This blog post was written by: Dave Madan, Senior Manager, Scotiatrust

Recent decisions from the British Columbia Court of Appeal have underscored how fragile an estate plan can become when a Will is ambiguous, or when life insurance and beneficiary designations conflict with the testator’s broader intentions. These cases remind us that estate planning isn’t just about having a Will, it’s about making sure the pieces are consistent, coherent, and defensible.

The “Novel Clause” That Created Dispute

In a recent matter, the testator included a unique clause in her Will granting her husband the “use, occupation and enjoyment” of her half interest in real property, with conditions relating to payments to her children. When the husband died, the children challenged the interpretation.

The lower court found the clause was a conditional gift. On appeal, the Court of Appeal refused to disturb that decision, emphasizing that the clause had to be read in the context of the Will as a whole and the testator’s intention. Read more in Canadian Lawyer.

As Investment Executive reported, the Court stressed that its role is not to rewrite a Will to make it more “fair,” but to interpret the words used.

This is a powerful caution. Creative or unconventional drafting, even with good intent, can open the door to conflict. Courts will default to the written language, not to what “might have been meant.”

Irrevocable Beneficiaries and Insurance Proceeds

Another recent Court of Appeal decision dealt with an irrevocable life insurance beneficiary. A father had designated his daughter (then a minor) as irrevocable beneficiary of a life insurance policy. Years later, after a separation, conflicting obligations arose between his separation agreement and the irrevocable designation.

At trial, the daughter’s unjust enrichment claim was dismissed. On appeal, the Court set aside the dismissal, noting that irrevocable designations carry enforceable rights and must be carefully weighed against competing claims. Case summary in Canadian Lawyer.

As Investment Executive described, this was essentially a “botched beneficiary switch” that created a legal mess.

The lesson is clear. Irrevocable designations are not mere formalities, and executors and families must recognize their binding power.

Practical Implications for Families and Advisors

These recent judgments deliver important lessons:

• Clarity is paramount. Ambiguous or unusual clauses can generate litigation.

• Beneficiary designations are powerful. An irrevocable designation may override a Will. Executors must check insurance contracts and policy provisions.

• Coordination is critical. Wills, life insurance, registered accounts, trusts, and separation agreements should be reviewed together.

• Periodic review is essential. Old clauses or designations can create unintended outcomes as life circumstances change.

• Professional advice helps. In complex or high-value estates, a lawyer, trust officer, or corporate executor can provide impartial guidance.

Avoiding Pitfalls

Families can reduce risk by:

• Using clear, conventional language in Wills and powers of attorney.

• Reviewing beneficiary designations regularly, especially after major life changes.

• Seeking legal advice before making or revoking an irrevocable designation.

• Ensuring all documents, including Wills, trusts, insurance, and separation agreements, are consistent.

• Considering a corporate executor or trustee to avoid conflicts.

 

Final Thoughts

Estate disputes rarely arise from money alone. They are often triggered by conflicting instructions, unclear drafting, or overlooked provisions. The BC Court of Appeal cases show how one unusual clause or one designation can derail an estate plan.

The best protection is clarity, coordination, and regular review. If it has been years since you last reviewed your estate documents or beneficiary designations, now is the time.