Wills Variation: Date for Adequate Provision in a Will
The Court of Appeal in Eckford v. Vanderwood, 2014 BCCA 261 affirmed that in a wills variation action, the date of death of the testator is the date to be used in determining whether a testator has made adequate provision for the proper maintenance and support of a spouse or children. When determining whether adequate provision was in fact made, the court cannot consider substantial changes in the circumstances of a claimant or of a beneficiary in the intervening period between the date of death and the date of trial unless those changes were reasonably foreseeable at the time of the testator’s death.
The will in question
Mr. Vanderwood (the “Testator”) and Ms. Eckford lived in a marriage-like relationship for approximately four years before the Testator died unexpectedly in a motor vehicle accident on September 4, 2010. In his will (the “Will”), dated September 6, 2005, the Testator divided the residue of his estate 80% equally between his two adult children from a previous marriage and 20% to his mother. The Will made no provision for Ms. Eckford, his common law wife. However, on the Testator’s death, Ms. Eckford received the Testator’s half interest in the matrimonial home by right of survivorship.
It is of note that the Testator’s two children received approximately $113,000 under the Will and the Testator’s mother received about $57,000, while Ms. Eckford, in obtaining the Testator’s half interest in the matrimonial home, received more than $150,000 – a significant portion of the Testator’s estate.
Change in circumstances after spouse’s death
During the course of their relationship, Ms. Eckford suffered from hypertension, asthma and diabetes, but there was no evidence to suggest that she missed work or struggled because of these health issues prior to the Testator’s death. Subsequent to the Testator’s death, however, there was a significant change in her circumstances. In June 2011, she left work due to a lung infection. Due to various medical ailments she subsequently became disabled and it was unlikely she could return to work in the future.
Application to vary the will based on post-death change in circumstances
Ms. Eckford applied for variation of the Will on the basis that the Testator did not make adequate provision for her proper maintenance and support. She argued that her decline in health was reasonably foreseeable at the time of the Testator’s death and should be taken into account in determining whether the Testator made adequate provision for her. Alternatively, she argued that the deterioration in her health represented a substantial change in her circumstances in the intervening period between the date of death and the date of trial and should be taken into consideration in determining whether the Testator made adequate provision for her.
Thus, the critical question in Eckford was the appropriate date for deciding whether adequate provision has been made. Could the change in Ms. Eckford’s health and ability to work after her husband’s death be taken into account in determining whether to vary his Will?
Statutory framework for wills variation claims
The claim was brought pursuant to the provisions of s. 2 of the Wills Variation Act, R.S.B.C. 1996, c. 490, which is now found at s. 60 of the Wills, Estates and Succession Act, S.B.C. 2009, c. 13:
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.
Two-stage process in a wills variation action
Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807 remains the seminal authority in wills variation actions. As explained therein, a two-stage analysis applies: the court must first determine whether a testator has made “adequate provision” for his or her spouse and children; only if the court concludes that he or she has not does the court then go on to consider and determine a provision that it thinks is “adequate, just and equitable”.
First stage: Date for determining “adequate provision” in a wills variation action
At paragraph 50 of Eckford, Goepel J.A. concluded that at the first stage of the Tataryn analysis, the date to be used in determining whether a testator has made adequate provision for the proper maintenance and support of a dependent is the date of death of the testator, that being the last chance that the testator had to make a proper will. At the first stage, a court should take into consideration the circumstances existing and reasonably foreseeable to the testator as of that date.
Second stage: Date for determining what is “adequate, just and equitable”
In regards to the second stage of the two‑step process, Goepel J.A. affirmed that in determining what is adequate, just and equitable in the circumstances, the court is entitled to take into account not only the circumstances existing and reasonably foreseeable at the date of the testator’s death but also any substantial change in circumstance that may have occurred between the date of death and the trial in the circumstances of a person who may be entitled to make a claim or indeed a beneficiary.
Recall, however, that per Tataryn, the second stage of the analysis comes into play only if the court concludes that adequate provision has not been made.
Share in matrimonial home found to be adequate provision on the facts
Ms. Eckford received a significant portion of the Testator’s estate by right of survivorship. In conversations with the lawyer who prepared the Will, the Testator made it clear that he viewed Ms. Eckford as being “taken care of” by arranging for the matrimonial home to be held in joint tenancy. The Court of Appeal agreed with the trial judge’s conclusion that given the length of their relationship, the fact that Ms. Eckford was not a dependent spouse, and the competing moral claims of his adult children, the Testator’s disposition of his assets was within the wide range of options that could be considered appropriate in these circumstances. Because it was found that the testator made adequate provision for his spouse and children, the inquiry did not proceed to the second stage of the Tataryn analysis.
Change in circumstances not reasonably foreseeable
The Court of Appeal found that the trial judge was correct in not taking into account Ms. Eckford’s medical disabilities at the first stage of the analysis (i.e., in determining whether the Testator had made adequate provision for Ms. Eckford):
[62] […] the court cannot, at the first stage, when it is determining whether adequate provision was in fact made for a claimant, consider substantial changes in the circumstances of a claimant or of a beneficiary in the intervening period between the date of death and the date of trial unless those changes were reasonably foreseeable at the time of the testator’s death. […] While the change in Ms. Eckford’s condition was a matter of substance, it can only be taken into account at the second stage, after the Court has first determined that adequate provision has not been made and has gone on to address the second question and determine what provision would be adequate.
While the Testator was aware that Ms. Eckford suffered from hypertension, asthma and diabetes, those conditions were not impairing her ability to work and function. In their years together they travelled widely without incident. At the time of the Testator’s death Ms. Eckford was working full-time. There was nothing in the evidence which suggested that the Testator should have reasonably foreseen the rapid decline in Ms. Eckford’s health within a short time of his death:
[58] Ms. Eckford’s submission that the Court must take into account possible outcomes at the first stage of the analysis is not supported by the authorities. In life most anything is possible. While the Testator would have known that Ms. Eckford’s health would likely at some stage of her life deteriorate, he could not reasonably foresee that it would happen in the time frame it did.
In the result, the dismissal of Ms. Eckford’s wills variation action was upheld.
Taking assets falling out of the estate into account on a 1:1 ratio
Interestingly, the trial judge in Eckford took into account the assets that Ms. Eckford inherited outside the estate (i.e., half the interest in the matrimonial home) on a 1:1 ratio with the assets that were still a part of the estate, and this approach was upheld by the Court of Appeal. Such a 1:1 ratio has rarely been applied in the past. In fact, the author had previously only seen it applied once, in the case of Nightingale v. Hepting, 2010 BCSC 1214. Before Eckford, courts took assets inherited outside the estate into consideration, but did not do so in a calculated way; rather, they were taken into account in a more general sense when assessing competing legal and moral claims to an estate – essentially, whether or not a significant gift had been given to a party prior to the testator’s death.
The 1:1 ratio applied in Eckford allows for a more precise calculation and comparison of pre-death gifts versus gifts provided for under a will. However, it is noteworthy that difficulties may arise in truly comparing pre-death gifts to gifts provided for under a will if a pre-death gift was given any significant time before death (i.e., not simply by right of survivorship that becomes effective at the time of death). This is because the time value of money will have to be taken into account, as will the tracing of value of any gifts received if they were used to invest into other assets that produced income for the recipient of the gifts. Expert evidence from an actuary or economist would be necessary to present arguments as to the true value of the benefits given pre-death in order to compare them with the overall size of the estate and the value of the gifts received as per the testator’s will.
Debunking the myth that the spouse always gets a variation
Eckford also provides a contextualized analysis of a blended family situation where a late-in-life, short-term second spouse’s legal and moral claims were balanced against the moral claims of the adult independent children of a previous marriage. The second spouse was completely disinherited from the deceased’s estate, but received a joint interest in the family home outside the estate. The trial judge and appellate judges found that in the circumstances, it was within the range of fair outcomes that the testator be able to disinherit his spouse from his will, which may be a surprising outcome to many people.
What this case seems to be showing is the court’s acknowledgement that there is no automatic entitlement to inherit from a spouse’s estate when a spouse has already inherited assets outside the estate. It was found to be fair for the testator in this case to disinherit his spouse because of the short length of his marriage to the second spouse, the fact that they were financially independent of each other prior to the testator’s death, and the high moral obligation that the testator owed to his grown children and financially dependent mother.
Summary
The date of death of the testator is used to determine whether a testator has made adequate provision for the proper maintenance and support of a spouse or children. Circumstances existing and reasonably foreseeable to the testator as of that date are to be considered in deciding whether adequate provision has been made in the circumstances. The court is entitled to take into account any substantial change in circumstance that may have occurred between the date of death and the trial only in cases where the court has first determined that adequate provision has not been made and has then gone on to address what provision would be adequate.
Assets falling outside of the estate will also be taken into account on a 1:1 ratio in a wills variation case to determine whether a will should be varied or not.
Finally, it is clear that the courts will examine the facts on a case-by-case basis to determine the competing claims of the parties. There will be no automatic entitlement of a spouse to inherit from an estate if that spouse has already received assets outside the estate, the marriage was short, and there are valid competing claims of adult independent children.