Tag: testamentary intention
There are relatively few circumstances in which a court will stifle, rather than vindicate, a deceased person’s testamentary intentions. If a testator wished to give all of his or her assets to a charity for cats, but did not leave adequate funds for his or her dependants, the testator’s will may be varied in order to support the dependants. When a deceased person assigned insurance policy proceeds to his spouse, but previously he had promised an ex-spouse that if she paid the insurance premiums, the proceeds would go to her, the courts interceded, in spite of the designation to the spouse, and awarded the proceeds to the ex-spouse on the basis of unjust enrichment.
In this blog we shall discuss Calmusky v. Calmusky, a recent decision which may have added another context in which courts can upset a deceased person’s testamentary intentions.
Gary and Randy were the sons of Henry, the deceased. In Henry’s last will, he left the residue of his estate to one of Randy’s children and his, Henry’s, nephew. Upon Henry’s death, his interests in bank accounts jointly held between he and Gary were transferred to Gary by right of survivorship. He also made Gary a joint holder of his Registered Income Fund (RIF).
Part of the court’s decision was conventional: since the account transfers were gratuitous transfers between a parent and an adult child, according to Pecore, there is a presumption of resulting trust (with the transferee, Gary, holding the accounts in trust for Henry’s estate) that must be rebutted, with evidence of a donative intent on behalf of the parent, before the transferee can retain the assets. Since Gary could not show donative intent, the bank account funds were to revert to Henry’s estate. And then came the unconventional: the court determined that the rule in Pecore applied to the RIF:
“I see no principled basis for applying the presumption of resulting trust to the gratuitous transfer of bank accounts into joint names but not applying the same presumption to the RIF beneficiary designation.”
By stretching the rule in Pecore to this new context, the court may have burst open floodgates which protect beneficiaries of RIFs, pension plans, life insurance policies, and more. And as was observed in our recent blog on Calmusky, there is “legislation that uniquely applies to beneficiary designations (e.g. the Income Tax Act, the Succession Law Reform Act or the Insurance Act)” that appears to conflict with the decision.
And then there is the policy dilemma arising from Calmusky: if the designation is not good enough, what is? Should an affidavit be executed to corroborate the designation, or should a testator put a provision in his or her will that crystallizes existing beneficiary designations? The trouble with the latter option, which ostensibly seems to be the surest option, is that the subject matter of the beneficiary designation may, since it is mentioned in the will, have to be listed in the probate application and the Estate Information Return – leading to heightened expenses.
The last time that estate solicitors were put in such a dubious position, arguably, was when the court in Re Milne ruled that a will is a trust, thereby rendering “basket clauses”, a common estate solicitor’s tool, precarious or even invalid. Now, while Calmusky stands, there is no clear best practice with respect to bullet-proofing beneficiary designations. And sadly, Gary, who prior to Calmusky would have received the RIF funds, is left disinherited; and Henry, who prior to Calmusky would have had reason to trust in the RIF beneficiary designation, may have had his testamentary intentions frustrated.
Thanks for reading – have a great day,
Ian Hull and Devin McMurtry
What happens to communications between a solicitor and a testator once the testator passes away? Can privilege be waived in order to determine the intentions of a testator?
As stated in R v McClure, 2001 SCC 14, “solicitor/client privilege must be as close to absolute as possible to ensure public confidence and retain relevance. As such, it will only yield in certain clearly defined circumstances, and does not involve a balancing of interests on a case-by-case basis.”
It has been established that the beneficiary of privilege (i.e. the client) is able to pass on their privilege to established successors. Pursuant Bullivant v AG for Victoria  (HL), a testator’s death does not destroy the privilege that can be asserted by an executor, and the heirs of the testator.
In Hicks Estate v. Hicks, (1987) 25 E.T.R. 271, the Ontario District Court (as it then was) was faced with the question of whether an Estate Trustee could step into the shoes of the deceased individual and waive privilege in the same fashion as the deceased. In this case, the court clarified that solicitor/client privilege exists for the benefit of the client, not the solicitor.
In Goodman v Geffen,  2 SCR 353, the Supreme Court of Canada established that there are situations where privilege does not arise where the interests of the party seeking information are the same as those of the individual who retained the solicitor. For example, the court may receive evidence from a solicitor of instructions given to the solicitor by a deceased testator in order to determine the testator’s true intentions. This principle has been further explained in the case of Stewart v Walker (1903) 6 OLR 495 (CA): “the reason on which the rule is founded is the safeguarding of the interest of the client, or those claiming under him when they are in conflict with the claims of third persons not claiming, or assuming to claim under him.” As such, upon the death of a testator, it is possible for the privilege between the testator and their solicitor to extend beyond death.
Aside from trying to determine the true intentions of the testator, the principle of solicitor/client privilege upon the death of a testator can be applied to the disclosure of legal opinions to a trustee, as a trustee is bound to act in the best interests of the beneficiaries and to further their interests. This will be discussed further next week.
Thanks for reading,
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The BBC recently reported on a case in which an actress appealed from a decision of the High Court, seeking CDN$1.6 million from the estate of a 92-year old deceased woman who had left her a mere CDN$5,000 in her estate. The claimant alleged that the deceased had been in a lengthy lesbian relationship with the claimant’s mother and treated the claimant as her own daughter. The Court of Appeal dismissed the appeal, apparently concluding that she was not a dependant. (As an aside, the fact that the actress was noted to be the former wife of director Ken Russell apparently made the case newsworthy).
As has been noted in numerous past blogs, the common law recognizes various arguments that may be advanced against estates. In Ontario, a claim under Part V of the Succession Law Reform Act is the clearest example of the legislature recognizing obligations that can be binding upon and enforceable against estates, trumping even testamentary intention.
But of course, testamentary intention does matter where a claimant advances an argument based not on allegations of dependency but, rather, on allegations that he or she falls within a class of relative of the testator. Where, for example, a testator leaves his or her estate to "nephews by blood", a claim advanced by one who claims to fall within that class on the basis of the nature of the relationship (rather than being a blood relative) will almost certainly fail to oust such clear evidence of a contrary intention.
David M. Smith
Yesterday, we read about Franz Kafka’s unfulfilled wishes with respect to his manuscripts, both published and unpublished, at the time of his death in 1924. Flash forward eight decades or so. Dmitri Nabokov, the 73 yr old sole surviving heir of Vladimir Nabokov, continues his 30-yr struggle with his father’s deathbed request that his last unpublished work, The Original of Laura, be destroyed. The stakes are high for Laura; at one point, Dmitri referred to it as "the most concentrated distillation of [my father’s] creativity." The task of burning the manuscript was originally entrusted to Vladimir’s wife Vera, but when she died in 1991 she had not yet carried out her husband’s last wish.
As discussed in the Business Standard, those in favour of heeding Nabokov’s wishes are not willfully destructive. It is understood that great writers might work through countless drafts before arriving at a final product that meets their approval. On the other hand, there’s the argument that writers (including Kafka) seldom can judge their own work.
The long twisted saga may find its fate as a cliffhanger of sorts. In a dramatic verdict, Dmitri indicated late last month that he had indeed "decided to make a decision" about what to do, but that he would "neither disclose publicly either the decision or the deed." Apparently (or should I say apparition-ly?), Dmitri reached his decision after an imagined ghostly conversation with his dead father. Stay tuned for the future unveiling of either a box of Laura‘s ashes or what might be Nabokov’s greatest literary work.
David M. Smith
By my count, in the relatively short history of our website, our firm’s lawyers have blogged on the transfer of wealth by the boomers to their children on six separate occasions. See, for example, this blog and this blog. And our blogs reflect a trend to report on the subject as the dominant sociological issue in the business media. See, for example, this piece by Jonathan Chevreau of the National Post.
Numerous surveys have been released as to the intentions of boomers with respect to their estate plans. The fundamental characteristic is a focus (on those in their fifties) on enjoying quality time with their families and ensuring that their estate plan properly provides for their children both before and after they are gone. Some have suggested that this "family focus" is a departure from previous generations although I think this is open to question. Nonetheless, the statistics are illuminating, particularly respecting inter-vivos gifts to children.
Take, for instance, the findings of a Royal Bank of Canada Poll released in November, 2007:
1. Fifty-seven per cent of Canadians in their fifties have received or are expecting to receive money from their parents and in-laws;
2. Approximately three in five respondents in their fifties expect to give money, during their lifetime, to their own adult children; of those, sixty-nine per cent say they will do so because they want to see their children enjoy their lives; seven per cent say that they would not, believing that their children need to earn their own way or wait until their parent dies.
5. When contemplating their legacy, seven in ten respondents want to be remembered as a person who enjoyed time with their family. This family focus is also reflected in the finding that four in five of those in their fifties believe that "their children are their legacy."
David M. Smith