Homemade wills often require interpretation

There are many reasons a will may need to be interpreted. An interpretation application is a request for the opinion, advice and direction of the court on specific questions. The questions will relate to matters of concern to the executors and trustees (and/or certain beneficiaries) who are unable to discern from the terms of the will how to implement it, or who is to benefit and how. An executor who administers the estate in accordance with guidance received from the court will be protected from subsequent complaint by a beneficiary.

Holograph or homemade wills commonly require interpretation. This is not surprising, as a lay person has little understanding of what a will should contain. For example, the appropriate place for a residue clause – which disposes of all remaining property – is at the end of a will, following any specific bequests or gifts. If the residue clause appears first, followed by a series of gifts, the question arises as to whether the residue clause carries all of the testator’s property. When the residue clause appears last, these questions do not arise.

Ambiguous language

Changes to the subject matter of a gift between the date of the will and the testator’s death often arise. For instance, if the testator owned a house on 5th Street when the will was made, but then sold it and moved into a house on 6th Street, is the gift ineffective, or does the gift apply to the new house? What if the house was sold prior to the testator’s death, but the net proceeds were kept segregated in some investment? If the testator owned two houses on 5th Street, which of the two is meant?

The above are examples of ademption issues. These arise when the subject matter of the gift no longer exists at the time of the testator’s death or does not exist in the form described by the testator. It can also happen when the subject matter of the gift is improperly described. When the gift or proceeds still exist, and the gift is held to adeem, it will fall into residue. As the residual beneficiaries are often different persons than those who benefit from a specific bequest, a gift that adeems is one in which the testator’s intention has been frustrated.

Some of the problems that plague holograph wills can also be found in formal wills. A gift by a testator of “my Company B” can give rise to an ademption issue. In law, a testator does not own a company. What he or she owns is shares in a company, which have certain rights attached to them. Accordingly, while an imperfect gift may be saved in some cases, the gift of a company is best effected by describing it as “my Class A shares in Company B.”

A gift to “my friend John” is ambiguous if the testator had two friends named John. Also, there are a number of charities that have similar names. There may be a national parent and provincial chapters of a given charity, for example. If the name given in the will is inaccurate or incomplete, the testator’s intended beneficiary will be unclear.

A gift to be held in trust, without the addition of further terms, can result in interpretation questions. Such a gift may be open to different interpretations, depending on language. For instance, what is meant by a gift described simply as “in trust”? It may be a gift for outright distribution, if there are no subsequent interests or gifts over to other beneficiaries. Or it may be a gift to be held to a certain date or until a certain event, depending on the other terms of the will. When all those with an interest in the trust are adult and capable, and there are no gifts over, they can call for the gift.

What is meant by a gift “in trust” for particular purposes — such as health and education — but has no terms as regards the distribution of income and/or capital? If it’s to be held until a future date or event, the purposes are rendered moot. Once the beneficiary reaches that date or the event occurs, he or she can use the monies comprising the gift for whatever purpose he or she chooses and is not limited to the purposes in the will. The question that arises is what use of or access to income and/or capital was intended in the interim for the purposes specified. Again, in such circumstances, a testator’s intention may end up being frustrated.

Intestacy issues

A specific gift, or a gift of the residue to a person who dies before the testator, without any gift or gifts over to contingent beneficiaries, will result in an intestacy. While those who take on an intestacy are statutorily prescribed, difficulties can arise in locating all of those persons who are entitled to share on an intestacy. Relatedly, on an intestacy, or partial intestacy, there can be an interpretation issue as to the date when the persons who are to take possession of the gift. Is it as of the date of the testator’s death, even if the intestacy arises later? Or is it at the date at which the intestacy arises? The answer can affect persons who are to be included as beneficiaries, or not.

Missing words, or an inappropriate choice of words, can arise from the use of an outdated precedent. For instance, many precedents contain a clause that addresses the payment of debts and taxes. However, old precedents refer to such things as succession duties, which no longer exist in Ontario.

Still, the clause shows up in many wills today. This may lead to confusion, where the balance of the clause does not refer to such taxes that do exist and are currently payable upon death. What, then, is meant by the words “succession duties?” A poor choice of words can potentially affect how taxes on capital gains are to be paid. Are they to be paid from the residue, as is typically the case, or from the proceeds of a specific bequest?

Dubious interpretation

Every will requiring interpretation and every decision of the courts interpreting a will tend to stand on its own. In other words, prior decisions can be of little precedential or instructive value. In interpreting a will, a court will first examine the whole contents of the will and, after giving them full consideration, try to discern the intention of the testator. When the court forms an opinion as to intention, it should strive to give it effect. This may sound straightforward, but words can have many meanings. This can depend on popular usage versus that of the testator, the context or placement of the words requiring interpretation, and the structure of the will as a whole.

A court interpreting a will is generally not able to consider direct evidence of intention. In other words, a beneficiary or would-be beneficiary cannot give evidence as to what he or she believes the testator intended. Such evidence is often self-serving. A court may, however, take into account certain circumstances that are considered to be indirect evidence of testamentary intention. These include: the character and occupation of the testator; the amount of, extent, and condition of his or her property; the number, identity and general relationship to the testator of immediate family and other relatives; the persons who comprised his or her circle of friends; and any other natural objects of the testator’s bounty.

Aside from these general principles, there are a host of interpretive rules and principles that may be brought to bear in rendering a decision, depending on the question or issue before the Court.

Advise your clients to avoid a holograph or homemade will. Any savings from not having to pay a lawyer to draw up a proper will is likely to be more than eaten up by the costs of any necessary interpretation application. A good will is not necessarily simple; rather, it is one where considerable thought has been put into the provisions which, when read together, are integrated with each other.

Care needs to be taken in ensuring not only that beneficiaries and gifts are properly described, but also that changes over time do not render provisions of the will ineffective. Accordingly, gifts over to persons and gifts of things or their proceeds can do much to ensure that executors and trustees are able to implement testamentary intentions. The words used should be chosen to express the actual intention of the testator, such that it can be implemented, and does not result in litigation over ambiguities or misunderstandings.

DANIEL J. DOCHYLO, TEP, CS is partner and national chair of the Estate and Family Law Litigation Group, Borden Ladner Gervais LLP.