When Laws Collide, Part 2

In my previous post on this case, Easingwood v. Cockroft, 2011 BCSC 1154 I promised to outline the  judge’s analysis of the facts.

To recap, here are the parties:

Reg Easingwood (the deceased, died Sept 2009)

Kay Easingwood, married Reg in Dec 1983. (2nd marriage for both)

Reg’s four adult children (Lauren, Vicki, Hank and Edward.  Their mother had died in 1976;  Edward died in 1996, Hank died in 2009, shortly before his father.)

Kay’s two adult daughters from her first marriage (not part of the litigation)

The documents:

  1. Marriage agreement. (1983) Mainly dealt with what would happen upon death:  no sharing of assets, not claims against estates.
  2. Power of attorney to Reg’s son Hank and his daughter Lauren in 2001.  Unfortunately, the two had to act together, so if one died or become incapable, the other could not continue either.
  3. a Will in 2004, creating a life estate in income and his residence for Kay with a gift over to the children/grandchildren.  (house was in Reg’s name alone) That will was in place when Reg died.
  4. An Alter Ego trust established in 2007 by the attorneys under the PA.

The alter-ego trust was set up using the power of attorney. The trust terms mirrored those in Reg’s 2004 will, including life interests for Kay in income and the residence.  All of Reg’s assets except his residence and joint accounts he held with Kay were settled on the trust. The declared value assets under his will was $530,000.  The assets in the trust were about $5.6 million.

Hank died in mid Aug 2009;  Reg died four weeks later (Sept 12, 2009) and Kay started a WVA claim two weeks after that.

Kay subsequently amended the WVA action  to add claims under the  Family Relations act and the Fraudulent Conveyances act.  She asked for the following (among other things)

  1. a declaration that the Trust is null and void and therefore all assets transferred to the Trust are properly assets of the estate;
  2. if the Trust is valid, a declaration that the various transfers of property to the Trust were fraudulent transfers and are void and of no effect;
  3. declaration that the deceased, his estate, the Trust, and the beneficiaries were all unlawfully enriched
  4. an injunction;
  5. a declaration that the deceased failed to adequately provide for Kay in his will (WVA action)

Trustees of the Alter Ego Trust applied for dismissal of everything except the WVA claim (that will be for the executors to do later)

Madam Justice Dillon found that under the power of attorney, Lauren and Hank owed duties of loyalty, prudence, and good faith to Reg, but not to anyone else.  Therefore, the only question to be answered was whether, in exercising the PA, Hank and Lauren were in breach of their duty to Reg (as opposed to a potential claimant against his estate).

The court found Lauren and Hank acted in Reg’s best interest because of the imminent danger that the PA would become inoperable (if Hank died) and because the terms of the trust exactly mirrored what Reg himself had set up in his will.

Next, the court dealt with the Fraudulent Conveyance (FCA) claim.  Kay said she was a creditor, first under the family relations act (all of Reg’s assets being family assets according to her), second under unjust enrichment (the hard work she said she provided to Reg’s companies) and third for breach of the marriage agreement (not argued)

The judge said, first, the claim must have arisen during Reg’s lifetime.  For that reason, because a Wills Variation Act claim arises after death, it cannot support a FCA claim;  ie, a future WVA claim does not make someone a “creditor or other”.

Also the Family Relations act (FRA) could not be used as a basis for Kay to claim status as a creditor or other under the FCA.  No FRA claim existed when the assets were transferred to the trust, so no FCA status.  The fact that a claim could arise in the future was not relevant.

Kay’s claims in unjust enrichment were really against Reg’s companies, not against Reg, and therefore could not affect his estate, and there was no evidence to support that she ever expected to be paid for looking after the household or Reg as became less capable.   Additionally, the court found the marriage agreement provided a bar to any such claim.

Nevertheless, the judge reviewed whether the dispositions of the assets to the trust were made with intent to delay, hinder or defraud Kay.

Because the trust tracked the terms of the will, and because of the marriage agreement, the judge found no such intent.


  1. For anyone advising on powers of attorney, if you are trying to create an enduring powers, make sure it’s not messed up by sloppy drafting.
  2. As an aside, this case was decided under the old powers of attorney act.  So do attorneys still have the right to create a trust for the “adult”/donor?  Because the new act creates a number of express restrictions on attorneys, it might be a good idea to express that ability in the PA,  but I think even without that, this case makes it clear that if the trust tracks an existing will, with the requirement in the act that the attorney must act in the adult’s best interests, the answer is yes.
  3. A potential WVA claimant is not a “creditor or other” for purposes of the FCA, which will make everyone doing estate planning, whether for tax, creditor proofing or other reasons, breathe a sigh of relief.
  4. Also on the “future claim” question, the judge said that since no FRA claim existed when the assets were transferred to the AE trust, Kay could not be a “creditor or other”;  again, the claim must exist at the time of the transfer.
  5. Kay was not a creditor or other under her unjust enrichment claims as those claims failed for a number of reasons:  lack of evidence and the marriage agreement being chief among them.

Obviously in circumstances where there is an actual Family Relations act action under way, or a successful unjust enrichment claim, estate planning that removes assets out of reach of the claimant can give rise to a FCA claim, but that’s not news.

The case is under appeal, and the WVA claim remains to be dealt with, but unless the CA overturns the trial court, the assets in the trust will not be subject to the WVA claim.

I’ll let you know what happens at the Court of Appeal level.

About Maria Holman

I am a lawyer with over 28 years of experience in drawing up wills, trusts and estate plans, helping clients with probate and estate administrations and advising business owners and families about planning for the future. You can find me at Webster Hudson & Coombe LLP in Vancouver, BC
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