Wills Variation: $5M Lump Sum Fulfils Moral Obligation to Spouse

In Picketts v. Hall, 2009 BCCA 329 the Court of Appeal held that the bequest of periodic payments to provide a surviving spouse with the standard of living enjoyed while the testator was alive may not be adequate; the moral obligation to a spouse may greatly outweigh the legal obligation to provide maintenance for basic needs. The moral claim of a spouse is bolstered by factors such as the length of the relationship, the contribution of the claimant spouse, and the desirability of independence. The size and liquidity of the estate may warrant an order for a lump sum rather than periodic payments.

Long-term common law spouses

Mr. Hall and Ms. Picketts lived together in a common law relationship for 21 years prior to his death at the age of 96. He was a 75 year old widower when he began his relationship with Ms. Picketts, who was 25 years his junior. They lived very frugally and shunned extravagance.

Bequest to surviving spouse of periodic payments for life

Mr. Hall died in 2002 leaving an $18M estate, the majority of which was accumulated before the relationship with Ms. Picketts began. Mr. Hall’s will, prepared ten years before his death, left Ms. Picketts the family condominium valued at $297,300, personal effects valued at $106,740, and $2,000 per month for life. The residue of the estate was bequeathed to Mr. Hall’s sons: 40% to Maxwell (age 80), and 60% of the estate to Brenton (age 70). Both sons were independent and financially comfortable when their father died.

Common law spouse brings wills variation action

Maxwell and Brenton, as executors of their father’s estate, agreed that the will did not make adequate provision for Ms. Picketts and voluntarily increased the monthly amounts she would receive. Ms. Picketts brought an action under the Wills Variation Act, R.S.B.C. 1996, c. 490 (since repealed and replaced by the Wills, Estates and Succession Act, S.B.C. 2009, c. 13, referred to herein as “WESA”). The trial judge varied the will to provide Ms. Picketts with a substantially increased monthly payment (approximately $15,000 per month).

Appeal seeking a lump sum payment

Ms. Picketts appealed, seeking an order that she receive a lump sum payment from the estate. The Court of Appeal allowed the appeal and substituted the periodic payments with a lump sum bequest of $5M in addition to the family condominium and personal and household effects.

Adequate, just and equitable provision in a will

The principal issue in the appeal was whether the order made by the trial judge varied the will in favour of Ms. Picketts in an adequate, just and equitable manner. The basis of a wills variation claim is now found in section 60 of WESA:

Despite any law or enactment to the contrary, 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 or children, the court may, in a proceeding by or on behalf of the spouse or children, order that the provision that it thinks adequate, just and equitable in the circumstances be made out of the will-maker’s estate for the spouse or children.

The two interests protected by wills variation legislation are (1) adequate, just and equitable provision for the spouses and children of testators and (2) testamentary autonomy.

Wills variation legislation permits the court to order lump sum payments

The types of orders the court can make on a wills variation claim are set out in what is now section 64 of WESA:

In making an order under this Division the court may, if it thinks it is appropriate, order that

• (a) the provision for the will-maker’s spouse or children is to consist of a lump sum, a periodic or other payment or a transfer of property, or
• (b) a trust be created in favour of the will-maker’s spouse or children.

Legal obligations to spouses and children

The leading case on the interpretation of wills variation legislation is Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807, wherein the Supreme Court of Canada held that there is a symmetry between the rights which may be asserted against the testator before death and those which may be asserted against the estate after his death (at 821-22):

The legal obligations on a testator during his or her lifetime reflect a clear and unequivocal social expectation, expressed through society’s elected representatives and the judicial doctrine of its courts.  Where provision for a spouse is in issue, the testator’s legal obligations while alive may be found in the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp), family property legislation and the law of constructive trust:  Pettkus v. Becker, [1980] 2 S.C.R. 834; Sorochan v. Sorochan, [1986] 2 S.C.R. 38; Peter v. Beblow, [1993] 1 S.C.R. 980. Maintenance and provision for basic needs may be sufficient to meet this legal obligation.  On the other hand, they may not.  Statute and case law accepts that, depending on the length of the relationship, the contribution of the claimant spouse and the desirability of independence, each spouse is entitled to a share of the estate. Spouses are regarded as partners. […]

Thus, maintenance and property allocations which the law would support during the testator’s lifetime should be reflected in the court’s interpretation of what is “adequate, just and equitable in the circumstances” after the testator’s death.

Change in family property legislation regarding common law spouses

When Picketts was decided, the Family Relations Act, R.S.B.C. 1996, c. 28 was in force. It excluded common law spouses from the property and pension division sections of the Family Relations Act. Because there was no marriage in the traditional sense, if the parties had separated Ms. Picketts would have had no claim to any of Mr. Hall’s assets under the family asset provisions of the now-repealed Family Relations Act. Her only claim would have been for spousal support because the applicable definition of “spouse”.

It is noteworthy that the Family Relations Act has since been replaced by the Family Law Act, S.B.C. 2011, c. 25. The new Family Law Act does not distinguish between common law and married spouses when it comes to property and pension division. Unmarried spouses now have property rights equal to the rights of married spouses. This change in the legislation now influences the analysis of a testator’s legal obligations to a common law spouse.

Moral obligation more important than the legal obligation in this case

The Court of Appeal in Picketts gave weight to the fact that under the family legislation existing at the time, Ms. Pickett’s would not have a claim to family property; however, it determined that the moral obligation in the circumstances was more important than the legal one. In assessing the substantial moral obligation of the testator toward his common law spouse (in addition to the legal obligation), the Court of Appeal took into account the lengthy period of loving and effective care Ms. Picketts provided to her spouse during his decline, the length of their relationship, the promise Mr. Hall made that he would take care of Ms. Picketts as though she were his wife. The absence of a legal obligation of Mr. Hall to either of his sons was also an important consideration.

Size and liquidity of the estate permit a lump sum payment

A key factor in the decision to order a lump sum bequest was that the bulk of Mr. Hall’s sizeable estate was in liquid form. As such, there was no impediment to distribution of the estate among the beneficiaries in a timely manner. The Court of Appeal noted that the case would have been more complicated if the bulk of the estate had been a family business needing to remain intact for the benefit of future generations.

Lump sum award provides autonomy to the surviving spouse

In deciding to award a lump sum, the Court of Appeal also considered it important that Ms. Picketts be able to administer her own financial affairs without being dependant on the estate. In addition, a lump sum would allow her a measure of testamentary autonomy of her own so that she could pass her own estate to whomever she wished.

Take home point

The moral obligation assessed under a wills variation claim is not limited to a reasonable or even a generous level of maintenance. A lump sum bequest may be appropriate, particularly where the estate is sizeable and in liquid form. The length of the relationship, the contribution of the claimant spouse and the desirability of independence are also important factors.