Thwarted Philanthropy (Part 2)

This is the second in a series of posts where Darren Stewart discusses the law with regard to making specific bequests in your will to charitable recipients and how such bequests can be challenged by your children. Later, Maria Holman will discuss some estate planning strategies that can be used to allow your assets to pass outside your estate to whatever organizations or whomever you choose.

follow this link to read Part 1

PART TWO

Your children (and surviving spouse) will always have the right to challenge the contents of your will in hopes of having a court vary it in their favour. This is a matter of some controversy and surprise to those who are drawing their will and learning of this issue for the first time. You cannot make an unchallengeable will in British Columbia. This doesn’t mean you have to give everything to your children for fear that they will challenge your will. However, there are no black and white rules for these things. The appropriate amounts depend on the circumstances and facts of the particular situation.

There are some guideline principles. To start with, there’s the Wills Variation Act which states at s.2:

Despite any law or statute to the contrary, if a testator dies leaving a will that does not, in the court’s opinion, make adequate provision for the proper maintenance and support of the testator’s spouse or children, the court may, in its discretion, in an action by or on behalf of the spouse or children, order that the provision that it thinks adequate, just and equitable in the circumstances be made out of the testator’s estate for the spouse or children.

Then there’s the court’s interpretation of this provision, the most important of which is the Supreme Court of Canada’s judgment in Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807. A discussion of Tataryn and the cases that follow could fill a great many blog posts so we’ll focus on a very brief summary relevant to the topic at hand.

The court in Tataryn found that a parent in British Columbia has what’s called a “legal duty” and a “moral duty” to provide for their children (again, you have the same duties to a surviving spouse but that is a topic for a different day). Even if their children are grown up, working and self-sustaining. Even if their children are any one or more of estranged, entitled, irritating, unlikeable and not still a part of your every day life.

TheBritish Columbiacourts have considered some claims where a parent tries to give all or most of their money to charity. Generally, it helps if you have a close connection with the charity – say you supported it for most of your life and were actively involved in it. You can’t just suddenly find a random organization on the Internet, leave them all your loot and expect a court to allow that on a variation application by your children.

See for example Southam v. Royal Trust Corp. of Canada, 2000 BCSC 559 where the deceased left a will with bequests amounting to $30,000 to her only daughter. The residue was to go to three charitable institutions in equal shares. The residue of the estate was valued at $150,000. The plaintiff daughter was awarded 75 % of that residue and the charitable beneficiaries kept 25% in equal shares.

Justice Low considered the reasons behind the deceased’s decision to divide her estate in such a manner. Notably, Justice Low remarked, at para. 27 and 29:

There is no evidence that [the deceased] was involved with or connected to any of the three defendant charities except for the fact that her husband was a diabetic as is her grandson… however, that is not to say that she should not leave bequests to the charities once she has discharged her moral duty to the plaintiff and if the size of her estate permits.

In the absence of a strong connection between the plaintiff and the charity beneficiaries, it is my opinion that more regard must be had to the plaintiff’s financial circumstances and prospects than might otherwise be the case.

Thus, at least one Justice of the Supreme Court of British Columbia was willing to make quite drastic changes to a testator’s wishes where that testator chose to leave a small bequest to her child and the significantly larger portion to charity. However, establishing a connection between the testator and the beneficiary organization may lead to a different result.

In Crowley v. Walkhouse, 2008 BCSC 319 the testator left 25% of her estate, valued at $1 million, to her only son. The testator left the rest to various relatives and to her church. The plaintiff son was 70 years old at the time he brought a Wills Variation claim for 50 to 60% of the estate. The court upheld the testator’s wishes and left the estate to pass as it was outlined in the will. Rogers J. ruled that a court should not interfere with a bequest to an only child that is within the “range of options” that the court could find appropriate under all the circumstances.

Where the plaintiff is an independent, adult child of the testator, the court has very wide discretion to allow or disallow a variation claim. A plaintiff of modest means who did nothing during the life of the testator that would lead a reasonable person to believe that plaintiff should be disinherited will have a strong claim to a share of an impugned estate. Really, the discretion rests with the court to fashion a remedy based on the circumstances.

Clearly the caselaw does not show a lot of consistency. But do not despair. There are some methods you can use to allow all or part of your assets to pass outside of your estate making it more difficult for your children (or spouse) to make a Wills Variation claim. Those methods will be discussed in an upcoming post to this blog.

About Darren D. Stewart

Darren Stewart practises general corporate commercial litigation, with an emphasis on wills, estates and trust litigation, contract and lease disputes, transportation matters and personal injury litigation. He has appeared before the B.C. Provincial Court and the B.C. Supreme Court.
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