All About Estates

Rest assured, a will is not a trust

The past few months have been quite dramatic for estate lawyers; both on the drafting and litigation end.  As many of our readers know, Justice Dunphy stirred the pot in the estate world with his decision in Milne Estate (Re).  To recap, in the Milne decision, a husband and wife died on the same day.  They each left mirror primary and secondary wills.  Each of the primary and secondary wills contained the following, typical “basket clause”:

Primary Will:

all property owned by me at the time of my death EXCEPT…. [certain named assets and] any other assets for which my Trustees determine a grant of authority by a court of competent jurisdiction is not required for a transfer or realization thereof.

Secondary Will:

all property owned by me at the time of my death INCLUDING … [certain named assets and] any other assets for which my Trustees determine a grant of authority by a court of competent jurisdiction is not required for the transfer or realization thereof.

The estate trustees applied for probate for the primary wills.  Justice Dunphy refused to grant probate, finding multiple wills that use the typical “basket clause” above invalid.  His Honour’s reasoning was that a will is a trust and must therefore meet the three requisite certainties of a valid trust (i.e. certainty of intention, subject matter, and object).  Justice Dunphy held that the three certainties must be satisfied at the time the trust was created (i.e. at the time the testator died). His Honour found that it could not be determined with certainty which assets were governed by the primary will at the time of the testator’s death.  Justice Dunphy ruled that the will (as a trust) did not satisfy the certainty of subject matter and was therefore invalid.  For a complete summary of the Milne decision, take a look at the blog written by my colleagues, Justin de Vries and Jacob Kaufman.

The estate trustees appealed Justice Dunphy’s decision to the Ontario Divisional Court.  However, before the appeal was heard, a new decision, Panda Estate (Re), was released, directly contradicting the earlier Milne decision.  In summary, Justice Penny in Panda held that a will is not a trust, such that it does not need to meet the three certainties of a trust.  Justice Penny clarified that, for a will to be valid, a will need only satisfy the requirements set out at ss 3 and 4 of the Succession Law Reform Act and to provide for distribution or administration of property upon death.  My colleague, Joanna Lindenberg, summarized the Panda decision here.

Back to Milne.  The Divisional Court heard the appeal in December 2018 and released its decision last week.  The Divisional Court overturned Justice Dunphy’s decision, agreeing with the reasoning in the Panda decision.  In coming to its decision, the Divisional Court noted the following:

  • primary and secondary wills are a commonly used estate planning technique;
  • a will is not a trust; rather, “a will is an instrument by which a person disposes of property upon death”; and that,
  • even if a will is a trust such that the three certainties must be satisfied, the subject matter of primary wills are certain where there is a basket clause.  In that regard, the Divisional Court explained that:

The property in the Primary Wills can be clearly identified because there is an objective basis to ascertain it; namely whether a grant of authority by a court of competent jurisdiction is required for transfer or realization of the property.  As a result, the Executors can allocate all the deceased person’s property between the Primary and Secondary Wills on an objective basis.

Estate solicitors can sleep easy now, knowing that the basket clauses in the primary and secondary wills drafted prior to Justice Dunphy’s Milne decision are, if drafted property, perfectly fine.

 

 

About Anna Alizadeh
Anna was called to the Ontario Bar in June 2016. Prior to joining de VRIES LITIGATION LLP, she articled at a full service firm where she developed a strong background in litigation and alternative dispute resolution. Anna also worked on estate litigation files and estate planning matters, and co-authored a chapter on Physician Assisted Dying for Key Developments in Estates and Trusts Law in Ontario, 2015-2016 edition. She obtained her Honours Bachelor of Science in Psychology, with a minor in Biology, from York University, and her Juris Doctor from the University of Ottawa. While in law school, Anna participated in an exchange program in Paris, France, where she obtained her Certificate in French and European Union Law. Anna practices in the areas of estates, trusts and capacity litigation. She is fluent in Farsi and has a professional working proficiency in French. Email: AAlizadeh@devrieslitigation.com

1 Comment

  1. Malcolm Burrows

    January 30, 2019 - 2:38 pm
    Reply

    Anna – Nice summary. Thank you. Same confusion and conclusion applies – in many cases – to charitable gifts creating charitable funds. Malcolm

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