Sunday, February 22, 2009

Sikora v. Sikora Estate

One of the most challenging aspects of my estate-planning practice is assisting married clients with children previous relationships or marriages. The problem for the client in a second (or third) marriage is how to balance the competing interests of his spouse and his children. When a reasonable balance is not achieved, the result may be litigation between the children and the spouse.

Peter Sikora died on December 20, 2004. He had a widow, San Sikora. They had been married for over 18 years, and lived together for about five years before their marriage. He also had a child from a previous marriage, Richard Arthur, and three sons from a previous common-law relationship, David Sikora, Douglas Sikora and Donald Sikora.

When he made his will on August 16, 1986, Peter Sikora owned a house in Ashcroft, in which he and his wife lived, and a rental property in Delta, B.C. He also owned a small business, buying and selling electronic parts.

In his will, he appointed his wife and his son Donald as his executors. He left his wife his house in Ashcroft (the title to which he held in his sole name), his furnishing and his car. He left $500 to his son Richard. He left the residue of his estate to his other three children.

He later sold his rental property in Delta, and used some of the proceeds to pay off his mortgage on his house in Ashcroft. He also wound up his business.

At his death, most of the value of his estate was comprised of the house at Ashcroft. It now has a property tax assessed value of just under $570,000. After deducting his debts, funeral expenses, executor fees, legal and probate fees, there was only about $11,500 to be divided among the three children entitled to the residue of Peter Sikora’s estate.

Two of Peter Sikora’s children, David and Douglas, brought an application to vary Peter Sikora’s will under the Wills Variation Act. In British Columbia, spouses and children may apply to vary a will if their deceased spouses or parents (as the case may be) have not made adequate provision for them. The Supreme Court of British Columbia may then make such provision as the Court decides is just, adequate and equitable in the circumstances.

Both children testified that their father was an alcoholic and abusive to them and their mother when they were growing up. They continued to have a relationship with him until his death.

Douglas Sikora is 43 and has his own construction contracting business. His income is about $95,000 per year. He owns his home, but has a mortgage. The total net value of his assets is about $284,000. He has a son.

David Sikora is 47, and works as a general contractor. He expects a loss in 2008, and had income of about $36,500 the previous year. He owns his home, but has no equity in it. The net value of his assets is about $81,000. He supports his daughter.

San and Peter Sikora kept title to their assets separate. Peter Sikora used his own funds to buy the house in Ashcroft, and paid property tax, insurance, and other expenses for the house.

Apart from her interest in her husband’s estate, San Sikora has assets in Canada with a net value of approximately $1,273,000 as well as an interest in property in Taiwan. She is 62 years old, and has an income of about $50,000 a year. She lives in the house in Ashcroft with her adult son.

In his reasons for judgment released yesterday, in Sikora v. Sikora Estate, 2009 BCSC 195, Mr. Justice Cullen balance the competing principles of respecting Peter Sikora’s testamentary intentions and giving effect to Peter Sikora’s moral obligations to Douglas and David to make provision for them. He considered the fact that San Sikora had built up her own estate, which she wished to leave on her death to her own son from a previous marriage. He also considered the financial resources of both David and Douglas, and their obligations to support their minor children.

Mr. Justice Cullen also considered the fact when Peter Sikora made his will, he had more assets that would form the residue of his estate, and go to three of his children. Mr. Justice Cullen inferred that Peter Sikora did intend to make greater provision for his children than what they would receive under his will given the change in his assets between when Peter Sikora made his will and his death.

The Court varied the will by giving title to the house in Ashcroft to Douglas Sikora and David Sikora, subject to a life interest in favour of San Sikora. Douglas and David Sikora would be required to pay the property insurance premiums and for any major repairs during San Sikora’s lifetime. San Sikora, in turn, would pay the property taxes and costs of minor repairs. The effect of this order is that San Sikora will have the benefit of the house during her lifetime, but on her death, Douglas and David will receive the house, rather than San Sikora’s own son.

1 comment:

Anonymous said...

Re: Sikora vs. Sikora

The Sikora house that was being fought over in court is not IN Ashcroft, BC it is ON Ashcroft Ave in Richmond, BC (10831)

Also, Peter Sikora's wife's name is San Meei, not San and she should have won this case. The judge did not take into account the equal partnership in maintaining the home and all the money San Meei put into it and, 18 years of marriage. The bottom line is, it was family home of 3 where they raised her son.