Posts by Jeremy R. Costin

Jeremy R. Costin
Thursday, July 28th, 2016    Posted by Jeremy R. Costin (posts)

An unintended consequence of British Columbia’s revised legislation on wills and estates is the possibility that a gift to someone may be inadvertently doubled.

The Wills, Estates and Succession Act (WESA), section 6, provides that where a gift in a will is contingent on the death of someone else, that gift will take effect if it cannot be determined whether the latter person died before or after the person who made the will.

While in most circumstances, this makes it easier to deal with contingent gifts, there is one situation that becomes more complicated.

Consider a will that directs the executor to “give all to my spouse, but in the event my spouse dies before me, give $25,000 to my nephew Horatio and divide the rest equally between my children.”

If both spouses have included that clause in their wills and they die in a situation where the sequence of their deaths cannot be determined, Horatio will receive $50,000.  Most likely, the intention was for Horatio to receive $25,000 on the death of the second spouse to die.

It was suggested at a recent conference that this can be remedied in two ways:

Suggested remedy 1:  If you state the intention that the gift is to be given only once, that ought to be sufficient.

It is not.  The substance of such a provision would be to ask that another person’s will be changed, which is of course not permitted by law.

Suggested remedy 2:  Since the WESA now allows a judge to fix an imperfect will, you can rely on a judge ensuring the gift is not duplicated.

A will is far too important a document to leave to chance.  Hoping that a judge will know what you wanted and then fix it accordingly is a far riskier proposition than spending a bit of extra time to make it crystal clear.

Further, even if you state the intention in both wills that the gift is to be given once, and even if a judge tries to rectify the wills to accommodate this intention, it still remains unclear whose estate should give the gift.

If there are other beneficiaries whose gifts would be affected, especially if the distributions are not identical in the wills, how should the judge determine which person’s beneficiaries will bear the brunt of the gift?  Given such a scenario, a judge might be inclined to remove the entire provision due to lack of certainty; or if inclined to keep the provision, the judge would have to engage in a significant review of the facts of the estate – at significant cost and headache – to remedy an uncertainty which could easily have been avoided at the time the will was drafted.

Solution:

If the legislation creates a window for an unintended result, efforts should be made to draft around the potential problem.  My approach is as follows:

First, I make the gift using language that includes both the intention and a term for which we will make our own definition, “Single-Non-Duplicated Gift.”

If my Spouse does not survive me for 30 days, my Executor shall give to my nephew, Horatio Doe, presently of Fort Elsinore, BC, a Single, Non-Duplicated Gift of $25,000.

We create a term, “Single, Non-Duplicated Gift.”  This term shows our intention clearly (that the gift be given only once); it also tells us that it’s a defined term and that there will be a definition of it elsewhere in the will.  That definition will include the specifics of how to make the gift only once, even if we can’t tell who died first.

The definition of “Single, Non-Duplicated Gift” says that the gift is only made once in total, and it includes a clear mechanism for figuring out which estate actually pays it.

The mechanism is as follows:  In each spouse’s will, the mechanism says that if the sequence of death cannot be determined, then Horatio is to get half of the gift under that will (because he’ll also get half from the other will).  It also says that if one estate falls short, the other estate will make up the difference.

Provided that both spouses include the whole “Single, Non-Duplicated Gift” definition and mechanism in their wills, Horatio will receive an inheritance equal to the amount intended, and not a double-gift.  Regardless of whether the spouses die simultaneously or one survives the other, Horatio’s gift remains the same.

Tags:

Posted by Jeremy R. Costin (posts) | Filed under Financial Transactions, Other | ....