Listen to Developments in Will Changes.
This week on Hull on Estates, Ian and Suzana discuss developments in will changes. They reference cases from Key Developments in Estates and Trusts Law in Ontario ed. 2008.
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Listen to "Spousal Exclusion Issues"
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In this week's episode of Hull on Estates, David Smith and Diane A. Vieira discuss the issues surrounding spousal exclusion from the will of the deceased and how to challenge this exclusion.
Click "Continue Reading" to read the transcribed version of this podcast.
Spousal Exclusion Issues - Hull on Estates Podcast #74
Posted on August 28th, 2007 by Hull & Hull LLP
David Smith: Hello and welcome to Hull on Estates. You’re listening to Episode #74 in our continuing podcast series.
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.
David Smith: Good afternoon Diane.
Diane Vieira: Good afternoon Dave.
David Smith: Diane, today we decided that we’re going to talk about the issues that generally arise when the surviving spouse of the deceased walks into your office and shows you a Will where she’s not a beneficiary or he’s not a beneficiary. And asks you what you can do for him or her. And I understand that there’s a fact situation that we can relate to our listeners that might help illustrate this example, and I wonder if you could lead us into that.
Diane Vieira: The fact situation is we have someone who’s in a short marriage, less than two years, and they’re away for a short period of time on a small vacation. And during that time, her spouse makes a Will that completely cuts her off or leaves her a very small part of his estate. She doesn’t find out about this until after the Will has been probated and now she’s left in a situation of not knowing what her rights are or what’s she’s entitled to.
David Smith: I guess the first thing that jumps to mind, Diane, when you present the fact situation is a Will challenge. And I think if we look at the Will challenge first of all, does this fact situation, just as you’ve described it, give rise to any basis upon which to challenge the validity of that Will?
Diane Vieira: There are a few red flags that come up immediately. The Will was drafted when she was out of the country for a short period of time. Other things to consider was the lawyer who drafted the Will was introduced to her spouse by a third party. There’s also some issues regarding the capacity of her spouse to make the Will or to transfer his assets at the time.
David Smith: In this situation where she’s out of the jurisdiction and the Will is made in her absence, what does that suggest in terms of creating a legal argument to challenge this Will?
Diane Vieira: The first thing that immediately comes to mind is undue influence by third parties and in this situation, it was other family members. They waited specifically for a period of time where her spouse would be isolated and she would not know about this Will until after.
David Smith: And earlier, Diane, you mentioned that she was, or that the deceased was taken to a new lawyer by a third party. Do we know in our fact situation as presented whether the third party who took the deceased to a lawyer was in fact one of the family members who benefits under this new Will?
Diane Vieira: In this case it was. It was a family lawyer known to the other family members and who had done work for the other family members. And the lawyer who drafted the Will actually spoke to the other family members prior to ever speaking to her spouse.
David Smith: You know that just strikes me as just a fantastic set of circumstances. If I’m the lawyer wanting to challenge the Will, you’re telling me I’ve got a situation where the wife is out of the jurisdiction. The theory will be that the family members swoop in, take the Dad or uncle or whoever the person is in terms of their relationship, to a lawyer of their choosing with whom they have a relationship. It’s kinda surprising, isn’t it, that that lawyer would even agree to make the Will in those circumstances?
Diane Vieira: It is, and it appears that it could be even the third parties in this circumstance who paid to have the Will drafted and the costs associated with that.
David Smith: Wow, I mean that’s just, that’s just something that, for a practicing lawyer, you got to think that the advice, common sense and any good advice would dictate that you just simply would not make a Will in those circumstances. Or refer the deceased to someone else. So it sure sounds to me like there’s a good basis for a Will challenge there. Of course, if we’re alleging undue influence, the burden of proof is on the surviving spouse challenging the Will to prove undue influence, isn’t it?
Diane Vieira: Yes it is and another thing to consider is testamentary capacity.
David Smith: And what are we looking for in terms of testamentary capacity?
Diane Vieira: Whether or not the testator was capable of drafting that Will or making his wishes known.
David Smith: And, of course, we know from the case law, Banks and Goodfellow being the leading case, that what you need to demonstrate is that the deceased knew who he had obligations to, knew the value of his assets, and had a clear plan and a clear understanding of what it was he wanted to do. Now it’s quite possible he may have wanted to cut his wife out of his Will. It doesn’t necessarily mean that he was capable if he didn’t know the value of his assets, didn’t understand that he had obligations. It’s not enough simply to have the intention to want to deprive someone of their entitlements. I think now though what I’d like to do, Diane, is why don’t we segway into a different fact situation or same fact situation but different argument which is, let’s assume that we’ve got no basis for a Will challenge. What can we do to help such a person if she were to walk into our office in terms of advancing her entitlements when we don’t have a good case to make a Will challenge?
Diane Vieira: One thing she can, she or he can decide is to not take under the Will and make an equalization claim under the Family Law Act.
David Smith: Alright and in this case, if there’s no entitlement under the Will whatsoever, clearly electing under the Family Law Act would probably be the prudent thing to do.
Diane Vieira: It appears so.
David Smith: Right. Certainly and, you know, we’ve talked a little bit about Family Law Act elections. The difficulty with Family Law Act elections is that they can be very complicated in terms of preparing the net family property statements and given a choice, what else or is there anything else, Diane, that can be pursued apart from a Family Law Act claim?
Diane Vieira: You might also consider a dependency claim under the Succession Law Reform Act under Part 5.
David Smith: If we want to make a claim for support under the Succession Law Reform Act on behalf of a spouse, can you give me a little bit of an explanation as to what that entails?
Diane Vieira: The spouse will have to look under the definition of dependent in the Act; if they do fall under that definition, they can make a claim.
David Smith: Let’s talk about that just briefly. How is a spouse defined under the Act? I mean, do you have to be married or can you be a common-law spouse?
Diane Vieira: You can be a common-law spouse as long as you’ve lived together continuously for three years or if you have a dependent child together.
David Smith: Alright and so, I mean, in our fact situation, we’ve said that this was a situation where the deceased was married and I take it, it’s probably obvious that someone who’s married, that meets the definition of spouse as well.
Diane Vieira: Yes.
David Smith: And in terms of dependency, what does it mean to be a dependent?
Diane Vieira: First and foremost, you consider if the dependent is in need of support. There’s also, under Cummings and Cummings, a moral obligation, if that first part can’t be met.
David Smith: Yeah and I think, Diane, what we want to look at there, what we consider is, did the deceased have moral obligations to the spouse which give rise to a support claim? And can that exist independently of need? And, you know, that’s a whole topic for a separate podcast. But I think certainly we want to consider the relevant section of the statute. And the relevant section of the statute for this purpose is Section 62 of the Succession Law Reform Act. And Diane, I wonder if you can just sort of touch on some of the issues that the court considers under that Section in determining the amount of support.
Diane Vieira: Some things the court will consider are the current assets of the person making the claim. The assets they’re likely to have in the future, the capacity to contribute to their own support, the person making the claims age, physical and mental health. They will also look at the standard of living, what they were accustomed to when they lived with their spouse and the lifestyle they were accustomed to.
David Smith: And let me interrupt there, Diane. I think that’s a really important point because if someone comes to your office as a spouse and says my spouse has died, I’m cut off, I’m now in a new relationship. But my new spouse is not making anything close to the relationship I had with my previous spouse. And yes, I’m able to get by, but no, I’m not going on vacations and out to dinner and what have you. Isn’t it fair to say that that person could still advance a support claim even though it’s as if they’re missing wants rather than needs.
Diane Vieira: I think that’s fair. In their Affidavit evidence, they should demonstrate how the lifestyle has changed from what they were previously accustomed to, to what they’re accustomed to now.
David Smith: And then you touched briefly on the Cummings case, Diane, and you know, that’s, of course, engendered a whole lot of debate within the Estates Bar. A decision of the Court of Appeal saying that the court must consider if there’s any moral obligation owing by a spouse, a deceased spouse, to a surviving spouse which gives rise to a determination of support. And really, the interesting language in that case is when the court says that a surviving spouse is entitled to a fair share of the estate. And it’s going to take a lot of case law to determine exactly what that means. So I think, Diane, we’ll wrap things up here at this juncture but perhaps, you know, in terms of summarizing, perhaps you can just, for the listeners, summarize what we’ve talked about in very general terms, in terms of claims and entitlements that a surviving spouse can make.
Diane Vieira: Sure, if someone approaches you, a spouse that has been cut off from a Will or did not receive their fair entitlement, some things to consider would be a Will challenge if those circumstances exist. If that is not the case, they can try to make an equalization claim under the Family Law Act and not take under the Will. Or a third option is to make a dependency claim under the SLR Act.
David Smith: And in terms of preparing material and going to court with respect to this, what kind of information gathering should you do if you’re going to make a support claim?
Diane Vieira: I would gather evidence of the lifestyle that you were accustomed to before, the assets of the estate currently and I would refer to Section 62, subsection 1 of the SLR Act under the different subheadings there and see if you have evidence to support your claim.
David Smith: Right and then it’s that evidence which the court will consider, won’t it, in evaluating the claim? So thanks very much. I enjoyed podcasting with you, Diane, and we’ll look forward to doing this again soon.
Diane Vieira: Thank you. Bye.
David Smith: Bye-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.
To listen to other podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.
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In a recent decision out of Alberta, a court denied one of the litigants leave to present viva voce or oral testimony in the context of an application to have that litigant declared incapable.
In Adria v. M. (E.) [2007] A.J. No. 291 (Q.B.) (Q.L), a father's children brought an application to have their father declared a dependent adult. The father had previously been admitted to hospital and found incapable of making decisions regarding his personal matters. The diagnosis had included dementia and significant impairment of judgment. On the basis of medical opinions, the children believed that their father should permanently live in a locked supported-living facility. Hence, the need for their application.
The father, in turn, brought an application for a declaration that he was being wrongly and unconstitutionally detained. As part of his application, the father sought leave to give oral testimony at the hearing. The court ultimately denied leave.
As part of its reasons, the court held that although it had discretion to allow an individual to give viva voce evidence, that discretion should be exercised sparingly. The court found that there were no special circumstances present in favour of departing from the usual rule that evidence should be provided by way of affidavit. Indeed, the father had filed three affidavits, in which his views, evidence and wishes were expressed. The court found no obvious reason to supplement the father's affidavit evidence with oral testimony.
The issue before the court was not one of credibility, as no one doubted the father's desire to be free and live in his own home. The court held that where groundwork has been laid to question capacity, and in this case the various medical opinions provided by the children had laid that groundwork, the issue of capacity became one of expert opinion, and not credibility.
The Adria case is a good illustration of the limitations placed on litigants in presenting evidence on motions and applications. Unlike trials, presenting oral testimony is not a right, but ultimately an exercise of judicial discretion.
Have a great day!
Bianca La Neve
In McMullen v. McMullen [2006] B.C.J. No 2900, an 86 year old widower commenced an application against two of his three daughters, who held his power of attorney. The application was to set aside the transfer of a 99% interest in the father’s condominium property to the husbands of his two daughters. The daughters, in turn, brought an application for an order requiring their father to submit to a psychiatric assessment.
According to the medical evidence before the court, the father had some medical problems, but no documented cognitive problems. At worst, he suffered from depression. However, the two daughters alleged that their father’s spending habits had changed and his investments had been depleted. The daughters claimed that their father was sending money to a new female acquaintance in the United States. The family contacted medical professionals and legal authorities with concerns that their father was being financially abused, but to no avail.
When the daughters confronted their father with respect to his worsening financial situation, he became angry and denied he was being financially exploited. He asked his one daughter to stop monitoring his bank account though she did not accede to his request, as she considered it her duty under the power of attorney. The two daughters then transferred the father’s condominium property to preserve his only remaining asset and provide for his future care.
However, the daughters did not immediately register the transfer of the condominium property, as they thought it would cause emotional distress. It was not until a year later that the daughters finally registered the transfer of the condominium without telling their father or providing consideration. The father commenced the application when he ultimately discovered the transfer.
The court allowed the application by the father and the condominium transfer was declared null and void. While the daughters acted in what they considered to be in their father’s best interests, there was nevertheless no evidence to show that the father was incapable of managing his financial affairs. The daughters had therefore breached their duties as attorneys by acting contrary to their father’s intentions. The court dismissed the daughters’ application, as the father was not required to submit to a psychiatric assessment where his mental capacity was not an issue.
The case holds that even when a family fears that an elderly parent is being financially exploited, but mental incompetency is not an issue, a power of attorney does not give the family carte blanche to do what they think is in the best interests of that parent. A power of attorney for property has its limits even in the most egregious situations.
Enjoy!
Justin de Vries
A recent case out of England has led to an interesting twist on testamentary capacity. In Sharp v. Adam [2006] EWCA 449, the English Court of Appeal upheld the trial judge’s ruling that the unexplained exclusion of the testator’s daughters from his Will, together with evidence of brain deterioration (due to Multiple Sclerosis), was enough to set aside the Will on the basis of incapacity. This was despite evidence that the testator was able to communicate effectively by blinking and using a spelling board, and his experienced solicitor and family doctor were present when the Will was signed and had concluded that the testator had the requisite capacity.
In essence, the case turned on the lack of an explanation for why the testator had excluded his daughters. There was no evidence of undue influence by the named beneficiaries or of any problems with the daughters. While the Court of Appeal accepted that the testator’s ‘cognitive ability’ was satisfactory to make the Will, his ‘mood’ was not. In excluding his daughters inexplicably from his Will, the Court concluded that the testator’s ‘mood’ was so affected by his MS that this deprived him of the requisite testamentary capacity. This arguably raises the threshold for establishing testamentary capacity. A challenger to a Will may now be able to convince a court to set a Will aside on the basis that the testator’s mood was impaired, even if his/her cognitive abilities remained intact.
Have a great day!
Bianca La Neve
Lack of testamentary capacity and undue influence are usually difficult to prove. However, too many clients are willing to advance such claims on the basis of a weak evidentiary record. A recent decision from the Alberta Court of Appeal, Nicholson v. Kurtz sounds a note of caution.
Two sisters appealed a trial decision setting aside their father’s Will on the basis of lack of testamentary capacity and undue influence.
The father’s previous Will had divided the residue of his estate equally between his three children. However, in 1998, the father, who was 92 at the time, retained a lawyer to prepare a new Will (“1998 Will”). The lawyer asked his client a series of questions. Some of the responses were inaccurate, but the lawyer ultimately concluded his client had capacity. The 1998 Will specifically stated that the father wanted to exclude his son “because I believe if he receives any money he will use it for liquor”. The son had been convicted of drinking and driving offences in 1987 and 1992.
The trial judge concluded that the father lacked capacity and was unduly influenced by his two daughters and set aside the 1998 Will. The Alberta Court of Appeal disagreed and reversed the trial judge’s decision. The 1998 Will was declared valid.
According to the Appeal Court, there was no medical evidence suggesting the testator lacked capacity and there was no direct evidence that the daughters influenced their father’s decision to exclude their brother. Moreover, the father’s lawyer specifically questioned his client to gauge his capacity during their first two meetings. Their third meeting lasted two and a half hours and the lawyer had no reason to conclude that his client’s capacity had changed. After reading the 1998 Will to his client, the lawyer was satisfied that it expressed his client’s wishes.
According to the Appeal Court, the finding of undue influence could also not be sustained on the record. The father’s reason for excluding his son was expressly stated in the 1998 Will. There was also clear evidence that the father’s wish to exclude his son arose several months before the 1998 Will was signed. The Appeal Court held that the trial judge simply failed to give any weight to this evidence. The trial judge also failed to give weight to the lawyer’s evidence that he discussed the possibility of the daughters’ influence with his client who expressly denied such influence. Mise en garde!!
Justin de Vries
READ THE TRANSCRIBED PODCAST HERE
During Hull on Estates Podcast #2, we discussed the concept of testamentary capacity.
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