( Disponible en anglais seulement )
In Lutz Estate v Lutz, 2020 SKCA 14, the Court of Appeal for Saskatchewan confirmed that under certain circumstances, “reasonable provision” under the Saskatchewan Dependants’ Relief Act (“DRA”) may require the entire estate being used towards the support of dependant teenage children. That case resulted in an estate worth just over $245,000 being divided between the two minor daughters of the deceased, who had been entirely left out of the will.
Facts
The deceased, Mr. Lutz, had two teenage daughters who claimed against his estate as dependants under the DRA. By all accounts, the daughters had good father-daughter relationships with the deceased. The estate consisted of two quarters of farmland in southern Saskatchewan. Mr. Lutz’ previous will, drafted by a lawyer before the younger daughter was born, left his entire estate to his sole child at the time and named his sister as executor. He had indicated to various friends, as well as to his lawyer, a desire to update his will to include his younger daughter. But there was no conclusive evidence he had ever done so.
As a life-long alcoholic, the deceased was not particularly good at handling his own affairs and relied on his sister to a significant extent. Everyone agreed that his ultimate desire was that his daughters should benefit from his estate, but as the trial judge found, he did not know how to bring this about, having no knowledge of trusts or other similar legal arrangements. Two years before Mr. Lutz’ death, while he was in the hospital with liver disease, Mr. Lutz’ sister asked him if he had his estate in order and her recollection of that conversation was that he wanted to bequeath his estate to her because he trusted her to take care of his daughters. She proceeded to draft a will, which he signed in the presence of two other witnesses, that said that he bequeathed his entire estate to her, but left out any mention of his daughters.
The trial judge found the will to be valid, but structured an order that resulted in the entire estate going to the daughters through the DRA. Although the finding of the will’s validity was cross-appealed, the Court of Appeal did not see the need to decide that issue, given its finding that the trial judge had properly exercised his discretion under the DRA.
Key Principles
The Court of Appeal found that a number of principles worked together to support the trial judge’s order distributing the entire estate to the dependant daughters under the DRA. The first key principle that emerges from the decision is that awards, even to children on the verge of adulthood, can be quite high when the testator has no competing moral obligations towards anyone claiming under the will. In this case, Mr. Lutz’ sister was a person of comfortable means and was not a dependant of Mr. Lutz.
The second principle is the relevance of evidence of the testators’ subjective intentions towards the dependants who are left out of his will. In this case, the reason the daughters were disinherited had nothing to do with a falling out or a desire not to benefit them. Mr. Lutz had simply used an ineffective vehicle to benefit his daughters. The positive relationship between the deceased and his daughters, his stated intention to benefit them with his estate, and the sister’s own testimony that he had not expressed an intention or desire to enrich her in any way, were all highly relevant and supported a high-end award under the DRA.
The third principle is the relevance of the resources of the dependants claiming under the DRA. In this case, the daughters were found to have very little resources. The deceased had not consistently worked or paid child support due to his alcoholism. Upon his death, it was found that it was appropriate to benefit his daughters in a way that was more generous than what he could afford or was inclined to provide when he was alive. The Court of Appeal found that so long as the award is not intended to punish the testator for not adequately providing for his dependants during his life, but is linked to the needs of the dependants in accordance with acceptable community standards, it should be upheld. Moreover, it is not an error in principle to take into account the lack of support provided by the testator while he was alive when this failure goes hand in hand with the current financial circumstances of the claimants under the DRA.
The fourth key principle was the finding that the upper limit of an award under the DRA is what can be described as “building an estate” for their future beneficiaries. The Court of Appeal confirmed that an award under the DRA need not solely be to meet proven needs, but can be broader by covering the moral obligation to a dependant to cover “future, albeit undefined, living expenses”.[1] In other words, an award under the DRA can be made to help teenage or even young-adult dependant children have a good start in life and meet future contingencies. This confirms that when fixing an amount, the upper limit of what a trial judge can order under the DRA, even for young-adult children, is in fact quite high if there are no competing moral obligations from those claiming under the will.
The fifth principle is maintaining respect for the testamentary autonomy of the deceased. Although not the primary consideration when reasonable maintenance for dependants has not been provided, courts take interest in the reasons of the testator in making their will the way they made it and try to give some effect to benefiting the individuals they intended to benefit. In this case, the sole expressed intention of Mr. Lutz was to benefit his daughters to the extent his estate could provide. The trial judge also took into account another quarter of land jointly owned by the deceased and his late mother, which had ultimately gone to the sister through the mother’s will. The award was therefore found to respect the testamentary autonomy of the deceased to the extent it was relevant to the analysis.
Takeaways
This decision provides important clarifications on the law with regard to dependants’ relief in Saskatchewan and throughout much of Canada. Although the facts of this case are quite unique, many of the principles provided have wide-ranging impact. Of particular importance is the Court of Appeal’s lengthy analysis of the distinction between strict “needs-maintenance”, maintenance which satisfies one’s moral obligations to dependants, and maintenance which builds an estate for future beneficiaries of the dependants or gives dependants “testamentary autonomy” over an estate.
Our experienced lawyers at Miller Thomson are able to provide comprehensive legal advice in estate planning, as well as legal advice and litigation support to those who believe they have a claim as dependants under their provincial legislation.
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[1] Lutz Estate v Lutz, 2020 SKCA 14
