COVID-19: Court appoints interim committee who proposes to keep mother out of care facility until health emergency subsides

While the B.C. Supreme Court is starting to hear certain limited non-urgent matters, for the most part the courts are still only hearing urgent and essential matters. We discussed what elder law and estate litigation matters might be considered “urgent” or “essential” in a previous post which can be found here.

The court recently heard such an urgent application in Cho (Re) 2020 BCSC 689, which arose as a result of COVID-19.  In Cho, the petitioner sought a declaration that his mother was incapable of managing her affairs, and an order appointing him as committee to manage his mother’s affairs and person. His sister agreed that their mother should be declared incapable, but sought an order appointing her as committee instead of her brother.  The two other siblings supported her appointment as committee.

The urgency arose because the siblings disagreed as to where their mother should reside and what arrangements should be in place for her care during the COVID-19 health emergency.  The mother had been residing in a long term care home in the Vancouver area.  In light of concerns with the mother staying in the care facility and risking exposure to COVID-19, she was removed from the care facility to reside with the respondent daughter.  The daughter’s plan was for her mother to reside with her until the end of the health emergency.  The petitioner brother disagreed with that approach, and wanted to move his mother to his residence for a two week quarantine, followed by re-evaluation, which left open the possibility that his mother could return to the care facility before the health emergency subsided.

The parties agreed that the court could make an interim order to deal with the urgent concerns, and deal with the dispute over who should be committee for the longer term at a later date.

The judge considered the merits of the competing committeeship applications, which is a fact specific inquiry where the court looks at a number of factors, including whether the appointment reflects the patient’s wishes (as expressed when they were capable), whether immediate family members are in agreement with the appointment or whether there is conflict between family members, and whether the proposed committee would be likely to consult with immediate family members for appropriate care of the patient.

After discussing each factor, the judge appointed the respondent daughter as interim committee.  One of the most significant factors in favor of the daughter’s appointment was whether the proposed committee has an appropriate plan of care and management for the patient and his or her affairs and is best able to carry it out.  In effect, the court agreed with the plan to keep the mother out of the care facility until the end of the COVID-19 health emergency, and appointed the person who advocated for this plan.

It is not unusual for siblings to have disputes over the care of their elderly and incapacitated parents, and for these disputes to end up before the courts.  It is not surprising that a COVID-19 related dispute of this type has made its way before the courts.

Skipping your Children and Leaving your Estate to your Grandchildren? The Court may vary your Will

A parent often worries about their children fighting over their estate after their death.  Parents seek ways to avoid conflicts between their children after their passing, while at the same time maintaining the testamentary autonomy to dispose of their estate as they see fit.  It may seem attractive to skip a generation, and leave your estate to your grandchildren, in the hopes of avoiding conflict between your children. There may be other reasons to benefit your grandchildren.  You may have better, less complicated relationships with them.  Grandchildren may also have greater financial need to establish themselves.

However, issues (and claims) still arise. What if one of your children has more grandchildren then the other children?  Does each grandchild get an equal amount, or does each “branch” of grandchildren divide the same amount equally?  Can you provide a greater benefit to your “favorite” grandchild?  What if one child doesn’t have any children?  What if you have already provided gifts or other benefits (for example, payment of tuition) to some of the grandchildren during your lifetime, but they others?

In B.C. there is another complication: the ability of children (and spouses) to bring wills variation claims. A spouse or child of a deceased person may bring an action to vary the deceased person’s will if it does not make adequate provision for the proper maintenance and support of the spouse or child.  A grandchild does not have standing to vary a will. They will have to be happy with what you decide to give them (subject to the will being varied to reduce their bequest as a result of a wills variation claim by someone who does have standing).

In Scurek v. Scurek 2020 BCSC 450, the Court recently considered whether a testator can discharge his moral obligation to his adult daughter by benefiting her sons at her expense. The deceased had two adult children, a son and a daughter. His daughter (the plaintiff) had two sons, the deceased’s grandchildren.  The plaintiff daughter had no significant assets, and was disabled and unemployable.

Rather than dividing his estate equally between his two children, the deceased decided to leave one half of his estate to his son, and the other half of his estate to his daughter and her two sons in equal shares.  As a result, the daughter received a 1/6 share instead of a 1/2 share.  The estate was worth approximately $1.6M. The plaintiff sought to increase her share of the estate at the expense of her brother’s share. Her position was that her sons’ shares should not be touched. Her brother argued that the will should not be varied, because it reflected a notional equal distribution to the deceased’s son and daughter, but also reflected a concern that if one half of the estate were given to the daughter, it would be wasted due to her inability to manage money, given her past history, thus leaving the grandsons with no benefit.

The judge held that the deceased could not discharge his moral obligation to his child by benefiting her children at her expense. The fact that one-third of the estate was allocated to the plaintiff’s sons “is of no material benefit to her” and her sons “are not obligated to support her, and they can be expected to prioritize their own needs”.  The deceased’s alleged concern that the plaintiff would waste her share of the estate was speculation. Even if it was established that the deceased had this concern, it was unfair and deserved little weight. The plaintiff was a hard worker, who had not been fortunate in financial matters.

As a result, the Court varied the will to provide as follows: ½ to plaintiff, 2/6 to the brother, and 1/12 to each grandchild.

Wills variation claims are fact specific. While a will-maker can certainly make provision for grandchildren, a deliberate attempt to skip over children and provide “their share” to their children (the grandchildren) may result in a variation of the will in favor of that disinherited child.

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

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.

B.C. Courts may Remove an Executor to Protect the Welfare of the Beneficiaries

The court may pass over a person entitled to become the personal representative if the court considers that the person should not be granted probate or administration. This was discussed in a previous post which can be found here.

However, the more common complaint that we hear from our clients is one of frustration with the personal representative after the personal representative has obtained a grant and has started to administer the estate. They want the personal representative to be removed and replaced.

We’ve heard a range of complaints about an executor’s conduct. The concerned party may allege fiscally irresponsible or even criminal conduct by the executor that puts the estate property at risk. Often, however, the concerns may not be as serious on their face. A beneficiary is concerned that the executor is favoring other beneficiaries and not treating all beneficiaries with an even hand. A beneficiary doesn’t agree with certain decisions made or steps taken by the executor, such as a listing price for real estate owned by the estate, or the decision not to pursue legal claim to recover assets on behalf of the estate, when the outcome of the litigation is uncertain. A beneficiary isn’t happy with how long it is taking to wind up the estate. A beneficiary simply doesn’t get along with the executor, and doesn’t want to have to deal with this person until the estate is wound up. At what point will the court agree to step in and remove the executor?

The court has the jurisdiction to remove and replace a personal representative after the grant of probate or administration has been obtained and the personal representative has started to administer the estate. The grounds for removing and replacing a personal representative are the same as the grounds for passing over a personal representative. Any person having an interest in an estate may make the application to remove the personal representative.

Section 158(3) of the Wills, Estates and Succession Act sets out some of the grounds for removing an executor or administrator, including the personal representative’s refusal to act, incapability, conviction of an offence involving dishonesty, or bankruptcy. It also provides that a personal representative may be removed if that person is “unable to make the decisions necessary to discharge the office of personal representative, not responsive, or otherwise willing or unable or unreasonably refuses to carry out the duties of a personal representative to an extent that the conduct of the personal representative hampers the efficient administration of the estate.”

To succeed in removing and replacing a personal representative on the basis of misconduct, the applicant must convince the court that the executor acted in a manner that endangered the estate, or acted dishonestly, without reasonable fidelity or without the reasonable capacity to execute the duties of the office. The fundamental consideration is the welfare of the beneficiaries.

The court will not disturb the deceased’s choice of executor lightly. The existence of friction between the personal representative and one or more beneficiaries is usually not enough, on its own, to justify removal of the personal representatives. If a beneficiary doesn’t get along with the personal representative, or doesn’t agree with a step taken by the personal representative, or doesn’t believe the personal representative is acting quickly enough, this will likely not be enough to justify the removal of the personal representative. There must be some risk to the estate which will arise if the personal representative is not removed.

There may be other consequences for lesser conduct that does not reach a level that justifies removal of the executor, such as (1) a reduction in the executor’s fee that is ultimately approved by the court, or (2) refusal by the court to approve payment from the estate for unnecessary expenses claimed by the executor.

We have also been consulted where there is disagreement or hostility as between the co-executors themselves, and as a result estate administration grinds to a halt or is otherwise hampered. In such a case, the Court may remove one or more of them to ensure proper and timely administration of the estate.

Committees in BC – Orders Requiring Unwilling Adults Examined to Determine Capacity

In British Columbia, the Patients Property Act allows a person to apply to Court for a declaratory Order that another adult person is incapable of managing his or her affairs. Such incapacity may be due to mental infirmity arising from disease, age or otherwise, or disorder or disability of mind arising from the use of drugs. To succeed, the applicant must submit to the Court affidavits from two medical practitioners providing opinions that the person who is the subject of the application is incapable of managing his or her affairs.

If the Court is satisfied by the two affidavits and any other evidence, the applicant or someone else will be appointed “committee” to make decisions on behalf of the person, now referred to as the “patient”, concerning his or her financial and estate affairs or person or both. Also, a person   who has been subject to examination at a Provincial mental health facility or psychiatric unit may become a “patient” if the Director signs a Certificate of Incapability. For example, in Johnston Estate v. Johnston, 2019 BCSC 2149, the patient was willingly examined at a psychiatric unit and the Public Guardian and Trustee was appointed committee of his financial and legal affairs. When a committee is appointed, powers of attorney and representation agreements previously signed by the patient are suspended.

What If the Person Does Not Co-operate?

For many years it was accepted that the Patients Property Act did not give the Court jurisdiction to order a medical examination before two medical affidavits had been produced. In other words, if the proposed patient would not co-operate and agree to be examined, the applicant was out of luck. Then in 2012 the door was opened to ordering an adult person to attend for medical examinations for the purposes of the Patients Property Act in appropriate circumstances.

In Temoin v Martin, 2011 BCSC 1727, the Court addressed a situation where the elderly businessman who was the subject of the application refused to be examined by two medical practitioners and the applicant, his daughter, was unable to obtain the necessary affidavits. The daughter argued that there was an inadvertent gap in the legislative scheme, namely that there was no statutory means by which a court could compel an individual to undergo the necessary medical assessments to determine capacity. She relied on Supreme Court of Canada judgements saying the Court had inherent discretionary jurisdiction, which was not derived from a statute, to make orders to protect the interests of children and vulnerable adults.

The judge agreed that if there was prima facie proof of incompetence and a compelling need for protection the inherent jurisdiction would extend to ordering a person to attend for medical examination, but Temoin was not such a case. The Court of Appeal agreed: 2012 BCCA 250, pointing out that the starting point for such an application was the presumption of capacity of the person to be protected, the importance of the Charter values of liberty, autonomy, and equality, while emphasizing that the inherent jurisdiction must be used cautiously and only for the benefit of the person to be protected, and not for anyone else. The daughter’s motive of trying to gather evidence with which to attack her father’s recent estate planning was a relevant consideration when assessing her evidence. In cases of this kind, the applicant must present evidence establishing a serious question to be tried, both as to the capacity of the individual and his or her need for protection.

After Temoin, applications were made to compel unwilling adults to undergo mental capacity testing but none were successful until 2017 when the case of Singh (Re) became the first successful Temoin application: 2017 BCSC 984. In the Singh case, unlike in Temoin, the judge was satisfied that a medical opinion from the family doctor and evidence of questionable financial dealings raised serious questions as to both mental capacity and the need for protection, so the order was made.

So far, there have been no other reports of successful Temoin applications. Thus, while the door has opened to ordering an adult person to attend for medical examinations for the purposes of the Patients Property Act, it is not wide open. Nevertheless, Singh demonstrates that such orders are available if the applicant is able to present the right kind of evidence, even over the objections of the person to be protected and anyone else who opposes. Hopefully, this will provide helpful guidance for families struggling to deal with uncooperative or alienated loved ones who refuse the medical examinations needed so orders to protect them can be obtained.

Estate Plans and Fraudulent Conveyances

What is a Fraudulent Conveyance?

For more than four centuries there have been restrictions on the ability to dispose of property to delay, hinder or defraud creditors and others of their just and lawful remedies. This began in 1571 in England with the Statute of Elizabeth and they are now encapsulated in the Fraudulent Conveyance Act, RSBC 1996, c. 163 (the “FCA”) in British Columbia and across Canada in similar legislation. All such dispositions or transfers by any method are void against any person or the person’s assignee or personal representative whose rights are adversely affected by the transaction. An exception exists for transfers of property for valuable consideration and without knowledge of the collusion or fraud of the transferor.

The absence of lying or deceit does not absolve a defendant from a claim of fraudulent      conveyance. The only intent necessary to void transactions under the modern FCA is the intent to put assets out of the reach of creditors and potential creditors. No further dishonest or morally blameworthy intent is required.

Does the FCA Apply in the Context of Estate Matters?

Transactions commonly carried out for estate planning purposes, such as gifts and the settling of trusts and transfers of property into joint tenancy may be caught by the FCA. For example, an estate plan whereby real property was transferred into joint tenancy and a trust was created to   hold other assets was cancelled because it had been made for an improper purpose: Antrobus v Antrobus, 2009 BCSC 1341. Similarly, a terminally sick wife’s transfer of her property into joint tenancy with her husband to avoid the claims of her creditors was a fraudulent conveyance: Vancouver Coastal Health Authority v. Moscipan, 2019 BCCA 17.

Creditors and Others

The term “creditors and others” includes present creditors, future creditors and those who might become creditors of a debtor. A plaintiff seeking an order reversing a transfer does not need to show that he or she was a creditor of the transferor at the time of the transaction. It is sufficient if the possible claim was within the contemplation of the transferor: Abakhan & Associates Inc. v. Braydon Investments Ltd, 2008 BCSC 1547; aff’d 2009 BCCA 521.

However, for the purposes of the FCA, a possible claim does not include a claim against the estate of the transferor pursuant to the Wills Estates and Succession Act, SBC 2009, c. 13, (“WESA”). Such will variation claims do not satisfy the test because they do not arise until after the death of the transferor. To be able to use the FCA to successfully attack a transfer, a spouse or child of the transferor must have had a legal or equitable claim against the transferor during his or her lifetime, and the claim must not be trivial: Mawdsley v Meshen, 2010 BCSC 1099; 2012 BCCA 91.For example, in Antrobus the plaintiff had an unjust enrichment claim against her parents while they were alive based on her long-time services to them and their promises that she would receive their estate.

FCA Claim Made to Replenish the Estate

If a spouse or child establishes that a transfer by his or her spouse or parent was a fraudulent conveyance, the asset may be available to satisfy a wills variation claim against the transferor’s estate pursuant to WESA. In effect, the estate will be replenished with the asset which had been fraudulently conveyed away. However, to repeat, this only applies when the FCA claim has the essential foundation of a legal or equitable claim against the transferor existing during his or her lifetime.

Intention and the Badges of Fraud

The crux of a fraudulent conveyance claim is often the intention of the transferor when making the transaction. Estate planning transactions, including settling trusts and transferring assets to the trustee, transferring assets into joint tenancy or into a corporation as part of an estate freeze, and other gifting, are recognized as legitimate transactions unless the court concludes that the transfer was intended to deprive a creditor or other of a just and lawful remedy. Intention is a state of mind and a question of fact to be determined in each case. In circumstances where the impugned transaction was not made for valuable consideration, a presumption of fraud arises, but the presumption may be rebutted by evidence that the transferor did not act in furtherance of an improper purpose.

The so-called badges of fraud are often referred to by the court when deciding whether to draw an inference of fraudulent intent within the meaning of the FCA. The indicia considered may include the state of the transferor’s financial affairs at the time of the transfer, the relationship between the transferor and the transferee, the effect of the transfer on the over-all assets of the transferor, evidence of haste in making the disposition, the timing of the transfer relative to knowledge of a claim against him or her, whether the transferee gave any valuable consideration for the transfer, the transferor remaining in possession and having use of the asset following the transaction, and secrecy in making the transfer.

Evidence that the transferor did not act in furtherance of an improper purpose may include lack of debts or obligations to the claimant or others, a remaining estate sufficient to satisfy any possible claim, an oral or written agreement that the transferor and his or her spouse would keep their assets separate and be able to deal with their assets free from claims by the other, an oral or written agreement that their respective estates would be left to their respective children from prior relationships, knowledge of any such agreement by others, providing for a subsequent spouse or child, other legitimate estate planning purposes such as avoiding future wills variation claims and probate fees and other taxes, and the lack of evidence of a fraudulent intent as opposed to speculation.

Will a Concurrent Valid Purpose Cure the Taint of an Improper Purpose?

The short answer is “No”.  There will often be more than one reason for an estate plan. Sometimes estate plans are created to hide improper purposes. The FCA simply says that if made to delay, hinder or defraud, a disposition is void. The authorities clearly establish that dispositions or transfers made in part to insulate an asset from the grasp of a creditor will not be excused by a concurrent lawful purpose, even when the transferor acted on professional advice.

COVID-19: B.C. court closures and estate litigation

On March 30, 2020, the B.C. Supreme Court posted an updated notice regarding suspension of court operations. A copy of the notice can be found here.

Effective March 19, 2020 and until further notice, regular operations of the Supreme Court of British Columbia at all of its locations have been suspended. All civil and family matters scheduled for hearing between March 19, 2020 and May 1, 2020 have been adjourned, unless the court otherwise directs. Courthouses are still open, but all persons are strongly discouraged from attending at the courthouse unless absolutely necessary or ordered by the court. In person registry services have been suspended.

It remains the case that limitation periods have been suspended, as discussed in a previous post found here.

The court will now hear only essential and urgent matters. The notice outlines the procedure to request a hearing of an essential or urgent matter. Certain listed matters are presumed to be “essential” or “urgent”, and the court has discretion to hear other matters not listed (or decline to hear a matter presumed to be essential or urgent). A judge will decide whether a matter is essential or urgent and is to be heard.

Some elder law and estate litigation matters may fall within certain of the “essential” or “urgent” categories, which include:

  1. Refusal of treatment and end of life matters;
  2. Emergency adult guardianship and committeeship orders, including under the Adult Guardianship Act and Patients Property Act. A substitute decision maker may need to be appointed to manage the financial and personal affairs of an incapacitated person on an urgent basis; and
  3. Urgent injunction applications or preservation orders. While these are relatively rare in the estate litigation context, as an example there may be a real likelihood that a personal representative or other person intends to cause irreparable harm by disposing of or destroying estate assets.

In certain circumstances, a beneficiary may seek the urgent removal of an executor, to protect the welfare of the beneficiaries. However, there must be a strong case for urgency if the matter is to be set for hearing at this time.

Most estate litigation matters will not be considered urgent or essential, and so any court hearings will have to wait until the court resumes regular operations.  In the meantime, parties can take other steps in the litigation, such as filing and serving pleadings, exchanging documents, and conducting examinations for discovery, so that legal proceedings continue to move forward and are ready to go to a hearing when the courts reopen to all matters. Parties are also still free to negotiate or mediate (including by video) to attempt to resolve matters.

These circumstances are quickly changing (and the state of emergency will eventually be cancelled), and so any affected party should regularly check the B.C. Supreme Court website.

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

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.

Passing over the Executor: What BC Law Says About Executor or Administrator Conflicts of Interest

What if you are a beneficiary under a will, and you have concerns about the person named as executor in that will? Maybe you believe the named executor is in a conflict of interest or may not treat the beneficiaries with an even hand (especially if the will allows for the exercise of some discretion by the executor). Maybe you suspect that the named executor will engage in impropriety or misconduct once they obtain a grant of probate. Maybe you simply do not get along with the named executor. At what point is it appropriate to ask that the court pass over a person as executor or administrator of an estate?

The Wills, Estates and Succession Act, S.B.C. 2009, Chapter 13 [“WESA”] allows for a person having an interest in an estate to apply to remove or pass over a personal representative. To “pass over” means to grant probate or administration to a person who has less priority than another person to become a personal representative. This means passing over a named executor where there is a will, or passing over the person entitled to become administrator if there is an intestacy (no will).

The court may pass over a person entitled to become the personal representative if the court considers that the person should not be granted probate or administration. Section 158 of WESA includes a non-exhaustive list of circumstances that the court may consider. Some of them are clear, such as if the person refuses to accept the position, or is incapable of managing his or her own affairs, or has been convicted of an offence involving dishonesty.

Subsection 158(3)(f) is more general, and allows the court to consider whether the person is (1) unable to make the decisions necessary to discharge the office of personal representative, (2) not responsive, or (3) otherwise unwilling or unable to or unreasonably refuses to carry out the duties of a personal representative, to an extent that the conduct of the personal representative hampers the efficient administration of the estate.

The court will consider the following principles when deciding whether to pass over an executor named in a will:

  1. Recognize that the testator’s choice of estate trustee should not be lightly disregarded. A deceased’s right to nominate his executors is not to be lightly interfered with;
  2. Require clear evidence of necessity;
  3. Focus on the main consideration of the welfare of the beneficiaries; and
  4. Require proof that the executor’s acts or omissions are of such a nature as to endanger the administration of the estate.

In the recent case of Gawdun v. Lord 2020 BCSC 266, the court considered an application to pass over the person named as executor of the deceased’s will. The deceased and the proposed executor (“Ms. Lord”) were in a common law relationship at the date of death. The applicants were the deceased’s children from a previous marriage.

The plaintiffs argued that Ms. Lord should be passed over for the following reasons:

  1. The plaintiffs doubted that Ms. Lord would maintain an even hand between her own children and the plaintiffs, all of whom were residuary beneficiaries;
  2. The plaintiffs alleged that Ms. Lord had continually demonstrated hostility and animosity towards them and the deceased’s sister (who was named as co-executor);
  3. The plaintiffs alleged that Ms. Lord was involved in the deceased’s estate planning in 2010 and 2011, which resulted in the execution of the will providing the majority of the estate to Ms. Lord and her children, which conduct was at issue in an underlying wills variation application;
  4. The plaintiffs alleged that Ms. Lord offered to pay the deceased’s sister $50,000 from the estate during the course of the action which the plaintiffs found suspicious;
  5. Foreclosure proceedings had been initiated to recover funds owing to the estate, which was being funded entirely by the plaintiffs, and Ms. Lord had refused to assist in collecting the debt owing; and
  6. The plaintiffs alleged Ms. Lord entered into a share exchange agreement as attorney for the deceased. The terms of the share exchange agreement were alleged to have conferred an improper benefit on Ms. Lord.

The court dismissed the application, concluding that passing over Ms. Lord was not justified. There was no evidence demonstrating misconduct by Ms. Lord that was capable of supporting a decision to pass her over. Even if the court accepted there was misconduct as alleged, it is past misconduct and was not done in her capacity as executor.

If may be difficult to convince a judge that a person will endanger the welfare of the beneficiaries or commit misconduct as executor or administrator before they have even been appointed. If you have concerns about the person who is entitled to be personal representative, but don’t believe that you can succeed with an application to pass over, you may also bring an application remove and replace a personal representative if those concerns become a reality. This will be discussed in an upcoming post.

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

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.