With the Toronto Maple Leafs season ending earlier this week, I thought I would take this opportunity to discuss the recent B.C. Supreme Court ruling involving the estate of former Leafs head coach, Pat Quinn (“Pat”). On March 9, 2018, B.C. Supreme Court Justice Funt declared the “pour over” clause in Pat’s Will invalid. The clause could not be “cured” by the Wills, Estates and Succession Act, S.B.C. 2009, c. 13, and the result was that the residue of Pat’s estate would be distributed on intestacy.
At the time of Pat’s sudden death on November 23, 2014, he was both a Canadian and U.S. citizen and a resident of B.C. 18 years prior to his death he executed a Will in respect of his Canadian assets, which consisted primarily of shares in the capital of several private corporations. The Will was prepared by a U.S. lawyer and was executed in B.C. with all requirements for proper execution satisfied.
In Pat’s Will, the residue of his Canadian estate was to “pour over” to a revocable, amendable, inter vivos family trust (the “Quinn Family Trust”), which was settled by Pat and his wife approximately one month before the execution of his Will. Pat and his wife were the trustees of the Quinn Family Trust. The beneficiaries of the Quinn Family Trust were Pat and his wife during their lifetimes and following the death of the survivor of them, the beneficiaries were their daughters, or the issue of a predeceased daughter.
About one year after Pat executed his Will, certain administrative provisions of the Quinn Family Trust were amended to ensure that it would be considered a Qualified Domestic Trust for U.S. tax purposes.
The “pour over” clause in Pat’s Will was declared invalid on the basis that the gift of the residue cannot “pour over” to be held by the trustees of the Quinn Family Trust on the terms which existed at the time the Will was executed because the trustees are now obliged to follow the terms set out in the amended Quinn Family Trust. Further, the gift of the residue cannot “pour over” to be held by the trustees of the Quinn Family Trust on the basis of the amended Quinn Family Trust because this would have the effect of permitting the will-maker to essentially amend his Will without complying with the formalities of execution for a valid Will. The fact that the Quinn Family Trust is a future document, capable of being amended after execution of the Will, without the requirements for a properly executed Will, is determinative of invalidity. Justice Funt’s ruling followed the same conclusion regarding the invalidity of the “pour over” clause that the B.C. Supreme Court came to in 2013 in Kellogg Estate (Re). In that case, similarly, there was a “pour over” clause in a Will to an existing inter vivos trust which contemplated future amendments of that trust and the trust was in fact amended after the execution of the deceased’s Will.
Although “pour over” clauses have been held to be valid in several American states, there is minimal Canadian case law on this topic altogether. Being a solicitor in Ontario, one wonders how this issue would have been decided in Ontario. Perhaps a “pour over” clause in a Will to an irrevocable inter vivos trust would be considered valid, or perhaps, incorporating by reference the provisions of an existing revocable inter vivos trust into a Will and restricting the terms of the inter vivos trust to be determined as at the date of execution of the Will would be considered valid. Until there is more case law, we should be wary of drafting “pour over” clauses in Wills.