Why competent legal advice is fundamental

Interpretative principles reiterated – “for awhile” does not mean indefinitely

Four main principles of will interpretation were recently illustrated in Kirst Estate (Re), 2020 ABCA 233. In that case, the deceased left all of his assets, the most significant of which was a house, to his seven surviving children, and provided that his one child, Whitehorn, “could live in the house for awhile, to be determined by Him and his brothers + sisters”. The trial judge gave the term “for awhile” its natural and ordinary meaning and held that Whitehorn could only remain in the house so long as his surviving siblings agreed. But because the siblings could not agree, it was determined that a reasonable time for Whitehorn to leave was by April 30, 2020  (mere months away).

Whitehorn appealed, arguing that his father had granted him a right to live in the house indefinitely. Interpreting the will in its entirety, along with the absence of any conditional language, he argued, meant that he had absolute discretion as to when to vacate the home.

Dismissing the appeal, the Court of Appeal highlighted the following principles:

1. the “cardinal principle” of will interpretation is that the testator’s intent is to govern;
2. courts must have regard to the entire will;
3. courts will assume that the testator intended words to have their ordinary meaning, unless a compelling reason suggests otherwise; and
4. courts may canvass extrinsic evidence to determine the testator’s intent.

There was ample extrinsic evidence about the testator and his family and no compelling reason or witness testimony that might alter the natural and ordinary meaning of the testator’s words.  The testator wanted his estate to be divided equally and the house was the principal asset of the estate.  The unique provision referencing Whitehorn recognized that he had lived with his father for a lengthy period of time after his siblings moved out, although his continued occupation of the house was manifestly to be determined by all of his siblings and not just him. Accordingly, Whitehorn’s appeal of the decision that he vacate the home by a specified date could not succeed.

The importance of corroborating evidence and independent legal advice

In Logan Estate, Re, 2021 ABCA 6, the Alberta Court of Appeal upheld the validity of a will that disinherited the grandchildren of the testator, thus illustrating the requirement for corroborating evidence when challenging a will, along with the importance of independent and skillful legal advice in will preparation.

Velma Logan passed away at age 96 and had prepared three wills over her lifetime. The effect of the second and third wills was to disinherit two of her granddaughters. Specifically, her first will divided her estate equally amongst her six children, and if one of her children predeceased her, that child’s share would pass to their surviving children. Subsequently, one of Logan’s children predeceased her. Logan then changed her will to leave her estate to her five surviving children, rather than leaving her deceased daughter’s share to her grandchildren.

After Logan’s death, one of her disinherited granddaughters applied to set aside the grant of probate, alleging suspicious circumstances surrounding the preparation and execution of the two wills that disinherited her. She argued undue influence, lack of testamentary capacity, and mistake or fraud. Conversely, Logan’s Estate argued that one rationale of this change was that the grandchildren’s father had sufficient resources to care for his daughters, and Logan previously claimed to have discussed disinheritance with him.

The chambers justice rejected the granddaughter’s claims in part because the evidence relied on was hearsay. That evidence was a brief video of the applicant’s father saying he did not ever tell anyone to disinherit the granddaughters because he had sufficient money to look after them. In response, Logan’s Estate filed seven affidavits, including an expert report from Logan’s physician and from the lawyer who prepared all of her wills. The lawyer’s affidavit outlined that Logan was aware that her granddaughters would be disinherited, but also outlined Logan’s belief and rationale that their father had sufficient financial resources to care for them. The lawyer’s memos to file specifically noted that there was no evidence of incapacity or undue influence, and that the disinheritance was confirmed several times.

The Court of Appeal emphasized the requirement of material corroborating evidence when challenging the validity of a will, pursuant to section 11 of the Alberta Evidence Act (the “Act”). That is, the person challenging the will must provide independent evidence that helps the adjudicator believe the statement or fact alleged by the challenging party, and that evidence must enhance the likelihood that the challenging party’s statement is true. Uncorroborated evidence, like the video of the father denying he told anyone to disinherit his daughters, will not suffice.

In this case, the applicant had no direct knowledge about the creation or execution of the will and could only offer speculation. Moreover, she provided no evidence of domination or control over Logan’s actions. Therefore, the applicant failed to meet the requirements of the Act.

The Court further noted that the result would be the same under the presumption of validity. Upon proof of a properly executed will that the testator appears to understand, it is presumed that a testator approved the contents and had the necessary capacity. A person challenging a properly executed will bears the burden to rebut the presumption of validity. To do so, the applicant is required to raise a “genuine issue to be tried” with an appropriate evidentiary foundation. Here, that evidentiary foundation did not exist.

Capacity “is a legal question, not a medical one” – medical diagnosis insufficient to displace the presumption of validity

In McAndrew Estate (Re), 2020 ABQB 614 the question was which of the three wills governed the distribution of the estate:

1. In 2005, the testator, Patricia, created a will that left the bulk of her estate to her daughter;
2. In 2011, the testator’s brother made arrangements for her to visit a lawyer where the testator executed a new will that reduced her daughter’s entitlement. In 2011, prior to the making of the second will, the testator was diagnosed with dementia and the doctor signed a declaration stating that Patricia was incapable of making various non-financial decisions; and
3. In 2012, the testator executed a third, this time holographic will, that further reduced her daughter’s share of the estate. The holographic will contained no revocation clause. One week after this, the testator’s lawyer prepared an enduring power of attorney naming her brother as the attorney.

Patricia’s brother brought the application for advice and direction, seeking a declaration that the holograph will was valid. The testator’s daughter challenged both the 2011 and 2012 wills on the basis of suspicious circumstances. She argued that those suspicious circumstances extinguished the presumption of validity and returned the onus to the testator’s brother to prove capacity, knowledge, and approval. The Court disagreed and admitted the holograph to probate, holding that it governed the distribution of the estate.

The Court noted that capacity is a legal question, not a medical one. While medical evidence can and often does inform the legal assessment, such evidence is not necessarily determinative, and a mental illness, cognitive impairment, or dementia does not automatically imply a lack of capacity. The Court applied the classic test for testamentary capacity from Bank v Goodfellow (1870), LR 5 QB 549 (Eng QB), which provides:

1. The testator must understand the nature of the act and its effect;
2. The testator must understand the extent of the property of which he/she is disposing
3. The testator must be able to comprehend and appreciate the claims to which he or she ought to give effect;
4. The testator must not be suffering from a disorder of the mind or an insane delusion which would influence his or her Will in disposing of his or her property and bring about a disposal which, if the mind had been sound, would not have been made.

The Court held that the 2011 will was validly executed and revoked the 2005 will. Patricia was not in such an advanced state of decline that she did not understand what she was doing in 2011, meaning that the evidence of the testator’s mental state was not sufficient to amount to suspicious circumstances to displace the presumption that she had testamentary capacity for the 2011 will. If anything, she was on the margin of incapacity at that time. The lawyer’s affidavit also expressed that he had no concerns about testamentary capacity in 2011, and the testator’s brother was not in the room when the 2011 will was executed.

The 2012 will was also valid because it was properly executed and revoked previous wills by implication by prescribing a distribution that was incompatible with the 2011 will. Specifically, there was no evidence that the testator’s mental state had further deteriorated when she executed the 2012 will, and her lawyer noted no capacity issues when he prepared her enduring power of attorney, one week after the 2012 will. Her brother being present when the testator executed the new will did not change this result.

Further, although the testator’s brother had exercised some influence over her, this did not amount to undue influence or coercion. The Court noted that the burden would remain on the testator’s daughter to show undue influence, and there was nothing in the evidence to show that the contents of the 2012 will were not what Patricia wanted. The absence of undue influence was also supported by the smaller share allocated to her brother in her final will.

A competent testator is entitled to have pre-death financial affairs kept private

Related to testator capacity, in Duhn Estate, 2021 ABQB 35, the issue was whether four years worth of financial transactions should be disclosed to the beneficiaries to determine if other assets should be included in the estate distribution.

In this case, the testator’s husband left his estate to the testator, who in turn, spent several million dollars of the estate over the course of four years, resulting in a lesser estate value at the time of her death. The two applicants were the beneficiaries of the estate and children of the testator. The applicants alleged that the transfers made before death had significantly diminished the value of the estate, and that the testator may have lacked capacity, been subject to undue influence, and that some of the transactions might have been made without her knowledge. The respondent personal representatives argued that there was no legitimate reason to investigate pre-death transactions, and denied that it was their duty or obligation to disclose the private pre-death information of the testator.

The evidence of the testator’s treating physician of 20 years was that the testator was competent and in “full control of her mental facilities” throughout her life. Moreover, the testator was “very involved” in her financial affairs, keeping detailed notes, banking, and visiting her doctor and lawyer frequently. The Court accepted that the testator wanted to give away much of the estate before she died.

The Court noted that, generally, a personal representative is only obligated to account for the period of estate administration that occurs after a testator’s death. Usually, pre-death transactions are only accounted for when there was a prior duty under a power of attorney or other formal trustee relationship to account for. It is much more rare for a court to order an accounting of a competent testator’s pre-death financial affairs without evidence that gives rise to a “significant concern” of potential abuse. Even so, this would only be ordered after full consideration of the testator’s privacy rights. This applied equally to the joint bank account between the testator and one of her children – absent an issue of competence, it would be impossible for the joint holder to account for pre-death transactions for which they had no influence or involvement.

The Court held that a pre-death accounting was not warranted in these circumstances. The testator was competent throughout her life, and the decrease in the value of the estate was explained by the evidence. Competent testators are entitled to keep their financial decisions private and confidential – here, that was the plain wish of the testator, and the applicants did not meet the minimum evidentiary threshold to displace that desire.

Conclusion

There are several key takeaways from these Court of Appeal and Court of Queen’s Bench decisions:

1. The Court of Appeal decision in Kirst Estate serves as a recent affirmation of the relevant principles which are to be applied in determining a testator’s intent. In doing so courts will examine the ordinary meaning of the words used in light of the broader context, unless there is compelling witness testimony or other reason to accept a different meaning.
2. The party challenging the validity of a will must provide material corroborating evidence to substantiate any adverse claim. Conversely, independent legal advice accompanied by diligently drafted lawyer’s notes are useful in upholding a testator’s wishes, especially when a beneficiary is disinherited.
3. A broad range of factors inform the judicial view of “capacity” to execute a will and medical evidence will not necessarily be determinative. It follows that proper documentation by the lawyer and other estate administrators is crucial to ensure that important estate documents are not successfully challenged post-death. Related to this, it is important to ensure that wills and other documents are stored in a safe place.
4. A court can only order a pre-death financial accounting in limited circumstances. Absent significant, unexplainable concerns about the testator’s pre-death transactions, a competent testator is entitled to privacy in their financial affairs.

More fundamentally, these cases highlight the need for competent legal advice when navigating the complexities of estate planning, estate administration, and dispute resolution. If you have questions, or need advice and assistance, contact Miller Thomson’s Estate Litigation group.