By Polly Storey and Mackenzie Do

Estate planners (and litigators) often encounter families who have made informal verbal agreements about how assets are to be dealt with on death. While oral agreements may seem convenient and cost-effective at the time they are made, they all-too-frequently lead to disputes down the road. Where relationships change within the family, a party to the agreement may later deny the terms of an agreement, or even its very existence. Even where an agreement is admitted, memories may fade or differences of opinion may arise regarding the terms of the agreement.

In McRae v. McRae, 2026 BCSC 21, a recent decision from the Supreme Court of British Columbia, Justice Caldwell had an opportunity to address, and order enforceable, an oral agreement made for estate planning purposes.  

Formation of the Property Agreement

Dorothy and her husband, Robert, had four children together: Debra, William, James, and David. In 1991, Dorothy and Robert purchased a property in Vernon, British Columbia, where they built their home (the “Property”).

Over time, Dorothy and Robert’s health declined. In 2015, they made an offer to Debra and Debra’s spouse, Carl, regarding the Property. Dorothy and Robert proposed the following:

1. Debra and Carl would transfer $200,000 to Dorothy and Robert;
2. Dorothy and Robert would transfer their Property into the joint names of Dorothy, Robert, and Debra;
3. When Dorothy and/or Robert required care and assistance , Debra and Carl would move into the Property, and would provide Dorothy/Robert with care and support for the rest of their lives; and
4. On the death of Dorothy and Robert, Debra would receive the Property as surviving joint tenant

(the “Property Agreement”).

Debra and Carl accepted Dorothy and Robert’s offer.

In late January of 2015, the Property was registered in the names of Dorothy, Robert, and Debra as joint tenants. Dorothy and Robert worked with a lawyer to carry out the transfer. Some time later, Carl was also added as a joint owner of the Property.

Dorothy and Robert’s Other Children and Estate Planning

In working with their lawyer, Dorothy and Robert made clear that they did not intend for their son, David, to receive anything from either of their estates. In their view, David had already received more than his share of the parents’ estate in the form of financial assistance.

Following the making of the Property Agreement, Dorothy and Robert put in place other arrangements for their affairs:

1. They paid $100,000 to their son, James, and $70,000 to their other son, William.
2. They made Wills leaving their estate to each other and, in the event of the other’s predeceasing, equally to James and his wife and to William and his wife; and
3. They made enduring powers of attorney naming each other  as first attorney and James as alternate attorney.

Triggering the Property Agreement

By 2016, Robert and Dorothy’s health had declined significantly. The family determined that the time had come that Robert and Dorothy required more care. Pursuant to the Property Agreement, Debra and Carl moved into the basement of the Property to take care of them. In 2017, Dorothy’s doctor advised that she was suffering from dementia and was incapable of managing her own affairs.

David’s Return and Changes to Dorothy’s Planning

In December 2019, Robert passed away.

In early 2020, shortly after Robert’s death, David began contacting Dorothy. By this time, David had been estranged from his parents for some years.

In the summer or 2020, Debra and Carla became aware of changes that had been made to Dorothy’s affairs:

1. They discovered that Dorothy’s power of attorney appointing James had been revoked.
2. They discovered that a new power of attorney in favour of David and James had been made. This new power of attorney was then also revoked, and replaced by a power of attorney appointing David and David’s wife, Sandra, as Dorothy’s attorneys.
3. They discovered that Robert had been removed from title to the Property, and that the joint tenancy between Dorothy and Debra had been severed.
4. They discovered that Dorothy had revoked her Will, and made a new Will naming David as beneficiary.

As of the time of the Court hearing, David had hired full-time caregivers to be with Dorothy in the upstairs of the Property. He had installed surveillance camera, and had prohibited Debra or Carl from being present in the upstairs of the Property unless supervised by caregivers.

Enforcing the Agreement

Debra and Carl applied to Court. They alleged that the Property Agreement had been breached through the severance of the joint tenancy, and argued that they had partly performed the Agreement by paying the $200,000 and providing care for several years. Given Dorothy’s incapacity, William acted as Dorothy’s litigation guardian. Debra and Carl sought to have title to the Property transferred to them, subject to a life estate in favour of Dorothy. On behalf of Dorothy, William consented to Debra and Carl’s application.

The Court observed that there was ample evidence that the Property Agreement was a valid and enforceable agreement. Dorothy and Robert had provided clear and unequivocal instructions to their lawyer regarding the transfer of the Property and the reasons for that transfer. Their mental capacity to provide those instructions was not in issue. In addition, all of Dorothy, Robert, and Debra had acted in accordance with, and relied upon, the Property Agreement. Debra had paid her parents $200,000, and Dorothy and Robert had transferred title into joint names with Debra. When the time came, Debra and Carl moved into the Property and provided care until they were prevented from doing so by David.

Terms of the Agreement and Order

While the judge was satisfied that the Property Agreement existed and was valid, the judge declined to make the Order sought by Debra and Carl, namely, that the Property be registered in their joint names subject to a life estate for Dorothy.

The judge found that the remedy sought by Debra and Carl did not accord with the terms of the Property Agreement, noting that “the order now sought seeks to significantly rewrite and amend the agreement of the parties and to move it well beyond what was intended” (para. 41). The parties had agreed that the Property would be registered in joint names, and that Debra would ultimately receive the Property on the death of Dorothy and Robert as surviving joint tenant. Based on the registration of title now sought by Debra and Carl, if Dorothy died first as assumed to be the case, the terms of the Property Agreement would be fulfilled.

If, however, Debra and Carl were to die before Dorothy, the order sought by Debra and Carl would not result in full title reverting to Dorothy, who would no longer be a joint owner of the Property. In effect, the application sought to “accelerate Debra and Carl’s claims to ensure that they receive full title to the Property, whether or not they survive Dorothy” (para. 46). “This,” the judge held, “[was] not what was contemplated by the agreement.”

The judge ordered that the Property be registered in the joint names of Debra, Carl, and Dorothy. To protect and enforce the Property Agreement, the judge also ordered that until Dorothy’s death, no person was allowed to alter or deal with title to the Property in any manner.

What about David?

Despite his apparent role in undermining the Property Agreement, David was not a party to the application.

The decision indicates that a separate action was commenced against David. The Court’s decision does not specify what claims were made against David, however, and for reasons not set out in the decision, that action was discontinued. While David was given notice of Debra and Carl’s application, he did not respond or appear before the Court.

Key Takeaway

McRae v. McCrae case serves as a reminder that oral agreements can be valid and enforceable as an estate planning tool. However, parties should be cautious if they choose not to reduce an agreement to writing. Such agreements invite uncertainty, even where the existence of an agreement is not disputed. Where evidence is not available to support that an agreement was made or to provide certainty as to its terms, a party may be left disappointed. Written agreements, which set out the terms agreed to and which are entered into with the benefit of independent legal advice, are the most effective and reliable way to ensure that estate planning intentions are carried out, and to minimize the risk of costly and contentious disputes.

For more information regarding estate planning and litigation, please contact Polly Storey or another member of our Elder Law or Estates & Trusts groups.