time

* The PG&T frequently administers intestacies in the role of Official Administrator - but is appointed as a last resort if no one else comes forward (see s. 6 of Public Guardian and Trustee Act on p. 30).

1 Definitions

“intestate” or "person dying intestate" means a person owning property dying without a will;

"spouse" includes a common law spouse;

"common law spouse" means either

(a) a person who is united to another person by a marriage that, although not a legal marriage, is valid by common law, or

(b) a person who has lived and cohabited with another person in a marriage-like relationship, including a marriage-like relationship between persons of the same gender, for a period of at least 2 years immediately before the other person's death;

81 “issue” means includes all lineal descendants of the ancestor (i.e. not only children, but grandchildren, great-grandchildren, etc…)

26

“estate” includes both real and personal property

PROCESS FOR DISTRIBUTION

83 Spouse but no issue - all surplus goes to spouse

84 Issue - subject to rights of spouse, if intestate dies leaving issue, surplus to be distributed “per stirpes” among the issue (see s. 85)

“per stirpes” - means issue of a deceased person takes or inherits the share of an estate which their immediate ancestor would have inherited, if living (note: share bypasses estate of immediate ancestor: see Re Forgie)

s. 85(1) - “net value” means the value of an estate wherever located, both in and outside of BC, after payment of any charges on it and debts, funeral expenses, expenses of administration and probate fees.

85 Spouse and issue

(3) if net value is $65K or less, entire estate goes to spouse

(4) & (5) if the net value is greater than $65K, spouse gets an initial $65K (aka “spouse preferential share”) and residue is divided as follows:

One child only: 1/2 goes to spouse (aka “ordinary spousal share”) Children: 1/3 goes to spouse (aka “ordinary spousal share”)

(6) If child has died leaving issue who are alive at date of intestate’s death, spouse takes same share as if child had been living at the date (i.e. half or one third). Child’s share – per sterpes

85.1 More than one spouse

For purposes of s. 85, if 2 or more are entitled as a spouse, they share the spousal share in the estate in the portions determined by the court as the court considers just.

86 No spouse, no issue

(1) Estate goes to father and mother in equal shares if both are living(2) If one parent is dead, estate goes to surviving parent.

87 No spouse, issue or parents

(1) Estate goes to brothers and sister in equal shares(2) Children of deceased brother or sister take the share their parent would have received if alive but “further representation must not be admitted” (per capita - i.e. stop and niece and nephew) (see Re Kishen Singh; Re Forgie)

“representation” is the principle upon which issue of a deceased person take or inherit the share of an estate which their immediate ancestor would have taken or inherited, if living – the taking or inheriting per stirpes.

27

“per capita” method of division by a number of individuals, share and share alike with no reference to their issue (i.e. no further representation). It is the anti-thesis of per stirpes.

88 No spouse, issue, parents, brothers or sisters

Estate goes to nephews and nieces in equal shares - no representation (i.e. per capita).

89 No spouse, issue, parents, brothers, sisters, nieces or nephews

Estate is distributed equally among the next of kin of equal degree of consanguinity to the estate - no representation.

*See Table of Consanguinity changed to Parentellic system under Part 2 Model Law Act

90 Kindred and half-blood

(1) Degrees of kindred are computed by counting upward from the intestate to the nearest common ancestor and then downward to the relative.

(2) Kindred of the half-blood inherit equally with those of the whole blood in the same degree (see Re Kishen Singh)

91 Posthumous births

Descendants and relatives of the intestate, conceived before the person’s death but born afterwards, inherit as if they had been born in the lifetime of the intestate and had survived the intestate.

92 Advances to Children (the “Hotchpot Rule”) (note: repealed in Model Law Act)

(1) – (4) If any child of a person who died wholly intestate has been advanced by the intestate by portion, the portion must be “reckoned” as part of the estate distributable according to law and taken into account in determining the child’s (and descendants’) entitlements on intestacy

(5) Onus of proving that a child has been maintained, educated or given money is on person so asserting it , unless there is a writing or acknowledgement

Note 1: Rebuttable presumption arises once there is proof that a child did receive an advancement w/no logical explanation that it was not an advancement by portion , which then must be rebutted by child who received advance (Re Evaschuk p. 31)

[Note 2: the longer the period between the advance of money and the intestacy, the harder it will be to assert this rule]

“portion – an allotted part; a division in a distribution; a share of an estate or the like received by gift or inheritance”

An advancement is neither a loan nor a gift, but a bestowment of property by a parent on a child on condition that if the donee claims to share in the intestate estate of the donor, he shall bring in this property for the purposes of equal distribution. [Widdifield on Executors Accounts 5th ed. 1967 p.182]

94 Estate undistributed by will (i.e. partial intestacy)

28

All the estate not disposed of by will must be distributed as if the testator had died intestate and had left no other estate.

96 Spousal home and furnishings

Subject to s. 98 (separation of spouses)

(2)(a) except where it would otherwise go to the spouse under this Part of the EAA+, the spousal home* goes to those persons entitled to it, but they must hold it in trust for an estate for life of the surviving spouse*, or so long as the surviving spouse wishes to retain the estate for life

*life estate has same incidents of life estate at CL, including net income to property if leased (Kwasnycki)

(2)(b) household furnishings* go to the surviving spouse

*Note definitions in s. 96 and note s. 97 dealing with contiguous land not incidental to spousal home.

+Trigger: matrimonial house + spouse does not have 100% share + does not have to be sold to pay debts or taxes (e.g. see Aho Estate)

98 Separation of spouse as bar to entitlement on intestacy

(1) Unless a court orders otherwise, in an intestacy, the surviving spouse takes no part of the deceased spouse’s estate if the spouse:

(a) had, immediately before the death of one spouse, separated for one year or more with the intention of living separate and apart; and

(b) had not during that period lived together with the intention of resuming cohabitation

(2) Surviving spouse, executor or administrator or any person interested in the estate may apply to court to determine the matter*

*see Tuomi for rebuttable presumption (p. 32), but Law v. Tretiak for discretion where “strong moral claim” exists (p. 33)

(3) Application under (2) must be made no later than 6 months after the date of the issue of letters of administration of the deceased spouse’s estate

*Note changes to provision in Model Law Act ss. 1(2) and 19

Public Guardian and Trustee Act

6 The PG&T may(a) act as an executor under a will or as an administrator of an estate

(b) act, either alone or jointly with another person, as a trustee if the PG&T is appointed as trustee,

(i) in a will, settlement or other instrument creating a trust(ii) by a majority of the trust’s beneficiaries who have reached 19 years of age and are otherwise capable of making the appointment, or

29

(iii) by a court, and(c) act as attorney of a person in accordance with the terms of a power of attorney

Law and Equity Act

61

Child Status - re no distinction for illegitimate children(1) subject to the Adoption Act (see below) and the Family Relations Act, for all purposes of the law of B.C.

(a) a person is a child of his or her natural parents (b) no distinction between children born in a marriage and children born outside a marriage (i.e. abolishes concept of illegitimacy)

(2) this section applies to all statutes, regardless when enacted, and to any instrument made on or after April 17, 1985

CASE LAW

Re Kishen Singh: e.g. of application of ss. 87(2) and 90(2) EAARe Kishen Singh (BCSC, 1957)1) Issue :

a) whether the children of the half-blood sister of the deceased are entitled to share in the intestate estate as their mother would have taken if alive

2) Decision : a) s. 90(2) [half-blood inherit equally] is of general application to this Part of the EAA dealing w/

intestate successionb) as per s. 87(2), children take the share of the mother who was of the half-blood, but of the same

degree as her whole blood brothers and sisters

Re Evaschuk: e.g. of application of s. equivalent to s. 92 EAA (“Hotchpot rule”) – NOT COVEREDRe Evaschuk (Man. Surr Ct. 1983)1) Issue

a) whether payments to sons were “advancements by portion” that had to be “reckoned” as part of the estate distributable according to law, and taken into account in determining the descendants’ entitlements on intestacy

2) Decision a) Lack of evidence as to the intentions of deceased in advancing sums requires a court to turn to

rebuttable presumptions (i.e., prima facie case). b) In this case, size (of payments relative to intestate’s estate) and nature (designed to assist

donee to set up a business or establish a home) of gifts is indicative of a prima facie case of “advancements by portion”.

c) Prima facie case not rebutted. d) Thus, sums brought into account and considered to form part of the estate of the deceased.

3) Comments a) rebuttable presumption arises once there is proof that a child did receive an advancement w/no

logical explanation that it was not an advancement by portion

Re Forgie: e.g. of application of s. equivalent to s. 87 EAARe Forgie (Man. KB, 1948)1) Issue :

a) whether widow of the brother of the deceased is entitled to a portion of the intestate’s estate

30

which her husband would have received had he been alive2) Decision

a) brother’s share of the intestate estate goes directly to his children and never forms part of his estate

b) the widow is not entitled to a share of the intestate’s estate by statute [s. 87 provides that it goes directly to the children] or by her husband’s will [since it never passes through his estate]

Aho Estate: e.g. of application of s. 96(2)(a) EAAAho Estate v. Kelly (BCSC, 1988)1) Issue

a) whether a widow’s life estate in the matrimonial home (per the EAA) is monetarily valued upon the sale of the home and distributed (net of liabilities) to widow in priority to the distribution of the residue

2) Decision a) No, s. 96(2)(a) creates in the surviving spouse a life estate in the matrimonial home.b) the trust created is determinable during the surviving spouse’s life if there is a need to sell the

matrimonial home to pay off the debts of the estate. Where this happens, the trust in favour of the surviving spouse is terminated.

Kwasnycki: e.g. of interpretation of s. 96(2)(a) EAA Kwasnycki v. Kwasnycki Estate (BCSC, 1990)1) Facts

a) Wife had life interest as per EAA, remarried and then moved into new husband’s home. She leased the matrimonial home to the deceased’s daughter and then demanded rent. The daughter refused to pay.

2) Issue a) whether the widow is entitled to income from the lease of the matrimonial home while not

occupied by her personally3) Decision

a) life estate created for the surviving spouse has all the incidents of a life estate at CL (except that it may be terminated to pay estate debts)

b) this includes entitlement to net income from the property if it is leased by the life tenant during the course of his/her life interest in the land

2. INTESTATE SUCCESSION: SEPARATED SPOUSES

Tuomi: e.g. of interpretation of s. 98 EAATuomi v. Ungarian (BCSC, 1991)1) Issue

a) whether a widow is entitled to a share of her former husband’s intestate estate notwithstanding a finding of fact that she and the deceased were separated with the intention of “living separate and apart” for not less than one year prior to the death of the intestate.

2) Decision a) it is a question of fact whether there has been a withdrawal from the matrimonial obligation

w/the intent of destroying the matrimonial consortium. “Intention” to live separate and apart is also required under s. 98 EAA

b) The fact of a separation for “not less than one year” creates a rebuttable presumption that the spouses “intended” to remain separate (e.g. living separate and apart for work reasons may rebut a presumption)i) here, objective evidence also supports thisii) thus, here the presumption is not rebutted

31

c) Although the court has discretion under s. 98 to award the widow part of the estate, the widow in this case did not make out a “strong moral claim” so as to convince a court to exercise its discretion

Law: interpretation and exercise of judicial discretion under s. 98 EAALaw v. Tretiak (BCCA, 1993)1) Issue

a) is the former spouse of a deceased intestate entitled to an award under s. 98 EAA, pursuant to the discretion of the court?

2) Decision a) yes, the former spouse is entitled to part of the estate based on need, taking into account

i) the nature and duration of the marriage;ii) the interval of division of family assets and death (i.e. confines entitlement to “need” of formal

spouse)iii) size of the estate and the relative absence of other claims

Gosbjorn: further s.98 EAA interpretationGosbjorn v. Hadley (2008, BCSC)3) Issue

a) Under what circumstances will the separation of common law spouses for less than one year result in disentitlement of the survivor to the spousal share in the estate of the intestate? S.98

4) Decision i) At the time of death of the intestate the parties had not ceased to live and cohabitate in a

marriage-like relationship in the sense that the common law relationship had ended. Hence, Ms. Gosbjorn was entitled to her share in the deceased’s estate as the “surviving spouse”

3. INTESTATE SUCCESSION: ADOPTED CHILDREN

Adoption Act, R.S.B.C. 1996, c. 5, s. 37

37 Effect of the adoption order (restated in s. 4 of Model Law Act)

(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 (2) a parent jointly with the adoptive parent (i.e. “step birth parents”)

*Thus, on intestacy, the adopted child cannot make a claim on the birth parents’ intestate estates (exception: if interest vested prior to adoption: s. 37(4)).

(3) An adoption order for second or subsequent adoptions 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 (1).

(5) Family relationships of one person to another are to be determined in accordance with this section unless another statute specifically otherwise provides or distinguishes between

32

persons related by birth and persons related by adoption.

(6) 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.

Clayton: e.g. of application of s. 37(1) EAAClayton v. Markolefas (BCCA, 2002)1) Facts

a) Appellant was adopted by persons unrelated to her natural parents. Her natural father died intestate and she sought a share of his estate in accordance with the intestacy rules.

2) Held a) appeal dismissed

3) Decision a) While old Adoptions Act of 1920, preserved inheritance rights from natural parents, s. 37(5) of the

current Adoption Act provides that family relationships of one person to another are to be determined in accordance with s. 37

b) the clear effect of s. 37(1) is that the adoptive child becomes the child of the adoptive parent and it follows that all parental obligations fall upon the adoptive parents.

c) “the adoptive parents are the parents and the adopted child is their issue”

4. BILL 4 – WESSA REFORMS

Section Description Notes

3 Effect on Adoption

(1) Subject to this section, if the relationship of parent and child arising from the adoption of a child must be established at any generation in order to determine succession under this Act, the relationship is to be determined in accordance with the Adoption Act, respecting the effect of adoption

(2) Subject to (3), if a child is adopted, (a) the child is not entitled to the estate of natural parent except through the Will of the natural parent (b) a natural parent of the child is not entitled to the estate of the child except through the will of the child

(3) Adoption of a child by the spouse of a natural parent does not terminate the relationship of parent and child between the child and the natural parent

In order to determine succession rights under Bill 4, the Adoption Act will dictate the effects of adoptions with respect to the relationship of parent and child

Subject to ss.3(3) of Bill 4, an adopted child is NOT entitled to succeed to the estate of their natural parent except through the will of the natural parent and vica versa

VariousChanges to the Law of Intestacy 1 - Existing degrees of kinship system in BC to be

replaced by “parentelic” system under which the

33

1 - Parentelic System to Replace Degrees of Consanguinity System

2 - Two or More Spouses

3 - Rights of Separated Spouse in Intestacy

line of closest common ancestor must be exhausted before other relatives will share in the estate

Parentelic system will produce similar results to the current system; differences emerge where distributing to next of kin more remote than siblings of the intestate

Relatives having a closer common ancestor with the intestate will always take before ones in the more remote ancestral lines

2 - 22(1) If 2 or more persons are entitled to a spousal share of an intestate estate, they share the spousal share in the portions to which they agree, or if they cannot agree, as determined by the court

(2) If 2 or more persons are entitled to apply or have priority as a spouse under this Act in respect of an intestate estate, they may agree on who is to apply or who is to have priority, but if they do not, the court may make the decision.

3 – s.2 When a person is a spouse under this Act(1) Unless (2) applies, 2 persons are spouses of each other for the purposes of this Act if they were both alive immediately before a relevant time AND (a) they were married to each other, OR (b) they had lived with each other in a marriage-like relationship, including same gender, for at least two years

(2) Two persons cease being spouses of each other (a) in the case of a marriage, (i) they live separate and apart for at least 2 years with one of both of them having the intention, formed before or during that time, to live separate and apart permanently, OR (ii) an event occurs that causes an interest in family assts, as defined in Part 5 of the Family Relations Act (Matrimonial Property) to arise, OR (b) in the case of a marriage-like relationship, one or both persons terminate the relationship

(3) A relevant time for the purposes of (1) is the date of death of one of the persons unless this Act specifies another time as the relevant time

23 The Spousal Share

(1)The spousal “preferential” share is to be increased to either:

Impetus: since 1983, a number of Cdn prov have substantially increased the spousal preferential share. This fact, combined with typical estate values in BC and contemporary social stds that favour generous provision of an estate for surviving

34

(a) $300K, unless (b) applies, or

(b) $150K – if the issue of a spousal relationship are not all issue of both the intestate and the spouse [to provide fairness in cases of mixed families]*

(2) The spousal “ordinary” share, where there are issue of the intestate, is to be half the balance of the “net estate” after payment of the spousal preferential share, regardless of the number of issue .

spouse have led to recommendations.

*The $150K is to take in account the prevalence of mixed families and fact that full preferential share would end up benefiting stepchildren more than biological children.

26-35 Replacement of statutory life estate

Spouse could choose to set off the spousal preferential and ordinary shares against the value of the intestate’s interest in the spousal home and either be paid the balance of those shares (if the value of the home is less) or purchase the spousal home by paying the difference to the personal representative.

Statutory life estate replaced by a right to appropriate the spousal entitlements in intestacy against the spousal home

purpose: to simplify the administration of the estate - b/c obtaining appraisal of market value of house is easier than having to place value on an unmarketable life estate.

Policy: spouse can’t be kicked out w/ right of first refusal

19 Loss of spousal inheritance on occurrence of triggering event

A triggering event during the intestate’s life (such as signing a separation agreement, divorce, judicial separation, decree of nullity, etc. under Part 5 of FRA) means that intestate’s spouse is deemed to have predeceased the intestate.

Result: Triggering event will cause surviving spouse to lose immediately the right to inherit on the intestacy of the deceased spouse, even if two years of separation had not elapsed at time of death.

Rationale: to avoid overcompensating ex-spouse or separated spouse who has already become entitled b/c of triggering event to a half-interest as a TIC in family assets. Ex-spouse would be double dipping if inherited on intestacy. Even if not separated for 2 years,

Triggering events under Part 5 of FRA to be specific.

Upon triggering event each party acquires a statutory half-interest in all family assets as TIC.

25(3) Cut off of intestate inheritance rights at 4th degree kinship

Intestate inheritance rights are to end at the fourth degree of kinship (except for issue of the deceased). Model Act contains a provision deeming kindred of the fifth degree and higher to have predeceased the intestate.

This group comprises first cousins, grand-nieces and grand-nephews, great-uncles and great aunts, and great-great grandparents. Relatives more remote than this would have no legal right to inherit.

If fourth degree relative not found, property would escheat. But fourth degree relative retains right to come forward and claim property.

Rationale: relatives beyond 4th degree rarely take on an intestacy and in practice it is impossible to locate them.

35

n/a Hotchpot Rule

The Hotchpot Rule found in s. 92 of the EAA (redressing inequalities existing in the intestate’s lifetime) is to be repealed.

Rationale: The function of intestacy rules is to distribute what is left of the intestate’s estate and not redress inequalities arising during intestate’s lifetime. If testator really wanted to ensure that advances were set off in distribution of their estate, he/she would do so in a will.

WILLS

4 requirements of a valid will:(1) Testamentary capacity(2) Valid execution (i.e. compliance with Wills Act) (3) Knowledge and approval(4) Absence of undue influence or fraud

typically, more than one of the above is pleaded simultaneously when a will or specific gift is challenged - “suspicious circumstances”

o e.g. Quaintance v Quaintance Estate (see below)o e.g. Vout v. Hay (SCC, 1995)

Facts : Vout sought to establish the invalidity of a will under which she was a beneficiary. Hay argued that the will was invalid due to “suspicious circumstances”

Issues : was the will validly executed, was the deceased of testamentary capacity; was the deceased procured to execute will by undue influence?

Held : will is valid

Onus of Proof (Vout v Hay)

o Propounder has burden of proof that will was properly executed, with knowledge and approval of testator, and testamentary capacity, but is aided by a rebuttable presumption

so long as the will on its face appears to comply with the formal execution requirements under the Wills Act, after having been read to or by the testator, it is presumed that the it was validly executed (“presumption of due execution”), that testator knew and approved, and had the requisite testamentary capacity for a valid will.

o Once a challenger makes out a claim regarding validity of the will, the presumption is rebutted and the propounder must prove, on the balance of probabilities, that the formal execution requirements were met, that the testator had requisite testamentary capacity and knowledge and approved the will.

o A challenger who alleges undue influence, fraud or mistaken fact or belief, must prove, on the balance of probabilities, that the testator signed the will as a whole or a specific provision in it, while under undue influence, fraud or mistaken fact or belief but for which he/she would not have signed the will.

o Opponent of will has the onus of raising suspicious circumstances to rebut this presumption 1. Circumstances surrounding the preparation of the Will 2. Circumstances tending to call into question the capacity of the testator 3. Circumstances tending to show that the free will of the testator was overborne by

acts of coercion or fraud

o Once rebutted, the propounder reassumes the legal burden of proving on BoP knowledge and approval and testamentary capacity

36

o BUT for undue influence and fraud , the burden of proof is on the opponent of the will to prove on a BoP that the testator signed the will as a whole or a specific provision, while under undue influence, fraud or mistaken fact or belief

Propounder can overcome this burden by establishing that testator knew and appreciated what he was doing

Policy: favouring testator’s wishes where it is established that formalities of execution have been complied with, and that knowledge and approval and testamentary capacity have been established.

1. TESTAMENTARY CAPACITY

*Note: as a solicitor you are required to do a rudimentary assessment of your client’s capacity to make a will. This can be done through casual conversation using your interview checklist as a guide (i.e. name, address, spouse, issue, assets liabilities). This initial interview should provide a solicitor with a clue as to what a client’s intentions are which will provide insight into testamentary capacity (see e.g. Hall v. Bennett Estate; Public Trustee v. Gill)

Golden rule: If a solicitor does have an uneasy feeling that there may be a capacity issue, enlist the support of medical personnel to witness and observe the testator’s mental state at the time of execution, and to record their examination and findings. It will require very persuasive evidence for a Court to dislodge a conclusion of capacity (see Sharpe and Bryson v. Adam and Adam).

Solicitors’ common errors in will preparation (Hall v. Bennett Estate; Public Trustee v Gill)1. Failure to obtain mental status examination2. Failure to interview client in sufficient depth3. Failure to properly record or maintain notes4. Failure to ascertain existence of suspicious circumstances5. Failure to properly react to existence of suspicious circumstances

Minorso s. 7: will made by person under age 19 not valid unless at the time of making the will, the

person is or has been married is a military personnel (see s. 5) (but need proof - i.e. certificate of officer: s. 7(2))

o exception for military services – see Execution

BILL 4 – WESA REFORMS

S. 36 – Validity of Wills – Minorso (1) Will by a person under 16 is not valido (2) A minor who has reached 16 AND who would be capable of making a Will if the minor had

reached the age of majority, may make a valid will

S. 38 – Will by members of military Forceso (1) while placed on active service, regardless of age, may make a gift or property by Will in

writing, signed by the will-maker at its end or by some other person in the presence of and by the direction of the will-maker

o (2) if signed by the will-maker, there is no need for a witness

37

o (3) if the will is signed by another person, the signature of that other person must be witnessed by the signature of at least one other person, who must sign the will in the presence of the will-maker and of that person

Mental Capacityo TEST : does the deceased have the capacity to comprehend the extent of the property being

disposed of, and the nature of the claims the testator is excluding? (Bank)o Presumptions and onus :

Mental illness creates a rebuttable presumption - strongest when natural affection and near relationships are disregarded (Bank; Rampone)

Onus shifts to propounder to rebut this preliminary presumption of testamentary incapacity on the facts of each case.

o e.g. of testamentary incapacity - Re Estate of Bohrmann; Sharp and Brysono e.g. of testamentary capacity - Bank v. Goodfellow; Royal Trust Co. v. Rampone (p. 39)

Alertness and consciousnesso Determine which of the 3 possible states of mind from which the validity of the will could be

upheld, apply (Parker): 1) was T capable of understanding what she was doing (i.e. could she recall whole

transaction)? 2) if not, was T capable of confirming accuracy of each clause in will if it was read to

her? 3) if not, would T be able to say words to the effect: “I have settled that business with

my S. I reply upon his having embodied it in proper words, and I accept the paper which is put before me as embodying it.

o Note : a solicitor should not undertake to prepare a will before assessing testamentary capacity (Hall v Bennett Estate; Public Trustee v Gill)

but solicitor may still be liable if a reasonable and prudent lawyer in their position would have reached a dif conclusion re testamentary capacity

Case Law - re mental illness / capacity

Bank v. Goodfellow (UK, 1870) - mental illness creates rebuttable presumption of incapacity Facts: testator was haunted by 2 delusions: (i) spirits, and (ii) that a deceased man was going to

molest him. Validity of will challenged Issue: whether mental unsoundness which is wholly unconnected w/testamentary disposition should

take away testamentary capacity. Held: testamentary capacity met Analysis: testamentary capacity is the ability of the testator to comprehend the extent of the property

being disposed of, and the nature of the claims the testator is excludingo mental illness creates a rebuttable presumption (presumption is strongest when natural

affection and ties of near relationship have been disregarded).

Royal Trust Company v. Rampone (BCSC, 1974) - ibid Facts: 2nd codicil challenges on basis of lack of “sound and disposing mind”. Testator had been

declared incapable of managing his own affairs by reason of mental infirmity arising from arteriosclerosis and an order for an appointment of committee of his estate was made.

Issue: did the testator have testamentary capacity when he executed the codicil Held: testator had testamentary capacity and presumption of incapacity rebutted.

Re The Estate of Bohrmann (UK, 1938) - presumption of incapacity not rebutted for one gift

38

Facts: will of testator was attacked, in part, b/c he was a “paranoid psychopath” and thus deficient in human affections and, in part, due to his delusions relating to London County Council.

Issue: did testator’s mental disorder prevent him from making valid testamentary dispositions? Held: will and 4 codicils upheld, except for one clause in 4th codicil dealing w/ London County Council

b/c testator suffered from delusional insanity that went to his testamentary capacity.

Sharp and Bryson v. Adam and Adam (2006, Eng.CA) - to leave nothing to daughters = incapacity Facts: testator suffered from MS for 20 yrs and died in extreme physical debilitation (could not speak,

read and only communicated by blinking). He made will 5 yrs before his death, and left his estate to his daughters in equal shares. Sharp and Bryson ran testator’s business and cared for him during last 10 years of his life. 1 year prior to death, testator drew new will and left his entire estate in equal shares to Sharpe and Bryson. Daughters successfully attached the will on basic of lack of testamentary capacity, affirmed on appeal. Sharpe and Bryson appealed.

Issue: did testator have testamentary capacity in making second will? Held: no testamentary capacity; appeal dismissed. Analysis: case turns on own facts - to leave assets to S and B was understandable, but to leave

nothing to daughters was not. Note golden rule (see above).

Quaintance v. Quaintance (Estate), (2006, Alta. CA) Facts: shortly before death, testator revoked will which left his estate to his issue in favour of a will that

provided that the residue to the daughter of his CL partner. Testator’s daughter challenged will for lack of testamentary capacity and undue influence

Issue: what are the tests for testamentary capacity and undue influence? Held: there should be a trial of the UI issue. Analysis: proof that testator knew and appreciated what he was doing is strong evidence toward

overcoming the burden established by those attaching the will on the basis of UI.

Case Law - re drafting and taking instructions

Parker v. Felgate (UK, 1883) - T in coma roused only to ok someone else to sign will Facts: testator gave instructions to her S for purposes of updating her will but, prior to execution fell

into a coma from which she could be roused. S appeared at hospital for the execution and the testator was roused and asked if she wanted the will signed by another on her behalf; to which she answered “yes”.

Issue: was the will valid? Held: yes, validity of will was upheld Analysis: Review of 3 possible states of mind from which the validity of the will could be upheld:

o 1) was T capable of understanding what she was doing (i.e. could she recall whole transaction)?

o 2) if not, was T capable of confirming accuracy of each clause in will if it was read to her?o 3) if not, would T be able to say words to the effect: “I have settled that business with my S. I

reply upon his having embodied it in proper words, and I accept the paper which is put before me as embodying it.”

#3 applies in his case

Hall v Bennett Estate (Ont CA, 2003) - don’t accept retainer if suspect incapacity Facts: S saw Bennett in hospital and received instructions for a will but did not prepare one b/c

Bennett was unable to decide how to distribute the residue and b/c S felt that Bennett would likely not be alert enough to review the will and execute it.

Issue: was S negligent in not preparing B’s will and therefore in breach of his duty of care owed to Hall (an intended beneficiary under the will)?

Held: No, S was not liable to prospective beneficiaries.

39

Analysis:o solicitor rightfully assessed testamentary capacity before undertaking to prepare will and

entering into retainero since there was no retainer, there was no proximity between S and prospective beneficiaries

to impose a duty of careo but solicitor may still be liable if a reasonable and prudent lawyer in their position would have

concluded that the testator did have testamentary capacity.Note: See Solicitor’s common errors in Will preparation above

2. KNOWLEDGE AND APPROVAL

Trigger: gift in will seems larger or more generous than testator thought

Common Scenario: solicitor (or other person) writes or prepares a will (or assists in writing instructions for will), under which he/she takes a benefit

Issue: did the testator have sufficient knowledge and approval of the gift?

General Rule: if a party writes or prepares a will (or instructions for a will), under which he takes a benefit, the

court will generally be “suspicious, vigilant and jealous” (Harmes; Wintle; Russell)o the degree of suspicion will vary with the facts of the case which makes the burden to

rebut this suspicion more onerous e.g. high in Wintle b/c testator unversed in business and elderly e.g. high in Russell b/c beneficiary had prepared written instructions

to remove this suspicion the propounder must satisfy the court that the testator knew and approved of the contents of the will

o e.g. golden rule - have medical examiner corroborate the drafter in question (esp. if in hospital)

o e.g. solicitor should make good notes during interview, drafting process and reviews w/ client that illustrate that he took the necessary inquiries to confirm knowledge and approval

o e.g. review will with testator in presence of witnesseso testator need not know the exact amount of a residuary gift, but should have general

knowledge of the general value and magnitude of the gift (Wintle; Russell) if the suspicion is not removed, the propounder’s burden of proof to show knowledge and

approval is undischarged

Harmes v. Hinkson (PC, 1946): lawyer w/ non-prof rel drafts will and receives residual gift = gift is valid Facts: Hinkson (lawyer) was good friend of deceased for over 10 years but never had acted for him

professionally. Deceased became ill and while in hospital Hinkson attended on him with a “wills kit” for the purpose of making his will, and ended up acting as his executor and residual beneficiary. Hinkson oversaw execution of will at hospital, with two nurses as witnesses. At trial, most of the details of making the will came from Hinkson. The will was challenged by next-of-kin.

Issue: whether the testator had “knowledge and approval” of the contents of the will prepared by Hinkson

Held: will upheld Analysis: where a party drafts a will, under which he takes a benefit, the court will be suspicious it is not coercion to urge upon a man who is dying the desirability to make a will – not undue influence Comments: once Hinkson knew that testator wanted to name him as executor and residual

beneficiary, he should have gotten another lawyer to draft the will (but note Russell) or follow the “golden rule”

40

Wintle v. Nye (HL, 1954): S drafts will for unsophist T and receives residual gift = gift is invalid Facts: Nye (lawyer) drew a will for the testator and was appointed executor and residual beneficiary.

The testatrix, an elderly lady, unversed in business had no one to rely on except Nye and her family. A later codicil prepared by Nye revoked legacies to various charities (resulting in > residual amounts for him). Testatrix did not have firm grasp on the value of her estate or the size of the residue, despite a presentation on such by Nye. At trial, jury held that testatrix knew and approved the contents of the will and codicil. Family appealed.

Issue: was there knowledge and approval? Held: will and codicil invalid - Nye could not prove knowledge and approval on BoP Analysis: testator had little idea of the size of the benefit being conferred on Nye. Russell v. Fraser (BCCA, 1980): non-lawyer w/ bus rel. assists T in providing written instructions to S and receives gift = invalid gift Facts: Fraser, the manager of the deceased’s credit union, was the executor and residual beneficiary

under a will prepared by a lawyer. Fraser who only had a business relationship w/ the testator referred her to a lawyer to prepare her will after agreeing to be her executor. But the testator asked Fraser to intervene by providing written instructions to the lawyer. Fraser agreed and as he prepared and reviewed the instructions w/ the testator, he noted that she had not dealt w/ the residue of her estate and made suggestions for distribution. Fraser jokingly suggested that she should leave him the residue, and the testator instructed him to do that. Fraser took the written instructions to the lawyer who prepared the will. The testator also asked that if Fraser predeceased her, that his estate should get her residue. Fraser was not present for the will’s execution. But the lawyer and 2 witnesses were present and the lawyer reviewed the entire will w/ the testator. Testator made clear that Fraser was to receive residue b/c he showed attention while her family had not. At trial, residue clause was struck out.

Issue: was there full knowledge and approval? Held: residue clause struck out Analysis: testator did not fully appreciate what she was doing (i.e. wasn’t aware of approximate value

of the residue of her estate) Higher onus: burden was more onerous because he had prepared the written instructions for the will

and taken a substantial benefit under it

NOTE: solicitor must make the necessary inquiries so that if called upon he can show the testator fully appreciated the effect of what she was doing when she made her will – no evidence of this here

41

3. UNDUE INFLUENCE

Trigger: circumstances exist to suggest that the testator was unduly influenced to make certain gifts in a will

Policy rationale: where a testator is unduly influenced, the will, or a specific provision therein, does not truly reflect the voluntary wishes of the testator.

Definition: undue influence involves a degree of influence which overwhelms, overpowers or dominates the testator who is thereby “influenced” to provide a benefit (or abstain from providing a benefit: see Mayrand v. Dussault) in the will, or a provision therein, such that the will does not truly reflect a voluntary action on the part of the testator.

TEST: Central question is whether there is coercion (Wingrove)

o influence only amounts to coercion where influence is so excessive that leads a testator to make a will that he has no desire to make

o having the power to unduly influence someone is insufficient - this power must be exercised (Craig)

o examples: violence; confinement; pressing an ill; feeble and weak person in their last hours or days of life; someone who is so fatigued that they agree to do something for quietness sake

But note if alleged influencer is a spouse, child or parent - allowed to exert some influence (see Craig)

FRAUD VS. UNDUE INFLUENCE Fraud is a broader term Undue influence is a type of fraud GR: where a testator is influenced to make a will or provision in a will by fraud on the testator, the will

or the provision will be set aside where it can be shown that the will or provision would not have been made in the absence of fraud

o Distinguish between innocent legatees and fraudulent legatees - where the testator knew the innocent legatee personally and intended to benefit her personally, the gift must stay (Wilkinson)

o Note : evidence that a charity is fake does not satisfy test, but may be very persuasive for a court

Legislation

Community Care and Assisted Living Act prohibits a licensee from persuading or inducing a resident or person in care to:

o make a willo make a gifto provide gifts to the licensee (or their spouse, relative or friend), or o conduct their financial affairs for the benefit of a licensee (or their spouse, relative or friend)

42

Case Law

Wingrove v. Wingrove (UK, 1885) Analysis : see above.

Craig v. Lamoureaux (PC, 1920) - spouse/parent/child expected to exert some influence, just not undue Facts: H and his brother (a lawyer) were instrumental in preparing sick W’s will. Urgency arose due

to the realization that W’s property would not pass to H (as desired) in absence of a will due to their marriage K (Qc. law). 1st draft of will left all of W’s property to H w/ discretion in H to give gifts to W’s family. 2nd draft had specific provisions requiring H to benefit W’s family. W’s attempt to sign 2nd draft fails (due to feebleness and drugs) and she then executed the 1st will w/ a “mark” rather than wait for 2nd draft to be redone. W’s sister challenged will on basis of UI by H.

Issue: was H’s influence “undue”? Held: will upheld. Analysis

o *no reason why a spouse, parent or child, who the testator would naturally want to benefit cannot put forward a claim to his spouse, child, or parent and ask for their recognition in a will, provided that testator knows what is being done

o power to unduly influence must be exercised

Wilkinson v. Joughin (Eng. 1866) - distinguish btw fraud and innoc legatees - innoc may be ok Facts: Adelaide misrepresents herself as a widow (w/child) despite her husband still being alive and

marries the testator (marriage void, of course). Will leaves bequests to “my wife Adelaide” and to “my step-daughter Sarah”

Issue: are the gifts valid? Held: bequest to Adelaide is void, but gift to child is valid. Analysis: must distinguish between innocent and fraudulent legatees

o if testator knew innocent legatee personally and intended to benefit her personally, the gift is valid

BILL 4 – WESA REFORMS

Reverses the Onus of Proof in Undue Influence Claims – Will be the onus of the propounder of the will to prove that there was not undue influence exercised

- S. 52 In an Action, if a person claims that a will or any provision of it resulted from another persono (a) being in a position where the potential for dependence or domination of the will-maker

was present, ANDo (b) 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 pserson 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 and did not exercise undue influence over the will-maker with respect to the will or the provision of it that is challenged

43

4. VALID EXECUTION OF WILLS

The Wills Act prescribes several formalities for a validly executed will:o s. 3 - requires writingo s. 4 - signatures required on formal will (including witnesses attesting)o s. 5 - exceptions for military and marinerso s. 6 - place of signatureo s. 17 - alterationso ss. 10-13 - restrictions on who can be witness

1. THE BASIC LAW

s. 3 - a will is only valid if it is in writingo forms of writing: holograph will (i.e. T’s own writing), electronic will, typewritteno Legislation does not prescribe the media for the written will

i.e. media could be: paper, cardboard, tree bark, computer disk, tractor fender (U of Sask. e.g.), egg shell, etc.

s. 46(2) of Model Law Act provides broad definition of “document” to include various media

s. 4 - signature for formal wills o subject to s. 5, will not valid unless:

(a) at its end it is signed by the testator or signed in the testator’s name by some other person in the testator’s presence and by the testator’s direction

“signed by T”o signature can include a “mark” if rep testamentary intent (Re

Bradshaw)o a mark made w/assistance treated at T’s signature if T adopts and

acquiesces (Re White) “signed in T’s name”

o need direction and consent, but direction can be non-verbal (Wilson cited in Re White)

e.g. of no “direction” see Peden o other person can sign their name (Re Fitzhaut)

44

(b) the testator makes2 or acknowledges 3 the signature in the presence of 2 or more attesting witnesses present at the same time (see Re Brown), and then

(c) 2 or more of the attesting witnesses subscribe the will in the presence of the testator

“presence” means that, at the very least, the testator must be in a position (i.e. physically capable) of seeing witnesses sign, even if the testator doesn’t actually see them (i.e. curtains ok, facing wall and unconscious is not) (issue: blind testator?) (Re Wozciecnowiecz; Brown v. Skirrow)

witnesses do not have to sign together (Re Brown)

o attestation clause - mention special circumstances Re signature if someone else signs the will on behalf of the testator pursuant to s.

4(a) , the attestation clause should state this fact (i.e. “X signed on behalf of testator, in his presence and upon his direction”)

Re reading if due to illness, poor eyesight, literacy, etc. the testator cannot read the will, the attestation clause should include the fact that the will was read over by the testator and he appeared to understand its contents

o presumption of due execution - arises whenever a will, regular on its face and apparently duly executed, is before the Court. In the absence of evidence to the contrary, there is an inference that there has been compliance with the requirements of the statute (Wills Act) with reference to execution.

e.g. Ball v. Taylor - issue of acknowledgement of testator’s signature - may not be necessary to have positive evidence that testator’s signature was on the document before it was witnessed if court is satisfied that it was there

o doctrine of substantial compliance - n/a in BC (Bolton) But note: dispensing power under s. 46(1) of Model Law Act (see below)

s. 5 - exceptions for military / mariners *(but note Model Law Act)

o (1) military personnel (testator) may make will if in writing, signed by testator at its end or by some other person in the presence of an by the direction of the testator.

o (2) if the will is signed by the testator, there is no necessity for the presence, attestation or subscription of any witness.

o (3) if the will is signed by another person, the signature of that other person must be attested by the signature of at least one person, who must attest in the presence of the testator and of that other person.

s. 6 - place of signature *(but note: model law’s dispensing power will make s. 6(2) obsolete)2 The case law suggests that it is not necessary for the witnesses to see what the testator writes. So long as they see the testator write something on the document, a presumption will apply - that the testator wrote his or her signature on a will.3 Jarman on Wills, 8th ed. sets out 4 propositions of “acknowledgement” (approved in Re Shafner)1) Testator whether speechless or not may acknowledge his signature by gestures;2) There is no sufficient acknowledgement unless the witnesses either saw or might have seen the signature;3) Express acknowledgement of signature itself is not required, a mere statement that the paper is his will, or a direction to them to put their names under his, or even a request by the testator, or by some person in his presence, to sign the paper, is sufficient (e.g. see Ball v Taylor and Daintreet v. Butcher & Fasculo);4) When the signature is seen or expressly acknowledged, it is not material that the witnesses are not told that the instrument is a will.

45

o (1) A will is deemed to be signed at its end, if the signature of the testator, made either by the testator or the person signing for the testator, is placed at or after or following or under or beside or opposite to the end of the will so that it is apparent on the face of the will that the testator intended to give effect by the signature to the writing signed as his or her will.

o (2) a will is not rendered invalid in any of the following circumstances:

(a) the signature does not follow immediately the end of the will;

(b) a blank space intervenes between the concluding words of the will and the signature;

(c) the signature is placed among the words of a testimonium clause or of an attestation clause or follows or is after or under an attestation clause either with or without a blank space intervening, or follows or is after or under or beside the name of the subscribing witness;

(d) the signature is on a side or page or other portion of the paper or papers containing the will on which no disposing part of the will is written above the signature (see Re Wagner w/ envelope at p. 49);

(e) there appears to be sufficient space to contain the signature on or at the bottom of the side or page or other portion of the same paper on which the will is written and preceding that on which the signature appears.”

o (3) a disposition or direction underneath a signature (made in accordance w/ ss. 4 or 5) or is added after the signature was made (i.e. “inter-lineations”), is of no force or effect

s. 15 – Effect of Marriageo A will is revoked by the marriage of the testator, unless

(a) there is a declaration in the will that it is made in contemplation of marriage OR (b) the will is made in exercise of a power of appointment of property which would not

in default of the appointment pass to the heir, executor or administrator of the testator or to the persons entitled to the estate of the testator if the person died intestate

s. 16 – Effect of Divorceo …unless there is a contrary intention, the gift, appointment or power that was given to the ex-

spouse is revoked and the will takes effect as if the spouse had predeceased the testator

BILL 4 – WESA REFORMS:

ss. 37-39 Substantially the same as current Wills Act ss3-6

s. 58 Provides “dispensing power” to court where writing embodies the testamentary intention of the deceased person

--------------------------------------------------------------------------------------------------------------------------------------

2. INCORPORATION BY REFERENCE

Trigger: testamentary paper + in existence before execution of will + referenced in will

Issue: can the extrinsic paper be incorporated by reference into the will so as to be binding on executor?

46

TEST (Re Jackson, BCSC, 1985) Requirements to permit the incorporation by reference into a will of a testamentary paper: Document

o (a) must be in existence at time of execution of will; and o (b) must be described as then existing; ando (c) in such terms that it is capable of being ascertained; ando (d) the will must not state that the document is not to form part of it.

TEST (Re Currie, Ont H.C.J., 1978) If a document is to be incorporated into a will, two conditions must be satisfied:

o (1) Will must refer to some document then in existence; and o (2) The document in question must be beyond doubt the document referred to in the will.

Onus of proof is on the person seeking to have incorporated some other documents into a will.-------------------------------------------------------------------------------------------------------------------------------------

3. ALTERATIONS TO A WILL OR CODICIL

“Codicil” = means of amending a will. o format: (i) identify will, (ii) date of will, (iii) state which provision is being amended (i.e.

revoked and replaced with…), and (iv) confirm last will and testament

s. 17 - alterations to will or codicil

o (1) subject to (2), unless an alteration that is made in a will is made in accordance with the provisions of this Act governing the making of a will (e.g. validly executed codicil), the alteration has no effect, except to invalidate the words or meanings obliterated (i.e. no longer “apparent”) by the alteration. (see Goods of Itter)

o (2) exception to (1) – an alteration to a will is validly made when the signature of the testator and the subscription of the witness or witnesses to the signature of the testator to the alteration are made either:

In the margin or in some other part of the will opposite or near to the alteration, or At the end of or opposite to a memorandum referring to the alteration and written in

some part of the will.

General Rule: Alterations apparent on the face of a will are presumed to have been made after the will was executed

(Estate of Oats) Onus on propounder of will to adduce evidence that the alterations were made before the execution of

the will (e.g. successfully rebutted in Estate of Oats)o e.g. intention of testator relevant as evidenced by his declarations prior to execution of the will

court can draw inferences from such declarations, namely that the alteration was made in furtherance of an intention that existed before execution of the will

----------------------------------------------------------------------------------------------------------------------------------------

4. WITNESSES

s. 10 - incompetence of witnesso a will is not invalid only because a witness, either at the time of execution was, or afterwards

becomes, incompetent as a witness to prove its execution.

s. 11 - gift to attesting witnesses

47

o (1) If a will is witnessed by a person to whom or to whose then wife or husband a beneficial gift, except charges and directions for payment of debts, is thereby given or made, the gift is void so far only as it concerns the person so attesting, or the wife or the husband or a person claiming under any of them, but the person so attesting is a competent witness to prove the execution of the will or its validity or invalidity.

includes any “beneficial” devise, bequest, direction, etc. (Re Cumming - e.g. direction to sell house at low price)

interest conferred should benefit witness in personal capacity (Re Ray’s Will Trusts) time is relevant - to be invalid, witness must be beneficiary under will at time of

attestation or death of testator (Re Royce’s Will Trusts - e.g. of novus actus interveniens)

instrument is relevant - benefit must be originate from instrument legatee attests to invalidate gift (Gurney - e.g. not witness of will w/ gift, by a witness of codicil w/o gift)

cure defect - before death of testator, cure invalid gift w/ codicil and new witnesses (Anderson)

witness’s share of residue invalid - invalid share passes on intestacy (Jones) no discretionary relief - court has no power to grant relief to beneficiary who

witnesses will (Hammond) - but see BCLI Report (below)o (2) A gift is not void under this section if the will is attested in accordance with sections 4 or 5

by at least the number of persons required by those sections and who are not person within subsection (1).

e.g. if have 3 witnesses and one witness falls under (1), the gift to that person is still valid

s. 12 - creditor as witness is competento If property is charged by a will with a debt and a creditor or the wife or husband of the creditor

whose debt is so charged witnesses the will, the person so witnessing, despite the charge, is a competent witness to prove the execution of the will or its validity or invalidity.

s. 13 - executor as witness is competent o A person is not incompetent as a witness to prove the execution of a will, or its validity or

invalidity, solely because the person is an executor.

BILL 4 – WESA REFORMS:

“Incompetency” – means lack of ability, legal qualification, or fitness to discharge the required duty

s.40 Witnesses to Wills(1) Witness must be 19 or older(2) Witness may receive gift under a will, but gift may be void under s.43(3) Will not invalid only because witness was (at that time) or later became legally incapable of proving the will

s.43 Gifts to Witnesses(1) Unless a court otherwise declares under s.43(4), a gift in a will is void if it is to:

(a) a witness to the will or a spouse of that witness;(b) a person signing the will by the will-maker’s direction or a spouse of the person signing;(c) a person claiming under a person, other than the will-maker, referred to in paragraphs (a) or (b)

(2) For purposes of 43(1), relevant time of determination for who is a “spouse” is the time when the will was made(3) if a gift is void under 43(1), the remainder of the will is unaffected

48

(4) On application, the court may declare that a gift to a person referred to in (1) is not void and is to take effect, if the court is satisfied that the will-maker intended to make the gift to the person, even though that person was a witness of the will(5) Extrinsic evidence is admissible for purposes of establishing the will-makers intention under(4)

s. 54 How to Alter a Will(1) To make a valid alteration to a will the alteration must be made in the same way that the valid will is made under section 37(2) An alteration to a will is valid if the signature of the will-maker to the alteration, and the witnesses to that signature of the will-maker, are made

(a) in the margin or in some other part of the will opposite to or near to the alteration OR(b) at the end of or opposite to a memorandum referring to the alteration and written in some part of the will

(3) An alteration to a will that is not made by the will-maker in accordance with this section is ineffective

(a) except to invalidate a word or provision that the alteration makes illegible, unless the court reinstates the original word or provision under section 58; OR(b) unless the court orders the alteration to be effective under section 58

s. 58 Court Order Curing Deficiencies (“Dispensing Power”)(1) In this section “record” includes data that (a) is recorded or stored electronically, (b) can be read by a person, and (c) is capable of reproduction in a visible form

(2) On application, the court may make an order under (3) if the court determines that a record, document or writing or marking on a will or document represents

(a) the testamentary intentions of a deceased person,(b) the intention of a deceased person to revoke, alter or revive a will or testamentary disposition of the deceased person, OR(c) the intention of a deceased person to revoke, alter or revive a testamentary disposition contained in a document other than a will

(3) Even though the making, revocation, alteration or revival of a will does not comply with this Act, the court may order that a record or document or marking be fully effective as though it had been made

(a) as the will or part of the will of the deceased person,(b) as a revocation, alteration or revival of a will of the deceased person, OR(c) as the testamentary intention of the deceased person

(4) if an alteration to a will makes a word or provision illegible and the court is satisfied that the alteration was not made in accordance with this Act, the court may reinstate the original word or provision if there is evidence to establish what the original word/provision was

CASE LAW - RE TESTATOR’S SIGNATURE

Re Wagner (Sask. 1959) - signature on envelope valid b/c rep testator’s intentions Facts: Will signed at its beginning by the testator (i.e., not at end) and placed in an envelope with

words “Last Will & Testament of” and the testator signed his name (to complete the phrase) in the presence of the two witnesses.

Issue: Was the signature of the testator on the envelope intended by the testator to be his signature to the will or was it so signed for identification only? And if intended to be his signature to his will, does it make any difference that it was on a separate piece of paper to that containing the dispository clauses of the will?

Held: Will and envelope together constitute the deceased’s will. Signature on the envelope was accepted as signature to the testator’s will.

49

Analysis:o signature placed on beginning of document containing dispository clauses invalid, buto envelope was part of last will and testament and signature on envelope represented testator’s

intention to give effect to the entire will In re Mann Estate [1942] 2 AER 193, the judge held that a signature on the envelope

containing the will “was intended to be the signature to the will” and admitted the paper writing containing the dispository clauses and the envelope together as the last will and testament.

However, two years later in Goods of Bean [1944] 13 LPJ 65, involving a signature on an envelope containing the testamentary disposition, the judge said it was impossible to be satisfied that the deceased intended to give effect to the will by writing on the envelope as in all likelihood the deceased was under the impression that he had already executed the will.

Issue : was it necessary for the testator to sign the envelope for the purposes of identification? If not, it may serve as evidence that the signature was placed there for the purpose of authenticating the will

Here, identification was not necessary, so the signature must have been to give effect to the enclosed Will

Re Bradshaw Estate (NB, 1988) - marks can be valid signature if represents testamentary intention (animo testandi) Facts: Testator on his death bed was slightly propped up and the document was being held. He

signed his codicil (after pen was placed in his hand and he tried to sign) with two diagonal strokes and a further mark. He died shortly thereafter.

Issue: Whether or not this represented sufficient compliance with the applicable statute; i.e. do the marks constitute a signature?

Held: Codicil validly signed by testator - admitted to probate. Analysis: Testator clearly intended to sign but due to physical infirmity was only able to make the

markso In Re Kieran, [1933] I.R. 222, judge in similar circumstances asked: “What is the test I am to

apply? It is, in my opinion, whether I am satisfied that the two scrawls were placed there by the testator as a personal act or acknowledged as such by him, animo testandi, to verify the making of the will as his own act… I am satisfied that not only did the testator commence to make his signature animo testandi but continued in the same state of mind until the termination of the execution of his will…”

o In Re Chalcroft [1948] 1 All E.R. 700 the court upheld a partial signature which deceased was unable to complete: “… whether on all the facts I can draw the inference that what she wrote was intended by her to be the best that she could do by way of writing her name”

Comments:o as a rebuttal, argue that marks arose b/c testator changed mind in last minute, leaving marks

instead of signature

Re White (NS, 1948) - mark w/assistance is valid signature of T if T acquiesces and adopts Facts: Testator had a stroke and when it came time to sign his will he indicated that he would make a

mark but someone had to help him do it. Issue: Was there a requirement for a “direction” by the testator or is this simply a case where the

testator signed himself notwithstanding a bit of assistance? Held: Mark upheld as valid signature despite assistance from another – the same as if testator had

made the mark without any assistance. Not a case of “direction”. Analysis: In Wilson v. Beddard (1841) 59 E.R. 1041 the signature on a will was made by mark and a

guided hand. The judge held: “…it was necessary that the will should be signed by the testator, not with his name, for his mark was sufficient if made by his hand, though that hand might be guided by another person … If a testator, in making his mark, is assisted by some other person and acquiesces and adopts it; it is just the same as if he had made it without any assistance .”

50

Peden v. Abraham (BCSC, 1912) - mark w/ assistance invalid signature by T if he cannot acquiesce - w/o acquiescence there is a requirement for “direction” Facts: Testator did not sign the will nor did he express any desire to make a will. He was too weak to

sign or hold a pen but Dr. put his hand over the testator’s and traced his name on the will. After the signature the testator did not speak (his eyes were closed and he took no interest in the proceedings) so there was no “acknowledgement” of it before the witnesses.

Issue: Was the signature, “assisted” or “directed” in this fashion, sufficient for execution of the will? Held: Will not validly executed due to lack of sufficient “direction” by the testator. Analysis: While it may well be that you can “direct” another to sign for you in a way other than direct

communication … if a sign is sufficient, surely there must be some clear indication not only of a consent to the other’s signing it for him but a direction or request that he should do so. Nothing of this kind happened.

o (obiter in Re White (1948) - because that was not a case of “direction”): Where a signature is said to be by “direction” of the testator, the direction is as much a part of the signature as the making of the signature and the “direction” must be given in the presence of the witnesses or the signature “acknowledged” in the presence of the witnesses.

o In Wilson (referred to in Re White) judge says: “… the [statute] requires that a will should be signed by the testator or by some other person in his presence and by his direction; and I wish to know if a dumb man, who could not write, were to hold out his hand for some person to guide it, and were then to make his mark, whether that would not be sufficient signature of his will. In order to constitute a direction, it is not necessary that anything should be said

Re Fitzhaut Estate (BCSC, 1966) - person signing on behalf of T can sign their own name Facts: The testator did not sign his own will nor did anyone sign the testator’s name. Will was signed

on behalf of the testator using the name (signature) of the person signing on behalf of the testator, not the name of the testator.

Issue: Was will executed in accordance with the Wills Act? Held: Will properly executed. Analysis: s. 4(a) “signed in his name by some other person” in his presence and by his direction

o this does not require the signature to be in the testator’s name: see also In Goods of Clark (1839, Eng.)

Taylor v. Holt (Tennessee, 2003) - Facts: Testator prepared his will on his computer and each witness swore an affidavit acknowledging

that the testator was using his computer generated “stylized cursive signature”. Issue: Was this a valid signature? Held: signature is valid Analysis: Tennessee Code defined “signature” as including “any other symbol or methodology

executed or adopted by a party with the intention to authenticate a writing or record…” Comments:

o s. 2(4), BC Electronic Transaction Act, which provides a definition for “electronic signatures”, does not apply to wills.

Re Shafner (1956) - how to acknowledge T’s signature for witnesses Facts: Statute provides for a testator to “acknowledge” his previously made signature on a

testamentary document. Issue: what constitutes sufficient “acknowledgement”? Analysis: Jarman on Wills, 8th ed. sets out 4 propositions

o 1) Testator whether speechless or not may acknowledge his signature by gestures;o 2) There is no sufficient acknowledgement unless the witnesses either saw or might have

seen the signature;o 3) Express acknowledgement of signature itself is not required, a mere statement that the

51

paper is his will, or a direction to them to put their names under his, or even a request by the testator, or by some person in his presence, to sign the paper, is sufficient (e.g. see Ball v. Taylor and Daintreet v. Butcher & Fasculo)

o 4) When the signature is seen or expressly acknowledged, it is not material that the witnesses are not told that the instrument is a will.

Commentso Ideal acknowledgment would be, “this is my last will and testament, this is my signature, I

acknowledge this as being my signature, please sign directly below my signature”

CASE LAW - RE WITNESS SIGNATURES

Re Brown (Ont. Surr. Ct., 1954) - will invalid if one witness not present when T makes or acknowledges signature Facts: Only one witness (Mrs. V) originally present when testator signed the will. Both testator and

Mrs. V went to another room and are joined by second witness (Mrs. M) who had not been present when the testator and Mrs. V had signed the will. Testator acknowledges the document as her will and asks Mrs. M to sign as witness. Mrs. M complied and signed the will as the second witness.

Issue: Was the document properly witnessed so as to render it a valid will? Held: Will invalid. Failure of both witnesses to be present when testator acknowledged or made the

signature renders the will invalid. Analysis: the case law states as follows:

o (1) Witnesses must attest and subscribe the will in the presence of the testator; they need not do so in the presence of each other.

o (2) Testator’s signature must be made or acknowledged in the presence of two witnesses who must both be actually present at the same time, and both witnesses must attest and subscribe the will after the testator’s signature has been so made or acknowledged.

Re Wozciechowiecz (Alta. App. Div., 1931) - T has to be capable of seeing W sign will (i.e. curtains ok, facing wall is not) Facts: Witness to a will, Mr. N, was in a hospital bed between 12 and 21 feet away from the testator’s

bed. Testator was very ill and died about 1 hour after executing the will. To execute the will the testator had to be lifted or braced-up from his bed. Evidence suggests that the testator did not see either witness sign the will and was not told they were about to sign the will – he likely was not even aware that the witnesses had to sign the will. Testator was lying facing the wall when witnesses signed the will and was not asked to turn around.

Issue: was the will validly executed? Held: will not valid. Execution failed to duly comply w/ applicable statute. Analysis: testator has to be physically capable of seeing witnesses sign will

o Case law is fairly consistent in that when a will is held invalid due to improper execution, the witnesses or one of them was absent from the room in which the testator was, at they signed the will.

o In this case the witnesses were both in the room (a few feet away from the testator) and it was urged that since the testator could have seen the witnesses sign the legal position should be the same as if he did see them sign.

o In Tribe v. Tribe, 163 E.R. 1210, where it was impossible for the testator (in the same room as the witnesses) to have seen the witnesses sign the will, the judge said “what difference would there have been, in principle, if the witnesses had signed the will down stairs?”

o Tribe is cited for the following in Jarman on Wills (1930), 7th edition, Vol. 1, p. 109 and in Kingsford’s Canadian Law of Wills, (1913) p. 66: “If the testator be unable to move without assistance and have his face turned from the witnesses, so that it is out of his power to see them, if he so wished, the attestation will be insufficient.”

o Newton v. Clarke - curtains ok

52

o The Newton case was later distinguished from Tribe on the basis that in Newton the testator could have seen the witnesses sign if he chose to look, whereas in Tribe it was an impossibility.

o Brown v. Skirrow – is quoted by the judge as follows: “You cannot be a witness to an act that you are unconscious of; otherwise the thing might be done in a ball-room 100 feet long and with a number of people in the intervening space.”

CASE LAW - RE PRESUMPTION OF DUE EXECUTION

Ball v. Taylor (BCSC, 1999) - presumption of due execution applies - not rebuttable by defective memory Facts: Testator signed a will before his sister and brother-in-law who later advised that they could not

act as witnesses. Testator took signed will to work and got two co-workers to witness will. Neither witness was shown the will but both were present along with the testator at the same time and saw each other sign the will. Neither witness could recall if testator’s signature was already on the will.

Issue: Whether witnessing of the will was in compliance with the Wills Act. Held: Will is valid. Presumption of due execution applies. Analysis - acceptable acknowledgement - recall, T can say “this is my will”

o No question that testator and witnesses were all together at the same time, however, judge concluded that testator had signed the will prior to presenting himself to the witnesses so the issue became whether he acknowledged his signature in the presence of the two witnesses.

o “Presumption of due execution” arises whenever a will, regular on its face and apparently duly executed, is before the Court. In the absence of evidence to the contrary, there is an inference that there has been compliance with the requirements of the statute (Wills Act) with reference to execution.

o Here, the doctrine applies unless the defendants produce evidence to satisfy the court on the balance of the probabilities that there was an irregularity.

o Court will not allow a bad memory to upset an otherwise validly executed will (i.e. insufficient to rebut the presumption of due execution)

o It may not be essential that there be positive evidence that the testator’s signature was on the document before it was witnessed if the Court is satisfied that, in fact, it was there.

Bolton v. Tartaglia (BCSC, 2000) - doctrine of substantial compliance not part of law in BC Facts: Earlier case Krause v. Toni (1990 – BCSC) had suggested that the law allowed substantial

although not total compliance with the Wills Act. Held: doctrine not available in BC Comments

o Proposed B.C. Law Reform would grant judges “Dispensing Power” re formality in will executions

o S.58 WESA- gives discretion to judge to order a writing to be effective as a will provided the Court is satisfied writing embodies the intentions of the deceased. Such discretion will be available even where writing fails to meet some or all formal requirements for execution under the Wills Act.

CASE LAW - RE INCORPORATION BY REFERENCE

Re Jackson (BCSC, 1985) - 4-step test for incorp by ref Facts: July 8, 1975 will made no reference to a memo signed 8 days after the execution of the 1975

will. Memo is headed “Referred to in the last will and testament, dated 8th July, 1975… [re disposal of personal effects to take effect following death.] Memo is signed at the end by the testator and witnessed by two trust officers. Oct. 18, 1978 [new] will refers to “Memorandum made and signed by me and filed with this my will.” The only memo signed by the testator and filed with her will was the

53

1975 memo. Issue: Could the parol evidence be used to ascertain the instrument referred to in the testator’s will as

being “the memorandum made and signed by me and filed with this my will?” Was the 1975 memo effectively incorporated by reference into the 1978 will?

Held: Parol evidence could be used to ascertain the instrument referred to in the 1978 will. 1975 memo admitted to probate.

Analysis: o Requirements to permit the incorporation by reference into a will of a testamentary paper:

Document (a) must be in existence at time of execution of will; and (b) must be described as then existing; and (c) in such terms that it is capable of being ascertained; and (d) the will must not state that the document is not to form part of it.

o Allen v. Maddock (PC, 1858), allowed parol evidence to prove that an invalid will found following the death of the testator was the testamentary document referred to in a validly executed codicil.

o Distinction between admissibility of evidence to prove a testamentary paper and of evidence to explain its meaning.

o Parol evidence will not be allowed to explain expressions used in the will but will be allowed to explain intention declarations of the testator by word or in writing and other testimony of a similar character.

Re Currie (Ont. H.C.J., 1978) - two step test for incorp by ref Facts: Testator by codicil attempted to bequeath shares in an Alberta company to a trust referenced

in her codicil if the trust was in existence at the time of her death. Ontario Minister of Revenue attacked the codicil because the trust referred to in the codicil did not exist at the time of execution of the will and value of shares testator attempted to transfer were subject to Ontario succession duties.

Issue: Was the reference to a non-existing trust at the time of execution of the will a valid “incorporation by reference”.

Held: Invalid incorporation by reference. Analysis:

o If a document is to be incorporated into a will, two conditions must be satisfied: (1) Will must refer to some document then in existence; and (2) The document in question must be beyond doubt the document referred to in the

will.o Onus of proof is on the person seeking to have incorporated some other documents into a

will.

CASE LAW - RE ALTERATIONS

In the Estate of Oats (1946, UK) - onus of proof on propounder to show that alterations were written before execution Facts: Testator had a will prepared for her by her solicitor in 1939 which left the residue to her two

sisters. The testator executed a new will in 1941 which she prepared on her own. The revised will recognized the death of one of her sisters in 1940 by leaving the residue of her estate to her surviving sister. Two words “and personal” appeared between two lines (interlineation) of the 1941 will but they do not appear from the facts to have been witnessed (i.e. no initials of witnesses).

Issue: Were the words “and personal” written in the will before it was executed by the testator? Held: Onus of proof is on the propounder of the will to satisfy the court that the words “and personal”

were written in before the will was executed. The onus was satisfied and will with two words “and personal” admitted to probate.

Analysis

54

o propounder has onus of proof to show the alteration occurred before execution can adduce evidence of testator’s intentions underlying the alteration (e.g. testator declarations)

o e.g. here, the testator had intended to divide estate equally btw two sisters, but when one died, her revisions to the will were consistent w/ those intentions.

In the Goods of Itter (1950) - invalid alteration found not to obliterate provision in original will Facts: Testator made changes to her codicil by pasting slips of paper with writings and figures on

them over the original sections of her codicil on which appeared additional writings and figures. She initialed the changes but failed to have the changes witnessed. The original intentions and writings beneath the slips of paper could be deciphered by way of infra-red photography and those photos were produced at trial.

Issue: Do the original legatees under the codicil inherit according to the original codicil or the revisions, or do the slips of paper obliterate the original provisions so that they are no longer apparent due to the alteration and, therefore (by Statute) invalid provisions?

Arguments:o Plf: because of the infra-red photography the words and figures under the slips of paper were

“apparent” (i.e. not obliterated) within the meaning of the statute and should be followed. Held: Since alterations were not effective, the original legatees take in accordance with the terms of

the original codicil (b/c paper could be peeled off). Analysis

o The intention of the testator was to revoke the part of the bequests covered by the slips only if new bequests were effectively substituted. Her intention was not to revoke the bequests but to substitute different amounts. It follows that the slips may be removed from the document, if necessary, or any other means used to ascertain the writing which was on the document before the slips were pasted on

o The court rejected the Plf’s submission on the basis that “apparent” means “apparent on the face of the instrument itself”. If the words of the document can be read by looking at the document itself then it is apparent within the meaning of the statute – however elaborate may be the devices used to assist the eye… but if they can only be read by creating a new document (e.g. photograph) “I cannot find that the words are apparent. They may be discoverable; in this case they have been proved to be so; but that is not the word used in the section.”

CASE LAW - RE BENEFICIARIES AS WITNESSES

Re Cumming (Ont. HCJ, 1963) - direction for sale is a beneficial devise - thf witness invalidates gift Facts: The deceased’s will was prepared by and attested to by Mrs. E. Under the will the deceased’s

house was to be put in “perfect condition” (repair costs to be paid from estate) and then sold to Mr. E on very favourable terms ($30 per month, plus yearly taxes, for 3 years). Estimated value of house after repairs was $5,300 while the consideration to be paid for the house would be $1,080 plus yearly taxes.

Issue: Whether direction for the sale of the residence of deceased to Mr. E is void in whole or in part by reason of the fact that Mrs. E is an attesting witness to the will?

Held: Benefit (which Court held would clearly be conferred upon Mr. E by the terms of the sale under the will) is void by reason of the fact that Mrs. E is an attesting witness to the will contrary to the statute.

Analysis: Where a sale is directed by the will, the applicable provisions need to be reviewed to determine if they confer a beneficial interest to the proposed purchaser. The direction to sell the house here was a benefit conferred.

Commentso Note: not all cases of a bona fide sale would be affect by the statute in this way.

55

Re Ray’s Will Trusts (1936, Eng.) - to be invalid, gift must benefit witness personally (nuns) Facts: Testator was one of about 27 nuns in a convent. By her will she leaves her property “to the

person who, at the time of my death, shall be or shall act as the abbess [head nun] of the said convent, absolutely, and I appoint her executrix of my said will.” One of the witnesses was a nun who, although not abbess at the time of execution, was abbess at the time of the testator’s death. The other witness was also a nun and member of the convent.

Issue: Was the benefit conveyed by the will void because the nuns who witnessed the will were members of the convent that received the benefit or, alternatively, because a one of them became the trustee of the gift?

Held: Benefit conveyed by the will was upheld. Analysis:

o Abbess receives the gift as trustee for the purposes of the voluntary society (convent). Authorities provide that there is no objection to the validity of the gift arising from the fact that the trustee who receives the gift attested the will.

o However, the two nuns who witnessed the will are members of the society and will benefit from the gift – does the statute void the gift?

o Judge finds that the attesting witnesses do not obtain any beneficial legacy or interest under the will. Gift is a gift to the community, not a gift to the nuns in a personal capacity.

Comments:

Re Royce’s Will Trusts (Eng. 1959) - beneficial int conferred to witness must be evident at relevant time (i.e. attestation or death) to invalidate gift Facts: Following the death of a named trustee under the will, the surviving trustee, pursuant to a

power of appointment, appointed a solicitor (Mr. T) who witnessed the original will. The will provided for compensation to trustees for work done and included a charging clause enabling a solicitor-trustee to charge for legal work.

Issue: Can Mr. T benefit under the compensation and charging clauses in the will? Held: Mr. T is not precluded from benefiting under the compensation and charging clauses in the will if

he is otherwise entitled to such benefit. Analysis: Time is relevant; question to be posed is:

o “At the time of the attestation [or possibly some other relevant date – [i.e., date of death] is any beneficial interest given to the attesting witness under the instrument the execution of which he is going to attest?”

o e.g. here, Mr. T was not a beneficiary at time of attestation or death of testator - interest arose novus actus interveniens

Gurney v. Gurney (Eng. 1855) - to be invalid, must witness own gifts (e.g. will then codicil) Facts: Fry and Temple were not witnesses to the testator’s original will under which they were both

beneficiaries (Fry a legacy, Temple the residue) but they were the witnesses to two subsequent codicils which revoked some gifts, resulting in increases to the residue.

Issue: Does the fact that Fry and Temple witnessed the codicils act to void their benefits under the original will?

Held: Legacy to Fry was unaffected by the codicils which he witnessed, so it was upheld. While the residuary gift to Temple was affected by the codicils, it was upheld because that “gift” comes from the original will (which he did not witness) and not the codicil.

Analysis: The word “thereby” refers to the same testamentary instrument which is attested. It does not apply to the case where the legatee has not attested the instrument by which he takes his legacy but only where he has attested the same instrument under which he takes. Hence, the legacy to Fry was valid. Residuary gift to Temple is upheld because “the effect of the codicil does not amount to any beneficial devise … given to Temple.”

Anderson v. Anderson (Eng. 1869) - cure defect w/ codicil that has the effect of republishing will Facts: George Anderson was a beneficiary under a will which his wife witnessed. The testator later

made a codicil which was not witnessed by Mr. A’s wife.

56

Issue: Did the execution of the codicil by the testator with new witnesses cure the earlier defect so as to enable Mr. A to take the benefit under the original will?

Held: Yes, the codicil cures the earlier problem which arose due to Mr. A’s wife acting as a witness to the original will. Mr. A is entitled to receive the benefit under the will.

Analysis: Will and codicil together form ONE testamentary instrument. Object and effect of the codicil was to repeat and confirm the bequests contained in the will; operates to incorporate the will with the codicil. The duly executed codicil has the effect of republishing the will and making it a new and original disposition of the estate dealt with by the earlier will.

Comments:o Include broad provision in codicil to cure invalid gift - e.g. “I reconfirm all other provisions of

my will”, ORo “I am aware that my will is so erroneously attested as that X’s legacy will be forfeited, and to

prevent that I execute this codicil, and do thereby confirm my will.”

Jones v. Public Trustee (BCSC, 1982) - where witness’s share of residue invalidated, invalid share passes on intestacy not to other residue beneficiaries Facts: By will the testator gave specific gifts to Darlene Philips and her husband Steven Philips (both

of whom witnessed the execution of the will) and left the residue of his estate “evenly divided” among Darlene Philips, Vera Jones and Cheryl Jones. The specific gifts to Darlene and Steven Philips were void because they witnessed the will. The residual gift to Darlene Philips was also void for the same reason.

Issue: How is the residue to be distributed? Held: The will is first applied so that Darlene, Vera and Cheryl would each be allocated one-third and

then effect is given to the statute (s.11(1) of the Wills Act) so that the one-third that was allocated to Darlene Philips passes as on intestacy.

Analysis: The Court followed the decision of the BCSC decision in Re Fry (1913) in which two sisters were to share the residue equally with a gift over to their children in the even one or both had predeceased the testator. The gift to one of the sisters was void because her husband had witnessed the will but counsel for her children argued that they should receive their mother’s share of the residue as though she had predeceased the testator. The Court rejected the contention and held that there must be an intestacy as to the share of the sister whose husband witnessed.

The will would first be applied so that Darlene, Vera and Cheryl would be allocated one third each, and effect would then be given to s. 11 of the Wills Act, so that the one third allocated to Darlene passes as on intestacy

Hammond v. Hammond (BCSC, 1993) - crt has no discretionary relief Held: Example of case where court decided that it did not have the power or discretion to grant relief

to a beneficiary who had witnessed the will of the deceased.

57

EQUITABLE DOCTRINES

1. Introduction

Three Basic Types of Testamentary Gifts:

1. Devises – real property gifts2. Bequests – personal property gifts3. Legacies – cash or cash equivalent gifts

Major Categories of Testamentary Gifts

1. General and Pecuniary – gift of sum of money or annuity payable out of general assets (e.g. $1,000)

2. Demonstrative – gift which, by its terms, must be paid out of a specific source of funds (e.g. $1,000 from my stock fund)

3. Specific – gift of specific personal property which can only be satisfied by delivery of a particular thing (e.g. “my 1998 Red Honda Civic, or “all the cash, stocks and bonds out of my RBC account”)

4. Residuary – gift of all testator’s estate not otherwise disposed of by will (i.e. remaining estate after all debts, expenses, legacies, bequests and devises have been satisfied)

2. Equitable Doctrines

58

Ademption

Def’n = occurs where property which is gifted in a will, which existed when the will was made, is no longer the testator’s to give at the time of his/her death – The gift ‘adeems’ and the beneficiary receives nothing.

Triggers: conversion (includes “constructive conversion”: Re Sweeting; Re Dearden); property gifted away; substituting property with something of same kind

GR: the gift adeems and the beneficiary receives nothing (any proceeds go to residue) (Re Church)

Exceptions: o Tracing – where the will or codicil explicitly states

A T may direct in his will for the sale of property and then provide that certain cash gifts be made from the proceeds of the sale

Re Cudeck – The gift can only adeem if the T has taken steps which clearly indicate that he has appropriated the proceeds to himself.

Generally, ademption does not occur where the T’s intention was clearly set out in the will or codicil.

o Change in name and form – Where change to name or form only but specific property remains the same, it is not always the case that ademption applies (Trebett; Re Britt; Doyle)

e.g. shares in a co. that changes its name e.g. comingling of bonds in another account this allows some tracing (see p. 69)

o the rule of constructive conversion in Lawes v. Bennett has been rebutted (see below)Conversion

GR: exchange of property from real to personal or personal to real leads to ademptiono Where a T sells or otherwise disposes of property that was gifted in a will, the T has

effectively converted the original gift into other property and the gift therefore adeems

“constructive conversion” = conversion after testator’s death if option to purchase in a sales K is exercised (Lawes v. Bennett)

o But this rule can be excluded through T’s contrary intention – express or implied (Re Pyle)

e.g. republication of will by codicil (or new will) after the date of the sales contract granting an option to purchase beneficiary deemed to take entire interest, despite any subsequent conversion, thus avoiding ademption (Re Pyle)

Re Sweeting (Eng. 1988) – pre-executed K for land defeasible interest divests upon execution of K and subsequent conversion ademption1) Facts:

a) T made a will when he owned a house and a depot yard behind the house used for a haulage business. b) By his will he made a specific gift of the yard to his daughter, Cheryl, with a right-of-way granted to the

haulage business; with residue of his estate being divided equally among his 5 children. c) Three weeks prior to his death the testator entered into two contracts for the sale of the house and the depot

yard. He died before the completion of the transaction.2) Issue:

a) Whether the specific gifts to Cheryl and haulage business are adeemed by the sale contracts with the consequence that the sale price is added to the residue and does not form part of the specific devise?

3) Held:a) Contracts were carried out, property exchanged hands and conversion took place. Thus, the specific gifts

were adeemed. The proceeds of the sale of the yard pass as part of the testator’s residuary estate.4) Analysis

a) the gifts would have failed by ademption had the K been executed prior to T’s death

59

b) here, the daughter had a defeasible interest in the real property that divested on the execution of the K, at which time the real property was converted into personal property (cash proceeds)

c) any income from the real property (i.e. rents) would have been payable to the daughter prior to the divestment

Re Dearden Estate (Man. QB, 1987) – pre-execution K no conversion until option to purchase exercised – if K unenforceable, no ademption1) Facts:

a) D owned land upon which he operated a dry cleaning business. In Sept. 1970 he made a will leaving the land, business and equipment to his nephew. In Oct. 1985 D entered into a contract, subject to a large number of conditions, to sell land, business and equipment to P to be completed in Aug. 1986.

b) D died in June 1986 . c) in Sept. 1986 P took the position that the executors by their conduct had repudiated the K and that he

accepted the repudiation2) Issue:

a) Had the disposition in favour of the nephew been adeemed?3) Held:

a) The contract for the sale of the land, business and equipment was unenforceable by or against the testator and therefore the devise and bequest to the nephew is not adeemed.

4) Analysis:a) A contract for sale which is not enforceable does not affect an ademptionb) As per Lawes v. Bennett – where the T has entered into a K under which a person has an option of

purchasing the land, and exercises the option after T’s death. Constructive conversion only takes place where the option is exercised. It is exercise of the option, not the grant of the option that causes conversion

Re Pyle (Eng. 1985) – rule of constructive conversion can be excluded by T’s implied intention1) Facts:

a) T made his will in Mar. 1886 and left land to P and his two sons. b) In June 1890 T made a codicil to his will by which he made additional pecuniary legacies and confirmed his

will. On the same day he granted a 5 year lease of the land which lease contained an option to purchase. c) T died in Sept 1890 and the lessee exercised the option to purchase in 1893 - land was conveyed to him

2) Issue:a) Whether the proceeds of the sale were to be paid to P and his two sons or fell into the residue of T’s estate.

3) Held:a) No ademption b/c rule in Lawes v. Bennett does not apply – T must have known that property may be

converted if option to purchase was exercised, but he did not change the will – thus P entitled to the entire interest (real or personal)

4) Analysis:a) Because the lease and codicil were executed concurrently, it must have been present in T’s mind (when he

confirmed the will) that ademption was possible, thus the rule in Lawes v. Bennett does not applyb) The operation of the rule can be excluded by T’s intention – express or implied implied where the

republication of the will by codicil (or a new will) after the date of the sale contract granting the option does not change the bequest

Satisfaction

GR: If T makes a will leaving a legacy to a particular person and then makes an inter vivos gift to that person in the same amount, the gift is rebuttably presumed to revoke the legacy.

o Something given either in whole or in part as a substitute or equivalent for something else, and not something that may be construed as the identical thing convenanted to be done

o E.g. of presumption rebutted in Garnett; Lahay v. Brown (presumption of satisfaction of debt rebutted w/ clause directing trustee to pay all debts)

BUT note changes in Bill 4 (s.53) presumptions rooted in centuries old English social conventions continue to exist in the law of wills which, arguably, are no longer suitable in today’s society.

o Note: changes are subject to T’s contrary intention, which can be proven with extrinsic evidence (s.53(5))

60

o

Section Description Old CL Presumption / Comments

53(1)

The presumption of law that a gift by a testator made during the testator’s lifetime to a child of the testator or to a person to whom the testator stands in place of a parent is an advancement of a portion that is intended to revoke a gift in the testator’s will in favour of the child or person is abrogated and the gift in the will takes effect according to its terms.

Presumption against double portionsAssumes that parents intend to treat all of their children equally.When a will is made containing a gift to the T’s child, a presumption may arise that the (inter vivos) transfer was a “portion” that is intended to reduce the child’s entitlement under the will. The presumption only applies with respect to transfers intended to advance the child in life.

Comments: Designed to prevent financial abuse of parents by children. Not uncommon today to see large wealth transfers during lifetime of parent. Parents do not realize that what they do during their life can impact their will.

53(2)

The presumption of law that a legacy is revoked by a gift in the same amount as the legacy made by the testator during the testator’s lifetime is abrogated and the legacy takes effect according to its terms.

Presumption of satisfaction of legacy by gift during testator’s lifetimeIf T makes a will leaving a legacy to a particular person and then makes a gift to that person in the same amount, the gift is rebuttably presumed to revoke the legacy.

Creates uncertainty. T wishing an inter vivos gift to supplant the legacy should change the will.

53(3)

The presumption of law that a debt owed by a testator is satisfied by a legacy to the creditor equal to or greater than the debt is abrogated and the debt continues to be a claim against the testator’s estate.

Presumption of satisfaction of debtWhen a T has incurred a debt, and makes a testamentary disposition to the creditor in an amount equal to or greater than the debt, a presumption arises that the legacy is in satisfaction of the debt.

Creates uncertainty – if this is the T’s intention, it should be expressed in the will.

53(4)

The presumption of law that a binding promise by a person to make a gift to advance a child in life is satisfied to the extent of the benefit promised by a gift in the person’s will to the child is abrogated and the promise remains binding on the person and the person’s estate.

Presumption of satisfaction of portion debts by legaciesIf a parent enters into a formal obligation to advance a portion (“portion debt”) to a child and later makes a will leaving a legacy to the child but dies before the obligation is fulfilled, a presumption arises that the portion debt is satisfied by the legacy to the child. Thus the child is prevented from both taking under the will and enforcing the obligation. If the legacy is less than the portion, the portion debt is satisfied to the extent the amount of the legacy.

Creates uncertainty: Designed to prevent financial abuse of parents by children. Parents do not realize that what they do during their life can impact their will. Creates uncertainty.

53(5)The abrogation of a presumption set out in any of the subsections (1) to (4) is subject to a contrary intention of the testator and extrinsic evidence

Admissibility of extrinsic evidence to prove contrary intentThe abrogation of each of the four presumptions

61

may be admitted to prove the contrary intention. should be subject to the contrary intent of T and extrinsic evidence should be allowed to prove that intent.

This is an exception to the general provision in Bill 4 confining extrinsic evidence of testamentary intent to cases of demonstrated ambiguity.

Garnett v. Armstrong (NS. CA, 1977) – direction to pay all debts rebuts CL presumption of satisfaction of debt1) Facts:

a) P worked for the deceased for 20 years at low wages. Deceased promised to take care of P in his will. Will left property worth $58K to P while total estate was worth $516K.

b) At trial P failed in an action for breach of contract but was awarded $45K for quantum meruit (i.e., as much as P deserved) formal obligation / debt

2) Issue:a) Should the amount so awarded be deemed to be satisfied by the bequests given to P under the terms of the

will, or be paid out of the residue of the estate in addition to the bequests?3) Held:

a) No presumption arises that legacies were intended by testator to have been in satisfaction of the remuneration to which the plaintiff was entitled. Thus, P was entitled to be paid out of the residue, in addition to the specific bequests.

4) Analysis:a) By will testator directed executors to pay all his just debts … as soon as possible…b) In Lahay v. Brown, the following was approved:

A direction by will to pay debts alone is sufficient to rebut the presumption that a legacy of equal or greater amount than the debt is to be taken as satisfaction of the debt.”

Election

Def’n = where a lagatee or devisee under a will is put to the choice of accepting the beneficial interests offered by the donor in lieu of some estate which he is entitles, but taken from him by the terms of the will

o When the beneficiary’s interest in property is inconsistent with any provision of the will. The beneficiary cannot take both interests, but must make an election (Granot)

Trigger (Maw Estate): Doctrine of election applies to a will when two conditions are met:o (1) There must be a gift to a legatee; AND o (2) There must be a gift of that legatee’s own property to a third person (e.g. JT).

GR (Granot): o It applies only where the T clearly intended to dispose of another’s interest in property while

at the same time making a gift to that person under his will;o The intention must be made express or appear by necessary implication from Will terms;o One starts from the premise that the testator only intended to dispose of his or her own

property in the will; AND o General words in a will like “all my estate” or a residuary gift in general terms will not,

standing alone evince an intention to dispose of property or an interest in property which the testator was not entitled to dispose of in his will (see e.g. Granot)

Bill 4 s51(1): doctrine of election is abrogated – Subject to an intention appearing in a will that a gift is conditional on the disposition by the beneficiary of property owned by that beneficiary

o (a): A gift of property that the T does not own is void, ANDo (b): the rights of the beneficiary are not affected by the purported gift by the T of the property

owned by the beneficiary

62

Granot v. Hersen Estate (Ont. CA, 1999) – doctrine of election n/a – T did not intend to dispose of R’s int 1) Facts:

a) T was survived by daughter (L), son (R). T owned a condo in Switzerland worth btwn $600K and $800K. b) T’s will specified “I GIVE all my property wheresoever situate … to my trustees upon the following trust,

namely.” Will provides that R gets $600K and another of T’s properties, but makes no mention of condo, and leaves residue of estate to L.

c) Under Swiss property law, R entitled to ¼ interest in condo. By implication, under T’s will L received R’s interest in condo.

2) Issue:a) Was R required to make an election? (i.e., choose between his rights under T’s will and his right under

Swiss law to an interest in the condo?)3) Held:

a) Not proved that T intended to dispose of R’s ¼ interest in the Swiss condo in his will. The doctrine of election has no application and R is entitled to both the ¼ interest in the Swill condo and the Will gifts.

4) Analysis:a) Application of Doctrine of Election depends upon whether R’s ¼ interest in the condo is inconsistent with

any provision of the will. If there is an inconsistency, R cannot take both under the will and under Swiss law. If he elects to take the gifts under T’s will, he must forgo his rights to the condo. If he chooses to take his interest in the condo, his gifts under T’s will must be reduced by an amount equal to the value of his interest in the condo. If R’s interest in the condo does not create any inconsistency with the provisions under T’s will, then he is entitled to take both the gifts under T’s will and his interest in the condo.

b) R’s ¼ interest in the condo will be inconsistent with the terms of the will if T intended to give that interest in the condo to someone other than R. Such intention must be expressed on the face of the will or must arise by necessary implication from the text of the will taken as a whole.

c) Nothing on the face of the will suggested such an intent but the trial judge found that necessary implication of such intent arose when reading the opening words “I give all my property wheresoever situate”...

d) Canadian courts have shown a reluctance to invoke the election doctrine absent a clear intention of the face of the will to dispose of property in a manner inconsistent with the rights of another. That intention has been found either in the express language of the will read as a whole or where the clear intention of the testator could not be carried out if the property interest of the other person were given effect. Canadian courts have held that general language in the residuary clause standing alone will not demonstrate as an intention.

Maw Estate v. Bush (BCSC, 1999) – lacks express intention to put beneficiary to an election1) Facts:

a) Mr. and Mrs. M owned (as joint tenants) two properties – a residence and a vacation lot. b) Mrs. M died and her will divided her estate between Mr. M and their 3 daughters. Mrs. M’s will provided “In

the event that I own any house and property at the date of my death”, such properties shall be held for 10 years and then sold and distributed as per residual clause in my will.

c) Following Mrs. M’s death, Mr. M as the surviving joint tenant sold the vacation lot and keep the proceeds for himself and transferred the residence to his own name

2) Issue:a) Whether Mrs. M’s will specifically refers to either the residence or the vacation lot and, if so, does the

doctrine of election apply.3) Held:

a) Doctrine of election does not operate as there is nothing on the face of the will to show that Mrs. M was referring to the residence and vacation lot or was mistaken about her property rights (i.e., that she believed that she had rights that she did not have) and hence no evidence to suggest that she wanted to put Mr. M to an election. Nothing suggests that Mrs. M intended to deal with something that did not belong to her.

Abatement

Def’n = a proportional diminution or reduction of the pecuniary legacies, when the funds or assets out of which such legacies are payable are not sufficient to pay them in full

GR:o Pay debts

debts of testator (taxes, funeral expenses, admin costs, credit card debt, etc.) must be paid before any specific gifts are made

63

but note, charge on real property must be discharged using the proceeds from its sale before a net proceed can be delivered to a beneficiary (unless contrary intention)

o If after payment of debts, there are insufficient assets to pay out the gifts under the will, some or all the gifts will have to abate to make up the shortfall, in the following order:

residue gifts of personal property gifts of real property

LAPSES, ADEMPTION and DISCLAIMER

1. Lapses

Definition

The failure of a testamentary gift to vest because of the death of a beneficiary prior to the death of the testator. The gift “lapses” as a result.

General Rules

S.21 Wills Act: Property in a devise or bequest that fails or becomes void because the beneficiary predeceased the T, the gift is contrary to law or is otherwise incapable of taking effect, is to be included in the residuary devise or bequest, if any, contained in the will UNLESS contrary intention

For non-residuary gifts (i.e. specific bequest or devise) the gift will lapse and fall into the RESIDUE, unless

o a statutory anti-lapse provision applies (s. 29, Wills Act);o a contrary intention appears in a will (e.g. gift-over - “to his children”) (s. 21).;o it is a class gift; ORo the gift is a moral obligation (Re Mackie)

For residuary gifts the gift will lapse and pass on INTESTACY unless o a statutory anti-lapse provision applies (s. 29), o a contrary intention appears in a will (e.g. “to his children”) (Re Davison), o it is class gift (Re Stuart Estate; Milthrop), or

64

o the gift is a moral obligation – but unlikely b/c fixed debt (Re Mackie)

Cases: Re Stuart Estate (no class; residuary gifts pass on intestacy); Milthrop (no class), Re Hutton (class, despite naming – “type of class”); Re Peters (class, despite numbering)

Class Gift Exception

Def’n = a gift made to a group of beneficiaries that share a common characteristic (members of a family, sports team, etc.) is a “class gift”, as opposed to a “named gift”. A class gift allows for “members” to join (births) or leave (death) the group after execution of the will without requiring amendment to the Will.

GR: the beneficiaries of a class gift hold their interests as JT – right of survivorship means that any lapse passes to the remaining beneficiaries and does not go to the residue (if it’s a specific gift) or pass on intestacy (if it’s a residuary gift) (Re Peters Will)

TEST: for a “class gift” o testator looked to the “body as a whole” (Re Stuart Estate; Milthrop)o general description of class that bears some relationship to T (e.g. “my children”) (Re Brush,

cited in Milthrop)o no naming of beneficiaries(Milthrop, but see Re Hutton)o no number of beneficiaries (Milthrop, but see Re Peters)o no per stirpes – indicates that share was to pass to issue, not to the “class” (Milthrop)o “per capita” (Re Estate of Stella West)

Otherwise it is a “named gift”, or a “gift to individuals”, or a gift to “persona designata”

Moral Obligation Exception

Trigger: applies to the repayment of fixed debts of T or T’s relatives only

GR: where the legatee has predeceased T and the legacy was intended to fulfill a moral obligation (repayment of a fixed debt), the gift does not lapse but is instead paid to the legatee’s estate (Re Mackey) – because T intends to discharge the debt whether to the legatee or to the estate because “it is only morally proper to do so”

Statutory Anti-Lapse

Trigger: deceased beneficiary is a child or sibling of T that has a spouse or has left issue

s. 29, Wills Act:

UNLESS A CONTRARY INTENTION APPEARS IN THE WILL, if a person dies in the lifetime of a T (either before or after the will is made) and that person is a child or other issue or a sibling of T to whom either individually or as a member of a class, is gifted property or an interest in property not determinable4 at or before his or her death, and

(i) leaves issue alive at the death of the T, or(ii) leaves a spouse but no issue alive at the death of the T,

4 Requires the court to consider whether the proposed gift did end on or before the death of the proposed donee: Fossen Estate (Alta. QB)

65

the gift does not lapse , but takes effect as if it had been made directly to the deceased beneficiary’s issue, or to the deceased beneficiary’s spouse (if there are no issue)

Contrary intention to oust s. 29:

o Interpretation principles : use “arm chair” principle and look at the facts and circumstances that existed at the

time the will was executed – does a contrary intention arise? (Re Wudel – sis died) look at the whole will (Re Estate of Stella West) – give every word its natural and

ordinary meaning (Smith v. Chatham Home)

o Examples of contrary intention E.g. per capita (or “share and share alike”) suggests JT rather than statutory anti-

lapse (see Re Estate of Stella West) E.g. name a different substitute beneficiary (i.e. not issue or spouse) E.g. express words that anti-lapse only applies to beneficiaries that die after the will is

executed but before the T has died (see Re Wudel)

Bill 4 s.46 to replace s. 29 (see below)

General Anti-Lapse Provisions in a Will

If the anti-lapse provision is drafted broadly, it can apply to beneficiaries that die before the will is made (Re Davison)

If the anti-lapse provision fails (i.e. substituted beneficiary predeceases T) then the gift lapses (Re Cousen’s)

Anti-lapse provisions are not an attempt to exclude the rule of law of lapses, but indicates an intention by T to avoid the consequences of a lapse by substituting another legatee (Re Greenwood)

Bill 4 – *for non-class gifts

s. 46(1): subject to a contrary intention, if a gift in a will, including the residue, fails by reason of the death of the B in the lifetime of T , or for another reason is incapable of taking effect, the gift must be distributed according the following priorities:

o (a) to the alternative of B of the gift, if any, designated by T,whether the gift fails for a reason specifically contemplated by T or for any other reason;

o (b) to the issue of B (in accordance with s. 42(4)), where B is the brother, sister or issue of T;

o (c) to the surviving residuary Bs, if any, named in the will, in proportion to their interests

(2) If the gift fails by reason of B’s death in the lifetime of T, (1) applies whether the death occurred before or after the will was made

s. 42(4): A gift of property to a class of persons that:o (a) is described as a will-maker’s “issue” or “descendants” or by similar word; ANDo (b) encompasses more than one generation of beneficiaries

Must be distributed as if it were part of an intestate estate to be distributed to descendants

*NOTE:

66

s. 46(1) does not apply to class gifts – unlike s. 29 of current Wills Act; this is because a class gift implies a contrary intent that the remaining members of the class should be alternate B’s rather than a B designated by the Act.

s. 46(1) assumes that if a gift fails for a reason not contemplated by T, the T would have intended the gift to go to the alternative B rather than fall into residue. This is a change from the current law that provides for gift to pass under a residuary clause or else be divided as on intestacy in any contingency other than one specified by T.

A further change from the existing law concerns the treatment of failed residuary gifts. Under present law, a failed gift of residue passes on intestacy. Under s. 46(1) a failed gift of residue would be treated like other failed gifts and go to the alternate beneficiaries listed there.

Cases

Re Stuart Estate (BCSC, 1964) – share of a residuary non-class gift that lapses passes on intestacy1) Facts:

a) T’s will provided for the residue to be “equally divided among” 13 listed individuals – one of whom, a niece named AP, predeceased T.

2) Issue:a) How is AP’s share of the residue to be distributed?

3) Held:a) The gift to AP is not a “Class Gift”. b) Since T’s will is silent on what is to happen to AP’s share of the residue and because the Wills Act does not

provide for the disposition of lapsed residuary devises or bequests, AP’s interest in the residue of T’s estate passes as on an intestacy.

4) Analysis:a) Not a class gift because the testator did not look “to the body as a whole” – instead he looked at the

members constituting the list as individuals

Milthrop v. Milthrop (BCSC, 2000) - share of a residuary non-class gift that lapses passes on intestacy1) Facts:

a) Application for the interpretation of the residuary clause of a willb) T and her husband (predeceased) both had children from a previous marriage and the residuary clause

provided for the residue to be divided among her two named children and her husband’s six named children in equal shares per stirpes. One of the husband’s children (Richard) predeceased T and left no issue.

2) Issue:a) Does the share of the residue that Richard would have received had he survived T, fall into and form part of

the residue to be divided among the persons entitled to receive the residue?3) Held:

a) Richard’s share is to pass on intestacy because he had no issue (statutory anti-lapse n/a).b) This did not amount to a “class gift ” and there is no wording to indicate that Richard’s failed gift was to be

redistributed among the other named children.4) Analysis:

a) T names the beneficiaries an provided per stirpes suggests individual gift or named gift

Re Hutton (Ont. HC, 1982) – class gift despite naming and right of representation1) Facts:

a) T’s will provided for the residue to be paid in equal shares among his brothers and sisters, Alex, Arch, Myrtle and Jean; provided that if any are not living at his death but leave children living, that child or children are to take the share which his or her parent would have taken if alive. Elsewhere in the will there were specific bequests to these 4 beneficiaries.

b) All beneficiaries were alive at the time the will was made but Arch died on Mar. 19/79 and Alex died on Apr. 2/79 (both brothers dead).

c) T made a codicil on Apr. 28/79 removing Alex as executor and appointing another person and confirming

67

the will in all other respects. At the time of the codicil Alex and Arch were both dead but both had left a child or children living.

d) On June 25/79 Arch’s only child, PW, died. T died on Aug. 19/79 leaving his two sisters, the children of Alex, the three grandchildren of Arch (PW’s children) and Arch’s widow alive.

2) Issue:a) Whether the ¼ share of the residue left to Arch, or in the event of his death to his children, should pass to

the other 3 named residuary beneficiaries, or whether it should go to Arch’s widow and/or grandchildren, or whether it should pass on intestacy

3) Held:a) In the context of the whole of the will, T’s brothers and sisters and nieces and nephews formed a type of

class and being a type of class the residue is to be divided among the survivors of that group. b) Hence, the residue is to be divided into three parts – one for Myrtle, one for Jean and one to be divided

among Alex’s children.4) Analysis:

a) the Court reviewed the entire will and concluded that T’s intention was that he had covered all of his assets and any undisposed assets were to form the residue to be divided among those named brothers and sisters (and, if dead, their kids) as a type of class.

Re Peters Will (Man QB, 1967) – class gift despite numbering 1) Facts:

a) T left the residue of her estate to “my three stepchildren” one of which, ES, predeceased her.2) Issue:

a) Was this a class gift?3) Held:

a) Yes – class gift.b) Residue to be divided between 2 surviving stepchildren. In absence of any words of severance or

demarcation in the gift of the residue, the clause created a joint tenancy and with death of ES, residue is divided between the surviving joint tenants.

Re Wudel (Alta QB, 1982) – contrary intention to oust statutory anti-lapse provision1) Facts:

a) T died a widow with one of four daughters, MB, predeceasing her. She had four sons survive her. All surviving children were adults.

b) MB died on Oct. 16/61 but was survived by 4 children, all of whom were alive at T’s death. c) T’s will, made on Aug. 10/77, provided:

“If any of my sons and daughters should die after the date of my [will] but before my death, then I direct that the portion that that child was entitled to should be divided equally among his or her children. Should any of my children die as aforesaid leaving no children then the portion that that child was entitled to shall be divided between my children alive at the time of my death.”

2) Issue:a) Whether statutory anti-lapse provisions apply to MB or whether T’s will demonstrated a “contrary intention”

which ousted the application of the anti-lapse provisions.3) Held

a) T demonstrated a contrary intention in her will and intended to oust the application of the statutory anti-lapse 4) Analysis:

a) In construing a will the Court must read the will with the same knowledge of the surrounding facts and circumstances known to the T at the time she executed her will. This is the “armchair principle” which permits the Court to look only at evidence as to the facts and circumstances as they existed at the time of the execution of the will and the Court is barred from receiving evidence as to subsequent events.

b) when the will was drawn, it must be accepted that T knew that her daughter, MB, had predeceased her, and thus drafted the will to prevent the operation of the statutory anti-lapse provision for MB

Re Estate of Stella West (BCSC, 1999) “per capita” = contrary intention to oust statutory anti-lapse provision1) Facts:

a) T died leaving a son, K, and 3 grandchildren alive – 1 being K’s daughter and 2 belonging to T’s daughter, D, who had predeceased her. The will created a trust for each grandchild and paid the residue to D and K “in equal shares per capita for their sole use and benefit absolutely.”

2) Issue:a) Whether s. 29(1) applies such that D’s children take her share of the residue or whether T’s will

demonstrates a contrary intention such that K takes the entire residue.3) Held:

68

a) K takes the entire residue. b) The words “per capita” had the effect of creating a JT and hence a clear intention by T to oust the

application of s. 29(1). The intention of T to create a joint tenancy in the residue of her estate was clear.4) Analysis:

a) To discover T’s true intention and to determine whether it is contrary to the effect of s. 29, you must look at the whole of the will:

b) In construing a will the duty of the Court is to ascertain the intention of the T which intention is to be collected from the whole will taken together. Every word is to be given its natural and ordinary meaning and, if technical words are used, they are to be construed in their technical sense, unless from a consideration of the whole will it is evident that the T intended otherwise. (Smith v. Chatham Home of the Friendless (SCC)

Re Davison (NSTD, 1979) – broad anti-lapse provision1) Facts:

a) T had 14 children – 4 of which were dead when the will was made but 2 of the 4 were married and left issue which survived T along with the other 10 of T’s children. Residue clause provided:

“All the rest and residue of my Estate … I give, devise and bequeath to my executrix to divide among my children, share and share alike. IN CASE of the death of any of my children having married and left issue them surviving … I direct that the issue of the said deceased child or children shall receive and take the parents share in my estate by right of representation.”

2) Issue:a) Whether residue is to be divided into tenths or twelfths – i.e. whether children of a person who was dead at

the date of the will are entitled to share in the residue of the estate.3) Held:

a) Residue is to be divided into twelfths with 10 twelfths to go to T’s surviving children and the remaining 2 1-twelfth shares to be divided, respectively, among the children of the two children of T who predeceased T and left issue alive at T’s death.

4) Analysis:a) When a testator directs that issue shall stand in the place of, or be substituted for, a deceased child, and

take the share which their parent would have taken if living, he may intend such substitution to apply only to the case of a child dying subsequently to the date of his will and before the time of his own death, or he may mean it to extend also to the case of a child who was already dead at the date of the will.

b) But if he uses language so wide and general as to be no less applicable to a predeceased child than to a child living at the date of the will, then the direction as to such substitution must be held to embrace both

Re Cousen’s Will Trusts (Eng. 1937) – if anti-lapse provision fails, the gift lapses1) Facts:

a) T left a share of the residue to A if she was living at the date of his death, provided that if she died in his lifetime, before or after the making of his will, and had issue who were alive at his death, such share “shall be held in trust … by her personal representatives as part of her personal estate.” A predeceased T but was survived by a daughter, J, who survived the T. A’s husband, W, was her personal representative and entitled beneficially to her estate. W predeceased T.

2) Issue:a) Whether gift of residue A is to be treated as part of A’s estate or does it simply become undisposed residue

of T’s estate.3) Held:

a) As a matter of proper construction of T’s will, gift to A’s alternate (W) fails because he predeceased T and, hence, gift passes to T’s next of kin as on an intestacy.

4) Analysis:a) In no sense does the share of the residue which A would have taken if alive become part of her estate; it is

part of T’s estate given to A’s legal personal representatives to be held by them upon the same trusts as A’s property was held.

b) W did not survive T and since there is nothing in T’s will which provides against the lapse which must result if the person who is substituted for A as legatee predeceases T, it must follow that that portion of T’s estate has not been effectively disposed of.

Re Greenwood (Eng. 1912) – anti-lapse provision successful in avoiding consequences of a lapse1) Facts:

a) T’s will provided for residue to be divided among her two brothers, a niece and a nephew with a provision if any of them predeceased her as follows:

“If any of them … shall die in my lifetime leaving issue, and any of such issue shall be living at my death,

69

the benefits hereinbefore given to him or her so dying shall not lapse but shall take effect as if his or her death had happened immediately after mine.”

2) Issue:a) What is the proper construction to be given to T’s will?

3) Held:a) There is no intestacy but a good substitutionary gift in favour of the person or persons who would have taken

if the legatee had survived the testatrix, and died immediately afterwards.

70

2. Ademption

GR: o when a specific gift is not part of T’s estate at his or her death (whether T disposed of it or

POA did), then the gift fails and the B has no claim to an equivalent benefit under the will (Re Church)

Wills Acto S.19: where a specific gift adeems, the rest of the will is operationalo S.20: (1) If a will is revived or re-executed by codicil, then the will is deemed to have been

made at the time it was revived or re-executedo (2): a will speaks and takes effect as if it had been made immediately before the death of T

Policy: T should be free to deal with property during his or her lifetime and to change testamentary plans. If gift is not part of T’s estate, it’s assumed he or she revoked the gift.

Exception: a specific legacy will not adeem where the specific property has changed only in name and form, but remains the same in substance (Trebett)

it is a question of fact - whether the change is in name and form only tracing property will not change in substance if it has been commingled

momentarily or in a de minimis manner (Re Cudeck)

Bill 4:

s. 48: prevents the intention to revoke the gift from being imputed to T when the disposition is carried out by a property guardian, representative or attorney acting under an enduring POA at a time when T lacks legal capacity.

S. 48(2): unless contrary intention, if property is disposed of by the will-maker’s nominee, the B is entitled to receive from the estate an amount equivalent to the proceeds as if the will provided for it

o THUS, B named in the will to receive the missing item will be able to claim an amount equivalent to the proceeds from the disposition of the asset against the estate.

S.48(3): (2) does not operate if the nominee is simply carrying out the will-maker’s validly made instructions when he/she had the legal capacity to give such instructions

Rationale : if disposition is done by a person managing T’s affairs when T lacks capacity, then the theoretical basis for ademption (i.e., T is free to deal with own property prior to death) does not exist when someone else disposes of property for T.

Church v. Hill (SCC, 1923) – conversion – ademption proceeds from mortgage go into residue1) Facts:

a) T died and his will divided his property among 4 children – youngest daughter (M) gets specific real property (house) and other 3 children share residue equally. House is sold (with vendor take-back mortgage) prior to T’s death.

2) Issue:a) Can M claim the house or, alternatively, the proceeds from the sale of the house?

3) Held:a) M’s gift fails because the subject matter of the gift no longer existed in T’s estate at T’s death and proceeds

(due to Conversion) go into the residue of the estate to be divided among other 3 children.4) Analysis:

a) Notwithstanding the mortgage, the purchaser of the house immediately acquired an equitable interest in the

71

property.b) What the T devised to M was the property itself; what he had at death was the right to the price and not the

property. The devise fails because the subject matter of the devise no longer existed at death.

Trebett v. Arlotti-Wood (BCCA, 2004) – specific legacy + changed in substance = ademption1) Facts:

a) T’s will provided for any cash , stocks and bonds in his account no. xxxx with RBC, to be distributed. b) The value of assets in the account at the time of the making of the will was $110K. T transferred his assets

from RBC to Midland Walwyn (MW) in Nanaimo 6 weeks after making the will and at that time the assets were $66K cash and other securities. Many of the securities in the MW account after the transfer were the same as in the RBC account. At death, the value of the MW was down to $60K.

2) Issue:a) Whether the gift of assets in the RBC account had been adeemed?

3) Held:a) This was a specific legacy and, except to the extent that the particular securities which were in the RBC

account at the time of transfer can be identified in T’s MW account at the date of death, the legacy in T’s will adeems.

b) BUT, beneficiaries are allowed to pursue limited “tracing” (i.e. at time of T’s death) and submit more complete evidence to Court, failing which, the entire gift fails.

4) Analysis:a) Demonstrative legacies by their nature are a general legacy, usually pecuniary, directed to be satisfied

primarily (but not solely) out of a specified fund or a specified part of the T’s property. E.G. “$100 to be raised out of the sale of my Surrey properties” – a gift of this sort will not be adeemed even if the proceeds of the Surrey properties cease to exist or to be identifiable prior to the testator’s death.

b) However, if the will shows that the legacy is to be paid out of a particular fund AND ONLY OUT OF THAT FUND, it is then a specific legacy and is subject to ademption.

c) The tracing here was more than limited, such that the specific legacy changed in substance leading to its ademption

72

3. Disclaimer

Defn: occurs where B to a gift, pursuant to a will or following intestacy, chooses not to accept gift due to:

o Unacceptable conditions or onerous duties attached to the gift, set out in the Will by To Insolvency of B which might lead to creditors seizing the gifto B is precluded by statute or otherwise from accepting the gift; ORo Other reasons (taxes) personal to B

Rules:o B may disclaim orally, by conduct or writing so long as gift has not been unequivocally acceptedo Disclaimer of one gift does not preclude B from accepting another gift under that same will, unless

the two gifts are somehow bound togethero Disclaimed gifts are void, and added to the residue of the estate (Re Grund Estate)

o If it’s a residual gift, then it passes on intestacy – augments the share of the other next-of-kino T may avoid this if they provide for substitute B in case of disclaimer

Acceleration via Disclaimer:o B can accelerate a successive gift by disclaiming their interest in the gift (Estate of Creighton)

o The position now is that on a premature determination, the subsequent interests are accelerated unless there is an intention to the contrary

In the Estate of Brannan, 1991 BCCA: Disclaimer may accelerate contingent giftsFacts:

o T provided for life estate to husband with sons receiving residue of estate upon husband’s death or upon his remarriage. Husband disclaimed life estate to accelerate gift to sons

Issue:o Does the disclaimer accelerate the gift to the sons and vest the residue absolutely in them, or do

they take only if they survive their father?Held:

o Disclaimer accelerated the gift of residue to the sonsAnalysis:

o True intention of will – was to delay the distribution of residue so long as father was alive and not remarried – hence, distribution of the residue was to occur when the husband’s interest terminated

Giraudias v. Giroday Trust, 1998 BCSC: Will must provide for termination to allow accellerationFacts:

o Life tenant of a trust wished to disclaim her right to revenue from the life interest in hopes of terminating her interest in the trust and thereby vest the residual Bs with an interest in the trusto Income tax concerns

Issue:o If the life tenant disclaims interest does the trust estate vest immediately through acceleration?

Held:o Does not vest immediately pursuant to acceleration

Analysis:o Brannan’s case the will provided for a the husband to unilaterally terminate life interest in the

estate and cause distribution, here, no such intention is present. Death only to terminate.

Re the Estate of Creighton, 2006 BCSC: Acceleration through disclaimer is allowed even where not explicitly contemplated by the TFacts:

o T’s children wished to disclaim their respective life interests in the residue of father’s estate so as

73

to vest to their children an indefeasible interest in the residue of the estateIssue:

o Whether acceleration was allowed for the proposed vestingHeld:

o Children allowed to disclaim their respective interests – resulting in immediate vesting to their kidsAnalysis:

o Brannan: “to limit acceleration only to cases where the testator specifically contemplated that a B would refuse a gift or to exclude acceleration in any case where there is the contingency of survivorship, would be contrary to the weight of authority and to the very concept of acceleration

o Further: “…whether or not a gift is accelerated is a matter of intention…the position now is that on a premature determination of a particular interest, the subsequent interests are accelerated unless there is an intention to the contrary” – here, no intention to contrary

Re Grund Estate, 1998 BCSC: Disclaimed gifts pass to residue clear of any conditionsFacts:

o T’s will left house to two of her four children, on condition that they pay ½ the fair market value to the other two children; residue divided amongst the four

Issue:o If first two disclaim and receive a share of the house as part of the residue, would they have to

compensate the other two for the lost value they would receive? (sold for less than market value?)Held:

o The disclaimed gift forms part of the residue of the estate, clear of the conditions contained in WillAnalysis:

o Was not interpreted to be a charge on the house; T’s intention was that first two only pay if they accepted the house, which they did not

o A beneficiary need not accept a testamentary gift, and if he declines it, the gift falls into residue

74

REVOCATION AND REVIVAL OF WILLS

1. Revocation

s. 14(1) –General revocation - a will or part of a will is revoked only by

o (a) marriage of T (subject to s. 15 declaration) Note: abolished in Bill 4 – see below

o (b) another will made under the Wills Act see Lawer – but revocation clause in subsequent instrument ignored if does not

represent T’s intentions (see test on p. 77)

o (c) a writing declaring an intention to revoke made in accordance with the Wills Act

o (d) burning, tearing or destruction, etc. of the will by T or some person in T’s presence and by T’s direction with the intention of revoking it

If T had capacity following execution of will (Re Broome), presumption of animus revocandi created when a will if destroyed, torn or lost

Propounder of will must consider circs surrounding tearing, destruction or loosing of the will to rebut presumption (Re Norris – e.g. of successful rebuttal)

For destroyed wills T’s intention to revoke must be demonstrated! entire will does not have to be destroyed – just need destruction sufficient to

render a material part of it no longer apparent (i.e. can’t be seen w/ magnifying glass, and no physical interference to have clearer view) - e.g. scoring signature, cutting out signature (Re Adams; Hobbs)

For lost wills Rebuttable presumption that where a will which is last traced to the

possession of the T and is last known to be there is not available upon T’s death, it is presumed that the will was revoked by the T animo revocandi (with the necessary intention to revoke the will)

Strength of presumption depends on T’s custody over the will – “tight” or “loose” custody (Sugden)

o “loose” weaker presumption of intention to revoke (likely stolen) Presumption can be rebutted using extrinsic evidence – i.e. parol evidence of

the contents of the lost instrument (Sugden; Lefebvre)o parol evidence should be corroborated if possible

If presumption rebutted and substantial parts of the will’s contents are recovered from parol evidence, probate should be granted (Sugden; Lefebvre)

BUT, if T loses capacity after execution of will, RO arises – i.e. burden of proof lies on party alleging revocation (Re Broome)

3 Items to be Proved on BoP, re validity of lost wills – Lefebvre 1. Proof of due execution of Will 2. Proof of contents of will; and 3. Proof which rebuts presumption of revocation with animo revocandi

s. 14(2) – a will is not revoked by a presumption of an intention to revoke based on a change in circumstances

o e.g. if T provides a gift for his CL spouse, where that relationship ends, the gift is not revoked based on a presumption that T intended to revoke the gift

75

o e.g. if the description of B is in general terms (“to my brother’s wife”) and they subsequently divorce, the wife at the time of making the will is entitled to the gift, even if the brother remarried (unless contrary intention can be found in will)

s. 15 – Declaration of marriage – a will is NOT revoked by the marriage of T if

o (a) there is a declaration in the will that it is made in the contemplation of the marriage, or

[Case law: Re Pluto (must be express, not implied or inferred from will); Re Ratzlaff (may construe declaration having regard to all surrounding circs better approach given principles governing interpretation of wills)]

o (b) will is made in exercise of a power of appointment of property which would not in default of the appointment pass to the heir, executor or administrator of the testator or to the persons entitled to the estate of the testator if the person died intestate

s. 16 – Revocation of gift on dissolution of marriage

o (2) unless a contrary intention appears, if a will (a) gives an interest in property to a spouse, (b) appoints a spouse to be executor or trustee (c) confers a general or special power of appointment on the spouse

And after making the will and before T’s death

(d) a judicial separation has been ordered re marriage (e) the marriage is terminated by the divorce, or (f) the marriage is found to be void or declared a nullity by a court

Then the gift, appointment or power of appointment is revoked and the will takes effect as if the spouse had predeceased T.

BC Family Relations Act - Part 5: Matrimonial Property:

S. 56(1) – Each spouse is entitled to an interest in each family asset on or after march 31, 1979 wheno (a) a separation agreement,o (b) a declaratory judgement under s.57,o (c) an order for dissolution of marriage or judicial separation, ORo (d) an order declaring the marriage null and voido Respecting the marriage is first made.

(2) – the interest under (1) is an undivided half interest in the family asset as a tenant in common (3) – an interest under (1) is subject to

o (a) an order under this Part or Part 6, oro (b) a marriage agreement or a separation agreement.

(4) – this section applies to a marriage entered into before or after March 31, 1979

Declaratory judgement S. 57 – On application by 2 spouses married to each other or by one of the spouses, the Supreme

Court may make a declaratory judgement that the spouses have no reasonable prospect of reconciliation with each other.

BILL 4:

76

BCLI Report recommends abolition of revocation of will on marriage of T and makes a number of recommendations for changes on the effect of “marriage breakdown” on a will.

Rationale:o The rue is archaico Provision is not widely known - results in carefully planned estates inadvertently overturnedo Other estate planning instruments (i.e. RRSP and insurance designations) are not revoked

by marriageo CL marriages would not covered by s. 14 (results in uneven application of law)o FRA already affords protection to spouses during T’s lifetime, and WVA already applies to

dependents (spouses and children)

s. 55(1) – Will or part thereof is only revoked:

o (a) By another will made by T as per Act;o (b) By written declaration by T that revokes all or part – made as per s.37o (c) By T burning, tearing or destroying all or part of the will with the intention of revokingo (d) By Court order under s.58 (residual discretion) if the court determines that the

consequence of the act of burning, tearing or destroying the will in some manner is apparent on the face of the will and the T intended to revoke all or party of the will.

s. 55(2) – Will not revoked in whole or in part by presuming an intention to revoke it because of change in circumstances

s. 56 (1 & 2) – Subject to contrary intention, if To (a) makes a gif; (b) appoints as executor or trustee, OR (c) confer a power of appointmento on a person who (d) was a spouse of T, OR (e) became T’s spouseo and after will is made and before T’s death, the T and his spouse cease to be spouses, then

the gift, appointment or power of appointment is revoked and the will takes effect as if the spouse had predeceased the T

s. 56 (3) – supsequent reconciliation of T and spouse does not affect the operation of (1) s. 56 (4) – relevant time for determining whether person was a spouse for (2)(d) is the time the will is

made and for (2)(e) is any time after the will is made but before the couple cease to be spouses

Revocation by Marriage – insufficient declarations

Re Pluto Estate (BCSC, 1969) – insufficient declaration of marriage – will is revoked1) Facts:

a) T’s will date April 15/64 did not contain an express declaration that it was made in contemplation of a particular marriage, it says: “My house… is to be given to my wife, Mary Beatrice Pluto for her sole use absolutely… In the event my wife shall predecease me… house …shall revert to my estate…” T married Mary Beatrice Marriott on April 16/64.

2) Issue:a) Was T’s will dated April 15/64 revoked under Wills Act by his marriage subsequent to the making of the will?

3) Held:a) Having considered the will itself to determine whether it contains anything that would comply with the

declaration required by the Wills Act, the Court concluded that the passages of the will did not constitute the declaration required and the will was revoked by the subsequent marriage.

4) Analysis:a) More is required than language from which an inference may be drawn , to avoid revocation of the will

by a subsequent marriage of the testator5) Comments:

a) Is this being too nitpicky?

77

Re Ratzlaff Estate (Sask. CA, 2002) – sufficient declaration of marriage – will is valid1) Facts:

a) May 25 , 2000, was set as a wedding date for T and his Mexican bride-to-be (Antonia Ramos). A ring was purchased and all plans were made.

b) In addition, T visited his solicitor and financial advisor to prepare his affairs and revoked a former will and created a new will on Feb. 23, 2000 which provided, in part:

“If at the time of my death I am legally married, then in such case I specifically bequeath to my wife the sum of $10,000 for each year or a portion thereof that we have cohabited together as man and wife…”

2) Issue:a) Was T’s will revoked by his subsequent marriage given the lack of an express declaration in the will that it

was made in contemplation of marriage?3) Held:

a) Taking all the surrounding evidence into account and references in the new will to changed matrimonial status, the inescapable conclusion is that the will was made in contemplation of T’s marriage to Antonia Ramos and all the statutory requirements were met.

4) Analysis:a) The wording of the will must be construed having regard to those surrounding circumstances to aid and

explain what is written in the will, not to explain the intent or what he intended to write.b) Having regard to all surrounding circumstances it is clear that the marriage of the T referred to in the will

was the marriage to Antonia Ramos given that: i) he was unmarried at the time he made the will; ii) he left almost immediately after executing the will for Mexico where had made arrangements to marry

Antonia Ramos; iii) he intended to marry Antonia Ramos within a short period of time after the making of his will, andiv) he intended to benefit her in his will.

Revocation by Subsequent Instrument – Revocation Clause

Re Lawer (Sask. Surr. Ct., 1986) – ignoring a revocation clause1) Facts

a) T created two wills – Oct. 29/62 and May 23/78. b) The 1st will was contained in a handwritten document. c) The 2nd will, a printed stationery will form, says: “I revoke all former Wills and Testamentary Dispositions by

me at any time heretofore made and declare this to be and contain my last Will and Testament.”2) Issue

a) Can both wills be admitted to Probate after deletion of the revocation clause in the 2nd will?3) Held

a) Both wills are to be admitted to probate deleting from the second will the revocation clause. Even disregarding declarations made by the T, the Court was satisfied on reading both wills and having regard to the surrounding circumstances that T did not intend to revoke the first will.

4) Analysisa) General principles governing revocation clauses

i) Heavy burden of proof on those attempting to eliminate revocation clause where document is complete on its face

ii) *Revocation clause may be ignored if it does not reflect the trust intentions of T iii) Mere mistake by T in inserting a revocation clause is not sufficient in itself in granting probate to ignore

a revocation clauseiv) Indirect evidence of the circumstances surrounding the creation of the document alleging to revoke a

prior will may be admissible to determine whether T intended to revoke his will

Destruction and Lost Wills

Re Norris (BCSC, 1946) – will not revoked – tearing into pieces insufficient to prove T’s intent to revoke1) Facts:

a) T and B lived together as husband and wife. T suffered from “hallucinations and recurring delusions.” T made will and told Miss H where he kept it and even gave her a key and showed her the envelope inside a black box in his locked shirt drawer. When T died, Miss H found the will had been torn into a number of pieces but could be easily read. The will left most of T’s property to Miss H.

78

2) Issue:a) Was will revoked by operation of the Wills Act (BC)?

3) Helda) If will was torn by T it was done unintentionally or in a moment of mental confusion with no intention of

revocation. Hence, will was not revoked.4) Analysis:

a) Ms. H, as propounder of will had to rebut presumption if animus revocandi by using evidence of the circumstances surrounding the destructioni) The pieces of the torn will were carefully put back into the envelope*; if T’s intention was to create an

intestacy, would he not have thrown the pieces into the fire or trash?ii) Continued affection between T and Miss H and on the whole of the evidence T placed in Miss H’s

possession the envelope containing the torn will on the belief that it was still a valid will.

Re Adams (Eng. 1992) – scoring of signatures in will rendering them no longer apparent revokes will1) Facts:

a) T asked lawyer to destroy will but lawyer said it is best for T to destroy it. b) T died and the will was found heavily scribbled upon with heavy scoring with dark ink. Signature of T and

witnesses were heavily scored and almost totally illegible.2) Issue:

a) Whether the will has been effectively revoked by the heavy scoring or, in the alternative, has this will been revoked “by the burning, tearing or otherwise destroying the same with the intention of revoking…?”

3) Held:a) A material part of T’s will had been destroyed and accordingly the will as a whole had been revoked by T

and ought not be admitted to probate.4) Analysis:

a) There is a prima facie rebuttable presumption that where a will is destroyed or found mutilated in a place in which the T would naturally put it, that T destroyed it and it was destroyed with the intention of revoking it.

b) Intention of T to revoke was inferred from facts including request to lawyer to destroy will, scoring over signatures of T and witnesses. “Whatever was done to this will was done with the intention of revoking it.”

Sugden v. Lord St. Leondards (Eng. CA, 1876) – lost will not sufficient to revoke will – parol evidence used to re-create will and granted probate – loose custody of the will, lower burden if lost1) Facts:

a) T’s will was lost but executors attempted to propound the lost will made Jan. 13, 1870, and 8 codicils that were actually produced with application for probate.

b) T died Jan 29, 1875 (age 93). Will and codicils were all holograph kept in a small locked black box kept in T’s sitting room. Evidence of contents of will came from T’s daughter who lived with him and was one of T’s beneficiaries. Her memory of the contents of the will was almost unbelievable. When the will was discovered missing she immediately wrote a statement (setting out in great detail the contents of the will) from memory without reference to the codicils or other testamentary documents in the black box. A supplementary statement was made to fill in a few gaps. Probate was granted but there was an appeal.

2) Issues:a) Was will destroyed by T animo revocandi ?b) Can secondary evidence be given of contents of lost will., c) if yes, is there satisfactory evidence of contents of will ? d) if evidence is satisfactory, so far as it goes, but not altogether complete, ought probate be granted so far as

evidence of will which the Court has before it?3) Held:

a) The granting of probate of the paper propounded as containing the provisions of T’s will should be confirmed.

4) Analysis:a) Issue 1 - Where a will is shown to have been in the custody of T and is not found at his death there is a

rebuttable presumption that the will has been destroyed by T for purposes of revoking it and the presumption will be more or less strong according to the character of the custody which T had over the will. Here there was “loose custody” b/c so many people had access to will – suggests that it may have been taken

b) Issue 2 – parole evidence may be used to prove the contents of a lost willc) Issue 3 – daughter’s statements were truthful b/c they were corroborated by the codicilsd) Issue 4 – if substantial parts of the will can be made out, the court should grant probate

Lefebvre v. Major (SCC, 1930)-- lost will not sufficient to revoke will – parol evidence used to re-create will

79

and granted probate1) Facts:

a) T had will drawn by lawyer leaving all his assets to his sister and witnessed by his friend Z. b) T deposited will with bank and then had it sent to him but it could not be found on his death. c) Court of Appeal held that presumption that T had revoked the will had not been rebutted.

2) Issuesa) was due execution of will established?b) Were its contents satisfactorily proved?c) Does evidence rebut presumption of destruction by T animo revocandi?

3) Helda) On the whole, Court was satisfied that presumption of destruction by T animo revocandi is sufficiently

rebutted and probate should be granted.4) Analysis

a) Contents of will were proved by evidence of Z, T’s letter to his sister and statements made by T to other witnesses just prior to his death.

Re Perry, (Ont. C.A., 1925) – lost will revoked will Court refused to admit a lost will to probate when only the name of the residuary legatee was known.

Re Broome (Man. C.A., 1969) – reverse onus if T becomes incapable Court held that if T becomes incapable after making the will and at death will cannot be found or is in mutilated

state, burden of showing it was destroyed or mutilated with an intention of revoking it lies on the party alleging revocation.

80

2. Dependent Relative Revocation / Conditional Revocation

General This doctrine represents a form of conditional revocation (see Hawley) which arises where T does

not want revocation of a testamentary instrument to become effective until a replacement instrument becomes effective.

If the condition never takes effect (i.e. because the new instrument is ineffective or is based on a mistaken assumption), the revocation of the original will is deemed ineffective

TEST: Where T mutilates or destroys a will with intention of making a new will but fails to make the new will,

it does not necessarily follow that the mutilation or destruction was ineffective to revoke the will T must show clear “conditional intention of revocation” in his or her actions – i.e. an intention that the

original will should only be revoked if a new will was actually executed (Re Jones) A revocation which is shown to be made upon a mistake either of fact or of law, and is considered by

the Court not to be intended by the Testator except conditionally on the mistaken assumption being correct, is inoperative. (Hawley)

In Re Jones, Decd. (Eng. 1976) -- no conditional intention of revocation to allow doctrine to operate1) Facts:

a) T’s will left real property to two nieces but just before she died T attempted to instruct her lawyer to change her will and give the real property to the children of a nephew.

b) The lawyer was unavailable and T never executed a new will but she did (it was presumed) cut out the clauses in her will giving the gift to the nieces along with her signature and attestation clause and signature of witnesses.

2) Issue:a) Whether the mutilation by T was ineffective in revoking T’s will because of the “doctrine of dependent

relative revocation”.3) Held:

a) T died intestate. There was no direct evidence of T’s belief that revocation by destruction was conditional on her making a new will.

b) Instead, T intended there and then to revoke the pre-existing clauses and revocation was not conditional on a new will become effective.

4) Analysis:a) Where T mutilates or destroys a will with intention of making a new will but fails to make the new will, it does

not necessarily follow that the mutilation or destruction was ineffective to revoke the will.b) Revocation is only ineffective where it appears that in such action the T’s intention was conditional - in that

the revocation should only operate if a new will was actually executed. Therefore, must find conditional intention of revocation.

c) Trial judge drew the wrong inference from T’s actions.

Re Sorenson: Montreal Trust v. Hawley (BCSC, 1981) – true example of conditional revocation1) Facts:

a) T’s will provided for gifts to her husband’s two sisters (Mrs. S and Mrs. C). b) T mistakenly understood both sisters to have predeceased her and made a codicil providing for Mrs. H to

take the gifts that were to go to Mrs. S and Mrs. C. (Codicil stated that since “both [women] predeceased me and I am desirous of substituting [Mrs. H].”)

c) At T’s death Mrs. S, contrary to T’s understanding was, in fact, still alive.2) Issue:

a) Did codicil operate to revoke gift to Mrs. S?3) Held:

a) Codicil represented a conditional revocation of gift to Mrs. S and, as condition was not fulfilled, the revocation failed.

4) Analysis:

81

a) A revocation which is shown to be made upon a mistake either of fact or of law, and is considered by the Court not to be intended by the Testator except conditionally on the mistaken assumption being correct, is inoperative.”

3. Doctrine of Revival

s. 20 – effective time of willo (1) If a will has been revived or re-executed by a codicil, the will is deemed to have been

made at the time it was revived or re-executed

o (2) Unless a contrary intention appears by the will, a will speaks and takes effect as if it had been made immediately before the death of the testator with respect to the property.

NOTE:

s. 20 appears to confirm both the “doctrine of revival” and the ‘doctrine of republication’ (below)

TEST: for the doctrine of revival to operate the words of the codicil must clearly express, beyond a doubt, an intention to revive the will (Re McKay)

Bill 4:

S. 57(1) – A will or part thereof that has been revoked is revived ONLY by a will that shows an intention to give effect to the revoked will or the part that was revoked

(2) – Unless contrary intention, if a will that has been partly revoked and afterwards wholly revoked is revived, the revival does not extend to the part that was revoked before the revocation of the whole

(3) – If will has been revived by codicil or has been re-signed in the presence of 2 witnesses, the will is deemed to have been made at the time it was revived or re-signed

(4) A will or part of a will that has been revoked may not be revived excepto (a) by an order of the court under s.58 (residual discretion), where court is satisfied that T

intended to give effect to the will or part that was revoked, ORo (b) in accordance with any other provision of the Act that recognizes revival of a Will

S. 58(2)(b) – court may make an order where the intention of a deceased person is to revoke, alter or revive a will or testamentary disposition of the deceased person

(3) – even though the order may not comply with the Act, the court may still order…

Re McKay (BCSC, 1953) -- insufficient evidence of intent to revive will by codicil1) Facts:

a) T made a will on May 4/46 and revoked it by a new will dated May 26/51. b) Both wills appointed Royal Trust and her son as executors and trustees. c) On Oct 25/52 she made a codicil: “This is the first codicil to [T’s will] which Will bears date the 4th day of

May, 1946, replaces Royal Trust with National Trust and “in all other respects, I do confirm my said Will.”d) The codicil met all formal requirements under the Wills Act. e) T’s son was unaware of the 1951 will and T either forgot about it or missed it when executing the codicil. f) The first will made provision for T’s husband who died before the 1951 will, which makes no mention of him

or his relatives.2) Issue:

a) Does the codicil have the effect of reviving the 1946 will; does the codicil have any effect?3) Held:

a) There was no reason for reviving the 1946 will and it is not revived because there is insufficient evidence to show a clear intention to revive that will.

b) The 2nd part of the codicil (re National Trust) is to be given effect notwithstanding the obvious error in the 1st part of the codicil. The 1951 will and codicil (omitting ref. to the 1946 will) are admitted to probate.

82

4) Analysis:a) As per s. 20 of the Wills Act in order to revive a will, a codicil must clearly express beyond a doubt an

intention to do so

CONSTRUCTION OF WILLS

1. Introduction

Courts have specific interpretive roles and functions in relation to wills:

1. decide which documents comprise last will and testament and to admit the will to probate (“Court of Probate”)

2. once admitted to probate, an executor or a beneficiary may apply to court to have an unclear will interpreted. The function of the court is to determine the true intentions of T within the limits of the law (i.e. rules that constrict which evidence can be admitted to aid interpretation) (“Court of Construction”)

Testator’s intent: the court cannot give effect to an intention which is not expressed or at least implied by the words contained in the will, and not what the testator meant to do (otherwise, the requirement for a will to be written would be defeated) (Perrin v. Morgan)

Use of extrinsic evidence: the modern approach to ascertaining T’s intention is to go outside the will to consider extrinsic evidence as an interpretive aid

Void for uncertainty: if after the court uses all interpretive techniques and aids and still cannot determine the T’s intention, the disposition will fail due to uncertainty.

Bill 4:

S. 4 – Construction of Instrumentso (1) – If this Act provides for ‘contrary intention’, that contrary intention must appear in the

instrument or arise by necessary implicationo (2) – Extrinsic evidence of the T’s intent, including a statement of T, is NOT admissible to

assist in the construction of testamentary instrument UNLESS: (a) A provision in the will is meaningless, (b) A provision of the testamentary instrument is ambiguous

On its face OR in light of evidence demonstrating ambiguity in language OR (c) Extrinsic evidence is expressly permitted by this act

2. Construction and Interpretation

History of Approaches

1. Ordinary Meaning Rule: In construing a will the duty of the Court is to ascertain the intention of the T which intention is to be collected from the whole will taken together. Every word is to be given its natural and ordinary meaning and, if technical words are used (i.e. “devise”, “bequest”), they are to be construed in their technical sense, unless from a consideration of the whole will it is evident that the T intended otherwise (Smith v. Chatham Home)

2. The HL in Perrin added a gloss on the ordinary meaning rule -- the court must look at the specific context of the will and what the testator intended when interpreting a word’s ordinary meaning. In other words, the court must put itself in the position of the testator.

83

3. This position was furthered in Haidl where the Sask. CA held that surrounding circumstances are to be admitted at the start and that the “ordinary meaning” rule of construction ought to be applied in the light of those surrounding circumstances. Surrounding circumstances refers to extrinsic indirect evidence (see also Marks v. Marks; Re Burke)

4. This led to what is now known as the “armchair” principle – i.e. the court must put itself in the position of the T at the point when he or she made the will and construe the language from this vantage point.

5. BUT as noted by the BCSC in Laws v. Rabbit (citing the SCC in Fleury Estate) these rules of interpretation only apply if the intention of T cannot first be determined on the plain meaning of the words in the will

6. Process: (1) interpret the will using its plain meaning, (2) if the plain meaning is unclear, consider surrounding circumstances. This highlights a modern approach to ascertain T’s intention that is more lenient than previous strict approaches of interpretation.

Specific Rules of Construction (Re Estate of Murray; see also Re McEwen Estate)

1. Presumption against intestacy – if the will is capable of two interpretations, the court will prefer the interpretation which disposes of the whole estate in preference to one that results in intestacy (but see Re McEwen Estate below where this presumption didn’t apply)

a. Avoidance of intestacy is not sufficient reason for a Court to give an unnatural meaning to words or to construe plain words otherwise than according to their plain meaning. Also note: Canada Trust Co. v. Banks - opposite result.

2. Alterations – a court will not alter or add to the words of a will unless it is perfectly clear that the will does not express the intention of the T (especially where will is drafted by a solicitor). Specifically, the court must be certain:

a. that there has been an unintentional omission, andb. *as to the testator’s precise intention (i.e. what the testator meant to do) (Re Miles)

*Together, these two rules may allow a court, in certain circumstances, to avoid an intestacy by adding or correcting a term in the will. But satisfying 2(b) will be difficult (see below)

Perrin v. Morgan (HL,1943) – the context in which the word is used is the main guide to its interpretation 1) Facts

a) T’s will provided as a residual clause that “all moneys of which I die possessed shall be shared by my nieces and nephews now living.”

b) The Court of Appeal decided that “moneys” included only dividends, “cash” at the bank, rents due at death and the income tax payment – because they felt bound by authority to apply a strict meaning of “money” unless the word was used in a context in which it could be given a wider meaning which, in this case, the Court of Appeal did not find.

2) Issuea) What did the word “moneys” refer to?

3) Helda) The term “moneys” in this particular will means the whole of the T’s residual personal estate.

4) Analysisa) The approach to the ordinary meaning rule use by the CA is incorrect:

i) “The context in which the word is used is, of course, a main guide to its interpretation, but it is one thing to say that the word must be treated as having one particular meaning unless the context overrules that interpretation in favour of another [as was done by the Court of Appeal] and another thing to say that “money,” since it is a word of several possible meanings, must be construed in a will in accordance with what appears to be its meaning in that document without any presumption that it bears one meaning rather than another.”

b) the fundamental rule in construing the language of a will is to put on the words used the meaning which,

84

having regard to the terms of the will, the testator intendedc) I protest against the idea that, in interpreting the language of a will, there can be some fixed meaning of the

word “money,” which the courts must adopt as being the “legal” meaning as opposed to the “popular” meaning. The proper meaning is the correct meaning in the case of the particular will

d) The duty of the court is to ascertain without prejudice as between various usual meanings which is the correct interpretation of the particular document

e) I cannot for a moment believe that, had the testatrix intended to provide for what was in substance the whole of the generation of her family next to her own with nothing but money as defined by the rule [i.e. narrowly defined], she would have used the language that I have quoted. The words, in my opinion, according to their true construction mean the whole of her residuary personal estate.

Haidl v. Sacher (Sask. CA, 1980)1) Facts:

a) T’s will provided at clause (h) for the residue to be delivered(h) “…to the following persons in equal shares, share and share alike: (i) Donnie Sacher, (ii) Jerry Sacher … (viii) The Children of, Herbert Haidl, that may be living at the date of my death.”

b) There were 4 children of Herbert Haidl entitled to take under clause (h) but they sought clarification as to whether they each receive a 1/11th share or a 1/32nd share of the residue. In other words, was sub clause (h) (viii) shorthand for 4 separate sub clauses under (h) or did T intended that Herbert Haidl’s children share 1/8th of a share of the residue among themselves.

2) Issue:a) Did T’s will provide for a per capita or per stirpes distribution of the residue when it speaks of “share and

share alike”?3) Held

a) There is nothing in the surrounding circumstances that have been disclosed in the material to suggest that the children of Herbert Haidl should be placed on a better than a per stirpital footing.

4) Analysisa) Court identified competing procedures for application of the “ordinary meaning” rule of construction:

i) Procedure A – apply “ordinary meaning” rule without admitting and taking into account any surrounding circumstances at all and that the meaning so ascertained shall prevail unless it is found that such an application produces a meaning which is unclear and ambiguous in which event such surrounding circumstances may then be admitted and looked at.

ii) Procedure B – surrounding circumstances are to be admitted at the start and that the “ordinary meaning” rule of construction be applied in the light of those surrounding circumstances.(1) Surrounding Circumstances in this context refers to indirect extrinsic evidence – e.g., the character

and occupation of the T; the amount, extent and condition of his property; the number, identity and general relationship to the T of the immediate family and other relatives; the persons who comprised his circle of friends and any other natural objects of his bounty.

(2) Surrounding Circumstances in this context does NOT refer to direct extrinsic evidence of intent, the admission of which is governed by a different set of conditions - e.g., written instructions which T sent to his solicitor for the preparation of the will.

b) Canadian courts favour Procedure B: Marks v. Marks (court has a right to ascertain all the facts which were known to the T as the time was made in order to interpret the language he uses) and Re Burke (Each judge must endeavour to place himself in the position of the testator at the time the will was made)

85

3. Direct Evidence of Intent

General Rule (Re Estate of Murray; Millar)

When construing the terms of a will, the court may look at the surrounding circumstances existing at the time the will was made to determine the testator’s intention (indirect extrinsic evidence)

o e.g., the character and occupation of the T; the amount, extent and condition of his property; the number, identity and general relationship to the T of the immediate family and other relatives; and the persons who comprised his circle of friends.

The court may NOT, however, rely on direct extrinsic evidence of intent, except in limited circumstances, as the will is presumed to have been accepted by the testator, and to speak for itself.

o This precludes instructions provided to a solicitor, or other written or oral statements that amount to declarations of T’s intention (e.g. affidavit from solicitor)

Exceptions: Direct extrinsic evidence of T’s intent may be admissible where there is an equivocation (i.e. the

words of the will apply equally to two or more persons or things) (Sarkin; Re Estate of Murray)

o e.g. where a description of gift or B is clear on the face of the will but upon T’s death it is discovered that there is more than one gift, or more than one B, that meets the description in the will; parol evidence is admissible to show which gift or which B was intended by T (Millar; see e.g. Re Jackson – 3 “Arthurs”)

o e.g. where a description in the will of the thing intended to be gifted or the B is true in part but not true in every particular, the parol evidence is admissible to show what estate was intended to pass and to which B, provided there was sufficient indication of intention appearing on the face of the will to justify the application of the evidence (Millar)

Re Estate of Murray (BCSC, 2007) – direct extrinsic evidence of T’s intention is inadmissible1) Facts:

a) T’s will provided that all of his residue was to be given to named B’s but in fact he only provided for 90% of residue. Solicitor who prepared T’s will and other witnesses prepared affidavits providing both “indirect” and “direct” extrinsic evidence relating to surrounding circumstance and testamentary intent, respectively.

2) Issue:a) Whether “direct” evidence of T’s intention was admissible and whether one of the named beneficiaries was

to receive the unallocated 10% of residue or whether there was an intestacy with respect to that portion?3) Held:

a) Indirect extrinsic evidence was admissible (direct extrinsic evidence going to T’s intention was inadmissible) because there was ambiguity on the face of the will

b) based on the wording in the will and the surrounding circumstances T’s intention was that the unallocated 10% of residue was to go to the Salvation Army.

4) Analysis:a) Applying the two presumptions, Court was satisfied that T did not intend a partial intestacy and that T’s

intentions will be carried into effect by amending the relevant provision so that 20% of residue goes to SA and in so doing the Court is not altering the intended disposition of T but rather is correcting a drafting error

a) Support for this conclusion comes from surrounding circumstances and the fact that closing part of residuary clause provides for any failed gifts to go to SA – hence clear intention that SA would be ultimate residuary beneficiary;

Millar v. Travers (Eng. 1832) direct extrinsic evidence of T’s intention is inadmissible1) Facts:

a) T’s will provided a gift of “all his freehold and real estate whatsoever, situate in the county of Limerick, and in

86

the city of Limerick.” b) At the time of making his will (and at his death) T had real estate in the city of Limerick but none in the

county of Limerick although he had substantial real estate in the county of Clare. c) B of real property in city of Limerick wanted to introduce extrinsic evidence (parol evidence) to show that a

mistake had occurred and that T had intended to gift real estate in the county of Clare to B.2) Issue:

a) Whether the Court is free to admit the parol evidence which B proposes.3) Held:

a) Evidence excluded. b) Extrinsic evidence will not be admitted in the case where it is designed to introduce into the will an intention

not apparent upon the face of the will. c) In that case the extrinsic evidence is not introduced to assist with a difficulty arising from a defective or

mistaken description, rather it is making the will speak upon a subject on which it is altogether silent and is the same in effect as the filling up of a blank which the T might have left in his will.

d) It short, it amounts, by the admission of parol evidence, to the making of a new devise for the T which he is supposed to have omitted.

In Re Jackson (Eng. 1933) – e.g. of equivocation requiring the admission of direct extrinsic evidence1) Facts:

a) T left a gift to “my nephew Arthur Murphy.” b) But she had two nephews (i.e., her brothers’ sons) with that same name one in country and one abroad,

neither of whom had much to do with T and one of whose father was already receiving a substantial benefit under T’s will.

c) T also had a sister who had an illegitimate child named Arthur Murphy who was in close relationship with the T and had married one of T’s nieces and, in a sense, could be viewed as T’s nephew.

2) Issue:a) Which of the three “nephews” named Arthur Murphy did T intend to benefit under the terms of her will?

3) Held:a) Looking at the whole of the evidence, the Court had no doubt that T intended to benefit illegitimate child

named Arthur Murphy.4) Analysis:

a) Because there were two legitimate nephews named Arthur Murphy, this gave rise to an ambiguity as to which nephew the T intended to benefit and in order to solve that problem, evidence as to the state of the family generally is admissible.

b) Had there been only one Arthur Murphy no extrinsic evidence would have been admitted and the Court would not have been able to recognize the illegitimate Arthur Murphy. Once this investigation began it was open to the Court to discover the illegitimate child.

Bill 4: (repeated above)

S. 4 – Construction of Instrumentso (1) – If this Act provides for ‘contrary intention’, that contrary intention must appear in the

instrument or arise by necessary implicationo (2) – Extrinsic evidence of the T’s intent, including a statement of T, is NOT admissible to

assist in the construction of testamentary instrument UNLESS: (a) A provision in the will is meaningless, (b) A provision of the testamentary instrument is ambiguous

On its face OR in light of evidence demonstrating ambiguity in language OR (c) Extrinsic evidence is expressly permitted by this act

87

4. People and Solicitor’s Responsibilities

Responsibilities as a Solicitor

• Confirm T’s intentions regarding beneficiaries • Draft will/codicil as per T’s intentions• Understand implications where technical terms are used – issue, per stirpes, or per capita (see Re

Karkalatos Estate; Re Clarke Estate)• Confirm implications and operation of will with T

• Consider implication of births, deaths, adoptions, marriage and divorce• Use correct spelling and current location (are there more than two in the group of B’s with the same

name – see Re Jackson)• Carefully use trusts and identify B’s to trust and what is to happen to trust property if B’s are all dead

before trust capital is paid out• Be careful with gifts over following death where life estates used (i.e. Re Walker)

• Careful use of class gifts and pay special care to such things as “my” issue, nieces, nephews, grandchildren, children, stepchildren, husband, wife etc.

• As to interpretation of “husband” or “wife” see Marks v. Marks (SCC, 1908)• As to interpretation of “niece” or “nephew” see Estate of Holmes, (BCSC, 2007) – where a gift to “all

my nephews and nieces” operated in favour of the children of T’s brothers and sisters and those of T’s wife’s brothers and sisters.

Illegitimate Children - Law and Equity Act

• s. 61– Child Status – no such thing as “illegitimate children”o (1) Subject to the Adoption Act and FRA, for all purposes of the law of BC

(a) A person is the child of his or her natural parents, (b) Any distinction between status of a child born inside marriage and a child

born outside marriage is abolished, and (c) The relationship of parent and child and kindred relationships from that

relationship must be determined in accordance with (1)

o (2) This section applies to enactments made before April 17, 1985, but does not apply to instruments or dispositions of property made before April 17, 1985**

o (3)* When construing an instrument or statute, a reference to a person or a group or class of persons described in terms of relationship to another person by blood or marriage must be construed to refer to and include a person who comes within the description because of the relationship of parent and child as determined under (1)

*NOTE: ss. 61(1)(b) + (3) changes the old CL presumption that the word “children” did not include illegitimate children (see below).

Illegitimate Children at Common Law – APPLIES ONLY TO DOCS MADE BEFORE April 17, 1985

• Trigger: for wills or dispositions of property made before April 17, 1985

• GR (Re Jensen Estate): it is presumed that the word “children” in a will means legitimate children but there are two exceptions:

88

o where on the face of the will and on proper construction and interpretation of the words used in it, you find an expression of the intention of T to use the term “children” as including illegitimate children;

o where there are no legitimate children or where it is impossible for children born within the marriage to take (e.g. iron curtain, Cuba, China, etc.)

Re Jensen Estate (BCSC, 1989) –“children” only means legitimate children, unless expressed otherwise1) Facts:

a) T’s will made before April 17, 1985 (i.e. s. 61 does n/a)b) 9 grandchildren born to the legitimate children of T but T had one illegitimate child with children of her own.

T’s will provided for a trust for each “grandchild”.2) Issue:

a) Whether children of T’s illegitimate child are part of the class of grandchildren who will benefit from the trust.3) Held:

a) Taking into account all circumstances and T’s failure to mention his illegitimate daughter in his will, Court concluded that T did not intend to benefit the children of his illegitimate daughter.

4) Analysis:a) As per Hill v. Crook (Eng. 1873), it is presumed that the word “children” in a will means legitimate children

but there are two exceptions:i) where on the face of the will and on proper construction and interpretation of the words used in it, you

find an expression of the intention of T to use the term “children” as including illegitimate children;ii) where there are no legitimate children or where it is impossible for children born within the marriage to

take (e.g. iron curtain, Cuba, China, etc.) b) Those two exceptions are not met here.

Technical TerminologyRe Karkalatos Estate (SCC, 1962) – ambiguity when using technical terms (per stirpes) improperly –1) Facts:

a) T’s will provided for a trust for his two daughters with income therefrom to be paid annually “to among and between both of them in equal shares” until the death of one of them, after which it directs that his trustees:

“…shall pay divide and distribute approximately one-half of my then remaining estate to among and between my grandchildren, per stirpes, in equal shares, and they shall pay all the net profits of the remainder of my estate … annually and every year, to my surviving daughter until her death.” [Emphasis mine.]

2) Issue:a) Whether in using the words “to among and between my grandchildren, per stirpes, in equal shares” T

intended to designate his grandchildren as the “stirpes or stocks” so that each of the four of them would take in equal share of the portion of the estate made available for distribution upon the death of the first daughter or whether he intended to refer to the “stocks” represented by his two daughters so that one-half of the portion would go to the child of one daughter and the other half to the three children of the other daughter.

3) Held:a) Grandchildren means my children’s children and the two daughters and their two families are to be treated

separately and equally as to the division of both the profits and the corpus of the estate.

Re Clarke Estate (BCSC, 1993) -- ambiguity when using technical terms (per stirpes) improperly1) Facts:

a) T’s will provided: “To hold the other one-half (1/2) of my residuary estate in trust for my Grandson, Robert Clark, and I direct my Trustees to keep such share invested and pay same to the said Robert Clark at the rate of ONE THOUSAND DOLLARS ($1,000) per month … Upon the death of my Grandson, Robert Clark, I DIRECT my Trustees to divide the remainder of the one-half (1/2) of my residuary estate being held pursuant to this paragraph into to [sic] equal parts or shares and transfer one such part or share to each of the children of my son, GEORGE EDWARD CLARK, per stirpes.”

2) Issuea) Whether any person other than Robert Clark and the six children of George Edward Clark has a potential

interest in that part of T’s estate dealt with in the preceding paragraph. (i.e., if one of the six children of George predecease Robert Clark, do their children, if any, take a benefit from their deceased father.)

3) Helda) Remove “per stirpes”b) Based on wording in will, surrounding circumstances and authorities the phrase “the children of my son,

89

George Edward Clark, per stirpes” means the six children of George Edward Clark and that the shares of each of the six children are not subject to divestiture in the event that one of them predeceases Robert Clark.” (i.e. won’t go to George’s grandchildren)

4) Analysisa) Whatever the testatrix may have intended by the use of the words “per stirpes”, it is likely that she was not

intending to benefit the issue of the children of George Edward Clark.

5. Doctrine of Republication

General

• ‘Doctrine of Republication’ – a prima facie rule which provides that where a will is amended by a codicil which confirms the remainder of the will then, unless there is contrary intention, the will is effectively republished as at the date on which the codicil is executed.

• Republication via codicil gives a will a new, later date.

• Purposes :o Gives new meaning the broad and general terms (e.g. “my present lease” – Re Reeves)

o Surrounding circumstances to resolve ambiguities Republication is important where a will takes on a later date it can be construed in accordance with any change in surrounding circumstances existing at that later date –

i.e. court does not have to look at surrounding circumstances existing at the time the original will was made (see Re Hardyman)

o To cure defects in original will (see Anderson)

Exceptions / Limitations of Doctrine

• Doctrine of Republication is NOT automatically applied – depends on intention of T (Re Hardyman)

• Thus, it will not operate where it defeats the intention of the T (Re Health’s)

o E.g. It would seem, on general principles, that if a testamentary gift is valid at the date of the will, it cannot be invalidated by mere republication of the will” (Jarman on Wills, cited with approval in Re Heath’s) – i.e. otherwise, T would not have intended to republish

Wills Act

*The doctrine is codified in s. 20, Wills Act

20  (1) If a will has been revived or re-executed by a codicil, the will is deemed to have been made at the time it was revived or re-executed.

(2) Unless a contrary intention appears by the will, a will speaks and takes effect as if it had been made immediately before the death of the testator with respect to the property.

Re Hardyman (Eng. 1925) – doctrine of republication applies1) Facts

a) T’s will of Feb. 1898 created a trust in favour of “my cousin, [Colonel M], his children and his wife”.b) Colonel M was married at time of will but his wife died in Jan. 1901. T was aware of death. c) In Nov. 1901 T made a codicil with no reference to Colonel M. d) T died in Dec. 1901. Colonel M remarried in Jan. 1903.

90

2) Issuea) Whether Colonel M’s second wife took any interest under T’s will.

3) Helda) In light of true construction of the will and codicil and the surrounding circumstances, the second wife of

Colonel M has an interest in T’s will.4) Analysis

a) Had T not made a codicil there would be no question that Colonel M’s second wife would have no interest under T’s will. But the codicil changes things.

b) The effect of the codicil is to republish the will – a republication of the will at the date of the codicil and the effect of the confirmation by codicil of a previous will is to bring the will down to the date of the codicil and effect the same disposition of T’s estate as if T had at that date made a new will containing the same dispositions as the original will but with the alterations introduced by the various codicils.

Re Reeves (Eng. 1928) -- doctrine of republication applies (“my present lease” at date of codicil)1) Facts:

a) T’s will date May,1921, left “all my interest in my present lease of a [specified property]” to his daughter. At the time of the will T had a 7-year lease.

b) Effective Sept. 1924 he entered into a 12-year lease for the same property. By codicil dated Feb 1926 T made changes to his will (no reference to leases) and confirmed it “in all other respects.”

2) Issue:a) Did benefit of 12-year lease pass to daughter?

3) Held:a) When will and codicil are read as one document dated Feb 1926 there is a gift of “my present lease” and

present lease is the 12-year lease – full benefit passes.4) Analysis:

a) Without a codicil the “present lease” would have been the lease at the time of the will but by confirming will by codicil during the currency of the new lease the T effectively gifted new lease to daughter . –

b) Republication would not have saved a gift that had specifically identified the 7-year lease (e.g. by reference to its date), however, by reference to “my present lease” in the will, republication works to recognize the new lease entered into by the T shortly before execution of the codicil.

Re Heath’s Will’s Trusts (Eng. 1949) – republication cannot invalidate a will that was valid at its original date1) Facts:

a) T’s will of Dec. 1932 left a trust for his daughter “without power of anticipation”. b) T made 4 codicils in 1933 and 1934 and two in 1937; none referred to the restraint or affected the interest of

daughter and all confirmed the will. c) T died in 1939. d) A new Act which would have voided the restraint applied to instruments made after Jan 1/36.

2) Issue:a) Do the 2 codicils after Jan. 1/36, which confirmed the will, result in republication of the will and hence

constitute an instrument made after Jan 1/36 thereby invalidating the restraint under the original will?3) Held:

a) Restraint in Will is not rendered invalid by new Act as general rule of republication will not operate or be adhered to by the Court where it defeats the intention of the T.

b) The instrument by which the restriction attached was dated before Jan 1/36 and the restriction is contained in no other instrument and is a valid restriction notwithstanding the Act in 1935 and the codicils of 1937.

4) Analysis:a) Court would be defeating T’s clear intention if it followed the general rule in these circumstances.b) “It would seem, on general principles, that if a testamentary gift is valid at the date of the will, it cannot be

invalidated by mere republication of the will.”

Anderson v. Anderson (Eng. 1869): Republication can be used to cure previous defects1) Facts:

a) George Anderson was a beneficiary under a will which his wife witnessed (gift would be void). The testator later made a codicil which was not witnessed by Mr. A’s wife.

2) Issue:a) Did the execution of the codicil by the testator with new witnesses cure the earlier defect so as to enable Mr.

A to take the benefit under the original will?3) Held:

a) Codicil cures the earlier problem which arose due to Mr. A’s wife acting as a witness to the original will. Mr. A is entitled to receive the benefit under the will.

91

4) Analysis:a) Will and codicil together form one testamentary instrument. Object and effect of the codicil was to repeat and

confirm the bequests contained in the will; operates to incorporate the will with the codicil. The duly executed codicil has the effect of republishing the will and making it a new and original disposition of the estate dealt with by the earlier will.

6. Mistake - Probate

Recall: T must have knowledge and approval of contents of Will. Therefore, if there has been a mistake, the requirements may not have been met – provisions should fail or be rectified – court has this power

Main rectification areas: 1. Patent Mistake; 2. Erros in Drafting; 3. Execution of Wrong Doc

General

1. Patent Mistake: error of existing fact clear on the face of the will or from surrounding circumstances 2. Errors in Drafting: Court may exercise power of rectification to delete drafting errors 3. Execution of Wrong Document: execution must be inadvertent and contrary to T’s intentions

Doctrine of falsa demonstratio non nocet, cum de corpore constat – if there is adequate and sufficient description with convenient certainty of what was meant to pass (or a ‘latent ambiguity), a subsequent erroneous addition will not vitiate it. The doctrine operates to strike out the non-essential words (Re Davidson – e.g. Lots X and Y)

Alterations: a court will not alter or add to the words of a will unless it is perfectly clear that the will does not express the intention of the T (especially where will is drafted by a solicitor). Specifically, the court must be certain:

o that there has been an unintentional omission, ando *as to the testator’s precise intention (i.e. what the testator meant to do – which must be

clear on the face of the will or from surrounding circ) (Re Estate of Murray; Re McEwen)

(see Douet v. Budd and Canada Trust Co. v. Banks – below)

Bill 4:

s. 59 – Rectification of a Willo (1) a court may order that a will be rectified if it determines that the will fails to carry out T’s

intentions as a consequence of (a) an error arising from an accidental slip or omission (e.g. Jewish Association); (b) a misunderstanding of T’s instructions; or (c) a failure to carry out T’s instructions

o **(2) Extrinsic evidence, including evidence of T’s intent, is admissible to prove facts (1)(a)-(c)

o (3) Unless leave is granted, application under (1) must be made within 6 months from the date of probate.

o (4) Personal representatives will not be liable for erroneous distributions after 6 months from date of probate and before receipt of notice of an application for leave under (3) where distribution was done in reasonable reliance on the will.

o (5) Subsection (4) does not affect the right of any person to recover any part of the estate distributed in the circumstances described.

92

Re Moris, 1971 PDA: T did not know and approve of the contents – obvious mistake - deletedFacts:

T accidently revoked all of clause 7, instead of just the sub-clause 7(iv). – Relied on solicitorHeld:

Probate court could delete that section of the codicil, but the blank space would have to be interpreted by the court of construction

Analysis:1. Rule of Evidence: A competent T who has read the instrument must be taken to have known/approved it’s contents

Trend in CL against such an absolute rule2. Rule of Law: where T has delegated a draftsman, and T executes the draft, T is bound my mistakes.

Applies only to limited cases – if the draftsman puts in something that is outside T’s scope of intentions, then he is acting outside of T’s intentions.

In the Goods of Boehm, 1981 PDA: Striking name used to enhance the true desired benefitFacts:

Will accidently only benefits one of T’s two daughtersIssue:

Can the one daughter’s name be deleted in one clause to partially enhance benefit to the other?Held:

Yes, court would grant probate and strike name from one clause

Re Brander Estates, 1952 BCSC: Insertion of name is allowed under Rectification DoctrineFacts:

T and wife accidently executed each other’s wills – suggestion that his name be inserted in the place of his wife’s name in the will that he exectued

Issue: Does doctrine of rectification permit the court to insert words for T in a will?

Held: Will to be admitted to probate with the deletion of wife’s name and insertion of T’s name as needed

Alexander Estate v. Adams, 1998 BCSC: No words are to be added under the doctrine of rectificationFacts:

Court asked to delete and add words to a willIssue:

Does doctrine of rectification allow for addition of words to a will in BCHeld:

Probate granted but no words are to be added to the will as requested

Re Davidson (Ont. HC, 1979) – correction of mistake under doctrine falsa demonstratio1) Facts:

a) T is a widow with two daughters, Y & R, who were her executors and who were to divide the residue equally. R also received a $500 legacy.

b) T owned Lots 187 and 188 and the easterly 3 feet of lot 189. Lot 188 was to the north of lot 187 and lot 189 was to the west of both of lots 187 and 188. T’s house is substantially on lot 188 but encroaches on lot 187 by as much as 5 feet.

c) T’s will gave Y Lot 188 and the house, and R Lot 187, for their own use absolutely.2) Issue:

a) The house encroaches on lot 187 and yet the house and lot were gifted to different daughters – a latent ambiguity. How is the ambiguity resolved?

3) Held:a) Doctrine of falsa demonstratio is to be applied to strike out the reference to the specific lots (188 and 187)

in the will resulting in a construction of the will so that the house and corresponding land go to Y and remaining land to the south of the house to R with both enjoying the corresponding 3 foot section of lot 189.

4) Analysis:a) Because there is a latent ambiguity the Court can look to extrinsic evidence (i.e., circumstances

surrounding T at the time of the making of the will and up to T’s death) to determine if latent ambiguity exists

93

and to help resolve it.

Re McEwen Estate (BCCA, 1967) -- no correction of mistake1) Facts:

a) T’s will provided a trust for his wife and daughter and a residuary gift to charities, if T’s daughter predeceased his wife with no issue.

b) The will did not deal with the contingency which actually arose, namely that the daughter survived the widow. T failed to dispose of the residue of his estate in the event his wife predeceased his daughter (which would have been expected).

2) Issue:a) Whether it can properly be said as a matter of necessary implication from the context of the will as a whole,

that the omission of a provision for disposition of the residue of the estate in the event that the wife predeceased the daughter was unintended and the result of an error in drafting of the will and,

b) If yes, whether the precise words of disposition that have been omitted can be determined and supplied.3) Held:

a) Each issue is answered in the negative with the result that there is an intestacy with respect to the residue and daughter, being the next-of-kin, takes the residue.

4) Analysis:a) Presumption Against Intestacy’ does not operate here. b) That presumption is sometimes useful where the construction of the will is doubtful and there is room for two

interpretations and Court will be inclined to lean against an interpretation which will result in intestacy but the avoidance of intestacy is not sufficient reason for a Court to give an unnatural meaning to words or to construe plain words otherwise than according to their plain meaning.

5) Comments – other examples of correctionsa) In Douet v. Budd (BCCA, 1978) – the CA added the words “for his own use absolutely” to allow the

executor (Douet) to receive residue remaining after debts, taxes and funeral expenses were paid. This prevented an intestacy of the residue. In doing so, the court rejected the claims of T’s nieces and nephews who were entitled on intestacy. The court stated that the T was likely unaware of the effects of intestacy and if he had wanted to make a gift directly to the nieces and nephews, he would have done so.

b) In Canada Trust Co. v. Banks (BCSC, 1981) – The testator and his wife had executed similar wills on the same day. Both provided that, in the event that the other spouse predeceased the testator, the income from the residue of the estate was to go to H for her lifetime. The wife's will provided that, if H died first, or upon H's death, the principal was to go to one B. The testator's will made a similar provision in the event that H predeceased him and his wife, but did not provide for the contingency ' which occurred, namely that H survived them both and B survived H. (B did survive H). The omission was rectified to permit B to take the residue following H's death. A reading of the testator's will revealed an omission which "leapt to the eye". That being the case, the Court admitted evidence of surrounding circumstances, including the wife's will, to ascertain the testator's intention. It was clear from this evidence that the testator intended to benefit B, and that he intended her to take the residue following the death of the income beneficiary.

94

CONDITIONAL, JOINT AND MUTUAL WILLS

1. Introduction to Estate Planning

• Estate Planning – recall, estate planning involves the creation of a wealth management roadmap which efficiently meets the “wealth redistribution objectives” of a client either before / after their death

• Estate planning helps a client to:o Meet their wealth redistribution objectiveso Reduce taxes and expenses to their estateo Simplify and expedite the transfer of assets to their heirso Ensure their beneficiaries are protectedo Reduce the risk of estate litigation

• Estate Planning Toolso Wills

Personal wills Joint wills Mutual wills Conditional wills

o Joint Tenancieso Beneficiary designations

• Inter Vivos vs. Testamentary with estate planning, sometimes an issue may arise as to whether a document is to operate as a will or an inter vivos deed (see Bird)

Bird v. Perpetual Executors and Trustees Association of Australia (HC Aust. 1946)1) Facts:

a) Parker and his wife resided with Mrs. Bird (wife’s sister) and in recognition of her generosity (as there was held to be no contract for room and board)

b) Parker executed under seal (i.e., consideration) a deed which stated that upon his death, his executors and trustees would pay Mrs. Bird for the room and board.

c) The deed was delivered by Parker to Mrs. Bird’s solicitor and was presented to Parker’s administrator following his death (intestate).

d) The administrators refused to pay on the basis that the deed amounted to a will and it was not executed in accordance with the Wills Act and therefore the direction to the administrators in the deed was not legally binding on them.

2) Issues:a) Whether the deed amounted to acknowledgement of a debt due by Parker payable upon death, or b) Whether it amounted to an improperly executed will.

3) Held:a) The deed amounted to a will which failed due to improper execution and therefore not binding on the

administrators4) Majority

a) It was not a deed, b/c it was testamentary in character. As a will it was void for non-compliance w/ Wills Actb) “testamentary” document = “A document made to depend upon the event of death for its vigour and

effect and as necessary to consummate”c) In contrast, a document is not testamentary if it takes effect immediately upon its execution, though

the enjoyment of the benefits conferred are postponed until after the donor’s death.

95

d) That is not the case here as the document expressly states that it will not take effect until the death of Parkere) Parker intended payment to be post mortem

5) Minoritya) deed was not a will and therefore was binding on administratorsb) it was a immediate direction to pay a debt, once the indebtedness was fully ascertained (accruing liability)c) It was not a direction to the executors, but a covenant binding Parker as it contained an express

acknowledgement of indebtedness; it was a direction to pay a debt, not a gift, and the deed was given to Bird’s solicitor demonstrating an intention to be immediately bound.

2. Conditional Wills

Trigger: if T intends to dispose of property in case an event happens – the will is said to be “conditional”

Definition• A will that only takes effect on the occurrence of some uncertain event

Issue• whether T intends to limit the operation of the will to the time during which such calamity is imminent

TEST (Re Heubner)

• Was the event a reason for making the will, or a condition for its operation?

o If a reason, then it is a valid will, regardless of whether the event occurs or not

o If a condition, the will only takes effect if the condition occurs (i.e. the operation of the will is confined to that period) (see In the Goods of Porter for an e.g.)

Re Heubner (Man. CA, 1974, affirmed by SCC)1) Facts:

a) Holograph will of T was made in 1970, a day before leaving on a trip to Russia. It read in part: “…In the event of my death (on this trip)…” and left everything to PL and KL.

b) T returned from trip but died 2 years later. c) Application by PL to have will admitted to probate was opposed on grounds that it was conditional on the

happening of an event which did not occur and therefore was void and without effect.2) Issue:

a) Whether the holograph will can be admitted to probate.3) Held:

a) Will admitted to probate because T regarded trip as the reason for making the will rather than a condition for its operation.

b) The words “on this trip” refers to the occasion for the making of the will rather than to the condition for its operation.

4) Analysis:a) Principles are set out in In the Goods of Porter (1869) where the will was held to be conditional because of

the crucial words “at that time” in the context of the will. In that case the will read:“Being obliged to leave England to join my regiment in China…I leave this paper containing my wishes… Should anything unfortunately happen to me while abroad, I wish everything that I may be in possession of at that time or anything appertaining to me hereafter…. To be….divided…:”

96

3. Joint Wills & Mutual Wills

• Joint Wills – rarely used – single document signed by 2 testators which operates as 2 wills and which can be probated twice;*

• Mutual Wills – 2 documents with similar or “mirror” terms – the issue becomes whether there was an agreement between the 2 T’s to bind the survivor to deal with inherited property in certain manner;*

*Joint Wills & Mutual Wills – in most cases the wills provide for a life estate for the survivor with a remainder over (after the life estate is completed) to common beneficiaries. BUT in some cases the wills provide for an absolute gift to the survivor (i.e. an outright gift rather than a life estate) followed by a direction that what remains on the survivor’s death is to go common beneficiaries.

General

• Where an agreement underlying a joint or mutual will provides for property held in JT to be held in trust following the death of one T, with only a life estate for the survivor, it severs any JT in property between the two Ts, as it is inconsistent with the right of survivorship, and thus creates a TIC (Re Gillespie) (see also p. 110)

Creation of a Trust – Enforceable in Equity1) Upon the death of one T, the joint will or mutual wills operate to create a trust, enforceable in equity,

on the estate of the survivor (which includes their own property and that which was inherited from the first T to die), if the following requirements are met:

o (a) the joint will or mutual wills were made pursuant to a definite agreement or K not only to make such a will or wills, but also that the survivor shall not revoke;

note: the mere existence of a joint will, signed by both T, might be evidence of such an agreement (e.g. Re Gillespie)

but for mutual wills, other evidence, such as an express agreement, is required (e.g. Sanderson Estate) (Birmingham v. Renfrew)

o (b) such an agreement is found with preciseness and certainty, from all the evidence; and

o (c) the survivor has taken advantage of the provisions of the joint or mutual will

2) The trust gives the survivor a life estate in the property, but requires the remainder to be disposed of in accordance with the terms of the mutual wills or joint will (but see Re Ohorodynk)

3) For the trust to arise (and for equity to intervene), it is not necessary to have probate of the will of the first to die, nor is it necessary to have a benefit conferred on the survivor (Sanderson Estate)

Counter Argument

4) The survivor could argue that the gift under the other T’s will was absolute, rather than a life estate. As a result, no trust is created that can be imposed on the survivor to constrain any subsequent disposition of the property (Re Ohorodynk, Ont. HC, 1979, affirmed by Ont. CA in 1979)

5) BUT see Birmingham v. Renfrew (Aust HC, 1937) equity acts as a floating obligation on the survivor to prevent breach of the agreement. The survivor is allowed to enjoy the property during the

97

life estate, but upon his/her the death, the property shall be disposed of in accordance with the joint or mutual will.

Re Gillespie (Ont. CA, 1986) – joint will creates trust agreement to bind survivor1) Facts:

a) H and W made a joint will which was unrevoked at time of W’s death. b) It provided for a life estate for the survivor and a common disposition of the property following the death of

the survivor. c) H subsequent to W’s death executed a will purporting to deal with property in a manner inconsistent with

terms of the trust created under the joint will including real property of which H and W had been joint tenants prior to the execution of the joint will (“Baby Point”).

d) Executor of W’s will applied to Court.2) Issue:

a) Whether property dealt with by joint will became subject to a trust which determined its distribution and precluded the surviving H from making, by a subsequent will, any effective disposition inconsistent with the terms of the trust (including the property held in joint tenancy).

3) Held:a) Property that became impressed with a trust that included the real and personal property of which the H was

possessed at the date of death of W, including an interest as tenants in common in Baby Point property.b) The real and personal property of which W was possessed at her death (including her interest as tenant in

common [determine by Court to be the result of the agreement] in the Baby Point property) devolved upon her personal representative to be administered according to the terms of the joint will; the H never had any beneficial interest in such property other than the life interest created by that will.

4) Analysis:a) There was a definite agreement to make a joint will setting out distribution upon death of survivor, and by

necessary implication, such agreement precludes revocation which would otherwise frustrate the deal

University of Manitoba v. Sanderson Estate (BCCA, 1988) – mutual wills create trust to bind survivor1) Facts

a) H and W execute an agreement to make mutual wills and not to revoke them and in fact made such wills leaving residue to U of Manitoba. Clause 1 of Mutual wills affirmed the agreement.

b) W died in 1985 and almost all assets passed to H because they were jointly owned and H obtained ownership of all the assets by right of survivorship or “right of transfer”. W’s will was never probated. Executor and Trustee renounced because there was no estate to administer. In 1985 H made a new will thereafter with provisions which were inconsistent. When H died University challenged H’s will.

2) Issue:a) Does the obligation of the survivor not to revoke his mutual will depend on him receiving a benefit under the

will of the first to die?3) Held:

a) Neither probate of the will of the first to die nor a benefit flowing to the survivor under the will of the other is a necessary precondition for trust principles to operate in favour of the University of Manitoba. Requisite conditions for the imposition of a trust on the property of Mr. Sanderson have been met and the University is entitled to the balance of the estate

4) Analysis:a) This is a case of express agreement that mutual wills would not be revoked or altered without consent

during the joint lives and that after death of the first, the will of the survivor would not be altered or revoked. There was an exchange of promises and W had not revoked her will prior to death.

b) Enforcement of an agreement in a joint will or mutual wills is within equity’s jurisdiction to prevent fraud because it is a fraud on the deceased, who has acted upon and relied upon the mutually binding nature of the agreement, if the survivor breaks the agreement.

Note Generally:

Re Ohorodynk, 1979 ONCA – Court held that where the gift to the survivor is absolute, not trust is created that can be imposed on the survivor that which would constrain any subsequent disposition by survivor

98

CLAIMS AGAINST ESTATES*see s. 25 of BC IA

1. Introduction

Freedom of Testation vs. Dependent Relief

• Freedom of testation is a sacred long-standing principle of Anglo-Canadian law.

• BUT, it has never been an absolute freedom, having been subject to rules of public policy and various forms of death taxes which limit the testator’s right to dispose of his property entirely as he sees fit.

• Since the early 1900’s dependent relief legislation has permitted dependants of a testator to seek support out of an estate which has further restricted a testator’s freedom of testation.

o The purpose of such legislation is to ensure maintenance and support for a testator’s dependants if the testator was under a duty to provide support and failed to make adequate provision for them on his or her death.

o An ancillary purpose was to relieve the state of the burden of supporting such persons.

• Many U.S. jurisdictions have “forced-sharing” legislation which requires a portion of an estate to be shared with dependents.

• Canadian jurisdictions have generally opted for legislation which vests a discretion in the court to determine whether an applicant is a “dependent” entitled to support from the estate beyond that provided by the testator.

• New Zealand was the first common law jurisdiction to enact dependent relief legislation in 1900.

• British Columbia enacted the Testator’s Family Maintenance Act in 1920. It has undergone various changes since then and is currently undergoing a significant revision. In fact, BC’s proposed legislation (Bill 4) is moving toward vesting a discretion in the court to review intestate distributions as well as testate distributions.

• Today all Canadian common law jurisdictions have dependent relief legislation but they differ in many respects from other common law (e.g., English and Australian) statutes.

• THUS, great care needs to be taken when relying on cases from other jurisdictions; not only can the legislation be substantially different from that in BC but even similar legislation has been interpreted differently by the courts of the various jurisdictions.

• The LEADING CASE in BC regarding variation of a will under the BC Wills Variation Act is Tataryn v. Tataryn (SCC, 1994)

99

2. BC Wills Variation Act

General Overview

• s. 1 – definitionso “spouse” = married and CL spouses (“marriage like rel for more than 2 years”), including

same-sex spouseso “Nisga’a citizen” = same meaning as in Nisga’a Final Agreement

• s. 1.1 – will or cultural property of Nisga’a Citizeno deals with actions with respect to the will of a Nisga’a citizen that deals with cultural

property

• s. 2 – Maintenance from estateo Despite any law or statute to the contrary, if a T dies leaving a will that does not (in the

court’s opinion) make adequate provision for the proper maintenance and support of T’s spouse and children*, the court may, in its discretion, order that the provision that it thinks “adequate, just and equitable in the circumstances” be made out of T’s estate for the spouse and children.

o Requires action by or on behalf of the spouse / children* for court to consider the issue.

• s. 3 – Time limit and serviceo Action must be commenced within 6 months of the issuance of probate of the will in BC.

o Executor of T’s estate must be served with writ of summons (stops running of LP).

o Public Trustee and Guardian must be served with writ of summons if there are minor children or if spouse or child of T is mentally disordered,

• s. 4 – Representative actiono Where action is commenced on behalf of a person, it may be treated by the court as an

action on behalf of all persons who might apply (as far as LP is concerned) – i.e. only takes one writ of summons to stop the 6-month clock.

o Where land might be affected by action – plaintiff must register a certificate of pending litigation under Land Titles Act against land sought to be affected by action within 10 days after the issue of the writ of summons.

• s. 5 – Evidence o Court may accept the evidence it considers proper of T’s reasons, so far as

ascertainable, for making the dispositions made or for not making adequate provision for spouse and children including any written statement signed by T.

o Court must have regard to all circumstances from which an inference may reasonably be drawn about the accuracy of any statement made by T.

• s. 6 – Court may make order subject to conditionso Court may attach such conditions to an order made under the Act that it thinks fit.

o “Clean hands” Court may refuse to make an order in favour of a person whose character or conduct (in the Court’s opinion) disentitles the person to the benefit of an order under the Act.

100

• s. 7 – Lump sum of periodic paymentso Court can make an order for a lump sum, periodic or other payment (see Picketts, BCSC

vs. BCCA – and reasons in favour of lump sum – below)

• s. 8 – Payments fall rateably on Estateo (1) Unless otherwise stated, payment ordered is to fall rateably on the whole estate.

o (2) If authority of Court does not extend or cannot directly or indirectly be made to extend to the whole estate, (1) applies to as much of the estate as is located in BC.

• s. 14 – Court may cancel or vary an ordero Where periodic payments are ordered or where a lump sum is invested for some person,

the Court may:

(a) Inquire whether at any subsequent date the party benefited has become possessed of or entitled to provisions for that person’s proper maintenance or support, and into the adequacy of those provisions; and

(b) May vary or suspend the order or make another order that is just in the circumstances.

• s. 15 – Appeal to BCCAo A person who considers himself or herself prejudicially affected by an order made under

the Act may appeal to the Court of Appeal.

o Note : CA reviews the BCSC decision on a correctness standard and is thus free to come to its own determination of what is “adequate, just and equitable” (e.g. Bridger, but see Bill 4)

Who May Apply – Standing

• Married spouses (s. 1)

• CL spouses – i.e. marriage-like rel for more than 2 years (s. 1)o Test : objective and subjective arms of test (Gostlin)

objective factors: (Molodwoich v. Penttinen) 1. shelter arrangements 2. sexual and personal behaviour (*conjugal relations not determinative) 3. domestic services/chores 4. social activities/holding out 5. financial arrangements (how financially independent) 6. attitude/conduct towards children 7. viewed by community

subjective factors: (Gostlin) - note: may be better for “modern marriages” intentions of the parties to live as married couple, including what

obligations they would have felt to each other if one had been physically or mentally disabled during course of rel (evidence of commitment)

• Children, includes natural or adopted children, but excludes step-children (McCrea)

McCrea v. Barrett (BCSC, 2004): Step-children do not have standing under the WVA1) Facts: T did not provide for common law spouse, CM, or stepchild, KM, in his will [although it did provide for “all

my children”] so CM on her behalf and on behalf of KM sought a declaration under the Wills Variation Act (“WVA”) that she and KM were entitled to claim a remedy under the WVA. Application for a declaration was brought procedurally under Rule 18A – this was not a trial under the WVA provisions.

2) Issue: were T and CM in a “marriage-like” relationship for purposes of the WVA; and was KM a “child” for

101

purposes of the WVA.3) Held:

a) Issue of relationship of T and CM to be determined at trial when evidence of witnesses can be assessed by the trier of fact.

b) Issue of whether KM was a “child” for purposes of the WVA was decided against KM on the basis that stepchildren are not entitled to claim under the WVA.

4) Analysis:a) WVA allows for children of the testator to seek relief under the Act but the term “child” or “children” under the

WVA does not include the stepchildren of the T (i.e., a child who has a relationship with the T but is neither the natural or adopted child of the T)

b) The exclusion of a stepchild from the definition of “child” under the interpretation of that term as used in the WVA is not discriminatory under the Canadian Charter of Rights and Freedoms.

The Court’s Discretion

GR (as per Tataryn):• s. 2 of WVA imposes a duty on a T to adequately provide for the proper maintenance and support of

a surviving spouse and children.

• If T fails to discharge this duty, a court may (in its discretion) order for the claimant the maintenance from the estate that it considers “adequate, just and equitable in the circumstances”

• In exercising this discretion, the court must balance the two interests protected by the WVA, namely, (1) testator autonomy, and (2) the right of spouse and children to receive an “adequate, just and equitable” amount of maintenance (Waldman)

• To determine what is “adequate, just and equitable” the court will consider:

o Legal obligations – what the law would impose on a person during his or her life were the question of provision for the claimant to arise – it is the minimum level of what is “adequate, just and equitable” (Picketts; Glanville); and

Spouses maintenance and property allocations owing to a spouse under family law (i.e. Divorce Act; FRA; constructive trusts if CL) – consider:

Length of marriage/relationship, Spouse’s contributions to family assets Factors to negate entitlement (i.e. incompetence?)

Dependent children Independent children avoid unjust enrichment where children who have made

contributions to the estate

o Moral obligations – society’s reasonable expectations of what a judicious person would do in the circumstances, by reference to contemporary community standards (Waldman)

Spouse and dependent children - consider length of relationship, contributions, & the size of the estate, whether both spouses intended it to be used to provide for their old age whether surviving spouse cared for T in his/her declining years (Bridger) wishes or promises of T (Pickett) means and needs of spouse (Pickett)

Independent children more tenuous, but look to size of the estate, wishes of T, means and needs of children (Pickett); estrangement, disability (Doucette)

BUT if a parent has a valid and rational reason to disinherit, the moral obligation will be overborne ( Doucette )\

• If T has provided for his/her spouse and children within the range of what is considered “adequate, just and equitable”, such a provision will not be disturbed. However, if the provision falls below this range, the court shall make an order (Picketts; Crerar Estate; Lee Estate; Walman v. Blumes!!!!!)

102

Tataryn v. Tataryn (SCC, 1994)1) Facts:

a) T’s will left a life estate in matrimonial home to spouse, M, with a gift over to son, E, to the exclusion of his other son, J, whom he disliked.

b) E was trustee of trust for spouse (capital and interest could be used for support) with balance to E on his mother’s death.

c) T’s will explained the reasons for his distribution – his dislike for J and his fear that M would share estate with J if amounts were left to her.

d) J and M brought an application under the WVA and the trial judge’s decision was to make minor changes to the will including an immediate gift to J and E of $10K.

e) J and M appealed, but Court of Appeal upheld trial judge’s decision although it clarified a couple of issues relating to E’s trusteeship.

f) M appealed to the SCC.2) Issue:

a) Whether courts below erred in their interpretation of the WVA s. 2 – what considerations should govern a court faced with an application under this section of the WVA.

3) Held:a) “Legal claims” entitle M to at least half the estate.b) “Moral claims” entitle M to the funds set aside for her in old age indicate that an “adequate, just and

equitable” provision for her requires giving her the bulk of the estate. c) Moral claims of sons, J and E were satisfied with the $10K awarded at trial together with a residuary interest

in a portion of the property left after M’s death (1/3 to J and 2/3 to E).

Bridger v. Bridger Estate (BCCA, 2006)1) Facts:

a) Appeal by Mr. Bridger’s (i.e., T’s) three adult daughters from his first marriage from a wills variation order – where trial judge made an order providing for T’s second wife, Mrs. Bridger, with 25% of net estate of $300K and $125K from proceeds from revenue properties.

b) The Bridgers had made wills in 1981 which recognized that this was their second marriage and it appears that each intended to take care of their respective children from their first marriages and that neither would attempt to benefit from other’s estate.

c) Trial judge approached the will variation issues by first considering the positions of Mr. and Mrs. Bridger if they had separated immediately before his death (legal obligations). Following T’s death Mrs. Bridger obtained all proceeds from sale of various properties less tax ($400k). Judge concluded that need was not a factor to be considered in the apportionment of assets. He found that each had adequate pensions and money to invest. He concluded that had the two separated Mrs. Bridger would have had little or no entitlement to receive spousal support. He also concluded that need was not a factor in the claims from the T’s daughters.

d) After finding that there was no financial need on either side the trial judge turned to T’s moral obligations and concluded with respect to Mrs. Bridger, society’s reasonable expectations with reference to contemporary community standards are that the T would make additional provision (over an above whatever minimum legal property and support obligation lay upon him) for his wife in his will.

e) Judge found that there was no doubt that T had moral obligations to daughters as well. T recognized this in his will and judge held that no order varying T’s will should seriously frustrate that obligation.

f) Bearing in mind that duties to spouses outweigh obligations to independent grown children and that Mrs. Bridger had already received more than half of the couple’s combined assets and that T’s estate was relatively small, the judge concluded that “just, adequate, and equitable” provision for Mrs. Bridger would be 25% of T’s estate with daughters sharing the remaining 75% equally between them.

2) Issue:a) Did trial judge consider all the relevant factors – legal and moral duties of T – when considering T’s will and

a WVA application.3) Held:

a) Trial judge balanced the competing moral duties of T to his wife and to his children as the WVA requires. In so doing he did not fail to give adequate weight to any relevant factors and it was not unfair to allocate all of the proceeds of the real estate and 25% of balance of estate to his wife on the facts of the case.

b) The fact that Mrs. Bridger would benefit her sons with assets from T’s estate arising from the variation order was treated as irrelevant by the trial judge. That was a factor that arose due to Mrs. Bridger living frugally; it was her choice and beyond the purview of the Act.

103

Picketts v. Hall Estate (BCSC, 2007)1) Facts:

a) T died at age 96 (after lengthy illness) and had lived lovingly in a common law relationship for 21 years with P. There had been discussions of marriage but it never happened but T promised to “take care” of P. P had dedicated herself to T’s care and not allowed him to be placed in a nursing home.

b) T’s estate was worth $18 million. c) P made a claim under WVA – it was conceded that T had not made adequate provision in his will for P

2) Issue:a) What provision should have been made in T’s will for P.

3) Held:a) T’s will varied to provide a lump sum to update P’s home ($400K) plus $175K per annum of maintenance

and support and additional funds (when and if necessary) for nursing support of P in her old age.4) Analysis:

a) it is not the function of the Court to remake the wills of Ts; it is the duty of the Court to implement the T’s dispositions except insofar as those dispositions fail to accord with the requirements of the WVA (Crerar Estate)

b) the legal obligation defines the minimum acceptable level of what is adequate, just and equitable (Glanville)c) Legal obligations - under the Family Relations Act, P had no right to a share of T’s property, unless she

could make out a claim of constructive trust and unjust enrichment, but she would have been entitled to support and maintenance – in fact, a substantial amount due to the length of their relationship.

d) Moral Obligation – considered important were the 21 year relationship; the fact that P had been supplementing the family’s monthly allowance for many years by dipping into her own savings (questionable); her dedicated care of T during his lengthy illness;i) The moral duty side of Tataryn formula is best served by a regime in which P is secure in the enjoyment

of the standard of living she enjoyed while T was alive; a regime in which she need not worry about her financial position for the rest of her life.

ii) This is best secured by assuring P a proper annual income for life. Periodic, rather than lump sum payments also best reflect T’s wishes and honour his choice of the proper way to “take care” of P.

Picketts v. Hall Estate (BCCA, 2007) – moral claim > legal claim; virtues of lump sum payments 1) Facts

a) Picketts appealed the BCCA’s decision seeking a lump sum of $9M.2) Held:

a) Appeal allowed - $5M, family home and settled amount for Hawaii home3) Analysis:

a) In this case, T’s moral obligation was more important than his legal obligationb) A proper adjustment in allocating the estate to Pickett would not risk any harm to the lesser moral

obligations T owed to his two sonsc) It was not a viable option for the court to approve a disposition that substantially preferred the moral claims

of adult independent children to those of a long-term, caring and dedicated spoused) Considering the absence of the testator's legal obligation to his sons, the length of the common-law

relationship, the appellant's agreement to give up her career, and the husband's promise that he would take care of the appellant as if she were his wife, the husband had a substantial moral obligation towards the appellant.

e) **The appellant was entitled to administer her own financial affairs without being dependant on the estate.f) **She was also entitled to a measure of testamentary autonomy of her own so that she could pass her own

estate to whomever she wishedg) It was adequate, just and equitable for the appellant to receive from the estate a lump sum payment of $5

million plus the family home, the personal and household effects, and the settled amount for the Hawaii condominium.

Walman v. Blumes, 2009 BCSC, Facts:

T died leaving adult children from his first marriage and a spouse and minor children from his second marriage. T’s will left nothing to his children and entire estate to second wife

Issue: On a WVA app, should T’s will be varied to provide maintenance and support to children (all)

Held: Legal Ob to spouse and minor children, and Moral Ob to adult children. $75,000 lump sum ordered to be paid from estate to each of the adult children claiming under WVA. Minor

104

children were permitted to negotiate settlement with their motherAnalysis:

Obligations to second wife and children are of higher degree than moral obligation to adult children, whom T had already assisted growing up (schooling, housing, etc)

Summary of considerations governing the competing principles in WMA applications:1. Main aim of WVA is the adequate, just and equitable provision for the spouses and children of the T2. The other interest protected by the WVA is testamentary autonomy. Such freedom to dispose of T’s property

as he or she sees fit is to be interfered with not lightly but only insofar as the statute requires3. Test of what is “adequate and proper maintenance and support” under s.2 WVA is based on an objective

analysis:a. Society’s reasonable expectations of what a judicious parent would do in similar circumstances

by reference to contemporary community standards – T’s own subjective view of having properly provided for spouse or children is irrelevant.

4. The words “adequate” and “proper” can mean two different things depending on the size of the estate. A small gift may be adequate but not proper if the estate is large.

5. Court must first consider legal obligations of T to the spouse or children and, second the moral obligations to the spouse or children

6. Moral claim of independent adult child is more tenuous than the moral claim of a spouse or dependant adult children. But if size of estate permits, some provision for adult independent children should be made

7. Examples of moral obligations: disability, assured expectations, implied expectations arising from large estate or treatment of child during T’s life, present financial circumstances, probably future difficulties, size of estate, other legitimate claims

8. Circumstances that will negate moral obligation – “valid and rational” reasons for disinheritance9. “Needs test” not sole factor but consideration of needs of adult independent child is still relevant

Property Available to Satisfy a Claim

General Rules – re inter vivos trust

• Property in an inter vivos trust is NOT subject to a wills variation application, even if done to avoid possible claims under the WVA (Mordo)

• The trust CANNOT be attacked under the Fraudulent Conveyances Act since a claim by a “child” or “spouse” is not a claim by a “creditor or others” (Hossay v. Newman)

• The Crown has NO claim for probate fees since the property in an inter vivos trust never passes through the deceased’s estate (Mordo)

BCLI Report – Recommended Changes (not followed)

• Changes in the area of dependant relief are designed to:o Bring BC legislation into greater harmony with similar legislation in other Canadian jurisdictionso Bake it harder to avoid the effect of the legislation (see e.g. Mordo)

• Key components of the recommendations were:

1. permits a court to vary scheme of intestate distribution

2. restricts eligibility of children of deceased who have attained majority (19) to claim relief to those unable to be self-supporting due to special circumstances (e.g., mental or physical disability, illness and students)

3. Inclusion of minors who are stepchildren in the class of eligible claimants if the deceased supported them for at least 1 year immediately prior to death.

105

4. Distinguishes between the form of relief available to surviving spouses and that available to non-spouse claimants. A spouse would be entitled to “just and equitable” provision out of the estate if the will fails to provide it (continues present law). Non-spouse claimants would receive periodic maintenance of limited duration (except for those who will never be self-supporting) although the court could provide for a lump sum present value equivalent to the maintenance payments if long-term maintenance is required.

5. The distinction in form of relief introduced in this Part is justified because it allows the Court to award a surviving spouse the equivalent, at a minimum, of what the spouse would have received if a matrimonial property division had taken place under the FRA

6. An anti-avoidance provision has been included to prevent the rights it confers from being defeated by a deliberate disposition of property made for the purpose of nullifying rights under the WVA (see s. 95, below)

7. Existing WVA provision regarding appeals to BCCA (s. 15) has been omitted with the intention that future appeals from orders made under Model Act would be decided under general appellate jurisdiction and subject to the ordinary standard of appellate review.

Bill 4

Maintenance from Estate S. 60 – if a will-maker dies leaving a will that does not, in the court’s opinion make adequate

provision for the proper maintenance and support of the spouse or children of the will maker, the court may…order that the provision that it thinks adequate just and equitable in the circumstances be made out of the will-maker’s estate for the spouse or children

Limitation on Bringing an Action S. 61 – An action commenced by a perso claiming the benefit of this Division must not be heard

by the court unless:o (a) The action is commenced within 180 days from date the representation grant issuedo (b) A copy of the writ of summon shas been served on the executor of the wil no later

than 30 days after the expiry of the 180 day period referred to in (a) ANDo (c) If there are minor children, or if the spouse or a child of the will-maker is mentally

incapable, a copy of the of the writ of summons has been served on the Public Guardian

Evidence to be Received by Court S. 62 (1) – In an action under 60, court may accept evidence it considers proper so far as it may

be determined,o (a) For making the gifts made in the will, ORo (b) For not making adequate provision for the will-maker’s spouse or childreno Including any written statement signed by the will-maker

(2) – Court must have regard to all the circumstances from which inference can be reasonably drawn about the accuracy of the statement, when estimating weight

Court Orders S. 63 – the court may

o (a) Attach to an order under this Division any conditions it thinks appropriate ORo (b) Refuse to make an order in favour of a person whose character/conduct disentitles

the person to the benefit of an order under this Division

Court Orders for Lump Sum or Periodic Payments, Transfer of Property or Trust S. 64 – In making an order under this Division, the court may order that

106

o (a) The provision for spouse/children is to consist of a lump sum, a periodic or other payment or a transfer of property, OR

o (b) A trust be created in favour of the will-maker’s spouse or childrenCourt may Cancel or Vary Order:

s. 71 – From an order made under 60, the court may:o (a) inquire whether changes in the circumstances of the person have resulted in the

person’s entitlement to adequate provision separate from the order, ANDo (b) Cancel, vary or suspend its order, or make another order

Appeal to Court of Appeal s. 72 – A person who considers him/herself prejudicially affected by an order under this Division

may appeal to the Court of Appeal.

Mordo v. Nitting (BCSC, 2006) – inter vivos trust to avoid WVA is upheld as valid1) Facts:

a) EM established an inter vivos trust pursuant to which she was entitled exclusively during her lifetime to capital and income from the trust with gift over on her death to her daughter, V, (to the exclusion of her son, A). It was suggested that one reason for the trust was to avoid a Wills Variation Act (“WVA”) claim by A.

b) On EM’s death A alleged that the trust was invalid and that the assets of trust were available to satisfy any award to him under the WVA.

c) The court found the trust valid and WVA application by A failed. It addressed the argument that it should have been void on the grounds of being against public policy.

2) Issue:a) Was inter vivos trust valid or void as against public policy?

3) Held:a) WVA application fails and inter vivos trust was upheld.

4) Analysis:a) I cannot agree with A’s assertions: inter vivos trusts and alter ego trusts are standard estate planning tools. b) As noted in Waters Law of Trusts at pp. 593-594, “trusts are often used to avoid probate fees and achieve other

legitimate estate planning objectives.”c) Issue of arranging ones affairs to avoid possible claims under WVA in circumstances such as these was decided

by the Court in Hossay v. Newman (1988, BCSC) where it was held that the claim of an independent adult child under the WVA on moral grounds is not a claim by “creditors or others” under the Fraudulent Conveyance Act and that has not changed since Hossay.

d) As to claims by Crown for probate fees – no fees are payable unless assets pass through an estate and an application from probate or administration is granted. There is no liability to the Crown if no application is made or no assets pass through the estate of the deceased.

5) Comments:a) But Waters does not state that trusts can be used to avoid wills variation act claims

107

3. Contractual Restraints

Trigger: • Where you are dealing with contractual restraints regarding how assets can be distributed

o e.g. privately held corporation with unanimous shareholder agreement (USA) as to how shares can be distributed.

General

• A unanimous shareholder agreement can put restrictions on bequests in a will (Harvey; Frye)

• ALWAYS check the USA or articles when dealing w/ a bequest of shares in a will

Harvey v. Harvey (BCCA, 1979)1) Facts:

a) T and her 2 sons (F and R) were sole shareholders in Harvey Stores Ltd. F and R were the directors of the company. Article 2 of articles of association read, in part:

“Shares may be transferred from one member to another but no shares shall at any time be transferred to any person not already a Shareholder of the Company, so long as any Shareholder is willing to purchase the same…”

b) T’s will left her shares to her grandson, E, the son of R. c) F and R are the executors of the will. E sought an order that he be registered as a shareholder of the

company or, alternatively, a declaration that he was entitled to transfer the shares to his father, R, who is an existing shareholder and would be entitled to registration.

d) Trial judge ordered that E’s ownership be registered. F, who wanted to purchase the shares, appealed the judge’s order.

2) Issue:a) Did the articles prohibit the bequest of the shares to E?

3) Held:a) Articles do not prohibit the bequest of the shares to E. b) F and R were to apply for registration as the (legal) owners of the shares [in their capacity as executors] and

that as the directors of the company they cause the registration to be carried out.4) Analysis:

a) Provisions in article 2 did not prohibit the transfer from a shareholder on death or otherwise, rather, so long as F is a member of the company and is willing to purchase from the executors T’s shares, article 2 prohibits the entry on the company’s register the transfer of T’s shares to E (since he is not a member).

b) However, while R is a member, article 2 permits entry in the company’s register the transfer of said shares by the executors to R (presumably pursuant to E’s instructions) if and when made.

Frye v. Frye Estate (Ont. SCJ, 2006)1) Facts:

a) T’s will transferred shares in the family business to his sister. Shareholder challenges T’s right to transfer shares by will due to restrictions on transfer without consent of other shareholders as set out in the shareholder’s agreement.

2) Issue:a) Could shares subject to a shareholders’ agreement which places restrictions on their transfer without

consent be transferred by will without consent?3) Held:

a) T is bound by shareholder’s agreement and had no right to transfer shares to sister by will.4) Analysis:

a) The restrictions set out in the USA applied to dispositions in a will

108

INCAPACITY PLANNING*Adult Guardianship and Planning Statutes Amendment Act, 2007 (Bill 29)• This legislation has received Royal Assent but has not yet been proclaimed in force. If the new Act

comes into force it will repeal the Patients Property Act, R.S.B.C. 1996, c. 349, and strengthen and clarify representation agreements and enduring powers of attorney. The new Act will also amend the Health Care (Consent) and Care Facility (Admission) Act, R.S.B.C. 1996, c. 181, to include advance directives for health care.

1. Power of Attorney at Common Law

Trigger: where D is mentally or physically unable to do things, temporarily out of country, etc.

General

• At common law a POA is a document that evidences the authority granted by one person, “D”, known as the donor, (sometimes referred to as the grantor or principal) to another, “A”, known as the attorney (sometimes referred to as the donee, grantee or agent) to act on his or her behalf in conducting some financial transaction that D could otherwise do him or herself (except make a will).

• Donor (D) grants POA Attorney (A)

• POA may be general (i.e. all acts D could do, except make will) or specific (i.e. sell specific property, pay bills)

• Once established, POA will result in A’s signature being accepted by 3rd parties as representing and legally binding D

• Policy : D should have a great deal of trust in A’s faithfulness and loyalty

• Prudent to select alternative attorneys – A has a fiduciary duty to D – must answer to D and those interested in D’s estate

Revoking POA at Common Law

• D can revoke a POA at any time provided he or she has mental capacity to do so. o This is typically done by writing signed by D and delivered to A. o Should advise 3P who have been relying on the POA (e.g., banks, investment brokers…)

• Death of D automatically revokes the POA – o At that time the executor (under a will) or administrator (intestacy) will have authority to act on

behalf of D’s estate. o POA does not survive the death of D and A must cease to act upon learning of D’s death.

• Automatically revoked with the mental incapacity of D o Based on the principle of agency law (i.e. agency relationship terminates on death and mental

incapacity of principal) o Practically speaking, then bank should have to ask if D has mental capacity each time A tries

to engage in transaction on behalf of D – not the case from estate planning view

109

o But see BC Power of Attorney Act – which allows enduring POA as long as written instrument specifies that POA continues during mental incapacity of D

Statutory Power of Attorney

*Side note: if D has property outside of BC, a BC POA may not be recognized in that other jurisdiction. Thus, it is important to consult with legal counsel regarding formalities of POA in that jurisdiction.

TRIGGER: client only wants to deal with financial affairs in event of mental incapacity

Power of Attorney Act BC:

• s. 8 - enduring POAo (1) While D is mentally capable (Egli), he/she may make an enduring POA conferring on an A

powers to handle financial affairs should D become incapable, provided that (a) The written instrument provides that the authority is to continue despite any mental

infirmity of the donor AND (b) Is signed by the donor and by a witness to the signature of the donor, other than the

attorney or the spouse of the attorney

o (2) BUT this enduring POA terminates on (a) the making of an order under the Patients Property Act, (b) on the appointment of a committee under s. 6 Patients Property Act, or (c) as provided in section 19 (a) or 19.1 (3) (a) of that Act.

• s. 9 – short formo (1) general POA may be in Forms 1 or 2o (2) use Form 2 if more than 1 attorney is being used

Property Law Act BC

• s. 27 – A restricted from dealing w/ lando Unless a POA expressly authorizes it (or the D ratifies the sale) the A named in the POA cannot

sell, transfer or charge (in favour of A) land owned by the D. Policy: to protect D from fraudulent POA But see s. 331, Criminal Code

• s. 27.1 – Representative restricted from dealing w/ lando Unless a representation agreement (made pursuant to the Representation Agreement Act)

expressly authorizes it, a representative cannot sell, transfer or charge (in his or her favour) land owned by the adult on whose behalf there is a representation agreement.

Criminal Code of Canada • s. 331– theft by A

o You commit theft if being entrusted with a POA for the sale, mortgage, pledge or other disposition of real or personal property, fraudulently sells, mortgages, pledges or otherwise disposes of the property or any part of it, or fraudulently converts the proceeds or any part of the proceeds to a purpose other than that for which he was entrusted by the POA.

TYPES of POA

1. General POA – without restrictions

110

2. Specific/Limited POA – restrictions set out in instrument

3. Enduring POA – requires clause in POA to provide for it to endure even after D become mentally incompetent (see s. 8 of Power of Attorney Act)

4. Springing POA – Goodrich v. BC (BCCA, 2004) – one that can be used by A from time to time but only upon subsequent mental incapacity of D

Permitted Investments by Attorney

• Trustee Act will apply where A is responsible for investing assets of D unless there are specific instructions in the POA which differ:

• s. 15.1(1): A trustee may invest property in any form of property or security in which a prudent investor might invest, including a security issued by an investment fund as defined in Securities Act.

• s. 15.1(2) – exception – corp. trustee cannot invest in its own securities

Delegation of Investment Functions

s. 15.5(2): A trustee may delegate to an agent the degree of authority with respect to the investment of trust property that a prudent investor might delegate in accordance with ordinary business practice.

s. 15(3): if delegate, trustee must exercise prudence ino (a) selecting an agent,o (b) establishing the terms and limits of the authority delegated,o (c) acquainting the agent with the investment objectives, ando (d) monitoring the performance of the agent to ensure compliance with the terms of the

delegation.

Obtaining investment advice likely part of duty of care of prudent investor (Cowan) Mutual Fund Investments technically example of delegation, but s. 15.5(7) allows it

CAPACITY of DonorGeneral

1. PofA executed by someone mentally incompetent is void (Egli)

2. The capacity of the donor will always be a factual decision for the trial court to make based on the evidence (Egli)

o the donor must have a general appreciation of the enabling power he or she is bestowing upon the donee of the power

3. Watch out for suspicious circumstances (see Teffer)

Egli (Committee of) v. Elgi (BCCA, 2005) – D must have mental capacity when granting POA under s. 81) Facts

a) In 1998, F gave S PofA when his mental capacity was questionable. b) Public Guardian & Trustee intervened after it was appointed Committee for F and questioned transfer of real

property of F by son from sole ownership by F to joint tenancy by F, S and spouse of S.

111

2) Issuea) Did F have capacity to grant PofA to S in 1998 – what is the standard to be applied in assessing capacity of

donor of PofA?3) Held

a) F had capacity to grant PofA to S in 1998 – appeal by PG&T dismissed. b) Real estate transfer is upheld.

4) Analysisa) It may not be necessary to treat the test for testamentary capacity as being the standard required for valid

execution of PofA, yet the donor must have a general appreciation of the enabling power he or she is bestowing upon the donee of the power. The donor must be cognizant of the circumstance that the donee is being granted a broad power to deal with the property of the donor.

Teffer et. al v Schaefers (Ont.SCJ, 2008)1) Facts:

a) The grantor of the Power was 87 at the time of signing, and had been diagnosed as an Alzheimer's sufferer. b) A Power she had granted 8 years previously was held to be of doubtful validity.

2) In 2006, she appointed granted POA to a lawyer 3) Held:

a) The appointed Attorney was removed by the Court from having any future authority to act. b) The Power was  fully   invalid for lack of capacity.

4) Commentsa) Should a lawyer or financial institution presented with a PofA be considered negligent for relying on it?

i) Probably not; but perhaps it would always be cautious practice to simply ask - “Is this PofA valid”? 

POWERS AND DUTIES OF ATTORNEY

A/ General Duties (*can be modified by instrument)

• Fiduciary duties imposed on A due to agency relationship w/ D – e.g. A must act in best interests of D (see Tim v. Lai)

• Duty not to delegate - Attorney cannot (sub)delegate unless authorized by PofA (see Re Bussche) or by statute (see Trustee Act, s. 15.5)

• Duty of loyalty - Attorney NOT entitled to remuneration unless authorized by PofA

• Duty to provide information - attorney must keep proper records and is liable for failure to keep proper accounts (see Deacon)

• See more stringent requirements in McMullen

• Duty of care - to exercise reasonable care as would a typically prudent person managing his or her own affairs, and not act contrary to the interests of the donor (McMullen)

B/ Powers

• Depends on the construction of the instrument granting POA (Desharnais)o Authority must be found in the 4 corners of the instrument (express or implied)

• If instrument is silent, the general restrictions on an agent’s authority under agency law apply (Desharnais):

o Making a will; o Exercise of a power of a discretionary nature given personally to a donor;o Exercise of the donor’s duties as a trustee or executor (unless allowed by the instrument

appointing the donor, or by statute);

112

o Serve a prison term;o Any limitations imposed upon an attorney by fiduciary obligations owed to the donor;o Anything illegal

Desharnais v. TD Bank (BCCA, 2001): cannot make testamentary dispositions1) Facts:

a) KH granted an enduring PofA to his friend D and designated her the beneficiary of his TD RRSP. b) Through a series of mishaps and the incapacity of KH, the RSP was transferred to a TD bank associated

company (TD Evergreen) per D’s instructions without continuing the beneficiary designation in favour of D. c) On KH’s death the proceeds from the RRSP were paid to his estate of which D was not a beneficiary. d) D sued for the proceeds of the RRSP and claimed that TD Bank and TD Evergreen breached a fiduciary

duty owed to her or were negligent.2) Issue:

a) Did D have power to transfer the RRSP and change the beneficiary designation on behalf of KH?3) Held:

a) D had the power to transfer the RRSP from TD Bank to TD Evergreen (and open a new RRSP with Evergreen) but she did not have the authority to make a testamentary disposition similar to a beneficiary designation.

4) Analysisa) Revoking her own beneficiary designation under one RRSP and attempt to designate herself under the new

RRSP was a testamentary disposition – a change which an attorney could not do as under the Law and Equity Act (BC) (s. 49)

b) only KH could alter or revoke the designation.

McMullen v. Webber (BCSC, 2006): Failing to account as required by PoAA – breach of duties1) Facts

a) F grants an enduring PofA to his 3 children, exercisable by any two of them. The PofA required A to account to F on a regular basis whenever A assists F with his financial affairs.

b) Children feared F was being manipulated by a much younger woman and transferred F’s condo to their spouses (and F – 1%) to protect F. They never told F about the transfer or accounted to him.

c) F discovered the transfer and sued for transfer of property back to him.2) Issue

a) Where A was acting to “protect” F by transferring his property without an accounting – was A in breach of fiduciary duties?

3) Helda) Notwithstanding their attempt to protect their father, the children breached their fiduciary duties owed to F by

failing to account as required by PofA and by failing to act only in accordance with F’s interests.4) Analysis

a) An attorney acting under a PofA is bound to the duties enunciated on the face of the instrument granting the power.

b) Relationship between attorney and donor is fiduciary and attorney owes fiduciary duties to donor (i.e. act in best interests of D)

113

3. Representation Agreements

TRIGGER: if client wants to delegate power over financial and personal affairs

*note: authority over health-care decisions only kicks in when D is incapacitated; whereas authority over financial decisions can occur when D is still of capacity

Representation Agreement Act

• A person, while mentally capable, may make a representation agreement conferring on a representative powers to deal with the financial OR personal affairs (i.e., matters other than financial, like place of residence or provision of health care) should that person become incapable.

• DOES NOT include advance directives, that is, a document in which the person gives express directions about how health care is to be given, or not give, if that person become incapable.

*Note: The Adult Guardianship and Planning Statutes Amendment Act, 2007 (Bill 29 – 2007) strengthens and clarifies representation agreements (and enduring powers of attorney). It contains provisions on advanced directives. It has received Royal Assent but has not yet been proclaimed in force.

• s. 8 – lower std for capacityo Test for incapacity for standard representation agreement in s. 7 of Act o s.8 - adult may make a rep. agreement under s. 7 even thought the adult is incapable of

making a contract or managing his or her health care, personal care, legal matters, financial affairs, business or assets.

• s. 9 – higher std for capacityo Test for incapacity for enhanced provisions in s. 9 of Act (b/c allows rep to do more)o s.10 -- adult may authorize a rep agreement under s. 9 unless the adult is incapable of

understanding the nature of the authority and the effect of giving it to the representative

Types of Representation Agreements

s. 7 – Standard Rep Agreement

(rep to help make decisions or make decisions on behalf of adult)

• Lower capacity test• Requires monitor to be appointed in certain cases

(s.12)• No need for a lawyer (but not a bad idea)• Must be in writing and must meet execution

requirements (s. 13)• Can provide for alternate representatives

s. 9 – Enhanced Rep Agreement

(rep authorized to do any or all of the enlisted items on behalf of adult)

• Higher capacity test• ** Legal counsel needed (s. 9(2)(a)(i))+certificate)• Used for major health care decisions (including

refusing care)• Financial matters and permitted decisions must be

listed• Exhaustive listing requirements• Must be in writing and must meet execution

requirements (s. 13)• Can provide for alternate representatives

114

4. Substitute Decision Makers

TRIGGER: if client is incapacitated and needs medical treatment but does not have a representation agreement or an advanced directive

Health Care (Consent) and Care Facility (Admissions) Act

• Act deals with decisions by adults relating to health care consent and care facility admission and who can make “substitute decisions” on behalf of adults relating to care and admission issues.

5. Advanced Directives

Health Care (Consent) and Care Facility (Admissions) Act

• s. 19.1 – 19.9– Advanced directives (not in force yet) *

o The sections deal with “Advance Directives” and allow “capable” adults to make advance directives to give or refuse consent to any health care set out in the advance directive unless:

(a) It is prohibited by law; or (b) Requires omission of anything that is required by law

o Contemplates that an adult may have both a representation agreement and advance directives.

*Note: these sections are added to the Health Care (Consent) and Care Facility (Admissions) Act (BC) by Bill 29 – 2007 (Adult Guardianship and Planning Statutes Amendment Act 2007 – not yet proclaimed in force)

6. Committees

TRIGGER: if client wants to appoint a person to manage their estate or person; or if client fails to and court is forced to appoint at which time all prior POA or rep agreements are terminated

Legislation – Patients Property Act *

*to be replaced by the Adult Guardianship Act once by Bill 29 – 2007 (Adult Guardianship and Planning Statutes Amendment Act 2007 – is proclaimed in force)

• s. 1 – definition of “patient”o (a) Includes a person who due to mental infirmity is described in a Mental Health Act

certificate as being incapable of managing his or her affairs or o (b) Someone declared by a judge as incapable of managing his affairs or himself or both.

• s. 2 – judicial declaration of “patient”o The AG, a near relative or other person may apply to court for an order declaring that a

person is incapable of managing his affairs or incapable of managing himself (or both).o THUS a person can be a committee of “estate and/or person”.

Committee of person Committee of estate Committee of estate and person

115

• s. 6 – Court appointed Committeeo A court may appoint a committee to handle the financial or person affairs or both of a

person found to be incapable

• s. 9 – Individual appointed Committeeo While competent to do so , an adult may nominate a committee who is to be appointed

unless there is good and sufficient reason for Court refusing the appointment

• s. 16 – court imposed restrictions on Committee powerso Court can attach conditions or restrictions on Committee’s exercise of powers, etc.

including requiring the written consent of PG&T prior to exercise of power, etc.

• ss. 15 +17 – general powers of Committee o Subject to s. 16, these provisions sets out the powers of the committee and limits on

those powers; also the rights, powers and privileges vested in the committee

• investment powers Committee becomes a “trustee” and s. 15.1, Trustee Act applieso Standard of “prudent investor”

• s. 18 – general dutieso Committee must exercise the powers for the benefit of the patient and the patient’s family

having regard to the nature and value of the property and the circumstances and needs of the patient and his or her family (see O’Hagan)

E.g. X in coma – committee in charge of estate – committee wants to re-organize estate, but changes must comply w/ s. 18 (see also s. 28 – orders of ct)

• s. 19 – termination of all prior POA and RAo Where a person becomes a “patient” by Court order under s. 1(b) of the Act

Every PofA given by the person is terminated , and Unless the court orders otherwise, every representation agreement made by the

person is terminated

• s. 19.1 – suspension of POA and RAo Where a person becomes a “patient” by a Mental Health Act certificate under s. 1(a) of

the Act: Every PofA that was given by the person is suspended (pending review by

PT&G) Every provision of a representation agreement made by the person in respect to

his property is suspended (pending review by PT&G), UNLESS it is a special rep agreement described in s. 19.2(1)(b)

• s. 20 – previous conveyances by “patient” unenforceable o Every gift, grant, alienation, conveyance or transfer of property made by a person who is

or becomes a patient is deemed to be fraudulent and void as against the committee if:

(a) The gift, etc. is not made for full and valuable consideration actually paid or sufficiently secured to the person; or

(b) The donee etc. to whom property was alienated or conveyed had notice at the time of the gift, etc. of the mental condition of the person

• s. 21 – Committee acts as if persono Everything done by Committee in exercise of powers under Act has the same effect with

respect to all other persons as if done by the patient at a time when the patient was of full age and of sound and disposing mind.

116

Powers and Duties of Committees

General

• A Committee may carry out the expressed but unfulfilled intentions of the patient if the transaction or transfer is for the benefit of the patient and the patient’s family (s. 18, PPA) (O’Hagan)

• The test of “necessity in the traditional sense” no longer applies to approving the reorganization og a patient’s estate (O’Hagan; Re Bradley)

• When a Committee is considering disposing of or re-organizing a patient’s estate, it is held to the standard of “reasonable and prudent [person] of business” (O’Hagan)

o i.e. “would a reasonable and prudent business person think that the transaction would be beneficial to the patient and his family, given the circumstances that are known at the time and the possibilities that might arise in the future.” (O’Hagan; Re Bradley)

in deciding this, the patient’s own interests, present and future must be given paramount importance (O’Hagan; Re Bradley)

o Note : A committee uses the estate for the benefit of the patient and his dependents and preserves the estate to the extent permitted by such use, but has no authority for testamentary disposition without specific statutory enactment . (Allen)

O’Hagan v. O’Hagan (BCCA, 2000) – change to patient’s estate by Committee - permitted1) Facts:

a) Committee of “person and estate” for O appealed to Court of Appeal to implement an “estate freeze” because of the great value of O’s estate and the potential tax liabilities that were growing as assets increased in value.

b) Committee was one of two sons – both were the sole beneficiaries of O’s estate and other brother had consented to the application. Application clearly demonstrated tax problems and detrimental effects on the estate, family (and the family business) if some action like an “estate freeze” was not undertaken. Proposed reorganization set up a trust for the benefit of O and if he recovered he could call upon the capital of the trust.

c) “In short, the plan seems to be one that a prudent businessman of advanced years would see fit to undertake in order to minimize tax on his death and maximize the value of passing to his heirs… and poses no real disadvantage to O and does not disturb or deviate from what would occur under O’s will and therefore respects his intentions and autonomy.”

2) Issue:a) Lower court held that except in clear cases of necessity the Courts have consistently held that a Committee

should not change the form of a patient’s property – is this position to be continued in this case?3) Held:

a) Appeal allowed.4) Analysis:

a) The tax benefits realized can be done without jeopardizing or diminishing the patient’s estate during his lifetime or the ability to regain control should he recover – it would be unreasonable to withhold approval on the ground that “necessity” had not been shown

b) In deciding this, the patient’s own interests, present and future must be given paramount importance – e.g. will he recover or will his condition get worse and require more money –

c) In this case the estate was so large that these contingencies were not problematic.

Re Bradley (BCCA, 2000) -- change to patient’s estate by Committee - denied1) Facts:

a) Appeal by PT&G from a decision of lower court approving the payment of certain gifts by Committee of B. b) Committee was second husband of B. B has been comatose since a stroke in 1998 (at age 63) and the

117

annual cost of her maintenance is less than $4K thanks to insurance coverage.c) Committee is retired and has a good pension and B’s three sons from her previous marriage are all self-

supporting. B had intended to give sons each $105K gifts prior to her stroke and had sold securities to make the gifts but she never completed the gifts.

d) One of the applications to the Court below was to allow the Committee to complete these gifts and they were approved and PT&G did not appeal those gifts.

e) B had no will and under intestacy laws Committee will get 1/3 and B’s sons will get 2/3’s of the estate. Because she has a large estate and is a U.S. citizen her estate faces a sizable tax bite from the U.S.

f) B (prob Committee) received tax advice from U.S. attorney and was attempting to implement that advice to reduce B’s estate tax exposure through the proposed gifts.

g) B was seeking court approval (s. 28) to implement the gifting regime proposed to save taxes. Proposed gifting regime keep considerable assets for B ($800K) if she recovered and produced 10 times the income necessary to pay for her current maintenance.

2) Issue:a) Did lower Court err in not following the rule requiring “necessity in the traditional sense” before any gifts may

be made from a patient’s estate by a Committee.3) Held:

a) PGT Appeal allowed.4) Analysis:

a) Can appreciate the need for a rule like “necessity in traditional sense” for PT&G who cannot always get financial advice.

b) However where a private Committee formulates a good plan, it seems unfair to penalize patients and their families by denying planning opportunities that would otherwise be available to them because of the Committeeship and simply because there is no “necessity”.

a) The Patients Property Act does not impose any prohibition against transactions or dispositions on the part of a Committee merely because they are not “necessary”

b) Moreover given that Committees are held to the standard of care of a “reasonable and prudent person of business” it is only logical to approach applications of this kind according to whether a reasonable and prudent business person would think that the proposal in question would be of benefit to the patent and her family in light of the circumstances known at the time and that might arise in the future giving paramount importance to the patient’s own interest present and future

c) O’Hagan approved an ‘estate freeze’ for an 89 year-old; B is only 65 and the planned gifts taken in the circumstances of B’s age and the possible future costs of her care are quite different and the diminution of her estate all amount to something very different than was proposed in O’Hagan. B’s estate would go from $2.6 million to $800K and the distribution being proposed by Committee is quite different from what would happen on intestacy under Estate Administration Act – notwithstanding the consent of B’s sons.

d) While tax savings are desirable, Court of Appeal is not persuaded that a reasonable and prudent businessperson considering all circumstances and placing B’s interests first would proceed at this time with gifting regime proposed by Committee.

Allen (Committee of) v. Allen (BCSC, 1994)1) Facts:

a) Committee of the “estate and person” of P (also patient’s brother) applied to court because he wanted to revoke P’s will and was demanding solicitor’s records.

2) Issue:a) Committee revoke a will for a patient

3) Held:a) Application dismissed.

4) Comments:a) Without specific words such authority vested in the committee cannot include the making, altering or

revocation of a will.b) A committee uses the estate for the benefit of the patient and his dependents and preserves the estate to

the extent permitted by such use, but has no authority for testamentary disposition without specific statutory enactment.

118

NON-WILL DISPOSITIONS• see notes on slide 3, 4

1. Introduction to Non-Will Dispositions

Estate Planning Tools • A will is but one tool available for distributing property at death. While it is the most common tool

used, there are other methods available for transferring property before or after death which should be considered as part of the estate plan.

• There are a number of considerations which will influence the selection of a non-will disposition over the more traditional will. These include:

o Income tax treatment of will vs. non-will dispositionso Reduction or elimination of probate taxeso Protection of assets from estate creditorso Reduction of risk of Will Variation Act applicationo Increased certainty of delivering benefit to beneficiary

Types of Non-Will Dispositions

1. Insurance Beneficiary Designations (s. 54, Insurance Act)

2. Plan Beneficiary Designations (s. 54, Insurance Act; s. 71.3 COEA)*

3. Inter Vivos Gifting (CL)

4. Gifts given donatio mortis causa (CL)

5. Inter Vivos Trusts (CL – see Mordon)

6. Joint Tenancies with rights of succession (CL)

*For registered plans, make sure you advise a client to designate their spouse as the beneficiary. This avoids the problem of a tax burden falling on estate: see Couse Estate v. MNR (1985) DTC 104 (TCC)

119

2. Insurance Beneficiary Designations

Insurance Act – Life Insurance

• s. 48 – Designation of beneficiary o (1) insured can designate a personal rep or a beneficiary in a K or by declaration to

receive insurance moneys

o (2) insured can revoke the designation (subject to s. 49)

o (3) designation to “next of kin”, “heirs” or “estate” is deemed to be a designation to the personal rep of the insured

• s. 49 – Irrevocable (non-will) designationso (1) An insured may in a contract or by declaration – other than a declaration that is part of

a will – filed with the insurer, designate a beneficiary irrevocably, and in that event the insured, while the beneficiary is living, may not alter or revoke the designation without the consent of the beneficiary, and the insurance money is not subject to the control of the insured or the insured’s creditors and does not form part of the insured’s estate.

Note: used in family law settlements

o (2) if the insured tries to make a irrevocable designation in a will, it is deemed revocable

• s. 50 – Designation in an invalid will is oko (1) designation is an invalid will is still effective

o (2) designation made in will is revoked by a later designation

o (3) if a will contains a designation, and that will is entirely revoked, the designation is also revoked

• s. 51 – Trustee for beneficiary (e.g. if minor)o (1) An insured may in a contract or by a declaration appoint a trustee for a beneficiary

and may alter or revoke the appointment.o (2) A payment made by an insurer to the trustee for a beneficiary discharges the insurer

to the extent of the payment.

• s. 52 – Beneficiary predeceasing life insuredo (1) if the beneficiary predeceases the insured and the K or declaration does not provide

for a gift-over, the share is payable (a) to the surviving beneficiary (b) if there is more than one surviving beneficiary, to them in equal shares (c) if there is no surviving beneficiary, to the insured or the insured’s personal rep

s. 54 – Insurance moneys free from creditorso (1) Insurance money paid out after the insured dies. Insurance $ does not become part of

estate of insured, so proceeds are not available to creditors.

o (2) Policy exists, but event hasn’t happened yet, and beneficiary designated is a parent, child, grandchild or spouse: any interest insured person has in this $ is exempt from execution and seizure against the insured (e.g. cash redeemable).

120

Insurance Act – Accident & Sickness Insurance

• s. 102 – Designation of beneficiaryo (1) Insured can designate personal rep or beneficiary in K or by declaration to receive

insurance money payable in event of accident, sickness, etc.

o (2) designation in invalid will is still effective

o (3) designation made in will is revoked by a later designation

o (4) if a will contains a designation, and that will is entirely revoked, the designation is also revoked

• s. 103 – Personal representativeo designation to “next of kin”, “heirs” or “estate” is deemed to be a designation to the

personal rep of the insured

• s. 104 – Death of beneficiaryo (1) if the beneficiary predeceases the insured and the K or declaration does not provide

for a gift-over, the share is payable (a) to the surviving beneficiary (b) if there is more than one surviving beneficiary, to them in equal shares (c) if there is no surviving beneficiary, to the insured or the insured’s personal rep

• s. 105 – Trustee for beneficiary (e.g. if minor)o An insured may in a contract or by a declaration appoint a trustee for a beneficiary and

may alter or revoke the appointment.

121

3. Plan Beneficiary Designations

Pension, Retirement, Welfare Plans

• s. 46, Law and Equity Act - Designations under employee benefit plans5

o if an employee designates a person to receive benefits payable under the plan in the event of his/her death, the following rules apply:

(a) the designation must be in writing and signed by the EE *(b) designation is not affected in any way by a will executed by the EE after

making the designation (c) ER is discharged once it had paid benefit to designated person (d) designated person may enforce payment of benefit (e) EE may revoke or alter designation, but only in accordance w/ plan rules

• s. 63(1)(a), Pensions Benefits Standards Act: benefits are exempt from execution, seizure or attachment by a creditor

o BUT - s. 63(3) + (3.2)(a) – additional voluntary contributions made 12 months before or after the date that the debt arose are not exempt

Registered Retirement Savings Plans

• Rationale for RRSPs get tax deduction in year of contribution and it accrues on tax-deferred basis

• s. 49, Law and Equity Act – o If in accordance with terms of a RRSP the annuitant designated a person to receive a

benefit payable under the plan on the annuitant’s death

*(a) the designation is effective in writing and signed by the annuitant or if it is contained in a will

(b) person designated may enforce payment, *(c) the benefit is not part of the estate of the annuitant (d) s. 50(1) to (3) of the Insurance Act applies (designation in invalid wills, if will

revoked, so is designation) (e) annuitant may alter or revoke the designation

s. 54, Insurance Act – RRSP issued by insurance co. free from creditorso (1) Insurance money paid out after the happening of an event (i.e. someone dies). Insurance

$ does not become part of estate of insured, so proceeds are not available to creditors.

o (2) Policy exists, but event hasn’t happened yet, and beneficiary designated is a parent, child, grandchild or spouse: any interest insured person has in this $ is exempt from execution and seizure against the insured (e.g. cash redeemable).

s. 71.3, COEA – RRSP exempt from execution and attachment by a creditor (including spousal rollover: s. 71.3(4))

o exceptions : voluntary contributions within 12 months before or after debt, and payments out of RRSP

5 ‘plan’ means an employee pension, retirement, welfare or profit sharing trust or plan; ‘employee’ includes a former employee participating in the plan.

122

Registered Home Ownership Savings Plans

• s. 50, Law and Equity Act –o if in accordance w/ terms of RHOSP the planholder designates a spouse to receive a

benefit under the plan on the participant’s death:

(a) the designation is effective in writing and signed by the annuitant or if it is contained in a will

(b) the designated spouse may enforce payment (c) the benefit is not part of the estate of the planholder (d) s. 50(1) to (3) of the Insurance Act applies (designation in invalid wills, if will

revoked, so is designation) (e) planholder may alter or revoke designation

Registered Retirement Income Funds

• s. 51, Law and Equity Act –o if in accordance w/ terms of RRIF the annuitant designates a person to receive a benefit

under the plan on the annuitant’s death:

(a) the designation is effective in writing and signed by the annuitant or if it is contained in a will

(b) the designated person may enforce payment (c) the benefit is not part of the estate of the annuitant (d) s. 50(1) to (3) of the Insurance Act applies (designation in invalid wills, if will

revoked, so is designation) (e) annuitant may alter or revoke designation

• s. 71.3, COEA – RRIF exempt from seizure and attachment by a creditor (including spousal rollover: s. 71.3(4))

o exceptions : voluntary contributions within 12 months before or after debt, and payments out of RRSP

BCLI Report

• Report is concerned with the four categories where current legislation is lacking:

o Application of common law and statutory rules in connection with testamentary dispositions;

o Capacity to make a designation (same as a will);

o Creditors’ access during the lifetime of the planholder (although this is somewhat addressed in PBSA for RPPs, Insurance Act, and COEA); and

o Creditors’ access subsequent to the death of the planholder (also somewhat addressed in PBSA for RPPs, COEA for RRSPs, RRIFs, and Insurance Act).

Bill 4:

• S. 84 – Part 5 of WESA entitled “Benefit Plans” applies regardless of whether a benefit plan gives a person entitled to a benefit under the plan a right to make a designation. Hence, terms of plan do not prevent the operation of Part 5.

123

• Part 5 does not apply to Insurance Act (BC) designations in contract or by declaration.Div. 1 – “Designation Requirements”

Designated beneficiaries

• s. 85(1) – a person entitled to a benefit under a benefit plan may designate one or more persons as designated beneficiaries and, unless irrevocable (ss. 87 & 88) may alter or revoke the designation.

• s.85(2) (a) – to be effective, designation, alteration or revocation must be in writing and signed by the person making it or (by direction) by another on his or her behalf in which case the signature may be in the name of the person making it or the person signing it

• s.85(2)(b) – designation may be made in a will but is only effective if Div. 3 is followed and designation must relate expressly to a benefit plan either generally or specifically.

• s.85(3) – person granted power over financial affairs – attorney under an enduring power of attorney (s. 8 Powers of Attorney Act) or Committee (acting under Patients Property Act) may make a designation if expressly authorized to do so by the court and the designation is not made in a will.

Several designated beneficiaries

• s.86 – where 2 or more are designated (other than alternatively) but no division of the benefit is made, the benefit is payable following the participant’s death in equal shares.

Irrevocable designations

• ss. 87 & 88 – “irrevocable designations” and “effect of irrevocable designations”

Div. 2 – “Other Benefit Plan Provisions”

Death of Designated Beneficiary before Participant

• s.91 – If a designated beneficiary dies before the participant, and no disposition of the share of the deceased designated beneficiary is provided for in the designation, the share is payable:

• (a)To the surviving designated beneficiary,

• (b)If there is more than one surviving beneficiary, to the surviving designated beneficiaries in equal shares, or

• (c)If there is no surviving designated beneficiary, to the participant’s personal representative.

Trustee for Designated Beneficiary

• s.92(1) – a participant may, in the same manner as a designation, appoint or alter or revoke the appointment of a trustee for a designated beneficiary.

• s.92(2) – a payment made by a benefit plan to the trustee for a designated beneficiary discharges the benefit plan administrator to the extent of the payment.

Enforcing payment of benefit

• s. 93(1) – if designation is in effect when the participant dies, the designated beneficiary or trustee entitled to a benefit under the designation may enforce payment of the benefit;

124

• s.93(2) – benefit plan administrator may set up any defence that would have been available had the claim to enforce payment been brought by the participant or the participant’s personal representative.

Div. 3 – “Designated Beneficiaries in a Will”

Alteration or revocation of designation in a will

• s.96 – designation in a will may be altered or revoked by a later designation that is not in a will

Designation in a will

• s.97 (1) – a revocation in a will of a designation revokes a designation that is not in a will only if the revocation in the will relates to the designation, either generally or specifically, and the designation is not irrevocable;

• s.97(2) – revocation of a will revokes a designation in the will;

• s. 97(3) – revocation of a designation does not revive an earlier designation;

Effect of designation in purported wills

• s.98(1) - a designation or revocation of a designation contained in a purported will is not invalid merely because the instrument is invalid as a will;

• s.98(2) - a designation in a purported will is revoked by an event that would have the effect of revoking the instrument if it had been a valid will.

Effect of revival of will on designation

• s.99 – revival of a will by codicil does not revive a revoked designation in a will unless the codicil expressly provides for revival.

Effective date of designation and revocation

• s.100 - unless a designation is irrevocable, a designation or revocation of a designation in a will is effective from the time the will is made.

Case Law

• NOTE: can one argue s. 50(3) of Insurance Act (as referentially incorporated into Law and Equity Act) to argue that general revocation clause in a will acts to revoke prior beneficiary designations in a will?

National Trust v. Robertshaw (BCSC, 1986) – RRSP designation is not a “testamentary disposition” (see above note – on this basis, decision likely wrong)1) Facts:

a) In 1967, R, a contributor to an association’s Group RRSP, designated his first wife beneficiary under the plan. They divorced in 1972 and thereafter R remarried and divorced twice. In Aug. 1985 R executed a will under which his 3 children were named principal beneficiaries. The will contained a standard revocation clause: “I… hereby revoke all former testamentary dispositions made by me and declare this to be my last will.”

b) Nowhere in the body of the will is there any reference to any RRSP. R died in Sept. 1985.c) R’s executor applied to Court to receive proceeds from RRSP but was opposed by first wife (no new RRSP

designation to replace the one made in 1967 was made by R). Executor argued that the designation was a testamentary disposition and was revoked by the standard revocation clause in R’s will.

2) Issue:a) Was designation a testamentary disposition, which was subject to Wills Act requirements.

125

3) Held:a) Designation was not testamentary in nature . (As this issue was addressed on an application – determination

of who was entitled to the proceeds from RRSP will await trial.)b) THUS, it was not revoked.

4) Analysis:a) Court undertook an analogy of the nature of the RRSP contract and the trustee relationship and concluded

that the designation was not entirely dependent on death to be effective. Judge felt that it was more akin conferring on R’s wife an immediate, albeit contingent, future interest by way of an inter vivos trust, when the plan was established. Recent cases demonstrate that there is a true trust relationship between R and the trustee holding the RRSP assets.

MacInnes v. MacInnes (SCC, 1934) – EE pensions benefit designation is a “testamentary disposition”1) Facts:

a) the deceased had been a member of his employer’s ‘Employees’ Savings and Profit Sharing Plan’. He was entitled to designate a beneficiary on his written application (“Employee’s Acceptance”) to join the plan or by later written document filed with the plan trustees or by his will. He designated his wife to be his beneficiary in his written application and his signature was witnessed by one person.

2) Issue:a) whether the application form with its designation of Mrs. MacInnes as beneficiary was “a trust in her favour

or a testamentary disposition.”3) Held:

a) the written application and beneficiary designation in question was testamentary in nature and was invalid because it did not comply with the requirements for making a will.

Re Bottcher (BCSC, 1990) – general revocation clause does not revoke beneficiary designations made outside a will1) Facts:

a) T’s application to establish an RRSP designated her son, J, as beneficiary of any death benefit. T’s will contained a general revocation clause but did not refer to the RRSP.

2) Issue:a) Did general revocation clause revoke the RRSP designation in favour of J.

3) Held:a) General revocation clause did not revoke the previous RRSP designation made outside the will

4) Analysis:a) While Law and Equity Act does not specify an exact method of revocation – something more than the

language of a general revocation clause in a will is necessary to revoke a designation validly made other than by will.

b) The general revocation clause in a will does not revoke a prior beneficiary designation validly made outside a will unless the language of such a clause evidences a clear intention to do so.

Roberts v. Martindale (BCCA, 1998) -- erroneously unrevoked designation, despite agreement to revoke = beneficiary cannot claim proceeds from policy – equity steps in using constructive trust1) Facts:

a) In 1979, D completed a written Group Life Insurance Designation and designated her husband, M, to be the beneficiary of any money payable under the insurance policy on her death.

b) D and M divorced in 1981. They entered into an agreement whereby each relinquished all rights in the other’s estate free from all claims from the other. D never changed her designation having thought she had done all required to remove M as beneficiary (by signing separation agreement); on D’s death the insurance money was paid by the insurer to M. D’s executor sought a return of the insurance money.

c) At trial the judge said M held the money on a resulting trust in favour of D’s estate.2) Issue:

a) Did M hold the insurance proceeds on resulting trust in favour of D’s estate or is M entitled to the proceeds from the insurance?

3) Held:a) Trial judge erred in holding that M held the insurance proceed on a resulting trust, however, he did hold it

as trustee pursuant to a constructive trust.4) Analysis:

a) T’s not infrequently are mistaken about the legal effect of what they have or have not done. After reviewing

126

the applicable provisions of the Insurance Act appeal court concluded that because D had not changed her designation M was legally entitled to recover from the insurer and the insurer was obliged to pay to him the proceeds of the policy – from a legal perspective. However, M is not entitled to the proceeds in equity. “Equity will no permit even an act of parliament to be used as an instrument of fraud.”

b) Based on the analysis in McCormick v. Grogan (1869) L.R. 4 H.L. 82 the person you wish to convert to a trustee in equity must have acted in bad faith. However, M did not act in bad faith. He did not in any way contribute to the deceased’s mistaken belief. There was no fraud by M.

c) However, since that case was decided constructive trusts have been imposed in many cases where the defendant has done nothing which could properly be characterized as “fraudulent”.

d) It would be against good conscience for M to keep this money because; by the separation agreement M surrendered the right he might have had to the property of D.

e) For M to claim from the insurer the proceeds was a breach of that agreement and sufficient to call in aid the doctrine of the remedial constructive trust.

In Terrorem Clauses

• In Terrorem Clauses – i.e., threats to “cut” someone out of an inheritance under the will if he or she challenges a provision of a will. There are three issues:

1. there must be a ‘gift-over’ if there is a challenge, otherwise the clause will be viewed as “in terrorem” (a threat with no intended consequences) and void at common law;

2. Feeney suggests this comes down to construction of a will and extrinsic evidence of T’s intention may be considered by court;

3. Is the clause void as against public policy? – it can be if it prohibits a reference to court under, say, Wills Variation Act – which is a matter of public policy.

127

4. Joint Tenancies

Advantages of JT

• Income tax treatment of will vs. non-will dispositionso Note : when someone dies, they are deemed, for income-tax purposes, to have sold all

their property at FMV. But if you roll property to a spouse, tax consequences are deferred

o E.g. If have cottage that has appreciated in value capital gain on that property (b/c not principal residence) can be quite high and estate would have to pay

• Reduction or elimination of probate taxeso as long as intention of gift of beneficial title is clear (use JT & Survivorship Agreement),

otherwise, JT may be viewed as creating resulting trust for deceased’s estate

• Protection of assets from estate creditorso unless fraudulent conveyance under s. 1, FCA

• Reduction of risk of Will Variation Act applicationo subject to anti-avoidance provisions in Model Acto but see Doucette

• Simplify the administration of an estate

Examples of JT

• Real estate• Bank accounts• Automobiles• RVs• Non-registered investment accounts

Potential Problems Arising from JTs w/ Children

*Pitfalls for parent who adds child as joint tenant to an asset such as a bank account, non-registered investment account, etc.

1. Rebuttable presumption of resulting trust if intention to pass beneficial title not proven (see Pecore)2. Creditors of child – including judgment creditor3. Bankruptcy of child4. Marital separation and division of property of child (see Pecore)5. Estrangement from child – loss of control of asset by parent6. Fraud by child during parent’s lifetime7. Disputes with other children over actions by child “in control” of parent’s assets (accounting for

actions, etc…)

**THP = make spouse JT, if possible

128

Intention to Pass Beneficial Title and Resulting Trusts

GR:1. Where a parent transfers assets, without consideration, into a joint account held with one of their

adult children, there is a presumption of resulting trust (Pecore)

2. Where evidence of the transferor’s intention, at the time of transfer, is unavailable or unpersuasive, the presumption will apply (Pecore)

3. The onus is on the transferee to rebut the presumption and establish, on a balance of probabilities, that a gift (survivorship) was intended (Pecore)

4. The court may look to the following non-exhaustive list of evidence to determine a transferor’s intention to pass beneficial title (Pecore)

a. Lack of child’s knowledge of his/her status as a joint tenant (Doucette, BCCA)

b. evidence after the transfer provided that it is relevant to the transferor’s intention at the time of transfer;

c. banking documents that detail intentions of the transferor regarding how the balance of the funds should be treated upon her death;

d. granting of a power of attorney may demonstrate that the transferor intended to gift the monies in the joint account; and

e. Tax treatment of the joint accounts.

5. To avoid all of this, have a Joint Tenancy with Right of Survivorship Agreement

Pecore v. Pecore (SCC, 2007) – need intention that jointures were gift to avoid presumption of resulting trust 1) Facts:

a) An ageing father gratuitously placed the bulk of his assets in joint accounts with his daughter P, who was the closest to him of his three adult children. 

b) Unlike her siblings, who were financially secure, P worked at various low paying jobs and took care of her quadriplegic husband, M.  P’s father helped P and her family financially, including buying them a van, making improvements to their home, and assisting her son while he was attending university. 

c) P’s father alone deposited funds into the joint accounts.   He continued to use and control the accounts, and declared and paid all the taxes on the income made from the assets in the accounts. 

d) In his will, P’s father left specific bequests to P, M and her children but did not mention the accounts.  The residue of the estate was to be divided equally between P and M.  Upon the father’s death, P redeemed the balance in the joint accounts on the basis of a right of survivorship. 

e) P and M later divorced, and a dispute over the accounts arose during their matrimonial property proceedings. 

f) M claimed that P held the balance in the accounts in trust for the benefit of her father’s estate and , consequently, the assets formed part of the residue and should be distributed according to the will. 

g) The trial judge held that P’s father intended to make a gift of the beneficial interest in the accounts upon his death to P alone, concluding that the evidence failed to rebut the presumption of advancement.  The Court of Appeal dismissed M’s appeal.

2) Issue:a) Whether assets in joint accounts were estate assets held in a resulting trust for all beneficiaries under T’s

will or did they pass to P pursuant to right of survivorship?3) Held:

a) Appeal dismissed.4) Analysis: see above

129

Doucette v. Clarke (BCCA, 2009 – overturns BCSC): Found a JT, and exercised WVA1) Facts

a) Diane, Louie, John and Joslin were the adult children of the deceased, Mildred. b) Mildred passed away in 2004 with an estate valued at $890,000. Her last will named Diane and Louie co-

executors. She bequeathed $5,000 each to John and Joslin, a house initially valued at $240,000, now valued at $420,000, to Louie, and the residue of the estate to Diane.

c) A letter dictated by the deceased expressed hurt at her estrangement from John and Joslin. d) Diane was a joint tenant with Mildred on bank and investment accounts worth $230,390. Louie was a joint

tenant on an investment certificate valued at $43,900. Joslin was a joint tenant on an investment certificate valued at $150,000. The three children claimed their jointures under the right of survivorship and took the money in the respective accounts.

e) John sued Diane, Louie and Joslin for a declaration that the jointures were subject to a resulting trust in favour of the estate, and sought a more equitable division.

f) At trial, BCSC found that presumption of resulting trust was not rebutted - all of the joint account holders were adult children since the evidence is unpersuasive that the deceased intended the jointures to be gifts.

g) Further, BCSC held that Mildred had not met her moral obligations to make adequate provision for Joslin and John given their disabilities and need for assistance. The will was thus varied to provide Louie with 35 per cent of the estate, Diane and Joslin with 25 per cent of the estate, and John with 15 per cent

h) Diane and Louie appealed.2) Held

a) Appeal allowedb) Trial judge erred in finding that the accounts were subject of a resulting trust in favour of the estate by failing

to incorporate a significant uncontested fact into the analysis regarding the presumption of advancement.3) Analysis - JT

a) The children had no knowledge that Mildred named them as joint owners of the accounts. b) In that context, the chronology underlying the circumstances of Mildred's will and the subsequent purchase

and structuring of the accounts strongly indicated that she understood and intended that the beneficial interest in each account would fall to the named child upon her death.

c) The funds were thus returned to the children in whose name each account was held. 4) Analysis - WVA

a) There was no error in finding that Mildred had not met her moral obligations to Joslin and John, as the judge's findings reflected that Mildred bore some responsibility for estrangement rather than a need to compensate them to account for childhood abuse.

b) It was necessary to amend the variation order to account for the removal of the term deposit accounts from the estate. Mildred's duties to Diane and Joslin were fulfilled with the funds received from the accounts. She intended to leave the house and any proceeds from sale to Louie. The will was thus varied to provide Louie with 70 per cent of the estate and John with 30 per cent of the estate.

Impact of Trust Agreement Involving JT

• JT can be severed by a trust agreement signed by one of the joint trustees – such that agreement operates to convert the joint tenancy to property held as tenants in common.

• Hence, be careful of transactions which might operate to terminate the joint tenancy.

• Example : agreement to make mutual wills -- turns JT into TIC (see Gillespie at p. 90)

130

5. Inter Vivos Trusts

Trigger: inter vivos trusts are best suited for large estates (i.e. $100Ks) b/c of legal, accounting and trustee costs associated w/ establishing and maintaining an inter vivos trust

Definition

• Transfer of a person’s assets to a trust while alive.

• Declaration of trust or trust agreement would specify who is to benefit from income and capital of trust during the settlor’s lifetime and following the settlor’s death.

Advantages of Inter Vivos Trusts

• Because the transferred assets DO NOT form part of the settlor’s estate, a settlor can:

o Defer paying capital gains taxes

o Avoid probate fees on the value of the transferred assets (Mordo)

o Avoid creditors on death *subject to possible claims under FCA and FPA

o Avoid claims under WVA (see Mordo) *subject to anti-avoidance provisions in Bill 4

o May eliminate the need for a will for the specific assets transferred to the inter vivos trust

Fraudulent Conveyance Act

s. 1: any disposition of property . . . is void or of no effect if done to delay/hinder/defraud creditors of lawful and just remedies.

s. 2: exempts -- where transfer is for good consideration and in good faith, and transferee has no notice or knowledge of collusion or fraud at time of transfer.

Fraudulent Conveyance =

disposition of property + o unless property is generally exempt from execution

intent to delay/hinder/defraud creditors + o badges of Fraud (Twyne’s Case; approved in Re Romanowich)

no consideration o *note: if consideration, need to prove intent of both transferor and transferee)

Fraudulent Preferences Act

3 requirements in FPA s. 3:1. disposition of property (except payment of money) in favour of a creditor2. debtor must be in insolvent circumstances3. must be intent to create a preference

131

Inter Vivos Trusts and Income Tax Act

• Capital gains issues arise for transfers to inter vivos trust if not an ‘alter-ego trust’ or ‘joint partner trust’.

o “alter ego trust” = settlor is beneficiary

o “joint partner” = settlor and someone are beneficiaries

• Deemed disposition of capital assets transferred to inter vivos trust - with capital gains recognized UNLESS trust qualifies as an ‘alter-ego trust’ or ‘joint partner trust’

Requirements for Deferral of Capital Gains

1. Meet definitions of ‘alter-ego trust’ and ‘joint partner trust’ in s. 248, Income Tax Act

2. Settlor must be 65 or older

3. Settlor must be entitled to all income of trust during his/her lifetime.

Consequences

• Capital gains recognized at time of death of settlor or spouse, if later, for ‘joint partner trust’ under Income Tax Act

o i.e., capital gain recognition is not considered until time of settlor’s death for ‘alter-ego trust’ or death of spouse if later – for ‘joint partner trust’.

Inter Vivos Trust and Family Law

• GR: an interest in income and capital of a inter vivos trust is a family asset for FRA purposes: M(HR)

132

6. Inter Vivos Gifting

Advantages of Inter Vivos Gifts

1. Avoid probate fees on the value of the transferred assets

2. Avoid creditors on death o *subject to possible claims under FCA

3. Avoid claims under WVA o *subject to anti-avoidance provisions in s. 95 Model Act

4. Avoid disputes over the interpretation of a will

5. But note Income Tax implications (see below)

Definition

• An inter vivos gift is an irrevocable gratuitous (i.e., no consideration) transfer of property from the owner (i.e., the donor) to another person (i.e., the donee), during the donor's lifetime, with the intention that the transfer have present effect and the title to the property pass to the donee.

Essential CL Elements for Gifting

1. Donor capable of making the gift1. Donor must be mentally capable and of age of majority.

2. Donee must be capable of receiving the gift1. In case of a minor donee, the gift is valid unless the donee, upon reaching age of majority,

rejects the gift.

3. Clear and unmistakable intention on the part of the donor to irrevocably divest himself of the title

1. put it in writing (policy: reliability of evidence, deliberation) (Romaine Estate)2. If intention is insufficient resulting trust (donee is trustee)

4. Delivery of gift by the donor to the donee 1. Exception: donates mortis causa does not require delivery

5. Acceptance of the gift by the donee.

Income Tax Act Implications

• Gift of capital asset to a non-spouse will result in the donor being deemed under the Income Tax Act (Canada) as having sold the “gifted property” at FMV – which will trigger latent capital gains tax on the transferred assets

• Gift of income producing property (e.g., rental property, stocks with dividends, bonds with interest, etc…) to minor child can trigger Income Tax Act (Canada) attribution rules whereby income will be attributed back to donor for income tax purposes.

133

Donatis Mortis Causa (“Donation in prospect of death”)

• Def’n = A type of inter vivos gift of personalty which is made in contemplation (but not necessarily in expectation) of the donor’s death.

• Exception to the rule that the CL will not perfect an invalid gift

General

• Property need not been fully delivered to the donee to be an effective inter vivos gift at CL. (i.e., title need not be fully vested, but need partial delivery)

• Failure of delivery is overcome by showing a clear intention of the donor to give the gift upon the death of the donor – so constructive delivery is permitted.

• The gift while it takes effect immediately, is dependent for its absolute effect upon the death of the donor (i.e., the property is not fully vested until the death of the donor.)

• Personal representatives of deceased may be deemed trustees for the purpose of giving effect to the gift (i.e. transferring legal title)

• Revocation of gifto The donor is able to revoke the gift while livingo It is revoked automatically if the donor recovers from the feared peril.

TEST – 3 criteria (Bayoff Estate)

1. Gift must be made in contemplation of donor’s death;

2. Delivery of the subject matter of the gift by the donor (or delivery of means to gain access to the property); and

3. Circumstances must show that gift was to take effect only upon the death of the donor – and that the gift was to revert to the donor if he does not die from the feared peril.

Case Law

Romaine Estate v. Romaine (BCCA, 2001) – sealed K is reliable evidence of intention to make gift1) Facts:

a) R gave property to nephew to save on taxes on his death. Nephew’s lawyer prepared a letter of gift and declaration of trust transferring beneficial interest in property to nephew. R signed them, witnessed. R did not obtain ILA. Property was transferred to nephew, but in his company’s name.

b) R and nephew had a ‘falling out’. R sought property’s return and brought action alleging resulting trust. R died and estate continued action.

c) Trial judge found that the nephew had not met the onus of proving that R intended to make gift of beneficial title in property.

2) Held: appeal alloweda) The gift documents were enforceable as sealed contracts which R signed. R’s later change of heart

regarding the transfer was irrelevant.

134

Re Bayoff Estate (Sask. QB, 2000) – e.g. of donatio mortis causa1) Facts

a) Bayoff made gift to S, the executor of his estate. b) Bayoff was aware that he suffered from terminal cancer. He gave verbal instructions to his solicitor

regarding his will. c) After executing the will, he proceeded to give the key to his safety deposit box to S, in the presence of his

solicitor. He told S that everything in the box was hers. d) BUT Bayoff died before he could sign the necessary bank papers required to permit S to access the safety

deposit box.e) S sought a ruling as to the validity of the gift.

2) Issue:a) Was this a valid gift?

3) Helda) Application allowed – gift is valid

4) Analysisa) The gift of the contents of the safety deposit box was intended to be a gift inter vivos, as opposed to a

donatio mortis causa. b) The three elements of an inter vivos gift were: an intention to donate; acceptance of the gift; and, a sufficient

act of delivery. c) The first two elements were met, but the delivery of the gift had not been completed. d) However, an unfulfilled gift could be treated as complete if the donee became the executor under the will of

the donor. Here, the deceased intended to make an immediate gift to Simard of the contents of the box, but failed to perfect the gift by completing the paperwork.

e) His intention did not change before he died. The gift was perfected when Simard became the deceased's executrix and was able to take delivery of the contents of the box.

135

ABORIGINAL SUCCESSION

1. Introduction

APPLICABLE LAWS:

o Constitution Act s. 91(24) – the federal parliament has legislative authority over “Indians, and lands

reserved for Indians”. s. 35(1) – the existing aboriginal and treaty rights of the Ab. ppls of Canada are hereby

recognized and affirmed. o Indian Act

The Indian Act applies to wills made by Indians (as defined in the Indian Act) and to estates of deceased Indians who ordinarily resided on reserve land. Relevant provisions of the IA are sections 42 – 52.

INAC (“Indian &Northern Affairs Canada”) maintains that if someone is temporarily in hospital, that does not mean they did not ordinarily reside on reserve.

The Minister of INAC is given broad powers over testamentary matters and causes (ss. 42 and 43).

o Provincial legislation (Wills Act, WVA, EAA) Applies to Indians not ordinarily resident on reserve. Example: Estate Administration Act interaction with treaties:

Will or cultural property of Nisga'a citizen :o 2.1  (1) In any proceeding under this Act in which the validity of a will of a

Nisga'a citizen, or the devolution of the cultural property of a Nisga'a citizen, is at issue, the Nisga'a Government has standing in the proceeding.

o (2) In a proceeding to which subsection (1) applies, the court must consider, among other matters, any evidence or representations re Nisga'a laws and customs dealing with the devolution of cultural property.

o (3) the participation of the Nisga'a Government in a proceeding to which subsection (1) applies must be in accordance with the applicable Rules of Court and does not affect the court's ability to control its process

GAP : only applies to nations with treaties. What about the nations w/o treaties? Other examples include s. 1.2 of the WVA, and s. 2.2 of the EAA.

o Band bylaws Sections 81 and 83 of the IA empower bands to make their own bylaws. In particular, s.

81(1) is relevant with regard to real property in wills: 81(1) the band council may make by-laws consistent with this Act for any

purposes, namely, the residence of band members and other persons on reserve. o Treaties

As some Indian bands or First Nation entities have entered into treaties (e.g., the Nisga’a Final Agreement Act) that may have governance, property, and other related implications, that consider the status of an Indian instructing on a will and that of the band or First Nation in which a deceased Indian was a member.

See “example” under provincial legislation wrt Nisga’a treaty. o Aboriginal laws, practices, customs and traditions

Custom marriages and adoptions have been upheld as valid by Canadian courts. (marriage: Connolly v. Woolrich / adoption: Casimel v. ICBC).

These have implications on those who can lay a claim to the estate.o Common law

136

Powers of the Minister wrt property of deceased Indians

o Subject to this Act (IA), all jurisdiction and authority in relation to matters and causes testamentary, wrt deceased Indians, is vested exclusively in the Minister and shall be exercised subject to and in accordance with Reg. (s. 42, IA).

Jurisdiction of Courts

o S. 44 – Courts may exercise vires w/ consent of Minister – The court that would have jurisdiction if deceased Indian were not an Indian may, with the consent of the Minister, exercise the jurisdiction an authority.

o S. 44(2) – Minister may refer a matter to the court – Minister may refer probate of will to the court who would ordinarily exercise jurisdiction.

o S. 44(3) – Orders relating to lands – a court that is exercising any jurisdiction under this section shall not w/o the consent in writing of Minister enforce any order relating to real property on a reserve.

o S. 47 – Appeal – a decision of the Minister may be appealed by any person affected to the Federal Court.

Formalities of Indian Wills o The formalities of execution of an Indian will are governed by the Indian Act (ss. 45–46)

and the Indian Estates Regulations (s. 15). o Only requirements are that it:

be in writing, indicating the testator’s intention; and be signed by the testator.

o The Minister may accept a document as a will even if it does not comply with provincial laws of general application (s. 45(2)). It is good practice, however, to ensure an Indian will or testamentary document is executed in the presence of two witnesses, with those witnesses signing after the testator in the testator’s presence.

o Probate – s. 45(3) – an Indian will is of no legal effect unless the Minister accepts it, and that property of a deceased Indian cannot be disposed of without approval.

o Void wills – s. 46.1 – the Minister also has the power to void a will, in whole or in part, under certain circumstances (i.e. if he is satisfied that UI was present). If part or all of a will is declared void, intestacy provisions in the Indian Act will apply (ss. 46(2) and 48).

Executors and Administrators o Should an executor named in a will be deceased, refuse to act, or be incapable of

acting, a new executor can be appointed by the Minister (IA, s. 43; Reg, s. 11).

Resources for Aboriginal Succession: o Annotated Indian Act, Shin Imai (Thomson Carswell, 2005)o J. Woodward, “Wills and Estates” in Native Law, 359-370 (Carswell 1990)o Z. Wilson, “Wills and Estates of Indians: The Indian Act in Review”, (1993) 13 ETJ 129.o Check with Federal Ministry of Indian and Northern Affairs Canadao Further information on Aboriginal law issues is available on the “Aboriginal Practice

Points” page of the CLEBC website (www.cle.bc.ca) and in other CLEBC publications.

137

INTESTATE SUCCESSION – Indian Act, s. 48

If part or all of a will is declared void, intestacy provisions in the Indian Act will apply. The Minister has powers in all intestacy situations (ss. 46(2) and 48).

Distribution of intestate estate – s. 48:

S. 48(1) – Surviving spouse’s share – where the net value of the estate of an intestate is less than $75,000 (or such other amount as may be fixed by order of the Governor in Council), the estate shall go to the survivor.

48(2) – Spouse and issue – where the net value of the estate of an intestate exceeds $75,000 (or such other amount as may be fixed by order of the Governor in Council), the excess shall be distributed as follows:

o (a) if the intestate left no issue, the remainder shall go to the survivor,o (b) if the intestate left one child, one-half of the remainder shall go to the survivor, ando (c) if the intestate left more than one child, one-third of the remainder shall go to the survivor,

and where a child has died leaving issue and that issue is alive at the date of the intestate’s death, the survivor shall take the same share of the estate as if the child had been living at that date.

48(3) – Where children are not provided for – notwithstanding subsections (1) and (2), o (a) where in any particular case the Minister is satisfied that any children of the deceased will

not be adequately provided for, he may direct that all or any part of the estate that would otherwise go to the survivor shall go to the children; and

o (b) the Minister may direct that the survivor shall have the right to occupy any lands in a reserve that were occupied by the deceased at the time of death.

48(4) – Distribution to issue – same as EAA; subject to rights of spouse, if intestate dies leaving issue, surplus to be distributed per stirpes among the issue.

48(5) – No spouse or issue – same as EAA; goes to parents, and if one dead, to the survivor.

48(6) – No spouse, issue or parents – same as EAA; estate distributed among siblings in equal shares, and where a sibling is dead, the children of the deceased sibling shall take the share their parent would have taken if living, but no further representation. Nieces and nephews are not entitled to real property on reserve, only personal property, under intestacy laws. The interest in real property will revert to the band (Okanagan v. Bonneau).

48(7)(8)(9) – No spouse, issue, parents or siblings, nieces/nephews– estate goes to next-of-kin of equal degree of consanguinity (same as EAA). Next of kin are not entitled to real property on reserve, only personal property, under intestacy laws. The real property will revert to the band (Okanagan v. Bonneau).

48(10) – Descendants born after intestate’s death – same as EAA; if begotten before death but born after, shall inherit as if they had been born in the intestate’s lifetime.

48(11) – estate not disposed of by will – shall be distributed as if the testator had died intestate and had left no other estate (partial intestacy provision).

48(12) – no community of property – there is no community of real or personal property situated in a reserve (i.e. personal property is held personally and follows the will).

138

NOTE: s. 50.1 – Gov in Council may make regs re circumstances where more than one person qualifies as a survivor of an estate under s. 48.

Devisee’s entitlement – s. 49 A person who claims to be entitled to possession or occupation of lands in a reserve by devise or

descent shall be deemed not to be in lawful possession or occupation of those lands until the possession is approved by the Minister.

Non-resident of reserve – s. 50 S. 50(1) – not entitled – A person who is not entitled to reside on a reserve does not by devise

or descent acquire a right to possession or occupation of land in that reserve. 50(1) – sale by superintendent – where a devise is made to a person who is not entitled to reside

on a reserve, that devise shall be offered for sale by the superintendent to the highest bidder among persons who are entitled to reside on the reserve and the proceeds of the sale shall be paid to the devisee, as the case may be.

50(3) – unsold lands revert to band – where no tender is received within six months from the time the land is offered for sale under (2), the land will revert to the band free from any claim on the part of the devisee, subject to the payment, at the discretion of the Minister, to the devisee, from the funds of the band, of such compensation for permanent improvements (i.e. built house on land) as the Minister may determine.

50(4) – approval required – the purchaser of the land under (2) will be deemed not to be in lawful possession or occupation of the land until it is approved by the Minister.

Other Statutory Restrictions Other statutory restrictions may apply to estates of deceased Indians. For example, a person who is “not entitled to reside on a reserve” may not acquire rights to

possess or occupy land on that reserve under a will or on intestacy (s. 50), and NO person may acquire cultural artefacts w/o consent (s. 91).

o Cultural artefacts narrowly defined and only includes an Indian grave house, a carved grave pole, a totem pole, a carved house post, or a rock embellished with paintings or carvings.

GUARDIANSHIP

S. 52 – Guardianship of infant children property – Minister may administer or provide for the administration of any property to which infant children of Indians are entitled, and may appoint guardians for that purpose.

S. 52.1 – 52.5 – Money of infant children – deals extensively with the money of infant Indian children and addresses issues of distribution of capital, attaining age of majority and the Minister’s duty with respect to such property.

s. 51 – Mentally incompetent Indians – Minister has exclusive jurisdiction and authority.

Other considerations to bear in mind: Customs Cultural property Conflict of Laws Conflicts between testator’s wishes and custom

139

140