Thursday, December 30, 2010

Varying Wills

At two of my family Christmas gatherings, relatives brought up a recent British Columbia case that's been in the news where a Court varied the terms of a deceased father's will, who left his entire estate to his only son and completely ignored his four surviving daughters.

In life, the father had, to quote the Court, "ruled his family, and especially the women, with an iron fist". (The Court goes on at some length about the harshness and violence of his family's existence.)

His son was "favoured and indulged"; some of his daughters are "demonstrably in need". Ultimately, the Court decided that the fair thing to do was divide the estate five ways, to varying degrees based on need. Part of what factored into the Court's analysis was that the father actually explained in the will why he wasn't leaving anything to the daughters, and the explanations were untrue and irrational, according to the Court.

This has attracted some rather negative attention in the media. Why can't a person do what they want with their estate? We should be able to write out our kids if we want to.

Generally, that attitude is correct, legally. When this was described by my relatives, I had to look it up myself. It was surprising, and I found myself thinking through a lot of different ways that an estate can be distributed aside from the wishes as set out in the will, and wondering which one was present in this case - mind you, I am an Ontario lawyer, and will interpretations are governed by Provincial law, which makes me rather unfamiliar with British Columbia estate law.

As it turns out, the decision was based on a rather unique feature of British Columbia law: The B.C. Wills Variation Act contains provisions that have been interpreted to allow a Court a wide discretion to vary the will in a manner that it deems fair under certain circumstances.

There isn't really an equivalent in Ontario law. Mind you, there are quite a few other ways, some of them similar, and I'm not altogether convinced that a similar (or at least comparable) result couldn't have been obtained in Ontario.

Firstly, look at the overall validity of the will. There are a lot of ways that a will can be invalidated, lack of capacity and undue influence among them. If I'm disinheriting some children for reasons which aren't true, then this can raise questions about capacity and/or undue influence.

Secondly, and more broadly, there are a series of situations in which a person can be elevated to the position of creditor of the estate, and thus have a claim with priority over beneficiaries. It doesn't vary the terms of the will, but rather requires the payment of the claim prior to the distribution of assets to beneficiaries:

(1) Spousal election under the Family Law Act: A spouse can elect to take what she would have received upon divorce (i.e. equalization of the matrimonial property) rather than taking under the will. Thus, you can't meaningfully disinherit your spouse. (Formal separation agreements can and should displace this right of election. Spouses also have other rights in terms of the matrimonial home, etc., and dependant's rights - see below.)

(2) Dependants' claims: Dependant spouses, children (even adult children), or others can make claims against the estate.

(3) Other existing legal liabilities: This is where we really start getting into considerations potentially relevant to this fact-pattern. If you're an existing creditor, you become a creditor of the estate. If there are contractual liabilities which arise, those fall to the estate. If the deceased committed torts, then - with certain limitations - the victims of those torts can sue the estate for compensation. It seems that there were torts committed against some of the daughters in this case...It's hard to say what effect the passage of time may have had in this case, but violence towards children tends to draw a more relaxed application of the Limitations Act than is often applicable.

(4) Beneficial entitlements: In Ontario this could plausibly have created a very substantial claim by at least one of the daughters against the estate. If I perform significant services for aging relatives - taking care of their property, and of them personally, etc. - without compensation, then I may be able to make what is referred to as an "unjust enrichment" argument, saying that I am entitled to be compensated for the value of the services I provided.

In other Ontario, the law is that you have to take care of all your legal (and equitable) obligations first. Your entitlement to will away your assets as you please is otherwise unlimited - assuming you have capacity - but will always be subject to the prior satisfaction of any debts you may have.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

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