What I’m Reading: Interesting Estate Litigation Articles for November 2020

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

1. Trevor Todd at disinherited.com observes that one of the top reasons for disinheritance of a child is alleged estrangement, and he considers various B.C. cases on this issue: https://disinherited.com/uncategorized/wills-variation-overcoming-estrangement/

2. Janis Ko at Onyx Law provides a case comment which also deals with the issue of alleged estrangement of a child leading to disinheritance: https://onyxlaw.ca/spite-not-a-valid-and-rational-reason-to-disinherit-a-child/

3. The court will sometimes uphold the disinheritance of an estranged child, as Janis Ko at Onyx Law observes in a case comment found here: https://onyxlaw.ca/bc-court-finds-father-had-good-reason-to-disinherit-two-sons/

4. Stan Rule provides a useful and detailed discussion of some of the issues to be considered when granting a power of attorney: http://rulelaw.blogspot.com/2020/11/powers-of-attorney-consider-allowing.html

5. In advance of U.S election, Paul Trudelle at Hull & Hull LLP (in Ontario) considered the issue of whether an attorney under a power of attorney can vote on behalf of the grantor: https://hullandhull.com/2020/11/voting-and-powers-of-attorney/

6. Polly Storey at Clark Wilson provides a detailed update on medical assistance in dying (“MAID”) in Canada: https://www.cwilson.com/medical-assistance-in-dying-a-step-forward-in-ottawa/

7. Finally, Suzana Popovic-Montag and Tori Joseph at Hull & Hull LLP (Ontario) also provide an update on MAID, and go on to discuss the difficulty of accessing these services during the Covid-19 pandemic: https://hullandhull.com/2020/11/maid-accessibility/

Happy Reading!

Case Update: Removal of Reproductive Material from a Deceased Person

I previously discussed a case in which the petitioner wife applied for an order that her deceased husband’s sperm be removed from his body to be used for reproductive purposes by his wife. The application was dismissed.  The wife was not entitled to receive her deceased husband’s sperm for reproductive purposes because he had not provided his written consent during his lifetime. The post can be found here.

The petitioner appealed the decision and the B.C. Court of Appeal recently released their reasons for judgment dismissing the appeal at L.T. v. D.T. Estate 2020 BCCA 328. The Court of Appeal accepted that the deceased husband would have consented to the use of his reproductive material after his death if he had considered the issue during his lifetime. However, he did not provide this consent during his lifetime, and the prohibition on the removal of a person’s reproductive material without consent is criminal in nature. The legislation is clear: without the deceased person’s consent, the reproductive material cannot be used.

The Court dismissed the appeal with regret, acknowledging the painful and tragic circumstances confronting the wife. The Court granted a stay of the order for 60 days to permit the parties to consider their position on an appeal to the Supreme Court of Canada.

Family of Deceased Fights $1.5M bequest to the SPCA

A woman in Vancouver is contesting a bequest made in her great-aunt’s will in favor of the SPCA. A recent CBC story on the lawsuit can be found here: https://www.cbc.ca/news/canada/british-columbia/vancouver-family-heading-to-court-in-1-5m-inheritance-fight-with-spca-1.5803925

The deceased left the residue of her estate to the SPCA. The estate includes a valuable home in the Point Grey neighborhood of Vancouver. As a result of skyrocketing property values, it is estimated that the SPCA stands to receive approximately $1.5M from the estate.

The plaintiff is not the spouse or child of the deceased, so she does not have standing to vary the will. Instead, she wants to have a handwritten note composed by the deceased on her 99th birthday (in 2017) admitted to probate as reflecting the true final testamentary intentions of the deceased. The note purports to limit the amount of any gift to the SPCA to $100,000.

Section 58 of the Wills, Estates and Succession Act [“WESA”] allows the court to admit to probate a document or record that does not meet the technical requirements of a will. I have discussed this section in other posts, including one found here. This section would permit a handwritten note to be fully effective as though it had been made as part of the will.

In this case, the handwritten note is unsigned, undated and unwitnessed, and the deceased did not take any steps in the three years after writing the note to change her will to make it consistent with the note, so it will be interesting to see if it meets the test under s. 58 of WESA. The SPCA has also raised concerns about the deceased’s testamentary capacity when the note was written. If she had lacked capacity at the time, the handwritten note would not be effective as a testamentary instrument.

The plaintiff says that the SPCA is “greedy” for attempting to enforce the terms of the will, while the SPCA has called this a “challenging situation” for all parties.  The trial is set for January 2021.  However, as most estate litigation claims are settled in advance of trial through mediation and negotiation to avoid the expense and uncertainty of proceeding to trial, we may never know the final result.

What Rights do Disinherited Stepchildren have in British Columbia?

Blended families, second (or third or fourth) marriages, and stepchildren are now a common occurrence. Estate planning for blended families with stepchildren is a delicate issue, and the source of many estate litigation disputes.

For example, we often see the following scenario: A will-maker has children from a first marriage. The children are now independent adults. The will-maker re-marries. He makes a will leaving everything or substantially everything to his new spouse. The new spouse promises to make a will leaving what is left upon her death to the will-maker’s children. What rights do the children have, and when should they assert them?

There are a number of potential issues here.

First, if a will-maker in British Columbia fails to make adequate provision for the proper maintenance and support of the will-maker’s spouse or child, the spouse or child may bring a claim to vary the will. However, a “child” does not include a stepchild who has not been formally adopted. As a result, the children in the above scenario could apply to vary their father’s will, but they would not be able to wait and bring a claim to vary their stepmother’s will after her death.

What about the stepmother’s promise that she would make a will leaving everything to her husband’s children? Can the children rely upon that promise as the basis of a claim?

The children may have a remedy if their father and their stepmother made “mutual wills”. When two persons agree to make mutual wills, they agree that once the wills are made that no changes may be made by either party without the other party’s consent, and when one person dies the surviving party cannot change the disposition made in their will. The fact that the father and stepmother had identical wills at the time of the father’s death (which would be “mirror wills” ) is not enough. There must be clear and unequivocal evidence of an enforceable agreement between the parties that the survivor cannot not change their will after the death of the first person.

If the parties did not have “mutual wills”, and the stepmother has simply made a promise to make a will leaving her estate to the children upon her death, then the children may still have a remedy. If the children rely upon the stepmother’s promise and as a result agree not to bring a wills variation claim in relation to their father’s estate (because they will eventually receive the assets any event), then the court may find that there was an enforceable agreement between the parties, or that the children are otherwise entitled to enforcement of the stepmother’s promise.

All of this may be further complicated if the stepmother has her own children, mixes the father’s estate with her own assets, or spends or gifts away the father’s assets during her lifetime, and so the children may be better off making a wills variation claim at the time of their father’s death to avoid the future uncertainty and risk.  A child in this situation will want to carefully consider their rights (and strongly consider obtaining legal advice) at the time of their parent’s death, rather than waiting until the stepparent’s death.

Bernard and Honey Sherman Estates: Supreme Court of Canada Hears Arguments on Whether to Allow Public Access to Court Files for High Profile Estates

Court records, including documents filed in probate and estate proceedings, are open to the public. Access to the court, including access by the media, is a fundamental principle which is guaranteed by the Charter.  However, court filings in estate matters inevitably touch upon private and sensitive matters.  This raises the competing interests of balancing privacy and safety interests with the principle that the courts are open to the public.  In British Columbia, the open courts principle is paramount and will usually outweigh the right to privacy in estate matters.

In B.C., an application for a grant of probate must include the will, which means that once an application for probate has been filed, anyone can access and read the filed will. An application for a grant of probate or administration (if there is no will) must also include a list of all of the assets and liabilities of the estate. As a result, anyone can access the court file to determine the identity of estate beneficiaries and the assets of the estate, and determine, by inference, what each beneficiary stands to receive.

The same openness principle exists in contentious estate litigation proceedings. Estate litigation, which is often between family members, relating to determination of the validity of the will, issues of testamentary capacity or undue influence, and variation of wills can be highly contentious and highly emotional. This frequently results in the airing of personal and private matters in the courts, which means they become public.

Sealing orders limiting access to court records are available but rarely granted, as they are an exception to the open courts principle. A party seeking a sealing order has a heavy onus to show (1) the order is necessary to prevent a serious risk to an important interest which cannot be protected by an alternative method, and (2) the salutary effects of the confidentiality order outweigh its deleterious effects.

Last week, the Supreme Court of Canada heard submissions on whether the media ought to have access to the court files relating to the estates of Bernard and Honey Sherman, who held substantial wealth at the time of their high profile murders.  Their murders remain unsolved.  The hearings were widely reported in the media (https://www.cbc.ca/news/canada/toronto/barry-honey-sherman-court-estate-1.5752296).

The Sherman case was highly publicized, and the victims held considerable wealth at the time of their deaths (they were billionaires). Does this mean that they entitled to a greater degree of privacy than the average deceased person and their estate? The estate argued that in these circumstances the risk went beyond the typical privacy concerns, focusing on (1) the risk of publicity in this particular case, and (2) the fact that the murders remained unsolved.

In the Sherman proceedings, an Ontario Superior Court judge made orders without notice sealing certain court files relating to the Sherman Estates. The next month, the Toronto Star Newspaper and one of its reporters brought an application to terminate or vary the sealing orders. The judge dismissed the motion and upheld the sealing orders.

The Toronto Star appealed the order to the Ontario Court of Appeal. The trustees of the estate argued that (1) there is a need to protect the privacy and dignity of the victims of violent crime and their loved ones, and (2) there was a reasonable apprehension of risk to those who have an interest in receiving or administering the assets of the deceased.  The Court of Appeal allowed the appeal and set aside the sealing orders on two main grounds.

First, privacy concerns cannot, without more, justify an order sealing material that would normally be available to the public. This makes sense. Most will-makers, executors and beneficiaries would prefer that estate matters remain private, but that is not consistent with Canada’s open court principles.

Second, the Court of Appeal did not accept that because the identity and the motives of the murderers was unknown, it follows that the trustees and beneficiaries were also at risk. This was found to be speculation , and did not provide a basis for a sealing order.

The Supreme Court of Canada has now heard the arguments on appeal, and they have reserved judgment and will release their decision at a later date. Stay tuned.

B.C. Court Upholds Contract Requiring One Party to Leave Estate to Other Parties

What if you enter into an agreement with someone, for example to provide them with services, based on a promise from that person that they will leave something to you in their will, but then you find out that the person has made a new will which makes no provision for you?  Is the agreement enforceable, and do you have to wait until after the person’s death to take steps to enforce your rights?

This issue arose in the recent case of  Munro v. James 2020 BCSC 1348. In Munro, the parties were acquaintances in the equestrian community. Ms. James (one of the defendants) owned a large farm property which included ponies. In 2007, the parties entered into an agreement whereby the plaintiffs would move onto Ms. James’ farm, build a home there, and look after Ms. James’ ponies for the remainder of her life.  In exchange, the plaintiffs were to inherit Ms. James’ estate when she died.  The agreement was put in writing.

In 2017, Ms. James made a new will that left her entire estate to another acquaintance, instead of the plaintiffs.  In 2018, Ms. James sought to terminate the agreement on the bases that the plaintiffs breached their obligations.  The plaintiffs sued.

The judge did not accept that the plaintiffs had breached the agreement in any of the numerous ways alleged by Ms. James.   The agreement remained in force and Ms. James was not entitled to terminate it. The plaintiffs were able to sue for “anticipatory breach”, where a party repudiates their contractual obligation before it falls due.  In other words, the plaintiffs did not have to wait until Ms. James’ death before they brought an action.  By changing her will to exclude the plaintiffs, she rejected the obligations of the contract and the plaintiffs were entitled to sue immediately.

The next issue was the remedy. The plaintiffs (as the non-defaulting party) had the right to elect as to whether to treat the contract as continuing (and they may seek specific performance – requiring Ms. James to fulfill her obligations under the agreement) or as ended (and sue for damages).

In this case, the plaintiffs did not accept the repudiation and wanted the contract to continue.  The Court had to figure out the appropriate remedy for the unusual circumstance where Ms. James failed to fulfill a term that upon her death, the plaintiffs would inherit her estate but Ms. James was still alive.

The Court ordered that the entire residue of Ms. James’ estate on her death, after payment of taxes and reasonable funeral and testamentary expenses, is payable to the plaintiffs. Further, Ms. James was not to dispose of or encumber the farm property without the consent of the plaintiffs or a court order. The plaintiffs were no longer obligated to perform services on the farm property pursuant to the agreement.

The Munro case is a good reminder that you should think carefully before entering into an agreement with a term requiring you to make a will to benefit another person.  As long as the other elements of a contract are present (i.e. offer, acceptance, consideration, etc…), this type of agreement is enforceable in B.C., and you may be put in the unpleasant situation of losing any testamentary autonomy to decide what will happen to your estate.  Further, the party expecting to benefit from such an agreement does not have to wait until your death before commencing an action, if the beneficiary becomes aware that you no longer intend to abide by the terms of the agreement.

Separation revokes a testamentary gift to a spouse, unless there is good evidence of a contrary intention

Subject to a contrary intention appearing in your will, a gift to your spouse made in your will is automatically revoked upon a separation (Section 56(2) of the Wills, Estates and Succession Act S.B.C. 2009, c. 13 (“WESA“)).

If you still wish to benefit your ex-spouse in your will (it does happen!), then you should update your will post-separation to make clear that you intend to make a gift to them despite the separation.

But what if you are named as a beneficiary in your ex-spouse’s will that was made prior to your separation? What if your ex-spouse wasn’t aware that a separation revokes a gift to a spouse, your spouse mistakenly believed that the gift to you in their will was still valid, and you have evidence that your spouse wanted to continue to benefit you upon their death despite your separation?

A will, or a part of a will can be revived under s. 57 of WESA. This may be done by an order under s. 58 of WESA, which allows the court to order that a record or document be fully effective as though it had made as the will or part of the will of a deceased person or order the revival of a will of the deceased person. I have previously written about s. 58 here. In effect, this section allows a document that does not meet the technical requirements of a will to be fully effective as if it was the deceased’s will. It also may allow a part of a will that has been revoked to be revived and be included as part of the will.

This is what happened in the recent case of Jacobson Estate (Re) 2020 BCSC 1280. The deceased made a will in 2014 which provided that her common law spouse was to receive the residue of her estate. In 2017 she separated from her spouse. She never made a new will.  The issue was whether her ex-spouse was entitled to the residue of the deceased’s estate.

The evidence before the B.C. Supreme Court was that the deceased spoke with her lawyer, and was adamant that her spouse was to still receive her estate as per her will, despite the fact that they separated. The deceased was not aware of s. 56(2) of WESA and the fact that her separation revoked the gift in her will to her spouse. The court held that had she been aware of this, she would have prepared a new will or codicil to ensure the gifts to her spouse were effective.

The deceased repeatedly and unequivocally stated to her lawyer and a friend that she wanted her estate to go to her spouse despite her separation. The court held that the will, including the gifts to the spouse constituted a “document”, which could be given effect as the will of the Deceased, even though parts of it had been technically revoked by the separation. The deceased believed the gifts to her spouse were still valid, and it was her testamentary intention to make those gifts. As a result, the entire will, including the clauses which gifted to her spouse, was admitted to probate.

It is important to consider the effect of a separation on the validity of the terms of your will (including your choice of executor) and take the necessary steps to update your estate plan as your circumstances change. In Jacobson, the judge observed that “it is hard to imagine how the deceased’s testamentary intention could be established more clearly than it is on the evidence before me,” and the court was able to recognize and uphold the deceased’s intentions.  This evidence may not always be available, and you may unintentionally disinherit someone that you intended to benefit under your will.

Undue Influence may be Presumed in Certain Circumstances

The term “undue influence” often brings to mind overt acts of elder abuse, where a gift is the result of influence expressly used by the recipient (the “donee”) to obtain that gift.

However, the law recognizes a second class of transactions which may be set aside on grounds of undue influence: where the relations between the donor and donee have at or shortly before the execution of the gift been such as to raise a presumption that the donee had influence over the donor. There are certain relationships with the potential for dominance and dependence,  and if you receive a gift in those circumstances it is presumed that it was procured by undue influence unless proved otherwise.

This second class of undue influence does not depend upon proof of reprehensible conduct. The person receiving the gift may have acted honestly and without ulterior motive. The person may honestly say that the gift was a completely unexpected and unsolicited. However, the courts will intervene as a matter of public policy to prevent the potential for influence that exists in certain relationships from being abused.

As a result, you may receive an unsolicited gift from a vulnerable person, and find that you are placed in the unfortunate position of having to rebut a presumption that you received the gift as a result of influence that you potentially could have exercised over the donor.

The court will first examine the relationship between the donor and donee. Is the nature of the relationship such that the potential for domination exists?

This presumption as it pertains to undue influence in the drafting of a Will can now be found in the Wills, Estates and Succession Act [SBC 2009] Chapter 13. The Act provides that where a person establishes that someone was in a position where the potential for dependence or domination of a will-maker was present, the party seeking to defend the Will has the onus of establishing that the person in that position did not exercise undue influence over the will.

If a relationship of dependency exists, the court will next consider the nature of the transaction. In situations where the donee does not provide consideration (i.e. gifts or bequests), it is enough to establish the existence of a dominant relationship.

Once a plaintiff shows that the relationship between the donor and donee was such that the potential for influence exists, and the transfer is gratuitous, the onus moves to the defendant to rebut the presumption of undue influence. The donee must establish on a balance of probabilities that the donor entered into the transaction of his own “full, free and informed thought”. The defendant may show no actual influence was deployed in the particular transaction (such that the presumption is rebutted), or the donor had no independent legal advice.

A gratuitous transfer from an elderly parent to an adult child does not automatically result in a presumption of undue influence. However, if a parent is vulnerable through age, illness, cognitive decline or heavy reliance on the adult child, the presumption may arise.

A presumption of undue influence may also arise in circumstances where a where a donee is intimately involved with the management of the donor’s assets. However, as discussed in a previous post found here, simply assisting a loved one will not necessarily trigger the presumption.

Bergler v. Odenthal – counsel comments featured in this month’s issue of Take Five

We were counsel in Bergler v. Odenthal 2020 BCCA 175.  I discussed this recent decision from the B.C. Court of Appeal in a post found here.

I recently provided my commentary on the case in the July 2020 edition of Take Five, a monthly publication highlighting the most interesting civil cases emerging from the B.C. Court of Appeal.  Here is an excerpt from my comments:

When a deceased person leaves a will, a disappointed beneficiary may have a variety of available claims, including challenges to the validity of the will and, of course, wills variation claims. When a deceased person dies intestate, it may seem at first blush that a disappointed beneficiary has no recourse, as the legislation sets out a non-discretionary scheme as to how the estate is to be distributed.

However, in Bergler v. Odenthal 2020 BCCA 175, there was a remedy available: the secret trust.

As the Court of Appeal notes, secret trusts are “rarely encountered today” and this will likely continue to be the case. There is considerable risk in relying upon a secret trust to carry out your testamentary intentions. The person who would otherwise receive your assets (whether by will or intestacy) will directly benefit from denying the existence of a trust after your death Or, as happened in Bergler, the trustee make seek to add a “clarification” to the terms of the trust, which would postpone his obligation to distribute the assets until his own death.

You can read my comments in their entirety in this month’s issue of Take Five, and the discussion was also featured in an article on Slaw, Canada’s online legal magazine, which can be found here.

Undue Influence, or Simply a Caring and Involved Loved One?

We are often contacted by clients who feel very strongly that a loved one, usually a parent or spouse, has been unduly influenced to make an estate plan that does not reflect their actual intentions.  For example, a person may be unduly influenced in the making of their will, a transfer of property into joint ownership, or a large gift made during the person’s lifetime. Undue influence is a serious allegation, and there is a high threshold to establish it.

Undue influence certainly does happen. Elder abuse unfortunately happens. However, some clients’ concerns of undue influence arise simply from the fact that the alleged influencer was heavily involved in the life of the person alleged to have been influenced.

Consider the example of a mother and her children. As the mother ages, she requires more assistance. Perhaps she is no longer able to drive or has other mobility issues or physical limitations. It is not unusual for one child to step up and provide more assistance than the other siblings. This sibling may live closer to her mother, or her work schedule and other obligations may offer more flexibility such that she is able to provide a greater level of assistance. This assistance may include taking her mother to doctors’ appointments, or to the bank (where some bank accounts are transferred into joint names?), or to meetings with lawyers (where some changes are made to the mother’s will?). It will certainly mean that this child will have more face time with her mother than her siblings.

When the more-involved child ends up receiving greater benefits during the mother’s lifetime, or a larger share of the estate after the mother’s death, the other siblings may look back at all the time that their sister spent with their mother, and in some cases they will speculate or assume that their sister was influencing their mother. It is not uncommon for disappointed beneficiaries to look for some explanation for perceived unequal treatment or favoritism.

Stewart v. McLean 2010 BCSC 64 is a case that I always keep in mind as an example of conduct that does not reach the level of undue influence. In that case, the Court observed as follows:

[108]   In general, the plaintiff’s allegations of undue influence are unfounded suspicions and are based on an unfair view of the relationship between Donald and their mother. At best, the plaintiff’s case is that Donald, by his presence in Victoria, his driving his mother to appointments, his working around her house, his visiting her frequently, and his receiving a benefit from his mother leads to the conclusion that he unduly influenced her.

And after observing that objectively viewed this was a loving and caring mother-son relationship in which the son did what most mothers would expect:

[110]    There is no evidence that Donald dominated the Deceased. In fact, all of the evidence is to the contrary. The evidence consistently establishes that the Deceased was competent, “sharp”, and independent until her death. Certainly when it came to financial matters, she exercised a mind of her own. While she may have depended somewhat on Donald and his family due to her physical limitations, given her financial and intellectual independence, she could have made alternate arrangements.

Other cases have made similar observations. Some people require assistance in being mobile, and a family member is a logical person to provide this assistance. There must be something more to establish undue influence.