Disinheritance and Will Challenges

In most common law jurisdictions, a parent is not obligated to leave an inheritance to a child if that child was not financially dependent at the time of the parent’s death.  There are various reasons why a parent would want to leave nothing to one child, or much less than to other children.  The parent may have loved both children equally, but felt that one child is already sufficiently affluent and the other has a greater financial need.  In other cases, the child may be estranged or may have done something the parent disapproved of.

Wills of this type are a frequent cause of estate litigation.  When one child has been treated differently there is a significant risk of litigation among the siblings after the parent’s death.    A parent who hopes to avoid this, and to make sure that the Will is not overturned, should take careful steps in its preparation and have the reasons well documented in the event of a challenge.  These issues are illustrated by two recent Ontario cases that will be discussed here. In both cases, one of two children of a wealthy mother was disinherited.  In Quaggiotto v. Quaggiotto, 2018 ONSC 345, the disinheritance was upheld, while in Slover v. Rellinger, 2019 ONSC 6497 it was partly reversed.

Will challenges of this type usually involve two main arguments: that the deceased lacked testamentary capacity to make her Will, and/or that she succumbed to undue influence from the child who received the larger inheritance.   Both of these were at play in these cases.

The decisions discussed here demonstrate that proving lack of capacity is a difficult challenge in the absence of clear evidence of a disabling mental illness.  Mere eccentricity or unreasonable behaviour by the deceased is not sufficient to support an argument of incapacity.  In both of these cases, the claim of a lack of capacity by the testator was dismissed by the judge.

Proving undue influence is also a significant challenge.  Merely persuading, nagging or cajoling the testator does not meet the test.  It is necessary to prove that the influence overcame the wishes of the testator, and caused her to sign documents to produce results that she really did not want.   In Quaggiotto, the documentation of the preparation of the challenged codicil was sufficient to defeat this claim.   By contrast, in Rellinger, the complex series of financial maneuvers organized by the son, through a host of documents and financial rearrangements using lawyers and advisers that he retained on behalf of his mother, was found to meet the test.

The Facts in Slover v. Rellinger

Slover v. Rellinger, 2019 ONSC 6497, stands out for the complexity of the issues involved and the large sum of money at stake.   Justice Sanfilippo presided over a trial lasting more than 20 days, and wrote an 84-page decision that is a useful illustration of some of the key principles involved in Will challenges.

Gertrude Rellinger of Kitchener died in 2016 aged almost 94.  She and her late husband had been remarkably astute investors who amassed a substantial fortune.   She had two children, Joan Slover and James Rellinger.  Gertrude had been generous to both children during her lifetime, making gifts totalling more than $14 million.

In 2008, Gertrude made a Will that left her wealth to each of her two children in equal shares.  In the following years, there was increasing hostility and a degree of estrangement between Gertrude and Joan.  Gertrude did not like the long-term care home in which she had been placed in Waterloo, and blamed Joan for the decision.  There was one period in which Getrude and Joan did not speak for about six months.  Later, James arranged for her transfer to a new long-term care home in Toronto.

In 2013, Gertrude changed her Will to say that James would receive 75% of her fortune and Joan only 25%.   At her death, she still had about $21 million.  However, in the years between 2013 and 2016, her assets were all shifted into joint accounts with James, which purported to give him a right of survivorship.  These were backed up with documents stating that she intended these to be the property of James after her passing, rather than being held in trust for her estate.   If these post-2013 maneuvers were allowed to stand, the 25% share of the estate left to Joan in the 2013 Will would have amounted to nothing.

Joan sued, arguing that not only were the later maneuvers invalid because of undue influence, but that her mother lacked testamentary capacity when she signed the 2013 Will.  If she had been successful in that argument, the 2008 Will would have come into force again, and she would have been entitled to half of the estate.

Testamentary Capacity in Slover v. Rellinger

The classic 19th century English case of Banks v Goodfellow laid out the principles of what constitutes testamentary capacity, and these principles continue to be applied in Canada.  In that case, the testator Mr. Banks had delusions that he was being persecuted by devils.  In spite of that, the court ruled that he had testamentary capacity, because his insane delusions did not affect his understanding of his financial assets or obligations.  Given that this is the governing case, it should be obvious that a Will challenge based on testamentary capacity faces a difficult evidentiary burden.

There are five elements in the Banks v Goodfellow analysis, and Joan only challenged based on one of them.  As noted by the judge, “Joan conceded that, throughout, Gertrude understood the nature of a Will and its effect; that she understood the nature and extent of her property relevant to the disposition; that she was capable of evaluating the claims of those who might expect to benefit from her estate, and; that she was capable of communicating a clear and consistent rationale for the distribution of her property on her death.”

Justice Sanfilippo observed that it would have been futile for Joan to argue that the deceased did not understand her assets:  “Not only was Gertrude well-aware of her holdings, but she earned over $800,000 on her investments in 2013, at 91 years of age.”

The fifth criterion for capacity in Banks v Goodfellow is whether the testator suffers from delusions or a mental disease that interferes with her ability to make a “rational disposal of property.”  In particular, “if insane suspicion, or aversion, take the place of natural affection; if reason and judgment are lost, and the mind becomes a prey to insane delusions calculated to interfere with and disturb its functions,” then her testamentary disposition will be void.

Joan argued that the antipathy that her mother developed towards her was based on an insane delusion, but the judge rejected this based on the jurisprudence that requires a very high standard of proof:

[311]      The question that I must answer is whether Gertrude’s belief that Joan was an uncaring, unkind, inattentive daughter who was untrustworthy were “fixed, false beliefs”, as defined by the expert psychiatrists. Were they, on the evidence that I have accepted, delusions? This is more than Gertrude getting the facts wrong or misinterpreting a situation or exaggerating or posturing. This is more than Gertrude being vindictive, spiteful, mean-spirited, or unforgiving. This is a persistent belief in a state of facts that no rational person could hold to be true but rather exist only in the mind of the deluded testator…

[336]      To assess whether Gertrude suffered from insane delusions, I must determine whether there is a factual basis – even very tenuous, illogical, or illusory – for Gertrude’s belief that Joan was an uncaring, unkind, and inattentive daughter, and that she was untrustworthy….

In assessing the facts, the judge came to the conclusion that there was a factual basis for Gertrude’s attitude towards Joan.  He declined to decide whether Gertrude was justified or fair in holding these views about Joan, as that is unnecessary, as long as a sane person could hold such views:

[370]      To lose testamentary capacity on the basis that the testator lacks a sound and disposing mind, a lack of mental capacity or mental disorder must be established. This is more than being “eccentric, unfair or capricious…. A will-maker can be unfair, capricious and even mean but still have testamentary capacity so long as the testator does not suffer from a mental disorder.

This is a relatively low standard of capacity to meet.  The judge found that Gertrude met it, and therefore she had the capacity to reduce Joan’s share to one-quarter in her 2013 Will.

In this case, as in others of this type, each side provided a psychiatrist as an expert witness on capacity.  Joan’s expert was the well-known Dr. Kenneth Shulman, who took the position that Gertrude lacked capacity in 2013.  He had the disadvantage of never having met Gertrude, and doing a retrospective assessment based on documents:

[333]      I accept Dr. Shulman’s eminent qualifications … but I do not accept his conclusion regarding Gertrude’s testamentary capacity…. Dr. Shulman did not cite a single instance of Gertrude having a fixed, false belief that derived from Gertrude’s conduct….

The psychiatrist testifying for James was Dr. Wendy Yiu, who had met Gertrude on numerous occasions and may have been retained with a view to defending against a future challenge.  This raised a question about whether Dr. Yiu was an independent expert.  In some instances, a lack of independence can lead to complete disqualification of an expert witness,  as in Bruff-Murphy v. Gunawardena, 2017 ONCA 502, where a psychiatrist’s evidence was found to be completely inadmissible.  A more common approach is to take this factor into account by giving reduced weight given to her testimony, which is what the judge opted for in the present case.  Even with the reduced weight, it appears that her evidence was sufficient to overpower that of Dr. Shulman.

Undue Influence in Slover v. Rellinger

There is also a high standard for demonstrating undue influence on the testator:

[381]      A testamentary disposition will only be invalidated on the basis of undue influence when the person challenging the document establishes, on a balance of probabilities, “that the influence imposed by some other person on the deceased was so great and overpowering that the document reflects the will of the former and not of the deceased”: Banton, at para. 89. In such circumstances, the testamentary disposition does not reflect the intentions of the person who made the testamentary disposition but rather the wishes of the person exerting the undue influence.

[382]      … testamentary undue influence consists of “outright and overpowering coercion of the testator”.… I found particularly instructive the statement of the Privy Counsel in Craig, at p. 15, that undue influence is established when “the execution of a paper pretending to express a testator’s mind … really does not express his mind, but something else which he really did not mean”. Cullity J. applied this concept in Banton, at paras. 59-60, when he stated that undue influence is present when a Court finds that the testator or gift giver “simply delegated the will-making power to the other person”.

[386]      [other factors include] … substantial pre-death transfers of wealth; using a lawyer previously unknown to the testator and chosen by the alleged influencer; the alleged influencer communicating instructions to the lawyer acting for the testator; the alleged influencer receiving a draft of the document prior to the testator.

That is effectively what Justice Sanfilippo concluded with respect to the post-2013 documents and shuffling of assets.  He found that James organized the lawyers and others who prepared these documents, and Gertrude did not have the willpower to refuse her consent:

[408]      … my assessment that the repetition constitutes the latter and not the former is supported by analysis of the remarkable speed and frequency by which James mobilized the changes to Gertrude’s testamentary dispositions, many at times when Gertrude was about to be admitted to hospital or recently discharged.

[409]      I find that the number of changes made by Gertrude the documents executed in the period from August 2013 to September 2014 pertaining to the distribution of her wealth, the speed at which they were done, the repetition of similar concepts through complicated documents totalling 19 in 13 months and the presentation of so many of them to Gertrude while frail are, on the evidence presented in this case, factors that are suggestive of undue influence.

[410]      All of the steps taken by Gertrude in the Post-August 2013 Documents were done with a lawyer previously unknown to her. Gertrude’s long-standing lawyer, Mr. McCarter, had been replaced.

[411]      As I have explained, all the lawyers and professionals who interacted with Gertrude after August 2013 were chosen and retained by James….

In sum, a situation where one beneficiary takes a heavy-handed role in the process of decision-making can be found to represent the exercise of undue influence.   As a result of his finding that all these changes were made through undue influence, the judge ruled that the assets that James held in joint accounts with his mother were held by him as a trustee on behalf of the estate.  James did not have a right of survivorship, and therefore, the assets revert to the estate.   However, based on his ruling that Gertrude had capacity to make her 2013 Will, and that change was made without undue influence, James would still inherit three-quarters and Joan only one-quarter.

The Facts in Quaggiotto v. Quaggiotto

In Quaggiotto v. Quaggiotto, 2018 ONSC 345 (affirmed, 2019 ONCA 107), the fact situation was quite similar, except that the elderly mother had two sons.  Maria Quaggiotto, the mother in this case, passed away in 2016 at the age of 89.   She had been predeceased by her husband, who left her his shares in a number of construction businesses that he had owned in the Windsor area.

Franco, the elder son, had worked throughout his life with his father in the business and owned significant shares of it.  Livio had in his youth also participated, but did not get along with his older brother.  He subsequently left the construction business and worked as a truck driver.  Livio had benefitted from large gifts from his parents while they were alive, but was apparently still less well-off financially than Franco.   There had been continuing friction between the brothers over various matters, and during the last years of Maria’s life they were barely on speaking terms with each other.

Maria’s Will made in 2011 divided her estate equally between Franco and Livio, and designated them both as executors.  That Will had been drawn up by her long-time family lawyer who also handled the corporate interests.  Then, out of the blue, in 2014 Maria visited a different lawyer (introduced to her by Livio’s wife, Rosa) who drew up a codicil to her Will that radically altered it.  Under the codicil, Livio received everything (apart from small bequests to grandchildren) and was named sole executor, and Franco received nothing.   Franco sued, claiming both a lack of testamentary capacity for his mother, and undue influence by Livio.  A ten-day trial before Justice Rogin ensued.  At the end, Franco was unsuccessful in his attempt to overturn the codicil.

Testamentary Capacity in Quaggiotto v. Quaggiotto

Justice Rogin found that there were “suspicious circumstances” involved in this case:  1) the sudden change in the beneficiary of the residue of Maria’s estate from Franco and Livio in equal shares to Livio alone thus, in effect, disinheriting Franco; 2)  the naming of Livio alone as estate trustee;  3) the change of solicitors who drafted the codicil from the long-time family and corporate solicitor, to a new solicitor with whom Maria had had very few business dealings;  4) the involvement of Livio’s wife, who organized the visits to the new solicitor, and a capacity assessment that he requested; and 5) Maria’s age, physical abilities and limited ability to converse in English.

Based on the principles laid down by the Supreme Court, where suspicious circumstances are established, the onus falls onto the propounder of the Will to prove on the balance of probabilities that there was testamentary capacity.

In reviewing capacity, the judge relied on a number of pieces of evidence.  One was the formal assessment by a designated capacity assessor, who was a nurse by background.  He also placed considerable emphasis on evidence that Maria had a good understanding of her business holdings and interests.   That was also confirmed by her previous lawyer, in spite of his disapproval of her switching to a different lawyer to draw up the codicil.

One sticking point concerned a dispute about a cheque for $60,000 for money from one of the companies.  Franco was supposed to give it to her, but Maria later believed that he had not done so, and this was a source of friction between them while she was alive.  In reviewing the evidence (including banking records), the judge came to the conclusion that Maria had been mistaken about this cheque, and Franco had in fact given it to her.   However, a mere mistaken belief of this sort does not constitute a lack of capacity, again confirming the low bar for capacity assessment.

Therefore, the conclusion was that Maria did have capacity at the time she signed the codicil:

[87]           It was argued by Franco that Maria did not know what her assets were. I reject that argument. She knew that under Bert’s will she was his sole beneficiary. She knew what her interests in Caboto and Blueview were. She knew she had investments, savings accounts and chequing accounts. She knew she was changing the will drawn by J.P. Corrent which named both sons as estate trustees.

[88]           I do not believe that the law requires a testatrix to have an encyclopedic knowledge of her assets. This is especially so when there is an extensive estate. It is sufficient for the testator to have a general knowledge of her assets which I find that Maria did.

[95]           On all of the evidence, I find that Livio has achieved his burden (in light of the suspicious circumstances) of proving testamentary capacity. While Maria may have been wrong in her negative feelings about Franco and the cheque from Blueview, she did not suffer from any disorder of the mind that “poisoned her affections”, “perverted her sense of right”, or prevented her from “…the exercise of her natural faculties”: see Banks v. Goodfellow….

Undue Influence in  Quaggiotto v. Quaggiotto

As in the previous case, the judge noted that undue influence is a high standard and requires much more than mere persuasion:

[98]    It is not bad influence, but coercion. Persuasion and advice do not amount to undue influence so long as the free volition of the testatrix to accept or request them is not invaded. …there was no undue influence unless the testatrix…if she could speak would say “this is not my wish, but I must do it”….

Franco’s argument that there had been undue influence was rejected.  While Livio’s wife had selected the lawyer to draw up the codicil, she was not present for the event.  Maria had gone to the new lawyer’s office with a letter handwritten by her in Italian, laying out the reasons for why she wanted to benefit Livio based on his greater financial need.

The new lawyer and his assistant, Mr. Maggio and Ms. Kerim, both testified at the trial. They were fluent in Italian and had conversed with Maria in that language. They had gone through the codicil line by line with Maria, documented in their notes.  Their belief that this is what Maria wanted was accepted by the judge.

Even though Livio’s wife had some involvement by introducing Mr. Maggio to Maria, Justice Rogin was willing to overlook that, unlike Justice Sanfilippo in the Rellinger case above.  In the Quaggiotto case, the evidence of Maria’s wishes was perhaps more clear-cut, and there was a single codicil, rather than a pattern of multiple documents being signed by the mother, through arrangements organized by the son.

On appeal, the Court of Appeal, 2019 ONCA 107, also gave its endorsement to the judge’s reliance on this factual evidence:

[12]      …. Furthermore, Mrs. Quaggiotto’s love of both sons … did not detract from her desire to balance her two sons’ financial well-being.  Her intent in this regard was corroborated by the evidence of Mr. Maggio and his assistant, Ms. Kerim, is reflected in the codicil she executed, and did not simply emanate from the respondent and Rosa.

Conclusions

Disinheriting one child is an unusual and perhaps unfortunate situation, but a parent who feels strongly that this is the best thing to do is legally entitled to do it.   After the parent dies, this may lead to litigation among the siblings.  To reduce the risks of the Will being overturned or challenged in court, the reasons for the unequal distribution should be clearly documented, and careful steps should be taken in the preparation of the Will to avoid any risk of it being impugned.   Evidence that the beneficiary who was favored took charge of the preparation of the changed Will would tend to support a claim for undue influence.

Peter Spiro is counsel to Rogerson Law Group for tax appeals & litigation and estate litigation and planning. This article is for general information purposes and you should seek specific advice for your particular case