Geluch v. Geluch Estate

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.