In B.C., a spouse or child (including an adult independent child) can bring an action to vary a will if they believe it does not make adequate provision for them. However, a wills variation claim can only seek a greater share of assets which form part of the estate. If assets pass outside of the estate, they are not available to claim against in a wills variation claim.

As a result, some will-makers take steps to deplete their estate so that there are no assets available for the purpose of a wills variation claim. This may include registering assets in joint ownership with right of survivorship, direct beneficiary designations, or inter vivos transfers (gifts during the will-maker’s lifetime).

Disappointed beneficiaries must first succeed in attacking these planning steps and “returning” the assets to the estate for the purpose of the wills variation claim. This may include claims that the assets are held in resulting trust for the estate, or claims attacking the validity of the transfers (lack of capacity, undue influence, etc…).

A recent example can be found in the B.C. Supreme Court decision in Franco v. Franco Estate 2023 BCSC 1015. In Franco, the deceased father took certain planning steps during his lifetime. He transferred property, proceeds of sale of property and monies from bank accounts to one of his children, and changed his will to leave the entirety of his estate to that child (and to name that child as executor). As a result, his other two children (the plaintiffs in the action) did not receive a share of the transferred assets, and were disinherited under the will. If the planning and transfers were upheld, it would mean that there would be very little in the estate available for a wills variation claim.

The defendant argued that her father validly gifted assets to her. There are two requirements for a legally binding gift:

1. the donor must have intended to make a gift and must have delivered the subject matter to the donee. The intention of the donor at the time of the transfer is the governing consideration.
2. The donor must have done everything necessary, according to the nature of the property, to transfer it to the donee and render the settlement legally binding on him or he

Where a parent makes a gratuitous transfer to an independent adult child (as was the case in Franco), the presumption of resulting trust applies. The transferee must prove on a balance of probabilities that the transferor intended the transfer as a gift.

The most compelling evidence is direct evidence of the transferor’s intention at the time of transfer. Post-transfer conduct may be relevant, but must be approached with caution as it may be self-serving (or show a change in intention).

The Court in Franco held that the fact that the deceased continued to deal with jointly-owned property unilaterally does not cause the gift to fail. Continuing control and use of the property by the transferor after the transfer is not necessarily inconsistent with a gift.

The Court held that documentary and affidavit evidence established an intention to gift. The evidence included transfer documents, a deed of gift document, bank account documents, and the affidavit evidence of the defendant, the deceased’s niece, and the deceased’s financial advisor.

The Court also found there was no undue influence.

As a result, the Court concluded that the gifts were valid, and the assets passed outside of the estate. The parties agreed that if the claim relating to the gifts failed, the wills variation claim would not be pursued (because there were insufficient assets in the estate to justify the action). Accordingly, the plaintiffs’ claims were dismissed.