We occasionally encounter situations where a client has an incapable spouse living in care, and the basic needs of that spouse are already met by the spouse’s own income or assets. Such a client might ask us whether they can avoid including their incapable spouse in their Will – which is a fair question given that the spouse does not “need” the money.
However, it is important for the client to understand that an individual has a moral and legal obligation to provide for their immediate family (spouse and children) through their Will. If they do not, the surviving spouse and/or children are entitled to challenge the Will. This is called a Wills Variation action. The outcome of a Wills Variation action will depend on the size of the Estate and what is “adequate, just and equitable” in the circumstances.
If the client fails to make fair and adequate provision for his or her incapable spouse, there is a high likelihood that the Will will be challenged and the estate will be sued, either by the incapable spouse’s attorney (acting under a Power of Attorney) or the Public Guardian & Trustee (“PGT”)[1], after the client’s death.
This situation occurred in the 2015 B.C. Supreme Court case BH v JH[2]. Here, the PGT launched a Wills Variation action on behalf of an incapable wife who received nothing from her husband’s estate, because his Will left his entire estate to their daughter. This essentially disinherited the wife as well as their two sons. The daughter argued the Will should not be varied in favour of the wife because she was already adequately provided for through her old age pension. The Court rejected this argument and found that the husband failed to make adequate provisions for his wife, and that his moral duty was not discharged just because the government provided his wife with an old age pension. The Court also stated that a Will-maker’s moral duties are enhanced when their spouse is incapable of managing their affairs.
The incapable wife was awarded $60,000 and each son was awarded $50,000.
Instead of disinheriting altogether, clients in these situations should consider establishing a trust in the Will, to set money aside for the benefit of the incapable spouse to use during his or her lifetime. Such a trust can contain directions to the trustee about how the funds are to be used and can provide varying levels of discretion to the trustee. The Will also stipulates whom is to take what remains upon the death of the spouse, i.e. the children. If the trustee spends nothing on the spouse, then the entire trust fund will remain for the children. This arrangement, as opposed to nothing at all, is more likely to be upheld by the Courts as being sufficient.
[1]When someone is incapable of managing their affairs, the Public Guardian & Trustee (“PGT”) may act on their behalf, as a last resort if no Attorney has been appointed through a Power of Attorney. This may occur regardless of the incapable person’s age or financial circumstances.
[2] 2015 BCSC 1551.