When families feud over wills

Seeking a fair share? Suing can be very costly, in more ways than one.

Michael Ryval 16 June, 2011 | 6:00PM
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Four months after Vallry Waldman's father died in 2006, she and her sister, Joy, decided to contest his will which left everything to their step-mother, his second wife.

"There was nothing for his children. It wasn't right," says Waldman, a former Toronto teacher who grew up in Vancouver. "In addition, my mother and father were married for 48 years and all the property and accumulation was acquired while they were married. My mother was the business head in the family."

Waldman's father, Joseph, left a $3-million estate to his second wife, by whom he had two sons who were teenagers when he died. But after consulting a Vancouver lawyer, Waldman learned they could sue under the Wills Variation Act in B.C. "We had a case, although I didn't know how strong it was," recalls Waldman, noting the statute allowed a court to vary a will under certain conditions.

Pursuing a claim against a deceased parent's estate is one of the toughest and thorniest challenges adult children may face. It can be very costly, with legal bills mounting in the tens of thousands of dollars, but also in terms of damage to family relationships. Indeed, it is a two-edged sword and you have to weigh the benefits against the stress and expense of litigation.

While other provinces allow claims only by minors or dependent children (such as a disabled child), British Columbia differs in that it permits independent adults to sue.

Yet every case of a disinherited child is different, says Judith Milliken, a Vancouver lawyer who works alongside her lawyer-husband, Trevor Todd, and whose practice is exclusively devoted to helping the disinherited at www.disinherited.com.

"The search is for contemporary justice. In section 2 of the Wills Variation Act, it talks about adequate provision for proper maintenance and support. If the will doesn't make proper maintenance and support for the spouse and children, then the court may vary the will -- to make it fair."

A parent has a legal obligation to support his or her children. Assuming the estate is large enough, moral obligations should be satisfied as well. "It's a matter of prioritizing competing claims," says Milliken, noting that legal obligations take precedence over moral obligations.

Consider the 35-year-old woman who had cerebral palsy but could not inherit her parents' estate until she turned 60. "We had a study done by an occupational therapist who said, 'This is what she needs to have a comfortable life.' The judge said, 'There is no reason why she should wait until she is 60 years of age.' There were all these needs that could be satisfied now," says Milliken, noting that a home-made will was at the root of the problem.

Occasionally, a claimant may have avoided the stress of living within a dysfunctional family, leaving their aging parents to be influenced by others. They run the risk that otherwise helpful evidence may go missing, says Milliken. For example, cards or photographs corroborating the claimant's story may be destroyed. "The evidence could go missing," says Milliken, admitting that two such cases have been unsuccessful because of insufficient documentation to corroborate the claimant's story.

In Ontario, where the Succession Law Reform Act prevails, there is a two-step process. First, someone must fit within the definition of dependent: a spouse, parent, child or sibling. Second, you have to be someone to whom the deceased was providing support or was under a legal obligation to provide it.

"If you fit these definitions, a court will look beyond that and ask, 'Was adequate provision made for the proper support of that dependent?'" says Suzana Popovic-Montag, a managing partner at Toronto-based Hull & Hull LLP, who works exclusively in the area of estates and trusts.

These are very vague terms, admits Popovic-Montag. "What is 'adequate support'? What we struggle with as practitioners is making that determination: we help our clients decide whether they want to pursue this kind of claim against an estate. This is one of the options you can explore, and certainly one of the strongest."

Lately, some adult children have successfully qualified as dependents and were entitled to financial support. Popovic-Montag points to the Cummings v. Cummings decision by the Ontario Court of Appeal in 2004. "For the first time in Ontario, this allowed for the recognition of a moral claim against an estate, not just a financial needs-based claim. We haven't gone as far as B.C., with the Wills Variation Act. But it is something that the court took into consideration," says Popovic-Montag, noting that the court upheld Justice Maurice Cullity's decision to re-distribute the estate so that several dependants would be provided for.

The case raised this principle: a fair share of family wealth. "Since then, depending on which side you are on, we're relying on the Cummings decision," says Popovic-Montag. "We're still struggling with what exactly that decision means. What is 'a fair share'? To what extent are moral obligations taken into account?" In short, the decision still has to be tested by the Supreme Court, "although not many estate cases make it that far."

Pursuing a case into court is time-consuming and costly. It's not unusual for legal costs to exceed $100,000. And most frustrating of all is that the outcome is unpredictable. "Everyone's story is different. These things are so factually driven that you just never know."

As a consequence, even though the Cummings case is regarded as precedent-setting, Popovic-Montag urges settling out of court as the best way to go. "You know you will have X dollars in your pocket," says Popovic-Montag, adding that about 90% of cases in Toronto settle through mediation. "If you go to court, you are throwing the dice whether the judge will find you are a dependent, and find enough money for you."

That's a route that Vallry Waldman discovered on hindsight might have been more rewarding. After a three-day trial in July 2009, Madam Justice Gerow ruled that Waldman and her sister were entitled to $75,000 each, plus court costs of $40,000. Since Waldman's legal fees were $75,000, she netted $40,000.

Waldman's father had a moral obligation to his adult independent children, although, as the judge noted, "the claim of an adult independent child is always more tenuous than the claim of a spouse or a dependent child."

However, Madam Justice Gerow added, "where priorities must be considered, legal claims should take precedence over moral claims. As between moral claims, some may be stronger than others....A will may only be varied if the testator has divided the assets in a manner which falls below his obligations as defined by reference to moral and moral norms." In the judge's view, Joseph had a legal obligation to his second wife that was of the "highest order."

"I was disappointed with the outcome," admits Waldman, noting that her sister settled before the trial.

Her advice to those in similar situations? "Be aware: you will lose your family that you are contesting," says Waldman, adding that the trial strained relations with her step-brothers and step-mother. "If you can mediate, then do it."

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Michael Ryval

Michael Ryval  is regular contributor to Morningstar. He is a Toronto-based freelance writer who specializes in business and investing.

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