Ensuring Your Gift Survives the Beneficiary
Over the years I have seen many wills, prepared by both lawyers and non-lawyers. The most glaring omission in these wills has been the lack of a contingency plan for those situations where beneficiaries under a will are no longer alive at the date of death of the deceased or “testator” of the will.
For many years, the common law doctrine of “lapse” has provided that a gift to a beneficiary who is not alive at the date of death of the testator, fails, or lapses. The failed gift would then fall back into the testator’s estate and the will would be construed as if the failed gift was never contemplated. This seems to be a reasonable consequence: if a person who has been left something under a will has died before the testator, the deceased person is not going to be able to receive the gift.
However, following years of lawsuits by disappointed beneficiaries (or their estates) and recommendations by numerous law reform commissions, all provinces in Canada have enacted what is commonly referred to as “anti-lapse” legislation. These laws are designed to prevent the failure or “lapsing” of gifts to close relatives of the testator.
Section 31 of Ontario’s Succession Law Reform Act (the “Act”) contains anti-lapse provisions that apply to gifts made to
brothers, sisters, children and grandchildren of the testator. As a result, unless a contrary intention is expressed in the will, if a legacy or bequest (hereinafter called “gift) is made to a brother, sister, child or grandchild of the testator, and such relative dies before the testator, the gift does not lapse but rather will be distributed to the spouse and/or issue who survived such deceased relative When any debts and preferential shares are ignored (as mandated by Section 31 of the Act), Ontario’s laws of intestacy, as set out in the Act, provide that if a testator has a spouse and no issue, the spouse will inherit all; if there is a spouse and one child, the spouse will inherit one-half and the child will receive the other half; and where there is a spouse and two or more children, the spouse will receive one-third and the children will share the remaining two-thirds.
By way of example, let us consider a situation where John is married and provides in his will that everything will go to his wife, unless she predeceases him, in which event all of his assets will go to his children. Let us also assume that John’s two children are both married and that his one son, Robert, has three children and the other, a daughter, Susan, has no children. There is no mention made in John’s will of what should happen if either of John’s children have predeceased him.
If John survives his wife, then upon his death, John’s estate will be divided between his two children as set out in his will. But if John’s son, Robert, predeceases John, leaving his wife and children surviving him, then the share that would have gone to Robert, will now be divided between Robert’s widow (who will receive one-third of the amount to which Robert would have been entitled), and Robert’s children (who will share the other two-thirds of what would have been Robert’s share). If John’s daughter, Susan, should also die before John, then, without any children, Susan’s share will go to her husband. It may not have been John’s intention to leave anything to his daughter-in-law or his son-inlaw, but that is exactly what would happen in this situation because there was no “contrary intention” expressed in John’s will.
In another example, let us assume Mary is an elderly widow with no children. Mary has prepared a will in which she has left everything to her brothers and sisters. If the clause that divides the residue between her siblings does not contain a “contrary intention”, and if any of her siblings predecease her, then the spouse and children of the deceased sibling will receive the share that would have gone to the deceased sibling had he or she been alive at Mary’s death.
It is not difficult to express a “contrary intention” in one’s will. It requires only the addition of phrases such as “if he or she survives me” or “if alive at my death” or “in equal shares per capita” to get around the anti-lapse provisions of the Act. However, as mentioned above, I have seen many wills and have dealt with a number of estates in which a contrary intention is not expressed.
It is always good practice to regularly review the terms of your will to ensure that it still reflects your wishes, to make sure that the proper terminology has been used and that all possible contingencies have been considered and addressed.
This is the first in a series of articles by Lori Brown on matters relating to the preparation and interpretation of Wills and to issues surrounding the administration of estates.