Right of Spouse to Acquire Spousal Home in Intestate Estate

In British Columbia, when a person dies without a will (or in other words intestate), his or her spouse may take the deceased interest in the spousal home as part of the surviving spouse’s share. The survivor does not receive the house automatically, but the Wills, Estates and Succession Act provides a mechanism for the spouse to select the home.

When someone dies without a will leaving a spouse and children or other descendants, the spouse receives the first $300,000 if the descendants are descendants of both the deceased and the spouse, or $150,000 if the deceased left descendants who are not also descendants of the spouse. For example, if the deceased had a child from a previous relationship, the surviving spouse would receive the first $150,000 as her preferential share. The spouse is also entitled in either case, to one-half of the rest of the estate.

Sections 26 through 35 of the Wills, Estates and Succession Act sets out the process for a surviving spouse to receive the spousal home. When the personal representative applies to court for a representation grant, the representative must give notice to the spouse of her right to acquire the spousal home. She has 180 days from the date the court issues the representation grant to provide written notice to the personal representative of her decision to acquire the home. If the spouse is the personal representative, then she must give notice to those entitled to a share of the estate, and if any are minors or mentally incapable person, notice is also given to the Public Guardian and Trustee.

When the spouse gives notice, the notice must set out a value of the home. If the personal representative agrees with the value, then the agreed value is taken from the spouse’s share of the estate. If the spouse is the personal representative, then the other beneficiaries may agree on the value. If there is a disagreement about how much the home is worth, then the court may determine the value.

What if the value of the home exceeds the spouse’s share? For example, what if the home is worth $1,000,000 but the value of the estate after payment of debts and expenses is $1,200,000, and the spouse’s share is $750,000? The spouse may then purchase the home by paying the difference into the estate ($250,000 in our example).

If purchasing the home would “impose a significant financial hardship to the spouse,” then the court has a broad discretion to give the spouse the home and may impose conditions. For example, the court could require the spouse to pay the other beneficiaries and amount that is less than the difference between the value and the spouse’s interest in the estate. The court may also place a charge on the home in favour of the other beneficiaries, in which case they will eventually receive funds, but may have to wait until sometime in the future as the court may set out, perhaps when the spouse sells the home, ceases to live in the home or dies. In applying this provision, the court will need to balance the interests of the spouse and the other beneficiaries.

I am not aware of any reported court decisions that have applied these provisions. Fortunately, my experience has been that the value of the spouse’s share of the estate has been sufficient to acquire the house, and the value has been agreed upon.

These provisions also apply when there is a will does not dispose of all of the deceased’s assets (referred to as a partial intestacy), and does not dispose of the home. Partial intestacies are unusual in professionally drawn wills, but may occur, if for example, the will-maker makes a will leaving specific assets to beneficiaries, but does not have a clause disposing of the residue of the estate.

Quinn Estate Appeal

In Quinn Estate v. Rydland, the British Columbia Court of Appeal had held that a pour-over clause in former NHL coach Pat Quinn’s will is invalid. As I wrote in my post about the British Columbia Supreme Court decision in this case,

Mr. Quinn and his wife Sandra Quinn settled a trust in the United States which dealt with assets in the United States. Mr. Quinn was an American citizen, and Mrs. Quinn had U.S. Green Card, but they lived in British Columbia. Their U.S. lawyer also draft a will for Mr. Quinn dealing with his assets in Canada. The will provided that the residue of his Canadian Estate would “pour over” into a U.S. trust, referred to as the Quinn Family Trust. 

The issue in this case was whether the distributive provision of the Canadian will is valid under British Columbia law. The will was signed by Mr. Quinn in the presence of two witness in accordance with the requirements of section 37 of the Wills, Estates and Succession Act. The will itself was formally valid. The difficulty was the “pour over” clause, which I understand is valid in at least some states. The terms of the Quinn Family Trust allowed Mr. and Mrs. Quinn to amend it. Because they could amend the trust, the beneficiaries could be changed without compliance with the requirements of section 37.

The Trust was amended, but the amendment was a relatively small administrative change that did not change the beneficiaries. But the fact that it could be amended was sufficient for Mr. Justice Funt in the Supreme Court to find that the clause is invalid.

On appeal, Chief Justice Bauman considered whether the clause could be saved on any of three grounds: the doctrine of incorporation by reference, the doctrine of facts of independent significance or section 58 of the Wills, Estates and Succession Act (the “WESA”).

In a will, the will-maker may incorporate another document. The Chief Justice set out the criteria as follows:

[19]         Incorporation by reference simply contemplates that the terms of the trust are deemed to be incorporated into the will. There are five prerequisites to applying the test, per Leal, A. “Testamentary Additions to Trusts” in Proceedings of the Forty-Ninth Annual Meeting of the Conference of Commissioners on Uniformity of Legislation in Canada (St. John’s: 1967) 207 at 208:

(1) that the reference in the will must show that the testator intended to incorporate the extrinsic document into the will; (2) the language of the will must be such that it refers to the extrinsic document as one already in existence at the time of the execution of the will; (3) the reference in the will must be sufficiently specific that it identifies the extrinsic document with reasonable certainty; (4) the document offered must be proven satisfactorily to be the one referred to in the will; and (5) there must be satisfactory proof that the document was actually in existence at the time of the execution of the will: see Allen v. Maddock (1858), 11 Moore P.C. 427.

The Chief Justice found that the will did not refer to a document, and Mr. Quinn did not intend to incorporate the trust by reference. Rather Mr. Quinn intended to make a gift “to the trust.” The trust c could not be incorporated by reference “because as of the date of that will, the trust, being amendable and revocable, was not a ‘presently existing document’ and the testator cannot, by his will, create for himself a power to dispose of his property by an instrument not duly executed as a will or codicil.”

The doctrine of facts of independent significance refers to facts that are independent of the will that may affect the disposition of the will-maker’s property. For example, if the will-maker leaves his property to those of his children who survive him, the birth of a child after the will affect how is property is divided upon death. 

Chief Justice Bauman described the doctrine as follows:

That doctrine purports to resolve the issue of potential uncertainty in a will. In the Anglo-Canadian cases it would typically respond to resolve the uncertainty inherent in a bequest: “my car to my partner at the time of my death”. Certainty is achieved by reference to a fact of independent significance (i.e., independent of simply testamentary significance), such as the fact of who the testator’s partner was at the time of his death. So too could the fact of the make and model of the testator’s car have independent significance.

In some jurisdictions in the United States, the doctrine of facts of independent significance has been applied to similar pour-over clauses, but the Court of Appeal rejected the application of the doctrine to pour-over clauses in British Columbia. Chief Justice Bauman wrote:

[31]         In my view, this doctrine should not be seen as a device to validate a pour-over clause like that at bar both as a matter of statutory interpretation and as a matter of principle. When WESA came into force in 2014, it heralded a significant overhaul of the wills, estates and trusts law of the province. Nothing in WESA addresses pour-over clauses. Were the doctrine of facts of independent significance applied to pour-over clauses, it would allow a will-maker to avoid the formalities and the necessity of testamentary intent embodied in WESA so long as the will-maker had sufficient assets in the trust at the time of amending the trust (at least on the American authorities). Had the Legislature intended to allow amendments to a will so long as the amendment presently affected significant assets, the legislature could have provided for it. Extending this doctrine to apply to an amendable, revocable trust would permit a testator to avoid the strictures of WESA and thus defeat the legislature’s intent.

[32]         Applying the doctrine to validate a pour-over clause would also differ in character to the existing applications recognized in the Anglo-Canadian jurisprudence. The traditional applications of the doctrine validate de facto amendments to the will only with regard to limited “facts”. The terms “partner” and “car” are inherently limited. A trust document recognizes no such limit. Extending the doctrine to pour-over clauses would grant testators unlimited power to amend the disposition of their estate without following the strictures of WESA. In my view, this is not an extension the common law should permit

Finally, the Court of Appeal considered whether the curative provision in section 58 of the WESA could save the pour-over clause. Section 58 allows the court to give effect to a document or record that does not comply with the formal signing and witnessing requirements for a valid will if the court finds the document or record reflects the deceased person’s testamentary intentions. (I have co- written a paper on section 58, which you can find here.)

The Court held that section 58 has no application. The will met all of the formal requirements, and Mr. Quinn did not intend for the trust to be a will. Chief Justice Bauman wrote at paragraph 37,

That s. 58 is inapplicable here is made stark when we ask what “record or document or writing or marking on a will…” is to be ordered “fully effective” under WESA per s. 58(3). Ms. Rydland does not seek probate of the QFT; rather, she seeks to validate the sixth clause. That clause is part of a will that complies with the formalities. It seeks to create a vehicle — the QFT — that would allow the will-maker to circumvent the formalities altogether. Section 58 simply has no application to that circumstance. The chambers judge did not err in declining to apply s. 58 here.

What is my own view? From a practical perspective, I think it unfortunate that a pour-over clause to an amendable trust is invalid. In some circumstances, it might be a useful tool. Family trusts appear to be quite popular in some U.S. states, such as California. I don’t see any harm from a policy perspective in, for example, allowing someone with a trust in California with California resident beneficiaries to create a will for his British Columbia assets that pours over to his California trust.

I also think this case illustrates an incoherence in our succession law. Supposing that Mr. Quinn’s will made no reference to the trust, but he simply named his wife as the beneficiary of his estate. Suppose he also told her that she was to distribute his estate in accordance with the trust, and she agreed. Supposing further that he decided to amend the trust after he made the will, and he communicated the changes to her and she agreed to deal with the estate in accordance with those changes. Provided that the will did not itself refer to the fact that she would receive his estate as a trustee, this arrangement would be a valid secret trust under British Columbia law, and he would be able to change the terms right up to his death, without complying with the formal requirements for a valid will. I am not advocating the use of secret trusts in this manner as a good estate-planning tool, but merely highlighting the inconsistency.

Interest on Legacies

In British Columbia, if a legacy is not paid within one-year of the will-maker’s death, the beneficiary is entitled to interest at a rate of 5% per year from the first anniversary of the date of death. This rule applies unless the will provides that no interest is payable or provides for a different rate. In my experience, most will-makers do not address this issue in their wills.

The first year is sometimes referred to as the “executor’s year.” The notion is that an estate will be administered in about one year, but in practice estates often take longer to administer. The time is likely to be drawn-out much longer if there is litigation.

This rule was considered and explained in an Ontario case, Rivard v. Morris, 2018 ONCA 181 (CanlII). Alexander Rivard died on October 24, 2013. In his last will, he left legacies of $530,000 to each of his two daughters and his farm land to his son. His daughters unsuccessfully challenged the will. As a result of the dispute, the two daughters did not receive their legacies until October 24, 2016. They sought interest on the legacies but the Ontario Superior Court denied interest, reasoning that it was the daughter’s actions in challenging the will that caused the delay.

In allowing the daughters’ appeal, and awarding them interest, Mr. Justice Paciocco explained the rationale for the rule:

[22]      Centuries ago, Ecclesiastical courts in England developed a practice of giving personal representatives one year after the death of the deceased to wind up the estate. To this day, it is still presumed, including in Ontario, that estates will be wrapped up within the “executor’s year”: Carmen S. Thériault, Widdifield on Executors and Trustees, loose-leaf (2016-Rel. 11), 6th ed. (Toronto: Carswell, 2016), at pp. 5-6.3 to 5-6.4. This involves calling in the assets of the deceased, paying off the estate debts, and converting the remaining assets to enable bequests and legacies to be distributed according to the will, and then doing so.

[23]      For more than two centuries, the law of equity has recognized a related rule, often referred to as the “rule of convenience.” According to this related rule, described in more detail below, “where no special time is fixed for the payment of a legacy, it carries interest ... from the expiration of a year from the testator’s death”: Widdifield, at p. 5-6.3. See also: James MacKenzie, Feeney’s Canadian Law of Wills, loose-leaf (2016-Rel. 64-9), 4th ed. (Toronto: Lexis-Nexis, 2000), at p. 8.22. This rule was thoroughly reviewed in the 1997 article by Rosanne T. Rocchi and Michael W. Kerr, “Legacies: A Matter of some Interest” (1997), 16 E. & T.J. 305 (“Rocchi and Kerr”).

[24]      The “rule of convenience” can be easily explained, in my view. One of the maxims of equity is that it presumes as being done that which ought to be done. Since the beneficiaries should be enjoying the earning power of their legacies by at least the anniversary date of the testator’s death, where that enjoyment is postponed and the testator has not provided an alternative date for payment of the legacy, interest is to be paid: Hutcheon v. Mannington(1791), 1 Ves. Jr. 366, at p. 367, 30 E.R. 338 (Ch.); and Elwin v. Elwin (1803), 8 Ves. Jr. 547, at p. 557, 37 E.R. 467 (Ch.). This does not mean that the interest is itself a legacy: Foster v. Wyles, [1938] 1 Ch.  313, at p. 316. It does mean that equity takes steps to put the legatee in the position they would have been in had the legacy been distributed as the testator, not having set a different date for distribution, is presumed to have intended.

According to Mr. Justice Paciocco, the rule of convenience is not tied to the conduct of the personal representative or the beneficiaries. It applies even if it is not possible to pay the legacy within a year of death. Although he did  not rule out the possibility that a judge might have discretion to deny interest, he emphasized the importance of certainty in the application of the rule, and held that even if there is discretion, the Superior Court Judge erred in principle in tying interest to whether it was reasonable for the two daughters to expect payment within a year in this case.

With respect to the question of whether there is a discretion, Mr. Justice Paciocco wrote:

[53]      As explained, the “rule of convenience” is not predicated on the possibility of payment within the executor’s year. The “rule of convenience” applies even where payment within the executor’s year is impossible. It would involve a significant realignment of the rule, in my view, to permit courts to choose whether to pay interest based on how reasonable it is to expect the distribution of property within the executor’s year to occur.

[54]      No relevant Canadian cases supporting the discretion to deny interest have been found. No English cases doing so have been uncovered either. Re Allen, at para. 32, cites an unreported New Zealand decision, Cook v. Cook (20 April 2004), Greymouth, 2001-418-000004, that apparently recognizes a discretion to deny interest but Re Allen disapproves of Cook v Cook on the basis that the decision was made without supporting authority. After a close examination of the case law, the court in Re Allen, at para. 33, held that “unless the will provides otherwise, a legatee has a right to interest on the legacy as from the end of the executors’ year”.

[55]      The reason there may be no authority supporting a discretion to deny interest may simply be that discretion is seen to be undesirable in this context. In Re Beech, Saint v. Beech, [1920] 1 Ch. 40, at p. 44, quoted in Re Parry, Brown v. Parry, [1947] Ch. 23, at p. 47, Eve J. appears to explain why:

[A] departure from a salutary rule in matters of this kind – introducing as it does an element of uncertainty in practice and administration – can only be justified if the changed conditions on which it is founded continue at least as constant as those upon which the rule was itself framed.

[56]      Expressing the same sentiment in more modern language, certainty is critical to the simplicity and the efficacy of a rule that is most often applied, not by courts, but by personal representatives. It is one thing to identify fixed exceptions to the “rule of convenience”. It is another to leave the operation of the “rule of convenience” free floating. Doing so would undercut its function as a “rule of convenience”.

[57]      In addition, the “rule of convenience” is predicated on what a testator, presumed to know the law, is presumed to intend where they have not opted out of the rule. Denying discretion is arguably a better way of having testators, rather than executors or courts, determine how to distribute their property, including the payment of interest on legacies.

Mr. Justice Paciocco acknowledged that five percent is a high rate in this age of low inflation and investment returns, but the rate for the “rule of convenience,” was not argued in this case, and Mr. Justice Paciocco declined to adjust it. His discussion of the rate is also quite interesting, and I will quote part of it:

[83]      Initially interest amounts varied modestly over time - between 4% and 6% over three centuries - but the rates are now set by statute in England. The rates are regularly reviewed by the Lord Chancellor with the concurrence of the Treasury and are linked to the interest payable on money paid into court. Currently the rate of interest is negligible: 0.1%.

[84]      Conversely, as Rocchi and Kerr explain, at p. 312: “In Ontario, 5% appears to have been the accepted rate, but the cases do not demonstrate any suggestion that the rate is tied to an anticipated rate of return”. Not surprisingly, over the centuries there have been anomalous decisions where judges have applied different rates of interest close to that amount, but judges in these cases tend not to purport to be exercising a case by case consideration. Instead, they appear to have been attempting to define an appropriate general rate at the time: see for e.g. Re Nathanson, 1946 CanLII 104 (ON SC), [1946] O.R. 421 (H.C.).

[85]      Some Canadian cases that have applied a 5% rate appear simply to have been mimicking the English practice of the day, while others tie the rate of interest expressly or by implication to the legal interest rate provided for in s. 3 of the Interest Act, R.S.C., 1985, c. I-15: Lynch’s Estate; and MacIntyre Estate, Re (1989), 92 N.S.R. (2d) 110 (Prob. Ct.). In Merritt Estate, Smily J. commented, at para. 4, that “it is well established that [the rate of interest] should be the legal rate, which is 5%.” Section 3 of the Interest Act  provides:

Whenever any interest is payable by the agreement of parties or by law, and no rate is fixed by the agreement or by law, the rate of interest shall be five per cent per annum.

[86]      It can be seen, then, that the 5% interest rate is not grounded in a uniform or compelling legal basis.  Moreover, a policy case can be made that courts should move away from the 5% rate. Arguably, the current practice of imposing an interest rate that is materially out of line with the market interest rate is not in keeping with the underlying purpose of the “rule of convenience” of ensuring that legatees enjoy the earning potential of a property right that has arisen where enjoyment has been delayed. Perhaps the English example should be followed of using a periodically adjusted but fixed statutory interest rate by analogy for the “rule of convenience”, such as the rates provided for in the prejudgment interest provisions, the postjudgment interest provisions or the rate set under r. 53 of the Rules of Civil Procedure for prejudgment interest on non- pecuniary damages.

[87]      This, however, is not the case for deciding whether such a change should be made. We have not been asked to readjust the rate used under the “rule of convenience,” and we have not been presented with argument on this issue. Even though a 5% interest rate may seem aggressive relative to the current prime rate, given the state of authority and the manner in which this case was presented before us, I see no reason to deviate from the established 5% rate in this case.

In the result, each of Alexander Rivard’s daughters is entitled to $53,000 in interest on her legacy, being two years at 5% per year.

Panda Estate

I wrote about the Ontario decision in Re Milne Estate, in which Mr. Justice Dunphy refused to grant probate in respect of two wills on the grounds that in his view they were void for uncertainty of subject matter. A husband and wife each made two wills, one intended to deal with those assets for which an estate grant was required, and the other for which no grant would be required for the estate trustee to deal with the assets.

I described this two-will strategy to reduce probate as follows:

The idea is that the will-maker makes one will in which she deals with those of her assets that can be dealt with by her executor (or “estate trustee” in Ontario), without a grant of probate. The most common type of asset is shares and shareholder loans in closely held companies. There is then another will in which she deals with those assets, such as real estate, publicly traded shares and investment accounts for which probate will be required for the executor to deal with the assets. Both Ontario and British Columbia charge probate fees based on the size of the estate. By using a separate will for the closely held companies, there may be significant savings if the will does not need to be probated.

In my post, I was critical of the reasoning in Re Milne Estate.

In a subsequent decision, another Judge of the Ontario Superior Court of Justice declined to follow Re Milne Estate. In Re Panda Estate, 2018 ONSC 6734 (CanLII), Mr. Justice Penny granted a Certificate of Appointment of Estate Trustee in respect of one of two wills. In Panda Estate, the will-maker had made two wills: a primary and a secondary will. The Secondary Will defined the secondary estate to include shares in two companies, and “any other assets for which my Trustees determine a grant of authority by a court of competent jurisdiction in not required for the transfer, disposition or realization thereof.” It also permitted the secondary estate trustee to disclaim any assets, which would then be administered pursuant to the primary will. If the reasoning in Re Milne were applied, then the primary will would be void for uncertainty of subject matter.

However, Mr. Justice Penny did not agree with the reasoning in Re Milne Estate. First, Mr. Justice Penny did not consider it appropriate to the Court sitting as a court of probate to engage in “matters of broad construction.” The functions of the court in probate and interpretation are distinct. He wrote:

[17]           It seems to me, although law and equity are now fused in the Ontario Superior Court of Justice, it remains nevertheless important to keep the probate and construction functions analytically distinct, if for no other reason than to align the scope and nature of the review being undertaken with the specific judicial function being exercised at that stage of the proceedings: Oosterhoff on Wills, 8^th ed.  The distinction is also important because the rules that govern the admissibility of evidence differ in the two courts.  A probate court may admit direct evidence of the testator’s intention when proving the will.  But, apart from limited circumstances, a court of construction does not admit such evidence: see pp. 244 - 246.

[18]           In my view, the question of the validity of the conferral of the authority to decide under which of two wills (the probated will and the non-probated will) the property of the deceased will be administered, and the effect of the answer to that question on the administration of the estate, are matters of broad construction which ought not to be dealt with in the context of an application for probate per se.

Secondly, Mr. Justice Penny did not agree with the assertion that a “will is a trust.” He wrote,

[20]           Not one of the authoritative texts on wills asserts that a will is a trust.  Not one of these texts, when setting out the criteria for a valid will, cites the necessity to satisfy the requirements for the creation of a valid trust; that is, the “three certainties.”  Rather, to establish validity for purposes of probate, a will must conform to certain formal requirements (noted above), provide for distribution or administration of property and take effect upon death.  Nor am I aware of any judicial precedent which concludes that a will is invalid because it, being a trust, failed to satisfy the three certainties.

[21]           A will is a unique instrument.  A will shares some of the attributes of a contract and some of the attributes of a trust but it is neither; a will is its own, unique creature of the law.

[22]           Wills frequently create or otherwise employ trusts, to be sure.  When they do, the three certainties will no doubt be relevant to the validity of the trust.  The invalidity of the trust element of an otherwise valid will, however, is not coequal with the invalidity of that will.

Mr. Justice Penny suggested that the real issue in these cases is whether a direction to trustees to determine whether a grant is required to deal with assets is valid. Because it was unnecessary to decide this question on the application before him, he did not rule on this issue. His comments, though, suggest that it is likely valid. He wrote:

[29]           The estates bar is not of one mind on how to draft provisions that facilitate reduction of estate administration tax by placing one set of the testator’s assets under a will intended for probate and leaving another set of assets to be administered without the need for probate.  While, as some commentators argue, detailed lists are preferable in terms of certainty, they can become problematic when certain assets take on a different form between when the wills are drafted and the testator’s death.  To deal with this problem, some suggest consideration be given to adopting language of the very kind used in this case.  This would balance the desire to maximize opportunities for reducing estate administration taxes with the desire to avoid language which is “circular” or “too vague” (such as describing non-probate assets as “those not requiring probate at the time of death”).

[30]           Where the detailed list approach is used, others recommend, to deal with the situation where an asset in the non-probate will turns out to require probate, including a clause that entitles the estate trustees of the secondary will to renounce their interest in that asset, causing it to fall into the general will with respect to which probate will be sought.

[31]           In the circumstances of this case, it is not at all clear to me that a direction from the testator about how the estate trustees should decide whether or not to seek probate in respect of two or more wills dealing with particular components of the deceased’s property, is any more extreme or “uncertain” than other, well-established discretionary choices frequently conferred on and exercised by estate trustees.  Directing the estate trustees to determine whether a grant of authority by a court of competent jurisdiction is or is not required for the transfer, disposition or realization of property, and to act on that determination in their administration of the estate, arguably provides to the estate trustees an objective, ascertainable basis for the exercise of whatever “discretion” is embedded in that conferral of authority.

In my view, the reasoning in Re Panda Estate is preferable to that in Re Milne Estate. I hope that if this issue arises in British Columbia, our courts will follow Re Panda Estate.

Re Milne Estate

[The decision I discuss below had been overturned on appeal. Please see my post on the appeal here.]

I suspect that a recent decision from the Ontario Superior Court of Justice is causing some consternation among the Ontario estate planning bar. In Re Milne Estate,/ 2018 ONSC 4174, the Court held that a will was void for uncertainty of subject matter and could not be admitted to probate. The effect of the decision was to frustrate a two-will estate planning strategy to minimize probate fees. In understand that the decision is under the appeal, and I would argue that the reasoning is fundamentally flawed. But it does highlight the risks of using a multiple-will strategy to reduce probate fees.

Using two wills to minimize probate fees has been popular in Ontario for quite some time, and has grown more popular in British Columbia since the Wills, Estates and Succession Act came into effect. The idea is that the will-maker makes one will in which she deals with those of her assets that can be dealt with by her executor (or “estate trustee” in Ontario), without a grant of probate. The most common type of asset is shares and shareholder loans in closely held companies. There is then another will in which she deals with those assets, such as real estate, publicly traded shares and investment accounts for which probate will be required for the executor to deal with the assets. Both Ontario and British Columbia charge probate fees based on the size of the estate. By using a separate will for the closely held companies, there may be significant savings if the will does not need to be probated.

In Re Milne Estate, the Court considered wills made by two spouses, John Douglas Milne, and Sheilah Marlyn Milne, who both died on October 2, 2017. Their wills are described in the reasons for judgment as follows:

[2]           In the present case, each testator created two materially identical wills. The Primary Will settled upon the executors “all property owned by me at the time of my death EXCEPT…. [certain named assets and] any other assets for which my Trustees determine a grant of authority by a court of competent jurisdiction is not required for a transfer or realization thereof” [emphasis added].  The Secondary Will, expressly not revoking the first, settled upon the executors “all property owned by me at the time of my death INCLUDING … [certain named assets and] any other assets for which my Trustees determine a grant of authority by a court of competent jurisdiction is not required for the transfer or realization thereof”. 

After their deaths, the Primary Wills, the ones dealing with assets for which probate would be required, were submitted for probate.

The Court determined that in each case the Secondary Will is valid, and the Primary Will is invalid.

The Court’s reasoning is based on the proposition that a “will is a from of a trust.” No authority is cited, and I have never read or heard that before. A will may be used to create a trust, but I don’t think that is the same thing as saying that a will is a form of a trust.

The Court then reasons that trust must meet the three certainties of intention, subject matter, and objects. In this case, the Court found that the primary wills were void for uncertainty of subject matter. As set out in paragraphs 21 through 23:

[21]        The Estate Trustees urge me to find that there is no uncertainty arising from clause (f) of each of the Primary Wills because the “excluded assets are sufficiently defined in the Primary Will to permit their identification by the Estate Trustees”. They submit that there is no discretion of the Estate Trustees involved because they must determine which assets do not require a Certificate and “[t]hose assets are then not governed by the Primary Wills”.

[22]        The three certainties necessary for a valid trust must be satisfied at the time the trust is created – in this case, at the time of death. It is not enough to say that the assets subject to the trust will be determined later and will then be governed by one will or the other. There is no requirement to probate a will. Whether the trustees decide that a Certificate is necessary or desirable to dispose of a particular asset is a matter of their discretion and is not ascertainable by objective criteria ascertainable in advance. Bank X may decide not to accept anything less than a Certificate in order to authorize the Estate Trustees to deal with a bank account of the deceased, for example, while Bank Y may be satisfied with a certified copy of the will appointing them. 

[23]        The Estate Trustees in this case urge me to find valid a will that confers upon them the discretion to determine retroactively whether any particular assets are included in it. Inclusion of all assets in a trust subject to the power to exclude all of them – as has been attempted here – is no different than conferring the power upon the Estate Trustees to determine which if any assets will be subject to the trust. The testator must settle upon the Estate Trustees assets that are specifically identified or are objectively identifiable by reference to the intention of the testator and not the subsequent decision of the Estate Trustees.

I don’t take issue with the assertion that the subject matter of a trust must be certain as at the time of the trust’s creation. However, it does not follow that the assets must be known at the date of death. They must be ascertainable by objective criteria, but that is not the same thing as saying that the assets must be ascertained on death. An executor must often investigate to determine what assets are part of an estate. In this case the estate trustees might not immediately know if an asset fell under the primary will, but it is still ascertainable.

Nor do I agree that conferring a power of appointment on an executor to select assets to comprise a trust renders a trust void for uncertainty of subject matter. Wills commonly contain provisions allowing an executor to allocate the specific assets among beneficiaries, which may include a portion of the estate to be held in trust. 

Most fundamentally, the Court conflated the functions of a court of probate and a court of construction, although this was brought to the Court’s attention. The Court addressed this issue as follows:

[18]        The applicants submit that I needn’t concern myself with construction of the will and that any ambiguities regarding the property subject to the will can be dealt with in due course by way of application by the executors for directions. Citing Feeney’s Canadian Law of Wills, (James MacKenzie, Feeney’s Canadian Law of Wills (Toronto: LexisNexis Canada, 2000)) and Oosterhoff on Wills (Albert J. Ooserhoff, C. David Freedman, Mitchell McInnes and Adam Parachin, Oosterhoff on Wills, 8^th ed. (Toronto: Thomson Reuters Canada, 2016)), the applicants urge upon me that the probate function of the court is a separate and distinct function from the construction function. The former is concerned with the question of whether there is a will, the fact of its contents and the validity of the process of its execution. The latter concerns the interpretation of the contents of the will and the intentions of the testator with respect to his or her property.

[19]        The Court of Appeal has recently reviewed and succinctly summarized the role of the court in relation to probate proceedings in the case of Neuberger v. York, 2016 ONCA 191 (CanLII). The jurisdiction of the court is not simply to adjudicate a dispute between parties. The court’s role is inquisitorial and the court’s function and obligation is to ascertain and pronounce what documents constitute the testator’s last will and testament:  Neuberger at para. 68. 

[20]        It follows from this that I am both required and entitled to examine the validity of the will where questions as to same arise from an ex facie examination of the will itself or the evidence filed in support of the application for a Certificate. If the will is invalid on its face, a Certificate may not issue. In the present case, questions as to certainty of subject-matter are raised by the language of the will itself. These are questions that go to the essential validity of the will in question. Such questions, should they arise, are appropriately examined at the probate stage.

The distinct functions are well established, and I fail to see how the Neuberger decisions assist. Yes, the courts have an inquisitorial role, but they are still required to follow and apply the principles of probate law. If a will-maker has capacity, the will meets the formal signing and witnessing requirements of validity, and the will-maker acted freely, and knew and approved of the contents of the will, then the will is admitted to probate. The will might create trusts or may contain gifts that are invalid, but that does not affect the ability of the executor to obtain a grant of probate. Even if all of the gifts in a will were determined to be invalid, the executor would still be entitled to a grant. In such a case, there might seem to be little point to obtaining the grant of probate, but in some cases it would still make sense for the executor to do so in order to confirm her authority to deal with the estate.

I hope this decision will never be followed in British Columbia. But I do think it worthwhile for planners to be a bit more conservative. First, I think a two-will strategy requires a great deal of care and attention. I am concerned that the multiple-will strategy to reduce probate fees has become a bit of the flavour of the day in British Columbia, and is sometimes used when the amount involved does not warrant the complexity. Secondly, I suggest that where it is used, it would be wise to specifically identify the assets that are subject to the will that is not intended to be probated. The will that is not intended to be probated can identify the closely-held companies to which it applies, and use language to include successor companies. The other will, which will be probated, may then exclude those assets.

Kimberly Rule Presenting at "Death is Not the End" Continuing Legal Education Course

Kimberly Rule of our firm will be one of the group leaders at the two-day estate-administration workshop, "Death is Not the End." The course will be held on March 8th and 9th at the Pan Pacific Hotel, 999 Canada Place, Vancouver, B.C. For further course information and registration, see the Continuing Legal Education website here.

B.C. Supreme Court Rules Committee Inviting Comments on Proposed Changes to Probate Rules

The Attorney General’s B.C. Supreme Court Rules Committee is requesting comments on proposed changes to the probate rules. You can read the proposed changes here.

A couple of the proposed changes caught my eye. One proposed changes to broaden the class of persons who may file a notice of dispute to oppose an estate grant. As I previously wrote the current Rule 25-10 (1) is too restrictive. Only those to whom notice of the application for an estate grant must be given are entitled to file a notice of dispute. In the case of an application to probate a will, the applicant must give notice to all of those who are named beneficiaries in the will, and anyone else who would be entitled to share in the estate on an intestacy. However, someone who does not fall within one of those categories, but who is a beneficiary under a previous will, does not appear to have the right to file a notice of dispute. The proposed change would allow anyone with an interest under a prior or later will to file a notice of dispute.

A second proposed change the caught my eye is a proposed change to Rule 25-14 which currently provides that some types of claims could be commenced by a requisition if there has been no application for an estate grant. For example, currently you can apply to pass over and executor by requisition, if no application for an estate grant has been filed.

Requisitions are in my view inappropriate for commencing litigation. There are no rules governing who is entitled to notice of the application, nor times for responding. The proposed change would eliminate the ability to make applications by a requisition. The exceptions under the proposed changes are applications which may appropriately be made without giving anyone notice. For example, under the proposed changes, you would be able to make an application to shorten the 21-day waiting period to file a submission for an estate grant following the date you mail a notice to the beneficiaries and those who would be entitled to a share of the estate on an intestacy.

In most cases, a petition would replace a requisition. 

You may make comments by email to AGSupremeCourtRulesCommittee@gov.bc.ca  until October 16, 2017.

The Rule in Cherry v. Boultbee

If you wait too long to sue on a debt, your claim may be statute-barred by the applicable limitation legislation. But can the personal representative of a deceased person require a beneficiary to bring into account an amount the beneficiary owed to the deceased even though the limitation period for the deceased to bring a claim has expired?

The answer in British Columbia is yes.

The principle is known as the rule in Cherry v. Boultbee, and was recently applied by Madam Justice Church in Re: Johnston Estate, 2017 BCSC 272.

The applicant and the respondent in Johnston Estate were the two sons and sole beneficiaries of their father, William Leonide Johnston's will. William Johnston had lent the respondent son $70,000 in 1996 and the respondent had not made any payment since 2000. Under the applicable limitation legislation, William Johnston's claim would have been statute-barred. (There have been significant changes to British Columbia's limitation legislation in respect of debts.) The applicant, as his father's personal representative following his father's death, sought to have a debt brought into account and deducted from his brother's share.

In holding that the applicant was entitled to deduct the amount owing from the respondent's share, Madam Justice Church described the rule in Cherry v. Boultbee as follows:

[28]         The applicant relies on what is commonly referred to as the rule in Cherry v. Boultbee which provides that where a legatee of a share of the residue is a debtor of the estate, he or she is not entitled to receive his or her legacy without bringing his or her debt into account.   The rule derives from the case of Cherry v. Boultbee (1839), 4 My. & Cr. 442.  It is an equitable principle designed to ensure fairness.  The purpose of the rule was to prevent a beneficiary who owed money to an estate from receiving more than his or her fair share of the estate.  In the case of Re: Akerman, Akerman v. Akerman, [1891] 3 Ch. 212, Kekewich J. stated: 

A person who owes an estate money, that is to say, who is bound to increase the general mass of the estate by contribution of his own, cannot claim an aliquot share given to him out of that mass without first making the contribution which completes it.  Nothing is in truth retained by the representative of the estate; nothing is in strict language set off; but the contributor is paid by holding in his own hand a part of the mass, which, if the mass were completed, he would receive back.

[29]         The rule has been held to apply even where the debt is statute-barred: see  Re: Akerman.

The respondent argued that the rule no longer applied in Canada, citing a decision of Mr. Justice Clark in the Alberta case, Re: Moody Estate, 2011 ABQB 222. But Madam Justice Church declined to follow Moody Estate:

[36]         With all due respect to Clark J., I cannot agree with either his reasoning or his conclusion.  In my view, he begins his analysis from the premise that the “rule permits an executor to recoup the amount owing, even though the deceased would have been unable to do so.”  In my view, that is not an accurate description of the application of the rule.  The rule in Cherry v. Boultbee does not confer on the estate any right to recoup the amount owing but rather operates to ensure fairness in the distribution of an estate, recognizing that the relationship between a testator and his or her beneficiaries is typically not at arm’s length.   The fundamental purpose of the rule is to ensure that beneficiaries are treated fairly and it embodies the principal that he who seeks equity must do equity.  As the court noted in Re: Akerman, nothing is being retained by the representative and nothing is being set off but rather, the contributor is paid by what he is holding in his own hand.  The court in Re: Goy & Co Ltd. [1900] 2 Ch. 149, also noted that the claimant has in his own hands that which is applicable to the payment and should pay himself out of that.  The question of whether the testator or the estate can recover the debt or whether the debt is statute barred is therefore largely irrelevant to the application of the rule.  In my view, the change in approach to limitation provisions by the Supreme Court of Canada in Tolofson does not affect the application of the rule in Cherry v. Boultbee.

In the result, the respondent's debt will be brought into account when his father's estate is distributed. 

Counting the Days: How to Calculate the Five-Day Survival Period in Section 10 of the Wills, Estates and Succession Act

Section 10 of the Wills, Estates and Succession Act provides for a 5-day survival before a person may inherit from another. For example, if in your will you leave your estate to your spouse, then she must survive you for a period of at least five days (although you may specify a longer survival period in your will).  Similarly, if you and your spouse hold your residence as joint tenants, then for either of you to acquire the whole of the property by right-of-survivorship, the survivor must outlive the other by at least five days. Otherwise, in the case of a joint tenancy, if both joint tenants die within five days of each other, then one-half interest passes through the estate of each co-owner.

Section 10 (1) and (2) read as follows:

10  (1) A person who does not survive a deceased person by 5 days, or a longer period provided in an instrument, is conclusively deemed to have died before the deceased person for all purposes affecting the estate of the deceased person or property of which the deceased person was competent to give by will to another.

(2) If 2 or more persons hold property as joint tenants, or hold a joint account, and

(a) in the case of 2 persons, it cannot be established that one of them survived the other by 5 days,

(i) one half of the property passes as if one person survived the other person by 5 days, and

(ii) one half of the property passes as if the other person referred to in subparagraph (i) had survived the first person referred to in subparagraph (i) by 5 days, and

(b) in the case of more than 2 persons, it cannot be established that at least one of them survived the others by 5 days, the property must be divided into as many equal shares as there are joint tenants or persons holding the joint account, and the shares must be distributed respectively to those persons who would have been entitled to a share in the event that each of the persons had survived.

How are the five days calculated?

The calculation of the five days was considered in reasons for judgment on November 1, 2016, in Todoruk v. British Columbia (Land Titleand Survey Authority), 2016 BCSC 2241. Mrs. Grant died without a will on January 12, 2016 at 4:12 am. She did not have a will. Her husband, Mr. Grant died on January 17 at 1:40 p.m. If he survived her for 5 days, then Mrs. Grant’s estate forms part of Mr. Grant’s estate, and will be distributed in accordance with his will. If not, then Mr. Grant would be considered to have died before her for the purpose of succession of her wealth, and would go to some of her relatives in accordance with the provisions for person’s dying without a will.

Mr. Justice Dley considered three different methods of calculating the time between their deaths as follows:

[7]            Mr. Lund [counsel for the executor of Mr. Grant’s will] submits that there are three ways to calculate the time between the respective deaths:

i) First is by counting the hours. That would result in five days nine hours 28 minutes;

 ii) Second, if clear days are counted, as expressed in s. 25(4) of the [Interpretation] Act, then January 13 becomes the first day and only four days had passed when Mr. Grant died; or

 iii) Third, if the calculation is not to be expressed in clear days, then s. 25(5) applies, with the exclusion of the first day but inclusion of the last day, resulting in an interval of five days.

Mr. Justice Dley rejected both the first method, involving counting hours, and the third method, requiring five clear days between the two deaths, and held that the second method applied. Accordingly, the date of Mrs. Smith’s death (January 12) is excluded in the calculation of the five days, but the date of death of Mr. Smith (January 17) is included on the basis that he was still alive on the fifth day.

In the result, Mr. Smith survived Mrs. Smith by necessary five days, and her estate will form part of her husband’s estate to be distributed in accordance with his will. 

World War I Probate

Kimberly Wallis gave me a copy of a grant of probate from the United Kingdom dated October 28^th, 1914. The process for obtaining a grant of probate appears to have been very efficient in those days, as the deceased had died just 23 days earlier, on October 5, 1914.

What was most striking about the grant was the page stapled to it, which read:

This Grant is made upon the condition that no portion of the assets shall be distributed or paid during the War to any beneficiary or creditor who is a German or Austro-Hungarian subject wherever resident, or to any one on his behalf, or to or on behalf of any person resident in Germany or Austria-Hungary, of whatever nationality, without the express sanction of the Crown, acting through the Treasury; and if any distribution or payment is made contrary to this condition the Grant of Probate or Letters of Administration will be forthwith revoked.

Upon an application to the Solicitor to the Treasury there will be no difficulty in proper cases in obtaining the sanction of the Treasury to the payment of a moderate sum out of assets to beneficiary or creditors who are German or Austro-Hungarian subjects resident in this country at the commencement of the War and during the War.

Amendments to Probate Rules Include Provision for Substitution of Personal Representative on Death

As I wrote acouple of weeks ago, the probate rules were amended effective July 1, 2015. Among the changes is a new provision dealing with the procedure for appointing a new personal representative (executor or administrator) when the deceased’s personal representative dies before completing the administration of the estate.

The new provision, Rule 25-14 (1.2) reads as follows:

Substitution of personal representative in the event of death

(1.2)If a deceased's personal representative dies, a person may apply in accordance with Part 8, subject to any directions given by the court under subrule (8) of this rule, to be substituted as the personal representative by filing 

(a) a copy of the death certificate of the personal representative,

(b) an affidavit setting out the request to be substituted as the personal representative and specifying the right to be appointed as personal representative on the basis that the person is one of the following:

(i)   the alternate executor;

(ii)   entitled to apply for administration of the estate in accordance with section 130 of the Wills, Estates and Succession Act;

(iii)   entitled to apply for administration with will annexed in accordance with section 131 of that Act, and

 

 

(c) an affidavit confirming delivery of the affidavit referred to in paragraph (b) to

(i)   every person who was entitled to notice under the original application, and

(ii)   any executors who

(A)  did not receive notice of the original application, and

(B)  have an equal or greater right to apply to be the personal representative.

 

As I read this provision together with Part 8 of the Supreme Court Civil Rules, which deals with how applications are made to court, in most cases, a person applying under this section (or his or her lawyer) will need to appear for a hearing before a judge or court master. Part 8 contemplates a hearing unless the order is one that may be made without notice or by consent of all of the parties. In most cases there will be persons to whom notice must be given, and it is not always convenient to have all parties sign a consent order, or there may be minors or others without capacity to consent.

Unless contested, the hearing should be straightforward, but with the need to appear, and wait in court while other matters are heard, the expense may be higher than if the order could be obtained by desk order (without a hearing).

The application may be made by an alternate executor, if the first named executor dies after probate. It may also be necessary if there are two executors, but he will provides that if one dies, and alternate is appointed. If there is no alternate named, then another person may apply to be appointed as an administrator.

Section 130 of the Wills, Estates and Succession Act sets out the order of priority for appointment as an administrator if there is no will, while section 131 sets out the order of priority if there is a will, but there is no executor or alternate executor willing and able to act. These sections are as follows:

Priority among applicants — intestate estate

130  If a person dies without a will, the court may grant administration of the deceased person's estate to one or more of the following persons in the following order of priority:

(a) the spouse of the deceased person or a person nominated by the spouse;

(b) a child of the deceased person having the consent of a majority of the children of the deceased person;

(c) a person nominated by a child of the deceased person if that person has the consent of a majority of the deceased person's children; 

(d) a child of the deceased person not having the consent of a majority of the deceased person's children; 

(e) an intestate successor other than the spouse or child of the deceased person, having the consent of the intestate successors representing a majority in interest of the estate, including the intestate successor who applies for a grant of administration; 

(f) an intestate successor other than the spouse or child of the deceased person, not having the consent of the intestate successors representing a majority in interest of the estate, including the intestate successor who applies for a grant of administration; 

(g) any other person the court considers appropriate to appoint, including, without limitation, and subject to the Public Guardian and Trustee's consent, the Public Guardian and Trustee. 

Priority of applicants — administration with will annexed

131  If a person dies leaving a will, and the executor named in the will renounces executorship or is unable or unwilling to apply for a grant of probate, or if no executor is named in the will, the court may grant administration with will annexed to one or more of the following persons in the following order of priority: 

(a) a beneficiary who applies having the consent of the beneficiaries representing a majority in interest of the estate, including the applicant;

(b) a beneficiary who applies not having the consent of the beneficiaries representing a majority in interest of the estate;

(c) any other person the court considers appropriate to appoint, including, without limitation, and subject to the Public Guardian and Trustee's consent, the Public Guardian and Trustee.

Finally, if the “chain of executorship applies” (see my previous post), it will not be necessary for anyone to apply under Rule 25-14 (1.2). If the executor dies after receiving an estate grant, but before completing the estate administration, and the will does not name any other executor or alternate executor willing and able to apply, the executor of the now deceased executor may complete the administration. The executor’s executor will need to probate the will of the deceased executor.

The authority of the executor’s executor is confirmed in section 145 of the Wills, Estates and Succession Act:

Executor of deceased executor

145  If a deceased will-maker was an executor of a person who died before the will-maker, the executor of the deceased will-maker has all the rights, powers, rights of action and liabilities of the deceased will-maker with respect to the estate of the deceased person.

Changes to Probate Rules and Forms Effective July 1, 2015

Changes to the Probate Rules and Forms were brought into effect on July 1, 2015—that’s right, four days ago. I had heard that changes were coming, but I didn’t know what they were until very recently. The online consolidated Supreme Court Civil Rules has not as of today been updated to include the changes, but you can find them in B.C. Reg. 103, 2015 here.

There is a significant change to the procedure for making applications relating to estate grants in Rule 25-14. Under the rules as they stood before the amendments, many types of applications would be commenced by either a notice of application, if an estate file is already opened, or by requisition if nothing has been filed in relation to the estate. The types of proceedings to which this applies includes some potentially very contentious disputes such as passing over an executor. A requisition is a request to the court, and there are no rules saying who must be served, what they file to oppose it, or how long they have to file. Starting a contested proceeding by requisition doesn’t make sense.

Fortunately, as amended Rule 25-14 will now provide that where there has been an application for an estate grant, an application may be made by notice of application, but if there has not been an estate grant, then you may start a proceeding by a petition. In some cases, such as passing over an executor, it will be mandatory to start the proceeding by a petition rather than by a requisition. This makes a lot more sense.

Here are the amendments to Rule 25-14 (1) and (1.1), with deletions crossed out, and additions underlined:

How to apply for most applications

(1)A person If there has been an application for estate grant, a person may apply in accordance with Part 8, or, if nothing has been filed in relation to the estate, may, despite Rule 2-1 (1) and (2) (a) and (b), apply by requisition in Form P41, for an order

(a) under Rule 25-2 (14),

(b) granting administration with or without will annexed in circumstances in which the right to be appointed as the administrator is contested,

(c) revoking an authorization to obtain estate information or estate grant or an authorization to obtain resealing information or the resealing of a foreign grant,

(d) subject to subrule (1.2), removing or substituting a personal representative or, if different, the holder of an authorization to obtain estate information or the holder of an authorization to obtain resealing information,

(e) discharging a personal representative or, if different, the holder of an authorization to obtain estate information or the holder of an authorization to obtain resealing information,

(f) passing over an executor,

(g) appointing an administrator of an estate under section 132 of the Wills, Estates and Succession Act,

(h) removing or renewing a notice of dispute,

(i) that a foreign grant of probate or administration not be resealed,

(j) requiring security for the administration of an estate,

(k) varying or substituting security for the administration of an estate,

(l) directing that security be assigned to a person named in the order,

(m) respecting production, delivery or filing of

(i)   a testamentary document,

(ii)   a certified or notarial copy of an authorization to obtain estate information,

(iii)   an estate grant,

(iv)   an authorization to obtain resealing information, or

(v)   a resealed foreign grant,

(n) Repealed. [B.C. Reg. 44/2014, Sch. 1, s. 12 (c).]

(o) for the passing of accounts,

(p) fixing and approving the remuneration of a personal representative, or

(q) subject to subrule (2), respecting any other matter concerning

(i)   an authorization to obtain estate information,

(ii)   an authorization to obtain resealing information,

(iii)   a grant of probate,

(iv)   a grant of administration with or without will annexed,

(v)   an ancillary grant,

(vi)   a resealing, or

(vii)   the office of personal representative,

other than a question or matter covered by Rule 2-1 (2) (c) or (d).

How to apply by petition for orders

(1.1) If there has been no application for estate grant, a person may, with notice, apply by petition to the court for an order

(a) passing over an executor,

(b) appointing an administrator of the estate under section 132 of the Wills, Estates and Succession Act,

(c) respecting production, delivery or filing of a testamentary document, and

(d) subject to subrule (2), respecting any other matter referred to in subrule (I).

What Does Section 155 of the Wills, Estates and Succession Act Really Mean?

Does section 155 (1)(a) of the Wills, Estates and Succession Act permit an executor or administrator to distribute an estate within 210 days of a grant of probate or letters of administration with will annexed without the consent of a disinherited spouse or child, if all of the beneficiaries named in the will consent?

I have now discussed the meaning of section 155 (1) (a) with several other estate lawyers, and I think the wording of this section is quite ambiguous.

It may be useful to set out the section in its entirety to see the context.

Distribution of estate

155 (1) The personal representative of a deceased person must not distribute the estate of the deceased person in the 210 days following the date of the issue of a representation grant except

(a) with the consent of all beneficiaries and intestate successors entitled to the estate, or

(b) by order of the court.

(2) The personal representative of a deceased person must not distribute the estate of the deceased person after the period referred to in subsection (1) without consent of the court if

(a) a proceeding has been commenced to determine whether a person is or is not a beneficiary or intestate successor in respect of the deceased person's estate,

(b) relief is sought under Division 6 [Variation of Wills] of Part 4 [Wills], or

(c) other proceedings have been commenced which may affect the distribution of the estate.

(3) Nothing in this section

(a) affects any right or remedy against a person to whom an estate has been distributed in whole or in part, or

(b) extends any applicable limitation period.

There are two ways to interpret subparagraph (1) (a). One is that the personal representative (executor or administrator) may make a distribution within the 210 day period if all of the beneficiaries consent provided that the will disposes of the entire estate. This is because (or so those holding this interpretation will argue) if the will disposes of the entire estate there are no “intestate successors entitled to the estate.” There are only intestate successors entitled to the estate if there is no will, or if the will does not dispose of all of the estate. This interpretation seems to correspond with the literal meaning of the words, and my sense is that this may be the most popular interpretation (although my handful of conversation is not exactly a scientific survey of lawyers).

I think the above interpretation is wrong, and it is risky for a personal representative to distribute within the 210 days without the consent of all of those who would be entitled to the estate if there were an intestacy, even though there is a will that disposes of the entire estate.  If I am correct—and we won’t know until there is a court decision on point -- then their consent is required in addition to the consent of the beneficiaries.

My interpretation is based on the underlying purpose of section 155 which is to preserve the estate to allow those who wish to make certain claims, most notably claims to vary the will under Part 4, Division 6 of the Wills, Estates and Succession Act, time to do so. If anyone does make a claim to vary the will, the freeze on distribution is extended until the claim is resolved.

This section replaces section 12 of the now repealed Wills Variation Act, and its function is similar. Section 12 of the Wills Variation Act read:

No distribution until 6 months after probate

12  (1) Until 6 months have passed from the issue of probate of the will in British Columbia or the resealing in British Columbia of probate of the will, the executor or trustee must not distribute any portion of the estate to beneficiaries under the will except

(a) with the consent of all persons who would be entitled to apply, or

(b) if authorized by order of the court.

(2) Until the period referred to in subsection (1) has passed, a title passing by devise to a beneficiary must not be registered in a land title office unless under a similar consent or order, except subject to the liability of being charged by an order made under this Act.

The persons entitled to apply under the Wills Estates and Succession Act are the deceased’s spouse (including a common-law spouse), and the deceased’s children. Those are also the persons who would be entitled to a share of the estate if there is an intestacy.

The significance of the 210 day period is that it is the same time period a person claiming the vary a will has to both file a notice of civil claim in court (180 days) and serve it on the personal representative (a further 30 days).

If section 155 is interpreted to mean that only the consent of the beneficiaries are required if the will disposes of the entire estate, then the protection is significantly emasculated. If the will-maker leaves his entire estate to his nieces and nephews, and nothing to his spouse, then it is the spouse who will not want the estate is not distributed before she files her claim to vary the will. The nieces and nephews may be quite content to consent to an early distribution to them. It is no answer to say that the spouse can later pursue the beneficiaries for her share if she is successful in a claim to vary the will. She may, but it could be quite costly if there are many of them, or some live outside of British Columbia, and she may be without any practical recourse if they spend what they receive and have no other significant assets. Why have the provision at all if not to ensure that the estate is available if someone such as a disinherited spouse successfully applies to vary the will.

Furthermore, subsection 155(1) should be read in conjunction with subsection (2), which says that if proceedings are brought that may affect the distribution, including wills variation claims, then the prohibition on distribution is extended, and the personal representative requires the court’s consent to make a distribution. It would be inconsistent to allow the personal representative to distribute within 210 days without the consent of a disinherited spouse or child, or a court order, but then require a court order after that time period if the spouse or child does file a wills variation claim.

The other problem with the interpretation that the personal representative does not have to get consent for an early distribution of those intestate heirs who are not named in the will, is that the personal representative does not really know who is ultimately “entitled  to the estate” until after the time for bringing a claim has passed. If in our example of the disinherited spouse, the spouse does apply to court to vary the will, and is ultimately successful, she will be entitled to a share of the estate by virtue of the court order varying the will. But that will not be determined until well after the personal representative has distributed the estate if he or she has done so within the 210 days after probate.

Section 155 is broader than section 12 of the Wills Variation Act, and is intended to freeze the estate until other potential issues are resolved. For example, a person may seek a court interpretation of a will to determine if he or she is a beneficiary. Or there may be a disagreement about whether a person is a “spouse” as defined by the Wills, Estates and Succession Act.