Can your client disinherit a child?

A client who bequeaths nothing to their children now has greater certainty that their wishes will be fulfilled.

In May 2019, the Nova Scotia Supreme Court handed down its judgment in Lawen Estate v Nova Scotia (Attorney General). The case may have a fundamental effect on estate planning in that province and others if the decision’s logic is adopted by other provincial courts.

The legislation under review in the case prevents a testator from disinheriting a child. The issue for the court was the extent to which legislation that limits a testator’s discretion in distributing their estate is constitutional.

Case facts

Jack Lawen had four adult children: three daughters and a son. In his will, Jack left nothing to one daughter, $50,000 to each of his other two daughters and the rest of his estate to his son. Jack’s daughters were upset and commenced an action under Section 3 of Nova Scotia’s Testators’ Family Maintenance Act, asking that a portion of their father’s estate be distributed to them, regardless of the will’s provisions.

Section 3 of the act reads:

“Where a testator dies without having made adequate provision in his will for the proper maintenance and support of a dependant, a judge […] has power […] to order whatever provision the judge deems adequate […].”

The act defines a dependant as the testator’s widow/widower or child. There is no requirement that a child be financially dependent on the testator or under a certain age. Therefore, Jack’s daughters, despite being adults when Jack died and not financially dependent on him, qualified as dependants and could maintain an action.

The executor of Jack’s estate argued Section 3 infringed on a person’s right to distribute their estate as they choose and was contrary to Section 7 of the Canadian Charter of Rights and Freedoms, which guarantees the right to “life, liberty and security.” The executor argued the legislation should be read to create an obligation only to a spouse or child to whom the testator owed a legal obligation, as opposed to a child to whom the testator may owe a moral obligation.

The court’s decision

The court agreed with the executor and held that a testator’s decision as to the distribution of their estate is protected by the charter. Section 3 of the act should be read narrowly to include only those children to whom the testator owed a legal obligation of support, the decision said.

In effect, the court said it has no ability to enforce a moral obligation on a testator to consider family members in their estate plan. Only where there is a legal obligation, such as a requirement to support a minor child or an adult dependant, will the court intervene.

As much as the case impacts Nova Scotia law, it may be a hollow victory for the executor of the Lawen estate. The court specifically held that the decision wasn’t retroactive, and therefore the daughters remained qualified to maintain an action. However, the decision will have an impact on future estate plans.

Estate planning in Nova Scotia after Lawen

The province hasn’t indicated what steps, if any, it may take regarding the Lawen decision. It may decide to do nothing, in which case the act would be read narrowly based only on a legal obligation; appeal the decision; or draft new legislation. While estate planners await further action, it’s prudent to continue to use tools that mitigate the risk associated with the Testators’ Family Maintenance Act.

For instance, alter ego or joint partner trusts are often used in Nova Scotia because the act specifically refers to a testator, as opposed to a trustee; therefore, Section 3 doesn’t apply to these inter vivos trusts. Using trusts also reduces probate fees, as the disposition of trust assets is private.

The decision’s effect in other provinces

Two provinces — British Columbia and Newfoundland and Labrador — have legislation similar to Nova Scotia’s and are therefore most likely to be impacted by a similar challenge.

Most other provinces, including Ontario and Alberta, contain similar provisions allowing a judge to order maintenance and support of a dependant, but they define dependant narrowly: as a minor, or physically or mentally dependent adult child. These narrow definitions would likely be seen as constitutional or at least justifiable under Section 1 of the charter.

On the other hand, some provinces have a wide range of relations who could be dependants. For instance, Ontario’s legislation defines dependant as including not only a spouse and children but also a parent, brother or sister to whom the deceased was providing support or was under a legal obligation to provide support immediately before his or her death.

Estate planners with clients in Nova Scotia should contact clients to review and update their estate plans. As for other provinces, the case serves as a good reminder for clients to consider and re-evaluate whether they have dependants for whom their estate plans should be reviewed.

Keith Masterman

Tax & Estate

Keith Masterman, LLB, TEP, is vice-president, Tax, Retirement and Estate Planning at CI Global Asset Management. He can be reached at kmasterm@ci.com.