Tag: Lapse

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

31 Mar

Lapse and Anti-Lapse

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

I regularly tutor students who are preparing to write the Estate and Trust section of the Solicitor’s exam for the Law Society. One of the more common questions that my students ask is for help in explaining two concepts: lapse and the “anti-lapse provision”.

The common definition of a lapsed gift, is a gift that has failed because it is incapable of taking effect.   Two common reasons for a gift to be incapable of taking effect is where the beneficiary predeceases the testator or the gift is disclaimed by the beneficiary.  

 

Pursuant to Section 23 of the Succession Law Reform Act, unless a contrary intention appears in the Deceased’s Will, if a gift is incapable of taking effect, the failed gift will fall into the residue of the testator’s estate and distributed accordingly.

 

Section 31 of the Succession Law Reform Act is commonly referred to as the anti-lapse provision. The anti-lapse provision saves a failed gift if the beneficiary falls into the class of beneficiaries set-out under this provision and that beneficiary leaves a spouse or issue who survived the testator. If these conditions are met, the gift will not fall into the residue, however it will take effect as if it had been made directly to the spouse or issue of predeceased beneficiary.

 

Thank you for reading, and have a great day.

Rick Bickhram – Click here for more information on Rick Bickhram.

05 Aug

Does a Lapsed Gift Fail?

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

There is the view by some that issues surrounding the interpretations of Wills can be mind-numbing.  From time to time I tend to enjoy dusting off my book of consolidated estate statutes and reviewing some of the basic tenets of estate law, which makes our area of practice so dynamic.


The issue of a failed gift is a common subject in the context of will interpretations. The Ontario Legislature has considered failed gifts in sections 23 and 31 of the Succession Law Reform Act.


In essence, Section 23 states that unless a contrary intention appears in the subject-will, when a devisee or legatee predeceases the testator, the failed gift falls into the residue of the testator’s estate. 


Section 31 is commonly referred to as the "anti-lapse provision."  Section 31 prevents devises or bequests from failing by virtue of the devisee or legatee predeceasing the testator. In such a scenario, a gift is saved if the devise or bequest was left for a child, grand-child, brother or sister of the testator and the pre-deceased devisee or legatee died leaving a spouse or issue who survived the testator. If these conditions have been met, the devise or bequest will not fall into the residue, however it will take effect as if it had been made directly to the spouse or issue of predeceased devisee or legatee. 


Thank you for reading,


Rick Bickhram

 

 

 

 

 

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