Executing a valid will is a key component of a comprehensive estate plan. Beyond ensuring that your estate is distributed in accordance with your final wishes, a will can also minimize the potential for estate litigation. However, if someone moves through a change in their personal life, they may not immediately think to update their will to reflect their new circumstances, which can lead to complications and disputes down the road.
In a recent decision from the Alberta Court of King’s Bench, the Court was asked to determine what should happen to the property of a man who had passed away and failed to update his will following his marriage to his wife. At the time of his death, his existing will stipulated that the residue of his estate be distributed among his nieces and nephew and made no mention of his wife as a beneficiary to his estate. Although the parties were separated at the time of his death, there were questions as to what, if anything, she was entitled to.
Deceased’s will executed the year prior to his marriage
In the matter of Amyotte v Lefever Estate, 2023 ABKB 366, the deceased (“RL”) executed his will on December 13, 2007. There was no dispute between the parties pertaining to the validity of the will, which provided that the estate be distributed amongst the deceased’s nieces and nephew. However, when the deceased and his wife (“CA”) decided to get married in 2008, the year after he executed his will, they signed a prenuptial contract (the “contract”) which stated that even if the parties chose to separate or divorce, any property that they had acquired jointly would be divided equally between them. The contract also stated that property would be presumed to be held in joint names with a right of survivorship on death. Further, the contract specified that RL would amend his will to provide that if he died while the parties were married, the house and furniture in the parties’ home, which was purchased by him prior to the marriage, would be gifted to CA free and clear of any debt. The same would be said for a car that was registered to RL’s business, but was driven by CA.
RL and CA were separated when RL died, and CA subsequently sold the home RL was living in with CA keeping the sale proceeds. CA also filed paperwork to obtain title to a property RL owned. The contract had provided that the house would be given to the wife free and clear of debt, but there was a mortgage on it at the time the deceased passed away, which the estate stopped paying for. CA also received the funds in RL’s Registered Retired Savings Plan (“RRSP”) and Tax Free Savings Account (“TFSA”) pursuant to section 71 of the Wills and Succession Act.
The matter came before the Court whereby parties commenced competing applications seeking different relief under the contract. CA conceded that the Estate was entitled to one-half of the net sale proceeds of the deceased’s property. Conversely, the Estate’s arguments were based on unjust enrichment and constructive trusts, claiming that CA would receive a “windfall” if she were entitled to an interest in both of the properties in addition to the investments.
In its analysis, the Court first looked at the real estate owned by RL and CA, and found that the property CA was living in was acquired after the parties were married and should therefore be divided equally between them. Thus, the proceeds from the sale of the property should be divided equally between the estate and CA. In regards to the home that RL was living in at the time of his death, it was purchased before the marriage. As such, the Court found that the contract provided that this property would be transferred to CA free and clear of any debt upon the death of RL.
Prior to his death, RL did not amend his will as he agreed to in the contract. However, the Court determined that his failure to update his existing will did not mean that the Estate could escape the deceased’s commitments. After RL’s death, the Estate ceased payments on the mortgage and had, therefore, fallen behind.
The Estate argued that when CA filed her dower election, she chose to receive a life estate, which meant that she assumed responsibility for the mortgage which had a balance owing of just over $316,000. The Court determined that, pursuant to the terms of the contract, the estate was required to pay off the mortgage on the home and deliver clear title to CA.
When it came to the deceased’s investments, the Estate argued that the TFSA and RRSP accounts should be considered individual property and, in turn, should not be subject to the terms of the contract insofar as to direct the transfer of the funds in those accounts to CA. However, the Court determined that RL had the capacity and intent to name CA as the beneficiary of these accounts even though he had started to suffer from addiction issues in the years leading up to that change. The Court also pointed out that although RL and CA no longer lived together at the date of his death, they had not yet divorced, and therefore, RL had time to change the beneficiary on his investment accounts but chose not to do so. Therefore, the Court concluded that CA should receive the funds from those accounts.
This decision shows the approach courts may take when interpreting a will, contract and beneficiary designations when they appear to conflict with each other. It also shows that even if steps have not been taken, for example, not updating a will to reflect the terms agreed to within a prenuptial contract, the estate may still be subject to the commitments and obligations agreed to by the deceased. Further, the courts will consider all of the circumstances of the situation, including what steps the deceased did, or did not, take prior to their death, in order to best determine their final intentions.
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