A recent decision, Geluch v. Geluch Estate, 2019 BCSC 2203, illustrates that
a court may find part of a will to be valid and another part invalid. To make a
valid will, the will maker must have the capacity to understand the nature and
effect of the will, or testamentary capacity, and must know and approve of the
contents of the will. I am not aware of any cases in which a will made by
someone who is found not to have capacity is found to have some valid gifts,
but the court may find that the will-maker with capacity knew and approved of
some gifts in the will, but not others.
Jean Geluch signed two wills shortly before she died. She
signed a will dated January 12, 2016, in which she appointed her brother Ted
Josefowich as her executor, left seven charities $50,000 each, 17 individuals
cash gifts in varying amounts and the residue to her niece Carol Wells. The
cash gifts to individuals included a $15,000 gift to her daughter Sharon Geluch
who had developmental disabilities, $105,000 to Mr. Josefowich and $250,000 to
Carol Wells.
Eight days later, on January 20, Jean Geluch signed a new
will and a transfer of her home into a joint tenancy with Carol Wells. She
again named her brother as her executor, and she left $15,000 to her daughter
to be held in trust, $105,000 to brother, and the residue to her niece Carol.
On January 20, Carol also signed a declaration of trust declaring that upon
Jean Geluch’s death, she will not be entitled to the home, but will hold it for
the benefit of beneficiaries listed in two schedules, which set out the same
cash gifts to the same beneficiaries as were listed in the January 12, will.
Jean Geluch died four days later, on January 24. She had
bank accounts worth approximately $384,000 and the home sold for just over
$1,423,000. The total value of the assets subject to the lawsuit was
approximately $1.8 million.
The Public Guardian and Trustee of British Columbia, acting
as litigation guardian for Sharon Geluch, challenged both of the wills, the
transfer of the home into a joint tenancy and the declaration of trusts,
alleging that Jean Geluch did not have the capacity to make the wills or
transfer, and that she did not know and approve of the estate plan.
Although the wills, transfer and trust declaration were
drafted by a lawyer, much of the instructions came from Jean Geluch’s brother
and niece rather than directly from her. The lawyer did not have a clear recollection
of events, and his notes were sparse and were not dated. He did not ask the
questions needed to establish her capacity.
In deciding the case, Madam Justice Francis relied to a
significant extent on the email correspondence among Ted Josefowich, Carol
Wells and the lawyer.
Madam Justice Francis found that Jean Geluch did have the
capacity to make the estate-planning documents. She then considered whether
Jean Geluch knew and approved of the planning. She summarized the issue as
follows:
[124] In the recent decision of Halliday v. Halliday Estate, 2019 BCSC 554, at para. 178, Hinkson C.J. cites John Poyser’s text Capacity and Undue Influence (Toronto: Carswell, 2014) and its formulation of the distinction between testamentary capacity and knowledge and approval:
Testamentary capacity includes the ability to make choices, whereas knowledge and approval requires no more than the ability to understand and approve the choices that have already been made.[125] While I am satisfied that Jean was capable of making choices with respect to her testamentary dispositions in January 2016, I am not at all satisfied that she knew or approved of the choices that she purportedly made.
[126] To have knowledge and approval of testamentary dispositions, it is necessary for the will-maker to be aware of the contents of the will she is executing: Johnson v. Pelkey (1997), 36 B.C.L.R. (3d) 40 (S.C.) at paras. 114-116.
[127] Knowledge and approval requires more than simply knowing the contents of the will. The will-maker must be aware of the magnitude of the residue of her estate and must “appreciate the effect” of the disposition of her estate: Russell v. Fraser (1980), 118 D.L.R. (3d) 733 (B.C.C.A.) [Russell] at para. 12.
[128] Since the plaintiff has established suspicious circumstances, the burden falls on Ted and Carol to prove that Jean had knowledge and approval of the dispositions she made on January 20, 2016. I find that Ted and Carol have fallen far short of meeting that burden.
Madam Justice Francis found that they had not met the burden
of proof that Jean Geluch knew and approved of the January 20 will, property
transfer or declaration of trust. There was no evidence that the instructions
for the changes, which came from Mr. Josefowich and Carol Wells, were confirmed
with Jean Geluch. Madam Justice Francis emphasized that these changes were
significant:
[130] There was a wholesale change in the structure of Jean’s estate plan between January 12, 2016 and January 20, 2016. Jean went from having a conventional will that disposed of all her property on death to transferring her primary asset, the Home, to Carol on trust terms that even Jean’s lawyer did not appear to fully understand. The notion that Jean, without ever talking to her lawyer prior to the January 20, 2016 execution date, could have known and approved of the change in plan that would have her most significant asset pass outside her estate, pursuant to a declaration of trust that was signed by Carol and not Jean (and which Jean may never have seen), is simply not plausible.
Madam Justice Francis rejected the argument that the January
20 will could be upheld even if the property transfer and declaration of trust
were invalid. The effect would be to disinherit beneficiaries of cash gifts and
there was not evidence that Jean Geluch wished to do so.
She then turned to the January 12 will, and her evaluation
of the evidence was nuanced. There was evidence that Jean Geluch gave
significant consideration to the cash gifts, making changes requiring numerous
drafts, which contrasted with the residue clause. Madam Justice Francis wrote
at paragraph 157:
It is evident that Jean agonized over the list of Charitable Bequests and Individual Bequests, in terms of whom she wished to benefit, in what amount, and in some cases what trust terms to attach to certain gifts. For example, at one point she considered making the $5,000 gift to Michael Geluch conditional on his marital status. The level of detailed consideration given to these small bequests is completely inconsistent with Carol’s evidence that Jean simply announced one day that Carol was to inherit the residue without further discussion.
In contrast, although the residue clause disposed of
approximately $900,000, Madam Justice Francis found it “more probably than Jean
did not turn her mind to the residue because no one…pointed out to her that the
Charitable Bequests and the Individual Bequests would dispose of less than half
of her estate….The only credible explanation for Jean’s scrupulous attention to
the Charitable Bequests and Individual Bequests, and her lack of attention to
her residue, is that she had no idea of the magnitude of the residue of her
estate.
The result is that the cash gifts to charities and
individuals in the January 12 will is upheld. The residue was not effectively
disposed of in the will, and will go on an intestacy to Sharon Geluch.
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