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A Long Awaited Sigh of Relief – Re Milne Estate

Introduction

This is an update further to the earlier blog posts of my esteemed colleagues Albert Oosterhoff and Daniel Paperny on the Re Milne Estate decision.[1] A recent decision of the Divisional Court has allowed the appeal of Justice Dunphy’s decision. [2] Justice Dunphy ruled that the identical primary wills of John and Sheilah Milne were invalid because the wills provided the estate trustees with discretion to determine what estate assets were to form the subject matter of the primary wills.

In his reasons, Justice Dunphy opined that a will is a form of trust, which requires the three certainties in order to be valid. In this instance, Justice Dunphy held that the Milne’s primary wills failed for uncertainty of subject-matter because each clause failed to identify the deceased’s property to which it applied.

This decision has been the subject of much debate since its release and has given rise to considerable concerns for estate planning professionals. The use of multiple wills in estate planning is an integral tool for avoiding unnecessary administration costs for property that does not require probate.

Appeal Allowed

Undoubtedly, the recent decision of the Divisional Court is welcomed with open arms and provides necessary clarity on the issue of multiple wills and the distinct differences between wills and trusts. The court recognized several errors in law and sought to resolve them relying heavily on Justice Penny’s reasons in Re Panda.

In his reasons, Justice Dunphy held that a will is a form of trust and that in order to be valid, it must create a trust and satisfy the formal requirements contained within the Succession Law Reform Act.[3] No authority was cited in support of this conclusion.

The court looked to the plain definition of a will as illustrated in Oosterhoff on Wills[4] and the SLRA and noted that a will may contain a trust but that it is not a formal requirement for a valid will.

Further, the court looked to the nature of a beneficiary as referenced in Section 2(1) of the Estate Administration Act[5] in support of this conclusion and noted the difference upon which equitable and beneficial interest vests in a will as opposed to a trust.

Further, the nature of a beneficiary under a will confirms that a will is not a trust. See C.H. Sherrin et al., Williams on Wills, 9th ed. (London, U.K.: LexisNexis Butterworths, 2010) at para. 1.8:

Although the title to the assets vests in the personal representative …the property comprised in residue is not held in trust for the beneficiary under the will so as to invest any equitable interest in him. It is in fact a fallacy to seek a separate existence of the equitable beneficial interest in the assets during the period of administration. [Emphasis added][6]

The court concluded by providing an alternative analysis in that if the will was, in fact, a trust, it did not fail for lack of certainty of subject-matter.

The property in the Primary Wills can be clearly identified because there is an objective basis to ascertain it; namely whether a grant of authority by a court of competent jurisdiction is required for transfer or realization of the property.  As a result, the Executors can allocate all the deceased person’s property between the Primary and Secondary Wills on an objective basis.[7]

Conclusion

This decision has provided much-needed clarity to the practice with respect to primary and secondary wills and has offered relief to estate planners looking to utilize them in a way that best serves their clients.

[1] 2018 ONSC 4174

[2] 2019 ONSC 579

[3] R.S.O. 1990, c. S.26, (“SLRA”).

[4] Albert H. Oosterhoff et al., Oosterhoff on Wills, 8th ed. (Toronto: Thomson Reuters, 2016).

[5] RSO 1990, c E.22

[6] 2019 ONSC 579, at para 37.

[7] Ibid at para 49.

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