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Court Provides Deference To Agreements Between Deceased And Widow

In a recent decision of the British Columbia Supreme Court, the agreement between the deceased and his widow as to their financial arrangements and lifestyle was afforded significant deference in the determination of a wills variation claim. In Waldman v. Blumes, 2009 BCSC 1012, the Court was asked to vary the Will of the late Dr. Blumes by the adult daughters of Dr. Blumes, who were not named in the Will. Rather, Dr. Blumes left his estate to his second wife, who was the mother of his two sons. At the time the Will was prepared and at the time of his death, both of Dr. Blumes' sons were infants.

The Court found that the gross value of the estate at the time of Dr. Blumes' death was $1,868,362. This did not include the matrimonial home, valued at just over $1 million, which the deceased transferred to his widow shortly before his death. The Court considered the financial circumstances of the widow, including her ownership of other real properties, but concluded that due to the relationship between the deceased and his widow, and the lifestyle and roles they had each agreed to adopt, the testator owed a legal obligation to the widow of the "highest order".

The Court also considered the daughters' circumstances. The older daughter was divorced and lived in California, and deposed that she had limited income and poor health. She sought a variation based on need. The younger daughter was married and lived in Ontario. Her husband held an MBA and was employed as a consultant. She had recently retired as a teacher and was receiving a pension. She and her husband had recently completed a 9 month vacation touching many parts of the world. Their children were adults, and were enrolled in or graduating from university.

The older daughter sought a variation in the amount of $450,000 or 30% (there was a disagreement on the value of the Estate) and the younger daughter sought a variation in the amount of $250,000.

Ultimately, the Court did grant a variation of the Will, in the amount of $75,000 to each daughter. This was based primarily on the following factors:

1. The deceased married at age 70 and had his sons at ages 74 and 76. The widow did not pursue her career on a full-time basis in order that they could spend time together. They planned that she would be able to retire with the full benefit of his estate.
2. The older daughter failed to provide sufficient evidence to establish need.
3. The majority of the estate assets were acquired during the marriage to Dr. Blumes' first wife, the mother of the adult daughters. Neither daughter received any bequest upon their mother's death; it all passed to Dr. Blumes. The Court therefore awarded a modest amount to each daughter.
4. The Court acceded to the sons' request to adjourn the determination of their claim in the event that the Will was not varied. Although the Will was varied, the Court acceded to the request because the variation was so slight.

In the result, we see that the Court will recognize and respect the agreements made between spouses, particularly where the prospects of the widow were reduced in reliance on the agreement made.

The other interesting point of this decision is that it proceeded by way of summary trial (one based on written evidence, not live testimony of witnesses). This procedure is becoming more common for wills variation claims, and can often reduce the time necessary for the hearing of the trial (which in turn reduces legal costs).

Readers with questions or concerns are welcome to contact Amy Mortimore (604.643.3177; aam@cwilson.com) or any member of the firm's Wealth Preservation Group.

Second Time Is The Charm

The Wills, Estates and Succession Act (Bill 4), which consolidates and modernizes succession-related statutes into a single act, has passed third reading and is expected to come into force in 2011. The new legislation is generally based on the report of the British Columbia Law Institute, which is an independent research institution dedicated to modernization of law. However, in some controversial areas the government declined to follow its recommendations. Most notably, it rejected the recommendation for a wholesale reform of the Wills Variation Act, for example, to preclude independent children from bringing claims to vary a parent’s will.

The following are a few of the many changes that the new Act introduces.

Intestate Succession

When a person dies without a will (intestate), his estate is distributed under the Estate Administration Act to the relatives of closest kin. Degrees of kin are counted upward from deceased to the nearest common ancestor and then downward to the relative. For example, a degree of kinship of a nephew is 3: 1 to parent, 1 from parent to sibling, and 1 from sibling to nephew.

This scheme is replaced with a parentelic system, under which the descendants of the nearest common ancestor share the estate. The estate passes to grandparents and their descendants, and if none to great-grandparents and their descendants, and so on down each line descended from an ancestor until an heir is found. This system tends to divide the estate more evenly between the two sides of the deceased’s family.

Another significant change is that where the deceased is survived by a spouse and children, the spouse will receive the first $300,000 of the estate and half of the remainder. This is reduced to $150,0000 and half the remainder if the children are only of the deceased, and not of the spouse and the deceased.

Wills

Part 4 of the Bill deals with succession where there is a will. Most notably, it removes the provision which invalidated a will because of a subsequent by marriage of the maker, and adds a provision which revokes a gift to a spouse from whom the deceased lived separate and apart for at least two years.

As well, it extends the presumption of undue influence for gifts made during the lifetime to bequests in a will. Where a person challenges a bequest made to a person who was in a position of influence over the deceased, the recipient has onus to prove that he or she did not use undue influence over the deceased.

Administration

For small estates (value not yet defined), the Bill introduces a smaller and cheaper procedure for administration of the estate. This procedure, although it still requires an application to the court, avoids the legal formality of probate or grant of administration necessary for larger estates.

Readers with questions or concerns are welcome to contact Seva Batkin (604.891.7763; sqb@cwilson.com) or any member of the firm's Wealth Preservation Group.