Using Precatory Language in a Will
1. Introduction
The first of the three certainties necessary to establish a trust is certainty of intention. That means that the testator must clearly show that he intended to create a trust. He can do that by using trust language, for example, by directing the executor and trustee to hold property for the benefit of a named person. But if instead he uses precatory language, this is, language expressing a wish, hope, or expectation that the property will be applied for the benefit of a named person, it is likely that the court asked to interpret the document will interpret the language as precatory and hold that it does not create a trust. An early Ontario case that interpreted such language as being ineffective to create a trust is the early case, Johnson v Farney,[1] and there have been others like it. The issue continues to arise from time to time. The recent case, Landry v Christiansen-Hasset,[2] is an example.
2. Facts
The testator, Gary Landry, made his will in 2022. In it he stated:
I DIRECT my Trustees to transfer any interest I may own at the time of my death in my home and its contents … to my common-law spouse, KELLY CHRISTIANSEN HASSETT, for her sole and only use absolutely. It is my wishes [sic] that when KELLY CHRISTIANSEN HASSETT sells/otherwise dispose [sic] of the Home, twenty (20%) percent of the proceeds shall form part of the residue of my estate and distributed [sic] to [the beneficiaries named in another clause of the will].
The residuary beneficiaries referred to were Gary’s parents, his daughter, and his sister. Gary named his sister Janice his executor. His daughter Karina was from a prior relationship.
The drafting solicitor’s notes confirmed that Gary wanted Kelly to receive his house when he died, but if she sold the house during her lifetime, he wanted 20% of the proceeds to be divided equally among the residuary beneficiaries. Gary expected that his wishes would be honoured if the house was sold.
Gary told Janice that he was leaving the house to Kelly but that if she sold it, his parents, Karina, and Janice would share 20% of the proceeds. He also told her that Karina was the beneficiary of his pensions and life insurance.
Janice needs to sell the house to pay the expenses and debts of the estate, but since Kelly is unwilling to sell, she brought an application for a direction that the property be sold.
Janice argues that the court should apply the armchair rule in interpreting the will,[3] and that when it does so the surrounding circumstances will lead to the conclusion that Gary intended to create a binding trust in favour of the residuary beneficiaries. Kelly argues that the residuary language used by Gary is an unenforceable wish.
3. Analysis and Judgment
Justice WD Newton RSJ concluded that the language used indicated that Gary only expressed a wish and not a direction. His Honour drew a distinction between the clear express language in which Gary directed that the house be transferred to Kelly and the wish regarding the proceeds of sale. He noted that for a legally binding trust to be created, the testator’s language has to be imperative. The wish was not, even though Gary believed that it would be honoured if the house were sold. Thus it imposed only a moral, non-binding, obligation.[4]
Since Janice was unable to continue to pay the taxes and insurance and could not administer the estate until the debts were paid, it was necessary to sell the house.
His Honour noted that since there was no agreement permitting the estate to be administered, Janice had no choice but to bring the application for directions. Consequently the costs of both parties should be borne by the estate.
—
[1] (1913), 29 OLR 223, 9 DLR 782 (SC)
[2] 2024 ONSC 2509.
[3] Citing Trezzi v Trezzi, 2019 ONCA 978, para 13, and Ross v Canada Trust Company, 2021 ONCA 161, paras 37-39.
[4] Citing Barsoski Estate v Wesley, 2022 ONCA 399, para 21, on the fundamental principles governing the interpretation of wills.
Written by: Albert Oosterhoff
Posted on: October 3, 2024
Categories: Beneficiaries, Commentary, Wills
1. Introduction
The first of the three certainties necessary to establish a trust is certainty of intention. That means that the testator must clearly show that he intended to create a trust. He can do that by using trust language, for example, by directing the executor and trustee to hold property for the benefit of a named person. But if instead he uses precatory language, this is, language expressing a wish, hope, or expectation that the property will be applied for the benefit of a named person, it is likely that the court asked to interpret the document will interpret the language as precatory and hold that it does not create a trust. An early Ontario case that interpreted such language as being ineffective to create a trust is the early case, Johnson v Farney,[1] and there have been others like it. The issue continues to arise from time to time. The recent case, Landry v Christiansen-Hasset,[2] is an example.
2. Facts
The testator, Gary Landry, made his will in 2022. In it he stated:
I DIRECT my Trustees to transfer any interest I may own at the time of my death in my home and its contents … to my common-law spouse, KELLY CHRISTIANSEN HASSETT, for her sole and only use absolutely. It is my wishes [sic] that when KELLY CHRISTIANSEN HASSETT sells/otherwise dispose [sic] of the Home, twenty (20%) percent of the proceeds shall form part of the residue of my estate and distributed [sic] to [the beneficiaries named in another clause of the will].
The residuary beneficiaries referred to were Gary’s parents, his daughter, and his sister. Gary named his sister Janice his executor. His daughter Karina was from a prior relationship.
The drafting solicitor’s notes confirmed that Gary wanted Kelly to receive his house when he died, but if she sold the house during her lifetime, he wanted 20% of the proceeds to be divided equally among the residuary beneficiaries. Gary expected that his wishes would be honoured if the house was sold.
Gary told Janice that he was leaving the house to Kelly but that if she sold it, his parents, Karina, and Janice would share 20% of the proceeds. He also told her that Karina was the beneficiary of his pensions and life insurance.
Janice needs to sell the house to pay the expenses and debts of the estate, but since Kelly is unwilling to sell, she brought an application for a direction that the property be sold.
Janice argues that the court should apply the armchair rule in interpreting the will,[3] and that when it does so the surrounding circumstances will lead to the conclusion that Gary intended to create a binding trust in favour of the residuary beneficiaries. Kelly argues that the residuary language used by Gary is an unenforceable wish.
3. Analysis and Judgment
Justice WD Newton RSJ concluded that the language used indicated that Gary only expressed a wish and not a direction. His Honour drew a distinction between the clear express language in which Gary directed that the house be transferred to Kelly and the wish regarding the proceeds of sale. He noted that for a legally binding trust to be created, the testator’s language has to be imperative. The wish was not, even though Gary believed that it would be honoured if the house were sold. Thus it imposed only a moral, non-binding, obligation.[4]
Since Janice was unable to continue to pay the taxes and insurance and could not administer the estate until the debts were paid, it was necessary to sell the house.
His Honour noted that since there was no agreement permitting the estate to be administered, Janice had no choice but to bring the application for directions. Consequently the costs of both parties should be borne by the estate.
—
[1] (1913), 29 OLR 223, 9 DLR 782 (SC)
[2] 2024 ONSC 2509.
[3] Citing Trezzi v Trezzi, 2019 ONCA 978, para 13, and Ross v Canada Trust Company, 2021 ONCA 161, paras 37-39.
[4] Citing Barsoski Estate v Wesley, 2022 ONCA 399, para 21, on the fundamental principles governing the interpretation of wills.
Author
View all posts