Last week, Ian Hull and Jordan Atin discussed restrictions in Will planning and the limits on testamentary freedom during the e-State Planner Advanced Topic Webinar: You Can’t Do That! Restrictions in Will Planning. In particular, Ian and Jordan discussed three main instances wherein a client’s testamentary freedom may be limited as a result of Ontario’s legislation and the principles derived from our case law: Annuities, Pour Over Clauses and Public Policy.

Annuities

An annuity is a financial product that pays out a fixed stream of payments to an individual and is primarily used as an income stream for retirees.

An issue may arise if a client advises the drafting solicitor to create a testamentary disposition which leaves money to someone in a Will, but rather than creating a trust for this person, the client wants to purchase an annuity (i.e. a testamentary direction to take $250,000 from their Will to purchase an annuity).

In Robbins v. Legge (Eng.CA 1907), the court ruled that a beneficiary can elect not to take the annuity, stating that “…unless and until the purchase is made it is regarded as a legacy of the definite sum vesting in the intended annuitant on the testator’s death.” In 2009, the Ontario Court of Appeal in Ker Estate v. Stevenson ruled that Robbins remains good law.

Pour Over Clauses

A Pour Over Clause foregoes the distribution of the residue of the assets of the estate and instead directs that whatever is left in the estate is put into an existing inter vivos trust and the terms of the trust will apply. In Ontario, the general rule is that a direction like this in a Will is not valid. This is because a Will has to be amended and signed with certain formalities and cannot be changed after the fact, without going through the same formalities.

Therefore, because there is often always an ability to amend a trust without such formalities, our courts are concerned with a testamentary disposition that can be altered without the formality of a valid Will. See: Vilenski v. Weinrib-Wolfman, 2022 ONSC 2116

Public Policy Violations

A restriction on testamentary freedom will arise where such freedom violates public policy. A violation of public policy arises where there is a condition attached to a gift which requires a person to commit an act or engage in an activity that is against public policy. Examples include: a general restraint on marriage, encouragement of divorce and violation of human rights. Conditions in Wills that violate public policy are not valid.

To learn more about limits on testamentary freedom and additional restrictions in Will planning that may arise, watch the full e-State Planner Advanced Topic Webinar: “You Can’t Do That! Restrictions in Will Planning.

Thank you for reading and have a great day,

Nicole Cianci