As I have written before, when a child or spouse applies to vary a will under the Wills Variation Act in British Columbia, an executor must remain neutral. A Wills Variation Act case is a dispute among those claiming under the Act and the beneficiaries of the will. It is not a claim against the estate entitling the executor of the will to use estate funds to defend the claim.
In a decision released on Friday, February 3, 2012, Mr. Justice Wong gave reasons for judgment in an application by an executor for directions as to whether he may defend against a Wills Variation Act claim to vary a will. The requirement that an executor remain neutral is well established, but this case, Ketcham v. Walton, 2012 BCSC 175, has an interesting twist to it: the will directed the executor to defend against any claim under the Wills Variation Act, and if necessary to deplete the estate and take appeals to defend the will.
Eric Worthy Clay disinherited his three children, leaving his estate of just under $800,000 to friends and charities. In his will, he said that his children were estranged from him, and he directed his executor, Mr. Kenneth Walton QC, to defend against any Wills Variation Act claim. After his death, his children did apply to court under the Wills Variation Act to vary the will.
One of the arguments put forward for allowing the executor to defend against the Wills Variation Act claim was that the residual beneficiaries who would receive about $277,000, and whose interests were most likely affected, had not filed a response to defend against the claim.
Despite this clause directing the executor to defend, Mr. Justice Wong held that the executor must remain neutral. He held that the principle that an executor must remain neutral overrides the direction in the will. Furthermore, the provision that the executor may deplete the estate funds is void as being against public policy because the clause may discourage the children from having their case heard in court. If the executor is entitled to deplete the entire estate on defending the claim, the children could be denied any recovery even if successful.
But-- and this is I think a development in the law-- Mr. Justice Wong did say that if the Wills Variation Act claim is not being defended by the beneficiaries, “[i]n order to assist the Court in determining the merits of the plaintiffs’ WVA claim in a balanced and non adversarial role, the Executor might then retain counsel as Amicus for the Court with respect to questioning the plaintiffs’ claim for assistance of the Court.”
As I interpret Mr. Justice Wong’s decision, an executor usually has a very limited and neutral role in a Wills Variation Act case. The persons making a claim and the beneficiaries are the main parties to the dispute. But in appropriate cases, the executor may play an active role, but in a non-adversarial manner.
Mr. Justice Wong does not flesh out the specific things an executor or his lawyer might do as a friend of the court, but I suggest that in some cases it may be appropriate for the executor to lead evidence about the will-maker’s reasons for making the provisions he or she did in the will, and perhaps to have a lawyer cross-examine witnesses.
I can conceive of Wills Variation Act cases where it would be appropriate for an executor to lead evidence of the will-maker’s intentions and to question a claim. For example, suppose a mother has two children: a daughter who functions well, and a son who has a drug addiction. The mother leaves half of her estate to her daughter. She wishes to provide for her son as well, but is concerned that if she makes an outright gift to him, he will use it for drugs, thereby harming him. The mother provides in her will that the other half is to be held by a trustee who has discretion to make payments to or for the benefit of her son during his lifetime, with any funds remaining on her son’s death paid to a charity. The trustee can then use half of the estate to benefit the son, without the son getting control of the funds to feed his addiction. The son brings a Wills Variation Act claim seeking to vary the will so that he receives one-half of the estate outright, instead of it going into a trust. The daughter does want to spend her money on legal fees to defend against her brother’s claim given that he is only seeking half of the estate. The charity is reluctant to get involved in a family dispute, or spend funds when there may be nothing left for the charity in the trust after the son’s death in any event. In circumstances such as set out in these hypothetical facts, the executor should be allowed to spend funds out of the estate to provide the court with evidence of the mother’s reasons. The son could then lead evidence as to whether he does in fact suffer from a drug addiction, and the executor’s lawyer could cross-examine the son and the son’s other witnesses so that the court has sufficient evidence to decide whether to vary the will.
But before using funds estate funds to play an active role in a Wills Variation Act case, an executor is well-advised to seek directions from the court as Mr. Walton did in Ketcham v. Walton.