This blog was written by Isabelle Cadotte – Estate and Trust Consultant with Scotia Wealth Management
As lawyers, we routinely field questions from testators about how to avoid challenges to their wills, especially where they’ve decided to leave a family member less than what they might have expected. On the other side of the coin, we’re also asked to help executors facing court challenges commenced by the jilted family member who has been excluded from the estate. Sometimes, we’re even called upon to help a disappointed beneficiary pursue their cause against the estate.
People leave family members out of their wills for a variety of reasons, good and bad. Maybe it’s a daughter who has already received substantial sums from her father during his lifetime. Or, it could be a second spouse who has accumulated his own wealth and for whom the testator has provided through segregated non-estate assets such as life insurance or an RRSP. Sometimes, an adult child is estranged from the family for many years.
Whatever the reason, in Canada at least, testators are considered to have the Charter-protected testamentary freedom to exclude anyone from their will, with some exceptions. Both the Supreme Court of Canada (Tataryn v. Tataryn Estate,  2 SCR 807), the Ontario Court of Appeal (Spence Estate (Re), 2016 ONCA 196), and the Nova Scotia Supreme Court (Lawen Estate v. Nova Scotia (Attorney General), 2019 NSSC 162), among others, have confirmed the freedom of an individual to benefit whomever they want in their wills and to exclude those whom they wish to exclude. Some Canadian courts have confirmed that the Canadian Charter of Rights and Freedoms does not apply to a will, meaning that the Charter does not protect a family member who has been excluded for discriminatory reasons like having a child with someone from a different race. On the other hand, any limitations on testamentary freedom must be reasonably justifiable under a Charter analysis.
There are two major exceptions to testamentary freedom. The first is where the will purports to create a gift that is conditional upon the beneficiary or executor doing something that goes against public policy. An obvious example is a condition forcing a beneficiary to divorce their current spouse… an awkward conversation, to be sure.
The second exception requires the testator to make adequate provision for a dependant family member. If the purported dependant feels the testator did not adequately provide for them, provincial legislation allows them to make a claim for relief against the estate. The courts will ultimately determine what is “adequate” in the circumstances, having due regard to a number of factors. Though the definition of “dependant” varies from province to province, some examples could include a spouse, a minor child or an adult disabled child. In some provinces, like British Columbia, even a financially independent adult child can ask the court to modify gifts made in the will so as to make the estate distribution more “adequate, fair and equitable” in light of the testator’s moral duty towards them. In any event, it is important to understand that the provincial legislation does not guarantee any outcome to the claimant; rather, all it does is grant the purported dependant a time-limited opportunity to make their claim. In other words, just because someone makes a claim for dependant’s relief does not mean they will succeed.
Likewise, just because someone challenges the validity of the will based on the testator’s alleged lack of capacity or suspicious circumstances pointing to potential fraud or undue influence, this does not mean they will succeed. After all, the testator is presumed to have the testamentary capacity to make a will unless and until someone else raises sufficient evidence to rebut that presumption.
But, what happens if the testator wishes to entirely avoid protracted litigation of the sort that resulted in the above decisions? After all, litigation results in extensive use of time, court resources, and legal costs.
Unfortunately, there is no sure-fire way to stop someone from starting a challenge in court. But, it may be possible to reduce the likelihood of its success.
Where a testator intends to leave a smaller amount than anticipated, a “no contest” or “in terrorem” clause can be appropriate. This type of clause is a warning to would-be beneficiaries that if they challenge the will, they are considered to have forfeited their gift. However, this type of clause will not be acceptable if it has the effect of disinheriting a family member who makes a claim under dependant’s relief legislation or someone who seeks the court’s direction and advice about the proper technical interpretation of the will (or about the executor’s powers and duties). The clause should also provide for a contingent beneficiary to receive the gift in the event the would-be beneficiary does challenge the will.
In Mawhinney v. Scobie, 2019 ABCA 76, the Alberta Court of Appeal recently considered a “no contest” clause in the will of an 84-year-old testator. The testator, James Carl Anderson, had made successive wills that initially included his friend, Karen Mawhinney, as an equal residuary beneficiary along with his three adult children. He later changed his mind and gave Ms. Mawhinney specific gifts of land, personal property and $2.6MM in cash but did not include her as a residuary beneficiary. She challenged this latest will on the basis that Mr. Anderson did not have mental capacity to understand what he was doing at the time. Though the nature of their relationship was not entirely clear, the Court of Appeal decided to overturn the lower court’s decision and held that the “no contest” clause applied here to preclude her from challenging the will.
The Court of Appeal made an important distinction between making a claim for dependant’s relief, asking for directions of the court (which is what Ms. Mawhinney did here) and challenging the validity of the will (which Ms. Mawhinney presumably intended to do if she was successful with her request for directions). Though she did not succeed, because Ms. Mawhinney had only asked for directions under Rule 75(1) of the Surrogate Rules of Court (Alberta), she was not considered to have forfeited her inheritance. However, if she pursued her challenge further following the Court of Appeal’s decision, then she would have lost her inheritance. For whatever reason, Ms. Mawhinney did not make a dependant’s relief claim, which she would have been entitled to do.
Where the testator intends to leave out a family member completely, it may make sense to leave a side letter or note in the Will explaining the reasoning behind their decision to disinherit the family member. This letter or note can be an important element of the will-making because it shows the testator turned his mind to whether or not to make a gift to the family member. It may even offer an explanation that satisfies the family member and dissuades them from engaging in litigation.
Where a testator or his drafting lawyer is concerned about issues of testamentary capacity or undue influence, mitigating steps can be taken such as obtaining a capacity assessment to confirm the testator does not suffer from any illness or condition that could impact his cognitive and mental ability. In terms of the preparation and execution of the will, the drafting lawyer should meet with the testator separate and apart from family members, confirm the testator’s instructions directly with the testator and perhaps even counsel the testator to make arrangements to attend at the lawyer’s office without any family members present.
Where a testator feels that all of these precautions might still not forestall a court challenge from a disappointed beneficiary or a dependant’s relief claim, they should consider which of their family members is in the best position to act as executor and to devote the time, effort and attention to dealing with the complexities of a court challenge that could last for years. Some testators instead opt to appoint a third-party professional such as a trust company to handle the estate – and the litigation that might inevitably arise in the course of that estate’s administration.
Matt BJanuary 17, 2020 - 3:13 pm
Some great info here, thanks Isabelle!