There’s No Free Will in Wills
The German philosopher Arthur Schopenhauer said “A man can do what he will, but not will as he will” and while he was arguing human choice is an illusion, he may as well have been talking about the Wills, Estate and Succession Act.
How’s that for a relatable introduction?
People expect that they can write anything they want into their will – after all, it’s their money and property that is going to be distributed – but in most provinces the law believes you have “moral obligations” to provide for the “proper maintenance and support” of certain people. In most provinces those certain people include your spouse (it would be rather twisted to be able to effect something akin to a divorce from beyond the grave and have no means to dispute it), minor children, and adults who are dependents, such as for reasons of disability. This means these people, or someone on their behalf, can apply to the court to change your will.
In British Columbia (and Nova Scotia and Newfoundland and Labrador) the law goes further to say you have moral obligations to any children, including adults. This can often be fair – for instance, are you disinheriting a child for a bigoted reason or are you ignoring substantial contributions they made to your life in your later years? Nevertheless, you cannot deny it is a little absurd that a person may give away their stuff however they want five minutes before they die, and cannot five minutes after.
Aside from not being able to make your own choices, B.C.’s law creates substantial opportunity for mischief by children. Perhaps there has been a relationship breakdown or you have different views about the proper maintenance and support needed for your child and their siblings. Alternatively, you are deeply concerned about their spending habits or them snorting their inheritance. A huge issue is when one parent passes away and the other parent remarries – how are you to take care of your children and your new spouse if you pass away first? In these cases, your personal feelings and values may not be respected and your will may be changed.
A recent case (Grewal v. Litt, 2019 BCSC 1154) involved a family of four daughters and two sons. The parents’ wills gave cash gifts of $150,000.00 to each daughter and divided the remainder between the sons. That remainder equaled 93.4% of the $9 million estate. The daughters claimed this resulted from prejudicial Sikh traditions.
The court looked at these considerations from Dunsdon v. Dunsdon, 2012 BCSC 1274:
- the relationship between the will-maker and claimant, including abandonment, neglect and estrangement;
- the size of the estate;
- contributions by the claimant to the estate;
- the reasonably held expectations of the claimant (such as promises made during the will-maker’s lifetime);
- the standards of living of the will-maker and claimant;
- any gifts or benefits made by the will-maker outside the will;
- the will-maker’s reasons for disinheriting;
- the financial needs and other personal circumstances, including disability, of the claimant;
- any misconduct or poor character of the claimant, and;
- the positions of any competing claimants and other beneficiaries.
As you can see, there are many considerations and the case law says none trump the others. Some of these are objective factors that can be easily determined (the children’s standards of living) and factors that cannot be easily determined (what was going on in the minds of the parents?). This would be an easy process if there was a magic number you could say was “fair.
The court determined some prejudicial attitudes affected the distribution of the estate but there some reasonable factors that did not require perfect equality. The wills were changed to give each daughter 15% of the estate and each son 20% of the estate.
The enormous financial and personal costs of going through this litigation (which took three-and-a-half years and untold hundreds of thousands of dollars) are, in some respect, insurance against your children fighting over your estate (be it with each other or a new spouse, which brings its own unique and substantial legal problems). However, the only reliable way to prevent your will from being varied is to put your property into a trust structure. For persons over 65, your property can be rolled into an alter-ego trust or joint partner trust on a tax deferred basis and the trust can decide how to distribute the things you own. There are some significant up-front costs, but if you have an estate worth $3M or more, it can be a good solution for you.
There are, however, mid-range options. For instance, you can create a bare trust that protects your house. Many people put one of their children on title to their home but, without proper trust documentation, it is presumed they are holding that property on behalf of your estate, and then there are also risks of their creditors attaching debts to your home, capital gains being payable that wouldn’t have needed to be paid otherwise, and other problems such as if that child suffers an accident or does not want you to sell your house or refinance it (such as registering a CHIP mortgage). A bare trust declaration that clearly sets out the terms of ownership will go a long way to solve these problems.
Developing evidence of your intentions, both within the will and in supplementary documents only available to your executor, such as a letter or sworn affidavit, is another way to assist with your estate planning. However, as time goes by, the quality of that evidence diminishes – it becomes easier to say the evidence didn’t represent your current wishes and expectations or to point to more recent statements that contradicted them.
For the time being, this is the law in British Columbia but there is possible change on the horizon. A recent court case in Nova Scotia (Lawen Estate v. Nova Scotia (Attorney General), 2019 NSSC 162) decided that expanding moral obligations to non-dependent adult children violated a person’s right to life, liberty and security of the person under the Charter of Rights and Freedoms. The government of Nova Scotia could not provide a pressing and substantial reason that non-dependent adult children needed to receive proper maintenance and support.
Let’s not overstate this – a lower court in another province has said a law very similar to British Columbia’s violated the Charter and that decision has not been confirmed by a court of appeal. It isn’t enough to assume your collection of gold doubloons or Star Wars collectibles are safe because we have no idea how this issue will resolve itself in the courts.
Until then, developing an estate plan proportional to the size of the estate you may leave behind is important, if you either believe your wishes should be respected or if you fear your inheritance may create too much trouble. Qualified advisors that can look at your entire life and build that plan alongside you are an ounce of prevention that people typically appreciate and consider worthwhile.