Case Comment: Ketcham v. Walton – Disarming the Booby-Trapped Estate
Anticipating a raid by resentful family members after cutting them out of the will, a person might be inclined to booby-trap the estate against the coming attacks. This might be done by giving the potential raider a gift, but revoking that gift automatically if they sue the estate.
As a general principle, people are free to leave their property in their wills will to whomever they please, however they please. This includes the right to give gifts with conditions attached (e.g. “You only get my car when you earn your driver’s licence.”) However, the law does recognize some limits on the freedom to direct the lives of the living from beyond the grave. One such limit restricts the use of coercive conditions. A gift that is conditional on the recipient not suing the estate may be void as in terrorem, a condition that does nothing but try to threaten the beneficiary. It might also be void as being contrary to public policy, the policy being that dependants must be allowed to have recourse to the court system without penalty.
The British Columbia Supreme Court recently considered a deceased person’s creative new approach to booby-trapping his estate. In Ketcham v. Walton, the deceased disinherited his three adult children and instead split up his $740,000 estate between charities and friends. He expected his children to make a claim under the Wills Variation Act. To head off their attempt, he directed in his will that his executor should use all of the assets of the estate to pay the legal fees for defending the will in court.
It was an interesting approach, but not a successful one. The court said that an executor must keep a neutral position between beneficiaries regardless of the terms of the will. Furthermore, even though the executor’s scorched earth policy was an instruction to his executor and not exactly a “condition”, it had the same effect. It was void as being in terrorem and contrary to public policy.
This case is relevant in today’s environment of increasingly litigious disgruntled beneficiaries. Estate planners and people making wills should be cautious before planning an estate as a well-armed fortress.
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Written by: WEL Partners
Posted on: July 9, 2012
Categories: Commentary
Anticipating a raid by resentful family members after cutting them out of the will, a person might be inclined to booby-trap the estate against the coming attacks. This might be done by giving the potential raider a gift, but revoking that gift automatically if they sue the estate.
As a general principle, people are free to leave their property in their wills will to whomever they please, however they please. This includes the right to give gifts with conditions attached (e.g. “You only get my car when you earn your driver’s licence.”) However, the law does recognize some limits on the freedom to direct the lives of the living from beyond the grave. One such limit restricts the use of coercive conditions. A gift that is conditional on the recipient not suing the estate may be void as in terrorem, a condition that does nothing but try to threaten the beneficiary. It might also be void as being contrary to public policy, the policy being that dependants must be allowed to have recourse to the court system without penalty.
The British Columbia Supreme Court recently considered a deceased person’s creative new approach to booby-trapping his estate. In Ketcham v. Walton, the deceased disinherited his three adult children and instead split up his $740,000 estate between charities and friends. He expected his children to make a claim under the Wills Variation Act. To head off their attempt, he directed in his will that his executor should use all of the assets of the estate to pay the legal fees for defending the will in court.
It was an interesting approach, but not a successful one. The court said that an executor must keep a neutral position between beneficiaries regardless of the terms of the will. Furthermore, even though the executor’s scorched earth policy was an instruction to his executor and not exactly a “condition”, it had the same effect. It was void as being in terrorem and contrary to public policy.
This case is relevant in today’s environment of increasingly litigious disgruntled beneficiaries. Estate planners and people making wills should be cautious before planning an estate as a well-armed fortress.
This article is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
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