How Will B.C. Courts Interpret Section 58 (Curing Deficiencies) of the Wills, Estates and Succession Act?

Perhaps the most controversial provision of British Columbia’s new Wills, Estates and Succession Act coming into effect on March 31, 2014, is section 58 which will allow the Court to give effect as a will to a document, or an electronic record, that does not meet the formal criteria for a valid will in British Columbia, if the Court is satisfied that it represents the “testamentary intentions of a deceased person.” For example, the court could give effect to a document that might purport to be a last will, but might not be witnessed by two witnesses, or perhaps the deceased person might not even have signed it.

I have written about this new provision before, but for convenience, I will set out section 58 here:

Court order curing deficiencies

58  (1) In this section, "record" includes data that

(a) is recorded or stored electronically, 

(b) can be read by a person, and 

(c) is capable of reproduction in a visible form.

(2) On application, the court may make an order under subsection (3) if the court determines that a record, document or writing or marking on a will or document represents

(a) the testamentary intentions of a deceased person, 

(b) the intention of a deceased person to revoke, alter or revive a will or testamentary disposition of the deceased person, or 

(c) the intention of a deceased person to revoke, alter or revive a testamentary disposition contained in a document other than a will.

(3) Even though the making, revocation, alteration or revival of a will does not comply with this Act, the court may, as the circumstances require, order that a record or document or writing or marking on a will or document be fully effective as though it had been made

(a) as the will or part of the will of the deceased person,

(b) as a revocation, alteration or revival of a will of the deceased person, or 

(c) as the testamentary intention of the deceased person.

(4) If an alteration to a will makes a word or provision illegible and the court is satisfied that the alteration was not made in accordance with this Act, the court may reinstate the original word or provision if there is evidence to establish what the original word or provision was.

   

How will the British Columbia Courts interpret this provision? The short answer is I don’t know, but for a clue, I think it worthwhile to look at court cases in other provinces that have similar legislation.

One of the leading decisions is a 1997 Manitoba Court of Appeal decision, George v. Daily, 1997 CarswellMan 57. John Daily met with his accountant, Dale George, and advised him that he didn’t want his children to inherit his money and he wanted to change his will. They reviewed Mr. Daily’s will, and Mr. George wrote notes with proposed changes on a copy of a will. Mr. George then wrote to a lawyer, Mr. Brock Lee QC, setting out the proposed changes to the will. Mr. Lee met with Mr. Daily on September 15, 1995, and Mr. Daily confirmed that he wanted to make the changes. Mr. Lee asked Mr. Daily to obtain a certificate from his physician confirming his mental competency. Mr. Daily died two months later without having obtained a certificate from his doctor and without having signed a new will.

The issue before the Manitoba Court of Appeal was whether the Court should give effect to the letter from Mr. George to Mr. Lee as Mr. Daily’s last will pursuant to section 23 of Manitoba’s Wills Act. Section 23 said:

Dispensation power

23 Where, upon application, if the court is satisfied that a document or any writing on a document embodies 

(a) the testamentary intentions of a deceased; or 

(b) the intention of a deceased to revoke, alter or revive a will of the deceased or the testamentary intentions of the deceased embodied in a document other than a will; 

the court may, notwithstanding that the document or writing was not executed in compliance with any or all of the formal requirements imposed by this Act, order that the document or writing, as the case may be, be fully effective as though it had been executed in compliance with all the formal requirements imposed by this Act as the will of the deceased or as the revocation, alteration or revival of the will of the deceased or of the testamentary intention embodied in that other document, as the case may be.

In his reasons for judgment, Mr. Justice Philp undertook and extensive analysis of the underlying reasons for the formal requirements in wills legislation for making valid wills, the purpose of the provision allowing a court to give effect to a non-compliant document, and the principles applied in other jurisdictions to similar legislation.

As set out by Mr. Justice Philp, the formal requirements serve three main functions:

21        Imperfect compliance, even non-compliance, with the formal requirements under the Act may be excused by the application of the dispensation power under s. 23. Nevertheless, I think it is important to take a moment to review the purposes or functions of those formalities, and to understand what has been abandoned. In Langseth, I said of them (at p. 295):

Professor Langbein identified the main purposes or functions of the formality requirements of the Wills Act as (1) the "evidentiary" and "cautionary" functions in which the requirements of writing, signature and attesting witnesses impress the participants with the solemnity and legal significance; and provide the court with reliable evidence of testamentary intent and of the terms of the will; (2) the "channelling" function, in which the formal requirements result in a degree of uniformity in the organization, language and content of most wills; and (3) the "protective" function in which the formal requirements may protect the testator from imposition or fraud. 

22        It is the "evidentiary" and "cautionary" functions that are particularly relevant to the determination of whether or not a writing or document embodies the testamentary intentions of a deceased. The Commission described these functions in its 1980 report. The [Manitoba Law Reform] Commission explained (at p. 15):

A much more important function the formalities serve is the evidentiary one. Since the courts "are remote from the actual ... circumstances" [A.G. Gulliver and C.J. Tilson, Classification of Gratuitous Transfers (1941) 51 Yale L.J. 1, at 3] which claimants rely on to establish their interests, it is necessary that they be provided with sufficient evidence of the event.
 Reliable and permanent evidence of intention, genuineness and clarity of terms is ensured by "The Wills Act" formalities. Writing is permanent evidence which can be presented to a court at a later date. Signature at the end assures the court of the authenticity of the whole document. The requirements as to witnesses provide the court with parties who can give evidence to prove the will. By their being disinterested, the evidence of the witnesses is not self-serving. The testator signing or acknowledging in the witnesses' presence provides evidence of intent. And attestation and subscription give verification of their role.

 23        With respect to the "cautionary" function, the Commission wrote (at p. 16):

For a will to be valid it must be established that a testator intended his words to be legally operative. It must be clear that the finality and solemnity of the occasion were impressed upon the testator. This function is served by "The Wills Act" formalities. Writing is more final than oral declarations in the sense of the expression that "talk is cheap". Signature in our society is a sign of final authorization. Most people will not lightly sign a document entitled "last will and testament". All the witnessing provisions - presence, attestation and subscription - make the entire process very ceremonial, impressing upon the testator the importance of his actions.

Mr. Justice Philp considered whether any compliance was necessary, and concluded that the Manitoba Wills Act did not require any formal compliance. In principle, the document could be made by someone other than the now deceased person, and need not be signed or witnessed.

But not every expression of an intent to leave someone property may be given effect as a will. The test is whether the document records “a deliberate or fixed and final expression of intention as to the disposal of his/her property on death.”

He wrote at paragraphs 61 through 67:

61        Section 23 can be invoked to give effect to the testamentary intentions of a deceased in the face of imperfect compliance, even non-compliance, with the formalities of the Act. Section 23 cannot, however, make a will out of a document which was never intended by the deceased to have testamentary effect. In Re Balfour Estate (1990), 85 Sask. R. 183 (Q.B.), Gerein J. explained the principle:

Yet, it must be kept in mind that the section's [s. 35.1 of the Saskatchewan Wills Act] purpose is to overcome non-compliance with formal requirements. It does not empower the Court to render a document testamentary in nature when it is otherwise not so. In the instant case, the document does not manifest a true testamentary intention and therefore does not meet the threshold requirement of the section.

62        Not every expression made by a person, whether made orally or in writing, respecting the disposition of his/her property on death embodies his/her testamentary intentions. The law reports are filled with cases in which probate of holographic instruments has been refused because they did not show a present intention to dispose of property on death. Bennett v. Toronto General Trusts Corp., [1958] S.C.R. 392, was such a case.

63        In Bennett, the deceased's letter to her lawyer, a holographic document, contained details of "how [she] would like [her] will to be made out." Thereafter, until her death three and one-half years later, she met her lawyer on many occasions, both professionally and socially, but a formal will was never prepared. The court concluded that the letter was not written animo testandi; that it did not "record a deliberate or fixed and final expression of intention as to the disposal of property on death." The court's conclusion was supported by its findings that the deceased "did not want that letter to operate as a will;" and that "by her letter, she is committing to [her lawyer] both the finality of her decisions, if not of her deliberations, and that of the form in which they should eventually be expressed in a regular will, the preparation of which is entrusted to [her lawyer] himself."

64        In my view, in a similar fact situation today, the result would be the same, notwithstanding the enactment of s. 23. While the deceased's letter to her lawyer detailed the way in which the she would like her will to be made out, the letter did not embody her testamentary intentions. Section 23 cannot be invoked to overcome the absence of that essential requirement of a valid will.

65        The term "testamentary intention" means much more than a person's expression of how he would like his/her property to be disposed of after death. The essential quality of the term is that there must be a deliberate or fixed and final expression of intention as to the disposal of his/her property on death: Bennett; Molinary v. Winfrey (1960), [1961] S.C.R. 91; and Canada Permanent Trust Co. v. Bowman, [1962] S.C.R. 711.

66        In my opinion, these are the principles which must be applied in the determination under s. 23 as to whether or not a document or writing embodies the testamentary intentions of the deceased. Whether it is the deceased's own instrument or the notes or writing made by a third-party, the crucial question to be answered is whether the document expresses the animus testandi of the deceased - a deliberate or fixed and final expression of intention as to the disposal of his/her property on death.

67        At the very least, a third-party document would have to be one that had been made at the request of the deceased, or with his/her knowledge; and, in any event, with his/her awareness that the document recorded the deliberate and final expression of his/her wishes as to the disposition of his/her property on death. Another of the principles which have survived the enactment of s. 23 is that the court must be satisfied that the deceased knew and approved of the contents of the document which is presented for probate. Guardhouse v. Blackburn (1866), L.R. 1 P. & D. 109 (Prob.), which has not been overruled by the enactment of s. 23, is authority for that principle. Although this has been considered as a question of evidence rather than of substantive law, the rule takes on a heightened significance when the document is a third-party one.

The Manitoba Court of Appeal held that the evidence did not establish that the letter from Mr. Daily’s accountant to his lawyer was Mr. Daily’s deliberate or fixed and final expression of his intention. There was no evidence that he even knew of the letter, let alone that he considered it to be his will. He did not get a letter from his doctor, and may have changed his mind after meeting with Mr. Lee.

Mr. Justice Philp concluded:

82        In my view, the evidence put before the court on Mr. George's application is not sufficient to meet the onus upon him under s. 23. With respect, the finding of the motions court judge that the letter "discloses a testamentary intention" is not supported in the evidence. At best, the letter remained instructions for the preparation of his will. It was never touched by the animus testandi of the deceased.

83        Testators do change their minds! And sometimes their instructions are misinterpreted or misunderstood. It is a matter of notorious fact that even formal wills prepared by lawyers after full and careful instructions require, on occasion, amendments or alterations at the time of execution, or even require redrafting after the testator has reviewed the document. The cautionary and evidentiary functions of the formalities of the Act operate to ensure that in those kinds of situations the will that is eventually executed by the testator represents his/her testamentary intentions.

84        In this case the deceased died two months after his meeting with Mr. Lee, and with no intervening contact or communication with him. In the circumstances of this case, that unexplained hiatus is another factor, if one was necessary, which militates against a finding of testamentary intention.

CBA Wills and Trusts Section Responds to Proposal to Tax Testamentary Trusts at the Highest Tax Rate

The National Wills and Estates Section of the Canadian Bar Association has submitted a response today to the Federal Department of Finance's proposal to eliminate graduated tax rates for testamentary trusts. The effect of the proposal would be that the tax rate on income retained in a testamentary trust, including trusts created in wills, would be at the highest tax bracket, a very large tax increase.

I have written about the proposal here, and the invitation to provide responses here.

The Wills and Estates Section has expressed its opposition to the proposed elimination of graduated tax rates, noting that this will discourage good estate planning. Testamentary trusts are employed for spouses during their lives with gifts of what is left to children, for disabled beneficiaries, for young beneficiaries, for beneficiaries with addictions, and for beneficiaries who don’t handle money well. In many situations it makes sense to allow trustees to accumulate income for the future in years when the beneficiaries do not require all of the income. The Wills and Estates Section points out that a high tax rate will discourage such planning.

Although the section opposes the proposed changes in its submission, it suggests ways of reducing the harm if the Government is determined to change the tax rate. One proposal is to allow income that is accumulated in a testamentary trusts to be allocated to a beneficiary, with the beneficiary paying the tax at the beneficiary’s marginal tax rate if certain conditions are met. This is set out as follows:

We suggest an election of general application, with restrictions to meet concerns that tax-motivated trusts would be created to allocate income to low income beneficiaries, which would ultimately be capitalized and paid to high income beneficiaries. To meet these concerns, the following criteria could be applicable to the trust:
 

1. A testamentary trust could be created for only one beneficiary during that beneficiary’s lifetime.

2. The trustee may have discretion to pay income or capital to the beneficiary, but no one other than that beneficiary would be entitled to any income or capital during the beneficiary’s lifetime.

3. On the beneficiary’s death, any capital or accumulated income could then be paid to the remainder beneficiary(ies) set out in the trust, or a beneficiary selected pursuant to a power of appointment.

This arrangement would be flexible to meet the circumstances described in the above examples, together with other circumstances that may be unique. In our view, this approach is preferable to pigeon-holing the beneficiaries and imposing arbitrary eligibility criteria, such as specific tests of disability or specific ages in the case of young beneficiaries.

The proposal would be in addition to the preferred beneficiary election for disabled beneficiaries, which I discuss in my post on the preferred beneficiary election here.

The CBA Wills and Estate Section urges that graduated rates be retained for testamentary spousal trusts, even if the rates are changed for other testamentary trusts, given the important role of spousal trusts in estate planning. As set out in the submission:

The loss of graduated tax rates for testamentary spousal trusts would in many cases lead to negative consequences for a surviving spouse, such as:

• OAS claw back.

• Loss of eligibility for long-term residential care subsidies.

Testamentary spousal trusts achieve significant planning goals in the family and society:

• protecting elderly or vulnerable widowed spouses

• addressing the complexity of blended family situations

• protecting assets in the event of remarriage or common-law relationships

• deferring the tax consequences of the death of the first spouse

• preventing the duplication of probate fees, and

• supporting and encouraging charitable intentions. 

The proposed elimination of graduated tax rates for testamentary spousal trusts will make estate planning in the best interests of the family and society more costly and therefore less likely to be implemented. The societal costs of this change, particularly in the seniors community, are difficult to calculate but are undoubtedly considerable and will impact a segment of society that can be particularly vulnerable to financial abuse.

You may read the complete submission on the Canadian Bar Association, Wills and Estates Section Website here. The submission also addresses the proposal to require testamentary trusts to have a calendar year end, and the proposal that the top rate begin 36 months after death.

Significant Changes to the Rights of Separated Married Spouses Under the New Wills, Estates and Succession Act.

British Columbia's new Wills, Estates and Succession Act (WESA) will significantly change the succession rights of a separated married spouse when the new legislation comes into effect on March 31, 2014.

The Wills Act provided that unless a contrary intention appeared in a will, if a spouse makes a will leaving a gift to the other spouse, and after the will is made, there is a divorce, a judicial separation, or the marriage is found to be void or declared a nullity by the court, the gift to that spouse in the will is revoked. By far the most common of these occurrences is a divorce, and for convenience I will only refer to divorce.

Without a divorce, if you are just separated from your spouse, even for many years, the separation does not revoke any gifts to you in his or her will. You would each have to make new wills to disinherit each other.

Under the old law, a separated married spouse may apply to vary a will under the Wills Variation Act, even if he or she had been separated from the now deceased spouse for decades.

Under the Estate Administration Act, a separated spouse was entitled to a spousal share if his or her spouse died without a will, and they had not been separated for more than one year at the time of death.

Al of this will change shortly.

Section 56 of WESA provides that a gift in a will to someone who is or becomes a spouse is revoked if “after the will is made and before the will-maker's death the will-maker and his or her spouse cease to be spouses under section 2 (2)”

As with the Wills Act, revocation of the gift is subject to a contrary intention expressed in the will. You can say that you wish for your spouse to receive a gift, even if you later cease to be spouses.

The new Act, as amended by section 465 of Bill 16 (the Family Law Act), provides in section  2 (2) (a) that

(2) Two persons cease being spouses of each other for the purposes of this Act if,

(a) in the case of a marriage,

(i) they live separate and apart for at least 2 years with one or both of them having the intention, formed before or during that time, to live separate and apart permanently, or

(ii) an event occurs that causes an interest in family property, within the meaning of the Family Law Act to arise, or….

This begs the question: when does an event occur that causes an interest in family property to arise?

Section 81 (b) of the Family Law Act provides that “on separation, each spouse has a right to an undivided half interest in all family property….”

On the other hand, under section 83, they are not considered to have separated for the purpose of determining rights in property if they begin to live together within one year to reconcile and continue to do so for one or more periods totally at least 90 days.

What is required for a married couple to be considered to have separated?

Section 3(4) of the Family Law Act provides:

(4) For the purposes of this Act,

(a) spouses may be separated despite continuing to live in the same residence, and 

(b) the court may consider, as evidence of separation,

(i)  communication, by one spouse to the other spouse, of an intention to separate permanently, and 

(ii)  an action, taken by a spouse, that demonstrates the spouse's intention to separate permanently.

Reading the WESA and the Family Law Act together, the effect is that if spouses separate, and at least one of them demonstrates by words or action an intention to separate permanently, the separation will be sufficient to revoke a gift in a will to the separated spouse.  You don’t need a divorce.

Section 83 of the Family Law Act implies that the gift will not be revoked if the spouses reconcile and live together again within a year, and they do so for one or more periods for a total of at least 90 days. At least that is my interpretation.

But unless section 83 of the Family Law Act applies such that the spouses are not considered to have separated, a future reconciliation does not revive a revoked gift. This is because section 56 (3) of WESA says:

(3) The operation of subsection (2) is not affected by a subsequent reconciliation of the will-maker and the spouse.

So if spouses have wills in which they leave everything to each other, then separate for say two years, and then reconcile without making new wills, and one of them dies, the gift to the survivor will be revoked by the separation. This so even if they were married for 50 years, with just the one period of separation. This stands in contrast to the law before WESA, which required a divorce to revoke the gift. I expect that this change will catch many unawares.

There are other implications when someone ceases to be a spouse under WESA. He or she will no longer have any entitlement if his or her former spouse dies without a will. Nor will he or she have the right to apply to vary the will under Division 6 of WESA, which is the successor legislation to the Wills Variation Act.

I am not sure what the point is of maintaining subsection 2(2)(a)(i) of WESA which provides that married spouses cease to be spouses when “they live separate and apart for at least 2 years with one or both of them having the intention, formed before or during that time, to live separate and apart permanently.” I find it hard to wrap my head around what situations would be covered  under that subsection that are not caught by subsection 2(2)(a)(ii).

Norman v. Watch Tower Bible and Tract Society of Canada

In Norman v. Watch TowerBible and Tract Society of Canada, 2013 BCSC 2099, Madam Justice Warren considered whether funds that were given to a charity under an agreement by which the donors could have the funds returned was testamentary in nature, requiring that the agreement by signed and witnessed as a will to be effective.

During their lifetimes, Lloyd and Lily Norman made loans and gifts to support their local congregation of Jehovah Witnesses in Abbotsford, B.C. as well as to the national charity Watch Tower Bible and Tract Society of Canada.

On July 3, 2001, they signed a “Conditional Donation Agreement,” which read as follows:

The Watch Tower Bible and Tract Society of Canada (SOCIETY) acknowledges the receipt of a voluntary conditional donation in the amount of $200,000.00 … (hereinafter called FUNDS) to be held for the use and benefit of SOCIETY for the purpose of advancing the work of Jehovah’s Witnesses of preaching the good news about Jehovah’s Kingdom according to the judgment and sole discretion of the SOCIETY. The initial voluntary conditional donation is accepted from the following DONOR(S):  Lloyd E. and Lily Norman …

Any future funds advanced will be accepted by the SOCIETY and held according to this agreement if the DONOR(S) so indicates in a letter sent with any future funds.

DONOR(S) may personally request in writing the refund of all or any part of the FUNDS from the SOCIETY and such request shall be honoured. No request for a refund may be made by a power of attorney, an estate, or legal representative. The SOCIETY shall, however, in its sole discretion, consider refund requests from such parties, particularly if any financial need is being experienced by any who are DONORS and keeping in mind the best interests of all concerned. The total sums refunded shall not exceed the total of FUNDS.

After the death of all DONORS, the remainder interest that may exist in the balance of FUNDS held by the SOCIETY according to this agreement shall be in SOCIETY.

Pursuant to the agreement, they contributed $310,000, some of which, $60,000 was made into outright gifts for which they received tax receipts.

Following Lloyd Norman’s death, his wife having predeceased him, his administrator, Dana Norman brought a claim on behalf of Lloyd Norman’s estate seeking payment of the $250,000 (being the difference between the $310,000 contributed and the $60,000 that had been converted to outright gifts) from the charity to the estate. The basis of his claim was that because Lloyd and Lily Norman could compel the charity to return the funds during their lifetimes, the agreement was testamentary in nature, dependant on their deaths for its vigour and effect. If so, then as a testamentary gift, the agreement must meet the formal signing and witnessing requirement in the Wills Act to be effective. In this case, it was not witnessed and was not valid in British Columbia as a will.

Madam Justice Warren summarized the factors the courts consider in deciding whether a gift is testamentary as follows:

[23]         The BC Court of Appeal in Wonnacott [ v. Loewen (1990), 44 B.C.L.R. (2d) 23] went on to cite with approval several Canadian decisions. From that analysis, the following principles emerge:

·       The question of whether a disposition is or is not testamentary depends upon the intention of the maker (para. 19).

·       The intention of the maker is a question of fact. In determining the intention, the court is not restricted to the wording of the document alone, but can and should consider extrinsic evidence relevant to the transaction (para. 20).

·       If the document is not intended to have any operation until the maker’s death, it is testamentary (para. 19).

·       If the document is intended to have and does have the effect of transferring some interest in the property or of setting up a trust thereof in praesenti, it is not testamentary (para. 19).

·       The reservation of a right to revoke the transfer or bring a trust to a close does not necessarily have the effect of making the document testamentary (para. 19).

·       Cases where documents are held to be testamentary often include the following factual elements: 1) no consideration passes; 2) the document has no immediate effect; 3) the document is revocable; and 4) the position of the donor and donee does not immediately change (para. 21).

 [24]         Other relevant principles drawn from the authorities relied upon by the parties include the following:

·       Even where an intended disposition is revocable by the maker or where enjoyment of it is postponed until the death of the maker, if, at the time of its execution, the document is legally effective to pass some immediate interest in the property, no matter how slight, the transaction will not be classified as testamentary:  James MacKenzie, Feeney’s Canadian Law of Wills, 4th ed. (Markham, ON: LexisNexis Canada Inc., 2000), para. 1.20.

·       The level of control the donor exercises over the property during his or her lifetime is a factor to be considered in determining whether a disposition is inter vivos or testamentary and the more control the donor exercises, the more likely the disposition will be considered testamentary:  MacKenzie, paras. 1.25 to 1.27.

·       However, the central question is whether the maker of the document intended the document to pass some immediate interest or whether the maker intended the document to have no effect until his death. The degree of control the donor retains over the property during his or her lifetime is relevant to ascertaining that intention. However, if it is clear that the document is intended to have immediate effect it is not testamentary even if the donor retains control, such as the ability to call for the return of the property during his or her lifetime:  Mordo [v. Nitting, 2006 BCSC 1761], para. 335.

Madam Justice Warren found that the gift was not testamentary but took effect during the Normans’ lifetimes, and was not dependant on their death for its vigour and effect. The charity had the right to use the funds. The fact that Lloyd and Lily Norman could call for the return of funds made the gift subject to a condition, but that did not alter the fact that the funds became the property of the charity immediately.

She wrote at paragraphs 37, 38 and 39:

[37]         The next question is whether the Conditional Donation Agreement took immediate effect. In my view, it is clear from the Conditional Donation Agreement itself that it had vigour and effect upon execution. The Conditional Donation Agreement, once executed, governed the relationship between the parties with respect to the Conditional Donations. The positions of the parties immediately changed.

[38]         On the signing of the Conditional Donation Agreement, the defendant obtained both an immediate and future interest in the funds. The defendant already had physical possession of, and at least legal title to, the initial $200,000, but the terms upon which the defendant held those funds and any future contributions were settled with the signing of the Conditional Donation Agreement. The defendant acquired the immediate right to use the funds:  the Conditional Donation Agreement expressly states that the funds are “to be held for the use and benefit of [the defendant] for the purpose of advancing the work of Jehovah’s Witnesses of preaching the good news about Jehovah’s Kingdom according to the judgment and sole discretion of the [defendant]”. Further, as would be the case if the money was in a joint account, the defendant received an unrestricted future interest when the condition was cleared upon Mr. Norman’s death. The Supreme Court of Canada in Pecore v. Pecore, 2007 SCC 17, at paras. 48 and 50, held that the gift of the right of survivorship is inter vivos in nature and not testamentary.

[39]         The Conditional Donation Agreement changed the position of the Normans in that upon its execution they were bound by its terms. They gave up the funds and, unless they requested a refund of them in accordance with the terms of that agreement, nothing would change on their deaths. The ultimate disposition did not depend on the Normans’ deaths but rather on their decision not to request a full refund during their lifetime.

The result is that the Watch Tower Bible and Tract Society of Canada are entitled to retain the full amount of the donations Lloyd and Lily Norman made to it.

Authorization to Obtain Estate Information

In British Columbia, when you apply for a grant of probate of a will, or a grant of letters of administration of an estate, you have to file with the Court Registry an inventory of the estate assets and liabilities, which includes details of the deceased’s bank and investment accounts. Usually, the easiest way to obtain this information is to write to the financial institutions the deceased dealt with and request it. I often do this on behalf of clients whom I assist with estate administration. Although most financial institutions in British

Columbia reply promptly, I have had experiences with some banks taking an unacceptably long time. Furthermore, in some cases, financial institutions may decline to provide any information until the executor or person applying for administration receives a grant form the Court, particularly if there is no will, and the applicant is applying for letters of administration. This creates a circular problem: you need the financial information to get a grant, but you need the grant to get the financial information to apply for the grant.

The new Probate Rules will provide a remedy. The new rules come into effect on March 31, 2014, when the new Wills, Estates and Succession Act also comes into effect.

If you are applying for a grant of probate or a grant of letters of administration, and need financial information from a financial institution, you may obtain an Authorization to Obtain Estate Information (Form P18) from the Supreme Court Registry where you are making the application pursuant to Rule 25-4 (1) of the Supreme Court Civil Rules. To obtain this form, you need to give the required notice to beneficiaries and others entitled to notice of your application, and you need to file the other materials required to obtain the grant of probate or letters of administration, including the Will if you are applying for probate.

Once the Court has issued the Authorization, you can deliver it to a financial institution or other person from which you require the information. The financial institution must then provide you with information related to the nature and value of the deceased’s assets within its possession or control within 30 days.

If the financial institution does not provide the information within 30 days, you may then apply to court for a court order that it provide the information. The court may then award costs against the financial institution for failing to comply with the Authorization to Obtain Estate Information. The risk of a cost award should provide financial institutions or others with a good incentive to comply.

Once you have the necessary information to complete the inventory of the deceased’s assets and liabilities, you may then file the inventory with the Court Registry to obtain the grant of probate or of administration.

This process will provide a good way to obtain information to obtain a grant if a financial institution is slow or reluctant to provide information without court authorization.

I hope that financial institutions don’t develop a practice of insisting on receiving an Authorization to Obtain Estate Administration as a matter of course, which could have the effect of delaying grants of probate.

Canadian Bar Association National Wills, Estates and Trusts Section

I attended the National Wills, Estates and Trusts Section of the Canadian Bar Association executive meeting in Ottawa last Saturday, October 26, 2013.

The meeting consists of the Officers (I’m Treasurer this year), an Executive Member and the chairs of provincial Wills, Estates and Trusts sections from across Canada, as well as CBA staff.

Our section is active in professional education programs for lawyers; we publish a newsletter with articles of national interest, called The Last Word, and we also produce Succession Law Tables of Concordance. The latter is a table with comparisons of law and procedure among all of the Provinces and Territories, and is available to Canadian Bar Association members and subscribers through Carswell.

More importantly for the public, we are active in legislation and law reform. I will mention three matters we have been involved in during the last couple of years.

We have made submissions to the Tax Policy Branch, Finance Canada, suggesting changes to the Income Tax Act to facilitate charitable giving. As set out in our letter of May 2, 2012,

We are writing to propose six technical amendments to the Income Tax Act (ITA) to make the tax treatment of charitable giving more flexible, and relieve donors from a number of technical obstacles to tax-effective charitable giving. Sophisticated tax advice is required for prospective donors to overcome these obstacles, without which tax-driven conditions result that do not necessarily reflect the donor’s charitable intention. The proposed amendments are not intended to result in additional tax benefits for charitable giving, but rather make the existing rules and tax benefits of charitable giving more equitable, intuitive, accessible and rewarding.

The letter contains six very specific proposed technical changes to deal with the problems our members and their clients have encountered in estate-planned charitable giving.

Our Section has also written to Canada Revenue Agency about concerns that Canada Revenue Agency is on occasion inappropriately refusing to issue a final clearance certificate to an executor or other personal representative unless the personal representative has remitted from the estate Canada Pension Plan deductions from the personal representative’s remuneration. Clearance certificates are important because they protect personal representatives for claims for unpaid taxes by the deceased after the personal representative has distributed the estate. This practice by Canada Revenue Agency of requiring remittance of Canada Pension Plan deductions appears to be based on a misconception of the law, and creates unnecessary administrative costs and delays in distributing estates. You can read our letter here.

Thirdly, we are working on submissions to the Tax Policy Branch, Department of Finance in response to the Government’s invitation to respond to proposals to tax income earned and retained in testamentary trusts at the highest marginal tax rate, instead of the current graduated rates. I have written about the Government's proposed changes and my personal views of them in this blog here and reported on the opportunity to make submissions here.

We have not yet completed the draft submissions, but I hope to provide a link to our proposals once they are completed and published on the Canadian Bar Association website.

Supreme Court of Canada Will Hear Appeal on Constitutionality of B.C.'s Court Hearing Fees

As I previously wrote here, Mr. Justice McEwan held in Vilardell v. Dunham, 2012 BCSC 748, that the hearing fees charged by the Province of British Columbia for hearings in the B.C. Supreme Court are unconstitutional. The represent an impermissible barrier to access to the courts.

The Court of Appeal reversed, holding that the fees were constitutional. I wrote about the Court of Appeal decision here.

On September 12, 2013, the Supreme Court of Canada granted leave to the Trial Lawyers Association of British Columbia  to be added as a party and for the appeal to be heard by the Supreme Court of Canada. The style of cause is The Trial Lawyers Association of British Columbia v. Attorney General of British Columbia (B.C.).

I read a memorandum indicating that Court Services will await the outcome before sending bills for hearing fees. This means that you may complete a trial, but be billed perhaps a year later for the hearing fees if the Supreme Court of Canada upholds the fees.