What I’m Reading: Interesting Estate Litigation Articles for March 2021

The following is a roundup of noteworthy articles published this month on estate litigation and related issues:

  1. WEL Partners (Toronto) provided a checklist of red flags and indicators of undue influence.  While the checklist is intended primarily for lawyers watching out for clients who may be unduly influenced, it is also of assistance generally when there may be a concern of undue influence:  https://welpartners.com/blog/2021/03/solicitors-negligence-in-estates-and-trusts-context-no-14-a-lawyers-checklist-red-flags-and-indicators-of-undue-influence/
  2. Arielle Di Iulio at Hull & Hull LLP (in Ontario) commented on a recent Ontario court decision in which an award of costs was made against estate trustees as a result of unreasonable conduct: https://hullandhull.com/2021/03/dewaele-v-roobroeck-the-costs-of-bad-conduct/
  3. Trevor Todd at Disinherited.com listed the ten considerations when assessing the strength of an adult independent child’s wills variation claim:  https://disinherited.com/wills-variation/wills-variaiton-the-ten-considerations/
  4. Janis Ko at Onyx Law wrote about a recent case which held that it was too late for a mother to change her mind and undo the gifting of her house to her daughter: https://onyxlaw.ca/too-late-for-mother-to-change-her-mind-after-gifting-house-to-daughter/
  5. Tyler Lin at de Vries Litigation LLP (Ontario) commented on two court decisions (one from Ontario, and one from British Columbia), which considered whether a suicide note constituted a valid will:  https://devrieslitigation.com/tale-two-suicide-notes/

Happy Reading!

B.C. Court Intervenes to Uphold Bequest To Charity

It is common for will-makers to make bequests to charitable organizations in their wills. But what if the charity that is named as a beneficiary no longer exists at the date of the will-maker’s death? Over time, charities may be dissolved or cease to exist, change names or structures, or otherwise be replaced by successor organizations.  If a will-maker intends to make a charitable bequest, but the charity named in the will no longer exists at their death (or no longer exists in that name or form), what happens?

This issue was recently considered by the B.C. Supreme Court.  In Galloway Estate v. British Columbia Society for the Prevention of Cruelty to Animals 2021 BCSC 413, the deceased left shares of her estate to certain charitable organizations “that are in existence as at the date of [her] death,” including “Pacific Coast Public Television Association” (“PCPTA”).

PCPTA was registered as a Canadian charity so that persons could donate to the commercial-free educational channel, KCTS 9, or PBS Channel 9. The problem was that PCPTA (the beneficiary named in the will) was dissolved in 2018, and therefore that particular entity no longer existed at the deceased’s death.  KCTS also had changed its name to Cascade Public Media (“CPM”), and CPM continued to operate KCTS 9.

The executor needed directions from the court:

  1. Does the gift to benefit PBS/KCTS 9 fail because PCPTA no longer exists; or
  2. Can the PBS gift go to CPM instead?

The court applied the “cy-pres doctrine.”  The cy-pres doctrine determines what happens when property that has been dedicated to charitable purposes cannot be applied in the manner intended by the donor. Where the purposes or objects of a charitable trust have become impossible or impracticable to accomplish, the court may intervene and alter the purposes of the trust. The courts may implement modernized or modified objects that are “as near as possible” to the original purposes. The order must depart from the intentions of the settlor only to the extent required to remove the problem.

If it is not impossible or impractical (which the courts interpret broadly) to accomplish the purpose of the charitable trust, then the court cannot intervene.

In Galloway, the court concluded that the gift would go to CPM. The deceased intended to benefit the PBS channel, and CPM was now the entity that performed that role. CPM assumed responsibility for PCPTA’s obligations.

The court distinguished another case, Re Eberwein Estate 2012 BCSC 250. In that case, the deceased made a gift to a charity called “Aid to Animals in Distress,” which she donated to during her lifetime. The charity ceased to exist prior to the deceased making her will and her death. That gift was not subject to the cy-pres document (and the gift failed) because the court was unable to determine an alternative charity to which the gift should go.

If it appears that a specific charitable bequest may fail because the named charity no longer exists, in certain circumstances the court may intervene and give effect to the will-maker’s charitable intention by modifying the will to, for example, make the bequest to a successor charity, or a nearly identical charity.

B.C. Man Fails to Update Life Insurance Beneficiary Designation From Ex-Spouse to Current Spouse

When making changes to an estate plan, people sometimes overlook their direct beneficiary designations, for example on life insurance policies, RRSPs or TFSAs. You don’t want to make changes to a will, transfer assets into joint ownership with right of survivorship, and settle assets into a trust, but neglect to update a beneficiary designation. The result may be an unwelcomed surprise to your loved ones, when a beneficiary designation that you have failed to update provides a payout that was clearly not what you intended, and which is inconsistent with the rest of your estate plan.

This was the case in a decision of the B.C. Supreme Court released this week. In Knowles v. LeBlanc 2021 BCSC 482, the Court considered competing claims over the proceeds of a life insurance policy. The dispute was between the deceased’s ex-wife, who was named as the sole beneficiary under the policy, and the deceased’s long-time spouse at his date of death (described as the “disappointed beneficiary”).

The deceased obtained the life insurance policy when he was still married to his first wife, and the records indicated that no change of beneficiary had ever been filed. He separated from his first wife in the late 1980s, and their divorce was finalized in May 1991.  He moved in with his current spouse around 1993, and they lived in an exclusive common law relationship until his death in 2019.

The deceased continued the monthly payments on the life insurance policy with automated withdrawals from a joint account which he held with his new spouse. The benefit under the policy was $100,000.  Upon the deceased’s death, his spouse received the proceeds of every other life insurance policy that he held, as well as all of his other assets (by right of survivorship).

The Court first considered the intentions of the deceased. The evidence was clear that the deceased maintained feelings of hostility toward his ex-wife. He also became estranged from the two children that he shared with her. It was also clear that he intended to change the beneficiary designation to his spouse and thought he had done so.

While his ex-wife argued that there was no evidence of an intention to change the designation, the Court did not accept this in light of the ex-wife’s complete absence from his life after the divorce, his hostility toward her, and the circumstances which showed a wish to leave all of his property to his spouse.

The Court held that a consent order which was entered in the divorce proceedings involving the deceased and his ex-wife did not operate to prevent his ex-wife from claiming the proceeds of the life insurance policy. It did not include language that the parties clearly relinquished all interest in each other’s estate.

The spouse argued that if the ex-wife was to receive the insurance proceedings then this would result in unjust enrichment. To establish unjust enrichment, the plaintiff must show (1) an enrichment of the defendant; (2) a corresponding deprivation of the plaintiff; and (3) an absence of juristic reason (such as a contract) for the enrichment.

In Knowles, the spouse suffered a deprivation, as the premiums of the policy were paid from an account that she held jointly with the deceased for many years, and she believed that the deceased had changed the beneficiary designation to her. The ex-spouse would be enriched if she received the proceedings. There was no juristic reason for the enrichment, and there was no basis in the parties’ expectations or public policy to rebut the spouse’s recovery.

The court allowed the spouse’s claim in unjust enrichment, and imposed a remedial constructive trust over the insurance proceedings. The insurance company was directed to pay the insurance proceeds to the spouse.

The court was able to “fix” the deceased’s oversight in these particular circumstances.  The spouse had good facts on her side, including good evidence of the deceased’s intention.  This may not always be the case for a “disappointed beneficiary.”  This also resulted in time, stress and uncertainty for his spouse, which would have been avoided if he had properly updated the beneficiary designation.

Covid-19: B.C. to End Suspension of Time Limits for Commencing Legal Proceedings on March 25, 2021

On March 26, 2020, the Minister of Public Safety and Solicitor General took the exceptional step of suspending limitation periods to commence court proceedings in British Columbia. A previous post about this order, and the effect of the order on estate matters, can be found here: https://www.bcestatelitigation.ca/wills-variation/covid-19-b-c-suspends-time-limits-for-commencing-legal-proceedings/

The provincial government has now announced that they are lifting the suspension, and that limitation periods will resume running on March 25, 2021 (one year after the suspension was put in place).

My colleagues Brian Cheng and Taahaa Patel, articled student discuss the end of the suspension of time limits for commencing legal proceedings in B.C. here: https://owenbird.com/the-limitation-period-suspension-ends-on-march-25-2021/

The key point is this: while the suspension was in effect, any running of a limitation period was paused. When the suspension is lifted, the limitation period will resume running.

The Law Society of British Columbia has published helpful guidelines (with examples) which can be found here: https://www.lawsociety.bc.ca/about-us/covid-19-response/guidelines-for-calculating-bc-limitation-periods/

In my previous post, I noted that executors should consider the effect of the suspension (and now the end of the suspension) on estate administration matters, most notably distribution of estate assets to beneficiaries. Beneficiaries (or other potential claimants) should similarly be aware of the lifting of the suspension, so that they do not miss a deadline to bring a claim.

The Wills, Estates and Succession Act [SBC 2009] Chapter 13 provides that the personal representative of a deceased person must not distribute the estate of the deceased person within 210 days following the date of the grant of probate or administration, absent a court order or the consent of the beneficiaries.  This is so that potential claimants can bring claims before estate assets have been distributed, some of which must brought within 180 days of the issuance of the grant (most notably wills variation claims).  I warned that executors should obtain advice before distributing assets even after 210 days, if the 180 day deadlines have been suspended. Once the suspension is lifted, the 180 day and 210 day periods will resume running (or start running, if the period would have started during the suspension).

B.C. Supreme Court finds that Deceased had Two Spouses Entitled to Share Estate

The recent decision of the B.C. Supreme Court in Boughton v. Widner Estate 2021 BCSC 325 discusses a number of important estate litigation issues in the context of an unusual fact scenario: the deceased had a second “secret” family.

The deceased was a victim of homicide.  He did not leave a will. At the time of his death, the deceased was married (to Ms. Widner) and had two children. At the same time, he was in a long term relationship (with Ms. Boughton), which the parties at trial agreed was a “marriage-like relationship” of at least two years. He also had two children with Ms. Boughton.

Ms. Boughton knew that the deceased was married, but the deceased told her he would eventually obtain a divorce and marry her. Ms. Widner had no knowledge of the deceased’s relationship with Ms. Boughton.  The deceased was living a double life, telling Ms. Widner that he was working part of the week on the other side of Vancouver island, when he was actually spending time with Ms. Boughton and their children.

The headline of this article in the Vancouver Sun nicely summarizes the salacious circumstances: “Secret family and wife battle in court over dead Hells Angels prospect’s assets” https://vancouversun.com/news/local-news/secret-family-and-wife-battle-in-court-over-dead-hells-angels-prospects-assets

The evidence at trial was that the deceased was a member of the Hells Angels. Ms. Boughton claimed that the deceased told her many times that he paid for several properties that were registered Ms. Widner’s name. Ms Boughton sought orders that the deceased’s estate consisted of half of the value of the properties held in Ms. Widner’s name.

This decision addresses a number of important issues:

A person can have multiple spouses. The Court held that a deceased person can have two spouses at the same time for the purpose of the Wills, Estates and Succession Act. In particular, a person can be in a marriage-like relationship with someone who is still married to someone else. The Court declared that Ms. Boughton was also the spouse of the deceased, and so the deceased had two spouses at the time of his death. Ms. Boughton and Ms. Widner are each entitled to half of the deceased’s estate.

Ms. Widner argued that this cannot be the case, as it would sanction polygamy, which is an offence under the Criminal Code. However, it was previously decided that the criminal law prohibits “conjugal union” or “multiple marriages”, but does not extend to “conjugal relationships” or “common law cohabitation” (i.e. marriage like relationships).

Statements made by the deceased as to beneficial ownership of assets may be admitted as evidence. The Court considered whether statements by the deceased were admissible for the truth of their contents. The deceased allegedly made statements to Ms. Boughton that he paid for properties, even though they were registered in Ms. Widner’s name.   The general rule is that hearsay evidence is not admissible for the truth of its contents. However, hearsay statements may be admitted if it can be established that the evidence is necessary and reliable. In this case, the deceased was dead and so the requirement that the evidence be necessary was satisfied. The court was satisfied that some of the deceased’s statements were reliable. The judge did not accept that the deceased’s statements that he paid for all of the properties was reliable, as other evidence showed this was not the case.

An Estate may be entitled to an award for unjust enrichment. The Court found that the deceased contributed $150,000 towards the properties that were registered in Ms. Widner’s name, which resulted in an unjust enrichment to Ms. Widner. There was no juristic reason for Ms. Widner to retain the benefit of the deceased’s contributions. As a result, the deceased’s estate was awarded $150,000 from Ms. Widner.