League and Williams Lawyers

Category: Estate Disputes

  • Stepchildren Challenging a Will: Estoppel if Your Biological Parent Gifts Their Estate to Your Stepparent

    Stepchildren Challenging a Will: Estoppel if Your Biological Parent Gifts Their Estate to Your Stepparent

    In BC, courts can rule a will unfair and have it revised – or varied – if it does not make ‘adequate provision for the proper maintenance and support’ of the will-maker’s spouse or children. The Courts have the authority to prevent the disinheritance of spouses and children of will writers without sufficient cause. But, what about stepchildren? According to the Wills, Estates and Succession Act (WESA), a child is ‘a natural birth child or a legally adopted child’. Unless the stepparent has adopted a stepchild, WESA does not recognize them as a child.

    It’s clear that a stepchild cannot apply to vary their stepparent’s will under WESA. However, there are other ways that stepchildren can challenge a will. These scenarios can arise if:

    Estoppel for Your Biological Parent Gifting Their Estate to Your Stepparent

    If a stepparent unfairly disinherits them, stepchildren lack the legal standing to directly request a variation of the will

    Estoppel is a legal argument used to prevent a party from breaking a promise to benefit themselves. In the context of stepchildren challenging a will, estoppel can stop a stepparent from receiving more of an estate than their spouse intended. A parent might agree to gift the entirety of their estate to a spouse because the spouse promised to include their stepchild in their own will. If the spouse later changes their will to contradict their promise, the party impacted by the broken promise may be able to make an estoppel claim against the stepparent’s estate.

    In order to have a successful claim for proprietary estoppel, the following must be present:

    • A promise is made,
    • That promise is reasonably relied on,
    • That promise is unfairly broken; and,
    • This causes detriment.

    An Example of Proprietary Estoppel

    Let’s examine a scenario that illustrates how a proprietary estoppel claim may arise. Chris is a man who has a daughter named Deb. He marries Jane, who becomes Deb’s stepmother. Chris plans to leave his estate to Jane if she outlives him, and then wants the property to pass to Deb once Jane and Chris have passed away. Chris gifts the whole estate to Jane because she has promised to include Deb in her own will. This should ensure that Deb will inherit indirectly from Chris’s estate. Deb trusts this pledge and relies on it reasonably. She chooses not to dispute the gift, because she doesn’t expect to be disinherited. Following Chris’s death, Jane breaks her promise, changing her will to pass the entire estate to her own child. Deb can no longer dispute the gift from her father’s estate, since 180 days have elapsed since his passing.

    However, Deb may have a valid claim to receive the assets that were passed from Chris’s estate to Jane. If she can demonstrate the presence of the components of a proprietary estoppel claim in her circumstances, the Courts may vary Chris’s will.

    Children and adults who have relied on a promise from their stepparent concerning their natural parent’s estate and suffered resulting loss should speak to an experienced estate lawyer as soon as possible. An experienced estate lawyer can support you in making a claim to vary a will.

    Have a question about estate disputes or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Solicitor’s Negligence: Suing the Will-Drafting Lawyer

    Solicitor’s Negligence: Suing the Will-Drafting Lawyer

    Sometimes, due to the drafting lawyer’s negligence, a will may not reflect the testator’s requests, unbeknownst to them. Perhaps the lawyer failed to carefully review the directions given to them by the testator, or improperly applied the law, making an error which causes the will to be invalid. In either case, the beneficiaries of the will often discover these mistakes themselves and must find a remedy. Usually, these types of errors cause the beneficiaries of the will to sufferEven though the beneficiaries are not directly clients of the will-drafting lawyer, do they have a valid legal claim? The answer is commonly yes; beneficiaries can sue solicitors for negligence, depending on the facts of the case.

    A Lawyer’s Standard of Care

    The Law Society of BC regulates the legal profession to protect the general public of BC

    As described in the case of the Central Trust Co. v. Rafuse (1986), “a solicitor is required to bring reasonable care, skill and knowledge to the performance of the professional service which he has undertaken.” When negligence claims arise, the question that the courts must ask is whether a reasonably competent lawyer in the same situation would have made the same mistake or not. It is not a question of the drafting lawyer being perfect in their conduct, rather just that they were acting reasonably.

    The Law Society of British Columbia enforces a high standard of care for all BC lawyers handling client cases. They provide a checklist outlining tasks that will-drafting lawyers must adhere to. Some of the common errors made by will-drafting lawyers which can result in a negligence lawsuit are:

    • Not writing detailed notes on the client,
    • Not using proper witnesses for the will,
    • Not interviewing the client thoroughly enough,
    • Not suspecting undue influence,
    • Missing limitation dates on taking certain actions, or
    • Forgetting to include a certain provision that the client requested.

    Any one of these mistakes could alter the main principles or function of a will. When mistakes occur, beneficiaries can face significant financial loss.

    Beneficiaries Suing the Lawyer

    Until recently, the courts took the position that lawyers only owed a standard of care to their clients (in this case, the testator). Lawyers did not owe a standard of care to the beneficiaries of the will. Most of the time, the client of a negligent lawyer has no recourse as they have passed away before the negligence was discovered. This made the standard impractical. Now, a beneficiary is able to take legal action against the will-drafting lawyer – solicitors owe a duty of care to the third parties affected, including beneficiaries of a will.

    The case of Whittingham v. Crease & Company (1978) examines a scenario where a will-drafting lawyer is held accountable for their negligence. In this case, the solicitor did not follow the proper procedures for witnessing a will in British Columbia. The witnesses were unsuitable as they had an interest in the will. One of the witnesses was married to a beneficiary. The will was ruled invalid due to this error and the testator died intestate (without a valid will).

    Due to intestate succession laws, the plaintiff (a beneficiary) received less of the estate than he would have if the will had been valid. Believing he had suffered a loss because of the lawyer’s incompetence, the beneficiary sued the lawyer for negligence.

    The Court’s Decision

    The solicitor should have understood their responsibility to provide accurate information, because the client sought them out for professional advice. The courts ruled that the solicitor in this case committed the following acts of negligence:

    1. Failing to take care to ensure that in the matter of the witnessing of the said will the provisions of s. 12(1) of the Wills Act were not contravened;
    2. Failing to take any reasonable steps at all to remedy the said failure;
    3. Requesting the wife of the plaintiff to act as a witness to the execution of the said will;
    4. Misstating to the plaintiff that it was safe for his wife to act as a witness to the execution of the said will.

    Due to the acts of negligence, the court ordered the lawyer to compensate for the damages suffered by the beneficiary. Though this is an older case, it demonstrates how a clear act of incompetence by a will-drafting lawyer will hold the lawyer accountable if a beneficiary suffers as a result.

    Contact an experienced estate lawyer today if a solicitor’s mistake has wronged you as a beneficiary. We can support you in holding the will-drafting lawyer accountable for their negligent acts.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • An Executor’s Job: What an Executor of a Will Should Expect

    An Executor’s Job: What an Executor of a Will Should Expect

    Before naming someone as executor in a will, the will-writer usually asks the person if they’re comfortable with the responsibility. Often, without fully understanding the legal duties and obligations associated with being an executor, the person accepts. However, executors often make the mistake of accepting executorship just to please the testator. The size and structure of an estate may task executors with a long and complicated estate administration process. Therefore, executors need to understand what they’re agreeing to and ensure they can handle all the expected tasks.

    Duties, Tasks and Responsibilities

    An executor’s duties cover all aspects of estate administration. They are responsible from the testator’s death until the distribution of all assets from the estate to its beneficiaries. Planning the testator’s funeral is often one of the first tasks an executor faces.

    Generally, the executor must have the original copy of the will – there are scenarios which may arise where the original copy is not required and a copy of the original is fine. The executor must present the will to the probate courts for validation and execution. This is only necessary if the will requires probate, which is most often the case.

    Next, the executor can begin to administer the estate, preparing it for distribution to the beneficiaries. The testator must repay any debts owed even after their death. The executor, using the estate’s funds, is responsible for paying these debts, including taxes, on behalf of the estate. Executors are responsible for ensuring that they have not left any of the testator’s debts unpaid. This can even include putting adverts in the newspaper to notify any potential debtors of the testator’s death.

    Passing of Accounts

    It’s crucial that the executor is careful to account for all transactions involved with the estate, tracking anything that goes into and out of the estate. When the estate is ready for distribution to the beneficiaries, the executor must detail all the transactions made on behalf of the estate in an account. The accuracy and detail of these records is crucial in the instance that a beneficiary of the estate raises a claim for passing of accounts. To help make this process easier for executors, it’s recommended to open an estate bank account to keep all the estate’s funds in one place.

    Even if not specified in the will, an executor can receive compensation for their work.

    After all the debts and assets of the estate have been accounted for, the executor can then distribute the estate assets according to the will.

    In most cases, there can be excess assets of minimal value left behind with no one named in the will to receive them. The executor is responsible for disposing of these assets themselves. Once the estate has no remaining assets, the executor has finished their job.

    Remember, this list of executor duties isn’t exhaustive – each estate administration process is unique and requires attention to various debts and assets. This list covers the most common and important duties that an executor will likely be responsible for.

    Risks of Personal Liability

    Anything that the testator did or failed to do while they were alive which resulted in damages will not make executors personally liable. An executor becomes personally liable only if they do something themselves that warrants liability. For example, if the executor fails to give adequate notice of the testator’s death to the debtors of the estate and then distributes the estate, they can become personally liable.

    In this case, the beneficiaries of the estate would not be held responsible for repaying such debts after they’ve received their portion of the estate, as they cannot be held liable for the executor’s negligent administration. The court could order the executor to repay these debts from their own pocket, which is why keeping an accurate and detailed account of the estate’s assets and debts is essential for executors. The executor can also become personally liable if they abuse their power and engage in fraudulent behaviour.

    Is It Worth It?

    Everyone knows that an executor bears numerous responsibilities and must devote a significant amount of time and energy to ensure the proper administration of an estate. Executors can feel pressured by time as they usually have one year from the testator’s death to finish the administration and distribute the assets to the beneficiaries – known as the executor’s year. While there’s no strict deadline, beneficiaries can start urging the executor with court orders to speed up the process if the administration extends beyond the executor’s year and causes undue delay.

    When deciding whether to accept executorship, understand that the law allows executors to receive compensation for their efforts through executor’s fees. The Trustee Act entitles an executor to a maximum of 5 percent of the gross aggregate value of the estate, unless the will specifies otherwise. In most cases, 5 percent is a high figure for the executor’s compensation, and fees are more commonly between 2 percent and 3 percent of the estate’s value.

    Other Details to Consider

    When contemplating accepting executorship, it is also important to consider the proximity with which you live to the location of the estate’s assets. It can be quite difficult to administer an estate when you are living in another province or country. An executor usually cannot complete their tasks during a week-long trip to the location of the assets. They will need to stay in the same city where the majority of the assets are for an extended period.

    Taking on the role of executor for a will can be a significant burden. However, if you do it correctly, you will receive rewards for your efforts. The will always names an executor for the estate. If you decline the position, the courts will assign someone else. However, this could lead to the appointment of an incapable executor, which could cause extensive and potentially expensive delays in the administration process.

    If you are an executor and are unsure how to begin the estate administration process, contact an experienced estate lawyer today. We can help guide you through the tasks of being an executor, and can help ensure that you are not held personally liable for any issues related to the administration of the estate.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Self-Representation in Estate Litigation: Is a Lawyer Required?

    Self-Representation in Estate Litigation: Is a Lawyer Required?

    People involved in small-scale estate litigation cases often question if they can represent themselves to save on legal costs. In short, yes, the law in BC allows people to self-represent. However, those who choose to do so may find themselves at a significant disadvantage.

    What to Expect

    The recent estate case of Sull v. Pengelly (2019) featured a self-represented litigant. The courts specified exactly the obligations that a self-represented litigant must adhere to:

    1. Familiarize themselves with the relevant legal practices and procedures that pertain to their case;
    2. Prepare their own case; and
    3. Be respectful of the court process and the officials within it.

    Essentially, the court holds a self-representing litigant to the same standards as a lawyer, and they must prepare well to avoid undue delays in court proceedings. Further, the courts do not have any special treatment for self-represented litigants. In the case, the Court stated, “the mere fact a party is self-represented is not a basis on which to depart broadly from the rules that govern litigation, for the administration of justice is not well served by an imbalance in the latitude afforded litigants.” In sum, the court treats a self-represented litigant as a trained lawyer, expecting them to act and prepare for the court hearing as a lawyer would, which puts them at a disadvantage due to their legal inexperience and lack of formal legal training.

    When is Self-Representation a Good Idea?

    According to the Law Times, 98% of self-represented litigants lose their case.

    Being a self-represented litigant almost always poses a significant disadvantage when the case is against someone who has formal legal representation. Self-represented litigants lack the experience to present the necessary information to the Court, struggle to find the resources for researching relevant legal issues, and are unfamiliar with the legal procedures involved in an estate dispute claim.

    While self-representation may save money in legal fees, it comes at the cost a significant amount of time to research the relevant legal issues and to prepare the case. Further, self-represented litigants have a heightened chance of losing their case with an estimated 98% of self-represented litigants failing to win their case. People should approach representing themselves in an estate dispute with a high amount of caution as the lack of legal training and experience can mean failing to get the desired result from the claim.

    Other Options Available

    In some cases, lawyers will offer to work on your case on a contingency basis. The lawyer receives payment only if they win the case, sometimes earning a percentage of the winnings. If they lose the case, they charge the client only for their out-of-pocket expenses, known as disbursements, incurred while pursuing the case. If cost is the main determinant to choosing to self-represent, a contingency fee agreement with a lawyer can be a great option to consider. It’s important to note however, that contingency fees are typically higher than regular lawyer fees because of the risk of loss on the part of the lawyer.

    Other Limited Legal Services

    There are also other approaches that one can take when it comes to estate dispute litigation that fall somewhere between complete self-representation and full lawyer representation. A limited scope retainer or unbundled legal services is one option. In a limited scope retainer, the litigant engages a lawyer for case preparation assistance, receiving advice on the necessary documents and the evidence to present before the courts. The litigant then represents themselves before the courts with the information imparted to them by a lawyer. This way, self-represented litigants can be sure that they are following proper legal procedures while they have the autonomy to present the case before the courts as they wish.

    In the end, even though complete self-representation can save legal expenses-if they win the case– it ultimately puts litigants at a considerable disadvantage, particularly when their opponents have retained counsel. Lawyers will always strive to represent their clients to the best of their abilities, ensuring the best possible outcome. If a person is considering self-representing, pursuing a limited scope retainer or full lawyer representation, consultation an experienced estate lawyer can be helpful in making the right choice.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Stepchildren Challenging a Will: Assets in Joint Tenancy Held in Resulting Trust

    Stepchildren Challenging a Will: Assets in Joint Tenancy Held in Resulting Trust

    In BC, courts can rule a will unfair and have it revised – or varied – if it doesn’t make ‘adequate provision for the proper maintenance and support’ of the will-maker’s spouse or children. This ensures that spouses and children aren’t disinherited without sufficient cause. But, what about stepchildren? According to the Wills, Estates and Succession Act (WESA), a child is a natural birth child or an adopted child. A stepchild is not a child under WESA, unless they have been adopted by their stepparent.

    It’s clear that stepchildren can’t vary a stepparent’s will under WESA. However, there are ways that stepchildren can challenge a will. These scenarios can arise if:

    Assets in Joint Tenancy Held in Resulting Trust

    Stepchildren cannot directly vary a stepparent’s will if they’re unfairly disinherited.

    Houses are usually the largest asset in a person’s estate. Homeowners want to be sure that their homes are distributed as intended when they pass away. Joint tenancy is typically used by couples to ensure that the surviving spouse will receive the home, without having to go through probate (the process that ensures a will is real). Joint tenancy agreements can also help to maintain continuity in the life of the surviving spouse following the death of their partner.

    Agreements with rights of survivorship can allow the surviving partner full rights to the property and accounts belonging to their partner – as specified in their agreement- following their death. In joint tenancy agreements, disputes can ensue over whether the property contributed by one partner to the joint tenancy was a gift, or if the property was to be held in a resulting trust following their death. In BC, there is a presumption of resulting trust – the presumption that a transfer of property is not a gift.

    If a property is held in resulting trust by someone, it does not necessarily mean that they own the property. Rather, that they hold the legal title of the property for the benefit of the owner. On the other hand, if the property was given as a gift, they do own the property. Unfortunately, surviving spouses sometimes try to “steal” their spouse’s estate by claiming that it was given as a gift rather than to be held in resulting trust.

    Consider This Example

    Let’s look at how this might apply to a stepchild who has been unfairly disinherited. As an example a man, Alex, has a son, Ben. Alex is married to a woman, Emily, who is Ben’s stepmother. Before Alex dies, he transfers joint tenancy to Emily, intending for her to hold his estate in resulting trust so he can provide for her if she survives him. Upon Emily’s and Alex’s death, Alex wants the remainder of his estate to be given to Ben. After Alex dies, Emily decides to remarry and give Alex’s estate to her new husband. As a result, Ben does not receive any part of his biological father’s estate.

    Ben decides to bring this case to court because he believes he was unfairly disinherited. According to the presumption of resulting trust, Emily’s trustee must be able to prove that Alex intended to give the estate as a gift to Emily, not to be held in resulting trust. If Emily’s trustee cannot do this, Ben should receive the estate as intended by his father.

    When there is a transfer of ownership using a joint tenancy agreement, stepchildren should still expect to receive their inheritance from their biological parents. If you are a stepchild who was disinherited by a stepparent through a joint tenancy held in resulting trust, you could be eligible to challenge the will. Contact an experienced estate lawyer to ensure that you receive your fair share of the estate.

    Have a question about estate disputes or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Inheritance Scams: Red Flags to Prevent Fraud

    Inheritance Scams: Red Flags to Prevent Fraud

    Inheritance scams commonly involve an individual claiming to be the executor for the estate of a ‘long lost relative’ who the victim hasn’t met. They tell the victim that they are entitled to a large inheritance from the estate. However, in order to receive it, the victim must give personal banking details to arrange the transfer. They commonly request a moderate sum of money in order to facilitate access to the funds from the bank. Sometimes, it’s obvious when someone is a target of a scam. However, many people are vulnerable to online scams and fall victim frequently.

    Receiving an Inheritance in British Columbia

    In British Columbia, a person does not have to pay or give anything to receive an inheritance. An inheritance is a gift, meaning its recipient does not have to pay anything. Further, there are no gift taxes or inheritance taxes in British Columbia. Any taxes owed by the estate will be paid out before beneficiaries can receive their inheritance. If an ‘executor’ is asking beneficiaries for money, it is possible that they are trying to scam a victim. Beneficiaries do not pay any of the estate’s fees or taxes. This is the responsibility of the estate executor, using the estate’s funds. A legitimate executor might need your bank account number to transfer funds into or an address to ship assets to.

    Detecting Inheritance Scams

    While it might sound far-fetched that a distant relative has left someone a large inheritance, it is a possibility. When someone dies intestate (without a valid will) in British Columbia, their assets are distributed according to the intestacy laws. It is possible that a very distant relative is entitled to an estate by the chain of rightful heirs. The courts will track down heirs to give them their inheritance. It might seem unrealistic; however, it could (and does) happen. Because of this, you should not immediately ignore a letter or email indicating that you are a beneficiary of an estate.

    Common Red Flags of Inheritance Scams

    If you’ve received an inheritance scam email/letter, it’s best to simply ignore it and not respond.

    Usually, inheritance scammers are careful to craft their emails or letters to create the illusion that they are coming from credible law firms in your city. If you search for the firm’s name in the fraudulent letter, it will typically be a real place. Further, scammers sometimes have access to some personal information such as your name, address or family member names. This makes it look as if they are a legitimate organization.

    To detect an inheritance scam, the first spot to look is at the sender’s address. If it’s an email, you can check the address to see where the email came from and it will usually not be a standard email address. Most law firms will have a custom mailing address with the name of their firm. For example, our firm uses @leaguelaw.com as the domain name for all staff email addresses. Another indicator of fraud is that there will usually be spelling, grammatical, or even basic English language errors in the letter. In general, law firms are very particular with their language and will not have any of these errors in their writing.

    As provided by the Australian Competition & Consumer Commission’s Scamwatch, an example of a standard inheritance scam letter – see the inheritance scam letter here.

    Fraudulent Wills

    Another type of inheritance scam is carried out using fraudulent documents. With the ability of the Wills, Estates and Succession Act to cure imperfect documents into valid wills, it can be quite difficult to detect these types of scams. Usually, a fraudulent will is handwritten and lacks witness signatures. The difficulty arises because the courts can cure an invalid will that does not meet the usual requirements into a valid will. The only way to know the will is invalid is if a person is certain that the named testator was not the one who wrote the document. It can be difficult and incredibly time-consuming to prove whether or not a document was written by a particular person.

    To prevent being involved in inheritance scams, understand that you will never have to pay out-of-pocket for estate administration or estate inheritances. The estate is responsible for paying any fees or taxes that arise from the estate.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Revoking or Changing a POA (Power of Attorney) Agreement

    Revoking or Changing a POA (Power of Attorney) Agreement

    As part of proactive estate planning, it is often a good idea to appoint a power of attorney (POA). A POA is authorized to make financial and legal decisions on your behalf. The primary purpose is to have someone ready to act on your behalf if you are unable to. In an enduring POA agreement, the appointed person has authority, once you become incapable, to make any financial/legal decisions you could normally make yourself. It’s a good idea to appoint a POA before it becomes too late to do so. After a person becomes incapable, someone will have to apply to become their committee to make decisions on their behalf.

    The appointed attorney must act in your best interests with all the decisions they make on your behalf. There is not necessarily anyone watching over the POA, ensuring that they’re making the best decisions for you. Sometimes, the POA isn’t making the “right” decisions and you may wish to change or revoke the POA agreement.

    Mental Capacity Required

    A POA can resign from their duties at any time.

    In order to change or revoke a POA agreement, you must be mentally capable of understanding the nature of the decision. The only person who is able to revoke the agreement is the person who is the subject of the agreement.

    Some people wonder how a person could be mentally capable of modifying the agreement, but not capable of managing their own financial affairs. Under the Power of Attorney Act, an adult is incapable of managing their affairs if they cannot understand all of the following:

    • The property the adult has and its approximate value;
    • The obligations the adult owes to his or her dependents;
    • That the adult’s attorney will be able to do on the adult’s behalf anything in respect of the adult’s financial affairs that the adult could do if capable, except make a will, subject to the conditions and restrictions set out in the enduring power of attorney;
    • That, unless the attorney manages the adult’s business and property prudently, their value may decline;
    • That the attorney might misuse the attorney’s authority;
    • That the adult may, if capable, revoke the enduring power of attorney;
    • Any other prescribed matter.

    It’s possible to prove someone is capable of understanding a POA revocation without being able to manage their own affairs.

    Modifying the POA Agreement

    You must draft an amendment to make a change to a POA agreement. An amendment is a separate document that clarifies what you wish to be changed from the original agreement. You must sign and witness the amendment to ensure validity. The changes are immediately effective and the appointed POA must adhere to the new changes by law. If they don’t want to or feel that they are not able to, they must resign immediately. The appointed attorney doesn’t have any say in the changes and has no authority to make changes to the agreement.

    Revoking a POA

    In some cases, the original POA agreement is outdated and should be revoked. Usually, a new POA is appointed thereafter. To revoke a POA agreement, you must give the appointee a signed notice. A notice of revocation can be a very simple document stating you are revoking the POA. It should include the date, the attorney’s name and your name with a signature.

    Further, it’s important to know people can have two POAs at once. If you appoint a new POA, there is no presumption of revocation of the original POA. If you do not want two attorneys, you should remember to revoke the original agreement.

    Anyone who is capable of understanding the consequences of their choice is able to modify or revoke a POA agreement. The person doesn’t need to provide any reasoning for their decision to revoke or modify. The appointed attorney won’t be able to decline a proposed change or revocation and must adhere to the ruling. The only other option available to the attorney is to resign.

    If you want to revoke or modify your power of attorney agreement, contact an experienced estate lawyer today.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Varying a Trust: Courts Approving Trust Fund Modifications

    Varying a Trust: Courts Approving Trust Fund Modifications

    In the estate planning process, people commonly use trust accounts to give gifts. They can also create purpose trust accounts, which designate funds for a specific purpose. Some common trust accounts that are made in wills include:

    • Trust accounts made for minors to give them parts of the account at certain intervals or milestones of their life;
    • Purpose trust accounts, where the contents are to be spent for a specific purpose (such as a pet trust account);
    • Trust accounts made for children in a past relationship, where the funds can be used by the testator’s spouse until their death; or,
    • Trust accounts for disabled beneficiaries.

    Purpose Trusts and Estate Planning

    Trusts can have lengthy terms or be in effect for many years before the beneficiary recieves the entire gift. Sometimes the terms of the trust become outdated, preventing the beneficiary from using the trust to its fullest potential. The courts are sometimes able to vary the terms of the trust to create more realistic and useful terms.

    In essence, the terms and overall purpose of a trust can be anything that the testator wishes. This sometimes causes unrealistic conditions in trusts. For example, a person writes in their will, ”$100,000 is to be put in a trust account for my daughter. These funds are to be used to support her future schooling. My daughter will only be entitled to withdraw from this trust account for the purpose of paying overdue library books.” While this trust has a beneficial purpose, it is not realistic that the daughter will require $100,000 to pay overdue books. In this case, the courts could vary the trust for the daughter, adjusting the terms to better reflect the overall intention of the trust and enable the daughter to use the trust to support her education more effectively.

    Trust and Settlement Variation Act

    The Public Guardian and Trustee of BC can file to have a trust modified on a person’s behalf.

    In BC, the Trust and Settlement Variation Act (TSVA) specifies the conditions in which the courts are able to vary a trust. Any interested party is able to come forward before the courts to request a variation. The courts have the discretion to either approve the request and vary the trust, to revoke the trust or enlarge the powers of the trustee. Variations occur most commonly with trusts that the beneficiary cannot reasonably utilize, although the courts have no specific criteria for approving a request.

    Who Can Request a Trust Variation

    The TSVA is intended to benefit people who are incapable of defending their legal and personal interests. It specifies the following people are able to have a trust variation request filed on their behalf:

    1. Any person having, directly or indirectly, an interest, under the trusts who by reason of infancy or other incapacity is incapable of assenting,
    2. Any person, whether ascertained or not, who may become entitled, directly or indirectly, to an interest under the trusts as being at a future date or on the happening of a future event a person of a specified description or a member of a specified class of persons,
    3. Any person unborn, or
    4. Any person in respect of an interest of the person that may arise by reason of a discretionary power given to anyone on the failure or determination of an existing interest that has not failed or determined.

    The TSVA allows people to act on behalf of unborn babies, minors and incapacitated people. The courts allow any person to act on any of the above person’s behalf.

    Varying an Unreasonable Trust Account

    Let’s examine the example above. Assuming the daughter was a minor at the time, her guardian might recognize the bizarreness of the trust terms and request it be varied. One might propose to remove the restriction on spending the funds on overdue books. This way, the trust still honours its intentions (supporting her schooling) and becomes reasonably useful to the beneficiary. The guardian could request a provision that entitles the daughter to the remaining funds after she completes her education.

    In the end, the TSVA is designed to ensure trusts can fully benefit their respective beneficiaries. If you believe a loved one should have their trust inheritance modified to their benefit, contact an experienced estate lawyer today.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • When are Beneficiaries Entitled to Receive Interest? The Rule of Convenience

    When are Beneficiaries Entitled to Receive Interest? The Rule of Convenience

    Executors and beneficiaries are often aware of the executor’s year – a common law principle stating that an executor has a year from the testator’s death to finish administering the estate and distribute its assets. During the executor’s year, beneficiaries are usually not able to raise motions to speed up the process. In some cases, the estate administration takes longer than expected and beneficiaries inherit their share of the estate years after the testator’s death. Beneficiaries can sometimes use the Rule of Convenience to collect interest on their inheritance when delays occur.

    The Rule of Convenience

    The rule of convenience states that an inheritance which takes longer than the executor’s year to distribute could be subject to simple interest of 5% per year. However, if the will-writer acknowledges that their estate administration will likely take an extended period of time, they could include a provision stating that inheritances are not to be subject to interest if administration extends beyond the executor’s year. On the contrary, will-writers can specify that they wish to give interest to beneficiaries of their will in the event that the administration is lengthy.

    Interest Payments Because of a Will Challenge

    The executor’s year is not a legally binding principle and courts can allow motions to speed up the administration during the executor’s year when necessary.

    In the case of Rivard v. Morris (2018), the courts confirmed the use of the rule. A father left his two daughters with $530,000 each and the residue of the estate to his son (which was significantly larger than the $530,000). The daughters challenged the will, claiming that the son had unduly influenced the father during the will-writing process.

    After a lengthy dispute that lasted multiple years and ultimately failed, the daughters filed a claim for interest under the rule of convenience.  They wanted interest to be paid from the residue of the estate (the son’s share). The Court of Appeal allowed the daughters’ hearing and found them entitled to interest on their inheritance, even though the daughters’ claim caused the will challenge and related delays. The reasoning was that the challenge was non-frivolous and it would be unfair to not grant the interest payments. The judge emphasized the importance of certainty and predictability in the decision.

    What This Means for Executors

    For executors of wills, it’s important to be aware of the rule of convenience as it could have a financial impact on the estate. We encourage all executors to be proactive in their estate administration. In the majority of cases, it will not be difficult to finish the estate administration within the executor’s year. In some cases, like the one above, the executor is not at fault for the delay, but the rule of convenience still requires them to pay interest from the estate. If you’re an executor expecting an estate dispute, you should anticipate potential interest payments and plan accordingly.

    What This Means for Beneficiaries

    For beneficiaries of an estate that is taking longer than the executor’s year to administer, you should understand your rights as a beneficiary. If the executor’s year has passed, you could be eligible to start a claim citing the rule of convenience. Beneficiaries can initiate motions to expedite the estate administration process if there are undue delays. If executors prove to be incompetent and unable to administer the estate, the Courts can remove them. Just because you’re a beneficiary with minimal authority in the estate administration doesn’t mean you don’t have legal remedies available if you’ve been wronged. For more on this, read our article on forcing an executor to act.

    If you’re a beneficiary of a will that has been in the administration process beyond the executor’s year, contact an experienced estate lawyer today. We can help you to speed up the administration process and have you receive inheritance interests when necessary.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Constructive Trust: Using Trusts to Remedy Estate Plans

    Constructive Trust: Using Trusts to Remedy Estate Plans

    Trust accounts are a common and useful estate planning tool. Trusts are accounts where a third party holds an asset for the specific use of a beneficiary. Typically, the beneficiary is only able to withdraw funds (or other property) from the trust account at certain time intervals or for a specific purpose. Will-writers use trust accounts to control the distribution and use of their estate assets. People commonly use trusts to hold high-value assets like land. The trustee maintains the trust and its contents. The beneficiary gets the proceeds upon sale of the asset. A constructive trust, which forms differently than a standard trust in estate planning, is another type of trust.

    Constructive Trust

    Regardless of the intent of the settlor (the person creates the trust), the law can impose a constructive trust. Like any other trust, a trustee holds property for the benefit of another person. Essentially, when someone owes another a legal obligation concerning property, the courts usually create a constructive trust. The law requires them to hold the property in trust for this person.Most trusts used in estate planing are express trusts, trusts created by the will-writer intentionally and explicitly.

    Constructive trusts arise through application of the law in order to uphold equitable property interests. In such a trust, the rightful (title) owner keeps the title to the property, even though they have an obligation to share the benefits of the property with a beneficiary. A common example is when a parent disinherits their child. Usually, children are entitled to a portion of their parent’s estate under the Wills, Estates and Succession Act (WESA). The person who ultimately receives, for example, the parent’s home, might have a legal obligation to distribute benefit from the property to the child. In this instance, the court would impose a constructive trust, allowing the child to claim benefit from the property.

    Remedial Constructive Trust

    The courts can also impose a remedial constructive trust. This is similar to a constructive trust, and it provides a remedy to someone who has been wronged. Typically, the date of the wrongdoing is when a remedial constructive takes effect at law. Often times, it is only part of the full remedy the victim receives. Unjust enrichment often leads to the opening of a remedial constructive trust.

    Another common form of remedy for unjust enrichment is quantum meruit (monetary payments).

    The courts order a remedial trust, which is the main difference between a constructive trust and a remedial constructive trust. The law imposes a constructive trust, but the courts do not directly or specifically order its creation to remedy a situation. A constructive trust is created when a person is lawfully entitled to a property, ensuring they receive their rightful benefit from the property. On the other hand, if a person successfully contests an issue before the courts, the courts might open a remedial trust be opened as part of the compensation package.

    Unjust Enrichment and Remedy from the Courts

    In the case of Haigh v. Kent (2013), the claimant argued that the defendant had been unjustly enriched by his (the defendant’s) contributions to the resort he had lived at for over 30 years. After the court considered the test for unjust enrichment, the claimant proved a valid claim for equitable benefit from the property – the defendant had unjustly gained at the claimant’s detriment. Instead of awarding a lump sum of money, the courts determined it was more equitable to give the claimant a portion of the resort.

    Since joint ownership of the property would be unreasonable for the two, the courts opened a remedial constructive trust. The trust awards the claimant 25% of the resort if it sells. This way, the trust rewards the claimant for his services to the resort, but the defendant still retains ownership of the property.

    Establishing Unjust Enrichment

    For those who have fallen victim to unjust enrichment, remedial constructive trusts are often the solution the courts will provide. To quickly summarize, in order to have a successful unjust enrichment claim, you must prove that:

    • There was an enrichment or benefit received by the defendant;
    • The plaintiff suffered a loss related to the enrichment, and;
    • There was no juristic reason for the enrichment.

    After a successful unjust enrichment claim, the courts might order the creation of a remedial constructive trust as part of your remedy. If you feel you’ve been wronged and have a claim for a remedial constructive trust, contact an experienced estate lawyer today. We can help you to receive the assets that are rightfully yours whether that is through a remedial trust or not.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.