Mutual Wills - Hull on Estates #232
Listen to: Mutual Wills
This week on Hull on Estates, Paul Trudelle and Rick Bickhram discuss a recent case out of the B.C. Supreme Court that applies the mutual Wills doctrine and discusses what Will be needed in order to find a mutual Wills agreement.
For more information on Brewster v. Lenzi, 2010 BCSC 1488 (CanLII), please click here.
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Paul E. Trudelle – Click here for more information on Paul Trudelle.
Rick Bickhram – Click here for more information on Rick Bickhram.
Mutual Wills - Hull on Estates- Episode #232
Posted on December 14, 2010 by Hull & Hull LLP
Rick Bickhram: Hello and welcome to Hull on Estates. You are listening to episode 232 on Tuesday, December 14, 2010.
Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada. Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and wills. Now, here are today’s hosts.
Paul Trudelle: Hi and welcome to another episode of Hull on Estates. I’m Paul Trudelle.
Rick Bickhram: And I’m Rick Bickhram.
Paul Trudelle: Hi Rick. How are you today?
Rick Bickhram: I’m doing well. How are you?
Paul Trudelle: Good, good. The year is quickly winding down.
Rick Bickhram: It is and this is one of the very few podcasts left for the year.
Paul Trudelle: Yes, I think it’s my last one for 2010 so I wanted to thank you for participating in our podcasts this year and thank our audience for listening this year and I hope everyone has a great holiday.
Rick Bickhram: Yes. I would like to wish everybody happy holidays out there and I hope everyone enjoys it.
Paul Trudelle: And happy New Year. We thought we’d end the year by discussing a recent case out of the BC Supreme Court that talks about mutual Wills and applies the mutual Wills doctrine and discusses what will be needed in order to find a mutual Will agreement.
Rick Bickhram: Absolutely. And I think it’s the facts in this case that makes this case particularly unique. And it was Paul that pointed it out to me. And again, I guess I’ll just jump into the facts right away.
Paul Trudelle: Sure.
Rick Bickhram: And Paul will jump in and put in your two cents whenever you feel fit. So in this situation we have Peter and Lena. And this is their…both their second marriage. They’re both pretty elderly. I think the wife…Peter was 64 years of age and Lena was 69 years of age.
Paul Trudelle: That’s not actually very old, Rick. You’re showing your youth. They were…yes, they were middle-aged, let’s say, at worst.
Rick Bickhram: Okay, we’ll leave it at that. And they had their assets during their lifetime that they had accrued but when they originally got married, they moved into Peter’s residence and then they decided that they were gonna each contribute one-half of the purchase price of a condominium.
Paul Trudelle: Right. And I think it’s important to note that they both contributed to that condo but for the most part they kept their finances separate other than that one joint purchase.
Rick Bickhram: Absolutely. And that’s a very important fact here. After they each contributed one-half to the purchase of the condominium, they moved into it where they lived for I would say about 6 to 7 years until the husband, Peter dies.
Paul Trudelle: Yeah, he died in 1997.
Rick Bickhram: During their marriage, they had…both Peter and Lena agreed to execute Wills, mutual Wills. And those of us that are not really familiar with mutual Wills, I’m gonna ask Paul to jump in here and maybe he can explain a little bit more, better than I can.
Paul Trudelle: Yeah, the mutual Will, I guess, is a finding that the Court makes. It will apply in the circumstances where in this case Peter and Lena both made Wills. They agreed that they would transfer one-half of the contents and their one-half interest in the matrimonial home to the other, to the survivor. And then upon the survivor’s death, it’s going to go to specified parties. And in Peter’s case, if he died first, the property would go to Lena and then when Lena died, it was going to go to Peter’s daughter by a first marriage, the plaintiff. If Lena was to die first, Peter would get Lena’s interest and then when he died, Lena’s half would go to Lena’s nephew and niece. That’s the mirror Will type provisions that we often see. It would be a mutual Will if those provisions were put in place and there was an agreement found that upon the death of the first that those terms became irrevocable. And that was the issue here because as it turns out, after Peter died, Lena made a new Will that left…that didn’t leave half of the property to Peter’s daughter but in fact gave the entire property to Lena’s niece and nephew.
Rick Bickhram: Absolutely. Well that’s exactly what happened here was they had the mutual Wills. Peter dies. Lena doesn’t die as yet but she executed a subsequent Will and in that subsequent Will it names…she leaves the residue of her estate to the two designated beneficiaries that would have taken which is I believe one was her niece and then the other one was…
Paul Trudelle: A nephew.
Rick Bickhram: A nephew.
Paul Trudelle: Yeah. And the Court says that “When the fact of the new Will and Mrs. Lindsay’s (Lena’s) apparent intention to disregard the alleged agreement came to the attention of the plaintiff, she commenced this action”. What’s not clear is how the daughter found out about the new Will that Lena had entered into. But in any event she found out about it and cried foul, stating that that would be a breach of the mutual Will agreement. So the issue was whether there was a mutual Will agreement and whether Lena was bound by it. The Court looked at the terms of the Will itself and there were mirror terms saying that Peter’s share would go to Lena and then it was to go to half to his daughter. The Court correctly quoted the facts…sorry, the law in the area saying that those terms alone aren’t enough for…to found a finding of mutual Wills. What you’d need is something more than that, that shows an agreement that the recipient agrees to be bound by the terms of the mutual Will. And so the Court then turned to whether there was that…whether there was enough evidence to show that Lena agreed at the time of the making of the Will to be bound by those terms.
Rick Bickhram: And I think that’s the interesting and the very neat little tweak in this whole…in this case is that the Court comes out and says, you know what, even though you guys have mirroring provisions in the Will, we want more proof. We want some sort of corroborating evidence to indicate that there was an agreement before I decide to hold both Lena mutually…or impose some sort of obligation on Lena to be held responsible, to hold that half of property in trust for the beneficiaries of Peter’s estate. And in this case, the plaintiff heir which is his daughter, Lorraine.
Paul Trudelle: Right. And the Court went on to consider the evidence and whether there was such an agreement. And I think there’s two important points there: one is the actions of Lena after Peter’s death served to confirm the agreement; and secondly was independent evidence from a friend of the family that served to confirm that agreement of mutual Wills. Let’s first turn to what Lena did after the deceased passed away. I think at that time she did go to see a lawyer. The lawyer was addressing concerns raised by the daughter and the lawyer spoke to Lena allegedly and wrote back saying that Lena intends to be bound by the agreement.
Rick Bickhram: Yeah, I thought that the daughter wanted to go on title to the condo because the condo was originally held in joint tenancy. So when you have an asset held in joint tenancy, there’s a possibility that it may go by right of survivorship, and I use that word very lightly…or very loosely because we all know that there’s this constructive trust argument. So that’s what the daughter raised in the situation. She said that Lena, you are holding this property in trust for me on the basis of that mutual Wills’ argument.
Paul Trudelle: Yes and I think that’s the way to get around the joint tenancy issue. I think it would have been open to the Court to consider whether this was jointly held property and whether it passed to Lena outside of the estate and therefore the Wills didn’t quite govern. The Court did discuss briefly, though, whether the joint tenancy was severed by the terms of the mutual Will agreement. Also alluded to the trust claim that the daughter would have against this jointly held property. The Court did consider the fact that Lena did…confirm or agree that she would be bound by the agreement. It appears that there was an issue at trial as to whether that agreement was actually authorized by Lena and for that reason, I think we heard evidence from Lena’s lawyer at the time who said yes, he met with Lena and they discussed it and this was her agreement. It looks like Lena tried to distance herself from that evidence but the Court did accept the evidence of the lawyer.
Rick Bickhram: Absolutely. And that’s pretty strong evidence. You have a family friend who comes in to corroborate hey, there is a mutual Will here and by course of conduct, that mutual Will kind of severs the joint tenancy. And then we have subsequent testimony from the lawyer, and it’s Lena’s lawyer, and his evidence is again Lena was aware of the agreement, she acknowledged it and I don’t…that’s pretty tough evidence to get around so…
Paul Trudelle: Yeah, and I think that strongly supports the judge’s conclusion that there was a common intention at the time the Will was entered into that the property…half of the property would go to the survivor and upon the survivor’s death, it would go as the parties agreed when they entered into the Will – half to Lena’s side and half to Peter’s side. So in order to…the remedy that the Court imposed was a finding that Lena held half of the condo in trust for Peter’s daughter from his first marriage. There was an agreement, it appears, that Lena would be able to live in the property during her lifetime and it would only pass upon her death.
Rick Bickhram: So basically she gets a life interest and then subsequent to her passing, the proceeds I guess would be divided or…I don’t know how.
Paul Trudelle: It would be sold and half would go to Peter’s…
Rick Bickhram: Peter’s estate.
Paul Trudelle: Yeah, Peter’s side and half would go to Lena’s side. Well, it’s an interesting decision. And we’ll put the link up to that decision on our website in our show notes. We thank you for listening. If you have any questions, please feel free to write to us at estatelaw.hullandhull.com. That’s our website. You can write to us at hull.lawyers@gmail.com or visit our website where you’ll find notes on this podcast and other podcasts and blogs as well.
Rick Bickhram: We hope that you enjoyed the show. I’m Rick Bickhram.
Paul Trudelle: I’m Paul Trudelle. Thank you.
Rick Bickhram: Until next week, so long.
Paul Trudelle: Bye.
This has been Hull on Estates with the lawyers of Hull & Hull. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.
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