All About Estates

“Pour Over” Clauses Revisited

You may recall I wrote a blog post last year on the Supreme Court of British Columbia decision, Quinn Estate, 2018 BCSC 365, which rendered the “pour over” clause in the late Pat Quinn’s (“Pat”) Will invalid.  The basis for this decision was twofold:

  1. the amendable and revocable nature of the inter vivos trust to which the residue of Pat’s estate was directed to be “poured over” (the “Trust”) effectively reserved Pat the right to make a testamentary disposition in the future without complying with the formalities of execution required by B.C. legislation; and
  2. the amendable nature of the Trust (which was in fact amended subsequent to the execution of Pat’s Will) gave rise to an uncertainty as to the actual disposition supposed to be made by Pat.

Pat’s daughter appealed this decision on the basis that the judge erred by not upholding the “pour over” clause using:

  1. the doctrine of incorporation by reference;
  2. the doctrine of facts of independent significance; or
  3. s. 58 of the Wills, Estates and Succession Act, S.B.C. 2009, c. 13.

I will address the first two arguments and explain the grounds upon which the Court of Appeal for British Columbia[1] dismissed the appeal.[2]

Incorporation by Reference

The doctrine of incorporation by reference contemplates that the terms of the Trust are deemed to be incorporated into the Will if certain prerequisites are met, primarily that the testator’s will must evidence his intention to incorporate the extrinsic document into the will and that the extrinsic document must be in existence at the time of execution of the will. Pat’s Will did not refer to incorporating the Trust terms into his Will.  Instead, his intention to make a gift of the residue of his estate to the Trust was clear.  Further, this argument failed as the Trust, as amended, was not an existing document at the time the Will was signed.

Facts of Independent Significance

The doctrine of facts of independent significance contemplates certainty being achieved by reference to a fact that is independent of testamentary significance. For example, a testator who does not have children at the time he makes his will can bequeath property to such persons who are his children at the time of his death. Or, in his will, a testator can bequeath his car to his spouse at the time of his death.  Though the description, fact or entity (being, the children of the testator at the time of his death in the first example, and the model of the car and the spouse of the testator at the time of his death in the second example) may be determined after the date the will is signed, such extrinsic evidence, which has non-testamentary significance, is nevertheless admissible.

Following this reasoning then, a properly established trust might arguably be a fact of independent significance. However, “pour over” clauses to amendable or revocable trusts are problematic since the trust does not then have independent significance and the testator is reserving the right to make a future amendment to his will without complying with the attestation formalities.  Some American courts have invoked the doctrine of facts of independent significance in the case of wills with “pour over” clauses on the basis that the trust had independent significance where the amount of assets already in the trust exceeded the amount of assets that flowed into the trust through the “pour over” clause.  Further, to overcome the problem with amendable or revocable trusts, many U.S. states have enacted legislation to permit “pour over” clauses in wills notwithstanding the trust is amendable or revocable.

Canadian jurisdictions have not followed suit. The Court explained that applying the doctrine of facts of independent significance to “pour over” clauses would permit the testator to make future testamentary dispositions without the necessity of the formalities set out in the legislation.  Further, this argument failed because while the terms “children”, “car” and “partner” are inherently limited, a trust does not contain such limits.  Therefore, extending the doctrine of facts of independent significance to “pour over” clauses would afford testators with an unlimited power to amend the disposition of their estate through amendments to the trust without adhering to the legislative formalities.

Given the state of the law in Canada at this time, drafters should exercise caution when employing strategies that are commonly used in other jurisdictions.

[1]   Quinn Estate v Rydland, 2019 BCCA 91.

[2]   I will not address the last argument as it is specific to B.C. legislation.

About Brittany Sud
Brittany Sud is a member of the Trust, Wills, Estates and Charities Group at Fasken, Toronto office. Brittany is developing a broad estates and trusts practice with a focus on planning and administration matters. As part of her practice, Brittany assists high net worth clients, entrepreneurs and professionals with Wills, powers of attorney, domestic contracts and trusts. She has experience developing and implementing cohesive estate plans that reflect the financial objectives and short and long-term goals of clients, including advising on probate planning, family business succession planning, asset protection strategies and disability planning. Brittany’s estate administration practice includes preparing applications for probate and administering the Canadian estates of non-residents. Outside of the office, Brittany enjoys playing softball and tennis, travelling and cooking. She is a dedicated volunteer of the United Jewish Appeal, Jewish National Fund, One Family Fund and Baycrest Foundation. Community Involvement • Host, Baycrest Foundation - Game Night for Baycrest, 2015 • Chair, Pitch for Israel Softball Tournament, 2014-2016 • Vice-Chair, United Jewish Appeal Young Lawyers Leadership Campaign Canvassing Team, 2016 Memberships and Affiliations • Member, Canadian Bar Association • Member, Ontario Bar Association - Trusts and Estates Law Section • Member, Ontario Bar Association - Young Lawyers’ Division • Student Member, Society of Trusts and Estates Practitioners (STEP) Canada

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