Clients who wish to leave their estate in a way that deviates from the usual manner (all to spouse, then equally among children) often worry that it will be contrary to the law to do so. I reassure them and so does the court.
Thanks in part to the great devolution of wealth to baby boomers as they inherit their parent’s estates; the legal landscape of estate planning is rapidly evolving. In Spence v. BMO Trust Company, an Ontario trial court judge set aside a properly drafted will on the grounds that it violated public policy.
In this case the testator was a widower with two surviving adult daughters, age 51 and 52. At the time of his death, the testator had been estranged from one of his daughters since the time of his divorce over three decades prior. The testator had lived with the other daughter and supported her financially as she obtained numerous post secondary degrees. In short, they enjoyed a healthy father-daughter relationship for many years until the daughter had a child who was not black. At that point, he cut off all communication and removed her as the sole beneficiary of his estate to be replaced by his daughter in England to whom he had not spoken in about 35 years.
The will stated that he was disinheriting the daughter because “she has had no communication with me for several years and has shown no interest in me as a father”. However, the daughter had been very close with her father for several years as compared to the other daughter, who lived in the UK and had not seen the testator in over 35 years. The disinherited daughter had a child who did not share the same skin colour has the testator. On that basis, the disappointed daughter challenged the will on the basis of a public policy violation and succeeded. The Court set aside the will, resulting in intestacy, effectively leaving the $400,000 estate to each daughter equally.
The general rule is that a will can only be set aside if it is invalid (due to undue influence, coercion, incapacity) or if the language of the will is ambiguous or uncertain. Courts work to balance the testator’s right to leave their estate as they choose against the entitlement of surviving children and spouses; however, in Ontario a person is legally able to disinherit a self-sufficient adult child in many situations.
The trial court decision was surprising, and the Court of Appeal decision rendered in 2016 overturned it to confirm that a court cannot interfere with a testator's freedom to gift his estate as he or she chooses. The court confirmed that the ability to gift one's estate as one chooses is a deeply held common law principle, constrained only by public policy and certain other legal obligations, which I will discuss in a future blog.