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MEMORANDA OF WISHES
By Kimberly A. Whaley, presented to The Law Society of Upper Canada, The Six Minute Estates Lawyer 2006, March 22, 2006
I. Introductory Remarks
When is it binding? When is it Precatory?
The word “precatory” is derived from the Latin verb, precari. “Precari” means “to ask”, “beg”, “entreat”, “beseech”, “pray”, “supplicate”, “call upon”, or “request”.1 Precatory words in wills are inherently ambiguous in meaning. According to Black’s Law Dictionary, “mere precatory words or expressions in a trust or will are ineffective to dispose of property. There must be a command or order as to the disposition of property.”2 However, the word “mere” obviously opens the door for debate as to the effect of any given set of instructions.
A “precatory memorandum”, or “memorandum of wishes”, is a document, which is not typically considered binding upon executors and trustees, but which is an “expression of wishes” made by a testator or settlor as to how executors or trustees might exercise the discretionary powers given to them in a will.
II. Non-Precatory Memoranda: Incorporation by Reference
Traditionally, for a memorandum to be binding, it should be incorporated by reference into the Will. The principal basis of the doctrine of incorporation by reference, whereby an unexecuted document entirely separate and apart from the Will itself may be considered part of a duly executed Will, rests on the existence of the “document of wishes” as at the time of the execution of the Will. An existing document may be incorporated into any subsequent Will simply by sufficiently identifying and referencing it.3
The doctrine of Incorporation by reference can only be applied where there is a valid independent Will into which the document may be incorporated.4 The document must be in existence at the time of making the Will; must be referred to in the Will; and must be described as being already in existence, as well as, and equally as important, the reference in the Will must be sufficient to identify the document so that it is clear which document is to be incorporated by way of reference.5
The recent Alberta case of, Popke v. Bolt6 supports the proposition of incorporation into subsequent testamentary documents, the principle is as follows:
“…, a future document is only effectively incorporated if the maker specifically refers to it in a second will, or codicil made after she actually makes the document referred to in the first will as a future document. But the later will or codicil must contain a reference to the document as an existing document”.7
III. Memoranda – Legally Binding? Admissible to Probate?
The Court in the 19th Century tended to view “precatory” words as creating a “precatory trust”. As early as 1884, in the case of Re Adams and Kensington Vestry8, Cotton L.J. expressed his concern in this regard, stating that “the Court ought to be very careful not to make words mandatory, which are a mere indication of a wish or request.” Around 1987, the Court’s attitude began to change such that the focus turned to intention as being the determinative factor in any given situation.9
The British Columbia case of Lewis v. Union of B.C. Performers10 also supports this proposition, “there is a line of cases to the effect that an absolute gift followed by precatory words that the recipient use the gift for a given purpose, will usually not give rise to a trust unless evidence of a contrary intention appears.11 The case of, Milsom v. Holien (2001)12 is also one in which precatory words were held insufficient to create a trust.
Chief Justice McLachlin, in Re: The Estate of Gwendolen Georgina McIver, Deceased13 stated that, “in considering whether a precatory trust is attached to any legacy, the Court will be guided by the intention of the Testator apparent in the Will, and not by any particular words in which the wishes of the Testator are expressed.”
In MacInnis Estate v. MacDonald14, the Court stated that “the modern way of judging whether precatory expressions are intended to impose enforceable trusts might be stated thus: If a gift in terms absolute is accompanied by desire, wish, recommendation, hope or expression of confidence that the donee will use it in a certain way, no trust to that effect will attach to it, unless, on the Will as a whole, the Court comes to the conclusion that a trust was intended. In other words, it is a question of construction of the particular instrument, and not a question of any supposed rule of the courts of equity.”15
Caselaw in Ontario has historically treated memoranda not incorporated by reference as “precatory”, that is, as an expression of desire made by a testator, which is not intended to be legally binding.
The Ontario High Court decisions in Re Blow 197716 and Re Rudaczyk 198917, are cases where the Court ultimately found memoranda to trustees to be “merely precatory”, that is, found to be distinct from the Will, not legally binding, and non admissible for the purposes of probate.
In Re Blow, the Court explained that the general rule for when a document should be admitted to probate is that it must provide for the disposition of the testator’s property. The Court suggested that the correct rationale for this rule was not that non-dispositive instruments are incapable of having testamentary effect, but rather that to admit such documents for the purposes of probate, would not serve any useful purpose (although, the fact that an instrument does not purport to dispose of property may be a factor to be taken into account in determining whether it was intended to have testamentary effect).
In general, the Court will look to the testamentary document as a whole in order to determine whether the memorandum is precatory. The Ontario Superior Court also supports this proposition in the 2002 decision, Ladd v. Ladd.18
IV. Exceptions:
United States caselaw seems to indicate that precatory language directed at an executor, where an executor is not a beneficiary of a Will, is frequently considered binding. Difficulties arise however, when the language is not only expressed in terms of wish or desire, but is also expressed with insufficient clarity as to intent.19 Intent, pursuant to the caselaw must be equivocal to a “deliberate or fixed and testamentary intention being ascertained.”
Another exception pertains to Holographic wills. These wills are valid if they are hand-written by the testator even if they do not comply with the usual requisite formalities. Since the testator/testatrix in such instances is usually a layperson without the benefit of legal counsel, there is often precatory language contained either within the will or in a memorandum. Courts take one of two approaches in either applying a lower standard of exactness to such wills and interpreting precatory language as mandatory, or refusing to enforce the precatory memorandum on the basis that a simple gift should not be encroached upon by subsequent ambiguous language.
For a will to be a holographic will, it must be, “wholly by his or her own handwriting and signature, without formality, and without the presence, attestation or signature of a witness.”20
And in respect of the position of signature:
7.(1) “Position of signature – In so far as the position of the signature is concerned, a will, whether holograph or not, is valid if the signature of the testator made either by him or her or the person signing for him or her is placed at, after, following, under or beside or opposite to the end of the will so that it is apparent on the face of the will that the testator intended to give effect by the signature to the writing signed as his or her will.
(2) Idem – A will is not rendered invalid by the circumstance that,
(a) the signature does not follow or is not immediately after the end of the will;
(b) a blank space intervenes between the concluding words of the will and the signature;
(c) the signature,
(i) is placed among the words of a testimonium clause or of a clause of attestation,
(ii) follows or is after or under a clause of attestation either with or without a blank space intervening, or
(iii) follows or is after, under or beside the name of a subscribing witness;
(d) the signature is on a side, page or other portion of the paper or papers containing the will on which no clause, paragraph or disposing part of the will is written above the signature; or
(e) there appears to be sufficient space on or at the bottom of the preceding side, page or other portion of the same paper on which the will is written to contain the signature.
(3) Idem – The generality of subsection (1) is not restricted by the enumeration of circumstances set out in subsection (2), but a signature in conformity with section 4, 5 or 6 or this section does not give effect to,
(a) a disposition or direction that is underneath the signature or that follows the signature; or
(b) a disposition or direction inserted after the signature was made”.21
On its own, a holographic document may not appear to contain a deliberate or fixed and final testamentary intention. A Court however, considers all of the circumstances at the time that the holograph document was made. There is a great deal of caselaw, in particular older caselaw, which deals with the requirements for the validity of holographic documents.
The doctrine of substantial compliance is utilized in some provinces across Canada, and as such, the caselaw treatment of the validity of holographic documents is diverse when analysis is made across the provinces of Ontario. It is not the intent of this paper to cover the law of holographic wills. Feeney, in, The Canadian Law of Wills (3rd ed.)22 summarizes the applicable laws concerning the grant of probate of ‘instructions to a solicitor’ as follows:
“Usually instructions to a solicitor for a will, if properly executed, will be a good will, but the court must be satisfied that they were intended to have disposing effect in the absence of a formal instrument and not… simply intended as a guide or statement of information for a future will.”
These principles are further stated in Halsbury’s Laws of England23:
249. Testamentary form unnecessary. …Thus an instrument duly executed, although apparently intended as preliminary to a more formal document, may be admitted to probate if there is evidence that the testator had the lasting intention that the document should be dispository and operate provisionally until a more formal will was prepared. On the other hand, a memorandum which is merely deliberative or initiatory and does not show the testators final intention will not be admitted to probate, and a paper which merely expresses an intention to instruct a solicitor to prepare a will for the purposes of leaving a certain legacy is not testamentary; and
250. Testamentary intention necessary. It is not necessary that the testator should intend to perform, or be aware that he has performed, a testamentary act, provided that he had the clear intention that the document should operate after his death. Such intention may be proved by extrinsic evidence, and, if the formalities of execution have been complied with, the document may be admitted to probate. Where there is doubt whether a document is testamentary, the burden of proven that it is testamentary is on the person propounding it.
There is a great deal of caselaw regarding duly executed instruments described as instructions for a will and whether or not it was intended that the instructions were to take effect in absence of a more formal instrument. Again, this paper does not address this caselaw.
The case of St. Cyr v. Leitch24 references the treatment of written memoranda prepared to give form to the testator’s intention. The memoranda in this case consisted of two memoranda which were in the form of a promissory note, and, a transference of shares. At some point the promissory note was forgiven and ripped up and disposed of, yet on death, the note was included as an asset of the estate. The issue then arose as to whether or not the executors and trustees could vote on whether or not the note was or was not considered an asset of the estate and the Court expressing its concern that the evidence was not clear enough to persuade the Court that the exclusion of the note from the estate could be accomplished by simple voter agreement of the executors. This case looked at the language of the memoranda, the alleged destruction of one of the memoranda and on an application for advice and directions, decided there should be a trial of the issue to determine same.
The New York case of, Re Anderson’s Will25 is a cure where a testator attempted to modify the will that his lawyer had drawn up, by himself, by drafting a holographic Codicil. The testator was expecting more grandchildren. Part of the Codicil said the following: “It is my earnest wish that the executor….make the property arrangement that each child, or children, be given an equal part in this estate set aside for this purpose.”
The Court in this case refused to apply the strict rule that would say that an absolute gift, that is the gift to the grandchild who was provided for in the original will, cannot be derogated from. Instead, the Court stressed the fact that instructions drawn up by a layperson must be treated differently. The Court, they said, must rather turn its attention to a determination of the testator’s intention. In this case, the testator was a retired Army officer. The Court used this fact to decide that the word “wish” to him would have been equivalent to a command.26
V. Should Memoranda be Disclosed?
Another issue facing executors and trustees where a memorandum of wishes exists is the question of whether if precatory, it should be disclosed.
The 1965 English Court of Appeal Case of Re Londonberry’s Settlement27 appears to be the accepted authority worldwide with respect to the disclosure of documents. In that case, it was held that with respect to letters of wishes generally, they should not be disclosed, and beneficiaries have no legal entitlement to see them.
The unreported case of Re Rabaiotti’s Settlements28 in the Jersey Courts has caused some controversy with respect to the issue of disclosure. In Re Rabaiotti, a beneficiary sought disclosure of certain trust documents, including trust deeds and accounts, and letters of wishes.
It was held that in relation to the Trust documents, the beneficiary of a Trust is normally entitled to inspect documents such as the Trust deed and other documents showing the nature and value of Trust property. Further, in relation to precatory memoranda, the Court held that it had the discretionary power to either refuse disclosure of a letter of wishes where it would not be in the best interests of the beneficiaries collectively, or to allow disclosure where there exists good reason to do so. The onus would be placed on the beneficiary to show clear grounds for disclosure in order for the Court to make such an order.
There are very few cases on this point alone. Another case that does address the disclosure of documents of this nature to beneficiaries is the 1992, Court of Appeal case of New South Wales, Australia, Hartington Nominees Pty Limited29. This case held that there was a duty of confidentiality that was owed to the testator. Despite a minority judgment to the contrary, and the Court, at first instance, ruling in favour of disclosure, the Appeal Court declined to order disclosure of a ‘letter of wishes’ on grounds which included that the letter did not constitute a Trust document. Furthermore, the Court found that there was a duty of confidentiality owed to the testator.
While a beneficiary is not normally entitled to the disclosure of a “precatory” memorandum, the beneficiary is usually entitled to inspect the trust documents. The Court does maintain the discretion, however, to refuse disclosure. There is authority pursuant to Re Rabaiotti’s Settlements for the proposition that Court discretion exists in support of an argument for an order of disclosure, and as such, perspective trustee/executor clients should be so advised.
VI. How to avoid the issues of disclosure?
Perhaps for an Estate Planning Practitioner, the cautious approach would be to keep comprehensive file notes in lieu of a ‘precatory’ memorandum so as to avoid contentious family battles and any ensuing liability. This too, however, may not be enough so the Estate planning lawyer must advise the testator fully on intent.
If a trustee/executor is in doubt regarding disclosure, an application for the opinion, advice and directions of the Court should be sought. Those with a financial interest in an estate/trust may also take this same approach.
VII. Worth Noting
The Estate Practitioner might encounter situations in which “secret trusts” exist. “Secret trusts” or “half-secret trusts” are created in order to keep the ultimate beneficiary of a person’s assets away from public scrutiny. In order for such a trust to be created, there must be the following:
(i) the testator’s intention to benefit secret beneficiaries;
(ii) communication of the trust to the beneficiaries or trustees; and
(iii) express or tacit acceptance of the trust by the beneficiaries/trustees.
A testator may informally impose a “secret trust” after making a Will. It is in this way that secret trusts are an exception to the strict requirement that a memorandum must exist at the time that the Will is constructed in order for it to be incorporated by reference and considered legally binding.
The terms of a fully-secret, or half-secret trust may be contained in a document prepared subsequent to the Will, or may be communicated orally.
It is important to be aware of the difference between, on the one hand, a moral obligation imposing no legal duty on either the trustee or beneficiary as a result of a “precatory memorandum”, as opposed to, on the other hand, a legally recognizable secret trust considered to be both legally binding and enforceable.30
VIII. Concluding Remarks
Precatory memoranda then are used in circumstances where the testator will make his wishes made known to the
executors and trustees, but which are not binding on the executors and trustees. Normally, precatory memoranda will address funeral or burial arrangements, distribution of personal effects, and possibly, to address the executors or trustees on matters on which they will likely have to exercise their discretion, a big concern in this regard being the custody of minor children. In essence, precatory memoranda will give the testator/testatrix an opportunity to express their own wishes to give guidance to the executors and trustees.
Secondly, legal memoranda incorporated by reference are intended to be legal, and therefore binding on the executors and trustees. Legal memoranda become part of the actual Last Will and Testament, and, therefore is subject to the same rules of construction and can only be amended by means of a codicil, or by a new will and memoranda. Normally, the application of this type of memoranda deals with certain bequests, for example, household effects. Increasingly, it is being used to fix compensation for executors and trustees.
*My thanks to Helena Likwornik, Student-at-Law, University of Toronto, for her assistance in updating my paper.
Footnotes:
1 Prof. L.A. McElwee, “Precatory Language in Wills” (1992) 11 Probate Law Journal 145 at 145.
2 Black’s Law Dictionary, 1176 (6th ed. 1990), as cited in “Precatory Language in Wills”.
3 Feeney’s Canadian Law of Wills, Fourth Edition, James MacKenzie, Butterworths, c.6, Republication, Revivial and Incorporation by Reference, para 6.17, p. 6.7.
4 Ibid., at para. 6.21, p.6.8.
5 Ibid.
6 [2005] A.J. No. 999 (quotation from the Canadian Law of Wills, 3rd Ed.)
7 Ibid. at para. 290.
8 (1884), 27 Ch. D. 394, 410, see also Bourne Estate v. Bourne Carswell Estates Partner (Ontario) 2000 Ont. S.C.J. 793.
9 Supra note 1 at 146.
10 [1996] B.C.J. No. 133
11 Hanbury and Martin, Modern Equity, 14th ed. (1993) at 95-97.
12 (2001) 40 E.T.R. (2d) 77 (BCSC)
13 [1981] B.C.J. No. 68
14 [1994] N.S.J. No. 603
15 Ibid. at para. 120.
16 18 O.R. (2d) 516 (Ont. H.C.J.)
17 (1989), 69 O.R. (2d) 613; [1989] O.J. 1368 (Ont. H.C.J.)
18 [2002] O.J. No. 4167
19 Supra note 1 at 167.
20 Section 6 of the Succession Law Reform Act, R.S.O. 1990, c. S.26 as amended, S.O. 1994, under Part I Testate Succession.
21 Supra note 20 at Section 7.
22 Feeney, The Canadian Law of Wills, Third Edition, 1987, volume 1, p. 8.
23 Halsbury’s Laws of England, Fourth Edition (London: Butterworths, 1984) volume 50, paragraph 249 and paragraph 250.
24 St. Cyr v. Leitch (1992), Carswell Ontario 2420
25 151 N.Y. S.2d 707 (N.Y. Sur. Ct. 1956).
26 Supra note 1 at 177.
27 [1965] 2 WLR 229.
28 Re the Rabaiotti: 1989 Settlement: Royal Ct: (Birt, Deputy Bailiff and Jurats Myles and Georelin) May 30th, [2000] unreported WTLR 953.
29 Hartington Nominees Pty Ltd. v. Rydge (1992), 29 NSWLR 405.
30 Re Snowden, [1979] 2 All E.R. 172 (ch.) per Megarry V.C.; see also Hull, Ian “Secret Trusts – What are they and What do they Look Like?” (2001), 40 E.T.R. (2d) 147.
