Fargey v. Fargey

If you want to ensure that your child or grandchild (or any other beneficiary) will not have control over an inheritance from you until he or she attains a more mature age than nineteen, the age of majority in British Columbia, then it is important that your will be drafted to avoid that beneficiary from being able to terminate the trust your create in your will for him or her. One way you may accomplish this is by providing that if the beneficiary dies before the age at which you wish to give the beneficiary control, his or her children will receive the funds held in the trust. But simply saying that a trustee will hold a beneficiary’s share until the beneficiary attains the age of say twenty-five will not do.

I have written before about the rule in Saunders v. Vautier (1841), 41 E.R. 482, allowing a beneficiary with legal capacity to terminate a trust if the beneficiary’s interest has fully vested, but the principle has been applied recently in British Columbia. The case is Fargey v. Fargey, 2015 BCSC 721.

Donald Robert Fargey in his will provided that if, as occurred, his wife and either of his two children died before him, the share of the deceased child, the trustee of his estate would hold the that share for each of that deceased child’s own children (Donald Fargey’s grandchildren) and:

invest and keep invested each such sub-share and to pay the income therefrom or so much thereof as may be necessary or advisable in my Trustee’s discretion for the grandchild’s maintenance, education or benefit during his or her minority, (any income not so paid in any year to be added to the capital of the share) and upon my grandchild attaining the age of twenty-five (25) years to distribute the capital of the sub-share to him or her.

The will did not contain a provision for anyone else if a grandchild died before the age of 25.

Donald Fargey’s son died before him, and his son had two children, Mathew Robert Fargey and Joseph Bartholomew Fargey. Mathew Fargey is an adult, but not yet 25, and Joseph Fargey is still a minor. Both grandchildren applied to court to terminate the trust, with Joseph Fargey’s mother bringing the application as his litigation guardian.

The two grandchildren relied on Saunders v. Vautier. In his reasons for judgment, Mr. Justice McEwan wrote at paragraph 7:

[7]             The authority cited by the petitioner is Saunders v. Vautier (1841), 41 E.R. 482 (Saunders). It was considered in British Columbia in Grieg v. National Trust Co. Ltd. (1997), 47 B.C.L.R. (3d) 42 (B.C.S.C.), where Grist J. observed:

4  Donovan Waters in The Law of Trusts In Canada, 2d Ed. (Toronto: Carswell, 1984) at 962-963, comments on the rule in Saunders v. Vautier (1841), 41 E.R. 482,

If there is only one beneficiary, or if there are several (whether entitled concurrently or successively), and they are all of one mind, and he or they are not under any disability, the specific performance of the trust may be arrested, and the trust modified or extinguished by him or them without reference to the wishes of the settlor or the trustees. (Approved in Re Johnston (1964), 48 D.L.R. (2d) 573 (B.C.S.C.) per Nemetz, J., as he then was).

In finding that Mathew Fargey was entitled to his share outright, Mr. Justice McEwan distinguished a Manitoba Court of Appeal case Fast v. Van Vliet, 49, D.L.R. (2d) 616, in which the court refused an order collapsing the trust where the will provided that a share of the will-maker’s estate would be divided between two named beneficiaries “upon their attaining the age of twenty-five years.” The majority of the Manitoba Court of Appeal held that the interest of each of the beneficiaries had not fully vested, but was contingent on each attaining the age of 25, which is when the division occurs.

In contrast, in Fargey, the division occurred on the date of Donald Fargey, and each of the two grandchildren’s shares vested at that time. The will did not postpone the gift, but rather the enjoyment of the gift.

Mr. Justice McEwan wrote:

[12]         What is clear in that case is that the will [in Fast] provided that the estate was not to be divided into shares for the beneficiaries until they attained the age of 25 years.

[13]         In contrast the shares in Donald Fargey’s will are to be created at the time of his death and the distribution of the share is postponed to the age of 25. It appears that what was anticipated was that equal shares would be created immediately and the income administered as the differing needs of the beneficiaries dictated, until their majority. There is then a gap until each share can be distributed to each brother as each attained the age of 25. The division into shares appears to take place before, not upon the attaining of the age of 25.

Because Joseph Fargey has not attained the age of majority, his share remains held in trust for him until he turns 19. But Mr. Justice McEwan made an order under the Trust and Settlement Variation Act allowing the trustee to use capital from Joseph Fargey’s share for his benefit before he attains the age of 19. This will allow the trustee to use funds to assist with his tuition at his school, which exceeds the income from his share.

Re Beck Estate

In a previous post, I wrote about the first reported case applying section 58 of the Will, Estates and Succession Act. This section allows the court to give effect to a “record, document, or writing or marking on a will or other document” as a will even though it does not meet the signing and witnessing requirements for a valid will in British Columbia. We now have a second reported decision, Re Beck Estate, 2015 BCSC 676, released on April 29, 2015.

Celena Beck made a will on June 23, 2009. She appointed her son Dietrich Reimer as her executor, gave $25,000 to her granddaughter, and gave her two acre property and the residue of her estate to Deitrich Reimer and her daughterArlene Minshull. The will was made by a lawyer and was properly signed and witnessed.

On November 25, 2012, Ms. Beck made a handwritten record, which she entitled “Codicil to my last will at above date,” and which she signed. She also crossed out the word “codicil” in one place in her will, and wrote “Codicil Enclosed.” There were no witnesses to the handwritten note nor to the markings she added to her will. She gave the handwritten record to her son, the executor.

The contents of the handwritten note are described by Master Young as follows:

The Handwritten Record starts with the words:

Mrs. Celena P. Beck.

Having had my lawyer ‘Mr. Mote’ [sic] make out my will and with myself in my sound mind have been forced to change a few things stated in said will.

[10]         The Handwritten Record goes on to discuss the difficult relationship Arlene has had with the family and her brother, and Arlene’s occupation on her property since 1965. She expresses a wish that Arlene be left alone on the land that she has occupied and worked on over the years; and her wish that Arlene live there for the rest of her life and then leave the land to her only child, Wendy Reimer.

[11]         The Handwritten Record then says:

Rick as my trustee will see that $10,000 goes to my dead Grandsons [sic], son Adam Minshall [sic].

Any money left in Estate should help repair my run-down property.

This will be in Ricks [sic] capable hands.

This is the only Codicil (underlined in red ink) to my legal will.

Celena Pearl Beck.

To be read out by My Lawyer. Mr. Mote [sic] (in red ink)

I thank you (in red ink)

Master Young applied the Manitoba Court of Appeal decision in George v. Daily (1997), 143 D.L.R. (4^th) 273 (a case I wrote about here), and Madam Justice Dickson’s decision in Young Estate, 2015 BCSC 182, and considered whether the Handwritten Note represented Ms. Beck’s “deliberate or fixed and final expression” of her wishes. Master Young found that the handwritten note did, but that the only enforceable provision was the gift to Adam Minshull.

Master Young wrote:

 [18]         The Handwritten Record is dated and signed and is written by the deceased. The executor recognizes the handwriting and signature as that of the deceased. Her signature is not witnessed. The wording, “Codicil to my last will” and the words, “To be read out by My Lawyer. Mr. Mote” [sic] suggests to me that this document contains a deliberate or fixed and final expression of intention as to the disposal of her property upon her death. Although the document does not make reference to funeral arrangements, it does make reference to the reading of the Will, which suggests a final expression.

[19]         The fact that the deceased gave this document to her executor for safekeeping one week before her death and told him that she thought the unwitnessed Codicil was a valid Codicil, reinforces my conclusion that this is a final expression of her testamentary intention.

[20]         Some of the content in the Handwritten Record is unenforceable. She speaks of her wish as to how her daughter will use the gift of property when she says:

Arlene must be left alone on the place she has worked all these years and made beautiful as a Park. I would like her to do so the rest of her life. Then leave it for her only child Wendy Reimer …

[21]         In Eberwein Estate (Re), 2012 BCSC 250, the executor sought advice and direction from the court regarding bequests in a Will which were unclear. The bequest that is relevant for this discussion was a gift of $1,000,000 to a beneficiary with direction that she invests the money to purchase a revenue-producing property. Madam Justice Griffin says:

[30]      Courts are greatly suspicious of attempts by testators to give with one hand and retain with the other. If an absolute gift is made, accompanied by uncertain language expressing a wish or request, the courts are reluctant to imply a trust: McIver Estate v. McIver, [1981] B.C.J. No. 68 (S.C.) at para 4; Sutherland Estate v. Nicoll Estate, [1944] S.C.R. 253 at 262, [1944] 3 D.L.R. 551 [sub. nom. Hayman v. Nicoll]. In the McIver case, the word “trust” was used and so the court did not consider the words to be “merely precatory or recommendatory”. However, in the present case, the word “trust” was not used in the clause at issue. Rather, I find that the words used here imposed no defined restrictions on the beneficiaries and are so loose that a trust could not have been intended by Ms. Eberwein, who was sufficiently sophisticated to have spelled out a trust clearly if that is what she intended.

[22]         Ms. Beck made an absolute gift of property to her daughter in the Will. The Handwritten Record contains uncertain language, expressing a wish as to how the property will be used. I do not find that the Handwritten Record creates a trust, but is an expression of wishes or recommendations.

[23]         The only clear gift contained in the Handwritten Record is the gift of $10,000 to “my dead Grandsons [sic], son Adam Minshall” [sic].

[24]         I find that this gift to Adam Minshull is a deliberate expression of the deceased’s wish and testamentary intention, so I will exercise the curative power under the authority of s. 58 of the WESA. I order that that portion of the Handwritten Record is fully effective, as though it had been made as part of the Will.

[25]         I have also considered the words:

Any money left in Estate should help repair my run-down property.This will be in Ricks [sic] capable hands.

 The residue clause in the Will says that the residue of the estate is to be divided between “Dietrick Reimer” [sic] and “Arlene Minshall” [sic]. I do not find that these words in the Handwritten Record constitute a deliberate expression of testamentary intention to vary the residue clause in the Will.