A recent decision stemming from the Ontario Superior Court of Justice is likely to have far-reaching implications on wills across the Province, and your will could be one of them.
On September 11, 2018, Justice Sean Dunphy ruled that wills cannot leave the distribution of one’s assets to the discretion of one’s trustees. If it does, it will be invalid.
A need to avoid the “basket clause”
The “basket clause” is used when an individual has more than one will. The use of the clause enables the trustees to determine what assets fall into either will, rather than enumerating each asset in one of the wills. Until Justice Dunphy’s ruling, the validity of the basket clause had not been tested in the Ontario courts, however, based on the ruling, it is now clear that the use of the clause can invalidate a will.
Given how many lawyers across Ontario rely on and utilize this “basket clause,” when drafting a will, it should come as no surprise that many established and well-respected estate planning lawyers in Ontario are concerned by Justice Dunphy’s ruling.
The case before Justice Dunphy concerned a couple who both passed away in October 2017. The couple each had two wills, a primary will and a secondary will, with “materially identical” language in each. Justice Dunphy found that the couples’ secondary wills were valid, and their primary wills were not. Reason being, the secondary wills of each testator (the person who made the will) vested all property of the testator in the executors, and therefore, the requirement of certainty of subject-matter was satisfied. By contrast, the primary wills effectively vested in the executors the entire discretion to determine retroactively whether any assets were vested under the will at death, based upon the executors’ view as to whether probate is necessary or desirable. The court found that it was the uncertainty contained within the primary wills that made those wills invalid.
The language used in a will must be certain
It is imperative that wills describe with certainty any property that is subject to them. The property or assets that are subject to a will must be ascertainable objectively based upon the expressed intent of the testator, without regard to discretion of the estate trustees exercised after the will has been executed.
If your will includes the “basket clause”, or a similar type of clause, you may want to consider contacting a lawyer to update your estate plans.
If you have questions about a current will, or need assistance with drafting a new will, contact one of the estate planning lawyers at Devry Smith Frank.
This article is intended to inform and entertain. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.