Estate planning is under scrutiny after an Ontario court overturned a beneficiary designation. The deceased’s final wishes were left to the court to interpret, much to the surprise of his twin sons. Make sure your final wishes are perfectly clear to avoid their fate.
Twin vs. Twin — Who Gets the Proceeds
Any parent knows twins are double trouble. You could say Henry’s problems started that way, but that might assume too much. Let’s just say it was the bankruptcy of his son Randy, twin brother to Gary, that left Henry’s estate up in the air.
A Family United Yet Apart
Henry died in February 2016 at 94, leaving his estate to his surviving sons. He spent his final years in his Thorhild home with Gary, who moved into the residence in 2013 to care for his mother Mary. She died in 2014, leaving her husband and Gary to batch together and Randy living in Alberta. As her survivor, her joint bank account became Henry’s after her death. He was also beneficiary of Mary’s RIF (registered investment fund).
Passing On Assets When You Die
Two days after Mary’s death, Henry and his sons went to a lawyer’s office, where he amended his will, naming his sons co-executors. Within a few days, Henry made Gary joint holder of his bank accounts and beneficiary of Mary’s RIF when he died. The assets totalled just over $325,000, not including the Thorhild home and a 2011 Chevy Cruze. That lit a fire under Randy.
Bankruptcy Complicates Everything
Gary and Randy agreed in court that their parents had treated them equally well throughout their lives, giving both generous gifts and loans. The consensus ended there. Gary argued his brother had suggested Henry change his will to protect the estate assets from Randy’s creditors from a failed business. Giving Gary the bank accounts and RIF was meant to compensate him for approximately $335,000 plus interest Gary and Mary lost investing in Randy’s venture. Gary’s share of that loss was at least $135,000.
Not the Way It Went Down
Randy disputed that. He said he suggested his father make Kyle, Randy’s son, beneficiary to his will precisely because of the bankruptcy. He also disagreed that Henry meant for his brother to have the joint bank accounts and RIF. Gary had made no financial contributions to the accounts and had no access to them before their father’s death. Randy was unaware his father had opened a joint bank account with Gary and assigned him survivorship rights when he died. Those rights meant Henry’s assets would pass directly to Gary, without being probated as part of the estate.
Are Assets Gifts or Held in Trust?
The question for the judge was whether the bank accounts and RIF were intended solely for Gary’s use or Henry expected his son to hold them in trust to be shared by his heirs. Henry may have wanted to avoid probate fees by transferring his assets directly to Gary. He also might have intended that Gary have benefit of the assets until his death, when they would be transferred to Randy as Gary’s survivor. The onus was on Gary to show what his father had planned and on Randy to provide hard evidence to overturn Gary’s position.
Arguing Evidence For and Against
What is a twin to do? While Gary conceded he hadn’t contributed to the bank accounts or RIF or used any of the proceeds while his father was alive, he argued Henry gave him survivorship rights so he alone would inherit the assets and they would be protected from Randy’s creditors.
Unclear Will Leaves Court to Decide
With Henry gone, the judge found Gary’s protests the money was meant for him weak. Randy’s evidence was inconclusive as well. The bank documents Gary and Henry signed were too “bare bones” to be helpful. If Henry had intended that Gary have his assets, he needed to clearly state it in his will. His failure to be specific had no significance either way, the judge ruled. It neither proved he wanted Gary to have the assets for his personal use or that they were part of an estate Henry wanted the twins to share.
Funds May Go to Estate If Will is Vague
Since Gary simply had no convincing evidence to support his position, the judge ruled that the bank accounts and RIF belonged to Henry’s estate, not Gary. Gary was directed to return the money to the estate to be distributed among Henry’s heirs.
What It Means for Will Writers in Ontario
The decision raised alarm bells for estate planners. Overturning a designated beneficiary for a RIF or other asset could leave an estate paying probate fees the will writer may not have intended. It also drives home the point that parents who want to gift one child over another need to make that perfectly clear in their final wishes. Otherwise, they could see their will challenged and that spells double trouble in the case of twins.
Write an Ontario Joint Tenancy Agreement
Axess Law Ontario wills and estate lawyers advise you on rights of survivorship and designating beneficiaries in your will. Video conference online with a qualified lawyer day or evening, at your convenience. Call toll-free to 1-877-522-9377 or in Greater Toronto at 647-479-0118 or use our online booking form to make an appointment. In person meetings are available at our Ottawa, Toronto, Scarborough, Vaughan, Etobicoke, Mississauga Winston Churchill or Mississauga Heartland law offices.
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