Guardianship litigation can be messy and upsetting to those involved in such proceedings, particularly when there are multiple family members fighting over who should act as guardian.
It is also possible for a guardianship application to be brought on an uncontested basis, meaning that no one is opposing the appointment of the proposed guardian. That being said, given that the appointment of a guardian is a serious restriction on a person’s liberty, the courts do not take guardianship appointments lightly, and still have strict requirements for evidence, even in uncontested guardianships.
Pursuant to s. 22(1) of the Substitute Decisions Act, 1992 (the “SDA”), and s. 55(1) of the SDA, the court may appoint a guardian of property and/or personal care for a person who is incapable of managing property and/or personal care if, as a result of that incapacity it is necessary for decisions to be made on his or her behalf by a person authorized to do so.
Least Restrictive Course of Action
Sections 22(3) and 55(2) of the SDA provide an important restriction on the court’s ability to appoint a guardian, requiring that a court not appoint a guardian if it is satisfied that the need for decisions to be made will be met by an alternative course of action that is less restrictive of the person’s decision-making rights than the appointment of a guardian.
In particular, if a person has made a power of attorney for property or personal care naming the individual(s) who they wish to make decisions on their behalf in the event of their incapacity, the court may be reluctant to appoint a guardian and override the person’s own choice of a substitute decision-maker. Accordingly, a guardianship application should include evidence as to whether the alleged incapable person has executed powers of attorney, and what efforts the applicant has made to determine whether powers of attorney exist.
It is also important to remember that even if a person is incapable of managing their property or personal care, he or she may still be capable of making a power of attorney in this regard. Allowing a person to name their own substitute decision maker will of course be less restrictive of his or her decision-making rights than the court imposing a guardian on him or her. Accordingly, a person’s capacity to make powers of attorney should always be considered in the context of a guardianship application, and evidence in this regard should be provided to the court.
Furthermore, if a person is capable of naming his or her own attorney by executing powers of attorney, it may be possible to avoid the costs of a guardianship application, which can be significant.
A Finding of Incapacity is Required
There is also a statutory requirement in s. 58(1) of the SDA that the court make a finding of incapacity in order to appoint a guardian. The court will require evidence in support of a finding of incapacity. Most frequently, this will take the form of a capacity assessment by a trained capacity assessor.
Sometimes applicants are hesitant to obtain a capacity assessment of an alleged incapable person, either due to the cost of the assessment, fear of upsetting the person, or some other reason. While these concerns are understandable, it is important that the court be provided with evidence sufficient to allow it to make the finding of incapacity. Otherwise, it will not be able to appoint a guardian. The cost of the capacity assessment will almost certainly be less than the cost of bringing a guardianship application, only to be unsuccessful when the court is unwilling to appoint a guardian without adequate evidence to satisfy it as to incapacity.
A capacity assessment is also useful as it may reveal that an alleged incapable person does have some level of capacity. As noted above, a person may be capable of executing a power of attorney, even if he or she is incapable of managing his or her own property or personal care. In that case, a guardianship application may be able to be avoided altogether.
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In Ontario, the Succession Law Reform Act, R.S.O. 1990, c. S.26 allows a deceased person’s dependants, to whom the deceased has not made adequate provision for his or her proper support, to seek an order for support to be made to the dependant out of the deceased’s estate. In order to qualify as a “dependant”, a person must be a spouse, parent, child, or sibling of the deceased “to whom the deceased was providing support or was under a legal obligation to provide support immediately before his or her death.” There are therefore several conditions for a person to be able to obtain an order for dependant’s support:
- they must have one of the required relationships with the deceased (spouse, parent, child, or sibling);
- the deceased must have been providing them with support, or have a legal obligation to provide support, immediately before the deceased’s death; and
- any provision made for the person in the deceased’s Will (if any) must be inadequate.
British Columbia deals with dependant’s support differently than Ontario. In B.C.’s Wills, Estates and Succession Act, S.B.C. 2009, c 13, s. 60 provides that if a testator does not make adequate provision for the proper maintenance and support of his or her spouse or children in his or her Will, the court may order the provision that it thinks adequate, just, and equitable in the circumstances for the spouse or children out of the testator’s estate. Unlike the Ontario law, it is not a requirement that the testator had been providing support to his or her spouse or children prior to death. This difference is significant because in Ontario, independent adult children are typically not able to obtain dependant’s relief as they do not meet the requirements of a “dependant”. In BC case law, there is also a greater emphasis on a testator’s moral duty to his or her dependant’s than there is in Ontario.
The BC Supreme Court decision in Jung v Poole Estate, 2021 BCSC 623 provides an example of how the difference in the law in Ontario vs. B.C. can result in vastly different outcomes. In Jung v Poole, the testator was survived by his two twin daughters, Courtney and Chelsea. Courtney and Chelsea’s mother had been dating the testator when she became pregnant. The testator suggested an abortion but the mother chose to keep the twins, and raised them as a single mother without any involvement or financial assistance from the testator. The mother died when the twins were 4 years old, and a custody battle ensued between the testator and the twins’ grandmother on their mother’s side, on the one hand, and a couple who were friends of the mother’s and whom the mother had named in her Will to be the twins’ joint guardians, on the other hand. The testator expressed a desire to be involved in raising the twins at that time.
Ultimately, the court determined that the couple chosen by the mother to be the twins’ guardians would become the twins’ custodial parents. The testator and the grandmother were allowed specific and generous parenting time, access, and consultations regarding major areas of the twins’ lives. However, the testator never exercised any of these rights and, with the exception of one attempt to contact the twins the year after the custody decision, ceased to have any involvement in their lives.
The testator executed two Wills after the custody decision, both of which disinherited the twins. In one Will the testator referred to the twins as his illegitimate children, and in the other he explained that one of his reasons for disinheriting them was that they had not made efforts to contact him.
As stated by the court, if the court concludes that the testator owed a moral obligation to the twins and did not make adequate provision for their proper maintenance and support, the court has the authority to vary the testator’s Will to make the provision for them that, in its view, is adequate, just and equitable in the circumstances.
The court did ultimately conclude that the testator abandoned the twins from the outset, as well as after the custody battle, and had a strong moral obligation to them, which he failed to meet during his lifetime. As a result, the court varied the testator’s Will to provide 35% to each of Courtney and Chelsea, and 15% to each of the two friends of the testator who had been named as estate trustees and sole beneficiaries of his estate. The court was of the view that the testator had blamed the twins for the decision in the custody battle, even though that was beyond the twins’ control, and also blamed them for the lack of relationship, notwithstanding what the court found were valid and rational reasons given by the twins in this regard (including that they were hurt that the testator had wanted their mother to abort them, and the testator’s actions during their lives made it clear to them that he did not want them in his life).
It is unlikely that the same decision would have been reached had this situation occurred in Ontario. The fact that the twins were independent adults, and that the testator had not been providing them with support, nor under a legal obligation to provide them with support, immediately before his death, would likely have resulted in a decision that the twins were not entitled to support, regardless of the unfortunate circumstances between the twins and the testator.
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During the COVID-19 pandemic, our Courts have unfortunately, but necessarily, been impacted. As a result, the Courts have, at times, had to restrict the matters that may be heard to only those that are urgent, as defined by the Notices to the Profession that have been published by the Court. For instance, the Consolidated Notice to the Profession, Litigants, Accused Persons, Public and the Media lists a number of matters that are to be considered urgent. With respect to civil and commercial list matters, this includes “urgent and time-sensitive motions and applications in civil and commercial list matters, where immediate and significant financial repercussions may result if there is no judicial hearing.” Discretion is also granted to allow the Court to decline to hear any particular matter described in the Notice as being urgent, if appropriate, or to allow a hearing that the Court deems necessary and appropriate to be heard on an urgent basis.
Despite the Notices from the Court, there may still be confusion amongst parties as to whether their matter qualifies as “urgent” or not. As The Honourable Justice Myers stated in the recent decision of Nicholas v. Ogniewicz, 2021 ONSC 4442, “Self-induced urgency is not ‘urgent’.”
In Nicholas v Ogniewicz, the issue was that there had been an agreement of purchase and sale with respect to real property, which provided that the purchaser would submit requisitions two weeks prior to closing. Unfortunately, the requisitions submitted by the purchaser were extensive, and as noted in the decision, it was apparent that several of the requisitions could not be physically accomplished before the closing date.
A week after the requisitions were received, the vendor asked for an urgent hearing date, pursuant to the Notice to Profession – Toronto, Toronto Expansion Protocol for Court Hearings during Covid-19 Pandemic, to resolve the validity of the requisitions.
Justice Myers described the current state of the civil list in Toronto as follows:
The civil list in Toronto is building a backlog of motion and application hearings. It is currently suffering unacceptably long timeouts for civil motions and applications due to the effects of the pandemic and a lack of resources. Truly urgent matters are being heard on an urgent basis. But no judge is sitting around waiting for them to come in. They are heard at a cost to other cases waiting in the queue or to case conferences that the judge may have to defer, or to parties waiting for the release of the judge’s reserved decisions that the judge was writing in her non-sitting time.
In the court’s view, in this particular case the time-sensitivity present was self-induced by both sides. It was also noted that no one was at risk of physical injury, the property was not about to suffer irremediable waste, no confidential information was at risk of disclosure or misuse, and no business was at risk of imminent failure or irreparable harm unless misconduct is urgently prevented. Ultimately, the court determined that the matter was not urgent as set out in the Notice to the Profession, and there was no basis for it to jump the queue.
Although there may be a light at the end of the pandemic tunnel, we must all still be mindful of the long-lasting consequences, including the heavy backlog that continues to exist, and will likely continue to exist for some time, in our courts.
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When there is a Last Will and Testament the question of who is going to act as Estate Trustee is usually fairly straightforward, with the Will typically naming an individual to such a role. In the event the individual who is originally named as Estate Trustee is unable or unwilling to act, the Will often provides for an alternate individual to be appointed. But what happens when the Will does not name an Estate Trustee or an individual dies intestate? Who gets to be the Estate Trustee under such a circumstance?
The order of priority for who gets to act as Estate Trustee when there is no one appointed is governed by section 29(1) of the Estates Act, which provides:
“Subject to subsection (3), where a person dies intestate or the executor named in the will refuses to prove the will, administration of the property of the deceased may be committed by the Superior Court of Justice to,
(a) the person to whom the deceased was married immediately before the death of the deceased or person with whom the deceased was living in a conjugal relationship outside marriage immediately before the death;
(b) the next of kin of the deceased; or
(c) the person mentioned in clause (a) and the next of kin,
as in the discretion of the court seems best, and, where more persons than one claim the administration as next of kin who are equal in degree of kindred to the deceased, or where only one desires the administration as next of kin where there are more persons than one of equal kindred, the administration may be committed to such one or more of such next of kin as the court thinks fit.”
Although the court retains the power to select amongst this group as it “thinks fit”, generally speaking the individual entitled to be appointed as Estate Trustee is the Deceased’s spouse followed by their next of kin (or some combination of these individuals). Section 29(3) of the Estates Act contemplates that the right of these individuals to be appointed as Estate Trustee is not absolute, with the court having the ability to select a different person if it thinks fit. The position of a majority of the beneficiaries can also be taken into account in selecting the individual under section 29(2).
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Remember travel? Remember getting on an airplane and going somewhere (anywhere) else? Although you would be forgiven for thinking of these activities as science fiction due to recent world events, with the COVID-19 pandemic hopefully on its downward trend the idea of travel could again be creeping back into the collective consciousness.
Although the more common souvenirs to bring back from a vacation are likely a sunburn and some tacky items with the name of the destination emblazoned across it, as this is an estate blog it got me thinking of whether there may be any estate related souvenirs that you could bring back. Could you, for example, sign a new Last Will and Testament while on vacation, potentially adding a Will with an exotic destination name at the top to the list of items you bring back? Could such a Will later be admitted to probate in Ontario? Like any good legal question the answer is “maybe”.
In Ontario the potential admittance of a foreign Last Will and Testament is governed by section 37(1) of the Succession Law Reform Act, which provides:
“As regards the manner and formalities of making a will of an interest in movables or in land, a will is valid and admissible to probate if at the time of its making it complied with the internal law of the place where,
(a) the will was made;
(b) the testator was then domiciled;
(c) the testator then had his or her habitual residence; or
(d) the testator then was a national if there was in that place one body of law governing the wills of nationals.” [emphasis added]
In accordance section 37(1)(a) of the Succession Law Reform Act, a foreign Will can be admitted for probate in Ontario so long as it complied with the internal law of the place where it was made at the time it was signed. As you would presumably be presently located in the destination on which you were on vacation, so long as the Will complied with the laws of the jurisdiction where you were on vacation at the time it was signed it could theoretically later be admitted to probate in Ontario making your vacation Will a valid Will in Ontario.
In considering your potential vacation Will it would be wise to remember that just because you “can” do something doesn’t mean you “should”, with a vacation Will likely being in the same category as a vacation tattoo as something that should be very seriously considered and thought through before it is done.
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You are the owner of real property that you would like to transfer to one of your children upon your death. Although you could include the bequest of this property in your Last Will and Testament, in the hope of potentially minimizing estate administration tax you decide to sign the transfer for the property now and provide your lawyer with clear instruction that it is not to be registered until after your death. Is this transfer valid and/or an effective estate planning tool?
A transfer/deed of land for real property which is not registered until after the transferor’s death is known colloquially as a “zombie deed”, insofar as they are said to come back to life after the transferor’s death. The use and availability of zombie deeds in Ontario is highly problematic.
The potential validity and/or enforceability of “zombie deeds” was recently considered by the Ontario Superior Court of Justice in Thompson v. Elliott Estate, 2020 ONSC 1004, wherein the court confirmed that zombie deeds were generally inoperable and could not be registered by a lawyer after the transferor’s death. In coming to such a decision the court places great emphasis on the fact that the Ontario registry office is correct in refusing to allow the registration of “zombie deeds” as they require the lawyer registering the document to knowingly make false statements, namely that the individual completing the transfer is still alive.
The Ontario Court of Appeal in Re Sammon (1979), 22 O.R. (2d) 721, confirmed that in order for a transfer to be valid the transferor must have intended to be “immediately and unconditionally bound” by the transfer at the time of signing. This requirement to be “immediately and unconditionally bound” by the transfer raises obvious questions surrounding whether a transfer that was signed under the instructions not to be registered until after the transferor’s death could be a valid transfer, as by the very instruction it would appear the transferor did not intend to immediately be bound by the transfer.
The Ontario Court of Appeal in Carson v. Wilson,  O.R. 113, confirmed that a transfer that was signed under direction not to be registered until after the transferor’s death could not be considered effective due to the issues surrounding the requirement to be “immediately and unconditionally bound”. As summarized by the court in Tubbs v. Tubbs,  O.J. No. 4373:
“The court held that the documents did not operate as present assignments or either immediate or remainder interests in the particular lands because there was no acknowledgement by the deceased, express or implied, of any intention to be immediately and unconditionally bound by them. Nor could the deeds be regarded as effective escrows. Delivery was contingent on death, and accordingly the court found that they were not effective deeds or assignments but testamentary dispositions which failed for want of compliance with the Wills Act. The Court of Appeal went on to hold that it could not be argued that the documents amounted to valid declarations of trust by the deceased.” [emphasis added]
The requirement that the individual transferring the property must have intended to be immediately and unconditionally bound by the transfer makes the potential use and availability of zombie deeds problematic, for by their very design the transferor likely intended to continue to enjoy some level of control over the property after signing the deed, whether it be the continued use and occupation of the property or otherwise. As a result any individual considering the potential use of a “zombie deed” should likely approach the topic with caution.
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Pursuant to section 3 of the Substitute Decisions Act, 1992 (the “SDA”), if there is a proceeding under the SDA where a person’s capacity is in issue, but they do not have legal representation, the court may direct that the Public Guardian and Trustee (the “PGT”) arrange for legal representation for the person. The person will be deemed to have capacity to instruct counsel. This legal representation is often referred to as “section 3 counsel”.
We have previously blogged about the role of section 3 counsel (for instance, here and here). Section 3 counsel has been described as a safeguard that protects the dignity, privacy, and legal rights of a person who is alleged to be incapable.
Section 3 counsel plays a very important role in proceedings dealing with a person’s capacity, as they allow the person whose capacity, and possibly their rights and liberties, are at issue, to have a voice before the court.
In Singh v Tolton, 2021 ONSC 2528, there was a proceeding relating to the validity of powers of attorney executed by Rajinder Kaur Singh. The PGT proposed that the court consider appointing section 3 counsel for Rajinder. One of Rajinder’s children also requested that section 3 counsel be appointed. One of her other children, Anney, took the position that section 3 counsel was not necessary and raised a concern with the expense of appointing counsel, which cost would be borne by Rajinder.
The court concluded that this was an appropriate situation for the appointment of section 3 counsel. In coming to this conclusion, the court considered the purpose of the SDA, which is to protect the vulnerable. As noted by Justice Strathy, as he then was, in Abrams v Abrams,  O.J. No. 5207, proceedings under the SDA do not seek to balance the interests of the litigants, “but the interests of the person alleged to be incapable as against the interest and duty of the state to protect the vulnerable.” Section 3 is just one of the provisions of the SDA that demonstrate the care that must be taken to protect the dignity, privacy, and legal rights of the individual.
The court in Singh v Tolton also noted that the material before it disclosed a family at odds regarding Rajinder’s personal care. In a situation such as this, there may be a concern that the wishes or best interests of the person whose capacity is in issue will be lost amidst the fighting family members. Section 3 counsel can serve a crucial function in these types of circumstances, by sharing the person’s wishes and instructions with the court.
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When a parent transfers assets to an adult child, the rebuttable presumption of resulting trust will apply to that transfer. Unless the child can rebut the presumption, it will be presumed that the child was holding the transferred assets in trust for the parent.
But what kind of evidence will be needed to rebut the presumption? Ideally there would be some kind of documentation made contemporaneously with the transfer to support the parent’s intention. If the documentation is lacking, there may be evidentiary issues where the parent has passed away or is incapable, and is not able to give evidence as to his or her intention at the time of the transfer.
In the recent decision of Pandke Estate v Lauzon, 2021 ONSC 123, the court considered two cheques paid by a mother, Carol, to her adult son and daughter-in-law, Steven and Marnee, in the amounts of $35,000.00 and $90,000.00, respectively, shortly before her death. The court reviewed the evidence in determining whether the presumption of resulting trust was rebutted, or whether Carol had intended the cheques to be gifts.
Carol was diagnosed with terminal pancreatic cancer in 2017, and died about a month following her diagnosis. At the time that she was diagnosed, she lived with her husband, William, to whom she had been married since 1992. Following her diagnosis, it was decided that Carol would move in with Steven and Marnee, as William was not physically capable of providing her the care that she would require. Shortly after moving in with Steven and Marnee, Carol provided a cheque in the amount of $35,000.00, payable to Marnee, with a note on the cheque stating that it was “For Rent”. Four days later Carol provided another cheque payable to Steven, in the amount of $90,000.00, with the note on the cheque stating “Medical Expenses”. The total value of the two cheques constituted the majority of Carol’s liquid assets. William, who was the sole beneficiary of Carol’s estate, challenged these payments following Carol’s death.
The court found that the $35,000.00 payment was intended to be a gift by Carol to Steven and Marnee. Part of the evidence on which the court’s conclusion in this regard was based was Marnee’s hearsay evidence of what Carol had told her about why she was making the payment, being that Steven had left his job to care for Carol and she did not want him to suffer financially as a result. The court found that Marnee’s hearsay evidence could be admitted, notwithstanding that it was hearsay, on the basis that it fell within a traditional exception to the hearsay rule (that the statement is adduced to demonstrate the intentions or state of mind of the declarant at the time the statement was made) and under the principled approach to hearsay evidence as it met the necessity and reliability requirements. The court also found that Marnee’s evidence was corroborated by independent evidence.
However, with respect to the $90,000.00 payment, the court found that there was insufficient evidence to rebut the presumption of resulting trust. Although the court admitted Steven’s evidence of statements made by Carol to him as to her state of mind at the time the cheque was signed, the court also raised other concerns with Steven’s evidence. For instance, the reference to “Medical Expenses” noted on the cheque was concerning, as there were no medical expenses, and the court wondered why Carol would not have simply indicated that it was a gift if that is what she intended it to be. The court was also not convinced by a statement that Steven said was made by Carol that she was making the payment because she did not want Steven to suffer financially because he had left work to care for her, given that only a few days before Carol had made the $35,000.00 payment, which paid off Steven’s truck loan, line of credit, and left around $15,000.00 cash to spare. There was also no corroborating evidence of Carol’s intention to gift the $90,000.00 amount to Steven. As a result, Steven held the $90,000.00 in trust for Carol’s estate.
Unfortunately, it is often the case that payments to adult children are challenged after the parent has died. Unless the parent has taken special care to document his or her intention in making the payment, the intention can be difficult to determine with any degree of certainty. Accordingly, a parent making a gift to an adult child should consider seeking legal advice as to the best way to document such a transfer in order to ensure that their intentions will be upheld. From the opposite perspective, if a parent wants to make a transfer on the basis that their adult child will hold the asset in trust for him or her, or his or her estate, the parent should also consider seeking legal advice to ensure that this is properly documented in order to reduce the chance of issues arising in this regard after his or her death.
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I have blogged this week about the general availability of “pour over clauses” and whether you can leave a bequest in a Will to an already existing inter vivos trust. In my blog yesterday I discussed “facts of independent significance” as one of the potential arguments that has been raised to attempt to uphold “pour over clauses”, and how the concept was rejected by the British Columbia Court of Appeal in Quinn Estate v. Rydland, 2019 BCCA 91. In today’s blog I will discuss another argument that was raised in Quinn Estate to try to uphold pour over clauses; the doctrine of “incorporation by reference”.
The doctrine of incorporation by reference at its most basic allows a Will to refer to a separate document which provides for dispositive provisions, with such a separate document being “incorporated” into the Will to be carried out by the executor as part of the administration of the Will. The most common example of incorporation by reference would be a memorandum directing who is to receive various personal items from the testator, with the Will directing the executor to distribute the personal items in accordance with the terms of the separate memorandum.
The general test for whether a document can be incorporated by reference into a Will is:
- It must be clear that the testator in the Will referred to some document then in existence; and
- the document in question must be beyond doubt the document referred to.
When incorporation by reference is raised as part of an attempt to uphold a pour over clause it appears to be the argument that so long as the inter vivos trust was in existence at the time the Will was signed, and the trust is clearly identified by the Will, that it should be able to meet the test for incorporation by reference such that the “pour over clause” can be saved.
In Quinn Estate the court ultimately rejects the attempt to save the pour over clause under the doctrine of incorporation by reference, appearing to emphasize there is a fundamental flaw in the attempt to incorporate a trust by reference into a Will insofar as it does not appear to be the testator’s intention to actually incorporate the terms of the trust into the Will, but rather simply to make a distribution to the separate trust. When something is “incorporated by reference” into a Will it means exactly that, insofar as the terms of the separate document are said to be incorporated into the Will and read as a single document. This concept appears fundamentally at odds with any attempt to make a bequest to an already existing trust under a pour over clause, as the testator never likely intended to have the terms of the trust incorporated into the Will to be administered by the executor as part of the Will, but rather to have the executor make a bequest to the trust to be administered separately from the estate. In emphasizing this point the British Columbia Court of Appeal in Quinn Estate states:
“Strictly speaking, resorting to incorporation by reference to incorporate the original trust document into the will belies the essential nature of a pour-over clause: here it is perfectly clear that the will-maker had no intention of incorporating the trust into his will. He rather demonstrated the obvious intention of making a gift to the trust.”
As my blogs this week have shown, any attempt to leave a bequest in a Will to an already existing inter vivos trust using a “pour over clause” is highly problematic.
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Trusts are generally divided into two categories; “inter vivos” or “testamentary” trusts. Inter vivos trusts are broadly defined as trusts that are established by a settlor while they are still alive, typically pursuant to a deed of trust, while testamentary trusts are established in the terms of a Will or Codicil. Generally speaking there is no overlap between an individual’s Will and any inter vivos trust, with any inter vivos trust existing separate and apart from the settlor’s “estate”. But does this have to be the case? Could you theoretically, for example, leave a bequest in a Will to an inter vivos trust that you previously established, thereby potentially increasing the assets governed by the trust upon your death, or must a trust which governs estate assets be a “testamentary trust” established by the Will? The short answer is “it depends”, although any individual considering such a bequest should proceed with extreme caution.
A clause in a Will that provides for the potential distribution of estate assets to a separate inter vivos trust is often referred to as a “pour over” clause, insofar as the assets of the estate are said to “pour over” into the separate trust. The availability and use of “pour over” clauses in Ontario is somewhat problematic.
The fundamental issue with the use of “pour over” clauses that allow a bequest to be made to a trust is that the formalities that are required to make or amend a trust are much lower than the formalities that are required to establish a Will, with trusts often containing provisions that will allow for their unilateral amendment or revocation after their establishments. The statutes which establish the parameters that are required for a Will to be valid are very strict, with a Will only being able to be later amended or altered if it too meets very strict criteria. The potential concern in allowing a distribution from a Will to a separate trust that can easily be amended after the execution of the Will is that it could create the scenario in which an estate plan could be altered after the Will was signed in a way that would not meet the strict formal requirements that would otherwise be required for a Will to be altered or amended.
In Ontario the formalities required for a Will to be valid is established by section 4(1) of the Succession Law Reform Act. A Will that has been signed in accordance with the formal requirements of section 4(1) can only be altered or amended by a Codicil that itself has been signed in accordance with the formal requirements of section 4(1), or if the alterations to the Will meet the requirements of section 18 of the Succession Law Reform Act. Unlike alterations and/or amendments to a Will, an alteration or amendment to a trust does not need to meet any formal statutory requirements for it to be valid, with the only requirements being those stipulated in the trust document itself and/or under the rules in Saunders v. Vautier. As a result, an inter vivos trust to which a bequest was directed using a “pour over” clause could theoretically be changed numerous times after the signing of the Will either with or without the involvement of the testator, thereby bringing into question whether the bequest actually represents the deceased’s testamentary intentions at the time the Will was signed.
In Quinn Estate v. Rydland, 2019 BCCA 91, the British Columbia Court of Appeal upheld the lower British Columbia Supreme Court decision, 2018 BCSC 365, which found that a “pour over” clause which purported to distribute certain estate assets to a trust that was settled by the Deceased during his lifetime was inoperable, with the funds that were to be distributed to the trust instead being distributed on an intestacy. In coming to such a decision the court appears to place great emphasis on the fact the trust in question could be amended unilaterally after the fact and in fact was amended in such a fashion after the execution of the Will.
The court in Quinn Estate provides an excellent summary of the considerations to make when determining whether a “pour over” clause can be upheld, including the concepts of “facts of independent significance” and “incorporation by reference”. I will discuss the concepts of “facts of independent significance” and “incorporation by reference” as they relate to pour over clauses in my remaining blogs this week.
Thank you for reading.