If 2021 is any indication, 2022 promises to be another busy year in estate litigation. With the incredible transfer of inter-generational wealth occurring right now, skyrocketing real estate values, the increase in blended families, and the heightened level of emotion when a loved one dies, estate litigation is going to continue to be a reality for many people in Canada.
Here are 12 of the top trends and recurring themes in estate litigation that I see as we start the New Year.
1. Challenging whether a person was actually the “spouse” of the deceased
Spouses have certain rights and available claims. In B.C., a spouse may bring an action to vary a will if it does not make adequate provision for them. If there is no will and the estate passes on an intestacy, then the spouse gets a significant share of the estate. As a result, whether or not a person qualifies as a “spouse” will have important consequences. In 2021, we continued to see an increase in decisions on this issue of standing: does the person making a claim actually meet the test to be considered a “spouse”.
Last month I wrote about a recent decision of the B.C. Court of Appeal on this issue here. The B.C. Court of Appeal upheld another decision dismissing a claim for lack of standing as a spouse in the same month, reasons found here. It appears that whether or not a claimant is a “spouse” will continue to be an issue before the courts.
2. The registered legal owner of property may not be the beneficial owner
We continue to see disputes over the beneficial ownership of property when the legal interest is transferred during the deceased’s lifetime, including into joint ownership. Disputes arise as to what a deceased person intended when they transferred their property. Did they intend for the transferee (or surviving joint owner) to receive the asset, or is the property held in resulting trust for the deceased’s estate?
Discussion of a “typical” resulting trust case (keeping in mind every case is fact specific) can be found here. This issue also arose this year in the context of a deceased failing to update his life insurance beneficiary designation from his ex spouse to his current spouse during his lifetime, discussed here.
Finally, we saw in 2021 that claims to beneficial ownership do not only arise after the death of the transferor. The transferor may attempt to “get their property back” during their lifetime, after transferring the property to family members or others (see discussion in my post found here).
3. Admitting testamentary documents which do not meet the formal requirements for a Will
In 2021 we continued to see more examples of when a court will admit (or not admit) a document as fully effective as the Will of a deceased person, even though the document does not meet the technical requirements of a Will. In B.C., s. 58 of the Wills, Estates and Succession Act allows the court to admit such a document if it reflects the testamentary intentions of the deceased.
Examples this year include cases in which a deceased person gave instructions for the preparation of a will but did not have an opportunity sign the will (examples found here and here) and), a document that was signed by the deceased but not witnessed and suicide notes.
4. Courts are reluctant to remove trustees unless the assets of the trust are in jeopardy
Parties continue to seek the assistance of the courts to monitor the conduct of executors and trustees, and in some cases remove them from their positions. There may be conflict between the beneficiaries and the trustees, or between co-trustees resulting in deadlock.
The overarching concern for the court on an application to remove a trustee continues to be whether the trustee’s conduct is putting the assets of the trust in jeopardy. Courts should not interfere lightly with a settlor’s choice of trustee. Conflict or friction between trustees, or trustees and beneficiaries, is not sufficient to justify removal.
Examples of the Court’s reluctance to interfere with the choice of trustee can be found here and here. In another case, the court refused to remove one of two co-executors to end a deadlock, and instead added a third trustee to act as a tie-breaker.
5. Courts struggle to deal with complicated issues of (alleged) elder abuse
We saw the continued struggle to try and address elder abuse. With an aging population, this will continue to be an issue. There were numerous articles and posts about elder abuse and financial predators (for example, here).
There were also a number of cases in which the alleged victim of elder abuse denied the abuse and opposed claims being brought on their behalf. The Court was placed in the difficult position of deciding whether to force an elderly person to undergo a medical assessment to prove that they had capacity to make their own decisions, including the decision to bring legal proceedings (see here and here).
6. Electronic wills
As a result of the pandemic, various jurisdictions made it easier (or possible) to execute certain documents remotely. B.C. has now introduced changes to the Wills, Estates and Succession Act to allow for the digital execution of wills: see here and here.
While will-makers will likely appreciate the convenience of being able to execute a will electronically, the possible existence of an electronic will may create uncertainty as to what document is actually the last will of a deceased person.
7. Litigants cannot assume that all parties will be awarded their costs from the estate.
In 2021, the Courts continued to make clear that litigants cannot unreasonably bring, continue or defend against any estate litigation claims as they see fit, and assume that all parties’ costs will be paid from the estate. This includes unreasonable conduct by beneficiaries (for example, here) and also unreasonable conduct by trustees (for example, here). If a party brings a claim (or opposes one) and is unsuccessful, they may be subject to cost consequences.
8. Litigants claim in unjust enrichment when they don’t receive adequate provision from the estate.
In 2021, we continued to see cases in which plaintiffs attempt to use the doctrine of unjust enrichment when inadequate provision is made for them from the deceased’s estate. Unjust enrichment requires that the plaintiff show a benefit to the estate, a corresponding deprivation to the plaintiff, and the absence of a juristic reason for the benefit and deprivation. A claim in unjust enrichment may be attractive to a plaintiff who is of the view that they have contributed to a family business, or to the family unit generally. However, as a couple of B.C. cases established this year (here and here), a claim in unjust enrichment can be difficult to establish in the context of contributions to a family business, as there will often be mutual benefits to family members as they function as a common unit. However, this will continue to be a potential claim to be made.
9. The Court grapples with new and unconventional relationships
Just as the Courts were asked to consider what constitutes a “spouse” (see #1), they also considered and gave legal recognition to unconventional relationships. This included recognition of a third legal parent in a polyamorous relationship and the existence of two spouses entitled to share in a deceased’s estate.
10. Supreme Court of Canada considers sealing orders for estate filings
The Supreme Court of Canada provided guidance on when sealing orders will be granted in estate matters to protect the privacy of the parties involved. The high profile murder of Bernard and Honey Sherman provided the Court with the opportunity to consider this issue. The Court ultimately concluded that a sealing order was not appropriate, as the alleged risk of inconvenience and embarrassment resulting from publication was not enough to overcome the open court principle.
11. Importance of documenting transactions between family members
2021 (and late 2020) included a number of cases which served as an important reminder that transactions between family members (loans, gifts, property transfers, etc…) need to be properly legally documented to avoid future conflict. Family members need to make clear that statements of intent or wish rise to the level of a binding agreement (if that is their intention). For example, see here and here.
As observed by the B.C. Supreme Court in Cadwell Estate v. Martin 2021 BCSC 1089: “As I am confident that everyone involved now recognizes, it would have been quite easy to document an agreement about the payment at the outset, thereby avoiding years of conflict.”
12. Wills variation claims
In B.C., while many wills variation claims now settle at mediation or through negotiation, some cases still make it to trial. A continuing theme that we see is how to deal with a wills variation claim by an adult independent child, and whether there is an obligation on a will-maker to treat children equally (see, for example, here).