Structure Your Estate For All Instances Or Courts Will

Is your estate planning up to date so that your final wishes will indeed be carried out?  If not, things may not pan out, as the courts take matters into their own hands.

In McGregor Estate, the testatrix¹ provided that the residue of her estate be placed in trust for the lifetime of her mentally ill son. Upon the death of her son, the residue of Ms. McGregor’s estate was to go to the organization that looked after her son during his lifetime, the Auxiliary for Woodlands. The difficulty was, when her son passed away the Auxiliary to Woodlands was no longer in operation; John had actually passed away in the care of another institution for the mentally challenged called H.O.M.E.S. Upon John’s death there was a $250,000 residue held by the executor, the Bank of Nova Scotia Trust Company.

The only known heir to Ms. McGregor’s estate that the executor was aware of was Ms. Lorna Fullman of East Sussex, England.  A letter was sent to Ms. Fullman's last known address in May 2013, but no reply was received.

Because the testatrix did not specify what would happen in case the gift lapsed, the court inferred a general charitable intent and felt that H.O.M.E.S. would be an appropriate recipient of the gift under the cy-prés doctrine. In reaching this conclusion, the court reasoned that Ms. McGregor's intent was to help fulfill the objects of the Auxiliary for Woodlands and that she generally wished to improve the lives of the mentally challenged by providing opportunities for activities or services that would not otherwise be available for them. The fact that the gift was a residuary bequest to a charitable institution with no gift over on its failure was instrumental in the court’s reasoning.

The Honourable Madam Justice Power stated at paragraph 35 of her reasons for judgment:
“I think it appropriate in this case to “lean in favour of charity”.  It is clear that the testator wished to see her money go first to support her son, and on his death, to support the type of charitable organizations that helped her son during his lifetime.  There is no indication of any intent to benefit any other next of kin or a desire to see the money fall into intestacy.”

In order to best satisfy Ms. McGregor’s charitable intent, the court ordered that the gift to H.O.M.E.S. was conditional on using the money for the extracurricular activities of their residents.  The court was concerned that an absolute gift would enable H.O.M.E.S. to put the funds towards operational needs or other concerns, therefore defeating the testatrix’s intent to benefit and improve the lives of mentally challenged persons by providing additional or extra services.

McGregor Estate is a good example of the doctrine of cy-prés being invoked. Under the circumstances, the Court probably made the right decision in invoking the doctrine in this instance, however, will makers and estate planners should be conscious of the court’s cy-prés analysis and temper the discretion of the court in testamentary documents where the intent of the testator is not generally philanthropic, but very specific to a certain organization. In those circumstances, that intention should be made objectively clear to avoid the effect of cy-prés.

Greer Jacks practices law in British Columbia and updates EverGreen Explanatory Notes for Knowledge Bureau for recent jurisprudence.
 

^1. A woman who makes a will or testament.