Interpretation of “Per Stirpes” in the Context of a Named Beneficiary

July 11, 2012 Hull & Hull LLP Estate & Trust Tags: 0 Comments

It is well established that the term "per stirpes" is properly used when referring to a class, as opposed to a named beneficiary. In its recent decision in Dice v. Dice Estate, 2012 ONCA 468, the Ontario Court Appeal was asked to consider the meaning of this term where it was used in the context of a named beneficiary, to indicate that his share of the residue was given to him "per stirpes".

In the case, the Will of the Deceased provided for a life interest in the Estate to the Deceased’s wife, and on her death directed that the residue of the Estate be divided equally "between my son [Eddie] and my daughter [Marlene], per stirpes." Eddie predeceased his mother (the Deceased’s wife), leaving behind adult children and a wife.  Following his mother’s death, an issue arose regarding who was entitled to Eddie’s one-half share of the Estate. There were three competing interpretations of the residuary provision of the Deceased’s Will: 

  1. Eddie’s three children claimed that they were entitled to Eddie’s share, since it flowed through him "per stirpes";
     
  2. Eddie’s wife claimed to be entitled to Eddie’s share, arguing that his interest in the Estate vested at the time of the Deceased’s death and, therefore, the phrase “per stirpes” had no effect since the distribution of Eddie’s share was governed by his own Will, which left everything to her; and
     
  3. Eddie’s sister, Marlene, argued that she was entitled to the entire residue of the Estate also because the phrase "per stirpes" had no meaning in the context of the Deceased’s Will. However, she argued that Eddie’s interest did not vest at the time of Deceased’s death – rather, vesting occurred on the death of their mother and, as Eddie was not alive at that time, the entire residue vested in her.

At the trial level, the Court acknowledged that in Lau v. Mak (2004), 10 E.T.R. (3d) 152 (Ont. S.C.) (“Lau”), a case that involved a will with a similarly worded residue clause, Cullity J. determined that no meaning should be given to the phrase “per stirpes”.  The trial judge, however, distinguished Lau, and found that various aspects of the Deceased’s will, including the Deceased’s use of the words “per stirpes”, indicated an intention to benefit the families of each of his children equally if either of them predeceased his wife.  Relying on these factors to interpret the will and deciding that Eddie’s share of the residue did not vest until the death of his mother, the trial judge declared that Eddie’s children were entitled to his share of the residue.

In deciding the appeal, the Court of Appeal agreed with the trial judge and held that Cullity J.’s approach in Lau of giving no meaning to the term "per stirpes" when used in the context of a named beneficiary was inappropriate in the circumstances of the case before them. Justice Simmons, writing for the Court, held:

Absent any other indicators of intent, it seems to me that, at a minimum, these words reflect an intention that the gift neither passes to Eddie’s estate nor to Marlene. Even if used improperly, it seems to me that, having regard to the traditional meaning of the phrase "per stirpes" when used in conjunction with the term "issue", the most logical meaning is that the use of the phrase conveys an intention, to benefit, at least, the testator’s children’s children.

Viewed in this way, I do not agree that a gift to named children, per stirpes, necessarily creates a contradiction in terms. Rather, in the context of [the Deceased’s] will, which provides no other indication of the testator’s intention, both aspects of this disposition can be viewed as an elaboration of his intention. That is, the disposition reflects both an intention to benefit each of the testator’s children, as well as [an] intention to benefit, at least, each child’s children …

While upholding the trial result, the Court of Appeal agreed with Cullity J.’s statement in Lau that terms such as “per stirpes”, if used at all, are best used in their traditional sense – otherwise, the testator runs the risk of having his or her words ignored.

Thanks for reading,

Saman Jaffery – Click here for more information on Saman Jaffery

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