What’s in a Name?

February 10, 2016 Suzana Popovic-Montag Estate & Trust, Estate Planning, Support After Death, Wills Tags: , , , , 0 Comments

In most common law jurisdictions, the devolution of an estate begins with the principle of testamentary freedom. That is, that a testator is free to dispose of his or her property in any way he or she sees fit. However, in practice, this is rarely the case. Testamentary freedom has many restrictions that significantly curtail a testator’s ability to freely dispose of his or her assets.

For instance, family law legislation provides certain rights to a surviving spouse which allow for an election to be made to receive an equalization of net family property rather than taking an  interest under the estate. Dependant’s relief legislation also steps in to provide relief to dependants who were not adequately provided for by the deceased’s estate. Furthermore, there are contractual arrangements, such as cohabitation agreements, as well as equitable claims in unjust enrichment, constructive trust, and quantum meruit, that may be available to further restrict the testator’s dispositions made in a will or under the laws of intestacy.

In contrast, in many civil law jurisdictions, there exists what appears to be a more rigid system of forced heirship. Forced heirship essentially starts with the premise that there are certain individuals to whom a testator has a moral and legal obligation to support after death, notably their descendants and spouse. Accordingly, it limits the ability to disinherit these protected heirs by setting out that a specific percentage of an estate’s value is to be reserved for their benefit. This amount can vary widely depending on the number of descendants as well as other variables such as whether any of them are disabled.

Provided that the will respects these percentages by making dispositions that provide at least the minimum required, there will be no issue of a claim against the estate. However, in circumstances where the testator has not met the minimum requirement, the protected heirs have the ability to make a claim against the estate enforcing their rights to the reserved portion.

It is important to note that a protected heir enforcing his or her forced heirship rights is not automatically an heir. He or she simply has a pecuniary claim against the estate which can be satisfied by the estate’s assets. In the event that the estate does not have sufficient assets, the protected heir can seek to enforce various clawback provisions. These vary by jurisdiction but may include inter vivos gifts made within a period of time prior to death or with the intention of subverting forced heirship rules, as well as the creation of any trusts for similar purposes.

There are similarities between forced heirship regimes and our own dependant’s relief legislation. For instance, section 72 of the Succession Law Reform Act (“SLRA”) provides for a similar clawback provision in order to ascertain the value of an estate in making an award for support. Forced heirship claims are also subject to strict limitation periods much like dependant’s relief and equalization claims. Moreover, forced heirship is not an automatic transfer of wealth upon death simply by virtue of being a descendant of the deceased. In many jurisdictions, the protected heirs have the ability to renounce these rights prior to death or may choose not to make a claim after death at all.

The main distinction is that in a dependant’s relief context, the claimant has the additional burden of proving that the testator owed them support, whereas under forced heirship, simply being a descendant can be sufficient. However, the common law courts have construed the test of whether a dependant was owed support under the SLRA quite broadly. Moreover, the definition of a dependant under the SLRA encompasses many more potential claimants then most definitions of a protective heir will permit.

Despite the fact that forced heirship starts from the opposite end of the spectrum of testamentary freedom, it reaches a similar end result. Where forced heirship applies a more rigid starting point and then gradually loosens its grip, testamentary freedom begins with an open ended proposition that is subsequently restricted. Regardless of the approach taken, both systems seek to address a shared concern of public order: the duty to provide for your dependants after death.

Thank you for reading.

Suzana Popovic-Montag

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