This blog was written by Meghan Carlin, summer student at Fasken LLP.
While the law in Canada on the criminal forfeiture rule (or the “slayer rule”) is generally well understood, questions about next steps in the administration of estates where the primary beneficiary has been disentitled may be more difficult to answer.
On March 3, 2021, the Ontario Supreme Court released its decision in the case of The Bank of Nova Scotia Trust Company v. Rogers, 2021 ONSC 1747 (“Rogers”), providing guidance on the relationship between the criminal forfeiture rule, the doctrine of acceleration and the armchair approach to the interpretation of wills.
In Rogers, the Bank of Nova Scotia as trustee sought direction from the Court regarding the proper treatment of the wills of David and Merrill Rogers. In this case, the testators’ son and primary beneficiary of their estates, Cameron, was earlier convicted of their murders.
After using the criminal forfeiture rule to disentitle Cameron from any benefit from the estates of his parents, the Court was tasked with providing direction on the proper interpretation of the testators’ wills, in light of the general principle that intestacy should be avoided. Specifically, the Court addressed the question of whether the estates should remain invested for Cameron’s potential future children, or if the beneficial interest should be accelerated to Merrill’s brothers as the next lineal beneficiaries.
In its analysis, the Court employed the “armchair approach” to interpretation, concluding that the best way to give effect to the testator’s interests is through the application of the acceleration doctrine.
The Criminal Forfeiture Rule
The Court describes the criminal forfeiture rule, or slayer rule, as a well-accepted doctrine in Canadian law that prevents a person from benefiting from their own crime. Outlined in the decision are three different approaches taken by Canadian Courts in dealing with estates issues brought on by an application of the criminal forfeiture rule:
- The “Deemed Death Approach”, which treats the beneficiary as deceased, as opposed to disentitled;
- The “Literal Reading of the Will Approach”; and
- The “Implied Intention Approach”, which requires that a determination be made on the actual or subjective determination of the testator’s intention through the Court’s interpretation of the will.
After providing a useful overview of all three approaches, the Court found that the Implied Intention Approach was best suited to the facts of the case at hand. The Court rejected the Literal Reading of the Will Approach, as it gave rise to the undesirable result of intestacy. While the Deemed Death approach would allow for the giftover possibilities considered in the will to eventually materialize, the Court preferred the Implied Intention approach as it confronts the actual facts at hand – Cameron’s disentitlement via the criminal forfeiture rule – while remaining focused on the intentions of the testators.
Taking the Implied Intention Approach, the Court found Merrill and David’s intentions to be clear: if they were unable to receive each other’s estates, then their estates would pass on to Cameron in the form of a life interest, or his then-living children. In the case that Cameron could not receive his life interest and had no then-living children, the estates would pass on to Merrill’s three brothers. In other words, Merrill and David had a clear intention to keep their estates in the family.
The question remained: could the estates be accelerated to Merrill’s brothers, or should they be held for Merrill and David’s future grandchildren? The Court describes acceleration as a concept in estates law that a subsequent interest can be accelerated if a prior interest is “disclaimed, surrendered or otherwise terminated”, and found that Cameron’s disentitlement through the application of the criminal forfeiture rule fit this criteria. In the case at hand, the application of acceleration would disentitle the potential future children of Cameron contemplated in the will.
The Armchair Approach to Interpretation
The Court applied the “armchair rule” to tackle the question of Cameron’s future children. The Court placed itself into the shoes of Merrill and David at the time they created their wills and asked: if Merrill and David had been aware of the possibility of Cameron’s disentitlement via the criminal application rule, would they have wanted to ensure a benefit to his potential future children nonetheless?
In applying the “armchair rule”, the Court found that holding the estate for any future grandchildren went against both the testators’ objective interest in keeping their estates in the family, as well as the public policy points considerations of Cameron’s disentitlement. Instead, the Court found that accelerating the beneficial interest was the best way to give effect to the testator’s intentions and posed no issue from a public policy perspective.
Considering the testators’ clear objective intention to keep their estates within the family, the Court found it unlikely that Merrill and David would have preferred to hold the estate for any children Cameron might have upon his release from prison, rather than accelerating the beneficial interest to Merrill’s brothers.
The Court noted that at the time of Cameron’s disentitlement, he had no children “then-living”, as specified in the will. Accordingly, accelerating the benefit of the estate posed no issue to the language and objective intention outlined in the will.
Further, the Court found that holding the estates for future grandchildren who have yet to arrive poses too great a risk, from both an interpretation and a public policy perspective. From a public policy perspective, the Court cannot ignore the idea that the knowledge of an almost $2 million trust might impact Cameron’s future decisions on whether or not to have children upon his release from prison. Also, as Merrill’s brothers are elderly, it remains a real possibility that they might not live to benefit from the estate should the trustee wait for the arrival of grandchildren. According to the Court, a result in which no future grandchildren emerge but the opportunity to pass on the estate to the next lineal beneficiaries has been lost runs contrary to the testators’ intention to keep their estates in the family. As such, the Court concluded that accelerating the estates to Merrill’s brothers is the best way to respect and reflect Merrill and David’s intentions.
As the Court notes, this case stands out for its analysis of the interplay between the doctrine of acceleration and the public policy points stemming from the criminal forfeiture rule.