Archive for October, 2014

October 2, 2014

Why Lawyers Draft Wills

A recent Ontario case is a good reminder of why preparing a will is best left to a competent lawyer.

In Budai v. Milton, the testator clearly wanted a no-nonsense approach to how his failing health and his estate were dealt with.  He had a will prepared by a retired financial planner, who also happened to be named as executrix of the estate.  The proposed executor was in all likelihood an excellent financial planner, but was found lacking in legal skills.

The will named one beneficiary, the applicant (defined in the will as a paid caregiver) and contained the following clauses:

6.1      Should my beneficiary, Kathy Budai challenge this Will or my choice of Executrix in any way then she will be removed from the Will and not inherit anything.

6.3      Should the estate have holdings due to my beneficiary not honouring my final wishes to pass away without any further efforts to prolong my life then the Executrix shall be in the control of distribution of the Estate.  She may give away the funds in any way she sees fit.  She may invest the balance of the Estate and use it for donations or any other purpose as long as the funds last.  There are no restrictions to what she may do with the balance of the Estate.

With respect to clause 6.1, the applicant took the position that it should be struck out as contrary to public policy on the basis of the in terrorem doctrine.  That doctrine can be invoked to strike a portion of a will where three criteria are satisfied, namely;

(a)   the legacy must be of personal property or blended personal and real property;

(b)   the condition must be either a restraint on marriage or one which forbids the donee to dispute the will; and

(c)   the “threat” must be “idle.”

The court found that these criteria had been satisfied. A bald prohibition to challenging the will “in any way” offended the doctrine.  Determining whether a threat is “idle” requires an examination of whether the threat is “imposed solely to prevent the donee from undertaking that which the condition forbids”.  Bare forfeiture of a gift is therefore considered an idle threat.

While the court found paragraph 6.3 to be valid, despite several claims of uncertainty, it did note that the ability of the executor to disburse funds in any way she sees fit to be suspicious. The proposed executor was also the drafter of the will and had the ability under that clause to disburse the estate to herself if the applicant was disinherited.  However, while the Court was willing to consider that suspicion may be a factor in determining whether a will as a whole is valid (an example would be suspicion contributing to a finding of undue influence), it was not satisfied that there was authority to hold that suspicious circumstances may be used to strike only a single provision in a will, leaving the remainder of the will valid.