Tag: interpretation of wills
The interpretation of wills was the subject matter of my blog earlier this week. Today I add to that a comment on the decision of Campbell v. Evert, a case where a son and daughter were disputing whether the daughter’s entitlement under a family trust supplants a bequest under the deceased mother’s will.
The will gifts the sister $145,000 (a gift of equal value was previously given to the brother) and divides the residue equally between the brother and sister. Several years after making the will, the mother settled an inter vivos trust, which provides that the daughter is to receive $150,000 from the trust assets, with the balance divided equally between the son and daughter.
Upon the mother’s death, the trust assets were distributed. The son asserted that the estate assets should be divided equally, in keeping with his mother’s intention that the daughter receives $150,000 from the trust instead of $145,000 under the will. The daughter argued that with both the trust and will terms being honoured the result was equal, taking into consideration that the gift to the brother made years earlier was appreciating over time. Nonetheless, the will was clear and unambiguous such that there was no legal basis for a different outcome, and extrinsic intention evidence was not admissible.
There was no dispute that the mother generally intended to treat her children equally in the will. The real dispute was the mother’s intention when she subsequently created the trust.
Even though the trust agreement is not a will, the Court reasoned that the trust provisions in issue relate to the distribution of the trust assets upon death, such that those provisions have testamentary effect. In these circumstances, the Court was satisfied that the same rules of construction apply. Applying the principles set out in Robinson Estate in the context of the trust agreement, the Court found in favour of the daughter. In so doing, it considered the trust agreement itself and the surrounding circumstances, and found no ambiguity or indication that the mother had intended to replace the specific bequest in the will. It also took note that the will was never amended after the trust was settled. Further, the Court ignored extrinsic evidence of the mother’s intention that the son put forward, as there was no equivocation present in this case that would make such evidence admissible.
The less common arguments of ademption by advancement and presumption against double portions were also put forward unsuccessfully, but for the sake of space I refer you to the case itself for consideration of those arguments.
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In the construction of wills there is a presumption against intestacy. When the court is endeavouring to apply this rule, consideration should be given to what type of evidence it can admit with respect to the testator’s intention.
Where there is an ambiguity in a will and the need for its interpretation arises, the analysis centers on determining the subjective intent of the testator. This is accomplished by the court putting itself in the place of the testator at the time the will was made, considering the circumstances that then existed and that might reasonably be expected to influence the testator in the disposition of property. The court should also study the contents of the will, try to find the testator’s intention and give effect to it.
Direct evidence of a testator’s intention is not admissible, the rationale being to preserve the role of the written will as the primary evidence of intention. An exception to this is in the case of an equivocation. The principle simply put is that there is an equivocation where the words of the will apply equally well to two or more persons or things. In such a case, extrinsic evidence of intention may be admitted to resolve the equivocation. DiNicola v. Tingley is an instance of where an equivocation was found. The Deceased left a will that provided for the distribution of the residue of her estate, in part, amongst three named beneficiaries. The will provided that if any of the named residuary beneficiaries “should predecease me then I shall direct his or her share designated as aforestated shall be divided and distributed among the survivors of same proportionately as between them.” The Court found that the words “survivors of same” could equally mean the surviving residuary beneficiaries or the descendants of a predeceased residuary beneficiary. This constituted an equivocation, and the Court accepted for consideration direct extrinsic evidence.
If no intention can be garnered from the language of the will and the admissible extraneous evidence, the court must declare the will void for uncertainty. One exception to this is where the uncertainty relates to a charitable beneficiary. In such a case, the court may apply the cy-près doctrine and direct that the property be given to a similar charitable purpose.
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Other blogs on this subject that may be of interest are:
When making testamentary gifts in a Will, if a specific bequest fails for any reason, the assets in question will fall into the residue of the estate. However, if a gift of residue fails, the distribution of whatever assets are affected by the failure will be governed by the intestacy provisions set out in Part II of the Succession Law Reform Act, R.S.O. 1990, c. S.26.
The recent decision of Sabetti v Jimenez, 2018 ONSC 3523 in part considers the interpretation of a residue clause in order to determine whether there is a partial intestacy in respect of the estate of Ms. Valdes.
The applicant, Mr. Sabetti, was Ms. Valdes’ second husband. She had three adult children from her prior marriage. Ms. Valdes’ Will provided that the residue of her estate was to be divided into four equal shares. The first share was to be held in trust for Mr. Sabetti during his lifetime, and on his death, whatever amount was remaining was to fall into and form part of the residue. The remaining three shares were to be transferred to Ms. Valdes’ three children.
Mr. Sabetti claimed that because of the gift-over of his share of the residue, which provides that it is to form part of the residue, the beneficiaries of the first share of the residue were not named with sufficient certainty, and a partial intestacy must result. Ultimately, the Honourable Justice Dunphy concluded that Ms. Valdes’ intention was clear on the face of the will, and found that there was no partial intestacy.
In its decision, the Court goes through an interesting analysis of the residue clause, outlining the rules applicable to construction of documents. Where there are two possible interpretations, one of which creates an absurd result, and one of which is in line with the apparent intention of the maker of the document, the latter is to be preferred. It is also preferable to construe a will so as to lead to a testacy over an intestacy, if it is possible to do so without straining the language of the Will or violating the testator’s intention.
In this case, the Court found that to interpret the term of the residue according to Mr. Sabetti’s position would lead to an absurd result. In terms of Ms. Valdes’ intention, the Court was of the view that the intended beneficiaries of the remainder interest were clearly the other three shares of the residue. The Court found no difficulty in discerning the testator’s intention or in applying it, and was able to read the Will in such a way as to avoid an intestacy.
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In drafting testamentary documents, the careful and precise use of language is of the utmost importance. After all, once the testator is dead and their will takes effect, the testator is no longer around to clarify any potential misunderstandings or ambiguous terms.
There are plenty of problems that can arise when interpreting a Will, from bequests to charities which no longer exist to the proper use of “per stirpes”. Even the most seemingly straightforward terms used in testamentary documents can lead to a great amount of discord among those with an interest in an estate. Today, I’ll look at one particular term which seems innocuous enough: “next of kin”.
Dictionaries, such as the Oxford Dictionary, defines “next of kin” in a straightforward manner as “a person’s closest living relative or relatives”. While seemingly simple, this term has lead to confusion in the past. In 2003, the Court of Appeal addressed this issue in Thomann v. Armgardt Estate, 170 OAC 11. In that case, the deceased left a Will relating to her assets in Canada in which she left the residue of her “Estate in Canada” to her next of kin in equal shares. She also had a will relating to her assets in Germany. At the time of her death, the testator had one sister and nieces and nephews living in Germany, along with one niece and a great-niece and great-nephew living in Canada. The testator’s sister died, however, before the estate was distributed.
The application judge found that “next of kin” had to be interpreted in conjunction with “equal shares” such that the testator intended for her estate to be left to a plurality of beneficiaries. Additionally, based on the use of a German will (which only provided specific bequests to German relatives) and the Canadian will (which only made a specific bequest to a Canadian relative), the application judge found that each will was only meant to benefit relatives living in the country to which the will applied. The judge thus found that the testator intended to leave the residue of her Canadian estate to her relatives (niece, great-niece, and great-nephew) living in Canada equally.
The Court of Appeal, on the other hand, made it clear that “next of kin” is to be defined by its ordinary meaning, i.e. as being one’s closest living relatives. Hence the Court found that the estate was to be distributed to the estate of the testator’s sister.
While it’s important to be as specific as possible and always good to define terms wherever possible, this case perhaps best serves to illustrate the point that you can’t prepare for every possible misinterpretation.
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In McCarthy Estate (Re), 2016 CanLII 87407 (NL SCTD) the executor of his mother’s estate was seeking directions on the meaning of a clause in the Will. Clause 5(a) of the Will gifts the residue of the estate as follows:
“to my children, namely … a building lot to be sized and located in accordance with the development regulations … and to be chosen in consultation with my Executor from my land at Paradise Road…”
The executor offered to convey a residential building lot of the minimum size permitted in the town’s regulations to each of his named siblings. Some of the siblings disagreed, asserting that “a building lot” should be given the widest and most liberal interpretation, and not interpreted as one of the minimum size permitted. Alternatively, they argued that their mother intended that each child should receive a parcel the same or similar in size to parcels conveyed to certain other children during their mother’s lifetime.
The executor argued that the Will is not ambiguous. Rather, it contains three directions, including that the executor is given the discretion to choose the size and location of each lot after consultation with the beneficiaries.
The Court reviewed the applicable legal principles, being that it must look to the language of the Will to ascertain whether the testator’s intention can be discerned from the natural and ordinary meaning of the words used. Only if this is not p
ossible may the court consider indirect extrinsic evidence of surrounding circumstances at the time of making the Will. Further, where an “equivocation” occurs (eg. where the words of a Will apply equally well to two or more persons or things), direct and indirect evidence of the testator’s actual intention may also be admitted.
The Court concluded that the language of the Will was not equivocal, such that direct extrinsic intention evidence was not permitted. In addition, it found that the intention was discernible from the language of the Will, such that it was not necessary for indirect extrinsic evidence of surrounding circumstances to be considered. However, as the parties had provided such evidence, the Court reviewed it and was satisfied that the interpretation of Clause 5(a) and the surrounding circumstances also lead to the conclusion that a conveyance as proposed by the executor was in conformity with the mother’s intentions.
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Natalia R. Angelini
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As speculation starts to appear in the media about the estate of the late Muhammad Ali, who passed away this past weekend, the typical estate questions emerged in the press: who will inherit his estate and how much do they stand to benefit?
When a celebrity such as Muhammad Ali (or Prince) passes away it is always an important reminder of estate issues that may arise, particularly when blended families are involved. For instance, my colleague Laura Betts recently revisited the issue of mirror or mutual Wills and what can happen when the surviving spouse changes their Will after their spouse has passed away.
Another issue that comes to mind are the possible claims that could be made against an estate by a long lost child.
In Ontario, any person appearing to have a financial interest in an estate may make an application to the court under the Rules of Civil Procedure seeking the court’s direction with respect to the estate.
Where a person claims to be a child of a deceased, section 8 of the Children’s Law Reform Act (the “CLRA”) imposes a rebuttable presumption of paternity in limited circumstances. In the alternative, the court has the jurisdiction pursuant to s. 10 of the CLRA to order DNA testing so that a finding as to the parentage of the applicant can be made.
Depending on the circumstances of the case, once the applicant is found to be the biological child of the deceased, a number of claims could potentially be asserted. For example, if the deceased died testate, the wording of his or her Will could give rise to an interpretation issue. Alternatively, in the case of an intestacy, the biological child may assert their statutory entitlement to the estate. In both instances, however, if the biological child falls within the scope of Part V of the Succession Law Reform Act then a claim for dependency may also be asserted.
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In the recent case of McDougall Estate, 2011 ONSC 4189 (CanLII) the deceased passed away leaving a handwritten will and codicil that together constituted a valid holograph will. The deceased had one surviving relative, his 83-year-old sister who lived in Florida.
The will did not name an estate trustee and so the deceased’s close friend applied for and obtained a Certificate of Appointment of Estate Trustee with a Will.
The will left the deceased’s estate to his sister, with a gift-over to “Eye Care research in Glaucoma and Catarach (sic) research”. The codicil said “this shall be expanded after all expenses and encumberances including burial, and the portion to [illegible – the Court determined it was either “expand” or “eye and”] glaucoma … At my death the remainder of my possession shall be bequathed (sic) to my sister Pearl McDougall, now residing in Florida.”
The estate trustee flew to Jamaica at a cost of $859 to deliver a cheque for $9,000 to a clinic for which the deceased had a passion. She delivered the donation herself because she wanted to make sure the charity was legitimate.
In interpreting a will, the court commented that its function was to determine the true intentions of the testator in light of all the surrounding circumstances. On a reading of the will as a whole, the testator intended to make a charitable gift for eye and glaucoma research and that the bequest to charity was to be paid before the residue would fall to his sister. This interpretation gave effect to the evidence concerning the deceased’s intentions including his history of making charitable gifts and his desire to benefit eye research because of his own cataract surgery.
However, the charitable bequest failed because no specific amount or share was stated by the testator.
The McDougall decision also dealt with the passing of accounts and contained some instructive discussion regarding trustee compensation, which I will cover in tomorrow’s blog, so stay tuned!
Sharon Davis – Click here for more information on Sharon Davis.