Tag: class gift

22 Jan

Class Gifts and the Rule of Convenience

Sayuri Kagami Estate & Trust, Estate Planning, Wills Tags: , , 0 Comments

When drafting wills, it is common to make gifts to a class of persons rather than naming the specific beneficiaries. This might include a gift to one’s grandchildren or to members of one’s book club. With a class gift, the members of the class may differ between the time of the writing of the will, the death of the testator and following the testator’s death; Some members may leave and new members may join in (for example, the birth of a grandchild). Because of the fact that membership in a class can change over time, the rule of convenience operates to the determine when a class might close so as to give final effect to a class gift.

The rule of convenience dictates when a class closes based on the idea that only persons in existence at the death of the testator are intended to take under the will. This rule will come into effect only where the will does not provide for when the class will close. For example, a will that provides a gift to “all my grandchildren now living” will take effect from the date of execution and only grandchildren in existence on the date of execution will benefit on the basis that the will limited the class to grandchildren alive at the date of execution. Where the will, however, does not provide any guidance as to the closing of the class, the rule of convenience will come into play.

Where a class gift is of a certain amount of money to each member of the class, rather than a share of some specified sum, the class will close immediately on the death of the testator. Thus if the testator provided that each member of the class was to receive $1,000.00, the class will only be comprised of those persons in existence at the time of death. This class would include any children in gestation, but not yet born at the time of the closing.

Where the class gift is such that the members will receive a proportional share of a gift, the rule dictates that generally, if members of the class have come into existence at the time of the testator’s death, then the class closes on the date of the testator’s death. Any new members of the class who join after the date of death would be excluded from receiving any interest.

Certain exceptions exist to this general rule. For example, where a class gift follows a life interest, the class closes at the termination of the life interest. Thus any member alive at the death of the testator or who comes into existence before the death of the life tenant will take under the class gift. Where the will stipulates that the gift is postponed until each member of the class fulfills a certain condition (for example, turning 21 years of age), then the class will close on the date of the first member fulfilling that condition. Thus where the gift is to grandchildren with the gift to be distributed at the age of 21, then any grandchildren born after the death of the testator and before the first grandchild reaches 21 will also join the class.

To learn more about the challenges posthumous conception and the legal definition of “child” may pose with respect to the rule of convenience, see “Posthumous Conception: Recent Changes to the Succession Law Reform Act and their Impact on Estates Law,” a paper presented by Krystyne Rusek of Pallett Valo LLP.

If you’d like to learn more on the distinction between class gifts and gifts to specific entities, see this blog.

Thanks for reading!

Sayuri Kagami

27 Jul

Class Gift or Gift Nominatum

Suzana Popovic-Montag Wills Tags: , , , , 0 Comments

We have written over the years about lapsed gifts and the anti-lapse provisions contained in section 31 of the Succession Law Reform Act. A lapsed gift is one that fails because it is incapable of taking effect. One of the most common reasons that a gift is incapable of taking effect is that the beneficiary predeceases the testator. In determining whether the gift has lapsed, one must first determine what kind of gift it is – a class gift or a gift nominatum.

A class gift is made to a group of individuals who share a common characteristic – for example, “to all my grandchildren”. The testator may not have any grandchildren when they execute their will but want to provide for any future grandchildren; or the testator may have two grandchildren and could have more grandchildren in the future. With a class gift, the number of beneficiaries in the class may increase or decrease; it allows others to join in the gift after the will is executed. Membership in the class closes on whatever date is named in the will.

D54Z0NSBIS (1)The other type of gift, a gift nominatum, is a gift to a specifically named or identifiable person or persons – for example, “to John Doe”. In this case, the beneficiaries of this gift are limited to those named, which is to say that the will is closed once it is executed. If the beneficiary predeceases the testator, then the gift will lapse. Generally, drafting solicitors will insert gift-over clauses to prevent a lapse. A gift-over provision simply provides a gift of the property to a second recipient if a certain event occurs – like the death of the first recipient.

However, one must be careful with the language employed. Describing the beneficiaries by number is generally considered a gift nominatum, unless there is clear intention that the testator intended a class gift. Therefore, a gift to “my two grandchildren” will prima facie be considered a gift nominatum that is not open to new members. The only beneficiaries under this clause would be the testator’s two grandchildren at the time the will was executed. But a gift “to my grandchildren that survive me” is a valid a class gift.

It is important to ensure that the testator’s intentions with regard to the type of gift are clearly expressed, and if making a class gift, it is equally important to set out specific rules to determine when membership in the class closes in order to avoid future litigation. Finally, whether making a class gift or a gift nominatum, it is prudent to include a gift-over clause to avoid unintended consequences.

Thank you for reading.

Suzana Popovic-Montag

13 Feb

Estate Administration and Persons Born Outside of Marriage

Hull & Hull LLP Estate & Trust Tags: , , , , , , 0 Comments

The Globe and Mail recently interviewed a man living in British Columbia who may be the son of John F. Kennedy.

The article made me reflect on the different ways solicitors deal with persons born outside of marriage when drafting a Will. Since March 1978, persons born inside of marriage and outside of marriage are entitled to share equally in an intestacy estate. In a testate administration, unless a contrary intention is included in the Will, any words identifying a class of persons such as “issue” and “children” includes persons born outside of marriage.

However, a testator may want to exclude persons born outside of marriage from being considered as part of a gift class in order to remove the obligation on an executor to search for members of the gift class who were born outside of marriage.

Given the prevalence of common law relationships, to include a boilerplate clause excluding persons born outside of marriage from inclusion in the gift class may result in the unintentional disinheritance of grandchildren or great-grandchildren.  Any exclusion clause has to be considered carefully.

The upcoming LSUC CLE program, The Annotated Will, being held on February 21, 2008, discusses how to deal with difficult drafting issues. The two hour program is being chaired by Laura Kerr, Jennifer A. Pfuetzner, and Corina S. Weigl and promises to offer valuable advice on avoiding common drafting errors.

Have a nice day,

Diane Vieira

17 Apr

Breaking the Ties

Hull & Hull LLP Archived BLOG POSTS - Hull on Estates, Beneficiary Designations Tags: , , , , , 0 Comments

Yesterday I reviewed the decision of Holmes Estate (Re) [2007] B.C.J. No. 45. You will recall that a gift in the testator’s Will to “all my nieces and nephews” was interpreted in the circumstances to mean a bequest to the children of the testator’s siblings including the 18 nieces and nephews of the testator’s late wife.

One such niece, Patricia Meadows, had been married to Alfie Meadows. Alfie was seeking entitlement to a share in the residue of the estate belonging to Patricia, who had died before the testator. He was doing so on the basis of the language contained in the Will that if any of the testator’s nieces or nephews predeceased him, that person’s share was to be paid to their surviving spouse.

The problem for Alfie was that he had been convicted of Patricia’s murder! The Court quite justly denied Alfie entitlement to Patricia’s share in the estate by applying the general rule of public policy that a person is precluded from benefiting from a crime.

The irony in this case is that while Alfie’s crime didn’t pay for him, it did benefit the surviving nieces and nephews, as the gift was a class gift (when a member of the class is disqualified their share is divided amongst the remaining members).

While this case made for an interesting read, I can only hope that the decision will help deter similar claims from arising again.

Have a good day,

Natalia Angelini

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