Beneficiary Holds Estate in Trust for a Third Party

Where a deceased person leaves a will, a disappointed party may seek to vary the will, or argue that the will is invalid on a number of grounds.  If a deceased dies without a will, the disappointed party has fewer remedies.  If there is no will, the estate passes on an intestacy, and the Wills, Estates and Succession Act sets out who will receive the estate.  There is no discretion for the court to stray from what is provided for in the Act.

In limited cases, this may not be in the end of the matter.  Bergler v. Odenthal 2019 BCSC 1882 was such a case.  In Bergler, the deceased died after the rapid onset of pancreatic cancer.  She did not have any children.  Her common law spouse, Mr. Odenthal, survived her.   She did not make a will.  As a result, her entire estate passed to Mr. Odenthal on an intestacy.

However, she gave Mr. Odenthal specific instructions about her estate.  She told him that she wanted her assets to be given to her niece.  All instructions were verbal – there was nothing in writing.  The issue was whether a trust was created by the deceased, wherein Mr. Odenthal held her assets solely for the benefit of the niece.

It is risky for a testator to deliberately forego preparing a will, and instead trust that the person who receives the estate under an intestacy will distribute assets in accordance with their instructions, especially when there is nothing in writing to confirm these instructions.  There may be no witnesses and/or the person who received the instructions may deny ever receiving such instructions.

Mr. Odenthal refused to transfer the assets to the niece after the deceased’s death.

Fortunately for the niece, the deceased made statements in the presence of third parties about her wishes, and Mr. Odenthal had a conversation with the niece and a third person (a second niece) about these wishes.  He also made certain admissions during his examination for discovery and at trial that these were the deceased’s wishes.

A secret trust arises where a person gives property to another (the “donee”), communicating to that person an intention that the property be dealt with in a specific way upon the happening of an event, and the donee accepts the obligation. The essential elements are the intention of the donor, a communication of the intention to the donee and acceptance of the obligation by the donee.  The court in Bergler held that the requirements of a secret trust were satisfied, and ordered judgment against Mr. Odenthal for the value of the assets that formed the deceased’s estate.