Over the holidays I had a great nostalgia trip watching the recent Netflix series “The toys that made us” about the history of toys. One of the episodes focused on “He-Man and the Masters of the Universe“. For those of you who did not grow up in the 1980s, the titular character had a habit of loudly proclaiming “I have the power” right before getting down to business and saving the day. I feel like loudly proclaiming “I have the power” is as good a segue as any to discuss the general principles surrounding the rule in Saunders v. Vautier.
The term “Saunders v. Vautier” is often thrown around by estates lawyers as if it is a foregone conclusion that everyone in the room, including clients, should instinctively know what is meant by the phrase. This, of course, is not always the case. For those needing a general refresher look no further.
When lawyers mention the rule in “Saunders v. Vautier” it is often done in reference to a scenario wherein a beneficiary is not to receive certain property until a specific age, however as the provision providing for the gift does not contain a “gift-over” to another beneficiary should the originally named beneficiary not reach the specified age, the beneficiary immediately demands receipt of the gift upon attaining 18 years of age thereby collapsing the trust. While the rule in Saunders v. Vautier can be utilized in such a scenario, it would be a mistake to assume that this is the only scenario in which the rule in Saunders v. Vautier may be utilized, as the potential applications of the rule are much more expansive than this.
At its most expansive the rule in Saunders v. Vautier can be thought of as the rule which allows a beneficiary(s) to ignore the testator’s/settlor’s intentions and vary the terms of a trust. It stands for the proposition that if all potential beneficiaries of a trust, collectively representing 100% of the potential “ownership” of the assets of the trust, unanimously direct that the trust is to be wound up and/or varied, the trustee(s) must act in accordance with the beneficiaries’ direction regardless of whether such direction goes against the testator’s/settlor’s “intention” in establishing the trust. As summarized by the Supreme Court of Canada in Buschau v. Rogers Communications Inc.:
“The common law rule in Saunders v. Vautier can be concisely stated as allowing beneficiaries of a trust to depart from the settlor’s original intentions provided that they are of full legal capacity and are together entitled to all the rights of beneficial ownership in the trust property. More formally, the rule is stated as follows in Underhill and Hayton: Law of Trusts and Trustees (14th ed. 1987), at p. 628:
If there is only one beneficiary, or if there are several (whether entitled concurrently or successively) and they are all of one mind, and he or they are not under any disability, the specific performance of the trust may be arrested, and the trust modified or extinguished by him or them without reference to the wishes of the settlor or trustees.”
If even one beneficiary of the trust, however remote their interest may be, should refuse to consent to the proposed variation, the rule in Saunders v. Vautier may not be utilized and the trust must continue to be administered as settled. If one of the potential beneficiaries of the trust is under a legal disability, whether as a result of being a minor or otherwise, the principles from Saunders v. Vautier may still be utilized, however the consent of the beneficiary under a legal disability must be obtained under the Variation of Trusts Act which allows the court to consent to the proposed variation on behalf of the beneficiary under a legal disability. Should the court ultimately provide such a consent, and assuming all remaining “sui juris” beneficiaries have already consented to the proposed variation, all potential beneficiaries would have consented to the proposed variation and the rule in Saunders v. Vautier would be invoked.
Thank you for reading. Wield that power wisely.
Today on Hull on Estates, Paul Trudelle and Stuart Clark discuss variations of trusts and a recent paper by C.D. Freedman presented at the 16th Annual Estates and Trusts summit.
If you have any questions, please email us at firstname.lastname@example.org or leave us a comment on our blog page.
Those wishing to vary a trust in Ontario, can look to the Variation of Trusts Act (R.S.O. 1990, c. V.1) (Act) for the authority to do so. Although the Act is surprisingly only one section in length, do not let the length fool you.
Essentially, the Act permits the Court to approve a variation of a trust under a will, settlement or other disposition on behalf of minor, unascertained, unborn or contingent beneficiaries if the variation, in the words of the Act, “appears to be for the benefit” of those persons.
While relying on the Act for jurisdiction to make a variation, there are many things to consider in pursuing a variation such as the procedure to follow and the criteria to meet in order to have the variation approved.
In the well-known case of R v. Irving, (1975), 11 O.R. (2d) 442 (H.C.), the Court set out three criteria to consider in determining whether to approve a variation, namely:
(i) does the variation keep alive the basic intention of the testator or settler?, (ii) does the variation benefit those for whom the Court is asked to consent?, and (iii) whether a prudent adult motivated by intelligent self-interest and sustained consideration of the expectancies and risks of the variation, would likely accept it?
There are a number of cases that have considered these criteria; too many to go into in this blog. Suffice it to say that the Act does provide an answer to the question as to whether one can vary a trust, but the answer is only a partial one as the Court will also consider criteria needed to be met in determining whether to approve a variation.
Thanks for reading,
Craig R. Vander Zee – Click here for more information on Craig Vander Zee.
My colleague Natalia Angelini blogged on February 18 of this year about the increasing possibility that independent, adult children may be entitled to dependant support.
A 2009 Ontario Bar Association paper by Susan Woodley concluded that moral obligations of deceased parents in Ontario may require them to provide proper and adequate support to their children, spouse and dependants.
While the legislation in British Columbia clearly distinguishes any case from that province, a consideration of a recent case on point illustrates the roots of this evolving trend.
In Sikora v. Sikora Estate 2009 BCSC 195, two of four adult sons of the testator brought an action under B.C.’s Wills Variation Act. The Deceased had one child by his first marriage, three children with a subsequent common-law spouse, and at his death he was married to the defendant, San Meei Sikora. The Deceased’s residue to be divided amongst three sons equalled just over $11,500.
The two plaintiff brothers maintained contact with their father despite a difficult childhood. Each plaintiff provided evidence of respective incomes of about $90,000 and $35,000 and described their relationships with their father whom they assisted in his business and investment properties over the years. The Deceased’s wife’s responses created some credibility problems for her.
Justice Cullen reviewed the case law from the Supreme Court, Tataryn v. Tataryn Estate and a B.C. case, Clucas v. Clucas Estate (1999), 25 ETR (2d) 175 (BCSC) that summarizes the principles of the Wills Variation Act.
In Sikora, the Deceased’s wife accumulated her own assets while the Deceased did not. The plaintiffs showed that despite their independence their father had a moral obligation towards them. The residue of the Deceased’s estate diminished in a manner that favoured his surviving wife and his moral obligation to his spouse was less firmly established than in other cases.
The Deceased used his money to purchase the matrimonial home, allowing the defendant to invest her money and increase her own assets. The plaintiffs succeeded and were therefore registered as tenants in common on a property with a life interest to the defendant.
Thank you for reading this week. Enjoy your weekend.
Today’s blog is the last in my series this week on the variation of a trust under the Variation of Trusts Act and touches upon the Application material to be brought in respect of the variation.
The Application seeking approval of the variation is usually brought by one or more of the capacitated beneficiaries. The respondents are typically all of the beneficiaries who are not named as the applicant(s) and the trustee (unless the trustee is the, or one of the, Applicant(s)). As a trustee is to act impartially toward the beneficiaries, it may not be appropriate for the trustee to bring the Application depending on the circumstances.
Today’s blog is a continuation of my blogs this week on the variation of a trust under the Variation of Trusts Act and will focus on the Deed of Arrangement.
The approach to, and content of, the Deed of Arrangement will most certainly depend on the circumstances involved. The approach to the Deed of Arrangement may be quite different if the variation arises as a result of an ongoing proceeding (and has been negotiated as part of that proceeding conditional on Court approval) than if it does not.
In yesterday’s blog on the procedure typically involved with a variation of a trust proceeding under the Variation of Trusts Act, I mentioned that today I would touch upon the need to appoint a litigation guardian for a minor, unascertained, unborn and/or for an incapable party in such a proceeding.
Rule 7 of the Rules of Civil Procedure regulates the bringing of proceedings by or against parties under disability. As set out in the commentary to the Rule, “its central requirement is that persons under disability must be represented by a litigation guardian…Rule 7.02 creates a presumptive right for a mentally incapable person’s guardian or attorney under power of attorney to act as litigation guardian, so long as the guardian or attorney has the authority to act by the terms of his or her appointment as guardian or attorney.”
I hope everyone had a nice Thanksgiving weekend.
In a recent blog of mine (“To vary a Trust or not to vary a Trust: Does a Statute have the Answer?”), I touched upon the Variation of Trusts Act (R.S.O. 1990, c. V.1) as the authority to vary a trust.In today’s blog and several more this week, I will comment on the procedure and documents typically involved with a variation of trust.
Having decided that a variation is necessary, the trust document should be carefully reviewed to ensure that all terms of the trust are properly understood, and to identify all of the persons having an interest or potential interest (actual and potential beneficiaries) in the trust, to consider those that need to sign the proposed arrangement (which sets out the variation proposed), to consider who will require representation before the Court and those that will be affected by the variation.
The procedure for such a variation consists of the preparation of and signature of a Deed of Arrangement (or agreement setting out the variation that the Court is requested to approve), and an Application to the Ontario Superior Court of Justice (to be heard before a single Judge) seeking a Judgment approving the Deed of Arrangement on behalf of the minor, unborn, unascertained, incapable or contingent beneficiary.
The Application materials, in turn, consist of a Notice of Application and affidavit material supporting the variation. A factum will also be required unless leave is sought further to Rule 38.09(4) of the Rules of Civil Procedure dispensing with the necessity of the factum. A draft Judgment should also be submitted when the materials are served and filed.
A Consent to the Application signed by all of the capacitated beneficiaries is best included as part of the Application material. A letter/document from the Children’s Lawyer/Public Guardian and Trustee indicating their position (ie. that they do not object on behalf of their respective interest) is also typically a part of the Application materials, unless the Children’s Lawyer/Public Guardian and Trustee are attending in Court at the Application before the Judge.
In tomorrow’s blog, I will take a look at the appointment of the litigation guardian for the minor, unborn, unascertained or incapable beneficiary of the trust for the purposes of a variation of trust.
Thanks for reading. Craig
Listen to Dependant Relief.
This week on Hull on Estates, Natalia Angelini and Craig Vander Zee discuss dependant relief and reference a variety of cases that utilized the Succession Law Reform Act.
In Cummings v. Cummings, the Court of Appeal affirmed the decision made by the application judge at first instance.
In coming to this conclusion, the Court of Appeal was strongly influenced by the concepts set out in the decision of the Supreme Court of Canada in Tataryn v. Tataryn Estate ( 2 S.C.R. 807 (S.C.C.)).
The decision in the Tataryn case held that moral considerations were applicable to a determination as to the amount of a dependant’s support award in the context of the British Columbia statute (The Wills Variation Act, R.S.B.C. 1979, c. 435).
Until the Cummings v. Cummings decision, the approach to quantifying dependant’s relief claims in Ontario was to essentially ignore the Tataryn moral considerations approach. This was as a result of the fact that the Tataryn decision was an appeal from the British Columbia Court of Appeal and was in respect to section 2(1) of the Wills Variation Act, which included substantially different wording than that of the SLRA. The Wills Variation Act assists dependants where there is a will which does not "in the Court’s opinion, make adequate provision for the proper maintenance and support of the testator’s wife, husband or children".
It is this language that has allowed the British Columbia Courts to approach the whole question of quantifying dependant’s relief on a very different basis and on a moral conviction approach. The language in the Wills Variation Act is broadly drafted and essentially allows the Court to do what it thinks is adequate, just and equitable in the circumstances.
With the Cummings v. Cummings decision essentially embracing the decision of Tataryn, a very different approach must be considered in respect of quantifying dependant’s relief claims in Ontario.
We hope this case gives you an idea of the application of the basics legal definitions and terms.
All the best, Suzana and Ian. ——–