Saskatchewan Estate Litigation Update

An interesting recent estate litigation decision out of Saskatchewan is Leason v Malcolm, 2020 SKQB 102.

Leason reminds us that once a  bequest is vested, it may not be divested. In other words, if a beneficiary survives the testator, but the beneficiary then dies before actually receiving their share of the estate, the  beneficiary’s estate will still be entitled to receive the share.

Background

In Leason, the deceased was one Donald Aronetz who died on September 9, 2018. At issue was a gift that his Will made to Jennie Leason. Jennie Leason then died on December 24, 2018, some 15 weeks after Mr. Aronetz had died.

Facts in Leason

Under estate administration law, the bequest to Jennie Leason in Mr. Aronetz’s will would have taken effect (would have vested) on the date of his death, September 9, 2018, when Jennie was still alive. Her subsequent death would have made no difference to that circumstance, and her share of the estate would be payable to her estate.

The bequest in Mr. Aronetz’s will, however, was unusally worded. It read as follows in paragraph 2:

2. … I gift my estate in equal shares unto any SURVIVING siblings, who at the present time are named as follows: (a) Jennie Leson [sic] …, (b) Anne Malcolm …, (c) John Aronetz …, (d) Lillian Whitfield …, (e) Mike Aronetz …, (f) Nick Aronetz …. In the event either of these siblings predecease me or die before having benefited in whole or in part from this my estate, I direct any such undistributed share shall NOT be redirected unto any spouse or child of such a deceased person, rather such an undistributed share shall be equally redistributed amongst the remaining SURVIVING siblings. I have not mentioned any other siblings who have already predeceased me, as this is consistent with my wishes to gift only unto surviving siblings.

[emphasis added]

The respondent applied for letters probate in Mr. Aronetz’s estate in December 2018, while Jennie Leason was still alive, and the executor of Mr. Aronetz included Ms. Leason in the list of beneficiaries of Mr. Aronetz’s estate. The executor however received the grant of letters probate in Mr. Aronetz’s estate in January 2019, after Ms. Leason had died. The executor had not distributed any part of the estate to Jennie before Jennie died.

The issue before the Court was whether the estate of Jennie Leason was a beneficiary of the estate of Donald James Aronetz.

In light of the above provision in paragraph 2 of Mr. Aronetz’s will, the executor of Mr. Aronetz’s estate took the position that Ms. Leason is no longer a beneficiary of Mr. Aronetz’s estate.

The Decision of the Court

The Court interpreted clause 2 above as providing for:

  1. a gift to vest on Aronetz’s death; and
  2. if there was a subsequent death of a beneficiary, before distribution, the gift would be divested.

The Court then turned to consider whether this testamentary intention should be enforced?

The Court held that such intention was contrary to the established legal principle that once a bequest is vested, it cannot be divested. As such, the above provision of Mr. Aronetz’s Will was not enforceable. The Court concluded as follows:

[30]         I conclude, then, that in law a testamentary direction that purports to reverse a gift that earlier had become effective is not enforceable. Put another way, a bequest once vested may not be divested.

[31]        The bequest to Jennie Leason, in Mr. Aronetz’s estate, was effective at the moment of Mr. Aronetz’s death. The gift vested – was de jure receivable – on his death. Ms. Leason’s subsequent death, before she actually received any part of the estate, does not affect the full vesting of her interest in the estate at the moment of Mr. Aronetz’s death. Mr. Aronetz’s direction that in such a circumstance Ms. Leason’s share should go to the other named beneficiaries, rather than to her estate, is not enforceable. 

As such, the Court held that the estate of Jennie Leason was indeed a beneficiary of the estate of Donald James Aronetz, and entitled to receive the gift as if the gift had in fact been distributed to Jennie during her lifetime.

Legal costs:

As an interesting aside,  the Court awarded full indemnity (dollar for dollar) legal  costs to both sides. Their full legal costs were thus payable out of the estate of Donald  Aronetz.

The Court noted the entire court application had been necessitated by the provisions of Mr. Aronetz’s will, and by no fault of the executor, nor the fault of the heirs of Jennie Leason. The Court held that it had been reasonable for the applicants to bring the application, and it was reasonable for the respondent to oppose it.

As such, Leason also serves as a reminder to ensure that a Will is carefully drafted. This will better avoid the risk that a court proceeding may be required to give effect to your Will (as such court application may dilute your estate through awards of legal costs).

 

James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or j.steele@rslaw.com. The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations. 

Kusch and Clavelle Contribute to CBA BarNotes

The most recent issue of the Canadian Bar Associations’s BarNotes contains articles by two RS lawyers.

Travis Kusch’s article “Closely Held Corporations: Avoiding the Messy Break-up”  offers practical advice to families who enter into business together.

Curtis Clavelle contributed “When Can an Employee Sue an Employer?”.  In the article he gives guidance on the scope and effect of c. 43 of The Workers’ Compensation Act.

BarNotes is published three times a year and is provided to members of CBA Saskatchewan.

 

 

Steele and Parsonson Speak on Wills and Estates

On March 5, James Steele and Ben Parsonson volunteered their time to address wills and estates issues with the residents of the Palisades Retirement Residence.

Together they spoke on the importance of having a Will, or Power of Attorney, or health care directive as well as some potential issues which may cause a Will to be challenged.

How to Avoid Challenges to your Will

How to Avoid Challenges to your Will

by James Steele

Robertson Stromberg LLP, Saskatoon

 

Having a Will is meant to provide comfort, and to make sure your family gets their inheritance when you pass on. Yet all too often Wills are challenged in court. This can cause a lot of stress and family turmoil.  However, there are things you can do to try to avoid your own Will being challenged.

A typical case?

I practise in the area of estate litigation. Let’s take a hypothetical but common scenario, similar to ones I have seen.

“Bill” is 85 years old and lives in Saskatoon. He is a widower and has a son and a daughter. His son lives in Ontario, and does not visit Bill often. Bill’s daughter lives in Saskatoon with her family.

In 2006, after his wife died, Bill made a new Will. It gave everything equally to his two children – a pretty standard Will. The children were aware of the 2010 Will.

In later years, Bill becomes more frail and more dependent. Bill gives up his driver’s license. His goes out of his home less and less. Bill relies on his daughter for medical needs, and errands and visits. Bill feels grateful. The son doesn’t see much of this, as he is living out of province. All the while, the son calls Bill on holidays, and notices Bill is more and more forgetful, although Bill is his cheerful self.

During this time, Bill make a new Will. He uses a homemade Will kit. He asks his daughter to buy a Will kit for him, and Bill fills it out. A friend of the daughter acts as one witness, and the daughter is the other witness (a bad idea, as shown below)

Bill leaves 80% to his daughter, and 20% to his son. He gives the daughter extra, because Bill is grateful to his daughter for the help, but still wants something to go to his son and the son’s family. Bill names the daughter as executor.  Bill never tells his son about the new Will, not wishing to risk any turmoil in the family.

A challenge begins:

Bill passes away. The son learns of the new Will. The son has suspicions, and feels this unequal treatment couldn’t have been intended by dad.

The daughter tries to explain, but the son cannot help having concerns about whether his dad was taken advantage of. After all, Bill was forgetful on the phone. Thus, maybe Bill lacked mental capacity when he made the new Will? Or maybe pressure was put on Bill? After all, Bill was living alone, and maybe the daughter used her visits to pressure him?

The son decides to hire a lawyer to challenge the new Will. The daughter hires a lawyer to defend the new Will. Both sides go to court and eventually each spend tens of thousands of dollars in legal fees. Eventually they agree to a compromise, but it takes years, emotion and money.

What can we learn from the above scenario?

First, having a lawyer properly draft your Will, can be a good investment. A lawyer should know what questions to ask, and will keep good notes. The lawyer will meet with a Will-maker alone, and make sure the Will-maker is of a sound mind and is not acting under pressure.  Then, if a challenge is later brought, the lawyer’s notes can be very helpful in clearing up any confusion.

The notes of a lawyer are more independent than evidence of the daughter. Right or wrong, any evidence of a beneficiary may unfortunately be seen as potentially conflicted, as she has a personal interest in upholding the Will. The other witness – the daughter’s friend is also not totally independent, as she is a friend of the daughter.

The lawyer will also make sure the Will is executed properly (i.e. the right wording is used to describe assets, and the proper signatures are applied). Here, for example, the daughter should not have acted as a witness. A person who receives a gift under a Will, should not be a witness, as it can lead to that person’s gift being void.

Finally, a Will-maker should tell his or her children about all new Wills, and not leave surprises to be discovered only after the Will-maker has passed on. In this case, if Bill had told his son what his new Will said, the son could have asked Bill questions to clear the son’s concerns. When a Will-maker has died without explaining a new Will to a disappointed child, too often the child assumes the worst.

 Summary

People choose to challenge a Will for several reasons. The most common grounds are concerns of lack of mental capacity, or concerns of improper pressure.

In my experience, many people wish to challenge a Will because they simply do not believe the Will-maker (who is often their parent) could have intended something which may seem unfair.

However, situations of suspicious family members can often be avoided. With the right planning and communication up front, you can better ensure that your wishes are smoothly followed when it counts the most.

 

Contacting a Lawyer on this Subject

James Steele practises in Saskatoon in the area of estate litigation, including will challenges, issues surrounding executors, joint account disputes, etc.

For more information on this subject or specific legal advice, contact James Steele at 1 306 933 1338.

The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations.

 

 

James Steele Contributes Article to Saskatoon Express

The Saskatoon Express newspaper has published an article by James Steele that offers practical advice on preparing wills.  He advises that with the right planning and communication up front, court battles over wills can be avoided.

Read James’s article in the January 28 issue of Saskatoon Express, page 12.

Area of Expertise Estate Litigation