All About Estates

Disproportionate Inheritance? WESA to the Rescue

This blog was written by Aathiya Bala, Associate Estate and Trust Consultant with Scotia Wealth Management

 

Nahar and Nihal Litt arrived from India in 1964 with modest beginnings. The couple worked tireless hours building their family’s farm business estate for decades. Their children, who were between the ages of three and fourteen when arriving to Canada, helped cultivate their family business throughout the years. The family began to acquire more real estate, including a number of farms. With a conservative lifestyle and hard work, a multi-million dollar estate resulted, upwards of about $9 million. The couple passed away three years ago, leaving this substantial estate to their two sons and four daughters. But here’s the catch: the will left a massively disproportionate inheritance amongst the children. 93% was willed to the 2 sons and the remaining 7% was to be shared amongst the 4 sisters. With the family farm business being a product of collective efforts, the daughters felt the need to contest the will that was written by their parents in 1993. Most provinces don’t let non-dependant adult children challenge the fairness of their parents’ wills. However, B.C may think otherwise. Inheritance matters in B.C are currently governed by the Wills, Estates and Succession Act. This Act states that a judge can vary a will if it “does not, in the court’s opinion, make adequate provision for the proper maintenance and support of the will-maker’s spouse or children”.[1] B.C is said to take on a more libertarian stance and allows British Columbians to have more opportunities to contest a will than other Canadians.

The women of the family challenged the arrangement set out in the will because they believed their parents had discriminated against them based on outdated values. These outdated beliefs being that the brothers were valued more highly simply for the fact that they are men. With the sisters helping to build the family’s farm estate in B.C and caring for their ailing parents before passing away, the sisters felt this was unjust and discriminatory. Justice Elaine Adair agreed to redistribute the Litt estate, granting about $1.35 million to each of the four sisters. This is equivalent to 60% of the family fortune, which is a lot more substantial than the $150,000 they were each initially promised. The two brothers were to split the remaining 40%, which is about $1.8 million each.

Would the outcome have been the same across all provinces in Canada? Probably not. For instance, let’s look at Spence v BMO Trust Company. In Spence v BMO Trust Company, 2016 ONCA 196[2], the Deceased made a will that left one of his daughters, Verolin, absolutely nothing from his estate. Although the Will was not directly discriminatory, Verolin pursued a declaration from the lower court that the Will was void. She relied on external evidence to argue that the Deceased had disinherited Verolin for racially driven reasons. The judge, Justice Gilmore, held that the Will violated public policy and set aside the Will entirely, meaning the estate was administered as if Mr. Spence had died intestate. The Ontario Court of Appeal overturned Justice Gilmore’s decision and allowed the appeal for several reasons; one of the reasons being that the will was not discriminatory on its face and therefore did not offend public policy. This is a prime example of how provincial legislation influences differences amongst the distribution of estates.

Almost a decade ago, there was a push to change the laws in British Columbia such that any legislation that allowed for will challenges was removed. However, B.C decided to keep the laws intact so that people who are aggrieved are given the right to challenge a will. That doesn’t mean that British Columbians don’t have a say in how their estates will be distributed after they pass away. It’s still possible to disinherit a child or leave nothing to a spouse of a will. However, there has to be rational, valid and provable reasons for doing so. Judges are always expected to take the intentions of the deceased into account. With the wills being written in 1993 by Nihal and Nahar Litt, there is a possibility that their intentions may have changed over the years. But the truth is, we’ll never know. At least in this instance, living in B.C gave them more avenues to contest the will and fight for fairness, something many people do not have the opportunity to do.

 

 

[1] https://www.bclaws.ca/civix/document/id/complete/statreg/09013_01

[2] https://www.ontariocourts.ca/decisions/2016/2016ONCA0196.htm

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1 Comment

  1. Mary Wahbi

    August 2, 2019 - 2:42 pm
    Reply

    The BC legislation is ripe for a s.7 Charter challenge as was done recently in Lawen Estate v. Nova Scotia (Attorney General), 2019 NSSC 162 (CanLii). Nova Scotia has similar legislation to that in BC and the Nova Scotia Supreme Court recently read down their Testator’s Family Maintenance Act, RSNS 1989, c 465 (“TFMA”) to exclude non-dependant adult children. The Court held that the testator’s testamentary decision is a fundamental personal decision covered by the liberty protection afforded under s.7 of the Charter in which “Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.” The TFMA definition of “dependant” includes the testator’s children with no requirement for actual dependency or need, thereby allowing independent adult children to bring a dependant relief claim. The Court held that these provisions infringed the testator’s s.7 right and were not justified under s.1 of the Charter. The remedy granted was to read down the offending sections of the TFMA to exclude non-dependant adult children.

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