Estate Planning – Considerations when Adding a Child as Joint Tenant to your Property

Many parents put their children on title to their residence as a form of estate planning. While this can help avoid probate fees and possibly assist with ease of administration of an estate, the case of Gully v. Gully, 2018 BCSC 1590 [Gully], demonstrates that parents must be careful when adding children onto title to their residence.

In Gully, a mother added her son as a joint tenant on title to her Burnaby property. She did so based on legal advice she received, including that her estate could avoid probate fees. She did not tell her son that he had been added as a joint tenant to title of the property.

In August of 2017, the son, and his company, consented to a judgment of $800,000.00 in favour of Ledcor Construction Limited (“Ledcor”). Ledcor discovered that the son was on title to the property and registered their certificate of judgment on the son’s undivided half interest in the property.

The mother sought a declaration, amongst other things, that the son held the property on a resulting trust for her estate. The court found that the son did not hold the property on a resulting trust for the estate and permitted Ledcor to retain their judgment on title, ultimately stating:

 [24]        Ms. Gully took a risk in registering her son as a joint tenant on her property. Whether she was properly advised of that risk is not before me. However, once she made the decision to register an interest in the Burnaby Property in Mr. Gully’s name, third party creditors of Mr. Gully became entitled to register judgments against Mr. Gully’s interest in the Burnaby property.

If you would like to book an appointment with any of our estate planning lawyers, please contact Heath Law LLP at
250-753-2202 or TOLL FREE: 1-866-753-2202.

Wills and Estate Law – Court Considerations in Wills Variation Cases

In the recent case of Peterson v. Welwood, 2018 BCSC 1379 (“Peterson”), a son sought, amongst other things, to vary his father’s will for failing to make provision which was adequate, just, and equitable in the circumstances.

In making its analysis, the Court stated that the following considerations have been accepted as informing the existence and strength of a testator’s moral duty to independent children:

  • the relationship between the testator and claimant, including abandonment, neglect and estrangement by one or the other;
  • the size of the estate;
  • contributions by the claimant;
  • any reasonably held expectations of the claimant;
  • the standard of living of the testator and claimant;
  • gifts and benefits made by the testator outside the will;
  • the testator’s reasons for disinheriting;
  • financial need and other personal circumstances, including disability, of the claimant;
  • misconduct or poor character of the claimant; and
  • competing claimants and other beneficiaries (para 190).

Relevant to the inquiry in Peterson was the fact that the plaintiff’s father had put the plaintiff on title to the father’s residence as a joint tenant, and the plaintiff became the sole owner of the property after his father died. The Plaintiff also received certain Canada Savings Bonds directly from the Deceased.

In balancing the factors noted above, the Court ultimately refused to vary the Deceased’s Will and found as follows:

[246] The plaintiff undoubtedly believes that his father has treated him unfairly. The Deceased’s disappointment and mistrust in his son, whether justified or not, appears to have precipitated the change in his estate planning. However, even with the change, the plaintiff received approximately 51% of the Deceased’s assets as of the date of death. This disposition was one of a range of possible dispositions of his assets. In all the circumstances, I am unable to conclude that the Deceased chose an option that fell outside the range of options that might be considered appropriate by a contemporary judicious parent. The appellate authorities have repeatedly cautioned that if a will-maker arranges his affairs in a manner that falls within the range of options that might be considered appropriate by a contemporary judicious parent, the will-maker’s testamentary autonomy must be respected.

If you have a question about a wills variation issue, please contact Heath Law LLP at 250-753-2202 and ask to speak to someone in the Wills and Estates Department.

Ever since 2015, when the Supreme Court of Canada decided in Carter v Canada (Attorney General) that a prohibition on physician-assisted suicide was unconstitutional, Canada has had to redefine what end of life care means and what rights individuals have at this time. This is an ongoing process that will likely continue for many years.

The Supreme Court declared that it violated an individual’s rights to life, liberty, and security of the person to be denied medical assistance in dying (“MAiD”) if the person consents, and if they had a grievous and irremediable medical condition that causes enduring and intolerable suffering. In response to Carter, the federal government passed a law that allowed an individual to receive MAiD, but only if they met the conditions in Carter and if their natural death had become reasonably foreseeable.

The new law has been the subject of another constitutional challenge by the BC Civil Liberties Association, which was one of the plaintiffs in the Carter decision in 2015. They argue that the current law is overly restrictive, and that it excludes people with multiple sclerosis, Huntington’s disease, and Parkinson’s disease that should be allowed to have access to MAiD.

The discussion around MAiD continues in the courts, Parliament, legislatures, and in our homes. If you or a loved one is considering MAiD, be sure to research and understand the legal and personal implications of this important decision.

If you need legal advice on medical assistance in dying, end of life planning, or any other law related inquiry, please contact us.

Not every attempt to make a valid Will is successful. The Wills Estates and Succession Act (WESA) of British Columbia has certain requirements that must be established and proven if the Will is to be deemed valid.

There is an age requirement that is designated by s. 36 of the WESA. S. 36 states that a person who is 16 years or older and is mentally capable may make a Will. A Will that is made by someone under 16 is therefore presumptively invalid.

There are other somewhat more technical requirements needed to make a valid Will found in s. 37 of the WESA. For a Will to be valid it must be (a) in writing, (b) signed at its end by the Will-maker or the signature at the end must be acknowledged by the Will-maker as his or hers, in the presence of 2 or more witnesses present at the same time, and (c) signed by 2 or more of the witnesses in the presence of the Will-maker. S. 40 of the WESA provides the age requirements for witnesses to a Will. Signing witnesses to a Will must be 19 years of age or older.

Once the technical requirements for making a Will are met there are also limitations to the type of property that can be gifted in a Will. S. 41 of WESA states that a person may by Will, make a gift of property to which he or she is entitled at law or in equity at the time of his or her death, including property acquired before, on or after the date the Will is made. This effectively means that one is only able to gift property that the Will-maker actually has or is entitled to.

Creating a Will is a significant life event that needs to be attended to with the proper diligence and care. If you would like to create your first Will or have any questions regarding your existing Will please contact Heath Law LLP at 250-753-2202.

A Will that contains unclear provisions may be found to be invalid or the particular gifts that are the subject of the unclear provisions may fail. People attempting to write their own Wills may be unaware that the Will is unclear. However, there may be more than one possible interpretation that the Will-maker did not anticipate which may make the provision seem unclear.

If a gift is unclear, a Court may be asked to interpret the Will to determine the Will-maker’s true intention. This will result in significant legal expenses for the Estate and the Court may not be able to determine the Will-maker’s true intent. An unclear Will may result in an intestacy (i.e., when a person dies without having a Will) which, in turn, could result in an unintended person receiving a gift or benefit by virtue of the default provisions of the British Columbia Wills, Estate, and Succession Act (WESA).

“Fixing” Ambiguities in a Will

Just because a Will contains an unclear provision, does not necessarily mean that the Will will be found to be invalid or that the gift containing the unclear provision must fail. Under WESA, there are provisions that can cure certain errors contained in a Will. However, these provisions cannot fix a Will where the Will-maker did not have the required mental capacity or the Will-maker was unduly influenced when making the Will.

Under WESA, a Will that is not in a typically acceptable form may be found to be valid if the Court determines that the Will represents the intentions of the deceased person. For example, the Court may consider whether a journal/diary entry represents the testamentary intention of the deceased.

Alternatively, a Court may also be able to fix an error in a Will if it appears that there is uncertainty because of a simple mistake made by the Will-maker or the person who drafted the Will or because the person who drafted the Will misunderstood the Will-maker’s intention. In these circumstances, the court may choose to look to evidence of the Will-maker’s intention to determine what his or her true intention was regarding the unclear provision. An application to fix an error contained in a Will must generally be made within 180 days of probate being granted.

Consequences of Faulty Estate Planning

Wills are intricate instruments where details matter.  The preparation of a Will requires care and diligence.  If improper care is taken, certain gifts may not be received by the person or entity that the Will-maker intended.  This article will canvas two areas where the gifts in a Will may not be distributed in accordance with the Will-makers wishes.

A gift could be deemed ineffective for many reasons including the beneficiary of a gift pre-deceasing the Will-maker or if the beneficiary mistakenly signs the Will as a witness to the Will.  British Columbia has enacted legislation found in s. 46 of the Wills Estates and Succession Act (“WESA”) to deal with these ineffective gifts.  A Will can provide for alternative beneficiaries to the gift, in which case, if the gift was deemed ineffective for any reason, the gift would go to that alternative beneficiary.  There is also a special rule if the ineffective gift was made to a special class of person.  The special class under the WESA consists of siblings of the Will-maker or descendants of the Will-maker.  In that scenario, the ineffective gift would go to that special class member’s descendants.  If there are no alternative beneficiaries mentioned and the gift is not to a special class of person, the ineffective gift will go to the surviving residuary beneficiaries in proportion to their interests.

Ademption is another consideration for the Will-maker.  Ademption arises when a “specific gift” is no longer part of the Will-makers estate or has been converted into something else.  This often happens when a Will-maker has gifted a car (or some other specific piece of property) to someone many years earlier but before the death of the Will-maker the car is sold to someone other than the person designated under the Will.  In that scenario, the gift under the Will would fail.  However, as stated in the seminal British Columbia authority on ademption, Trebett v Arlotti-Wood, 2004 BCCA 556, ademption will not occur where the specific property in question has been changed “in name or form only” so that it “exists as substantially the same thing, although in a different shape.”  What is considered a change “in name or form only” has been a litigious matter where answers vary considerably.

In regards to ademption, if the specific gift was sold by a nominee (attorney or representative) before the death of the Will-maker, the beneficiary of the gift is entitled to receive from the Will-maker’s estate an amount equivalent to the proceeds of the gift as if the will had contained a specific gift to the beneficiary of that amount.  In other words, the beneficiary will not receive the exact gift stipulated in the Will but will receive the cash proceeds of the sale of that specific gift.  This scenario is governed by s. 48 of the WESA.

“It has often been said that the other bank of the river Styx is lined with the shades of dissatisfied testators waiting to receive their judicial parsonages from those who have misconstrued their wills”  

Dying Without a Will – Intestacy Distribution

When a person dies in British Columbia without a valid Will they are deemed to have died “intestate”.  Since the person who died does not have a Will that distributes their property, there has to be a mechanism for the distribution of that property.  That mechanism is found in the Wills, Estate and Succession Act of British Columbia (“WESA”).

Intestacy distribution depends on the intestate’s “next of kin”.  If the intestate has a spouse (which includes legally married spouses and those common law spouses that meet the definition under WESA) but no other descendants (which means all lineal descendants through all generations), the spouse would receive the entire estate from the intestate.  This is governed by s. 20 of the WESA.

S.21 of the WESA covers the scenario of an intestate leaving a spouse and descendants.

21(2) If a person dies without a Will leaving a spouse and surviving descendants, the following must be distributed from the intestate estate to the spouse:

(a) the household furnishings;

(b) a preferential share of the intestate estate in accordance with subsection (3) or (4).

(3) If all descendants referred to in subsection (2) are descendants of both the intestate and the spouse, the preferential share of the spouse is $300,000, or a greater amount if prescribed.

(4) If all descendants referred to in subsection (2) are not common to the intestate and the spouse, the preferential share of the spouse is $150,000, or a greater amount if prescribed.

(5) If the net value of an intestate estate is less than the spouse’s preferential share under subsection (3) or (4), the intestate estate must be distributed to the spouse.

(6) If the net value of an intestate estate is the same as or greater than the spouse’s preferential share under subsection (3) or (4),

(a) the spouse has a charge on the intestate estate for the amount of the spouse’s preferential share under subsection (3) or (4), and

(b) the residue of the intestate estate, after satisfaction of the spouse’s preferential share, must be distributed as follows:

(i) one half to the spouse;

(ii) one half to the intestate’s descendants.

The last scenario that will be discussed in this blog will be if the intestate leaves no spouse but leaves descendants or relatives.  This scenario is governed by s.23 of WESA.

When there is no spouse the intestate’s estate shall be distributed firstly to the intestate’s descendants.  If there are no descendants then the estate will be distributed to the intestate’s parents.  If there are no parents then the estate will be distributed to the descendants of the intestates parents which will include brothers and sisters of the intestate and then to the nieces and nephews of the intestate.  If there are no descendants of the parents of the intestate the estate shall be distributed to the grandparents of the intestate.  If there are no grandparents, the estate shall be distributed to the great-grandparents of the intestate and, finally, if there are no relatives of the intestate living, the estate shall be distributed to the government.

As the above indicates, intestacy distribution can be intricate and convoluted.  If you have any questions regarding the law surrounding estates feel free to contact Heath Law LLP.

Many people own a home or other assets with their spouse or another person. One should consider what will happen to the property when the other owner dies. In some cases this may lead to litigation.

Types of Ownership

When a property is owned by more than one person, it can be owned as a tenancy in common or as a joint tenancy. The main difference between these two types of ownership is what happens when one of the owners dies.

In a tenancy in common each person owns an undivided interest in the asset. Therefore, if people own an asset as tenants in common and one of the owner’s dies, his or her interest passes to his or her estate. If the asset is held by the estate, the deceased owner’s interest in the property will be distributed according to that person’s will or according to the laws of intestacy (when a person dies without a will)

If an asset is owned in joint tenancy, the right of survivorship applies which means that on death, the deceased’s person’s interest in the asset automatically passes to the surviving owner.

As people often do not think about how their assets are owned, the owners’ intention when they purchased the asset as to the type or form of ownership may not be obvious.

The Owner’s Intention

Where the deceased owner’s intention is unclear, litigation may result to determine what the owner intended and who will receive the asset. If the other owner is claiming that the asset is held in joint tenancy, the beneficiaries under the will or the deceased’s next of kin who would inherit under intestacy may dispute the type of ownership.

Estate litigation may help determine the deceased’s intent when he or she purchased the asset or when he or she gave the other owner an interest in the asset. Unless there is evidence to the contrary, the law presumes that when two people own land, they own the land as tenants in common. However, if there is clear evidence that the deceased person intended to own the asset in joint tenancy and intended to give his or her interest to the other owner on his or her death by right of survivorship, the transfer will be valid and the property will remain with the surviving joint tenant. If it does not appear that the deceased person intended to give the other owner the right of survivorship, a Court may determine that a resulting trust applies and that the other owner holds the deceased’s person’s interest in trust for his or her estate.

Ending a Joint Tenancy

One of the owners who wishes to end the joint tenancy and prevent the right of survivorship from becoming effective on death, may sever the joint tenancy on his or her own. Once an owner severs a joint tenancy, the ownership of the property transfers to a tenancy in common.

An owner may sever a joint tenancy:

  • by registering a transfer of the property at the Land Titles Office to him or herself;
  • by reaching a written agreement with the other owner; or
  • inadvertently, where the surrounding circumstances suggest that the ownership has been severed. For example, a joint tenancy may be severed if a couple divorces.

 

Wills Variation: Unger v Unger Estate, 2017 BCSC 1946

In British Columbia, a person has an obligation to provide for his or her spouse and children in his or her Will. If a deceased person did not provide sufficiently for a spouse or any children, the spouse or the children can make an application to vary the deceased’s Will to receive a fair portion of the deceased’s estate. In deciding whether to vary a Will, a Court will weigh the will-maker’s wishes within the Will against his or her moral and legal obligations to his or her spouse and children. A Court will generally give more weight to the will-maker’s obligations to his or her spouse and children than to the will-maker’s wishes within his or her Will.

Unger v Unger Estate

In the recent case of Unger v Unger Estate, the British Columbia Supreme Court considered an estate litigation case in which a wife brought an application to vary her deceased husband’s Will. After 12 years of marriage, the Plaintiff and the deceased separated and a Court declared that the couple was legally separated. At the time of separation, the couple owned a home which was registered in joint names. As a result of the legal separation, the joint tenancy was severed leaving each person with half the home. However, after several months, the couple reconciled and were together until the husband’s death. The couple were together for approximately 34 years total.

The Will

In his Will, the deceased left the majority of his estate to his four children from a previous marriage. In the Will, the husband stated that he was not leaving anything to the Plaintiff under the Will because, when the couple separated, half of the family home was transferred to the Plaintiff.

The Court’s Decision

The Court considered the length of the couple’s relationship and the circumstances of their relationship and held that the deceased had an obligation to provide for his wife under his Will. The Court determined that, although the Plaintiff had received half of the matrimonial home by virtue of the separation, this did not satisfy the deceased’s moral and legal obligations to his wife. The Court ordered that the residue of the estate be divided in the following manner:

  • 30% to the Plaintiff; and
  • 70% to be divided between the deceased’s four children.

 

In order to minimize taxes, avoid probate fees, control distribution or to avoid estate litigation that may result from a Will, some people decide to give away some or all of their assets while they are alive. However, in some cases, giving a gift during your lifetime and outside a Will may lead to litigation to determine whether the person giving away the asset intended to give a gift.

Gifts Made During a Person’s Life

A person may make gifts during his or her lifetime by giving another person a particular item, money or an interest in property.  When a person makes a transfer of an item without receiving anything in return, the law presumes that there is a Resulting Trust. A Resulting Trust means that the person who received the transfer of the item holds the item in trust for the person who made the transfer. In other words, the person who made the transfer keeps the beneficial ownership of the transferred item because he or she did not receive anything in return for its transfer. In these circumstances, the person who received the transfer of the item has an obligation to return the item to the person who transferred it.

There are exceptions to the presumption of a Resulting Trust. For example, there is an exception where a parent has given a gift to a minor child. In these circumstances, the law presumes that the parent intended to give a gift to his or her minor child. This exception does not apply where a parent gives a gift to his or her adult children.

The person who received the gift may be able to rebut the presumption of a Resulting Trust and establish that the transfer was indeed intended it to be a gift. In these cases, the law looks to whether the person who made the transfer intended to give a gift or if they made the transfer for some other purpose (and believed that they would have the item returned). If a Court determines that the person who made the transfer intended to give a gift, no Resulting Trust will be found.

Unequal Distribution under a Will

How a person organizes their financial affairs while they are living may result in what seems like an unequal distribution of their financial assets to family members upon that person’s death. Beneficiaries may argue that, due to the presumption of Resulting Trust, gifts that the deceased made during his or her life were meant to be divided within the Will.  For example, a person may transfer a large sum of money to his or her adult child to help make a down payment on a house. In this case, the transfer may result in a smaller estate available to be shared by the beneficiaries under the Will. Beneficiaries under the Will may argue that the money advanced was only a loan and that the presumption of Resulting Trust applies such that the money should be returned to the Estate and divided according to the Will.

Making the Gift

When a person wishes to make a gift, he or she may want to clearly demonstrate that it was his or her intention to make a gift and not to have the item returned. For example, in the scenario described above, the parent may wish to create a Deed of Gift – a written document – stating that the money is a gift and that the other party does not need to pay the money back.