Estate Disputes - Part Two

In "Estate Disputes - Part One", I set out five of the 10 most common estate disputes that I handle in British Columbia. The next five of the 10 most common types of claims are:

Gifts/Resulting Trust

This is a common area of estate litigation, and usually deals with a purported gift of an asset by one individual to another. A claim for a resulting trust arises out of the equitable proposition that "equity presumes a bargain". A resulting trust usually arises in three instances:

• Where the individual gratuitously transfers the assets

• Where the individual supplies all or substantially all of the purchase price to acquire an asset

• Where the individual puts his or her property into another person's name and the other person gave no consideration for it (i.e. paid no monies). Invariably the person who made the gift has either died or became incompetent, and it is then a question for the Court to determine as to what was the true intention of the donor when the alleged gift was made. Generally speaking, there is an increasing trend in the law for the recipient of a gift to have to prove that it was intended that the gift was to be made to them, or failing same, the Court will find that the recipient of the gift holds the gift in trust for the estate of the Deceased.

Joint Bank Accounts

There are many contested claims relating to joint bank accounts, and the law is essentially that of the aforesaid resulting trust. Typically, when both joint tenants of a bank account have deposited monies into the account, then the survivor is entitled to the proportionate deposits. However, when only one of the joint tenants deposits money into the account, then a presumption of resulting trust will usually arise. In this situation there are a number of Court decisions that held that the bank document giving rise to the purported right of survivorship is merely for a matter of convenience, and it is always a question of intention, that must be proved by evidence. Accordingly, even though the bank form may state that the survivor is entitled to the whole of the bank account upon the death of the other tenant, the law may decide otherwise, and find that the joint account was merely created as a matter of convenience, and that it was not the intention of the Deceased party that there would be a gift of the funds to the survivor.

Constructive Trust (Unjust Enrichment)

This is perhaps the largest growth area in estate law. It has been evolving over the last approximately 200 years.

A constructive trust comes into existence, regardless of any party's intent, when the law imposes upon a party an obligation to hold specific property for another. The person obligated becomes by force of law a constructive trustee towards the person to whom he owes performance of the obligation.

A constructive trust is imposed by law whenever justice and good conscience require it. It is frequently applied in cases where the defendant cannot conscientiously keep the property for himself or herself alone, but ought instead to allow another person to have the property or a share in it. It is an equitable remedy where the Court can enable an aggrieved party to obtain restitution.

Generally speaking, for a Court to make a finding of a constructive trust, one must prove an unjust enrichment comprised of:

• An enrichment
• A corresponding deprivation
• No juristic reason for the enrichment

Breach of Fiduciary Duty

A fiduciary relationship is one in which there is a duty to one person, the fiduciary, to act on behalf of another person, with respect to property which is the subject of the relationship. Where there is a fiduciary relationship, then the fiduciary must act honesty, impartially, and cannot personally benefit other than for prescribed fees for services. The fiduciary is bound to protect the interests of the beneficiary, and cannot act in a conflict of interest, nor personally benefit. Fiduciaries are typically lawyers, bankers, directors, or any other person in a high position of trust. A frequent fact pattern that may give rise to a claim of breach of trust, is the misuse of a power of attorney where the holder of the power of attorney attempts to personally benefit him or herself. In these situations, there is then an onus on the fiduciary to prove that he or she acted properly when called into question.

Lawyer's Negligence

A lawyer owes a duty of care to his client to draft a Will in accordance with the instructions, and to provide all the required advice and attend to the execution of the Will expeditiously given the circumstances. The responsibility to carry the client's wishes extends to an intended beneficiary who may be foreseeably deprived of an inheritance by reason of a lawyer's negligence, such as an unreasonable delay in having the Will instructions reduced to writing and the Will properly executed.

The lawyer's negligence may also arise in situations such as a missed limitation date. For example a Wills Variation Act action must be commenced within 6 months from the date of a Grant of Probate, and it is somewhat common for a number of claims to be made against lawyers each year for failing to comply with that limitation date.

Conclusion

The law relating to estate disputes is very complicated and is currently in a great state of flux. It must be stressed that the client should obtain competent legal advice as quickly as possible once it is known that an estate dispute has arisen or may do shortly.

R. Trevor Todd practises wills and estates law and litigation in Vancouver and has contributed to the The Lawyers Weekly.