Saturday, May 13, 2017

Forbes v. Millard Estate: Court Applies Anti-Ademption provision of the Wills, Estates and Succession Act

One of the pitfalls of leaving specific property to a beneficiary in your will, is that you might not own that property on your death. You may specify in your will that you are leaving an item of sentimental value to your niece, or you may specify that you are leaving property of substantial value such as your home to a child. But what happens if on your death, you no longer own any property of that description? In many cases, the gift is said to adeem, which means that your beneficiary does not receive the property, or anything in substitution for the property (unless you provided a substitute gift in your will).

There are exceptions. One of those exceptions is set out in section 48 of the Wills, Estates, and Succession Act. The purpose of this provision is to provide for a financial gift to a beneficiary of specific property, when that property has been disposed of by someone acting on behalf of the will-maker, rather than by the will-maker himself. This anti-ademption provision applies when the will-maker becomes mentally incapable of managing his own affairs, and his attorney under an enduring power of attorney, or court-appointed committee, decides to sell the property that was subject to a specific gift in the will. Section 48 reads as follows:
Relief from disposition of property
48  (1) In this section,“proceeds” means the gross proceeds at the time of disposition, and includes
(a) non-monetary consideration, and
(b) in the case of a gift, the fair market value of the gift.
(2) If property that is the subject of a gift in a will is disposed of by a nominee, the beneficiary of the gift is entitled to receive from the will-maker's estate an amount equivalent to the proceeds of the gift as if the will had contained a specific gift to the beneficiary of that amount.
(3) Subsection (2) does not apply if
(a) the disposition is made to carry out instructions given by the will-maker at a time when the will-maker was legally capable of giving instructions, or
(b) a contrary intention appears in the will.

Mr. Justice Blok’s decision in Forbes v. Millard Estate, 2017 BCSC 361, illustrates how section 48 works. Helen Millard made a will on September 5, 2000. In her will, she left her daughter, Cherie Forbes, “any property which I may own and be using as a home at the date of my death.” When she made her will, Ms. Millard owned a home on Hornby Island, British Columbia, which he later sold. She purchased a new home in Courtney, British Columbia. Sadly, her mental functioning deteriorated to the point where she could no longer manage her own financial affairs. In September 2005, her other two children, Maureen Bryce and Richard Millard, acting as her attorneys under an enduring power of attorney sold Ms. Millard’s home in Courtney to pay for her expenses. When she died on February 9, 2015, Ms. Millard no longer owned a home.

Ms. Forbes applied to court for a declaration that she is entitled to the sale proceeds of the Courtney home pursuant to section 48.

Ms. Bryce and Mr. Millard argued that because section 48 did not come into effect until March 31, 2014, after Ms. Millard made her will, and after they sold the Courtney home, the anti-ademption provision does not apply in this case.

Mr. Justice Blok held that section 48 does apply, because under the transition rules of the Wills, Estates and Succession Act, the relevant date for determining whether section 48 applies is the date of the will- maker’s death. Because Ms. Millard died after March 31, 2014, section 48 applies, and Ms. Forbes is entitled to the sale of the Courtney home.

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