By Pavneet Grewal and Zachary Murphy-Rogers
If you are or know someone who moved to British Columbia and has a U.S.-style ‘pour-over will’, we strongly encourage seeking local estate planning advice. A ‘pour-over will’ is a will that includes a clause by which the will-maker names a trust that was created during their lifetime (“pre-existing trust”) as a beneficiary of their estate. The terms of the pre-existing trust are not reiterated in the will itself.
Wills that ‘pour-over’ the estate assets into a pre-existing trust are valid in certain other jurisdictions, including California and other parts of the United States of America, where we understand this estate planning tool is relatively common.
As discussed in a previous Clark Wilson article, the British Columbia Court of Appeal in Quinn Estate, 2019 BCCA 91, held that a pour-over clause in a will to an amendable or revocable trust is invalid. This is because in British Columbia executing a will requires two witnesses to make a valid testamentary disposition (meaning a disposition on the will-maker’s death); on the other hand, a pre-existing trust can have its beneficiaries changed without witnesses, bypassing the two-witness requirement for a testamentary disposition. Quinn stated that the fact that a trust can be amended or revoked voids a pour-over clause completely, clarifying the British Columbia Supreme Court’s decision in Kellogg Estate, 2013 BCSC 2292, which suggested that such a clause is only void if the pre-existing trust was actually amended. More recently, in Waslenchuk Estate, 2020 BCSC 1929, the Court reiterated the principles laid out in Quinn, confirming that a pour-over clause to an amendable or revocable trust is invalid in British Columbia even where the will-maker has not actually amended the trust since the will was made.
Our Estates & Trusts group is frequently approached by clients who have pour-over clauses in their existing wills, because this estate distribution mechanism is valid in certain other jurisdictions. If someone who is resident in British Columbia dies with a pour-over clause in their will, that gift may not take effect. Unless there are alternative instructions in the will (and there are usually not), the will-maker’s estate may be distributed according to British Columbia’s intestate distribution scheme (that is, to family members according to degree of relationship from the will-maker). For someone who has gone through the effort to create a will and a pre-existing trust to carefully set out how they want their estate to be distributed, this result is very likely not what they intended!
For British Columbia residents, we recommend revising or replacing all wills with pour-over clauses to ensure that the estate is distributed in accordance with the will-maker’s true intentions. As discussed in our previous article, a possible solution is structuring the will to create a testamentary trust (being a trust created on the will-maker’s death) with similar terms to the pre-existing trust. The will may give the trustees the power to transfer property from the testamentary trust to other trusts benefitting the same beneficiaries. The will-maker could then request that the trustees exercise their power by effectively merging the testamentary trust with the pre-existing trust using a non-binding letter of wishes.
If you have any questions or are looking for guidance regarding a will with a pour-over clause to a pre-existing trust, please contact the authors of this article, or another member of our Estates & Trusts group.
