Fluctuation in market value nearly disinherited child

Kelly v. Bell, 2012 BCSC 841

Olive Bell passed away in 2008 and appointed her son, Irving Bell as executor of her estate.  Valerie Kelly, her daughter, brought an application under the Wills Variation Act as, due to fluctuation in market value, she had been effectively disinherited.  At the time the will was drafted, her mother believed the value of her house to be approximately 1 million dollars.  At the time of her death, the house was valued over 2 million.

The court varied the will so that Valerie was to receive the equivalent percentage of the estate that her mother had bequeathed, and in doing so, applied Tataryn principles in considering the duty to independent children.

2     At the time of Mrs. Bell's death, the house had an assessed value of $2,058,000 and the contents were appraised at $23,200. The parties agreed at trial that the residue of the estate at death, before the costs of administration, should be valued at $694,897.32. Thus the execution of the terms of the Will would result in the defendant receiving assets worth about $2.4 million and the plaintiff receiving less than $350,000.

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6     Ordinarily, a contemporary judicious parent would distribute his or her estate equally amongst his or her adult independent children. However, it is open in law for a testator to conclude that a child's conduct may disentitle her to share equally in the distribution of an estate, provided such conclusion is based on accurate and rational reasons (Ryan v. Delahaye Estate, 2003 BCSC 1081; Peden v. Peden et al, 2006 BCSC 1713; and Doucette v. Clarke, 2007 BCSC 1021).

 

7     The law does not require that the reasons of the testator be justifiable, but they must be valid in the sense of being based on fact, and rational in the sense that there is a logical connection between the reasons and the act of disinheritance (Kelly v. Baker (1996), 82 B.C.A.C. 150).

8     In the case at bar, the plaintiff does not argue strenuously that Mrs. Bell's expressed reasons for unequal distribution are invalid or irrational. The plaintiff acknowledges she hurt her parents over the issue of her wedding. She acknowledges her good fortune in being well-supported by her husband and in a stronger financial position than the defendant. She acknowledges that the defendant provided care to both parents that she was not able to provide, given her own domestic responsibilities. She acknowledges the effort the defendant made to be employed successfully and his failure to do so. Contrary to the assertion of the defendant, the plaintiff is not being "grabby," but is only seeking a portion of the estate that more accurately reflects Mrs. Bell's true intention.

9     In my opinion, the issue in this lawsuit does not centre on the accuracy of Mrs. Bell's reasons for unequal distribution. As the plaintiff concedes, the statutory declaration likely meets the threshold test of unequal distribution.

10     The real issue here is the effect of the huge increase in value of the asset Mrs. Bell bequeathed specifically to the defendant. At the time of reviewing the adequacy of the provisions of her will in 2006, Mrs. Bell believed her house to be worth around a million dollars and the rest of her estate which she had bequeathed equally to her children to be worth $860,000. Thus the defendant would receive assets worth $1.43 million and the plaintiff would receive assets worth $430,000. On a pro rata basis this is approximately 77% to the defendant and 23% to the plaintiff.

11     A division of 77/23 is probably on the low side, but I would not find it to be outside the range of adequate, just and equitable distribution. However, by the time of Mrs. Bell's death, the value of the house had doubled, and the plaintiff's pro rata share of Mrs. Bell's assets at the time of death has now decreased to about 12%. I do not think this bequest is within the range of society's reasonable expectation of a judicious person in the circumstances. This is dangerously close to a disinheritance of the plaintiff and I do not think that was ever the intention of Mrs. Bell.

12     This is not a case of lengthy estrangement, or condemnable conduct on the part of the plaintiff, or enormous disparity between the means of the plaintiff and the defendant. This is a case of historical friction between Mrs. Bell and the plaintiff, greater contribution by the defendant to the welfare and well-being of Mrs. Bell, and a greater need on the part of the defendant for future financial security. These factors and perhaps other, less significant and less clearly expressed concerns caused Mrs. Bell to weigh distribution more heavily in favour of the defendant, but not to the extent of giving him almost 90% of her estate.

13     I am satisfied that varying the Will to reflect a 23% share to the plaintiff of the entire estate, including the house, properly balances the objective of s. 2 of the Wills Variation Act and the testamentary intention of Mrs. Bell.

14     I cannot fix the dollar amount to which the plaintiff is entitled because the residue of the estate is subject to the cost of administration. However, granting an order to the plaintiff that she is entitled to 23% of the value of the entire estate, including the house, should allow the parties to resolve this matter.