(i) Marriage
Most people are not aware of the fact that, subject to certain exceptions, marriage revokes a will in Ontario. This is critical information for drafters to impart to clients looking to do a will or a new will, particularly if that client intends to marry in the near future.
The general rule is set out in section 15(a) of the SLRA[1] as follows:
15. A will or part of a will is revoked only by,
(a) marriage, subject to section 16
However, there are certain exceptions, as stated in section 16 of that Act, which provide:
16. A will is revoked by the marriage of the testator except where,
(a) there is a declaration in the will that it is made in contemplation of the marriage;
(b) the spouse of the testator elects to take under the will, by an instrument in writing signed by the spouse and filed within one year after the testator's death in the office of the Estate Registrar for Ontario; or
(c) the will is made in exercise of a power of appointment of property which would not in default of the appointment pass to the heir, executor or administrator of the testator or to the persons entitled to the estate of the testator if he or she died intestate.
There continues to be judicial debate regarding whether the word "declaration" in section 15(a) of the Act requires a "formal" declaration that the will was made specifically "in contemplation of the marriage," or whether certain words of the will can be construed in light of the surrounding circumstances (such as the fact that at the time the will was drafted there was an impending marriage) so as to amount to such an expression.
As an illustration, the three cases below evince circumstances in which estate planning should have been updated and/or updated with more clarity.
Coleman v. Coleman
Unfortunately, Ontarians still await adjudication on this matter by an appellate level court. Historically, reliance was had on the case of Coleman v. Coleman (1976)[2] where the Chancery Division held that for a will to be made in contemplation of marriage, such contemplation had to be sufficiently expressed in the will itself. Hence, in that case, although the testator had made bequests to his "fianc�e" in his will and the two were married a year later, this alone was not enough for the court to construe the will as having been made in contemplation of marriage. According to the Court, in a situation where the will does not state that it was made in contemplation of marriage, a will which contains substantial beneficial dispositions which lacked any expression of such contemplation, could not be described as a will made in contemplation of a marriage. Thus, because the will in this case contained substantial gifts to family members (not the surviving spouse) that did not indicate that they were made in contemplation of marriage, the will was revoked.
Owers v. Hayes
This is a much stricter approach than that applied in the oft-cited Ontario case of Owers v. Hayes (1983).[3] Here, the testatrix had executed a will dated May 27, 1963, appointing her daughter her executrix and sole beneficiary. The testatrix then purported to amend the will by leaving a handwritten note for her daughter that stated, "[...] Barb: Just in case I do marry Norm & anything ever happens to me - I would like him to live rent free, until he desires to move back to Brockville or passes on He must pay all taxes - lights gas etc Also he may not bring another woman to live in this house - as that is when trouble will start. She may think she owns it. Love you Mom." The testatrix did later marry the man referred to in the note. The Court was satisfied that, both on its own terms and extrinsic evidence, the note was intended as a valid testamentary disposition, that it was a valid holograph codicil, that it revived the earlier testatrix's earlier will and that both documents survived the testatrix's marriage.
MacLean Estate v. Christiansen
The recent British Columbia Court of Appeal case of MacLean Estate v. Christiansen (2010),[4] involved a situation where the testator, a divorc�e, drafted a will six months before his marriage to the woman he was, at the time, cohabitating with. Only three months after his marriage, the testator passed away. Although the will did not contain an express declaration that it was made "in contemplation of marriage," significant provision was made for the testator's new wife who was referred to twice in the will as his "spouse." The trial judge found that the will was revoked since the testator's will did not contain the express wording. However, this decision was overturned by the British Court of Appeal which held that the extrinsic evidence overwhelmingly supported the construction of the term "spouse" as used in the will to mean the testator's legal spouse, to whom he was contemplating marrying. As such, the Court was of the view that when the will was necessarily read in its entirety, it was clear that it could be construed to have been made in contemplation of the testator's marriage.
Concluding Comments
Although it is likely that if ever such a case made its way to an appellate court in Ontario, a similar liberal approach would be taken as that in Owers v. Hayes and MacLean Estate v. Christiansen, in a culture like ours where more and more people are remarrying sometimes two, three or even more times, one cannot underestimate the importance of ensuring that one's testamentary documents are carefully drafted so as to ensure that one's testamentary wishes can be carried out after death. Thus, if one has a specific estate plan that they would like enforced after their demise, noting the limits that will necessarily be placed thereon due to the relevant matrimonial laws (in Ontario, this is set out in the Family Law Act [5]), out of an abundance of caution, a will should specifically state that it has "been made in contemplation of marriage." The other option, and a less viable one, would be attempting to challenge the validity of the marriage itself.
Although a marriage can be "void" or "voidable," a voidable marriage is only challengeable by one of the spouses while they are both living. Hence, in the practice of estates, disgruntled beneficiaries, in many cases children of previous marriages although it can be anyone with a financial interest in the marriage, will seek a court order that the marriage is void on the basis that one of the spouses lacked capacity to marry. Another, less common ground is that one spouse was mistaken about the identity of the other.
Although a marriage can be challenged on the basis of lack of capacity, as it currently stands in Canadian law, a spouse need only have a minimal understanding of the nature of the contract of marriage in order to be found capable of marrying. In fact, neither spouse is required to understand all of the financial or other consequences that flow from marriage, despite the ways in which our matrimonial property laws have evolved and the benefits that accrue on a surviving spouse as a result of those laws. The reason for this is that cases dealing with claims to void a marriage on the basis of incapacity often cite classic English cases which espouse the principle that "the contract of marriage is a very simple one, which does not require a high degree of intelligence to comprehend."[6] See for instance the Ontario case of Banton v Banton[7] and discussion of it in our many papers and presentations as found on our website.
Given the fact that marriage revokes a will, the low threshold for capacity to marry is having a detrimental impact on the estate plans of older adults, particularly those who are vulnerable due to cognition issues, dementia, or other illnesses, and, consequently, fall victim to predator suitors who marry solely in the pursuit of profit. This again underscores the importance for both lawyers and those interested in drafting a will to ensure that their wills contain the wording necessary to truly protect the interests of those the testator wishes to benefit after his or her demise.
For those interested in learning more about the critical issues arising from what we refer to as the "predatory marriage," you may wish to refer to Capacity to Marry and the Estate Plan, a Canada Law Book publication, co-authored by Kimberly Whaley, Dr. Michel Silberfeld, Heather McGee and Helena Likwornik.
http://www.canadalawbook.ca/Capacity-to-Marry-and-the-Estate-Plan.html
(ii) Separation or Divorce
Not only does marriage impact a carefully considered estate plan, but so too, can separation or divorce, albeit in different ways. This is evident in the recent case of Makarchuk v. Makarchuk.[8]
Michael and Joan Makarchuk married in May 1961. They had two children. In November of 2003, Michael and Joan separated and Michael purchased a new home. On December 19, 2003, Michael and Joan Makarchuk signed a separation agreement. Joan had independent legal advice. Michael Makarchuk was a retired lawyer. The couple did not divorce. Paragraph 8 of the separation agreement read as follows:
Except as provided in this agreement, and subject to any additional gifts from one of the parties to the other in any will validly made after the date of this agreement, the husband and wife each release all rights which he or she has or may acquire under the laws of any jurisdiction in the estate of the other and in particular:....[emphasis added][9]
Five months prior to executing the separation agreement, Michael made a new will. The will named Joan as the Executor of his will and the sole beneficiary of his estate. On November 29, 2008, Michael passed away.
After his father's death, Michael and Joan's son, Darwin Makarchuk, brought an application seeking directions with respect to the impact of his parents' separation agreement on his father's will. Darwin took the position that paragraph 8 of the separation agreement constituted a waiver by his mother of her rights to claim under Michael's will. He argued that the reference to "any will validly made after the date of this agreement" demonstrated that the parties were releasing each other from their existing wills (and any bequests therein) which must have been in their minds at the time. It was found, however, that Michael never did draft a new will. In essence, Darwin took the position that the release was sufficiently specific and cogent enough to trump the will.
Counsel for Joan took the position there are only three ways that the provisions in the will naming her as the executor and beneficiary of Michael's estate can fail. Those being: through revocation pursuant to section 15 of the SLRA, marriage or another will in writing. In addition, he submitted that the release in paragraph 8 of the separation agreement is not a release of any rights under the will.[10] In making this argument, counsel relied on Robinson v Morrell Estate[11] and, in particular, paragraph 23 where the court quotes from Eccleston Estate v Eccleston,[12] which considered similar language in a release.
As noted by the Court, in Eccleston Estate v Eccleston, the parties executed a domestic contract prior to their divorce that provided that each released and discharged 'rights that he or she has or may hereafter acquire under the laws of any jurisdiction in the estate of the other.' In the result, the New Brunswick Court of Queen's Bench found that the language expressly limited the releases to any 'statutory rights,' but that it was not broad enough to include rights that might be acquired by will or contract.
P.C. Hennessy J. agreed with this logic, finding that the language of the release in Eccleston Estate v Eccleston was "so similar to the language in paragraph 8 of this separation agreement that the same principle applies,"[13] such that the language is not broad enough to include rights acquired under the will. Her Honour concluded as follows:
Mr. Makarchuk had a number of means available to him to effectively revoke the gift he had made to Mrs. Makarchuk prior to their separation. The language of the release in the separation agreement does not specifically address the will made only five months prior. The language of the release speaks to 'rights acquired under law'. This is not a reference to rights acquired by the will. I find that the release does not trump the will.[14]
In the result, her Honour dismissed Darwin's application and submissions on costs were invited.
WHAT IS A LAWYER'S PROFESSIONAL RESPONSIBILITY WHEN RETAINED BY A CLIENT WHO MAY HAVE DIMINISHED CAPACITY, OR INDEED BE INCAPABLE OF INSTRUCTING THE LAWYER ON THE SUBJECT MATTER OF THE PURPORTED RETAINER?
The Substitute Decisions Act[15] governs substitute decision-making and capacity matters in Ontario, in addition to other inter-related statutes, namely the Health Care Consent Act[16] and the Mental Health Act17]. These laws affect the liberty and autonomy of certain individuals.
The Substitute Decisions Act is a tool that may be used to help protect the interests of vulnerable adults.
Specifically, it governs:
- The appointment and obligations of attorneys and guardians, both for property and for personal care; and
- Those who act as substitute decision makers in the event of incapacity
Certain Court proceedings are authorized to be commenced under the Substitute Decisions Act and it contains provisions which facilitate the protection of adults who are the subject matter of guardianship applications or capacity assessments.
The Substitute Decisions Act defines capable as "mentally capable" and capacity as having a corresponding meaning. It defines incapable as "mentally incapable" and incapacity as having a corresponding meaning.
There are certain presumptions of capacity under the Substitute Decisions Act. Pursuant to Section 2, it provides the following presumption of capacity: That a person 18 years of age or more, is capable of entering into a contract.[18] There is also a presumption that a person 16 years of age or more, is presumed to be capable of giving or refusing consent in connection with his\her own personal care.[19] There is a presumption that a person is deemed capable to retain and instruct counsel in circumstances where capacity is in issue in proceedings under the Substitute Decisions Act, and the Public Guardian and Trustee is ordered by the Court to arrange legal representation for the individual pursuant to Section 3.[20]
Under the Health Care Consent Act, Section 81(1), an individual is deemed to have capacity to retain and instruct counsel.[21]
The 1998 decision in Banton v. Banton[22] has been a primary reference, in addition to our Rules of Professional Conduct[23] and Ontario Rules of Civil Procedure[24] on guiding lawyers in dealing with retainers in the face of the presence of cognition issue .
In Banton, Mr. Justice Cullity opined:
"The position of lawyers retained to represent a client whose capacity is in issue in proceedings under the Substitute Decisions Act is potentially one of considerable difficulty. Even in cases where the client is deemed to have capacity to retain and instruct counsel pursuant to Section 3(1) of the Act, I do not believe that counsel is in the position of a litigation guardian with authority to make decisions in the client's interest. Counsel must take instructions from the client. It must not, in my view, act if satisfied that capacity to give instructions is lacking. A very high degree of professionalism may be required in borderline cases where it is possible that the client's wishes may be in conflict with his or her best interests and counsel's duty to the Court."[25]
WHAT RULES OF PROFESSIONAL CONDUCT PROVIDE GUIDANCE TO A LAWYER IN DEFINING THE PARAMETERS OF HIS/HER RETAINER WHERE CAPACITY ISSUES ARE OF CONCERN?
1. Rule 2.02 of the Rules of Professional Conduct - Quality of Service, Client under a disability - (6)
When a client's ability to make decisions is impaired because of minority, mental disability, or for some other reason, the lawyer shall, as far as reasonably possible, maintain a normal lawyer and client relationship.
The commentary to Rule 2.02(6) provides:
A lawyer and client relationship presupposes that the client has the requisite mental ability to make decisions about his or her legal affairs and to give the lawyer instructions. A client's ability to make decisions, however, depends on such factors as his or her age, intelligence, experience, and mental and physical health, and on the advice, guidance, and support of others. Further, a client's ability to make decisions may change, for better or worse, over time. When a client is or comes to be under a disability that impairs his or her ability to make decisions, the impairment may be minor or it might prevent the client from having the legal capacity to give instructions or to enter into binding legal relationships. Recognizing these factors, the purpose of this rule is to direct a lawyer with a client under a disability to maintain, as far as reasonably possible, a normal lawyer and client relationship.
A lawyer with a client under a disability should appreciate that if the disability of the client is such that the client no longer has the legal capacity to manage his or her legal affairs, the lawyer may need to take steps to have a lawfully authorized representative appointed, for example, a litigation guardian, or to obtain the assistance of the Office of the Public Guardian and Trustee or the Office of the Children's Lawyer to protect the interests of the client. In any event, the lawyer has an ethical obligation to ensure that the client's interests are not abandoned.
2. Rule 2.03 - Confidentiality
A lawyer at all times shall hold in strict confidence all information concerning the business and affairs of the client acquired in the course of the professional relationship and shall not divulge any such information unless expressly or impliedly authorized by the client or required by law to do so.
The commentary to Rule 2.03 provides:
A lawyer cannot render effective professional service to the client unless there is full and unreserved communication between them. At the same time, the client must feel completely secure and entitled to proceed on the basis that, without any express request or stipulation on the client's part, matters disclosed to or discussed with the lawyer will be held in strict confidence. This rule must be distinguished from the evidentiary rule of lawyer and client privilege concerning oral or documentary communications passing between the client and the lawyer. The ethical rule is wider and applies without regard to the nature or source of the information or the fact that others may share the knowledge. A lawyer owes the duty of confidentiality to every client without exception and whether or not the client is a continuing or casual client. The duty survives the professional relationship and continues indefinitely after the lawyer has ceased to act for the client, whether or not differences have arisen between them. Generally, the lawyer should not disclose having been consulted or retained by a particular person about a particular matter unless the nature of the matter requires such disclosure. A lawyer should take care to avoid disclosure to one client of confidential information concerning or received from another client and should decline employment that might require such disclosure. A lawyer should avoid indiscreet conversations, even with the lawyer's spouse or family, about a client's affairs and should shun any gossip about such things even though the client is not named or otherwise identified. Similarly, a lawyer should not repeat any gossip or information about the client's business or affairs that is overheard or recounted to the lawyer.
3. Rule 2.09 - Withdrawal from Representation
Subject to the rules about criminal proceedings and the direction of the tribunal, a lawyer shall withdraw if (a) discharged by the client, (b) the lawyer is instructed by the client to do something inconsistent with the lawyer's duty to the tribunal and, following explanation, the client persists in such instructions, (c) the client is guilty of dishonourable conduct in the proceedings or is taking a position solely to harass or maliciously injure another, (d) it becomes clear that the lawyer's continued employment will lead to a breach of these rules, (d.1) the lawyer is required to do so pursuant to subrules 2.02 (5.1) or (5.2) (dishonesty, fraud, etc. when client an organization), or (e) the lawyer is not competent to handle the matter. [Amended - March 2004]
Lawyers must be cautious therefore in retainers where incapacity is suspected to ensure that they are able to obtain instructions on the subject matter of the retainer, and where not able to obtain competent instructions, must not act. In the context of litigation, the Rules of Civil Procedure, in particular Rule 7 and Rule 15 apply to certain litigation.
Lawyers too, must be alive and attuned to issues of undue influence and improper motive and ensure that instructions are obtained from the purported client directly.
Where a person is under disability it may be that the individual requires a guardian, or litigation guardian if they are unable to manage their property or personal care affairs and if they have not authorized, for example, an attorney under a Continuing Power of Attorney for Property and under a Power of Attorney for Personal Care to assist them with their affairs.
As Justice Cullity stated, lawyers must act with a very high degree of professionalism and I would say caution in approaching matters where capacity is or may be of concern.
Checklist
In summary, the following is a brief checklist of drafting and retainer considerations:
1. Does the testator/grantor have the requisite capacity to make the will/codicil/grant the power?
2. Did the testator/grantor decide to draft this will independently of the pressure and influence of others? Ensure that they are met with independently, without potential predators, and that proper independent translators are obtained, if needed;
3. Obtain corroborative information about assets and liabilities;
4. Determine obligations to dependants;
5. Ensure the client understands and appreciates planning and financial choices being made;
6. Consider obtaining medical background;
7. Be alert to dependant relationships;
8. Be wary of propensity to be unduly influenced;
9. Address urgency where a client is severely ill;
10. Ascertain known physical incapacities and known mental incapacities;
11. Determine whether or not there are any hearing problems;
12. Determine whether or not the testator can read the will;
13. Determine whether or not the testator has any problems with the English language, either reading, writing or understanding and whether or not a translator or interpreter is required;
14. Determine whether or not the deceased understands the will;
15. Have the formal requirements for validity been met?
a. In the case of testamentary documents, refer to the SLRA and, in particular: sections 3, 4, and 7, and was the document read to the testator and did he or she understand and approve of its contents?
b. In the case of powers of attorney documents, refer to the SDA (and the HCCA), and, in particular, sections: 7, 8, 9, 10, 47, 48, and 49;
16. In the case of estate planning, is the testator contemplating any significant changes in his/her life, such as marriage, children, adoption, separation or divorce? If so, his/her testamentary documents may need updating to reflect such changes.
Footnotes:
[1] R.S.O. 1990, c. S.26.
[2] [1975] 1 All E.R. 675.
[3] 1983 CarswellOnt 621.
[4] 2010 CarswellBC 2128.
[6] Durham v. Durham (1885), 10 P.D. 80 at 82.
[7]1998, 164 D.L.R. (4th) 176 at 244.
[8] 2011 CarswellOnt 8451.
[9] 2011 CarswellOnt 8451, at par. 6.
[10] 2011 CarswellOnt 8451, at par. 10. Note that in this paragraph Justice P.C. Hennessy states that such was the argument of "Counsel for Darwin Frederick Makarchuk. However, this would appear to be an error and it would appear that such was the argument made by counsel to Joan Makarchuk.
[11] [2009] N.S.J. No 597 (NSCA).
[12] 221 N.B.R. (2d) 295.
[13] 2011 CarswellOnt 8451, at par. 13.
[14] 2011 CarswellOnt 8451, at par. 13.
[20] Counsel for person whose capacity is in issue
3. (1) If the capacity of a person who does not have legal representation is in issue in a proceeding under this Act,
(a) the court may direct that the Public Guardian and Trustee arrange for legal representation to be provided for the person; and
(b) the person shall be deemed to have capacity to retain and instruct counsel. 1992, c. 30, s. 3 (1).
Responsibility for legal fees
(2) If legal representation is provided for a person in accordance with clause (1) (a) and no certificate is issued under the Legal Aid Services Act, 1998 in connection with the proceeding, the person is responsible for the legal fees. 1992, c. 30, s. 3 (2); 1998, c. 26, s. 108.
Same
(3) Nothing in subsection (2) affects any right of the person to an assessment of a solicitor's bill under the Solicitors Act or other review of the legal fees and, if it is determined that the person is incapable of managing property, the assessment or other review may be sought on behalf of the person by,
(a) the person's guardian of property; or
(b) the person's attorney under a continuing power of attorney for property. 2009, c. 33, Sched. 2, s. 71 (1).
[22] 1998 Carswell Ontario 3423164 DLR (4th) 176, 66 OTC 1998
[25] Banton v. Banton, at 218
