$350,000 estate permitted recognition of moral claims of adult independent children

Houston v. Fowler, 2014 BCSC 489 

 The recent WVA claim regarding the division of assets surrounding the passing of Frederick "Bob" Houston provided discussion on claims by independent children and a testator’s intent from a will.  The claim simply addressed the application of established principles and a decision of what was fair in the circumstances given the size of the estate.  As the court found that Bob did not have an outstanding legal obligation to his wife, Angela, it came down to a balancing of the moral obligations owed to her and his children.  

Importantly, Bob and Angela had mirror wills which detailed that they each bequeathed the entire residue of their estate to the other provided the other survived for 30 days.  A significant factor was that if it were the case that the other did not survive the other for 30 days, the entire residue would be divisible into two equal parts, one to be shared by Bob’s four children, and the other by Angela’s two children.

Angela did survive Bob for the 30 days and received the entirety of the estate, which was valued at ~$450,000.  She had drafted a new will dividing her assets among her two adult children and Bob’s four children brought an application under the WVA to vary the will in their favour as they were to be essentially disinherited. 

The court found that Bob had satisfied his legal obligation to his wife and, considering that her pension income actually exceeded his, there was no issue of entitlement to spousal support either.  In regards to his children, Bob had a loving and caring relationship with all of them and each were independent and financially well off.  The moral claims of independent children are often quite tenuous, but it was shown that each had an assured or implied expectation to inherit arising from their mutual affection and support and the fact that each had an equal entitlement to the residue in the alternate bequest of his will.  Although their moral obligation had been established, Angela’s moral entitlement, as a long time wife, stood in priority. 

As the legal obligation to Angela had been met, the court found the estate adequate to meet the moral obligations that Bob owed to Angela and his four children.  The court found in favour of the plaintiffs, awarding them each ~$42,000, equalling just less than half of the value of Bob’s estate. 

[30]        In determining whether Bob made adequate provision for Angela, the first step is to determine his minimum legal obligations. For a spouse, the legal obligations are measured by a notional division of family property under the Family Relations Act, R.S.B.C. 1996, c. 128, and a notional determination of Angela’s right to support under the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), immediately before Bob’s death. See Glanvillev. Glanville 1998 CanLII 6031 (BC CA), (1998), 58 B.C.L.R. (3d) 240 (C.A.) at paras. 14-15.

[31]        Immediately before Bob’s death, the family assets were the condominium worth $770,000 and the joint investment account worth $95,000, along with other personalty of unknown value. Bob and Angela were debt free. Accordingly, at a minimum, Angela was entitled to an undivided one-half interest in assets having a total value of $865,000. Calculated in that fashion, her entitlement was $432,500.

[32]        Measured against Angela’s entitlement is the value of what she received immediately upon Bob’s death, namely half the value of the condominium and all of the joint investment account. Those assets came to Angela outside the will and had a total value of $480,000. They amounted to 55.5 per cent of the family assets and accordingly exceeded her notional minimum entitlement on a property division.

[33]        As Angela’s pension income exceeded Bob’s before his death, and there is no evidence to suggest that did not continue after Bob’s death, Angela was not notionally entitled to spousal support in addition to her share of the family assets. In the circumstances, I am satisfied that Bob met his minimum legal obligations to his spouse and the only remaining consideration in regard to Angela is her moral claim.

[47]        I also accept that, in assessing the moral obligations, I may take into account not just the size of the estate itself but the value of Bob’s half interest in the joint bank account that passed to Angela under the right of survivorship. Any residue of that interest will have since flowed to Louise under her mother’s will. These are all part of the circumstances to be considered here in determining what is adequate, just and equitable. The foregoing is consistent, in my view, with the approach approved in Inch v. Battie, 2007 BCSC 1249 (CanLII), 2007 BCSC 1249 at para. 69.

[48]        Finally, with regard to the moral obligation owed to Angela, I agree that the fact she changed her will does not reduce her moral entitlement. See Bridger v. Bridger Estate, 2006 BCCA 230 (CanLII), 2006 BCCA 230, at para. 25. Angela’s moral entitlement, as a long time wife, stands in priority to the entitlement of any of the plaintiffs.

[49]        The defendants contend that Bob’s moral obligations must be customized as between the individual plaintiffs based on their relative financial needs. It is insufficient, according to counsel, simply to have been a good child with a good relationship with the father. In support, the defendants cite two authorities: Scott‑Polson v. Henley, 2013 BCSC 247 (CanLII), 2013 BCSC 247, at para. 88 and Steernberg v. Steernberg Estate, 2006 BCSC 1672 (CanLII), 2006 BCSC 1672, at para. 63. In my view, the authorities do not support these arguments.

[50]        In Scott-Polson, the testatrix made some provision for each of her adult children arising from two marriages, but divided her estate 75 per cent to one family group and 25 per cent to the other. The practical result was that the three children from one family each received 25 per cent of the estate and the six children in the other group equally shared the remaining 25 per cent. No legal claims were established and the court concluded that the reason the testatrix gave for her distribution scheme was “genuine and valid” (para. 83). The decision does not address the narrow argument that is advanced here.

[51]        Neither does Steernberg. In that case, the judge pointed out, and I agree, that the moral claim of independent adult children is more tenuous than the moral claim of spouses. The decision goes on to point out that, “if the size of the estate permits, and in the absence of circumstances negating the existence of such an obligation, some provision for adult independent children should be made” (para. 64). I agree with that as well.

[52]        In Vielbig v. Waterland Estate 1995 CanLII 2544 (BC CA), (1995), 1 B.C.L.R. (3d) 76, the Court of Appeal found that a testator who provided for equal distribution between children, who were not disabled or dependent, would demonstrate “on a moral duty basis prima faciecompliance with the requirements of the [Wills Variation] Act” (para. 37). I see no reason to treat the individual plaintiffs differently from each other here as need is not a factor in determining their entitlement.

[53]        In conclusion, I find that the estate is adequate to meet the moral obligations that Bob owed to Angela and his four adult children. Due to the relatively modest size of the estate, both counsel invited me to award any damages in specific amounts, rather than express them, as is usually the case, in percentages of the estate residue.

[54]        In my view, society’s reasonable expectations of what a judicious person would have done in Bob’s circumstances, by reference to community standards, is, as counsel for the plaintiffs contends, to divide his estate with a little more than half to go to Angela and the remainder to be divided equally among his four children.

[55]        Although the net estate proceeds are $375,968, I do not know what amount needs to be deducted for probate or estate administration fees. Understandably, neither party led evidence on these matters. In my view, this is why the court usually does not vary a will by dividing the residue into specific amounts. Having said that, I appreciate that all parties must be prepared to accept a somewhat rough calculation in order to achieve certainty. Otherwise, counsel would not have invited me to make any awards in specific dollar amounts. Each side, however, must accept any associated risks.

[56]        Counsel for the plaintiffs suggests that it would be appropriate to divide 48 per cent of Bob’s net estate among the four children. That approach would yield $195,500 to Angela’s estate, leaving $180,468 to be divided equally between the four plaintiffs, presumably subject to proportionate adjustment for the interest earned on the GIC. According to counsel, a fair award is $45,000 for each plaintiff.

[57]        Counsel for the defendants suggests using $350,000 as a starting point, rather than $375,968, to reflect the eventual probate and estate administration fees. Using that starting point, and the same rough approach to the division as set out above, would yield $182,000 to Angela’s estate and about $42,000 for each plaintiff.

...

[61]          Using $350,000 as a starting point, I vary Bob's will to provide specific bequests of $42,000 for each of the four plaintiffs.