Pour Over Clauses – Incorporation by Reference

March 25, 2021 Stuart Clark Estate Planning Tags: , , , , , , , , , , 0 Comments

I have blogged this week about the general availability of “pour over clauses” and whether you can leave a bequest in a Will to an already existing inter vivos trust. In my blog yesterday I discussed “facts of independent significance” as one of the potential arguments that has been raised to attempt to uphold “pour over clauses”, and how the concept was rejected by the British Columbia Court of Appeal in Quinn Estate v. Rydland, 2019 BCCA 91. In today’s blog I will discuss another argument that was raised in Quinn Estate to try to uphold pour over clauses; the doctrine of “incorporation by reference”.

The doctrine of incorporation by reference at its most basic allows a Will to refer to a separate document which provides for dispositive provisions, with such a separate document being “incorporated” into the Will to be carried out by the executor as part of the administration of the Will. The most common example of incorporation by reference would be a memorandum directing who is to receive various personal items from the testator, with the Will directing the executor to distribute the personal items in accordance with the terms of the separate memorandum.

The general test for whether a document can be incorporated by reference into a Will is:

  1. It must be clear that the testator in the Will referred to some document then in existence; and
  2. the document in question must be beyond doubt the document referred to.

When incorporation by reference is raised as part of an attempt to uphold a pour over clause it appears to be the argument that so long as the inter vivos trust was in existence at the time the Will was signed, and the trust is clearly identified by the Will, that it should be able to meet the test for incorporation by reference such that the “pour over clause” can be saved.

In Quinn Estate the court ultimately rejects the attempt to save the pour over clause under the doctrine of incorporation by reference, appearing to emphasize there is a fundamental flaw in the attempt to incorporate a trust by reference into a Will insofar as it does not appear to be the testator’s intention to actually incorporate the terms of the trust into the Will, but rather simply to make a distribution to the separate trust. When something is “incorporated by reference” into a Will it means exactly that, insofar as the terms of the separate document are said to be incorporated into the Will and read as a single document. This concept appears fundamentally at odds with any attempt to make a bequest to an already existing trust under a pour over clause, as the testator never likely intended to have the terms of the trust incorporated into the Will to be administered by the executor as part of the Will, but rather to have the executor make a bequest to the trust to be administered separately from the estate. In emphasizing this point the British Columbia Court of Appeal in Quinn Estate states:

“Strictly speaking, resorting to incorporation by reference to incorporate the original trust document into the will belies the essential nature of a pour-over clause: here it is perfectly clear that the will-maker had no intention of incorporating the trust into his will. He rather demonstrated the obvious intention of making a gift to the trust.”

As my blogs this week have shown, any attempt to leave a bequest in a Will to an already existing inter vivos trust using a “pour over clause” is highly problematic.

Thank you for reading.

Stuart Clark

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