What I’m Reading: Interesting Estate Litigation Articles for July 2022

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

  1. Stan Rule at Sabey Rule LLP (Kelowna) and Albert Oosterhoff at WEL Partners (Toronto) both discuss a recent Supreme Court of Canada decision which concluded that taxpayers could not rely upon equitable rescission of transactions to avoid unintended tax consequences: Rule of Law: Collins Family Trust (rulelaw.blogspot.com) and Rescission Not Possible to Avoid Adverse Tax Consequences | WEL Partners Blog
  2. This month, lawyers at at Hull & Hull LLP (Ontario) posted various articles about digital assets and death, including: https://hullandhull.com/Knowledge/2022/07/digital-assets-planning-considerations-for-the-drafting-solicitor/, https://hullandhull.com/Knowledge/2022/07/digital-assets-are-we-keeping-pace/ and https://hullandhull.com/Knowledge/2022/07/apple-digital-legacy/
  3. James Steele at Robertson Stromberg (Saskatchewan) discusses a recent decision of the Saskatchewan Court of Appeal which serves as yet another reminder to put something in writing when you add a family member on title to your property (in this case, a parent adding a child to title), so that your intentions are clear: Saskatchewan Estate Litigation Update: Martin v Martin, 2022 SKCA 79 | Saskatchewan Estate Law Blog (skestatelaw.ca)

Happy reading!

B.C. Case Comment: Will Varied to give Disinherited Adult Child 30% of Father’s Estate

The B.C. Supreme Court recently considered a classic wills variation scenario:  an adult independent child from a deceased’s earlier relationship seeks to vary their parent’s will, which makes no provision for them, and instead provides for their second spouse.  It is very common to see wills variation claims in blended families.

In Pascuzzi v. Pascuzzi 2022 BCSC 907, the plaintiff was 32 years old when her father died.  Her parents had a short relationship, which ended before the plaintiff was born.  A few years later, the deceased met the person who would later become his wife, and he remained married to her until his death.  He had two children with her, and she had two children from a prior relationship.

The deceased left a will that was signed back in 1996, when the plaintiff was only nine years old.  The will provided for a trust that paid $450/month until the plaintiff turned 19 years old.  The remainder of the estate passed to the deceased’s wife.  In effect, the plaintiff was completely disinherited.  She brought a claim to vary her father’s will.

The Court went through the test for variation of a will by an adult independent child.

Wills variation claims must balance two fundamental interests: adequate, just and equitable provision for the will-maker’s spouse and children, and the will-maker’s decision to dispose of their estate as they see fit (testamentary autonomy).  In B.C., testamentary autonomy must yield to what is adequate, just and equitable.

To determine what is adequate, just and equitable, the court must look at the will maker’s legal and moral obligations.  When a wills variation claim is brought by a self-sufficient adult child with full capacity:

  1. There will usually be no legal obligation owed by the will-maker; and
  2. The moral claim will usually be more tenuous than that of a spouse or dependent child, but if the size of the estate permits, some provision for the child should be made, unless there are circumstances that would negate such an obligation.

The following circumstances are relevant when determining whether there is a moral obligation owed to an adult independent child (and the strength of that obligation):

  1. relationship between the will-maker and claimant, including abandonment, neglect, and estrangement by one or the other;
  2. size of the estate;
  3. contributions by the claimant;
  4. reasonably held expectations of the claimant;
  5. standard of living of the will-maker and claimant;
  6. gifts and benefits made by the testator outside the will;
  7. will-maker’s reasons for disinheriting;
  8. financial need and other personal circumstances, including disability, of the claimant;
  9. misconduct or poor character of the claimant; and
  10. competing claimants and other beneficiaries.

The Court in Pascuzzi went through each factor, and concluded that the deceased owed a moral obligation to the plaintiff.  Of particular relevance was the evidence that the deceased was in the course of ensuring that the plaintiff benefited from his estate.  For two or three years prior to the deceased’s death, he discussed estate planning with his wife, and agreed that the plaintiff “should get something”, although it was not clear what this would be, and of course he didn’t take steps to make a new will or otherwise benefit the plaintiff before his death.

The deceased’s wife pled that the deceased was not the plaintiff’s biological father.  However, she conceded at trial that she had no evidence to support this allegation.

In Pascuzzi, the Court did not fully accept either of the parties positions: on the one hand, that the deceased effectively abandoned the plaintiff as a child and never made an adequate effort to reconcile, and on the other hand that the deceased was a loving and caring father and any difficulties were caused by the plaintiff’s mother.  The deceased made a “terrible error in judgment” in the plaintiff’s early childhood, but over the course of time and reflection knew that he had made that error.

It appears that the estate was worth approximately $1.8 million.  The Court varied the will to provide that the plaintiff will receive 30% of the net value of the estate.

This case also serves as a useful reminder of the highly intrusive nature of wills variation litigation, especially if the matter proceeds to a trial.  The Court went through the history of the relationship between the plaintiff and her father in great detail.  The Court went so far as to quote from “an ill-advised and inappropriate letter” sent by the deceased to the plaintiff’s mother in 1992 (when the plaintiff was four years old), indicating that he would not be having the plaintiff to visit anymore.  When the Court is asked to consider the nature of the relationship between the will-maker and the person making the claim (including where there is estrangement), this often requires the Court to hear evidence on very personal and private matters, which becomes a matter of private record.

B.C. Case Comment: B.C. Court of Appeal Again Considers Whether a Claimant has Standing as a “Spouse”

When a person dies without a will and has no descendants, their spouse inherits their estate.  In order to benefit, a claimant must establish that they are indeed a “spouse.”  I continue to frequently see cases in which a person’s standing as a “spouse” is in dispute and is one of the key issues in the litigation.  This is relevant on an intestacy (dying with no will), and also for wills variation claims, which can only be brought by children and “spouses.”  This was one of the first issues that I wrote about when I started this blog, found here.  I have also wrote about it here.

The B.C. Court of Appeal recently considered this issue again in Coad v. Lariviere 2022 BCCA 222.

In Coad, the Court considered an appeal by a “spouse” from an order that the deceased died intestate and without a spouse, leaving her mother as the sole beneficiary.  The plaintiff was living in the same home as the deceased when she died, and he claimed to be in a marriage-like relationship with her at the time of her death.  The deceased’s ex-husband obtained a grant of administration with respect to a will dated August 11, 2011, while the plaintiff received a grant of administration based on an intestacy (on the assumption that he was a spouse).  The orders were in conflict.

The trial judge concluded that the deceased died intestate, but that the plaintiff was not in a marriage-like relationship with the deceased.  As a result, the deceased’s mother was the sole beneficiary of the deceased’s estate.  The plaintiff appealed the order.

A “spouse” is defined in s. 2 of the WIlls, Estates and Succession Act as follows:

2 (1) Unless subsection (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 for at least 2 years.

(2) Two persons cease being spouses of each other for the purposes of this Act if,

(a) in the case of a marriage, an event occurs that causes an interest in family property, as defined in Part 5 [Property Division] of the Family Law Act, to arise, or

(b) in the case of a marriage-like relationship, one or both persons terminate the relationship.

(2.1) For the purposes of this Act, spouses are not considered to have separated if, within one year after separation,

(a) they begin to live together again and the primary purpose for doing so is to reconcile, and

(b) they continue to live together for one or more periods, totalling at least 90 days.

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

There is no specific definition of when a marriage-like relationship exists.  The presence or absence of any particular factor cannot be determinative of whether a relationship is “marriage-like.”  There is no checklist of characteristics that will invariably be found in all marriages .  While the parties’ intentions may be important, objective evidence will also provide guidance as to whether a relationship was “marriage-like”.  Spousal relationships are many and varied.

Whether people are in a marriage-like relationship is a question of mixed fact and law, and the decision of a trial judge is entitled to deference.

The Court of Appeal held that the trial judge did not take a contextual and holistic approach, and instead applied a “checklist.”  He also placed undue emphasis on the fact that the plaintiff and the deceased did not engage in sexual relations.  The Court of Appeal allowed the appeal, and made an order that the plaintiff was in a marriage-like relationship with the deceased (i.e. was a “spouse”) and therefore received the estate.

As these claims are so fact-specific, and the result is “all or nothing” depending upon whether the claimant is a “spouse”, we can expect to continue to see this issue making its way before the courts.