With respect to financial affairs, one’s right to privacy does not necessarily extinguish upon their death. A recent decision from the Alberta Court of Appeal held that a competent testator was entitled to keep her pre-death financial decisions a secret, despite her children’s claims of undue influence and fraud.
Testator’s estate plan based on meticulous financial decision-making
In the case of Duhn Estate, the testator passed away in March 2018 at 84 years old and left behind a comprehensive Will in anticipation of litigation. The testator was a widow who had seven children. The family farm was sold in 2009, and several million dollars were transferred to the testator, her late husband, and two of their children who held interests in the farm.
After the death of her husband, the testator spent much of the money left to her on her children and grandchild. At the time of her death, the testator’s net worth was valued at approximately $4,500,000, notably less than it had been in previous years. The testator’s estate plan was drafted based on extensive legal advice. Her estate plan was also made after attending medical appointments to ensure her legal capacity, as she made significant decisions and included a no-contest provision in her Will.
While the testator had mobility problems and relied on her children to help with driving and household chores, she lived independently. Further, she was reported to have had “full control of her mental faculties”, particularly concerning her financial affairs, on which she kept meticulous notes.
Testator’s children seek review of her pre-death financial transactions
The applicants in the litigation were two of the testator’s children and beneficiaries of her Will. They applied to the Court, seeking full disclosure of the transfers of money, real estate, and personal property made by the testator in the four years before her death. The applicants claimed that the testator may have lacked capacity or was unduly influenced to make certain financial decisions. Two more of the testator’s children supported the application for full financial disclosure, while the remaining three siblings objected to further documentary production.
The respondents and personal representatives of the testator were two of her grandchildren. They stated that the testator did not instruct or authorize them to investigate transactions she made before her death, and there was no reason for them to do so.
The applicants relied on section 7(1)(a) of the Estate Administration Act, which states that estate assets and liabilities should include assets transferred before the testator’s death.
Respondents denied undue influence on testator
The applicants argued that various gifts and transfers made by the testator were suspicious and should be investigated, including gifts made for nominal value, which were presumed to be held in a resulting trust. They also challenged gifts given to two of the testator’s children by cheque and bank transfer on the same day. The applicants raised concerns about one daughter’s status as a joint signatory on the testator’s joint bank account and alleged undue influence exerted by three of the children on the testator.
The respondents argued that the testator made her wishes clear and had the right to keep her financial transactions private, even after her death. They stated that the testator tried to document her gifts and frequently visited with her lawyer and doctor to ensure that her gifts would be valid. Further, she deliberately included a no-contest clause in her Will to avoid estate litigation after her passing. The respondents denied any undue influence on the testator or a lack of capacity, as she remained independent and competent despite her physical disabilities.
Pre-death financial decisions rarely probed by courts absent significant concern of potential abuse
In her analysis, the chamber’s judge noted that personal representatives owe a duty to account for the testator’s estate administration. However, the accounting period is generally after the testator’s death, once the estate assets have been identified and listed. The Court stated it would rarely ever order an investigation into a competent testator’s pre-death financial affairs without evidence raising a “significant concern” of potential abuse. Further, any such order must consider the testator’s privacy rights.
The chamber’s judge agreed that the significant decrease in the estate’s value during the four years before the testator’s death did raise concerns. However, the Court accepted the explanations presented in the respondents’ evidence, including:
- The testator told her family that she wanted to provide them with gifts before she passed away;
- The testator went to great lengths to ensure that her wishes would be protected and valid upon her passing;
- There was no evidence of undue influence over the testator, given her competency until her death, and secrecy in her latter years did not equate to undue influence; and
- The personal representatives provided a List of Gifts, which provided transparency about the many gifts the testator generously provided to her family before her death.
The chamber’s judge held that competent testators are entitled to keep their pre-death financial decisions private if they desire and dismissed the application for further financial production.
Court of Appeal upholds findings in favour of testator’s privacy
On appeal by the applicants, the Court of Appeal carefully considered the chamber’s judge’s findings and reasoning. The Court noted that the testator left behind a carefully documented Will with a no-contest clause. Further, she regularly visited her doctor and lawyer when making financial decisions. As a result, the Court of Appeal found no reason to overrule the chamber’s judge’s findings and refused to allow further production of financial documentation for accounting purposes.
The Court concurred with the reasoning of the chamber’s judge. It confirmed that a claimant should not be able to put an estate through the “needless expense” of steps like documentary discovery without meeting a minimal evidentiary threshold.
Contact the Estate Litigation Lawyers at DBH Law for Guidance on Challenging or Defending a Will
The experienced estate litigation lawyers at DBH Law provide clients with trusted advice with respect to various estate matters, including challenging or defending a Will, passing accounts, and trust disputes. Our lawyers work diligently to avoid unnecessary costs and steps in the estate litigation process, both in alternative dispute resolution and at trial. To speak with a member of our team regarding your estate dispute questions, contact us online or call us at 403-252-9937.