Tag: life-interest

26 Mar

Dealing with Life Interests in Property

Paul Emile Trudelle Estate Planning, Litigation Tags: , , 0 Comments

Goldie and Kevin inherited a life interest in real property in Nova Scotia. Under the will, the survivor will get the property in fee simple.

Goldie wanted to have the property divided up. In the alternative, she wanted it sold and the proceeds split. Kevin opposed.

Could Goldie force the partition or sale of the lands? The Nova Scotia Court of Appeal said no.

In its decision of Fownes v. Ernst, 2021 NSCA 8 (CanLII), the Court of Appeal considered the nature of each of the party’s interests in the land. The Court considered that neither party had a “vested” fee simple interest, and only a contingent interest. At best, the parties had an “expectancy”, and an expectancy is not a property right. The right of survivorship granted in the will did not create an interest in the land until one of the life tenants died.

The Court of Appeal concluded that the Partitions Act “permits actions by those holding estates in possession, not in remainder or reversion.” Goldie could not force the sale of the land.

The Court of Appeal noted that the language of the Ontario legislation is broader, and permits life interest holders to bring partition proceedings. However, even with the broader language, Ontario courts do not permit holders of a contingent remainder interest to bring partition proceedings, as their interests were not “possessory”.

The issue is put another way in the Ontario decision of S. B. v. W. B., 2020 ONSC 5023 (CanLII). There, the court noted that partition or sale may occur where the life interest “runs concurrently” with the other interests, by not where the life interest runs “consecutively” with the other interests. Presumably, where the interests of the remainders are not immediate, but only arises after the life interest is determined, the remainders cannot seek partition or sale and oust the life tenant.

Thank you for reading. Have a great weekend.

Paul Trudelle

02 Feb

When will a Beneficiary’s Interest in an Estate Asset be Void for Uncertainty?

Rebecca Rauws Estate Litigation Tags: , , , , , , , , , , , 0 Comments

Something that surely no testator or beneficiary wants to see is the failure of a gift made in a Will. Unfortunately, circumstances can arise where the language of a Will may be ambiguous, or where events occurring during the estate administration expose uncertainty in a term of the Will that wasn’t necessarily apparent at the time of drafting or execution.

In Barsoski v Wesley, 2020 ONSC 7407, the estate trustee sought directions from the court regarding a clause in the deceased’s Will that allowed the deceased’s friend (the “Respondent”) to live in the deceased’s home during his lifetime, or such shorter period as the Respondent desires. Upon the earlier of the Respondent advising that he no longer wished to live in the home, or the Respondent “no longer living” in the home, the house and its contents are to be sold, and the proceeds added to a gift to another beneficiary of the Deceased’s Will, a charity, St. Stephens House of London (“St. Stephens”).

The deceased died in June 2017. Confusion arose when it became apparent that the Respondent was not actually living in the home on a full-time basis. This first came up around December 2017 and continued for a couple of years. The home was in London, but the Respondent continued living and working full-time in Toronto following the deceased’s death, and seemingly up until 2019. He then started a full-time job in Sault Ste. Marie in 2019.

The Respondent’s evidence was that he was using the home as his primary residence in that he spent time at the home on weekends 1-2 times per month, and used it as his address for his driver’s license and for CRA purposes. He stated that he planned to live in the home full-time after he retired around July 2021.

St. Stephens, as the gift-over beneficiary of the home, took the position that the Respondent had not been living in the home, and therefore it should be sold pursuant to the terms of the Will.

The court first considered whether the Will gave the Respondent a life estate or a licence to use the home subject to a condition subsequent, concluding that the proper interpretation was that it was a licence with a condition subsequent. The condition subsequent in question was when the Respondent was “no longer living” in the home. The court outlined that a “condition subsequent is void for uncertainty if the condition is ‘far too indefinite and uncertain to enable the Court to say what it was that the testator meant should be the event on which the estate was to determine’”. Accordingly, the court concluded that it was impossible to define, on the terms of the deceased’s Will, what it meant to “live” in the home.

The question of whether, on the facts, the Respondent’s use of the home constituted him “living” there is an interesting one. However, due to the court’s conclusion that the terms granting the Respondent an interest in the home were void for uncertainty, it was unnecessary for the court to make any findings of fact on this particular question.

The estate trustee, who was also the drafting lawyer, gave evidence (that was ultimately inadmissible) that the deceased had been considering some changes to her Will prior to her death. The changes would put time restrictions on the Respondent’s use of the home, including that he would be required to move into the home within 90 days of her death, and not be absent from it for more than 120 days. These additional terms may have provided sufficient certainty for the beneficiary to know what he had to do in order to maintain his interest in the home, and for the estate trustee to administer the estate. Although this evidence had no impact on the court’s decision, it can serve as an important reminder that if one wants to change their Will, one should do so as soon as possible to ensure the Will reflects their wishes at the time of their death.

Thanks for reading,

Rebecca Rauws

 

These other blog posts may also be of interest:

13 Jul

Life-Tenants, Remaindermen and Home Expenses

Suzana Popovic-Montag Common Law Spouses, Estate Planning Tags: , , , , 0 Comments

A life-interest allows a testator to gift the ultimate benefit of real property, while providing in the interim for a loved one during their lifetime. For example, a woman may want to allow her common law spouse to live in her home for his lifetime but ultimately want her children from a previous relationship to receive it. In order to accomplish this, the woman would give her common law spouse a life-interest in the house; after his death, the house would belong to her children, the ultimate beneficiaries. The person with the life-interest is called the life-tenant; the ultimate beneficiaries are known as the remaindermen.

While this approach allows a testator some control of their property after death, it can raise disputes regarding who is responsible for paying certain expenses associated with the real property during the lifetime of the life-tenant.

The general rule – as noted in Widdifield on Executors and Trustees, 6th ed, and demonstrated in Re Goodfriend Estate, [2003] OJ No 4291, 4 ETR (3d) 10 at
POQ7B631M3para 22 – is that “ordinary outgoings of a recurring nature” are the responsibility of the life-tenant. But any expenses that are not ordinary outgoings (i.e. capital expenses) are to be borne by the real estate itself and therefore at the expense of the remaindermen. Both rules are subject to contrary intentions expressed in the testator’s will.

Ordinary outgoings include: heat and hydro, taxes and interest on mortgage debt (but not the principal). In the above example, the common law spouse would be responsible for these expenses. Capital expenses, which are to be borne by the remaindermen, include the following: upkeep/repairs (such as the repair of a roof), expenses of legal proceedings (unless legal proceedings are for the life-tenant’s sole benefit), trustee’s costs and expenses, appointment of new trustees and investment advice.

However, as mentioned above, a testator can express a contrary intention. A testator may direct that ordinary outgoings of a recurring nature be paid out of the property or that capital expenses be paid by the life-tenant. A court will generally enforce the intentions of the testator if those intentions are clear or can be inferred from a reading of the will as a whole.

When a testator considers leaving a life-interest in a piece of real property, it is important to address the issue of payment of various expenses associated with the property in order to avoid conflicts between the life-tenant and the remaindermen.

Thank you for reading.

Suzana Popovic-Montag

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