Thursday Thinkpiece: Uniform Law Conference of Canada on Statutory Wills

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STATUTORY WILLS FOR PERSONS WITHOUT TESTAMENTARY CAPACITY
Uniform Law Conference of Canada

The paper, excerpted here (pp. 1-3, 12-13) is a Background Discussion on Statutory Wills, as part of the ULCC’s Uniform Wills Act project. The material in the paper has been updated to May, 2012 by Debra Hathaway, with input from Jenna Reist.

(Footnotes are omitted. They are available in the original version, reached via the hyperlink above.)

Introduction

[1] After reaching the age of majority, adults may possess and then lose testamentary capacity either temporarily or permanently. A loss of testamentary capacity may be due to any number of conditions resulting in mental disability or mental incompetence, including mental illness, brain injury from physical trauma, senile dementia, etc. Some people may never have testamentary capacity in their lifetime due to developmental delay or impairment. However, the legal assessment of an adult’s testamentary capacity is never just presumed from the presence of a mental condition; it is always assessed on an individual basis. The law is clear that a mentally challenged person whose affairs require management by a substitute decision-maker may still have the testamentary capacity to create a will.1

[2] The law in Canada also seems clear that a substitute decision-maker cannot exercise the testamentary power of a person under their care by making, altering or revoking that person’s will. A testator’s power to make a will cannot be transferred or delegated at common law. Like getting married or serving a prison sentence, will-making is classified as a personal act that can only be performed by the principal, not by an agent. In addition, the fiduciary nature of the relationship between a principal and their agent, attorney or trustee restricts a substitute decision-maker from disposing of the principal’s property without clear and specific authority to do so; therefore, this principle similarly restricts substituted will-making.2 Although many Canadian statutes confer on substitute decision-makers very broadly-stated general powers to deal with the property and affairs of the persons under their care, it is extremely doubtful that the power to make a will would thereby be included.3 Five provinces leave no doubt about the matter by expressly providing that a substitute decision-maker cannot make, change or revoke a will.4

[3] Courts have no greater authority in this area than other substitute decision-makers. In the absence of express statutory authority, a court cannot make, change or revoke the will of a person without testamentary capacity.5

[4] In England, Australia and New Zealand, courts are granted such express statutory authority to make “statutory wills” for persons without testamentary capacity. In Canada, however, courts typically do not have such statutory authority. The one exception is New Brunswick, which extended such jurisdiction to its courts about a decade ago.

Circumstances Addressed by Statutory Wills

[5] Before considering the relevant legislation and reform issues in this area, it is useful to canvass the type of fact scenarios which are typically advanced as reasons to make a statutory will.6 These scenarios are a cause for concern only if they result in an unjust or inappropriate distribution on the incompetent person’s death that, for whatever reason, cannot be adequately addressed by the law of intestacy or dependants relief legislation. If the safety net of intestacy and dependants relief statutes produces an acceptable result for a particular incompetent person and their family, then the justification for a statutory will is reduced. The usual fact scenarios discussed in the context of this issue include the following:

• The person made no will before becoming incompetent and intestacy will produce an undesirable result or a result the person would not have wanted.
• A pre-existing will was revoked by marriage or divorce, the person is now incompetent to make a new one and intestacy will produce an undesirable result or a result the person would not have wanted.
• The person did make a will before becoming incompetent but it has become seriously outdated during the period of incompetence for reasons such as:
  • a major asset in the will has been disposed of by the property trustee;
  • the will does not provide for a child who arrived after the period of
  • incompetence commenced;
  • the executor or chief beneficiary has predeceased the testator;
  • there has been a major change in the relationship between the testator and the beneficiaries under an existing will or on intestacy.
• A statutory will is needed to prevent money inherited from one side of the family from going to the other side on intestacy.
• It is just and desirable to make testamentary provision for a dedicated non-family caretaker (a friend, employee or charitable organization) who of course will have no claim on intestacy or under dependants relief legislation. This scenario is most compelling where the blood relatives are non-existent, remote or neglectful.
• A statutory will can prevent litigation over the estate which would otherwise occur.
• In jurisdictions where inheritance or estate taxes exist (unlike Alberta), a statutory will can result in significant tax savings, for example, by substituting a beneficiary’s child for the beneficiary in the will so the estate property passes between the three generations only once, not twice.

[6] A statutory will case in England that had very unusual circumstances is Re Davey.7 A young male nurse in a nursing home secretly married an elderly dying woman with mental deterioration. The marriage revoked her will (made while mentally competent) which had left her property to her family. On her death she would therefore die intestate and her estate would pass to her secret husband of a few days. In the course of an already ongoing application to appoint a trustee, the Court of Protection learned of the secret marriage and quickly appointed the Official Solicitor as trustee to deal with the matter. Without time to challenge the validity of the marriage in court, the Official Solicitor applied for and obtained a statutory will in the same terms as the revoked will, without notice to the husband or family. The woman died just a few days later. The court observed that the disinherited husband’s remedy would be to apply for a share of the estate under the dependants relief legislation.

[7] It is also important to remember when considering fact scenarios for statutory wills that a court need not be asked to make a statutory will to deal with absolutely all of a person’s estate. If an existing will or the intestacy laws will distribute a person’s estate in an appropriate way except for an aspect which needs intervention, the court can be asked to simply make that one adjustment. For example, the court could make a codicil to an existing will to add a bequest to a caregiver. As stated by the Law Reform Committee of Victoria:

… it should be made clear that the Court is not bound to make an entire will for an incapable person. The applicant may be satisfied with a specific bequest or devise, for example a life interest in a house in which the applicant may be living with the incapable person whom he or she is caring for on a gratuitous basis. The rest of the estate can be distributed according to an existing will or the intestacy rules, or be left to a family provision claim. The jurisdiction should be capable of being exercised only to meet the need at hand. If every time the court were to consider that it must authorise an entire will that could be an occasion for expensive enquiries and hearings.

. . . . .

 The Rest of Canada and the Case for Law Reform

[41] No other Canadian jurisdiction has followed New Brunswick’s lead to authorize the making of statutory wills. Nor does there appear to be any great reform movement to advocate this development in Canada. However, one academic – Professor Gerald B. Robertson of the University of Alberta – has called for this reform to be made:

If the present position is indeed that Canadian courts cannot authorize a property guardian to make or revoke a will, this is an unfortunate omission in our law. Although such a power is one which should rarely be exercised, there are situations in which its absence can cause grave injustice, injustice which cannot necessarily be cured by the law of intestate succession or by dependants’ relief legislation. Those responsible for reforming the law in this area should give [this matter] serious consideration . . . .71

[42] Arguments in favour of court jurisdiction to make statutory wills usually focus on the perceived practical need, in some individual cases, to avoid an unjust or inappropriate distribution of an incapacitated person’s estate on death. Sometimes the problematic distribution is not resolvable by reliance on intestacy or dependants relief laws and sometimes the problematic distribution may be the result of those laws.

[43] However, there are some major philosophical hurdles militating against allowing a court to simply come in and rearrange a person’s testamentary affairs when the subject is personally incapable of doing it. Canadian legislation largely respects the view that will-making is a sacrosanct personal act that should not ever be delegated to another.72 To allow even a court to engage in substitute will-making for the most vulnerable of testators can attract condemnation. As two legal commentators in New Brunswick stated:

Is this not another example of the “Big Brother” syndrome where the state can interfere with the discretion of an individual without the individual’s knowledge. To what extent should the state continue to interfere with the individual? What next? In the writers’ opinion, this is a bureaucratic enactment of control without justification and, as such, subject to dangerous development by the courts.73

[44] There is also the view that the statutory laws of intestacy and dependants relief already represent society’s considered legal response to situations where a person does not have a will (for whatever reason) or where the will or intestacy laws do not adequately provide for a dependent relative. This view argues that the integrity of these statutory safety nets should be preserved without special treatment for a certain class of persons (those without testamentary capacity) whose estates are then handled by alternative means. As stated by the Scottish Law Commission when it refused to recommend any system of statutory wills, “[w]hat such a power would really be would be a power to change the ordinary rules of succession, testate or intestate, which would otherwise apply on the death of the incapax.”74

[45] However, if a person who has testamentary capacity does not want their estate to be distributed according to intestacy or dependants relief laws, the person can avoid that result by exercising their testamentary capacity in an appropriate manner. Persons who lack testamentary capacity simply do not have that choice. It is arguable that the availability of a statutory will restores that choice to them (albeit via a substitute decision-maker) and provides equal opportunity to avoid an unwanted or undesirable result. Even though the choice would have to be exercised by substitute decision-making, it would at least occur in the context of an objective process with the most safeguards possible. . . .