Varying a Will: A Potential Estate Administration Solution

Varying a Will: A Potential Estate Administration Solution

In cases where an estate administration stalls, it can be challenging to get the ball rolling again. A new case, Hill v Hill, 2024 ONSC 3023, notes one “practical approach” to kickstart a stalled estate administration that merits further discussion – utilizing a deed of arrangement to vary the deceased’s will.

In this case, the deceased passed away in 2009, and his common law spouse subsequently brought an application for dependant support against the estate. In order to pay her claim, an estate asset that was supposed to be gifted through a specific bequest had to be sold. Afterwards, little was done to administer the deceased’s estate for years – the estate trustee eventually applied to the court to be released from the position. Recognizing that the estate could no longer be administered in accordance with the terms of the deceased’s will, Justice Faieta agreed with counsel that a deed of arrangement to vary the deceased’s will was a potential solution that could move the administration of the estate forward.

To successfully vary a will using a deed of arrangement, all of the beneficiaries of the estate must agree to vary the will, and also agree regarding how to vary it, as per the rule in Saunders v. Vautier (1841), 41 E.R. 482. However, it may not be possible to use a deed of arrangement to vary a will where any of the beneficiaries are under a disability and incapable as per the Substitute Decisions Act, 1992, SO 1992, c 30, are minors, or are unborn or unascertained. Under such circumstances, a deed of arrangement can only be utilized if an application is brought before the court to vary the will on the affected beneficiary’s behalf under the Variation of Trusts Act, RSO 1990, c V.1, and the court approves the proposed variation.

Subsection 1(1) of the Variation of Trusts Act bestows a broad power upon the court to vary trusts, including wills, providing that the court “may, if it thinks fit, by order approve on behalf of … any person having directly or indirectly an interest, whether vested or contingent, under the trusts who by reason of infancy or other incapacity is incapable of assenting … [to] any arrangement … varying or revoking all or any of the trusts or enlarging the powers of the trustees of managing or administering any of the property subject to the trusts.” However, subsection (2) goes on to provide that the court cannot approve an arrangement on a person’s behalf “unless the carrying out thereof appears to be for the benefit of that person.”

In Re Irving, 1975 CanLII 714 (ON SC), the court also heldthat a deed of arrangement can only be approved after the following three considerations are addressed:

First, does [the deed of arrangement] keep alive the basic intention of the testator? Second, is there a benefit to be obtained on behalf of infants and of all persons who are or may become interested under the trusts of the will? And, third, is the benefit to be obtained on behalf of those for whom the Court is acting such that a prudent adult motivated by intelligent self-interest and sustained consideration of the expectancies and risks and the proposal made, would be likely to accept?

The principles set out in Re Irving continue to apply today: see, for example, Pollock v. Bassett, 2024 ONSC 3283.Essentially, the court will only approve an application to vary a will as long as: a) the proposed variation will keep the basic intention of the testator alive, b) the proposed variation is for the benefit of all beneficiaries, and c) a prudent adult motivated by intelligent self-interest, and a sustained consideration of the expectancies and risks of the proposal would likely accept the proposed variation on behalf of those for whom the court is acting.

 In addition to using a deed of arrangement to vary a will to change the distribution of the deceased’s estate, a deed of arrangement may also be used to increase the powers of an estate trustee. For example, in Hart v Jacobs, 1991 CarswellOnt 526, the court permitted a deed of arrangement to be used to vary a trustee’s investment powers. Clearly, a deed of arrangement to vary a will can be a powerful tool for solving a variety of issues that may arise during an estate administration.

Thanks for reading, and have a great day!