Lapse & Anti-Lapse
A question often arises amongst estate trustees as to what should be done if an individual dies testate, yet, is predeceased by a beneficiary in the testamentary document. When this type of situation arises, attention must be given to the Succession Law Reform Act (“SLRA”). Section 23 of the SLRA states:
“Except when a contrary intention appears by the will, property or an interest therein that is comprised or intended to be comprised in a devise or bequest that fails or becomes void by reason of,
a) the death of the devisee or donee in the lifetime of the testator; or
b) the devise or bequest being disclaimed or being contrary to law or otherwise incapable of taking effect,
is included in the residuary devise or bequest, if any, contained in the will”.
Therefore, this section provides direction when a lapsed gift arises. If the beneficiary predeceases the testator, or, the bequest is disclaimed by the beneficiary, unless a contrary provision in the testamentary document provides otherwise, the bequest falls into the residue of the deceased’s estate. No distinction is made between gifts of personal or real property.
There are exceptions to this rule, including the application of the cy-pres doctrine, blogged about here, as well as exceptions under the common law, including: gifts passing under a joint tenancy; or property given to a group (class) of persons.
Exceptions can also be found under statute, one of which being s. 31 of the SLRA, often referred to as the anti-lapse provision. Section 31 states:
Except when a contrary intention appears by the will, where a devise or bequest is made to a child, grandchild, brother or sister of the testator who dies before the testator, either before or after the testator makes his or her will, and leaves a spouse or issue surviving the testator, the devise or bequest does not lapse but takes effect as if it had been made directly to the persons among whom and in the shares in which the estate of that person would have been divisible,
a) if that person had died immediately after the death of the testator;
b) if that person had died intestate;
c) if that person had died without debts; and
d) if section 45 [preferential share of spouse] had not been passed.
One of the effects of s. 31 is to ensure that gifts made to certain close relatives, the most common type of legacy or devise, do not fail, but instead pass to the next-of-kin of the predeceased. As the SLRA suggests, three criteria must be met in order for the anti-lapse provision to apply. They include: (i) there is no contrary intention in the will; (ii) the devise or bequest is made to a child, grandchild, brother or sister of the testator; and (iii) the donee was survived by a spouse, or issue, who also survived the testator (both spouse and issue are defined in s. 1(1) of the SLRA).
If the anti-lapse provision does not apply, and the bequest is residuary in nature, an intestacy arises. This is despite the ‘golden rule’ that the courts do not favour an intestacy: see Lord Esher M.R. in Re Harrison (1885), 30 Ch.D 390. However, not everyone views such a rule as golden. In Kilby et al. v. Meyers et. al., Ritchie J. states, “The inclination of courts to lean against a construction which will result in intestacy is far from being a rule of universal application and is not to be followed if the circumstances of the case and the language of the will are such as to clearly indicate the testator’s intention to leave his property or some part of it undisposed of upon the happening of certain events”.