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.