Wills Variation: An Estate Planning Consideration

It is important for those of all ages to create an estate plan to ensure that their assets are distributed in accordance with their wishes. This includes considering the possibility of a wills variation claim.

What is Wills Variation?

Wills variation allows an individual to make a claim upon the death of a will-maker, if they feel that they have been inadequately provided for in the will.

According to section 60 of BC’s Wills, Estates and Succession Act (“WESA”), if a will-maker dies leaving a will that does not, in the Court’s opinion, make adequate provision for the proper maintenance and support of the will-maker’s spouse/common-law partner (“Spouse”) or children, the Court may order any provision that it thinks is adequate, just and equitable in the circumstances.

Who Can Make a Claim?

Only a will-maker’s Spouse or child may make a wills variation claim.

An individual is a Spouse of the will-maker for the purposes of WESA if at the time the will-maker dies they were married to the will-maker, or they had lived in a marriage-like relationship with the will-maker for at least two years.

Generally, if the “spouses” separate or a marriage-like relationship terminates prior to the will-maker’s death, they do not qualify as a Spouse and therefore cannot make a wills variation claim.

“Child” is not defined in WESA; however, case law clarifies that only a natural child or a child adopted by the will-maker may make a wills variation claim.

What is the Time Period for Making a Claim?

A wills variation proceeding must be commenced within 180 days from the date the representation grant is issued in BC.

What Circumstances Increase the Risk of a Claim?

As WESA maintains that a will-maker must make provisions that are adequate, just and equitable, claims often arise where a will-maker disinherits a child or Spouse, provides an unequal division of assets amongst beneficiaries, or gives a life interest in certain assets, rather than the property outright.

If a claim will be made in relation to any of the above, specific advice should be obtained.

How to Mitigate a Claim?

There are many tools that may be effective in mitigating a wills variation claim depending on the will-maker’s circumstances, including:

1. Inter vivos gifts

The will-maker may make gifts during their lifetime rather than distributing assets to beneficiaries in a will. Upon the will-maker’s death, the gifted assets should not form part of their estate.

• A will supported with a memorandum of reasons

The reasons for a will-maker limiting or disinheriting a Spouse or child under their will must be “valid and rational”. The “valid and rational” reasons can be set out in a memorandum of reasons, which may be presented to the Court as evidence, if required, to help mitigate any potential claim.

• Direct beneficiary designations

The will-maker may designate a beneficiary for an asset, such as a registered account or life insurance policy, whereby upon the death of the will-maker the asset or benefit payable should not form part of the deceased’s estate. Often, separate beneficiary declarations are required to confirm the will-maker’s intention, in addition to the beneficiary designation itself.

• Passing assets by right of survivorship

Joint tenancy is where two or more owners share ownership of the entire asset. Upon the death of one of the joint tenants, the asset generally passes automatically to the surviving joint tenant(s), outside of the deceased’s estate.

• A marriage agreement

Examples of marriage agreements include cohabitation, separation, and prenuptial agreements. Courts have determined that provisions of such agreements are not enforceable when they conflict with the wills variation provisions of WESA. However, courts consider these agreements in determining whether adequate provision has been made for a surviving Spouse.

• Inter vivos trusts

In certain circumstances, a Joint Partner Trust or an Alter Ego Trust may be created by the will-maker. Generally, assets added to such a trust pass outside the will, and therefore do not form part of the deceased’s estate.

Creating dual wills, one will for non-probate assets and one will for probate assets, is not recommended as a strategy to avoid a potential wills variation claim. The reason for this is that the creation of dual wills eliminates the 180-day limitation period for claimants of the non-probate will. This means that, hypothetically, a disinherited Spouse or child has an indefinite period to make a claim.

Broadly, the Court only has jurisdiction to make an order in respect of the deceased’s assets passing under their will. Therefore, if the will-maker takes steps during their lifetime to remove certain assets passing under their will, a disgruntled claimant will have little to no assets in the estate to claim against.

How We Can Help

The information in this post is general in nature and does not necessarily apply to your specific estate planning situation. If you require any legal advice regarding your estate planning, please contact Bell Alliance LLP at 604-873-8723 or email us at info@bellalliance.ca.