A no-contest clause in a will is intended to discourage litigation by a beneficiary. If a beneficiary unsuccessfully challenges the will, their bequest is typically forfeited and reverts to the residue of the estate.
Recently, the Alberta Court of Appeal had to determine whether an application brought by a beneficiary, a person interested in the estate, to obtain formal proof of a will amounted to a challenge to the will that would trigger the no-contest clause. The court found that the application did trigger the no-contest clause.
The deceased passed away in September 2015 in Calgary at the age of 84. He had three adult children who were, along with the personal representatives of the estate, the appellants. The respondent said she had been in a long term relationship with the deceased and became his fiancée in March 2015. The appellants disputed this and said she was only a long term friend.
The respondent claimed that the deceased had made four different wills, the most recent dated May 7, 2015. Under all of these wills, she was a beneficiary, but also shared equally with the adult children in the residue of the estate. The scheme of distribution was altered in an August 1, 2015 codicil and ultimately in a new will signed by the deceased on August 6, 2015 (the “August Will”). The August Will gave the respondent, a parcel of property in Alberta, a house and its contents in Austin, Texas, a Bentley automobile, and $2.6 million dollars. However, the residue of the estate was to be distributed only among the three adult children.
The No-Contest Clause
The August Will contained a no-contest clause at paragraph 21 which stated:
“21. If any beneficiary of this my Will challenges the validity of this my Will or any Codicil hereto or commences litigation in connection with any provision of my Will or any Codicil hereto, other than for:
(a) Any necessary judicial interpretation or for the assistance of the court in the course of administration of my estate; or
(b) Seeking to enforce or obtain any rights or benefits conferred by the laws of the Province of Alberta;
then, such beneficiary shall absolutely forfeit and lose all entitlement to benefits or to any gift to him or her hereunder, and every such benefit or gift so forfeited shall fall into the residue of my estate and the residue of my estate shall be distributed as if such beneficiary had predeceased me and left no issue surviving me.”
The respondent contended that the deceased’s health was declining in the last months of his life, and asserted that there were suspicious circumstances surrounding the execution of the August Will. She applied to court for advice and direction to determine whether an application under the Surrogate Rules would trigger the no-contest clause. The respondent sought a declaration that an application under 75(1)(a) of the Surrogate Rules to request the personal representatives to obtain formal proof of the August Will would not constitute a challenge to the validity of the August Will or litigation in connection with a provision of the August Will, and would not trigger the no-contest clause.
The Court of Appeal ruled that while the wording of the no-contest clause in the August Will allowed for a beneficiary to enforce any rights he or she might have to the estate under the province’s dependency laws, it didn’t allow for the type of application the respondent intended to pursue. As a result, the court ruled that the respondent could proceed with an application to obtain proof of the August Will, but would lose all her entitlements under the no-contest clause should she be unsuccessful. The court stated:
“If [the respondent] were to proceed with her application and ultimately succeed in challenging the testamentary capacity of [the deceased] to make the August Will, then the August Will would be invalid, as would the no contest clause. If she is unsuccessful, then she would forfeit her bequest. That is exactly the type of dilemma the no contest clause is designed to create, and what was presumptively intended by [the deceased].”
This decision should give lawyers greater confidence in including a no-contest clause in a client’s will. However, the respondent has already indicated she will be seeking leave of the Supreme Court of Canada to appeal the decision.
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