Saturday, November 15, 2008

Wills Variation Act: Competing Claims of Independant Adult Children and Dependant Adult Children

Not all Wills Variation Act claims brought by disinherited children in British Columbia are successful. A parent may favour one child over another, even disinheriting a child, if the parent has a rational and valid reason for doing so. One reason a parent might leave her entire estate to only one child of two is the disability of the favoured child.

Lilian Campbell died on December 2, 2007 leaving two children, both in their 50s: Lynda Stone and Larry Campbell.

Lynda Stone lived independently. She owns her own home and had a modest income.

Larry Campbell lived with his mother. He assisted his mother in the household, and drove her to appointments. He has not worked outside the home for over 20 years. He receives a disability pension from the Province of British Columbia of $900, and is unemployable.

In 2004, Lilian Campbell transferred her house into a joint tenancy with Larry Campbell. The effect of this is that on her death, the title passed to her son by right-of- survivorship. In her last will made October 16, 2007, she left her estate to Larry Campbell.

The assessed value of the house in 2007 was $390,000. Lilian Campbell’s other assets were worth less than $10,000.

In Stone v. Campbell, 2008 BCSC 1518, Lynda Stone, who had been disinherited, challenged her mother’s estate plan.

She challenged the transfer of the house into a joint tenancy, both on the basis that the law presumes that Larry Campbell held the house in trust for his mother and her estate, and undue influence. She also argued that her brother procured the 2007 by exercising undue influence over their mom. (Lilian Campbell’s previous will left the Larry Campbell the household goods, but divided the residue of the estate equally). If the 2007 will were valid, Ms. Stone argued that it should be varied pursuant to the Wills Variation Act on the basis that her mother did not make adequate provision for her.

With respect to the transfer of the house, the presumption that a person who receives property for free holds the property for the transferor on a resulting trust may be rebutted by evidence that the transferor intended a gift. In this case, Mr. Justice Goepel found that Lilian Campbell intended to make a gift of an interest in the house to her son.

Mr. Justice Goepel also rejected Ms. Stone’s argument that Larry Campbell unduly influenced their mother to transfer the house into a joint tenancy, or that he procured the 2007 will by undue influence.

Because Mr. Justice Goepel upheld the transfer of the house into a joint tenancy with Larry Campbell as a gift, it does not form part of Lilian Campbell’s estate. Accordingly, the 2007 will does not affect the distribution of the house, and the court cannot change the distribution of the house under the Wills Variation Act. The Wills Variation Act only applies to those assets passing under the will.

Mr. Justice Goepel did go on to consider whether it would be appropriate to vary the will if the house did form part of Lilian Campbell’s estate. He found that it would not be appropriate.

Because Larry Campbell had a disability and was a dependant adult child, while his sister was independent, he had a stronger moral claim than Ms. Stone to their mother’s estate. His mother’s estate, even if the house were included, was modest. Lilian Campbell’s decision to leave her entire estate to Larry Campbell was morally defensible even if another parent might have made some provision for Lynda Stone. Mr. Justice Goepel held that the court should not interfere.

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