Let clients know about these will restrictions

When a testator makes provisions in their will, the expectation is that their wishes are absolute. Certainly, testamentary freedom grants that a testator of sound mind is free to leave their estate to whomever they wish without explanation.

But what if a testator doesn’t make provisions for a dependent child? Or what if will provisions are discriminatory? In these instances, the courts may interfere with the testator’s succession plan.

Freedom restrictions

Some provincial legislation gives the courts latitude to interfere with a testator’s estate plan. Generally, the court interferes in three types of situations.

• Failure to adequately provide for a dependent

In most provinces, a testator is expected to sufficiently provide for dependents, but each province has its own definition of dependent.

For instance, in Ontario’s Succession Law Reform Act, dependent is defined as the deceased’s spouse, parent, child or sibling for whom the deceased provided support or was under legal obligation to support. And Quebec’s civil code contains rights for the deceased’s spouse, ex-spouse, children and parents.

Similarly, certain provinces have a doctrine known as moral obligation. In B.C. a court may amend a will if the deceased failed to consider a moral obligation toward a child. Legislation reinforces this concept: B.C.’s Wills, Estates and Succession Act allows the court to intervene if a testator doesn’t provide “adequate, just and equitable” provisions for their spouse, common-law spouse or children. In other provinces, moral obligation is specifically rejected or is very limited.

In Verch v Weckwerth, Albert Verch’s adult children claimed that their deceased father had a moral obligation to provide for them in his will. Numerous factors affected the Court’s decision to reject this claim, but key was Ontario’s lack of legislation for moral obligation claims for adult children.

Also, in Ontario, Manitoba and Newfoundland, the deceased’s spouse can apply to the court for an entitlement from the deceased spouse’s estate. In essence, a spouse can request an equalization of net family property rather than take whatever gift was made in the deceased spouse’s will.

• Unworthy heir

Typically, an unworthy heir is a beneficiary who murdered the testator, is a terrorist group member or has committed a severe criminal offence. In these situations, the court will hold the gift is void, and the named beneficiary will not inherit.

• Provisions contrary to public policy

The court can also deem a provision in a deceased’s will void if it contradicts public policy. These wills tend to have provisions that disinherit a beneficiary based on race or religion, or that make a gift to a group that inherently opposes public policy.

For instance, in McCorkill v Streed, the New Brunswick Court of Appeal disallowed a gift to the National Alliance, a U.S.-based white supremacist group.

When reviewing a gift on public policy grounds, there’s discussion about whether to consider intent.

In Spence v BMO Trust Company, plaintiff Verolin Spence asked the court to void her Jamaican father’s will. Verolin claimed she had a healthy relationship with her father until she became pregnant by a Caucasian man.

Upon his death, Verolin’s father gifted all his property to his other daughter, Donna, and her children. His will stated he’d had no communication with Verolin for several years, and she had shown “no interest in [him] as a father.” Verolin claimed her father’s decision was racist and contradicted public policy.

The court reinstated the will, stating that the will’s language was neither explicitly discriminatory nor ambiguous, and therefore didn’t offend public policy.

What advisors should do

Though that case clearly endorses testamentary freedom, caution is warranted.

When considering disinheriting a beneficiary, your client should review the exclusion with counsel. Although testamentary freedom is alive and well in Canada, legislative and policy considerations should be carefully considered.

Keith Masterman, LLB, TEP, is vice-president, Tax, Retirement and Estate Planning at CI Investments. He can be reached at kmasterm@ci.com. Asha Sivarajah is a summer student for the Tax, Retirement and Estate Planning team at CI Investments.