Category: Wills Variation

Knives Out: How Might Estate Litigation Matters Raised in the Film Have Played out in B.C.?

April 27, 2020

I recently had the opportunity to watch Knives Out, the 2019 murder-mystery film directed by Rian Johnson. This film was a delightful distraction, with a great ensemble cast and engaging plot. I highly recommend it.

It also touches on a number of estate litigation issues. Stuart Clark, a lawyer at Hull and Hull in Ontario, has authored an interesting discussion that can be found here: https://hullandhull.com/2020/01/knives-out/. I will discuss some additional issues which might have arisen had Mr. Thrombey resided in B.C.

WARNING – SPOILERS AHEAD!

Harlan Thrombey, a wealthy crime novelist, is found with his throat slit, the morning after his family attended his 85th birthday party at his mansion. As might be expected, his family is highly dysfunctional and Harlan has strained relationships with various family members, which include two adult children, a daughter-in-law (married to his deceased son) and various grandchildren. Harlan had recently threatened to cut one of his grandchildren out of his will. Everyone has a motive, and a detective (played by Daniel Craig) is hired to investigate the crime.

When the family gathers for the will reading (a typical storytelling device, but an event that I have yet to witness in real life), it is revealed that Harlan left his entire estate to his nurse, Marta.  He did not make any provision for his children, daughter-in-law, or grandchildren.

The family take various steps to secure Harlan’s fortune, including trying to convince Marta to renounce her inheritance, threatening to expose Marta’s mother as an undocumented immigrant, and threatening to implicate Marta in Harlan’s death. None of these efforts are successful. The mystery is solved, and Marta receives Harlan’s estate.

Stuart Clark’s post identifies various estate litigation issues in the film, including the issue of undue influence – the situation where someone is forced or pressured into making a will (or some other transaction) that does not reflect their wishes, but reflects the interests of the person influencing the vulnerable person.   A will procured by undue influence can be set aside as invalid.

In B.C., the Wills, Estates and Succession Act provides that where a person was in a position where the potential for dependence or domination of the 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. Harlan’s disinherited family members would likely argue that Marta, as Harlan’s full time nurse, was in a position of power such that the onus ought to be placed on her to prove that she did not exercise undue influence. If Marta is unable to meet this onus, then the will is invalid, and the prior will would likely be admitted to probate (assuming there are not any issues with the validity of that prior will).

If Marta is able to meet the onus and establish that the will was not procured by undue influence, that is not the end of the matter. In B.C., spouses and children can bring an action to vary a will if it does not make just and adequate provision for them. A wills variation claim would not be available to the daughter-in-law or the grandchildren. Only the two surviving adult children could make claims.

Wills variation claims are highly fact specific, and the court has discretion. In this case the relevant factors that the court would consider might include: (1) the strength of the relationships between the deceased and the various parties; (2) claims by adult independent children the most tenuous of wills variation claims; (3) Marta is not a family member; (4) the purported reasons for disinheritance of the children – whether they were valid and rational, (5) the estate is large, which favours making provision for everyone; (6) whether the deceased provided gifts or benefits to the parties during their lifetimes; and (7) the relative financial and other circumstances of the disinherited children and Marta.

COVID-19: B.C. Suspends Time Limits for Commencing Legal Proceedings

March 30, 2020

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. Ministerial Order no. M086 can be found here.

The Order was made in response to the COVID-19 pandemic and the declaration of a state of emergency throughout the Province of British Columbia on March 18, 2020.  This has affected access to the courts.  Supreme Court registries are not currently providing in-person registry services (which includes the filing of pleadings) while the Court’s regular operations are suspended. Electronic filing is still available, as are other means which do not require in-person interaction with the registry (the B.C. Supreme Court announcement can be found here).

The Order provides that every mandatory limitation period and any other mandatory time period that is established in an enactment or law of British Columbia within which a civil or family action, proceeding, claim or appeal must be commenced in the Provincial Court, Supreme Court or Court of Appeal is suspended.  The Order applies from the date of the Order (not from the March 18, 2020 declaration of a state of emergency) until the declaration of emergency (or any extension) expires or is cancelled.

This is an extraordinary measure.  Limitation periods provide for a deadline for bringing a claim.  Failure to commence a claim within the limitation period will usually result in dismissal of the claim as statute-barred.  Limitation periods are intended to encourage the timely pursuit of claims, and reduce prejudice to the administration of justice.  If a plaintiff is allowed to delay the commencement of a claim, the defendant may be put in the unfair position of having to disprove a claim when key evidence and witnesses have been lost due to the passage of time.

Persons with potential claims should be aware of the Order.  They now have more time to bring claims, and should not be concerned if they are unable to file pleadings during the state of emergency due to court closures.

Executors should also consider the effect of the Order on estate administration matters, most notably distribution of estate assets to beneficiaries.  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).  Executors should obtain advice before distributing assets even after 210 days, if the 180 day deadlines have been suspended.

These circumstances are quickly changing (and the state of emergency will eventually be cancelled, ending the suspension), and so any affected party, or party seeking to rely upon the suspension to delay filing a claim, should regularly check the websites of the B.C. Courts and the B.C. Attorney General.

You are permitted to arrange your affairs to avoid wills variation claims

March 20, 2020

Under the Wills, Estates and Succession Act [SBC 2009] Chapter 13, a spouse or child of a deceased person may bring an action to vary that deceased person’s will, if the will does not make adequate provision for the proper maintenance and support of the spouse or child. This is often a source of frustration for a will-maker, who seeks to have testamentary autonomy and final decision-making power over how their assets will be distributed after their death.

However, wills variation claims only relate to assets that form part of the deceased’s estate. If assets pass outside of the deceased’s estate, then they are not available to be re-distributed as part of a wills variation action. Assets can pass outside of an estate in a variety of ways, including joint registration of property (so that the asset passes to the surviving joint owner), designation of direct beneficiaries, or settling assets into a trust. If there are no assets held in an estate, then there is no benefit to a disappointed beneficiary in varying a will. In response to this situation, beneficiaries have attempted to challenge steps taken to avoid wills variation claims.

In British Columbia, the Fraudulent Conveyance Act [RSBC 1996] Chapter 163 provides that a disposition of property is void and of no effect if made to delay, hinder, or defraud creditors and others of their just and lawful remedies. In other words, you cannot take steps to hide assets and avoid claims.  However, B.C. courts have repeatedly held that a person may arrange their affairs to avoid possible wills variation claims. A wills variation claim, which arises upon the death of the will-maker, does not qualify a claimant as a “creditor or other” within the meaning of the Fraudulent Conveyance Act.

In 2006, the British Columbia Law Institute proposed that an anti-avoidance provision be added to the legislation, which would provide that a transaction conferring a benefit on a second person would be voidable against an eligible claimant if it was made by the deceased for the purpose of defeating rights under the dependents relief legislation.

The legislature declined to act on the recommendation. The legislature has not seen fit to pass legislation or amend existing legislation to prevent the avoidance of wills variation claims. Will-makers are still permitted to arrange their affairs to avoid possible wills variation claims, most commonly by stripping their estate of any assets.

A disappointed beneficiary of a stripped estate may still have a remedy. For example, there may a claim that certain assets which appear to pass outside of the estate should actually be considered part of the estate and available for a wills variation claim.

A Testator Cannot Override a Beneficiary’s Statutory Right to Vary a Will

February 28, 2020

A spouse or child of a deceased person may apply to vary the will of that deceased person, if they do not believe that it made adequate provision for them.  This is obviously frustrating to testators who wish to have the autonomy to distribute their estate as they see fit.

To discourage wills variation claims, testators have attempted to include clauses to discourage wills variation claims or threaten consequences for bringing such claims.  These provisions have been held to be contrary to public policy and void.

For example, in Bellinger v. Nuytten Estate 2003 BCSC 563, the deceased included a clause in her will which provided that if any of the beneficiaries contested the terms of the will, then that beneficiary shall forfeit any legacy they may be otherwise entitled to receive.  The clause was void since it was against public policy to allow a testator to override a beneficiary’s statutory claim (to vary a will) by a provision in her will.

In Ketcham v. Walton 2012 BCSC 175, the deceased left a will that disinherited his adult independent children and instead left his estate to several friends and charities.  The will instructed the executor to take an active role in defending the will if any of the children brought a wills variation claim. The will stated that the executor was authorized to deplete the estate, if necessary, to defendant against the wills variation action, taking as many appeals as necessary to ensure that the deceased’s intentions are carried out.

The court held that while this clause does not obviously prevent a beneficiary from an inheritance if they bring a wills variation claim, that possibility existed.  As a result, the clause was void as contrary to public policy, as it purported to deny the deceased’s children their recourse to the courts.  It was, in effect, the same as what the deceased tried to do in the Bellinger case.

The clause in Ketcham also offended the rule that the executor must remain neutral in wills variation proceedings.  An executor cannot choose sides and take an active role in a wills variation claim.

The courts will not permit a testator to override a spouse or child’s statutory right to apply to vary a will, and any attempt to do so will likely be held to be void.  If you are a testator seeking to avoid wills variation claims, there are other steps which ought to be taken instead.  If you are an executor, you should not take an active role in wills variation litigation.  If you are a disappointed beneficiary, you should not be dissuaded from pursuing your rights by such a clause.

Who Can Dispute the Validity or Provisions of a Will?

February 24, 2020

A will may be attacked on the basis that the will-maker had lacked the necessary mental capacity to make the will or the will was the result of fraud, coercion or undue influence from someone else.

Such claims may be made by anyone who would benefit from an earlier will if the contested will is set aside or by someone who would, according to Part 3 of the Will, Estates and Succession Act, [SBC 2009] Ch. 13 (“WESA”), benefit if the deceased had died without a valid will at all.

In addition, s. 60 of the WESA gives the spouse and children of a will-maker the right to claim a variation of the will if it does not make adequate, just and equitable provision for him or her. A will variation claim must be commenced within 180 days of the executor named in the will obtaining a grant of probate of the will.

A dispute as to the validity of a will may be started by filing a caveat to prevent the executor obtaining a grant of probate without first proving the validity of the will in solemn form to the satisfaction of the court. If the court is satisfied as to its validity the will may still be subject to a will variation claim.

In an action for proof of a will in solemn form, the court must be satisfied that it was signed in compliance with the statutory formalities (in writing, signed at the end by the will-maker in the presence of at least 2 witnesses who also signed), and the will-maker knew and approved of the contents of the will when signing and he or she had the necessary mental capacity to make a will at the time.

Although the need for strict compliance with statutory formalities has been relaxed by s. 58 of the WESA, the   need to prove that the will-maker knew and approved the contents of the will or other testamentary document or record and he or she had the necessary mental capacity when making the will remains firmly entrenched in the law.

Will-Making Capacity

The test for will-making capacity is not too onerous. Sufficient mental capacity may exist despite cognitive deterioration. The will-maker may have sufficient mental capacity even when his or her ability to manage other matters is impaired or compromised. Having a less than perfect memory is not sufficient to take away will-making capacity unless it is so great as to leave the person without a mind capable of making a valid will. The law recognizes that cognitive deterioration may still allow for short periods of lucidity when will –making capacity is present.

In order to make a valid will, the will-maker must have a “baseline level of mental acuity” or a “disposing mind and memory” which is sufficient to understand the nature and effect of making a will. This includes an understanding as to whether there are persons who would expect to benefit from the will-maker’s estate and the extent of the property of which he or she is disposing. The assessment as to whether the will-maker had possessed the needed mental capacity is a highly individualized question of fact to be determined in all the circumstances. A will-maker cannot be found not to have will-making capacity simply because the will leaves his or her estate in a manner that some people might think unkind.

The person trying to prove the validity of a will may be assisted by a presumption as to the validity of the will. If the will was signed according to the statutory formalities after it was read over by or to a will-maker who appeared to understand the meaning of the will, it may be presumed that the will-maker possessed will-making capacity and knew and approved of the contents of the will when making it.

What if there are Suspicious Circumstances?

The presumption of validity may be rebutted by evidence of well-grounded suspicious circumstances concerning the preparation of the will or tending to call into question the mental capacity of the will-maker at the time or tending to show that the free will of the will-maker had been overborne by acts of coercion or fraud or undue influence.

The standard of proof for establishing suspicious circumstances is a balance of probabilities (more than a 50% chance), which is the standard of proof that applies in civil (non-criminal) litigation.

In order to rebut the presumption of validity, persons attacking the will must demonstrate that there is some evidence which, if accepted, would tend to negate knowledge and approval or will-making capacity. It is important to remember that mere suspicion that something improper may have happened is not sufficient to rebut the presumption of validity; the evidence must raise a specific and focused suspicion. The absence of such evidence will be fatal to a suspicious circumstances argument.

Suspicious circumstances have been found in a wide range of situations which are not necessarily sinister in nature. There is no checklist of circumstantial factors that will invariably fit the classification. Commonly occurring themes include situations where a beneficiary is instrumental in the preparation of the will (especially where the beneficiary stands in a fiduciary position to the will-maker), or where the will favours someone who the will-maker had not previously provided for and does not fall within the class of persons that will-makers usually remember in their wills, namely next of kin.

The validity of a will does not stand or fall on the presence or absence of suspicious circumstances. If suspicious circumstances are established, the presumption of validity fails and the legal burden of proof reverts to the person trying to prove the will to establish the knowledge and approval of the will-maker as well as his or her will-making capacity if the suspicious circumstances had reflected on that capacity.

Wills Variation Claims in BC

February 13, 2020

Your last will and testament may represent your true intentions with respect to the administration and distribution of your estate.  You likely gave careful thought to what is fair and reasonable.  However, most people in British Columbia are aware that having a will is not necessarily the end of the matter.  After death, your spouse or children may apply to vary your will in certain circumstances.

These circumstances are set out in section 60 of the B.C. Wills, Variation and Succession Act.  That section provides as follows:

…if a will-maker dies leaving a will that does not, in the court’s opinion, make adequate provision for the proper maintenance and support of the will-maker’s spouse or children, the court may, in a proceeding by or on behalf of the spouse or children, order that the provision that it thinks adequate, just and equitable in the circumstances be made out of the will-maker’s estate for the spouse or children.

This section has resulted in many disputes, lawsuits and reported court decisions.  Every case has a unique set of facts, and raises a unique issues.  Even a will which may on its face appear fair may result in a (successful) variation claim.  A deceased parent, with no surviving spouse, who leaves their estate in equal shares to their children may seem fair.  But what if one child stepped up and took care of the parent for many years?  What if one child received a large gift before the parent died?

Some Common Issues that Inevitably Arise in Wills Variation Cases

Some issues which the court must consider in a wills variation case (there are many more) include:

  • What is “adequate provision for the proper maintenance of the will-maker’s spouse or children”? This is assessed in the context of legal norms and moral norms, and what a judicious person would do in the circumstances, by reference to contemporary community standards.  If this sounds vague and non-specific, this is because the concept of “adequate provision” is a flexible one, which turns on the particular circumstances of the case.  There is not necessarily a clear answer, and what is adequate may change over time as the views of society change, or may even vary from judge to judge.
  • Did the deceased leave evidence of his or her reasons for making certain gifts or not making adequate provision for his or her spouse or children? If so, the court may accept evidence of the reasons (but it doesn’t have to), and can decide how much weight to give this evidence in light of all the circumstances.
  • If there is to be a variation, what is adequate, just and equitable? This is as flexible as the idea of whether the will-maker made “adequate provision” in the first place.
  • To what degree should the court consider gifts made by the will-maker during his or her lifetime?
  • Did the will-maker take steps to arrange his or her affairs to attempt to avoid a wills variation claim, for example by putting assets in a trust or in joint ownership with right of survivorship? If so, was this effective or should the estate plan be unwound so that assets are returned to the estate?
  • What if the person named as executor is also a beneficiary and wants to vary the will?
  • What if the person named as executor is also a beneficiary and is happy with the will and wants to defend against a wills variation claim brought by an unhappy beneficiary?
  • Only a spouse or child of the deceased can apply to vary the will. Sometimes the parties cannot even agree that the applicant was the “spouse” of the deceased.

All of this is complicated by the fact that the parties to the litigation are family, and emotions run high.

The courts have broad discretion to vary wills.  The province had the opportunity to get rid of or put limits on this discretion when the Wills Variation Act was replaced with the Wills, Estates and Succession Act in March 2014.  They chose not to do so, and so you need to be aware of the possibility of a wills variation claim, whether you are a will-maker, an executor, an unhappy (or happy) beneficiary or a spouse or child of a deceased person.

Cultural Traditions and Making Adequate, Just and Equitable Provision in a Will

February 11, 2020

If a will-maker dies leaving a will that does not make adequate provision for the proper maintenance and support of the will-maker’s spouse or children, the court may order that the provision that it thinks adequate, just and equitable in the circumstances be made out of the will-maker’s estate for the spouse or children.  What is “adequate, just and equitable” is determined in the specific circumstances, and in light of contemporary standards.

What place do the cultural traditions of the will-maker have in this consideration?

This issue arose in the recent case of Grewal v. Litt 2019 BCSC 1154.  The will-maker left each of his four daughters $150,000.  The residue of the estate (the total estate was valued at $9 million) was left to his two sons.  The court had to determine the extent to which this unequal distribution resulted from the will-maker’s East Indian cultural traditions.

The court was not persuaded that the father considered himself bound by any traditions, or that the sole reason for the unequal distribution was adherence to those traditions.  In fact, the court observed that to assume this was the case reflected stereotypical thinking about what “traditional” East Indian parents would do.  However, traditional cultural values had some influence on the father (and the mother) in how they treated their children, including in their wills.

The will was varied, but the estate was not divided equally between the siblings.  The court divided the estate 60 per cent in favour of the daughters and 40 per cent in favour of the sons. The daughters’ share was to be divided equally among the four of them. The sons’ share was to be divided equally between the two of them.

This can be compared to the facts in another case, Prakash v. Singh 2005 BCSC 1545 (which was cited in the Grewal case).  In Prakash, the will-maker adhered to her beliefs in the native Indo-Fijian tradition that sons should inherit all of their parents’ estate to the exclusion of daughters except for token amounts. It was common ground that the will-maker viewed the tradition as binding upon her testamentary choices, or at least highly influential.

The court varied the will to increase the gifts to the daughters, but also did not divide the estate equally between the siblings.  There was a rational and reasonable basis to favor the sons moderately regardless of her traditional values.  While these circumstances by no means rise to the level of her predominant reason for her choices (her traditions) they are compelling enough to recognize a measure of legitimacy in her will.

B.C. courts will not permit unequal treatment of children on the basis of cultural traditions.  However, they will not necessarily order that all siblings be treated equally.

“Spouse” or “Friend”? (or “Complete Stranger”?): Proving a Spousal Relationship to Make a BC Wills Variation Claim

February 7, 2020

A spouse or a child of a deceased person may bring a proceeding to vary the deceased’s will if they believe that the will does not make fair provision for them.  But before the court will consider whether the will was fair, the person making the claim must establish that they have standing:  was the person actually a child or spouse of the deceased?  Standing as a “child” is fairly straightforward.  Whether someone was a “spouse” can be more complicated.

A Hypothetical to Consider:  The Unexpected Spouse

Consider this:  Your father passes away. Your mother died a few years before him and your father did not remarry.  He leaves a will, naming you as executor, and dividing his estate equally between you and your siblings.  You start administering the estate, when you are suddenly served with a notice of civil claim:  someone has started a lawsuit claiming to be your father’s spouse at the time of his death, and this person is seeking a share of his estate.

Perhaps the claimant is someone you believed to be only a “friend” of your father;

Perhaps the claimant is someone that you believed to be a “girlfriend” of your father, and you are aware that they went on a few dates, but you don’t believe they had been dating for more than two years, or that they were living together;

Perhaps the claimant was a roommate or tenant of your father;

Perhaps the claimant was a resident at the same care facility as your father; or

Perhaps you have absolutely no idea who the claimant is – you’ve never even heard of her.

Whatever the case, you do not accept that this person was your father’s spouse at his death.  What do you do?

The Onus is on the Person Claiming to be a Spouse to Prove a Spousal Relationship

It is important to remember that the onus is on the person claiming to be a spouse to prove a spousal relationship.

Two people are “spouses” for the purpose of making a wills variation claim if, at the date of death of the deceased (1) they were married to each other; or (2) they had lived with each other in a marriage-like relationship for at least two years.  Whether #1 is met is usually obvious.  It is #2 that causes problems.

For common law spouses (not legally married), a claimant must establish: (1) that he/she was living with the deceased for at least two years; AND (2) that he/she lived with the deceased “in a marriage-like relationship.”  Simply living together (i.e. roommates, friends) is not enough to meet the test.

The Court will Delve into the Details of the Alleged Relationship

In this type of case, the court will almost always be presented with two very different versions of the relationship.  The alleged spouse will claim a close and intimate relationship.  The beneficiaries will claim that the alleged spouse was a friend, or a roommate (or even a stranger).

The parties will have to present evidence to support their version of events.  The court will be forced to consider the intimate details of the relationship.  For example:

(1)   SHELTER: Did the parties live under the same roof? What were the sleeping arrangements?

(2)   SEXUAL AND PERSONAL BEHAVIOUR: Did the parties have sexual relations? If not, why not?  Did they maintain an attitude of fidelity to each other?  Did they eat their meals together?  What, if anything, did they do to assist each other with problems or during illness?   Did they buy gifts for each other on special occasions?

(3)   SERVICES: What was the conduct and habit of the parties in relation to preparation of meals, washing and mending clothes, shopping, household maintenance, etc…

(4)   SOCIAL: What was the relationship and conduct of each of them towards members of their respective families, friends, and the community?  Were they perceived as a couple in the community?

(5)   SUPPORT (ECONOMIC): What were the financial arrangements between the parties regarding the provision of or contribution towards the necessaries of life (food, clothing, shelter, recreation, etc.) or the acquisition and ownership of property?  Was there any special financial arrangement between them which both agreed would be determinant of their overall relationship?

A fact-specific inquiry

Obviously, this is a very fact-specific inquiry – no two relationships are exactly the same, and different people have different views of what constitutes a “normal” common law spousal relationship.  Some factors may support a finding that there is a spousal relationship, while some factors may weigh against such a finding.  The court must weigh all of the evidence and make a determination.