It is increasingly common for wills to provide beneficiaries with a right to purchase specific estate assets, particularly real property. If a will grants a beneficiary the right to purchase property at “fair market value,” a simple question may arise: when should the asset’s fair market value be determined? Depending on when the value of the asset is assessed, the purchase price could end up varying significantly. In addition, an asset’s fair market value may be impacted by whether the testator’s will gives the estate trustee the power to improve or enhance the asset before it is offered for sale, as demonstrated by the Superior Court of Justice’s recent decision in Ward v Ward, 2026 ONSC 824.
Background
In this case, the testator’s will gave his wife a life interest in a residential property, and also directed that, upon her death, the property would fall into the residue of the estate, to be divided equally between his two sons, Brodie and Kelly. The will also granted the sons successive rights to purchase the property at fair market value – first, Brodie had a right to purchase the property within 30 days of receiving notice that the property was available. If Brodie failed to exercise his right in time, then Kelly would have a right to purchase the property.
The testator died in February of 2017, and Kelly was appointed as estate trustee within the year. At that time, the property consisted of two lots that could only be conveyed as a single parcel due to a municipal by-law restriction. However, in 2019, Kelly began to pursue a by-law exemption so the two lots could be conveyed separately. The exemption was eventually granted in September of 2022, allowing the lots to be conveyed separately and increasing the property’s overall market value.
Several months before the exemption was granted, the testator’s wife died and her life interest in the property ended.
On November 3, 2022, Kelly gave Brodie notice that he had 30 days to exercise his right to purchase the property. On December 2, 2022, Brodie responded by email, stating that he had a “full intention of buying the property;” however, the brothers were unable to agree on the fair market value of the property.
Kelly eventually sought the court’s opinion, advice, and direction, asking whether Brodie had properly exercised his right to purchase the property, and if so, how to determine the fair market value of the property. Since the lots could now be conveyed separately, Kelly asserted that the fair market value was $1.8 million, as established by an appraisal that he obtained in January of 2024. Brodie’s position was that the property ought to be valued as a single parcel as of April 2022, when the wife’s life interest ended, before the by-law exemption was granted.
The Court’s Decision
Justice McCarthy held that Brodie had properly exercised his right to purchase the property by sending the email expressing an intention to purchase. There was no requirement to provide a formal agreement of purchase and sale, a deposit, or proof of financing within the 30-day period, as the will reflected a “settled intention” to provide a relatively informal option to purchase.
Before addressing the fair market value of the property, the court affirmed that Kelly had acted within the scope of authority bestowed upon him as estate trustee when he applied for the by-law exemption. The will granted the estate trustee a number of powers with respect to estate property, including:
- the powers to manage and improve real property,
- the power to sell and dispose of assets,
- the power to retain assets “for any length of time,” and
- authority to act in his “absolute discretion.”
In light of these powers, Justice McCarthy confirmed that Kelly had not been required to offer the property for sale immediately once the life interest of the testator’s wife ended. The will did not specify when the estate trustee had to make the property available for purchase, and did not limit the trustee’s discretion with respect to the timing of a sale. Since there was no requirement to sell the property when the life tenant died, there was also no basis to fix the fair market value of the property as of that date.
Moreover, the will did not prevent the estate trustee from improving the property, thereby increasing its fair market value, prior to offering it for sale. To the contrary, the court noted that obtaining the by-law exemption was aligned with the testator’s intention to maximize the estate’s value for equal distribution among the residual beneficiaries.
Finally, the court found that the fair market value of the property was to be determined once Brodie exercised his right to purchase the property, in December of 2022. While the will did not specify when the fair market value of the property was to be fixed, Justice McCarthy held that it was only after receiving notice from Brodie that the estate trustee became “compelled to establish fair market value with a view to complying with the terms of the trust and carrying out the conveyance.”
Since the by-law exemption had already been passed when Brodie exercised his right, the court found that the fair market value of the property was $1.8 million.
Practical Takeaways
The court’s decision in Ward reinforces a familiar but often overlooked principle: when an option to purchase an estate asset is included in a will, it cannot be interpreted in isolation. A will must be read in its entirety – as a result, the operation of an option to purchase clause may be impacted by the powers and duties bestowed upon the estate trustee, including the power to improve estate assets and determine when estate property is available for sale.
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