Zaleschuk Estate

Victor Stephen Zaleschuk died on January 2, 2022, leaving his spouse, Wendy Chen, and two children, Shane Zaleschuk and Christian Zaleschuk. Most of his wealth was in California, and was held in two trusts. This case considers the interpretation of a Will he made on January 12, 2020, governing his British Columbia assets, which consisted of a residence in Victoria, and a handful of assets of significantly less value, and no funds. His son Shane was living in a suite in the residence.

The Will appointed Ms. Chen has his executor and included the following:

a).        I DISTRIBUTE MY ASSETS AS FOLLOWS:

i).         Residence at 750 Pears Road, Victoria, British Columbia, Canada, V9C 3Z8 to Wendy Xin Hong Chen. All Farm equipment and implements included.

ii).        2016 Ford Flex to Wendy Xin Hong Chen.

iii).        2011 Ford F-150 to Shane Zaleschuk.

iv).       All shop tools, Nikon Camera, Gold Bracelet with Lapis & Diamonds to Shane Zaleschuk.

b).        I DISTRIBUTE ANY RESIDUE OF MY ESTATE AS FOLLOWS:

To both Wendy Xin Hong Chen and Shane Zaleschuk all Art & Jewelry and personal belongings as they see fit.

5).        I give my Executrix the following POWERS:

Power of sale, realization, employ agents, and power of dispute resolution.

***When and if the property is sold: Shane Zaleschuk to receive $150,000 CAD. Steve Whitner (a minor) to receive $25,000 CAD invested towards a[n] Educational Trust Fund.

6).        This Will was executed in Canada for Canadian Assets ONLY. My updated (01-01-2020) USA Children’s Trust takes precedent of ALL MY ASSETS OUTSIDE OF CANADA.

There was an error in the description of the beneficiary Steve Whitner, whose last name is Widner.

In a letter to his lawyer in California seeking advice concerning his U.S. estate planning, he described his plans for his residence in Victoria:

This property to be gifted (***) to Wendy Xin Hong Chen with the following caveats

i).         Suite will remain as Shane Zaleschuk residence. If the property is sold Shane to receive $150,000 CAD. A $25,000 Education Fund gifted to Steve Whitner.

A Canadian Trust does not work as I am not a full time resident of Canada. A Canada Will is included to clarify Canadian assets only.

ii).        As the mortgage renewal will be due April - 2020.....Wendy will be added to the title.

***After which Wendy will automatically inherent by Canada Law. But the Will must be adhered to regarding the sale of the property.

It should be noted that Wendy Chen was not in fact added to the title of the residence and it formed part of the British Columbia estate.

In her reasons for judgment, in Zaleschuk Estate, 2023 BCSC 523, Madam Justice Young first dealt with a challenge by Shane to his father’s capacity to make a will, and found that he did have capacity and that the Will is valid.

The more interesting aspects of the decision involve the interpretation of the will in light of reforms made in 2014 to British Columbia’s succession laws when the Wills, Estates and Succession Act came into effect. The reforms liberalized the types of evidence admissible when construing a will, permitted the court to rectify mistakes in a will, and also permitted the court to give effect to a document or other record that does not comply with the formal signing and witnessing requirements of a will.

Wendy Chen argued that she was entitled to the residence, and that the payments of $150,000 and $25,000 were void because they are inconsistent with the gift of the residence to her.

Shane Zaleschuk argued that the gift of the residence was subject to a trust requiring her to pay those cash gifts when she sold the residence. He also argued that the letter to the California lawyer, referred to in the decision as the “Record,” gave him the right to occupy the suite in the residence.

The most relevant provisions of the Wills, Estates and Succession Act are: 4(2), 58 (1) through (3), 59 (1) and (2):

4(2)        Extrinsic evidence of testamentary intent, including a statement made by the will-maker, is not admissible to assist in the construction of a testamentary instrument unless

(a)        a provision of the will is meaningless,

(b)        a provision of the testamentary instrument is ambiguous

(i)         on its face, or

(ii)        in light of evidence, other than evidence of the will‑maker's intention, demonstrating that the language used in the testamentary instrument is ambiguous having regard to surrounding circumstances, or

(c)        extrinsic evidence is expressly permitted by this Act.

58 (1)   In this section, “record” includes data that

(a)        is recorded or stored electronically,

(b)        can be read by a person, and

(c)        is capable of reproduction in a visible form.

(2)        On application, the court may make an order under subsection (3) if the court determines that a record, document or writing or marking on a will or document represents

(a)        the testamentary intentions of a deceased person,

(b)        the intention of a deceased person to revoke, alter or revive a will or testamentary disposition of the deceased person, or

(c)        the intention of a deceased person to revoke, alter or revive a testamentary disposition contained in a document other than a will.

(3)        Even though the making, revocation, alteration or revival of a will does not comply with this Act, the court may, as the circumstances require, order that a record or document or writing or marking on a will or document be fully effective as though it had been made

(a)        as the will or part of the will of the deceased person,

(b)        as a revocation, alteration or revival of a will of the deceased person, or

(c)        as the testamentary intention of the deceased person.

 

59 (1)   On application for rectification of a will, the court, sitting as a court of construction or as a court of probate, may order that the will be rectified if the court determines that the will fails to carry out the will-maker's intentions because of

(a)        an error arising from an accidental slip or omission,

(b)        a misunderstanding of the will-maker's instructions, or

(c)        a failure to carry out the will-maker's instructions.

(2)        Extrinsic evidence, including evidence of the will-maker's intent, is admissible to prove the existence of a circumstance described in subsection (1).

Ms. Chen argued that there was no ambiguity in the will permitting extrinsic evidence, but rather two inconsistent gifts, and the absolute gift to her prevails over the inconsistent cash gifts. Madam Justice Young wrote:

[58]       The executor here submits that it is not appropriate to consider extraneous evidence when constructing a will which needs no clarification. Extraneous evidence is only considered when there is a need for clarification of a will. She cites ElliottEstate v. Elliott, 1998 Can LII 4471 which has some similarities to the present case. Of note, that case predated the enactment of the WESA, and so deals with the stricter common law rules of construction. The WESA came into force in 2014. Prior to that, the court had no power to rectify a will (Simpson v. Simpson Estate, 2022 BCCA 208 at para. 70).

[59]       In Elliott the will provided the petitioner with an absolute bequest of the testator’s estate. The respondents who had lived on the property for many years submitted that it was most probable that the testator intended to bequeath his property in trust to the petitioner subject to the life estate of the respondents.

[60]       The central issue in the case was what interest under the testator’s will did the respondents have in the house that they occupied. Justice Edwards found that this was not a case of a patent omission or even of ambiguity. It was a case where unambiguous but contradictory bequests were found in the same will. If the initial bequest to the executor of the property stood alone in the will it could only be interpreted as an absolute gift of the entire estate to her. If the other bequests stood alone they could not be said to be ambiguous as to the intention to create life estates or specific bequests of modest sums. The two gifts were inconsistent (Elliott at para. 19).

[61]       Justice Edwards found that the case before him was not a case of ambiguity which would permit the court to entertain evidence of surrounding circumstances in order to determine the testator’s intention or supply some omission (para. 20). He found that it was a case of a will containing incompatible bequests which were governed by the Blackburn and Cox v. McMillan (1902), 33 S.C.R. 65 line of authority (para. 21).

Citing Theimer Estate, 2012 BCSC 629, Justice Young held that the proper approach is to consider the Will as a whole in light of properly admissible extrinsic evidence.

She held that she could consider the letter to the California lawyer to assist in determining Victor Zaleschuk’s intentions. She found that it supported the view that he intended to impose a trust on the residence requiring payment of the cash gifts if and when it is sold.

In contrast, Madam Justice Young did not give effect to the statement in the letter permitting Shane to continue to live in the suite in the residence. The letter, though authentic, did not represent Victor Zaleschuk’s final testamentary intention.

Justice Young wrote:

[97]       I conclude that the Record is a working paper prepared to obtain advice from Mr. Watt and possibly from Shelsey Robertson as to whether the deceased’s overall estate plan is “doable”. It does not set out the deceased’s fixed and final expression of intention as to the disposal of the deceased’s property on death. I am influenced by his statement that “this is the second draft that I mailed to Mr Watts after he made a few changes”.

[98]       The gift to Shane of a life estate to the suite in the Residence is inconsistent with the gift of the property to Wendy. It is not provided for in the Will.

….

[100]    The cash legacies to Shane and to Steve Widner are repeated in the Will and although inconsistent with an absolute gift, I am satisfied that the deceased did intend that these cash legacies be paid. I find that the cash legacy clause should be read in as a trust imposed on Ms. Chen to pay if she sells the Residence.

[101]    I am not satisfied that the words “Suite will remain as Shane Zaleschuk residence” should be added to the Will. The Record is not a testamentary document. It sets out a plan for the U.S. and Canadian assets but some of it was not implemented, and the note changed on a few occasions, although the orphan signature page remains the same.

Justice Young declared:

      iii.        the subclause in clause 5 of the Will as corrected is valid:

 ***When and if the property is sold: Shane Zaleschuk to receive $150,000 CAD. Steve Widner (a minor) to receive $25,000 CAD invested towards a[n] Educational Trust Fund.

The Bank of Nova Scotia Trust Company v. Rogers

 

A murderer may not inherit from his victim. This much is clear. But the implications on the rest of a will are not always so straightforward. This is illustrated by an Ontario case earlier this year: TheBank of Nova Scotia Trust Company v. Rogers, 2021 ONSC 1747 (CanLii).

Cameron Scott Rogers was convicted of the murder of both of his parents, Merrill Gleddie Rogers and David Blair Rogers. He was their only child. He was their only child. There is some indication that he suffered from a disability, but I stress that this is not a case where he was found not guilty by reason of insanity, which would likely have affected the outcome of the case.

His parents made wills leaving their estates to each other. In each case, the will said that if the other had died first, most of their estate was to be used to set up a trust for their son during his lifetime. The trustee would have discretion to make payments out of the income or capital to or for his benefit, with any income accumulated for 21 years to be paid to charities. On his death, or if he died before his parents, on the last of them to die, the remaining funds were to go to his children (or remoter descendants), but if he did not have descendants, then the remainder was to be used to buy annuities for Merrill Rogers’ three brothers.

Justice Labrosse of the Superior Court of Justice held that, because he was convicted of murdering his parents, Cameron Rogers was not entitled to the benefits under their wills. This is not surprising. The more interesting question is: what would happen to their estates?   the estates go to the parents next of kin as if thy died without wills? Under the wills, if he had died before them their estates would go to Cameron’s children, but he did not then have any children. Should the funds be held in trust in case some day he had children? He would be eligible for parole 20 years after his conviction, and it was possible he could then have children. Or should the estates be used to buy annuities for Merrill Rogers’ brothers?

Justice Labrosse identified three approaches to what happens to a beneficiary’s share of the estate of his murder victim. One approach is to deem that the beneficiary died before the will-maker, and the will is read as if the murder had died first. A second approach is a literal reading of the will. Under the second approach, if the will does not provide for the possibility that the beneficiary murders the will-maker, the gift fails and a gift of residue would under Ontario law go on an intestacy as if there were no will (in my view the law of British Columbia differs because of section 46 of our Wills, Estates and Succession Act). The third approach, which Justice Labrosse adopted, is the implied-intention approach. The court strives to determine what the will-maker would have wanted if the will-maker had contemplated what in fact occurred.

Applying the implied-intention approach, Justice Labrosse found that Merrill and David Rogers would not have wanted their estates to go by an intestacy, but would likely have wanted it to go to the other beneficiaries named in their wills. This leaves the question of whether the estates should be held to see if Cameron Rogers had children, or if the estates should be used to purchase annuities for Merrill Rogers’ brothers as if Cameron had died without descendants.

In considering this question, Justice Labrosse looked at the public policy implications. In his words:

[52]           This analysis also includes a requirement that the Court apply the “armchair rule” whereby the Court asks itself:  if David and Merrill could have been aware of the possibility of Cameron’s disentitlement and the reasons for it, would they nevertheless have wanted to benefit their future grandchildren?  If they had living grandchildren at the time of their death, that question would be easier to answer.

[53]           In considering the “armchair approach”, the Court must also add to the picture the reality of Cameron leaving prison at some point during his life sentence.  He could be in his mid-forties and have the knowledge that a two-million-dollar trust lies available to any children he may have.  In the context of the public policy issues surrounding the criminal forfeiture rule, there is a distinct possibility that this could lead to some type of misfeasance.  This is a distinctive element of applying the “armchair approach” in these circumstances.  If David and Merrill could have been aware of Cameron’s disentitlement (and the exact basis for it), would they have wanted for their estates to wait for Cameron’s release from prison and possibly fuel a decision to have children?  It is my view that this would fly in the face of the original public policy reasons for disentitlement and would not have been an outcome that either David or Merrill would have preferred.

Justice Labrosse treated the murder as a triggering event that accelerated the trust for Cameron, as though Cameron Rogers had died before his parents without descendants. He found that this approach most closely reflected the will-makers’ likely intentions:

[63]           In returning to the armchair intentions of David and Merrill, I conclude that their intention was to leave a life interest to Cameron and if he could not benefit from it as a result of a triggering event such as his death, it should pass to his children if he had any living at the relevant time.  The wills are structured around providing contingencies or “gifts-over” to account for a series of triggering events. The first of these events is the spouse predeceasing, the second is Cameron predeceasing, the third is Cameron predeceasing or dying leaving no issue then living and the fourth is one of the brothers either predeceasing or dying before the annuities have been fully distributed.  Cameron’s disentitlement is a similar triggering event which leads to the gift-over provisions of the wills. 

[64]           In this context, I conclude that Cameron is disentitled and that his disentitlement crystalizes at a time where he has no living issue. The criminal forfeiture rule plays a role in guiding the Court to accelerate the bequeath to Cameron and also to his unborn children.  If the true intent of the structure of these wills is to be respected, the estates should be kept in the family.  The intent of the testators was to ensure that upon the triggering events, the estates should pass to the next level of lineal descendant.  The triggering event in question is that Cameron is disentitled and has no issue surviving.  As such, the next level of lineal descendants are Merrill’s three brothers, subject to the annuities.  

The outcome is that the funds in the estates will be used to purchase annuities for Merrill Rogers’ three brothers.

Gifts to Beneficiaries Who Die Before the Will-Maker

What happens to a gift in a will if the beneficiary dies before the will-maker? The beneficiary’s death may happen after the will is made, but the will-maker does not make a new will. On rare occasions, the beneficiary may have died before the will is made without the will-maker knowing of the beneficiary’s death. Often, but not always, the will provides for such a contingency. But what if the will is silent?

Section 46 of the Wills, Estates and Succession Act deals with this issue in British Columbia. This section says:

46   (1)If a gift in a will cannot take effect for any reason, including because a beneficiary dies before the will-maker, the property that is the subject of the gift must, subject to a contrary intention appearing in the will, be distributed according to the following priorities:

(a)to the alternative beneficiary of the gift, if any, named or described by the will-maker, whether the gift fails for a reason specifically contemplated by the will-maker or for any other reason;

(b)if the beneficiary was the brother, sister or a descendant of the will-maker, to their descendants, determined at the date of the will-maker's death, in accordance with section 42 (4) [meaning of particular words in a will];

(c)to the surviving residuary beneficiaries, if any, named in the will, in proportion to their interests.

(2)If a gift cannot take effect because a beneficiary dies before the will-maker, subsection (1) applies whether the beneficiary's death occurs before or after the will is made.

In applying this section, first you look at what the will says. If it says for example that if the beneficiary dies before the will-maker, that gift goes to some other beneficiary, then the provision in the will governs.

If the will is silent, then look at the identity of the beneficiary. If the beneficiary is the will-maker’s sibling, child, grandchild or great grandchild (or in theory further generations), then the gift will go to the deceased beneficiary’s own descendants. The way the legislation works is that it would go to the deceased beneficiary’s children, but if a child also died before the will-maker, then that child’s own children receive a share.

If the beneficiary does not fall within one of the categories in 46(1) (c), or if the beneficiary does not have any descendants, then the gift gets divided among the surviving residual beneficiaries.

The court applied section 46 in Terezakis Estate, 2018 BCSC 805. The will-maker, Aikaterini Terezakis, had five children, two of whom died before her. One of the children who died before her, Sophocles Terezakis, had two children, Victor and Katrina. Victor also died before the will-maker and did not have any children.

The case does not set out the wording of the will, which was rectified by consent. Mr. Justice Basran summarizes the will as rectified as follows:

[6]          If Victor had survived the will-maker, then Sophocles’ share would have been divided equally between Victor and Katrina. The issue before the court was what happens to the portion that Victor would have received if he had survived. One of the beneficiaries argued that his notional portion should be divided among the residual beneficiaries.

Mr. Justice Basran applied section 46 (1) (b) and held that Katrina receives the full amount that her father, Sophocles, would have received, including the portion that would have gone to Victor if he had survived. Mr. Justice Basran wrote:

[14]        The first priority in s. 46(1)(a) contemplates an alternative beneficiary of the gift if one is named or described by the will maker.  The will of Ms. Terezakis does not contemplate an alternative beneficiary.  It would have been highly unlikely that an alternative beneficiary would have been named in the circumstances where a mother, Ms. Terezakis, outlives not only her son, Sophocles, but also one of her grandchildren, in this case Victor.  The will understandably does not describe Katrina or any other person as an alternative beneficiary in these unusual and most unfortunate circumstances.

[15]        The next priority is set out in s. 46(1)(b) and is instructive.  Applying it to these facts, Sophocles is a descendant of Ms. Terezakis and at the time of Ms. Terezakis's death on September 3, 2016, the only descendant of Sophocles Terezakis was his daughter, Katrina.  Accordingly, by the operation of s. 46(1)(b), the share of Ms. Terezakis's estate that would have gone to Sophocles goes to Katrina. 

[16]        Having found that s. 46(1)(b) applies, it is unnecessary to consider s. 46(1)(c). 

Differences among General, Demonstrative and Specific Gifts

What is the difference between a general and specific gift? Or a general or demonstrative gift? Why does it matter?

In many cases it makes no practical difference how a gift in a will is classified, but the classification affects the rights of beneficiaries if there are insufficient assets to pay all of the gifts in a will, or if at the time of death, the will-maker no longer owns an asset that he or she left to a beneficiary.

This is illustrated in a recent Supreme Court of British Columbia decision.

Florence Verlene Celantano left cash amounts to family members and charities in her will. In most cases, her will provided that a beneficiary would receive an amount of money, such as “$50,000 to THE WAR AMPS,” but one provision directed her executor to transfer,

the sum of $50,000.00 each in US funds (such funds to be taken from my US bank accounts) to the following SHRINERS HOSPITALS:
             i)          PORTLAND HOSPITAL, 3101 SW. Sam Jackson Park Road, Portland,       Oregon, 97201-5090 (504) 241-5909, and
            ii)         SPOKANE HOSPITAL, 911 W. Fifth Avenue, Spokane, Washington,            99204-2901 (509) 455-7844….

When the amount of these gifts of money in her will is added up they total $130,000 in Canadian funds and $100,000 in U.S. funds. The problem was that at her death, Florence Celantano did not have enough assets at her death to pay all of the amounts in her will. Her main assets were bank accounts in the United States.

When there are insufficient funds to pay out all of the gifts in a will, then gifts abate. But not all types of gifts abate equally, and this is one reason the classification of gifts can be important.

As set out by Madam Justice Donegan in Celantano Estate v.Ross, 2014 BCSC 27

[13]         The common law order of abatement for testamentary gifts is:

1)    residuary personality;

2)    residuary real property;

3)    general legacies, including pecuniary legacies from residue;

4)    demonstrative legacies;

5)    specific bequests of personality;

6)    specific devices of real property.

(It should be noted that the order of abatement in British Columbia law will change with the new Wills, Estates and Succession Law that will come into effect on March 31, 2014, which I write about in my next post.)

The issue in this case is whether the gifts to the Shiners Hospitals were general legacies, or either specific or demonstrative. If general legacies, then they would abate equally with the other gifts of money, which were clearly general legacies. Accordingly, to the extent of any shortfall, then each gift would be reduced by the same percentage.

But if the gift to the Shriners Hospitals were either specific or demonstrative, they would be paid out of the U.S. bank accounts first, and the shortfall would be borne by the general gifts.

Madam Justice Donegan succinctly summarized these three types of gifts. She described general and specific gifts as follows:

General

[17]         A general legacy is a gift of something which, if the testator leaves sufficient assets, must be raised by her executor out of her general personal estate. It is a legacy not of any particular thing, but of something which is to be provided out of the testator’s general estate. An example of a general legacy is “I give [pounds] 100 to X”: Wood Estate v. Arlotti-Wood, 2004 BCCA 556 at para. 11.

 Specific
 [18]         A specific legacy is a gift of some particular thing or of some interest, legal or equitable, forming part of the testator’s estate. It must be identified by a sufficient description and separated in favour of the particular legatee from the general mass of the testator’s personal estate. In other words, a specific legacy is a gift of a severed or distinguished part of the testator’s property, thus showing an intention that the property shall pass to the legatee in specie. An example of a specific legacy is “I give my dwelling house, Blackacre, to X” or “I give my silver teaspoons to X”: Wood Estate at para. 11.

She wrote of demonstrative gifts:

Demonstrative

[25]         A demonstrative legacy shares characteristics of both general and specific legacies. It is in the nature of a specific legacy in that it is a gift of a specified amount or quantity which is directed to be satisfied primarily out of a particular fund or asset. It is in the nature of a general legacy, in that it could be paid out of the general estate if the specified fund falls short. An example of a demonstrative legacy is: “I give [pounds] 100 to be raised out of the sale of my Surrey properties”; Wood Estate at para. 12.

In this case, Madam Justice Donegan found that the gifts to the Shriners Hospitals were not general gifts, but were either specific or demonstrative. She wrote:

[31]         In my view, the Shriners’ legacies cannot be construed as general legacies. In so finding, I consider not only the specific language used in the bequest, but also its context in the entire will.

[32]         In determining the deceased’s intentions, I must consider the will as whole. It is notable that the Shriners’ legacies are the only bequests that are specified to come out of a particular fund. All other legacies are pecuniary and are clearly general legacies. Those other legacies have no reference to the actual state of the property; they are something simply to be provided out of the deceased’s general estate.

[33]         The Shriners’ legacies were treated differently by the deceased. By using the words “$50,000.00 each in US funds (such funds to be taken from my US bank accounts)”, the deceased specifically referred to the actual state of the property (the existence of her US bank accounts). Her use of the word “my” also suggests that the gift is specific and not general. She provided that recourse for payment of the Shriners’ legacies is to come from a particular fund - her US bank accounts.

As between specific or demonstrative, she found that it was most likely that these gifts were demonstrative. Accordingly, the Shriners Hospitals will receive the full amount of the gifts in the will, and the shortfall will be borne by the other beneficiaries.

Although in this case it made no difference whether the gifts to the Shriners Hospitals were classified as specific or demonstrative, in some cases this distinction is important. If a will-maker leaves funds from an investment to a beneficiary, and the will-maker no longer has the investment at death, then if the gift is considered to a specific gift of the investment, the gift adeems, and the beneficiary does not receive the gift. But if the gift is demonstrative, then the beneficiary is entitled to the gift out of other assets. Accordingly, if Ms. Celantano no longer had U.S. bank accounts, then if the gift to the Shriners Hospitals were classified as specific, they would not receive anything, but if demonstrative, then they would be entitled to receive their gifts (subject to any abatement) out of other funds. 

Are Will Clauses Making Gifts to Inter Vivos Trusts Valid in British Columbia?

In British Columbia it is common to create trusts in a will. In the will, the will-maker appoints a trustee and sets out the terms on which the trustee holds the property for beneficiaries. This is referred to as a testamentary trust.

It is not as common, but not unusual, in British Columbia for someone to create a trust during his or her lifetime and transfer property to the trustee to hold on the terms set out in the trust. This is called an inter vivos (among the living) trust. Often the person who settles the trust (the “settlor”) is a beneficiary for life, and then the trust sets out the beneficiaries on the settlor’s death. I have written before about some specific examples, referred to as alterego and joint partner trusts. The trust agreement may allow the settlor, or perhaps someone else, to change beneficiaries later.

But what if you create an inter vivos trust, and then put a clause in your will providing that your estate, or part of it, will pour over into the inter vivos trust? I will refer to this as a “pour-over clause.” Can you do this? In my experience, this is not very common in British Columbia, but appears to be more common in the United States. On Thursday, December 12, 2013, the Supreme Court of British Columbia considered the validity of a pour over clause in a will in Re Kellogg Estate, 2013 BCSC 2292. This case may be the first time a British Columbia court has considered a pour over clause.

Robert Kellogg was a resident of Washington State, but owned an interest in land on Saltspring Island in British Columbia. He and his wife, Lisa Kellogg, settled an inter vivos trust in Washington State in 1994, and transferred assets to the trustees. The trust was called the Kellogg Family Trust. The terms of the trust provided that Mr. and Mrs. Kellogg were the beneficiaries during their lifetimes, and following the death of the last of them to die, the trust assets were to be divided into three equal shares for each of their three daughters. Robert and Lisa Kellogg reserved the right in the trust to change the beneficiaries.

Mr. Kellogg signed his will in Washington State, in the presence of two witnesses, who also signed the will, on March 23, 1994. The will contained a pour-over clause. He gave his estate “to the Trustee under that certain Trust executed by me, which is known as [the KF Trust]. The Trustee shall add the property bequeathed and devised by this Item to the corpus of the above described Trust and shall hold, administer and distribute said property in accordance with the provisions of the said Trust, including any amendments thereto made before my death.”

The will also had a clause that said that if the Kellogg Family Trust were found to be invalid or if it no longer existed at Mr. Kellogg’s death, it would be given to the trustees named in the trust and distributed in accordance with the provisions of the trust in respect of his death as they were when the trust were found to be invalid or ceased to exist. In other words, if the trust no longer existed, the provisions of the trust were incorporated by reference into the will, so that the will would carried out as though those provisions were in the will.

On December 2, 1998, Mr. and Mrs. Kellogg signed a document amending the trust to delete one of their daughters as a beneficiary, so that the other two would receive all of the trust assets on the death of their parents. The amending documents were not witnessed.

Robert Kellogg died on April 15, 1999, and Lisa Kellogg died on October 24, 2010, without having probated her husband’s will. Their daughter, Inga Rouches, obtained a grant of probate of her father’s will in British Columbia, and asked the Supreme Court of British Columbia to decide if the pour over clause is valid.

Madam Justice Gray considered three possibilities. If the pour-over clause is valid, and Mr. Kellogg’s interest in the land on Saltspring Island goes into the Kellogg Family Trust, then under the terms of the trust, his interest in the land would be distributed to two of Mr. Kellogg’s daughter. A second possibility is that the pour-over clause is invalid, but the clause incorporating the trust by reference is valid to the extent that it incorporated the terms of the trust as it existed when Mr. Kellogg signed his will. In that case, his interest in the land would be divided among all three of his daughters. The third possibility is that both clauses are invalid, and his interest in the land would pass on an intestacy, there being no valid gift in the will. In that case, all three daughters would share.

Madam Justice Gray found that the pour-over clause is invalid because the clause contemplated that the beneficiaries of the trust could later be changed, and they were in fact changed, through a document that does not comply with British Columbia’s Wills Act. The Wills Act provides, with certain limited exceptions, that a will must be in writing, signed by the maker, who must either sign in the presence of two witnesses, or acknowledge his signature in the presence of two witnesses, who then sign the will as witnesses in the presence of the will-maker and each other.

The pour-over clause contemplated that the Kellogg Family Trust could be amended, and it was amended, which would in effect allow Mr. Kellogg to amend the distribution under his will by a document that did not comply with the formal requirements of the Wills Act.

She wrote at paragraphs 68 through 71:

[68]          The arguments suggesting that the Pour-Over Clause is not effective are that, at least with respect to the Amendment to KF Trust, it would enable RPK to avoid the requirements of the Wills Act; that although the execution of the KF Trust Indenture and the Amendment to KF Trust were acknowledged to a single notary public, they did not have the degree of finality and solemnity which would arise from proper compliance with the Wills Act, including two witnesses; and that the doctrine of “facts of independent significance” is not recognized in B.C. law, and the old English cases in which the doctrine is rooted should not be extended to apply in this situation.

[69]         In my view, the fact that the Pour-Over Clause refers to future amendments of the KF Trust and the fact that the KF Trust Indenture was amended by the Amendment to KF Trust following the execution of the Will is determinative.

[70]         The gift cannot “pour over” to be held by the trustee of the KF Trust on the terms which existed at the time the Will was executed, because that trustee is now obliged to follow the terms set out in the Amendment to KF Trust. The gift cannot “pour over” to be held by the trustee on the basis of the Amendment to KF Trust because the effect would be to permit RPK to have effectively amended his Will without complying with the Wills Act.

[71]         Even though there is some formality associated with acknowledging execution of a document before a single witness who is a notary public, the court does not have jurisdiction to weigh the degree of formality. The failure to comply with the Wills Act is fatal.

On the other hand, Madam Justice Gray held that the terms of the Kellogg Family Trust, as they were when Mr. Kellogg signed his will were incorporated by reference into the will. A will signed in accordance with the Wills Act may incorporate another document by reference, even if the other document does not meet the formal requirements of the Wills Act, if the document was in existence when the will is made. Mr. Kellogg’s will makes reference to the trust as being in existence when he signed the will, and both documents were dated the same day.

Although the clause incorporating the Kellogg Family Trust by reference referred to future amendments, and future amendments that were not made in accordance with the formalities of the Wills Act could not be given effect, Madam Justice Gray held that the court could interpret the will to give effect to the terms of the Kellogg Family Trust as they were when Mr. Kellogg signed his will in order to avoid an interpretation of the will that would result in an intestacy. 

She concluded her discussion of this issue as follows:

[81]         At the time he executed the Will, RPK intended that the residue would pass to the trustee of the KF Trust on the terms set out in the KF Trust Indenture. He also intended that any amendments to the KF Trust would effectively result in amendments to his Will, but he did not take steps in compliance with the Wills Act to make such amendments applicable to his Will.

 [82]         As a result, the Incorporation by Reference Clause incorporates the terms of the KF Trust Indenture, which governed the trustee on the date that RPK executed the Will. The gift of the Musgrave Farm Interest essentially passes to a testamentary trust which is on the terms of the KF Trust as at the date RPK signed the Will, being the terms set out in the KF Trust Indenture without amendment.

[83]         As a result, the Musgrave Farm Interest is to be shared equally by RPK’s three daughters.

Although I don’t read this decision as saying that all pour-over clauses in wills are invalid in British Columbia law, they would need to be drafted so that either the inter vivo trust cannot later be amended, or both the will and the trusts should require that future amendments can only be made in accordance with the formal requirements in British Columbia for wills.

In her decision, Madam Justice Gray notes that Washington State has legislation expressly recognizing pour over clauses in wills. British Columbia does not have similar legislation.

Finally, I note that under section 58 of the Wills, Estates and Succession Act, which will come into effect on March 31, 2014, the Court may give effect to a document that does not comply with the formal requirements for a valid will. It might have been possible for the Court to give effect to the amendment to the Kellogg Family Trust under the Wills, Estates and Succession Act, if it had been in effect when Robert Kellogg died.

Can You Make a Will That Says Someone Else May Decide Who Will Get Your Assets?

That is one of the issues that Madam Justice Fitzpatrick was asked to decide in Tassone v. Pearson, 2012 BCSC 1262.

Marion Evelyn Pearson, who died on September 21, 2010, left a will which said:

I appoint Ronald Wesley Pearson as executor / executrix of my will.I would like Ronald Wesley Pearson to pay my just debts and funeral and testamentary expenses as soon as possible after my death.
I Devise my estate as follows: and bequeath the real and personal estate, of which I may die possessed to be distributed as seen appropriate by my executor.
I nominate and appoint my son Ronald Wesley Pearson to be executor and trustee of this my will, and if the above named should predecease me, I nominate and appoint my grand-daughter Krista Pearson to be executive and trustee of this my will.
Original of this will is retained by the beneficiary [sic], Ronald Wesley Pearson.
I devise all the residue of my estate to be distributed as seen appropriate by my executor.
Beneficiery [sic] of this my will is my son Ronald Wesley Pearson.

Ms. Pearson had three children, but sadly, all of them died before her, and two of them died before she made her will. Ronald Pearson was the child still alive when she made her will. He had two children, Brienne Pearson and Adam Pearson, both of whom survived her.

Krista Pearson, who was named as the alternate executor, also survived her grandmother Marion Pearson. Ronald Pearson was her uncle.

The case centered on the meaning and validity of the sentence, “I devise all the residue of my estate to be distributed as seen appropriate by my executor.”

Krista Pearson argued that this provision meant that Ronald Pearson would have had the power to give her grandmother’s estate to anyone he wished including himself, if he had been alive at his mother’s death. Because he died first, and Krista Pearson is the alternate executor, she has that power to decide who receives her grandmother’s estate, and can give it to herself.

This kind of power is known as a general power of appointment. It may be contrasted with a specific power of appointment where someone gives another the power to select beneficiaries among a certain group of people.

If you give someone a general power of appointment, it is just like giving that person a gift of the assets over which he or she has the power of appointment. The person you give the power of appointment to can choose to give the assets to himself or herself just as if you simply left the assets to that person.

Ronald Pearson’s two children took a different position. They argued that you cannot validly give someone a general power of appointment in a will, because it offends a rule that you cannot delegate to someone else the power to make a will for you. His children argued that the only beneficiary of the will was their father, and because he died before their grandmother, section 29 (1) of the Wills Act operated to give them what their father would have received.

Section 29 (1) says:

29  (1) Unless a contrary intention appears by the will, if a person dies in the lifetime of a testator either before or after the testator makes the will and that person 

(a) is a child or other issue or a brother or sister of the testator to whom, either as an individual or as a member of a class, is devised or bequeathed an estate or interest in property not determinable at or before his or her death, and 

(b) leaves issue any of whom is living at the time of the death of the testator,
the devise or bequest does not lapse, but takes effect as if it had been made directly to the persons among whom and in the shares in which the estate of that person would have been divisible if the person had died intestate without leaving a spouse and without debts immediately after the death of the testator.

Previous cases in Canada and other common law jurisdictions dealing with the question of whether you can give someone a general power of appointment in a will are not crystal clear. The languages in some of the decisions lend support to the view that a general power of appointment in a will is an impermissible delegation of the power to make a will.

Madam Justice Fitzpatrick upon analyzing the decisions in Canada and England, and considering academic articles concluded that the weight of authority was that you can give someone a general power of appointment in a will. Furthermore, there is no principled reason for not allowing general powers of appointment in wills. What harm is there in allowing someone to give another the power to decide who should receive the donor’s estate in a will?

She wrote:

[72]         I am persuaded here that the decisions in Re Nicholls and Re Beatty's Trust represent the most reasoned and persuasive approach to this issue. As is acknowledged in both cases, general powers of appointment have been a fixture in the drafting of wills in Canada, and specifically, British Columbia for centuries. It would be a dramatic reversal of this practice to now hold that general powers of appointment in a will are invalid or void. As stated by Hoffmann J. in Re Beatty's Trust at 850:

... the invalidation of wide testamentary powers of appointment would involve considerable injustice to the beneficiaries of testators who, relying on cases like Re Park which have stood without adverse criticism for nearly 60 years, have conferred such powers on their trustees.

[73]         As explained by Hoffmann J., it could clearly not have been the intention of such eminent authorities as the Law Lords in Chichester to sweep away this practice on such general terms and without an examination of the historical basis for the granting of such powers.

[74]         Finally, as was stated by Krever J.A., there is no principled reason why, if such powers are valid through an inter vivos instrument, they should not be equally valid if contained in a will. The only basis upon which such a power in either an instrument or will should be invalidated arises where there is uncertainty, which is a concept that is equally applied in respect of other testamentary dispositions, such as trusts. 

[75]         I accept the submissions of Krista and declare that the provisions of Mrs. Pearson’s will create a general power of appointment in her favour and that accordingly, on the face of the will, she is entitled to exercise her discretion as she wishes. In particular, she is entitled to decide that she shall receive the whole of Mrs. Pearson's estate under that general power of appointment.

The next question was how should the will be interpreted? If Marion Pearson intended to give her executor a general power of appointment, why did she go on to say in her will “the Beneficiery [sic] of this my will is my son Ronald Wesley Pearson.”

Madam Justice Fitzpatrick considered the circumstances surrounding the will. She considered the evidence that Krista Pearson had a close relationship with her grandmother when her grandmother made the will.

She found that Marion Pearson intended her son Ronald Pearson to inherit her estate if he survived her, but if he died first, she wanted Krista Pearson to be able to decide who would receive her assets, and that Krista Pearson could give the assets to herself. The provision naming Ronald Pearson as the beneficiary was consistent with this intention, but it was just redundant.

In the result Krista Pearson is entitled to her grandmother’s estate.  

Thiemer Estate

What does “money” mean? Is it just cash? Or does it include bank accounts? How about Guaranteed Income Certificates? Mutual funds? Mortgages? Shares of companies traded on stock exchanges? Shares of companies that are not traded on stock exchanges?

Making a gift of “money” in a will can create interpretation problems, even when the will includes a definition of money. This is illustrated by the recent Supreme Court of British Columbia decision in Thiemer Estate, 2012 BCSC 629.

When Randy Thiemer died on August 7, 2008, he left an estate consisting of assets worth over $20 million. The assets included real estate in Vancouver that he left to his common law spouse, Gigi Schlappner, GICs worth about$ 1.4 million, and shares in privately held companies worth over $14 million as well as shareholder loans owing to him of about $900,000.

In addition to the real estate, he left his personal effects and the balance of “any money” he may have at the time of his death to Ms. Schlappner. He also directed his executors to cause the directors of one of the companies to transfer a Cadillac to her.

He left a total of $7 million in cash bequests to his brother, a niece, nephews and friends.

In his will, he directed that his executors and trustees would hold the residue of his estate in trust during Ms. Schlappner’s life. She would receive the income of the trust, and the trustees had discretion to use the capital for her benefit. On her death, the trustees were to distribute the remainder of the trust among Mr. Thiemer’s brother, sister, niece, three nephews and parents.

Mr. Thiemer’s will included a definition of “money”:

For the purposes hereof, the word “money” will include the balance of any monies in any savings and current accounts in my name, any savings certificates, shares and bonds but excluding the proceeds of any insurance policies or registered retirement savings plans.

One of the questions Madam Justice Dardi was asked to consider in this case was whether “money” included Mr. Thiemer’s shares and shareholder loans.

When considering the meaning of words in wills, you can’t just look them up in a dictionary, or even use meanings ascribed to the words in previous court decisions. The approach the courts in British Columbia take is to attempt to determine the will-maker’s subjective meaning by considering the words in the context of the will as a whole, and the will-maker’s circumstances when the will was made.

Madam Justice Dardi described the principles applied by the courts to interpret wills in paragraphs 48 through 51:

[48]         In keeping with contemporary judicial thinking, the courts of this province have favoured the subjective approach to interpreting wills, wherein the objective is to ascertain the actual meaning the testator ascribed to the words he or she used in the will. In determining the testator’s intention the courts have endorsed the analytical approach commonly described as the “armchair rule”. The rule requires that the court put itself in the position of the testator at the point in time when he or she made the will, and from that vantage point construe the language in the will in light of the surrounding facts and circumstances known to the testator.

[49]         In Re: Burke, the Ontario Court of Appeal articulated the guiding principles which were cited with approval by our Court of Appeal in Davis Estate v. Thomas (1990) 40 E.T.R. 107 (B.C.C.A.) and Smith v. Smith Estate, 2010 BCCA 106, at paras. 18 and 28 respectively:

... Each Judge must endeavour to place himself in the position of the testator at the time when the last will and testament was made. He should concentrate his thoughts on the circumstances which then existed and which might reasonably be expected to influence the testator in the disposition of his property. He must give due weight to those circumstances in so far as they bear on the intention of the testator. He should then study the whole contents of the will and, after full consideration of all the provisions and language used therein, try to find what intention was in the mind of the testator. When an opinion has been formed as to that intention, the Court should strive to give effect to it and should do so unless there is some rule or principle of law that prohibits it from doing so.

[50]         Although the primary source of evidence is the “four corners” of the will, the armchair rule entitles the court to look to extrinsic evidence to identify the surrounding circumstances known to the testator at the time the will was made which might reasonably be expected to influence the testator in the disposition of his or her property. The facts and circumstances that a court may consider include the occupation of the testator, the state of his or her property, and the general relationships of the testator to his or her immediate family and other relatives: Kaptyn Estate (Re), 2010 ONSC 4293 at para. 38. The weight of the authorities demonstrates that the modern judicial approach to interpreting a will is to admit all the evidence regarding the surrounding circumstances at the start of the hearing and then to construe the will in the light of those surrounding circumstances. Ambiguities in the will may only become apparent in the light of the surrounding circumstances: Rondel at paras. 23‑24.

[51]         Since the meaning of words in wills can differ so much according to the context and circumstances in which they are used, previously decided cases are of limited assistance except in so far as they may express general principles of construction. This notion has repeatedly been embraced by Canadian courts: Kaptyn Estate (Re) at para. 32; Perrin at 406; Re: Burke at 398.

Applying the “armchair rule,” Madam Justice Dardi found that Mr. Thiemer did not intend to include shares in privately-held companies (as opposed to shares of public companies traded on stock exchanges) in the gift of money to Ms. Schlappner. There were several reasons to conclude that the reference to “shares” in the definition of “money” included only shares in public companies, and not the shares in the private companies held by Mr. Thiemer:

1.                The other things in the list of inclusions as money, such as savings and current accounts, savings certificates and bonds were easily converted into money. Publicly-traded shares are also readily sold for money, but private shares are not.

2.                  If the shares of the companies were included in the gift of money to Ms. Schlappner, she could have arranged to have the Cadillac transferred to her by the directors, and the provision that the trustees require the directors to do so would not have been necessary.

3.                  Mr. Thiemer appointed three trustees, including two legal advisors, and he gave them extensive powers for managing his businesses in his will. These provisions were consistent with the view that he intended for the shares of the company to be held in the trust, and for his trustees to manage the companies, rather than for the trustees to distribute the shares to Ms. Schlappner.

4.                 If the shares of the companies were part of the gift of money to Ms. Sclappner, then substantially all of the estate would be distributed in the specific gifts, and there would be little value that would fall into the spousal trust. The creation of the spousal trust, and the gift of the remainder on Ms. Schlappner’s death to relatives with whom the court found Mr. Thiemer had close relationships, would be an “empty gesture.” A finding that the shares were not comprised in the gift of money to Ms. Schlappner was more consistent with the overall scheme of distribution in the will.

Madam Justice Dardi found that the gift of money did include the GICs, but did not include a mortgage owed to Mr. Thiemer, which was more in the nature of an interest in land than money. She also found that the shareholder’s loans were not generally easily liquidated, and accordingly were not intended in the gift of money. Tax refunds and a CPP death benefit were not money he had at his death, but were payable later. Accordingly she found that they were not included in the gift of money. 

When to Go to Court, and When to Settle.

Anytime you are involved in a will or estate dispute you have recourse to the courts. Sometimes it is difficult to resolve a problem without the involvement of a judge. Certain cases need to be decided by a judge. On the other hand, many disputes are best resolved by negotiations. Two Supreme Court of British Columbia decisions, both released the same day, November 25, 2011, illustrate this point well.

In Re: Brooks Estate, 2011 BCSC 1606, Mr. Justice N. Smith was asked to interpret a homemade will. The will said:

“I leave my property [address and legal description of the real property] to my brother George Brooks [address] Executor with Power of Attorney. Also my accounts at Royal Bank of Canada Merritt B.C.”

This was followed by the names of five of the will-maker’s nieces and nephews, and then the words “I would all the people named above to share equally in my estate.”

George Brooks argued that the will-maker intended for him to receive the house and the bank accounts, with the rest of the will-maker’s estate to be shared among the nieces and nephews.

Mr. Justice Smith noted the remainder of the assets in the estate was only worth about $500. It was unlikely that the will maker meant such a small amount when he wrote that they would “share equally in my estate.” The plain meaning of the word “estate” included all of the estate assets.

Accordingly, Mr. Justice Smith interpreted the will to mean that all of the will-maker’s assets would be divided equally among George Brook and the nieces and nephews.

He also ordered that the costs of all of the parties be paid out of the estate. He noted that it was appropriate for George Brooks as the executor to bring the question to court:

“[19] Given the positions of the parties, the petitioner as executor had a duty to seek guidance from the court and it was in the interest of all parties that he do so. I therefore order that the special costs of all parties be paid from the estate.”

Contrast Mr. Justice Smith’s remarks above, with the Court’s plea to the parties in Hansen v. Hansen, 2011 BCSC 1601, to settle their disputes out of court.

Hansen concerns a dispute among siblings over how one of them, the executor of their father’s will handled the administration of his estate. The executor’s siblings were critical of her handling of their father’s house. It is not clear from the reasons for judgment what precisely their claims were, but in an earlier hearing on a passing of the executor’s accounts, the Registrar found that she had delayed too long in marketing the house, and did not receive an appropriate amount of income from the property for the estate. The Registrar also disallowed some of her expenditures.

As noted above, the executor had passed her accounts before the court, a process that included a two-day hearing before the Registrar. It appears that the executor’s siblings were also suing her for negligent handling of the estate. The executor brought an application to dismiss their claims on the basis that the subject matter of their claims had already been dealt with at the passing of accounts.

Mr. Justice Leask heard the executor’s application. Although he expressed some sympathy for her position, he held that the passing of accounts decided the amount of the executor’s remuneration, but the court had not rendered a decision on the other claims. The executor’s siblings were entitled to proceed with those claims.

In his decision, Mr. Justice Leask quoted Master Tokarek at an earlier hearing:

[17] In the course of the hearing, Master Tokarek said:

... I don't know why you people can't agree on things instead of spending money on the court system.
(Transcript p. 8, lines 35-37)

[18] Later he said:

And I don't understand why people just don't do a reasonable thing. Like any other settlement, sometimes you have to give a little that you don't want to give. And sometimes you have to eat crow a little bit and just back off and do it. Because there's a practical result and there's a principled result. And the principled result, which I – is fine, but it costs money to get to a principled result. The practical result is usually the most efficacious way, least expensive way, to do what needs to be done.

(Transcript p. 13, lines 25-35)

After dismissing the executor’s application, Mr. Justice Leask concluded:

[23] I cannot leave this matter without joining my voice to Master Tokarek's plea. This matter should be settled between the parties. The family is tearing itself apart and wasting money and emotional energy on disputes with little or no economic justification. Please stop.

[24] This is a sad case.

[25] Who would be an executor? The dead cannot thank you; and the living will not.

Distinctions Between a Court of Probate and Court of Construction

In British Columbia, if you think the wording of a will does not intend reflect what the will-maker intended or if it is not clear what he or she intended, you may apply to the Supreme Court of British Columbia. But at what stage you apply, and what the court may do is not always straightforward. Distinctions are made between the Court sitting as a probate court and a court of construction, and the evidence it may consider and the remedies the court may grant depend on whether it is sitting as a probate court or court of construction.

To someone who is not a lawyer—and perhaps to many lawyers—the rules must seem archaic and common-sense defying. Some of the court cases seem to muddy the distinctions. Yet conceptually, the distinctions do make sense. In a recent decision, Re Ali Estate, 2011 BCSC 537, Madam Justice Dardi explains the distinctions quite clearly.

In Re Ali Estate, Muntaz Ali left his “interest” in a company to certain beneficiaries. He owned shares in the company, and the company also owed him money through shareholder loans and a promissory note.

One of the executors brought an application to Court to rectify the will by adding the words “including my shareholder loans and Promissory Notes owing to me,” in the clauses of the will leaving the interest in the Company to the beneficiaries. The effect would be that those beneficiaries will receive the amounts owing to Mr. Ali as well as the shares.

The executors did not yet have the grant of probate (in other words, they had not yet proved the will).

Madam Justice Dardi held that she could not add words to the will as part of the probate. After probate of the will is granted, she can later interpret the will to determine whether Mr. Ali intended to include the shareholder loans and promissory notes as part of the “interest” in the company he was leaving to certain beneficiaries.

She explained the distinction between a probate and court of construction (a court of construction interprets the will):

[21] The Supreme Court has jurisdiction to sit both as a court of probate and as a court of construction. Notwithstanding that the single court is empowered with dual jurisdictions, historically the court has exercised its probate function and its interpretation or construction function in separate proceedings. In broad terms, when ruling upon the validity of a will, the court sits as a court of probate, and when interpreting a will, it sits as a court of construction. The divided jurisdiction is significant because the powers available to the court depend on which jurisdiction it assumes: Law Reform Commission of British Columbia, Report on Interpretation of Wills, LRC 58 (Victoria, 1982) at 1.

[22] The jurisdiction exercised by a court of probate relates to whether the testamentary instrument submitted for probate represents the true last will and testament of a deceased and whether the named personal representative is entitled to administer the estate. In essence, a court of probate focuses on what constitutes the testamentary instrument of the testator and its validity. The inquiry pertaining to the validity of the testamentary document encompasses the issues of the capacity and the volition of the testator and whether the testator duly executed the testamentary document with knowledge and approval of its contents.

[23] On the other hand, in exercising jurisdiction as a court of construction, the court is concerned with ascertaining the meaning of the testamentary documents that have been approved by the court in the exercise of its probate jurisdiction. It is axiomatic that court must interpret or construe a will in the form in which it has been admitted to probate.

The distinction is important because the court of probate may consider evidence that the court of construction may not. Madam Justice Dardi wrote:

[24] In probate hearings, the court, in determining whether or not the document before it is truly the testator's will, is permitted to consider extrinsic evidence, including direct evidence as to the testator's intentions. That evidence may include copies of earlier wills and codicils, prior drafts of the will, and the notes of the solicitor who prepared the will. In contrast, the scope of admissible evidence is generally more constrained in a construction hearing. In that instance, a court may only consider the words of the will and if, applying the subjective approach, the evidence of the surrounding circumstances known to the testator at the time the will was made. Except in very restricted circumstances (such as equivocation), the court is not permitted to review direct evidence of the testator's intentions on a construction application: British Columbia Law Institute, “Wills, Estates and Succession: A Modern Legal Framework,” in B.C.L.I. Report No. 45 (B.C., 2006) at 37.

The probate court may omit words if the court finds that the will maker did not know and approve of those words when he or she made the will Madam Justice Dardi considered whether the probate court could also add words, and concluded based on previous case law, that it could not. The reason a probate court can’t add words to the will is that to do so would run afoul of the signing and witnessing requirements of the Wills Act for making and changing a will.

Madam Justice Dardi then considered whether she should interpret the will at this stage, and held that the better course is to do so after probate had been granted.

[44] Although the two applications being heard together is attractive for reasons of expediency of the litigation, in my view a distinction should be maintained between the court's probate and construction jurisdiction. The practice and procedure on a probate application is different than on a construction application. Ordinarily an application brought as a probate application should be limited to probate matters and, ordinarily a will should be admitted to probate before it is presented to the court for interpretation.

[45] As referred to above, the evidence which is admissible on a rectification application is different than that which is admissible on an interpretation. Before proceeding with the construction application, the court should have before it the affidavits with only that evidence which is properly admissible on a construction application. Otherwise it falls to the court to parse out that evidence which is properly admissible from that which is not. I cannot endorse such an approach. This two-step procedure also provides the parties with an appropriate opportunity to make submissions on the admissibility of any controversial evidence.

When the new Wills, Estates and Succession Act comes into force (it has been passed by the Legislative Assembly, but as of the date of this post, the Government has not said when it will come into effect), the Supreme Court of British Columbia will have an express power to rectify a will, which it may exercise either at the probate stage or after probate. In exercising this new jursidiction the courts should be able to add words as well as delete them. The new provision is as follows:

Rectification of will
59 (1) On application for rectification of a will, the court, sitting as a court of construction or as a court of probate, may order that the will be rectified if the court determines that the will fails to carry out the will-maker's intentions because of
(a) an error arising from an accidental slip or omission,
(b) a misunderstanding of the will-maker's instructions, or
(c) a failure to carry out the will-maker's instructions.

(2) Extrinsic evidence, including evidence of the will-maker's intent, is admissible to prove the existence of a circumstance described in subsection (1).

(3) An application for rectification of a will must be made no later than 180 days from the date the representation grant is issued unless the court grants leave to make an application after that date.

(4) If the court grants leave to make an application for rectification of a will after 180 days from the date the representation grant is issued, a personal representative who distributes any part of the estate to which entitlement is subsequently affected by rectification is not liable if, in reasonable reliance on the will, the distribution is made
(a) after 180 days from the date the representation grant is issued, and
(b) before the notice of the application for rectification is delivered to the personal representative.

(5) Subsection (4) does not affect the right of any person to recover from a beneficiary any part of the estate distributed in the circumstances described in that subsection.

Destroyed Will

In British Columbia, there are different ways you can revoke your will. The most common way is to make a new will with a clause that says you revoke your previous wills. Another way to revoke a will is to destroy it, either yourself, or by directing someone else to destroy it for you, but if you direct someone else to destroy it, they must do so in your presence.  To revoke a will by destruction, you must intend to revoke it. If you accidentally tear up your will, perhaps thinking you are tearing up a different document, then the will is not revoked.

But what happens if someone dies, their will is found torn to pieces, but nobody knows the circumstances of the destruction? Nobody even knows who tore it up, let alone whether the now deceased person had intended to revoke it.

Mr. Justice Barrow, in Jorsvick Estate, 2011 BCSC 528, dealt with this issue. Mrs. Jorsvick died on July 31, 2010. When she died, her husband was in a care facility, and was not capable of managing his own affairs. They had two children, Scott Jorsvick and Linda Samis.

Mrs. Jorsvick had made a will in 2005, in which she had left half of the residue of her estate to Scott Jorsvick, one-sixth to her daughter Linda Samis, and one-sixth to each of Linda Samis’ children.

In 2009, Mrs. Jorsvick had a disagreement with her son about her husband’s bank accounts. In 2010, she instructed her lawyer that she wanted to change her power of attorney to appoint her daughter in place of her son. She signed a revocation of the power of attorney to her son, and the new power of attorney in the presence of her lawyer on July 30, 2010—the day before she died. She told her lawyer that she wanted to meet with him the following week to discuss changes to her will, but died before the meeting could take place.

Mrs. Jorsvick kept her important documents in a locked filing cabinet in her home. But after her death, her son could not find the will in the cabinet. Her daughter later found an envelope containing the will torn to pieces behind a chest of drawers at her father’s care facility.

The question before the court was whether or not Mrs. Jorsvick revoked the will by destruction, in which case she would have died without a will, and her estate would go to her husband and two children in the proportions set out in the Estate Administration Act. If not, then the will would govern the distribution of Mrs. Jorsvick’s estate.

There is a presumption in British Columbia that if a destroyed will is found among the deceased’s papers, or in a place it would normally expected to be found, then the deceased had destroyed the will in order to revoke it.

But in this case the torn will was not found among Mrs. Jorsvick’s papers. Nor would it make sense for her to keep the will, or the remnants of the will, at her incapacitated husband’s care facility.

Accordingly, Mr. Justice Barrow found that the presumption that Mrs. Jorsvick destroyed the will intending to revoke it does not apply.

Mr. Justice Barrow also found it significant that when she met with her lawyer the day before she died, and said she wanted to change her will, she did not mention that she destroyed her will. If she had destroyed her will, she would likely have mentioned that fact. She spoke as if she still had a will.

The Court found that Mrs. Jorsvick did not revoke her 2005 will, and held that it remained her valid will.