Wills Variation Act and Sexual Orientation

In a Supreme Court of British Columbia case, Peden v. Peden, Smith et. al., 2006 BCSC 1713, released yesterday, Mr. Justice Groves held that a father's disapproval of his son's sexual orientation is not a rational and valid reason for the father to leave in his will substantially less to one son than to his other sons.

William John Peden died on October 25, 2004. His wife had died before him, and his three sons survived him. In his will, he left two of his sons outright gifts. But left his youngest son, Bruce Peden, a life estate only. In other words, Bruce Peden would receive the income generated from investments held in trust for him, but would not have the capital. (I am not clear from reading the judgment if the executors and trustees had discretion to apply some of the capital for Bruce Peden, but in any case, Bruce Peden would not have control of the capital.)

The division in the will was also unequal in that William Peden left his eldest son, Gary Peden, $150,000 less than the shares set aside for the other two sons, but Gary Peden did not contest this.

The estate was worth approximately $1.7 million. Bruce Peden would receive the income from $610,000, which was estimated to be about $24,000 a year assuming a 4% return.

Bruce Peden brought an application under the Wills Variation Act, RSBC 1996, c. 490, seeking a declaration that his father had not made adequate provision for him in the will. He asked the court to vary the will to give an outright share of the estate, instead of a life estate. If successful, he would get approximately $610,000 to use as he wished, instead of the income from $610,000.

The court found that Bruce Peden was not as well off financially as his brothers, and he was in poor health. He had also provided a significant amount of care for his father, and for other elder family members over the years.

William Peden's main reason for leaving the life estate to Bruce Peden instead of an outright gift was because of his disapproved of his Bruce Peden's sexual orientation.

Bruce Peden's application was successful. In his analysis, Mr. Justice Groves started from the position that a William Peden had a moral obligation to treat the children equally unless there was a rational and valid reason to treat them differently. In this case, William Peden's disapproval of Bruce Peden's sexual orientation was not a rational reason to leave him a life estate only.

Mr. Justice Groves also considered the significant sacrifices that Bruce Peden made to care for his father and other family members before concluding that William Peden did not make adequate provision for his son.

Steernberg v. Steernberg

In reasons for judgment released last week in Steernberg v. Steernberg, 2006 BCSC 1672, the Supreme Court of British Columbia has again considered the effect of a pre-nuptial agreement on a Wills Variation Act claim.

Cheryl Steernberg and Peter Steernberg began living together in 1997. He was 68 years old, and she 47. He brought significant assets into the relationship; she did not have much financial wealth.

They married in 1998. On the date of their wedding they signed a pre-nuptial agreement. The agreement provided that each would retain the assets he or she brought into the marriage, and that they would share any property acquired during the marriage. If he died before her, she would be entitled to one percent of his estate for each year they lived together. The court found that he wished to make sure that most of his assets would pass to his four children, and to a younger brother-in-law from his first marriage.

When he died in 2004, Mr. Steernberg left an estate of $1.7 million dollars. In his will he left Mrs. Steernberg 1% for each year they lived together for a total of 10% of the estate. (I don't get how the 10% was arrived at, but that is what the case says.) He left the other 90% of his estate equally to his four children and his brother-in-law.

Mrs. Steernberg applied to court to vary the will pursuant to the Wills Variation Act, on the the basis that her husband did not make adequate provision for her. If successful, the court could award her a provision the court considered adequate, just and equitable in the circumstances.

Mr. Steernberg's children opposed the application. They argued that Mrs. Steernberg was bound by the pre-nuptial agreement. They cited the Supreme Court of Canada decision in Hartshorne v. Hartshorne, [2004] 1 S.C.R. 550, 2004 SCC 22, in which the court took a very deferential approach to pre-nuptial agreements in determining the rights of spouses when dividing family assets on the breakdown of a marriage. The Supreme Court of Canada said the court should not depart from a division of property mandated by a pre-nuptial agreement, if the agreement was fair when entered into, and if the spouses lives unfolded in a manner within the contemplation of the parties when the agreement was made.

Madam Justice Martinson considered Harshorne, but found it to be of limited assistance. Following Mr. Justice Macauley's decision in Ward v. Ward, 2006 BCSC 448 (which I wrote about here), she distinguished between the considerations that arise on the division of property on a marriage breakdown, and the considerations involved in the death of one spouse. She made the following distinctions at paragraphs 79 through 82:

[79] There are a number of reasons why I have concluded that the Court’s analysis in Hartshorne is of limited assistance in the wills variation context. First, the Court in Hartshorne was specifically focused on only one legal obligation owed after separation, that relating to the division of property under the FRA. Other legal obligations are found in the law of unjust enrichment and the Divorce Act.

[80] Second, the Court in Tataryn concluded that the second part of the two-part wills variation test, dealing with moral obligations, is distinct from and goes beyond legal obligations. As noted above, the Court said that most people would agree that although the law may not require a supporting spouse to make provisions for a dependent spouse after death, a strong moral obligation to do so exists if the size of the estate permits.

[81] Third, the FRA explicitly provides that a marriage agreement will prevail unless a spouse can prove that it is unfair. Hartshorne was decided in that context. There is no such provision in the WVA.

[82] Finally, while both the WVA and the FRA consider fairness, each does so in a different context. The FRA is concerned with the situation in which a relationship breaks down and each person continues with his or her separate life; the WVA is generally concerned with a relationship that would have sustained but for the death.

Madam Justice Martinson considered Mr. Steernberg's legal and moral obligations to Mrs. Steernberg as required by the Supreme Court of Canada's decision in Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807. She found that Mr. Steernberg's will met his legal obligations to the extent that Mrs. Steernberg received about what she would have received as her share of the family assets if the marriage had broken down, taking the pre-nuptial agreement into consideration. But the pre-nuptial agreement did not deal with support obligations. Madam Justice Martinson found that Mrs. Steernberg would have been entitled to some support on a marriage breakdown.

In addition to his legal obligations, Mr. Steernberg owed moral obligations to his wife. In this case, Mrs. Steernberg provided Mr. Steernberg with personal care during his illness the last couple of years of his life. He insisted that his wife provide the care, rather than hire a paid caregiver. This affected her ability to earn and income, and build her business.

Madam Justice Martinson increased Mrs. Steernberg's share of the estate from 10% to 15%.

Wills Variation Act: Moral Obligations in a Multicultural Society

In deciding a claim in British Columbia by a child or spouse to vary a will under the Wills Variation Act, RSBC 1996, c. 490, the courts consider the testator's legal and moral obligations to the claimant. These moral obligations or norms "are found in society's reasonable expectations of what a judicious person would do in the circumstances, by reference to contemporary community standards." (Per McLachlin J. (now C.J.C.) in Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807. For a further discussion of Tataryn see this post.)

But in a multicultural society with people from many different cultural traditions, with different values and ideas about inheritance, what are "society's reasonable expectations?" Once the testator has met his or her legal obligations, should the testator's moral obligations be measured by his or her own culture's norms, or are there some broader norms?

This issue arose in a decision released earlier this week.

In Prakash and Singh v. Singh, 2006 BCSC 1545, the testator, Saraswati Singh, had left each of her three daughters $10,000 out of an estate worth, at the time of trial, about $763,000. She left the residue of her estate equally to her two sons.

The trial judge, Mr. Justice Rice, found that "[t]he Singh family has its roots in the Indo-Fijian culture, a culture of long standing and honoured family traditions. Several witnesses testified, and the parties agreed, that one of those traditions is that sons and not daughters should inherit the bulk of their parents’ estates. " Furthermore, " it was common ground that Mrs. Singh viewed the tradition as binding upon her testamentary choices, or at least highly influential. It seems that the children knew of the Will and were aware of their mother’s plans."

Two of the three daughters made claims under the Wills Variation Act for a greater share of their mother's estate. The other daughter accepted her $10,000.

Mr. Justice Rice found that all of the children were independent adults to whom Mrs. Singh did not owe a legal obligation. The issues were whether she met her moral obligations to her daughters, and, if not, what provision the court should make to the claimants.

The court held that Mrs. Singh's moral obligations could not be measured by her cultural traditions. Mr. Justice Rice said,

[58] In modern Canada, where the rights of the individual and equality are protected by law, the norm is for daughters to have the same expectations as sons when it comes to sharing in their parents’ estates. That the daughters in this case would have this expectation should not come as a surprise. They have lived most of their lives, and their children have lived all of their lives, in Canada.

[59] A tradition of leaving the lion’s share to the sons may work agreeably in other societies with other value systems that legitimize it, but in our society, such a disparity has no legitimate context. It is bound to be unfair, and it runs afoul of the statute in this province.

But, Mr. Justice Rice did not award the daughters an equal share.

[61] How much more the daughters should receive is another question. The court will always wish to be most cautious not to rewrite the Will, and most reluctant to disregard the testator’s legitimate motives, especially where, as in this case, the claimants are independent adult children.

The court awarded the two daughters who were making the claim two-fifths of the residue of the estate, and the sons kept three-fifths. In reaching this conclusion, Mr. Justice Rice took into consideration the fact that the sons had helped their parents with the mortgage, and one of the sons had taken their mother to live with him. He found that there was a rational and reasonable basis for Mrs. Singh to favour her sons, apart from the tradition in her culture to leave the most of the wealth to sons.

Succession Law Reform Project Committee's Proposed Dependants' Relief Anti-Avoidance Clause is Inadequate

I am disappointed in the British Columbia Law Reform, Succession Law Reform Project’s recommended changes to the Wills Variation Act, RSBC 1996, c. 490, which I have described in a general way here. My biggest concern is that the recommendations fail to adequately protect spouses in cases where the deceased spouse has structured his or her affairs so that assets pass to other beneficiaries outside of the deceased’s estate.

In British Columbia, a spouse (including a person who has lived in a marriage-like relationship with the testator for at least two years) or child may apply to vary a will if adequate provision has not been made for the spouse or child in the will. The court may then award the child or spouse such provision as the court considers adequate, just and equitable in the circumstances.

But the Wills Variation Act only gives the court jurisdiction to make an award out of the deceased’s estate. This means that the court cannot make an award to the spouse or child from assets that pass outside of an estate such as assets held in a joint tenancy that pass by right-of-survivorship to the surviving joint tenancy, or to a designated beneficiary of an insurance policy.

It is possible for someone to have millions of dollars of assets immediately before their death, but leave no estate. For example, a father and husband might buy real estate, and hold it in a joint tenancy with an adult child from a previous marriage, designate the child the beneficiary of his Registered Retirement Income Funds and Life Insurance, and leave few assets remaining to fall into his estate. In this case, the wife could be effectively disinherited, with no recourse under the Wills Variation Act.

In the above scenario, the wife would have to persuade the court to declare that the child is holding assets in trust for the estate, or to set aside transactions in favor of the child on some other grounds. Or the wife might have some other claim to the assets, perhaps on the basis that she contributed to the assets or provided care to her husband, and the child would be unjustly enriched unless the court imposes a constructive trust on some of the assets in favor of the wife. But, the wife is in a much more difficult position than if the assets fell into the estate, and the husband had left the assets to the child in his will.

Why should the wife’s entitlement depend on whether the husband left his assets to the child under his will, or by structuring his affairs so that the child can receive the assets outside of his estate?

Most perversely, if the wife had left her husband, started a suit against him, and was granted an order that there was no reasonable prospect of reconciliation under the Family Relations Act, RSBC 1996, c. 128, thereby triggering her interest in family assets held in the husband's name, she would be in a stronger position than if she remained happily married to him until his death, perhaps caring for him when he was sick.

The Succession Law Reform Project subcommittee assigned to consider the Wills Variation Act was alive to this issue. The Subcommittee circulated a paper for comments proposing that death be treated as a triggering event under the Family Relations Act, which would give the surviving spouse the same right on the death of the other spouse as a separating spouse has on the breakdown of the marriage.

I felt that this was at least an improvement over the current legislation, but that it would be preferable to extend the ambit of the Wills Variation Act so that it applies to assets that flow outside of an estate, such as jointures and life insurance. I wrote in response to the request for comments suggesting that the Succession Law Reform Project consider proposing legislation similar to Ontario’s Succession Law Reform Act, RSO 1990, c. S26.

The Committee has rejected this approach. According to the final Report at pages 62-3:

The Intestate Succession, Wills Variation Act and Family Relations Act Issues Subcommittee initially concluded that there was no need for anti-avoidance measures if a surviving spouse could elect within a limited time after the death of the other spouse to exercise the right to a division of family assets on the basis of Part 5 of the Family Relations Act.

Consultation with the family law Bar, however, led to the conclusion that there are too many difficulties in the way of introducing such an election under British Columbia’s current matrimonial property regime in Part 5 of the Family Relations Act. Once the proposal for a post-mortem spousal election was abandoned, anti-avoidance provisions were revisited. Provisions similar to those in the Ontario Succession Law Reform Act and other Canadian statutes involving the inclusion of the value of asset dispositions by the deceased in a notional estate and clawback powers were reviewed.

These, however, were thought by the Project Committee to be overly intrusive. Ultimately, a provision was conceived that operates by analogy to the Fraudulent Conveyance Act. This provision treats transactions by the deceased conferring a benefit on a second person with the intent to defeat rights under the dependants relief provisions of Part 5 as voidable at the instance of eligible claimants whose rights are or could be diminished by them. It does not apply to transactions entered into by the second person in good faith, for valuable consideration, and without notice or knowledge of the deceased’s purpose at the time of the transaction.

A court could make any order in respect of a transaction voidable under this provision that it could have made under the Fraudulent Conveyance Act. These could include making the property involved in the transaction subject to seizure and sale to satisfy an order giving relief under the Act to an eligible claimant, declaring the property is held in trust for the purpose of satisfying the order, ordering that the amounts payable under the order form a charge on the property, or directing a judicial sale. [footnotes omitted]

With respect, this remedy is inadequate.

The Fraudulent Conveyance Act, RSBC 1996, c. 163, allows a claimant to set aside transactions if “made to delay, hinder or defraud creditors and others of their lawful remedies.”

In Hossay v. Newman (Feb. 5, 1998), BCSC, Kelowna Registry 27559, the court held that an independent adult child who had no claim independent of a Wills Variation Act claim, was not a “creditor or other” under the legislation.

On the other hand, in Jack v. Parkinson (1994), 91 B.C.L.R. (2d) (C.A.), the Plaintiff’s husband transferred land to his common law spouse. His legal spouse from whom he had been separated sought to set aside the transfer. Mr. Justice Goldie said at page 98, “There is no doubt in my mind that Mrs. Jack [the Plaintiff] falls within the words in the statute, ‘creditors and others.’” On the facts, the court held that there was no fraudulent intent, and upheld the trial judge’s decision dismissing the claim.

Accordingly, spouses are already be able to set aside transactions if they can show that the deceased intended to avoid their claims, and that at the time of the transactions they had claims independent of the Wills Variation Act. But, they have to prove fraudulent intent. As a practical matter, in the case of spousal claims it is not clear that the Committee’s proposed remedy adds much to the current law--although admittedly the law is not now clear, and the proposal would clarify the law somewhat.

There are cases where spouses can be left with little or nothing because of the deceased spouse’s poor planning, or because of changes in circumstances, rather than because the deceased intended to defeat the survivor's potential Wills Variation Act claim. I have seen cases where one spouse attempts to find a fair balance between his or her spouse, and children from a previous marriage, but does not fully appreciate the needs of his or her spouse. Would the proposed remedy apply in such circumstances? I don’t know.

Supposing the husband prepares his estate plan at a time when he has significant assets. He plans to leave significant assets to his wife, worth well over one million dollars. He designates his children as the beneficiaries of a half-million dollar life insurance policy. He has no intent to avoid the Wills Variation Act. He suffers of business reversal, and dies bankrupt. But the life insurance is exempt from creditors. His children get the life insurance, and his wife gets nothing. Would the wife have any remedy under the Committee’s proposed anti-avoidance clause?

If the a deceased spouse fails to make adequate provision for the surviving spouse, and has significant assets that pass to other beneficiaries outside of his or her estate, why should the surviving spouse’s remedy depend on whether the deceased spouse intended to avoid the Wills Variation Act or the proposed new dependants' relief legislation?

How is it anymore intrusive to vary how life insurance proceeds are distributed than to vary a will? The Committee does not elaborate.

B.C. Law Institute's Proposed Changes to the Wills Variation Act

As I wrote here, the British Columbia Law Institute published a comprehensive report on succession law reform, entitled Wills, Estates and Succession: A Modern Legal Framework, in June 2006. The report recommends repeal of the Wills Variation Act, RSBC 1996, c. 490, and its replacement with a Part 5, Dependant’s Relief, in a new Wills, Estates and Succession Act.

The Succession Law Reform Project Committee's proposals include the following changes:

1. Restricting claimants to spouses (the definition in the proposed legislation includes two persons who lived and cohabitated with each other in a marriage-like relationship for at least two years), minor children, adult children who are students under 25, and adult children who are not self-supporting and are unlikely to become self-supporting by reason of “illness,” “mental or physical disability,” or “other special circumstances….” Independent adult children would no longer be able to make an application.

2. Allowing minor stepchildren to whom the deceased “had contributed support and maintenance for at least one year immediately before his or her death...” to make a claim.

3. Eliminating the right of a spearated spouse from making a claim, if the spouse and the deceased had been separated for more than two years and one or both of them intended "to live separate and apart from each other permanently."

4. Enforcing waivers of dependants’ relief claims.

5. Extending the ambit of the legislation to include intestate estates (where the deceased did not have a will), and partial intestacies (where the will did not dispose of all of the estate).

6. Restricting the type and extent of relief that is available to children and stepchildren. The proposed legislation provides for periodic payments or a lump sum equivalent to children and stepchildren. It expressly provides that the court may not consider whether the will provides a “fair share” of the estate to the child, nor the parent’s moral obligations to the child.

7. Giving the court power to make orders in respect of “transactions” conferring a benefit on others, if the deceased’s purpose in making the transaction is to defeat the rights of a dependants' relief claimant. Such “transactions” are voidable as against a claimant.

I will be analyzing some of the proposed changes to the Wills Variation Act in more detail in future posts. To foreshadow my comments, overall, were I a famous movie critic—or a Roman in the days of the gladiators—I would have to give the proposed changes to the Wills Variation Act a thumb down.

Executor's Duty in a Wills Variation Act Lawsuit

What role should the executor take in a lawsuit if a spouse, common law spouse, or child of the deceased brings a claim to vary a will in British Columbia on the ground that his or her spouse or parent did not make adequate provision for the claimant? Should the executor oppose the Wills Variation Act claim on the theory that the executor's duty is to uphold the will?

In British Columbia, the executor is required to remain neutral. Mr. Justice Bouck in Quirico v. Pepper (1999-09-03), Courtenay Registry S4550, said at paragraph 15:

The primary duty of an executor is to preserve the assets of the estate, pay the debts and distribute the balance to the beneficiaries entitled under the will, or in accordance with any order made under the Wills Variation Act. An executor should not pick sides between the beneficiaries and use estate funds to finance litigation on their behalf under the Wills Variation Act. It is a matter of indifference to the executor as to how the estate should be divided.

Wills Variation Act: What is the Effect of a Pre-nuptial Agreement?

What is the effect of a pre-nuptial agreement on a spouses claim to vary a will to obtain a greater share of his or her deceased’s spouse’s estate? This question was considered in Ward v. Ward, 2006 BCSC 448, a judgment released a few days ago.

As I have previously written here, the Wills Variation Act, RSBC 1996, c. 490, gives the Supreme Court of British Columbia the power to vary a will in favor of a spouse or child where the maker of the will (the “testator”) has not made adequate provision for the spouse or child.

In Ward v. Ward, the Plaintiff, Shirley Ward, married David Forsyth Ward in 1986. Before the wedding, they signed a pre-nuptial agreement. The agreement provided that on the death of one of them, the survivor would be entitled to the deceased’s survivor pension benefits, but otherwise neither had an obligation to leave the other his or her estate. The agreement expressly provided that neither could make any claim under the Wills Variation Act for a share of the other’s estate.

Mr. Ward, died in September 2004. He left his pension benefits to Mrs. Ward, but left the rest of his estate to his two children. Mrs. Ward brought a claim to vary the will under the Wills Variation Act, as well as a claim against the estate on the basis of unjust enrichment.

Mr. Ward’s children brought a summary trial application (an application on the basis of affidavit evidence, rather than a full trial) to dismiss the Mrs. Ward’s claim under the Wills Variation Act. The children argued that the pre-nuptial agreement precluded the claim.

The children relied on the Supreme Court of Canada’s decision in Hartshorne v. Hartshorne, [2004] S.C.J. No. 20, which is a case in which a majority of that court prescribed what I would characterize as a deferential approach to pre-nuptial agreements in the context of a marriage breakdown. In Hartshorne, Mr. Justice Bastarche for the majority held that the court should look at the fairness of an agreement both at the time it was made and at the time of distribution. In assessing the fairness at the latter time, the court should consider the parties’ own notions of fairness as expressed in the agreement. If the agreement was fair when it was made, and the parties lives unfolded as they had contemplated, then the agreement should be upheld.

In Ward, Mr. Justice Macaulay considered Hartshorne, but held that it did not preclude the Mrs. Ward from pursuing her Wills Variation Act claim. He also considered the leading Supreme Court of Canada decision in, Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807, in which the court held that the court must consider the legal obligations that the deceased had to his or her spouse, and any moral obligations.

Macaulay J. held that when considering the Mr. Ward’s moral obligations to Mrs. Ward, the pre-nuptial agreement is a relevant consideration, but is not determinative. Macaulay J. said at paragraph 25,

Unless death followed marriage within a very short time, it would be impossible, in my view, to consider the moral claim of a spouse solely on the basis of an agreement not to claim entered into before the marriage. The court must consider the circumstances of the relationship thereafter up to the time of the death of the testator. This reasoning is well reflected in the appellate decisions of this province dealing with the effect of separation and pre-nuptial agreements on the right to claim under the Wills Variation Act.

Mr. Justice Macauley, therefore, dismissed the children’s application, with the result that Mrs. Ward is entitled to a full trial of her Wills Variation Act claim.

I think it should be emphasized that if this case proceeds to trial, the trial judge could very well give effect to the pre-nuptial agreement, and find that in all of the circumstances, Mrs. Ward will not be entitled to a share of Mr. Ward’s estate. Mr. Justice Macauley’s holding simply says that the pre-nuptial agreement is not an absolute bar.

That said, my sense is that trial courts may have greater flexibility to order a distribution on the death of a spouse under the Wills Variation Act that differs from a distribution contemplated in a pre-nuptial agreement, than they may have in the context of a marriage breakdown. There are different policy issues where a marriage has broken down, and the court is asked to distribute assets in a manner that differs from the parties’ agreement, than where one spouse dies. In the latter case, the court is considering the competing claim of a surviving spouse as against beneficiaries who may not have as strong of a moral claim to the assets.

Time Limits for Bringing a Wills Variation Act Claim

A spouse or child who wishes to make a claim seeking to vary a will under the Wills Variation Act, RSBC 1996, c. 490, must file a claim “within 6 months from the date of the issue of probate of the will in British Columbia….” (See s. 3.)

I am of the view that a person may make the application before probate is issued. In some circumstances an executor is able to administer an estate without a grant of probate, and it would make little sense if a spouse’s or child’s right to apply is affected by whether the executor applies for probate. Nor should a claimant have to go through the process of citing an executor to apply for probate. I am not aware of any cases directly on point, but I have brought claims before a grant of probate has been issued without objection.

The Wills Variation Act does not contain any provisions extending the six-month limitation period. For example, in contrast to the provisions of the Limitations Act,RSBC 1996, c. 266, there are no provisions extending the six-month limitation period for minors or incapacitated persons.

However, once one person has brought a claim within the six-month limitation period, section 4 provides that the court may treat the action as an action on behalf of all persons who might apply. In other words, it may be possible for others who wish to make a claim to join in after the six-month limitation period has expired, if someone has started the lawsuit within the six-month period.

In Chan v. Lee Estate, 2004 BCCA 644, the British Columbia Court of Appeal held that because the defendant brothers had led their sisters to believe that they would the brothers would address the imbalance in their father’s will and estate plan after the estate was settled, and the brothers failed to give their sisters notice of their application for probate, the brothers were not entitled to rely on the limitation period defense. The sisters were successful in their claim despite the fact that they did not bring it within the six-month period.

In another case, Shaw v. Reinhart, 2004 BCSC 588, Mr. Justice Shabbits allowed the Plaintiff common law spouse to amend her claim to seek to have the grant of probate rescinded. The executors had not given her notice that they were applying for probate, and they swore an affidavit stated that the deceased did not have a common law spouse. Accordingly, the Plaintiff was not aware that a grant of probate had been issued. The court did not decide whether the grant should be rescinded, but Mr. Justice Shabbits reasoned that if the probate were rescinded, the limitation period would not begin to run until another grant of probate is issued.

Despite these cases, in most circumstances anyone who waits until after the end of six months to file their claim does so at his or her peril. Except in unusual circumstances, the six-month limitation period is strictly applied.

[See my other posts on the Wills Variation Act:
"Wills Variation Act: An Introduction"here;
"The Wills Variation Act: Who May Apply?" here;
"The Wills Variation Act: What is Adequate, Just and Equitable? here;
"Wills Variation Act: A Summary of the Principles" here.]

Wills Variation Act: A Summary of the Principles

This is my fourth post on the British Columbia Wills Variation Act, RSBC 1996, c. 490. As I discussed in the introductory post, the Wills Variation Act gives the court the power to vary a will, if in the court’s opinion the maker of the will (the “testator”) did not make adequate provision for the testator’s spouse or a child. The court may then make such provision as the court considers adequate, just and equitable in the circumstances.

I have discussed the fact that a legally married spouse, a common law spouse who had been living a marriage-like relationship with the testator for at least two years at the time of the testator's death, and the testator’s natural and adopted children (but not stepchildren) may make an application under the Wills Variation Act in my second post.

In my post "What is Adequate, Just and Equitable?," I discussed the leading modern Supreme Court of Canada case on the Wills Variation Act. In Tataryn v. Tataryn, [1994] 2 S.C.R. 807, the Supreme Court of Canada said that courts should consider the testator’s legal obligations to the testator’s spouse and children at the time of death first, and then the testator’s moral obligations.

Today, I am going to quote the best summary that I have been able to find of the principles that the courts consider when deciding Wills Variation Act cases. It is from Madam Justice Satanove’s decision in Clucas v. Royal Trust Corporation of Canada , 1999 CanLII 5519 (B.C.S.C.).

I will provide a summary of the facts of the case first.

When Violet Clucas died, she left an estate worth about $440,000. She had two children and five grandchildren. In her will, after some cash gifts, she set aside one third of her estate to be invested, and the income from the investments paid to her son Terry Clucas. The court found that the investments would generate about $7000 to $8000 per year for Terry Clucas. The trustee was not given any discretion to use the capital for Terry Clucas. On Mr. Clucas’s death the capital of this third would go to the grandchildren. The remaining two thirds of the estate were to be held in trust for four of the grandchildren.

In her will, Violet Clucas said that she had amply provided for Terry Clucas during his lifetime, giving him cars and money.

Terry Clucas was 53 years old. He suffered from Parkinson’s, was severely physically disabled, and could no longer work outside the home. He lived in a care facility, and he and his wife had combined incomes of just under $37,000 per year.

The court found that Terry Clucas did not share a happy relationship with his mother, but that they were not estranged either.

In her reason’s for judgment, Satanove J. set out the competing principles that the courts consider as follows:

1.The main aim of the Act is the adequate, just and equitable provision for the spouses and children of testators. (Tataryn v. Tataryn Estate,[1994] 2 S.C.R. 807)

2.The other interest protected by the Act is testamentary autonomy. In the absence of other evidence a Will should be seen as reflecting the means chosen by the testator to meet his legitimate concerns and provide for an ordered administration and distribution of his estate in the best interests of the persons and institutions closest to him. It is the exercise by the testator of his freedom to dispose of his property and is to be interfered with not lightly but only insofar as the statute requires. (Tataryn, supra)

3.The test of what is "adequate and proper maintenance and support" as referred to in s. 2 of the Act is an objective test. The fact that the testator was of the view that he or she adequately and properly provided for the disinherited beneficiary is not relevant if an objective analysis indicates that the testator was not acting in accordance with society's reasonable expectations of what a judicious parent would do in the circumstance by reference to contemporary community standards. (Tataryn, supra; Walker v. McDermott, [1930] S.C.R. 94; Price v. Lypchuk Estate (1987), 11 B.C.L.R. (2d) 371 (C.A.); Dalziel v. Bradford et al., (1985), 62 B.C.L.R. 215 (B.C.S.C.))

4.The words "adequate" and "proper" as used in s. 2 can mean two different things depending on the size of the estate. A small gift may be adequate, but not proper if the estate is large. (Price v. Lypchuk Estate, supra)

5.Firstly, the court must consider any legal obligations of the testatrix to her spouse or children and secondly, the moral obligation to her spouse or children. (Tataryn, supra)

6.The moral claim of independent adult children is more tenuous than the moral claim of spouses or dependent adult children. But if the size of the estate permits, and in the absence of circumstances negating the existence of such an obligation, some provision for adult independent children should be made. (Tataryn, supra)

7.Examples of circumstances which bring forth a moral duty on the part of a testator to recognize in his Will the claims of adult children are: a disability on the part of an adult child; an assured expectation on the part of an adult child, or an implied expectation on the part of an adult child, arising from the abundance of the estate or from the adult child's treatment during the testator's life time; the present financial circumstances of the child; the probable future difficulties of the child; the size of the estate and other legitimate claims. (Dalziel v. Bradford, supra and Price v. Lypchuk, supra)

8.Circumstances that will negate the moral obligation of a testatrix are "valid and rational" reasons for disinheritance. To constitute "valid and rational" reasons justifying disinheritance, the reason must be based on true facts and the reason must be logically connected to the act of disinheritance. (Bell v. Roy Estate (1993), 75 B.C.L.R. (2d) 213 (B.C.C.A.); Comeau v. Mawer Estate, [1999] B.C.J. 26 (B.C.S.C.); and Kelly v. Baker (1996), 15 E.T.R. (2d) 21 (B.C.C.A.))

9.Although a needs/maintenance test is no longer the sole factor governing such claims, a consideration of needs is still relevant. (Newstead v. Newstead(1996), 11 E.T.R. (2d) 236 (B.C.S.C.))

Madam Justice Satanove awarded Terry Clucas a lump sum of $200,000 in place of the income from the one third of the estate.

[Since I wrote this post, I have posted the following other article on the Wills Variation Act:
"Time Limits for Bringing a Wills Variation Act Claim" here.]

The Wills Variation Act: What is Adequate, Just and Equitable?

The Wills Variation Act , RSBC 1996, c. 490, gives the Supreme Court of British Columbia the power to vary a will in favor of a spouse or child where the maker of the will (the “testator”) has not made adequate provision for the spouse or child. (See my previous posts, "The Wills Variation Act: An Introduction," and "The Wills Variation Act: Who May Apply?") The court may then decide what provision would be “just, adequate and equitable in the circumstances.” This begs the question.

In the leading modern Supreme Court of Canada case on the Wills Variation Act, Tataryn v. Tataryn, [1994] 2 S.C.R. 807, Madam Justice McLachlin (now the Chief Justice of Canada), sought a principled and coherent approach to deciding what provision is adequate, just and equitable.

In Tataryn, Alex Tataryn left an estate of about $315,000 including the house he and his wife of 43 years, Mary Tataryn, lived in, and a rental property. He had two sons, John and Edward. In his will he allowed Mary to live in the house for her life, and appointed Edward to hold the rest of his estate during Mary’s life in trust. Edward had the power to decide if and when to give Mary funds from the estate. On Mary’s death, Alex’s will left everything to Edward, and nothing to John.

Mary and John brought claims under the Wills Variation Act.

In the Supreme Court of Canada, McLachlin J. considered the competing interests in allowing people to decide where their assets go at death-- their testamentary autonomy--and the claims of spouses and children. She said that in contemporary norms, society expected that a testator provide more than the bare necessities to his or her family where the size of the estate permits. The court must consider what a judicious spouse and parent would do.

McLachlin J. held that there were two sets of criteria that the court should consider when deciding what is adequate, just and equitable. First, the court should consider the testator’s legal obligations, such as his or her obligations to a spouse under family law statutes during the testator’s lifetime for support and division of property. Next, the court should consider the testator’s moral obligations. Where the testator has met his or her legal obligations, the court should consider whether he owed a moral duty to his spouse, or children, beyond the legal obligations the testator had in life. In McLachlin J.’s words,

If the phrase "adequate, just and equitable" is viewed in light of current societal norms, much of the uncertainty disappears. Furthermore, two sorts of norms are available and both must be addressed. The first are the obligations which the law would impose on a person during his or her life were the question of provision for the claimant to arise. These might be described as legal obligations. The second type of norms are found in society's reasonable expectations of what a judicious person would do in the circumstances, by reference to contemporary community standards. These might be called moral obligations, following the language traditionally used by the courts. Together, these two norms provide a guide to what is 'adequate, just and equitable' in the circumstances of the case.

The rationale for considering the testator’s legal obligations while alive is the “desirability of symmetry between the rights which may be asserted against the testator before death and those which may be asserted against the estate after his death….”

With respect to the testator’s legal obligations to a spouse,

[t]he legal obligations on a testator during his or her lifetime reflect a clear and unequivocal social expectation, expressed through society's elected representatives and the judicial doctrine of its courts. Where provision for a spouse is in issue, the testator's legal obligations while alive may be found in the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp), family property legislation and the law of constructive trust: [citations omitted].

With repect to children,

[t]he legal obligation of a testator may also extend to dependent children. And in some cases, the principles of unjust enrichment may indicate a legal duty toward a grown, independent child by reason of the child's contribution to the estate.

After the testator has met his or her legal obligations, the next question is whether any moral obligation is owed to the spouse or children:

For further guidance in determining what is 'adequate, just and equitable', the court should next turn to the testator's moral duties toward spouse and children. It is to the determination of these moral duties that the concerns about uncertainty are usually addressed. There being no clear legal standard by which to judge moral duties, these obligations are admittedly more susceptible of being viewed differently by different people. Nevertheless, the uncertainty, even in this area, may not be so great as has been sometimes thought. For example, most people would agree that although the law may not require a supporting spouse to make provision for a dependent spouse after his death, a strong moral obligation to do so exists if the size of the estate permits. Similarly, most people would agree that an adult dependent child is entitled to such consideration as the size of the estate and the testator's other obligations may allow. While the moral claim of independent adult children may be more tenuous, a large body of case law exists suggesting that, if the size of the estate permits and in the absence of circumstances which negate the existence of such an obligation, some provision for such children should be made: [citations omitted]

When there are competing legal and moral claims, McLachlin J. wrote, “it seems to me that claims which would have been recognized during the testator's life -- i.e., claims based upon not only moral obligation but legal obligations --should generally take precedence over moral claims.”

McLachlin J. went on to say that the court should interfere with the testator’s Wills only to the extent necessary to meet the testator’s legal and moral obligations:

I add this. In many cases, there will be a number of ways of dividing the assets which are adequate, just and equitable. In other words, there will be a wide range of options, any of which might be considered appropriate in the circumstances. Provided that the testator has chosen an option within this range, the will should not be disturbed. Only where the testator has chosen an option which falls below his or her obligations as defined by reference to legal and moral norms, should the court make an order which achieves the justice the testator failed to achieve. In the absence of other evidence a will should be seen as reflecting the means chosen by the testator to meet his legitimate concerns and provide for an ordered administration and distribution of his estate in the best interests of the persons and institutions closest to him. It is the exercise by the testator of his freedom to dispose of his property and is to be interfered with not lightly but only in so far as the statute requires.

In the result the Supreme Court of Canada held that the Alex Tataryn’s Will should be varied. The court gave Edward and John an immediate gift of $10,000 each. The court ordered that the rental property be held in trust during Mary Tataryn’s life, with the income going to her, and on her death Edward would be entitled to two thirds of the rental property, and John one third. The court ordered that Mary Tataryn receive the family residence and the rest of the estate outright.

[Since I wrote this post, I have posted the following other articles on the Wills Variation Act:
"Wills Variation Act: A Summary of the Principles" here;
"Time Limits for Bringing a Wills Variation Act Claim" here.]

The Wills Variation Act: Who May Apply?

[Effective March 31, 2014, the Wills Variation Act was replaced by Division 6 of Part 4 of the Wills, Estates and Succession Act, which will apply to all deaths on or after that date, and under which separation after a marriage or a termination of a common-law relationship affects the right of a former spouse to apply. This changes the law and the article below is no longer current in respect of separated spouses.]


The Wills Variation Act, R.S.B.C. 1996, c. 490, says that the court may vary a Will in favor of a “spouse or children.” (See my September 4 post for an introduction to the British Columbia Wills Variation Act here.)

A spouse includes a legally married spouse, and in some circumstances a common law spouse. Section 1 says that a spouse “means a person who
(a) is married to another person, or
(b) is living and cohabiting with another person in a marriage-like relationship, including a marriage-like relationship between persons of the same gender, and has lived and cohabited in that relationship for a period of at least 2 years.”

The Wills Variation Act does not allow claims on behalf of a divorced spouse, but a separated married spouse may apply. In Wagner v. Wagner Estate (1991), 62 B.C.L.R. (2d) 1, a majority of the British Columbia Court of Appeal held that the fact that the wife and husband had signed a final separation agreement did not bar the wife from making a claim under the Wills Variation Act after her husband’s death.

The use of the word “is” in the definition of spouse implies that a common law spouse must have been living with the deceased in a marriage like relationship at the time of the deceased’s death. The wording is not as clear as the definition of “common law spouse” in the Estate Administration Act, R.S.B.C. 1996, c. 122, where a person must have cohabited in a marriage-like relationship “for a period of at least 2 years immediately before the other person’s death.” The wording used in the Estate Administration Act has been held to preclude a claim by a person who had separated from the deceased before his death in Einfeld v. Bellrichard, 2001 BCSC 92. I am not aware of any decisions considering whether the wording of the current definition of spouse in the Wills Variation Act precludes a claim by a separated common law spouse.

To determine whether the Plaintiff lived in a marriage-like relationship with the deceased for the purpose of the Wills Variation Act definition of spouse, Mr. Justice R.R. Holmes in Janus v. Lachocki Estate, 2001 BCSC 1702, adopted the analysis used by Lambert J.A. for the Court of Appeal, in Gostlin v. Kergin, [1986] 5 W.W.R.1, 1 R.F.L. (3d) 448, 3 B.C.L.R. (2d) 264 in respect of support obligations of a common law spouse under the Family Relations Act, R.S.B.C. 1996, c. 128:

So I would ask whether the unmarried couple's relationship was like the relationship of the married couple in that the unmarried couple have shown that they have voluntarily embraced the permanent support obligations of s. 57. If each partner had been asked, at any time during the relevant period of more than two years, whether, if their partner were to be suddenly disabled for life, would they consider themselves committed to life-long financial and moral support of that partner, and the answer of both of them would have been "Yes", then they are living together as husband and wife. If the answer would have been "No", then they may be living together, but not as husband and wife.
Of course, in the particular circumstances of any case, the answer to that question may prove elusive. If that is so, then other, more objective indicators may show the way. Did the couple refer to themselves, when talking to their friends, as husband and wife, or as spouses, or in some equivalent way that recognized a long-term commitment? Did they share the legal rights to their living accommodation? Did they share their property? Did they share their finances and their bank accounts? Did they share their vacations? In short, did they share their lives? And, perhaps most important of all, did one of them surrender financial independence and become economically dependent on the other, in accordance with a mutual arrangement?
All those questions, and no doubt others, may properly be considered as tending to show whether a couple who lived together for more than two years have done so with the permanent mutual support commitment that, in the relevant sense of the Family Relations legislation, constitutes living together as husband and wife.

Because both a common law spouse and a separated married spouse can apply for a share of the deceased estate under the Wills Variation Act, two spouses may make competing claims under the Act.

“Child” and “Children” are not defined in the Wills Variation Act, but includes a natural child, whether the child is born inside or outside of marriage, and an adopted child.

Neither a natural child of the deceased who has been adopted out to other parents, nor a stepchild has any claim under the Wills Variation Act. Even a minor stepchild who was dependant on the deceased cannot apply for a share of the estate under the Wills Variation Act. The British Columbia Supreme Court held that the exclusion of step children from the Wills Variation Act does not offend the equality provisions of the Canadian Charter of Rights and Freedoms in McCrea v. Barrett, 2004 BCSC 208.

I suggest that where the deceased had been in the position of a parent to the stepchild, the law is incoherent. During the deceased’s lifetime, a minor or other dependant stepchild may be entitled to support from a stepparent under the Family Relations Act,but has no claim to a share of the stepparent’s estate under the Wills Variation Act, even where the stepchild can show financial need.

[Since I wrote this post, I have posted the following other articles on the Wills Variation Act:
"The Wills Variation Act: What is Adequate, Just and Equitable? here;
"Wills Variation Act: A Summary of the Principles" here;
"Time Limits for Bringing a Wills Variation Act Claim" here.]

Wills Variation Act: An Introduction

The Wills Variation Act, RSBC 1996, c. 490, is one of the most controversial statutes in British Columbia, giving the courts discretion to drastically change the provisions of a Will, without providing clear criteria or guidance for doing so. The heart of the Wills Variation Act is section 2 which says:

“…if a testator dies leaving a will that does not, in the court's opinion, make adequate provision for the proper maintenance and support of the testator's spouse or children, the court may, in its discretion, in an action by or on behalf of the spouse or children, order that the provision that it thinks adequate, just and equitable in the circumstances be made out of the testator's estate for the spouse or children.”

Although every common law province in Canada has dependent’s relief legislation permitting the courts to vary a Will where the maker of the Will (the “testator”) has not provided adequately for his or her dependants, British Columbia law is unique. The Wills Variation Act is both broader and narrower in its application than legislation in other provinces.

The Wills Variation Act, in contrast to legislation in most other provinces, allows independent adult children who were not dependant on the testator when he or she died to make a claim. On the other hand, some dependants, such as dependant stepchildren, cannot apply to vary a Will under the Act.

If the court determines that adequate provision has not been made, the court may make a considerable redistribution of the estate assets in favor of the applicant, and is not limited to providing sufficient assets to the applicant to alleviate finance need. On the other hand, the Wills Variation Act does not have any direct application to assets that flow to beneficiaries outside of an estate, such as designated beneficiaries of life insurance policies or Registered Retirement Saving Plans. Nor does the Wills Variation Act contain any anti avoidance provisions to prevent the testator from arranging his affairs so that substantially all of his or her assets flow to beneficiaries outside of his estate, thereby attempting to defeat any claims by a spouse or child under the Act.

The court cases interpreting and applying the Wills Variation Act are fascinating, as our courts, including the Supreme Court of Canada, have attempted to balance the policies of the Wills Variation Act, with the principle that a person ought to be permitted to decide who gets his or her assets at death.

I will be posting a series of articles examining various aspects of the Wills Variation Act, and I will discuss some ideas for reform. I think that the provincial legislature needs to reexamine the Act to alleviate some fundamental problems with the Act.

[Since I wrote this post, I have posted the following other articles on the Wills Variation Act:
"The Wills Variation Act: Who May Apply?" here;
"The Wills Variation Act: What is Adequate, Just and Equitable? here;
"Wills Variation Act: A Summary of the Principles" here;
"Time Limits for Bringing a Wills Variation Act Claim" here.]

Can you prevent a lawsuit over your Will by inserting a clause saying that anyone who sues is disinherited?

In Terrorem Clauses:
Despite its name, an in terrorem clause does not refer to clauses in Wills drawn for terrorists. Rather it is a clause that is intended as a mere threat to a beneficiary. For example, supposing you are concerned that someone will challenge your Will in court. Can you put a clause in your Will that says that anyone who starts a lawsuit about your Will forfeits his or her inheritance? Would such a clause stand up in court?

There are two reasons why a court in British Columbia is not likely to enforce a clause providing that anyone who challenges a Will forfeits his or her inheritance. First, the courts have not upheld clauses that are idle threats, intended to coerce a beneficiary. Secondly, in some cases our courts have said that these clauses offend public policy.

It is possible to avoid the first objection that a clause providing that a beneficiary who challenges the Will forfeits his inheritance is an idle threat. If the Will goes on to provide that the gift that would have gone to a beneficiary who challenges the Will, shall go to some other person if the beneficiary sues, then arguably the clause is not an idle threat.

However, even if the clause is drawn with a gift over to another person if the beneficiary challenges the Will, the clause may offend public policy.

The Supreme Court of British Columbia has refused to enforce a clause providing that a beneficiary forfeits his inheritance in cases where a child or spouse of the deceased has applied to court for a greater share of the deceased’s estate under the Wills Variation Act, RSBC 1996 Chapter 490. The Wills Variation Act allows a spouse or child to apply to court to vary a will on the grounds that the deceased did not make adequate provision for the child or spouse. In Bellinger v. Fayers, 2003 BCSC 563, (2003) 13 B.C.L.R. (4th) 348, the court said that it was a matter of public policy that support and maintenance be provided for spouses and children, and it would be against public policy to allow someone to circumvent that policy by putting in a clause providing for forfeiture of a gift if a Wills Variation Act claim is made.

The court in Bellinger did not rule out the possibility that a court could enforce a clause providing for forfeiture of a gift if the beneficiary challenges the Will on some grounds other than the Wills Variation Act (and there is a gift over to another person). For example, a beneficiary might challenge the Will on the basis that the deceased was mentally incompetent when he made the Will.

However, putting a clause in a Will providing for forfeiture of a gift if a beneficiary challenges the Will is probably not an effective strategy for reducing the risk of a lawsuit. It is quite proper to bring disputes about Wills to court for determination, and our courts may be reluctant to enforce clauses in Wills that are intended to prevent someone with a claim from having his or her day in court.

In British Columbia, the court usually requires an unsuccessful party to pay costs to the successful party. Although costs generally represent only a portion of each party’s actual legal costs, the prospect of having to pay the other party’s costs does discourage claims that are without merit.

If the prospect of having to pay the other party’s costs if a claim is unsuccessful does not discourage a lawsuit, a clause providing in a Will providing for forfeiture of a gift is not likely to be any more effective in avoiding a lawsuit by a beneficiary who feels aggrieved.