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A trust as an alternative to a will? Hunter, Fiona 1988

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A TRUST AS AN ALTERNATIVE  TO A WILL?  By FIONA  HUNTER  B.A., Queen's U n i v e r s i t y , 1976 LL.B., U n i v e r s i t y o f A l b e r t a , 1980 THESIS SUBMITTED IN PARTIAL  FULFILLMENT  THE REQUIREMENTS FOR THE DEGREE OF MASTER  OF LAWS in  THE FACULTY OF GRADUATE (Faculty  We a c c e p t to  this  STUDIES  o f Law)  t h e s i s -as c o n f o r m i n g  the required  standard  THE UNIVERSITY OF BRITISH COLUMBIA October ©  Fiona  1988  Hunter,  1988  In  presenting  degree freely  at  this  the  available  copying  of  department publication  of  in  partial  fulfilment  University  of  British  Columbia,  for  this or  thesis  reference  thesis by  this  for  his thesis  and  scholarly  or for  her  of  The University of British Columbia Vancouver, Canada  Date  DE-6 (2/88)  OcAsi^v U,  I  I further  purposes  gain  the  shall  requirements  agree  that  agree  may  representatives.  financial  permission.  Department  study.  of  be  It not  that  the  Library  by  understood be  an  advanced  shall  permission for  granted  is  for  allowed  the that  without  make  it  extensive  head  of  copying my  my or  written  -  i i -  ABSTRACT  The feasibility the  purpose of  j u r i s d i c t i o n of  lies  i n the  Variation the  Act  free  methods  by  it  of  context  the  the  genesis of  upon  the  assess  of  will  in  the  study  the  Wills  is  a  community  of  the  Assuming  death  legal  examined,  is  States  as  United  and  the  control  of  to  the  as  States  an  that sound  to  find  judiciary  alternative  provided. followed  of  the  retained the  i s one  interest  The  by  a  in  with  by  trust  Columbia  review The  power  the  to  the  historical of  its  particular  containing  settlor,  revocable  revocable  British  is  as  a wills substitute.  life  favor  referred  both  trust  trust  in  commonlaw  the  of  Whether the  to  province.  interference  settlor, a  capital  hereinafter  the  upon  study  application  this  property  incumbent  i n the  the  modification  The  and  overview  United  by  of  in  to  alternative  Columbia.  courts  properly  popular  revoke upon  of  an  is  matters.  brief  i n the  trust  the  is  as  thesis  interpretation  avoiding  To a  trust  alienation  testamentary  will,  a  this  British  liberal  principle,  use  using  of  a power to  and  to  encroach  powers  settlor.  of  It  is  acceptable  to  trust.  would is  be  examined,  and  the  - i i i  conclusion prevent  i t s  careful upon  reached use  as  drafting  the  is  of  Certain revocable  trust  including  income  claims  by  whether  the  by  of  use  as  an  the  possible w i l l .  a  tax  trust  in  that  our  a l l times  to  to  However,  prevent  in  the  will  provincial  tax  laws,  The  more  should  be  own  theory  w i l l .  to  attacks  permitted  United  by i s  are  i s  possible  employing crucial,  avoid  are  the  examined.  The  in  tentative  a  settlor  trust. the  of  claims  reviewed  permit  and  issue  also  Columbia. will  the  reviewed,  and  to  States  British courts  using  philosophical  children  in  drafting  the  in  to  Again,  facts  in  each  reviewed.  study  of  establishes  such  laws  legal use  to  considerations  the  claims  nothing  i t s e l f .  and  alternative  popularity income  laws,  caselaw  careful  The  of  of  succession  be  at  trust  spouses  i s  must  used  used  alternative  doctrines  conclusion  case  an  tax  existing  however,  be  the  as  i s  alternative  beneficiaries.  Conflicting  avoid  there  practical  surviving  light  an  must  validity  that  -  as  use well  community of  the  to  the  may, as  that will  in  however,  provincial to  revocable  the  new  British be  tax  ideas  trust  revocable  as  may an  can  Columbia.  limited laws.  trust  The  also  by  be The  Canada's resistance  reduce  alternative  to  the the  - iv TABLE OF CONTENTS  Abstract  i i  Introduction 1.  The P r o b l e m  1  2.  A l t e r n a t i v e s to the W i l l  8  Trusts  Generally  1. 2. 3.  The  The O r i g i n o f t h e T r u s t D e f i n i n g Terms The W i l l and The R e v o c a b l e A Comparison Revocable T r u s t i n America  14 23 Trust: 26  1. ' I n t r o d u c t i o n 2. A Brief History 3. P e r c e i v e d B e n e f i t s and D i s a d v a n t a g e s Transplanting 1. 2. 3. 4. 5. 6.  Spousal 1. 2.  t o B.C.  Introduction The C o m p l e t e l y C o n s t i t u t e d T r u s t The T e s t a m e n t a r y N a t u r e o f t h e T r u s t The E f f e c t s o f A Power t o Revoke o r M o d i f y The E f f e c t o f A L i f e I n t e r e s t The E f f e c t o f A Power t o C o n t r o l  Practical 1. 2. 3. 4. 5.  the Revocable T r u s t  Concerns  i n U s i n g The R e v o c a b l e  Introduction What A s s e t s Income T a x e s P r o v i n c i a l Taxes B e n e f i c i a r i e s Claims  32 34 39  52 53 63 70 73 80  Trust 102 103 104 119 125  Claims Introduction M a r r i a g e Breakdown  133 133  - V -  3.  T e s t a c i e s and I n t e s t a c i e s A. Current L e g i s l a t i o n B. The J u s t i f i c a t i o n f o r S t a t u t o r y Succession Rights C. Options: The L e g a l A p p r o a c h D. Options: The E q u i t a b l e C r e a t i v e Approach E. Conclusion  Conclusion  137 137 138 14 5 153 171 179  -  1 -  CHAPTER 1 INTRODUCTION  1.  THE  PROBLEM  The  subject  containing  a  power  suitability  as  a  There  is little  majority real  of  and  people  of  who  execute  or  a  to  inter  and good  both  trust  with  Insofar  either  of  need,  their  proceedings,  such  a  i t may  course,  to  then,  trust be  of  so many  will A  be  few  pension  irrevocable. which  its death.  the v a s t of  both  within  the  individuals  neglect, omission,  most  distributed  use  " e s t a t e planning" --the  insurance p o l i c i e s ,  will  today,  do  laws.  upon  disposition  property  the  more  combination  plans,  wills,  However, i t i s t h e people  turn  when  i s t h e r e t o examine t h e  inter  vivos  to the  will?  intentions.  a power o f r e v o c a t i o n as  as  the  trust  particular,  Columbia  because  vivos  property  death of  succession  testamentary  What  are,  r e v o c a b l e and  old-fashioned  contemplating  upon  inter  in  of  to c o n t r o l  There  death,  and  dispose  property  framework  i s the  in British  wish  intestate  vivos g i f t s ,  trusts,  to  a will,  Upon  sophisticated of  who  study  revoke,  that,  will.  avoidance.  pursuant  to  doubt  framework  this  vehicle  personal  never  of  can  very  an  alternative  bypass attractive  the to  need those  for  probate  wishing  to  avoid  the  government concern the  substantial  probate  of B r i t i s h  Columbia.  However,  to dispose  of assets  i s t h e freedom  early  twentieth  increasing pursuant Act  attack  (parallels  title  the  in  a r e found  nor  the  under  to  the provisions  "vary"  fashion,  "provision"  the l e g i s l a t i o n  not  substantially  no  Earlier  entitled of  issue  changed  chosen  drawn  established  and  and  since  is  little  doubt  exercise  Rather,  first  Children  Act". *  will  that  typical to  make of  ( w h i c h has  Provision  were  for  has,  titles  concern  the  were  with the  The s a n c t i t y  of a  afterall,  been  and e a r l i e r . 5  name t h e l e g i s l a t i o n  the s a n c t i t y  in  i n 1920)  Such  1  the seventeenth century,  as a power  t h e T e s t a t o r " 3 and  than v a r i a t i o n .  executed  their  and c h i l d r e n  enacted  of  of  exercised,  the l e g i s l a t o r s ^  However, by w h a t e v e r  t h e C o u r t t o , as  o f the l e g i s l a t i o n  Maintenance  rather  or another i n  t o t h e power  and  of this  Of c o u r s e , n e i t h e r  the  will.2  under  commenced  The p r o v i s i o n s  f o r t h e spouse  since  t o emphasis  o f maintenance  properly  refer  Since  been  claims  "An A c t t o S e c u r e Adequate  Family  N  by  a will. in  fundamental  has  i n one form  i s given,  versions  the Wife  "Testator s doubt  a  out o f the estate  testator.  the  of  t h e power  the  Maintenance  courts  by t h e  upon d e a t h .  o f Canada) a u t h o r i z e  o f the Act suggests, vary  discretion  actually  Act.''  imposed  a more  freedom  Columbia  Variation  law p r o v i n c e  recently  this  British  o f which  legislation  legal  fees  century,  to the W i l l s  e v e r y common the  2 -  of the w i l l  goes,  there  i s a hollow  prin-  - 3ciple  in British  number  o f cases  wills  are  family.  Columbia decided  being  today.  One h a s o n l y  under t h e l e g i s l a t i o n  varied,  and  The e m p o w e r i n g s e c t i o n  not merely  t o r e v i e w any to realize  that  to "maintain"  the  r e a d s as f o l l o w s :  N o t w i t h s t a n d i n g any l a w o r s t a t u t e t o t h e c o n t r a r y , i f a t e s t a t o r d i e s l e a v i n g a w i l l which does n o t , i n t h e c o u r t ' s o p i n i o n , make a d e q u a t e p r o v i s i o n f o r t h e p r o p e r m a i n t e n a n c e and s u p p o r t o f t h e t e s t a t o r ' s w i f e , husband o r c h i l d r e n , t h e c o u r t may, i n i t s d i s c r e t i o n , i n an a c t i o n by o r on b e h a l f o f t h e w i f e , husband o r c h i l d r e n , o r d e r t h a t t h e p r o v i s i o n t h a t i t t h i n k s a d e q u a t e , j u s t and e q u i t a b l e i n t h e c i r c u m s t a n c e s be made o u t o f t h e e s t a t e o f t h e t e s t a t o r f o r the w i f e , husband o r c h i l d r e n . 6  The  wording  "adequate  provision  m a i n t e n a n c e and s u p p o r t " s u g g e s t s an o b j e c t i v e based  on some l e v e l  Supreme  Court  "proper  maintenance  o f need.  o f Canada and  support"  v. M c D e r m o t t was  not  Rather, the court  the  proper  test for relief,  However, a s e a r l y  i n Walker  necessities of existence".  for  as 1 9 3 1 , 7  stated  limited  to  the  that "bare  should  proceed from t h e p o i n t o f view o f t h e j u d i c i o u s f a ther of a family seeking t o discharge both h i s marital and h i s p a r e n t a l duty...(and if)...the court comes t o t h e d e c i s i o n t h a t a d e q u a t e p r o v i s i o n h a s n o t been made, t h e n t h e c o u r t must c o n s i d e r what p r o v i s i o n w o u l d be n o t o n l y a d e q u a t e , b u t j u s t and e q u i t a ble also... 8 T h i s theme o f " j u s t and e q u i t a b l e " in that  a number  o f cases  the test  is a  in British highly  p r o v i s i o n h a s been Columbia,9  subjective  with  one, based  developed  the r e s u l t on  moral  obligations judge  or  of  the  judges  anomolities, obligations  testator hearing  f o r no i n any  door t o a b u s e ,  two  4 as  perceived  the  judges  one  -  case. will  instance.  by  the  Such  have t h e  a  particular  test  invites  same view o f m o r a l  Moreover,  the  test  opens  the  as  ( E ) v e n unworthy c l a i m s which have a s m a l l c h a n c e o f s u c c e s s a r e g i v e n enhanced " n u i s a n c e " v a l u e w i t h t h e r e s u l t t h a t e x e c u t o r s may be under p r e s s u r e t o s e t t l e them. 1 0  Finally, appear  ironically  the  actual  results  inequitable,  as t h e  M o r r i s 11  demonstrates.  In  Court  Appeal  relief  of  children, was  a  aged  lawyer  General,  her  the  inter  lifestyle",  $250,000.00.  application vivos g i f t s  Lest at  the  extreme  to  the  Two  i t be end  the  per in  with  out  other  the  the  a  older  was  a  England  in  a  limited  was  granted  an  children  income to  the  e s t a t e worth  ap-  who  although  younger Attorney  more  of  adult  The  the  London,  $75,000.00  former  of  v.  Columbia  a p p l i c a n t s , two  annum;  can  had  they  not  had  joined  received  testator.  thought of  British  Ministry  received nothing, from  the  cases  of Morris  respectively.  living  of  r e c e n t case  the  forty  although  award  individual  case,  $39,000.00  $50,000.00 t o t h e  proximately in  and  designer  An  that  with  about  sibling.  and  nine  employed  interior  "comfortable  latter  thirty  earning  freelance  than  granted  in  that range  this of  case  "just  stands and  on  its  own  equitable", i t  must  be  said  results.12 decisions  that  other  Naturally, from  common c o n c e r n  decisions  there  the l e g a l  5 have  has been  some  community.13  i n the following  produced  similar  criticism  o f these  Gordon  Bale  voices  a  passage:  In B r i t i s h C o l u m b i a , testamentary freedom has been eroded t o a c o n s i d e r a b l y g r e a t e r e x t e n t than i n other p r o v i n c e s because i t s C o u r t s have t o o f r e e l y exerc i s e d a wide d i s c r e t i o n w h i c h , i t i s s u b m i t t e d , i s not t o be found w i t h i n t h e S t a t u t e . The B.C. C o u r t s have n o t s i m p l y l i m i t e d t e s t a m e n t a r y freedom i n o r d e r t o p r o v i d e m a i n t e n a n c e which i s c l e a r l y mandated by the s t a t u t e but a l s o t o p r o v i d e a f a i r distribution of the estate which i s n o t mandated by t h e statute. ^ 1  Notwithstanding Commission persons  of British  entitled  extended  to  grandchildren, half the  sisters,  the  Columbia  to  apply  parents,  brothers,  to intestacies.  to  apply  testator  or  deceased  However,  the  substantial" 1 , 7  that  persons  have  been  i f they  "degree as  at  In f a i r n e s s , some  have  the  been  time  the  half  financial  by t h e d e c e a s e d  maintenance  that  the r i g h t  i t must be s a i d persons  h i s or  need  Commission's  b r o t h e r s and  dependent  of  A c t be  grandparents,  o f these  o f dependency  who may r e q u i r e  provided  recommended  that  the c l a s s o f  spouses,  sisters,  Reform  Variation  who a r e r e c e i v i n g  i t has a l s o  entitled  law  Law  that  the W i l l s  common  recommends  the  has s u g g e s t e d  under  and e x - s p o u s e s  Commission  criticism,  include  d e c e a s e d . 15  apply extend  this  not  "concern provision  to that  o n l y be upon  her  from  the  death.16  necessarily i s to  be  ensure  which ought t o  are permitted  to apply to  -  the  courts".^8  interpretation applicants, little  of  it  the  the  is  Wills  recommended  by  the  Commission  limits  on  spouse  and  s u c h as  Law  points  out  Today,  the  as  example,  these  limits  Wills Variation  has  the  As  i s not  to  take  Act.  class  will  testamentary  there  so  liberal  be  of  very  will.  of  that  very  t h i s new  there  Commission  freedom  children—for  to  that  p r o p e r t y by  Reform  their  Act  apparent  limitation  testamentary  curtesy.^9  apply  Variation  readily  radical  -  courts  purpose i n d e v i s i n g  The  The  if  6  rights  the  without  always  benefit  the  freedom  of  form  merit.  been  the  as  some  surviving  dower  and  of  of l e g i s l a t i o n  Commission  points  out:  A deceased's moral o b l i g a t i o n s to p r o v i d e adequately f o r h i s f a m i l y d i f f e r from i n t e r v i v o s o b l i g a t i o n s he may have owed them. P r i n c i p l e s which d e t e r m i n e i n t e r v i v o s o b l i g a t i o n s a r e p r i m a r i l y founded upon c o n c e p t s o f m a i n t e n a n c e and s u p p o r t . In some c a s e s members o f t h e d e c e a s e d ' s f a m i l y have a m o r a l c l a i m t o s h a r e i n the a s s e t s of h i s estate which i s not necessarily l i m i t e d to support. The b a s i s o f t h i s c o n c l u s i o n is that a deceased's death significantly alters his obligations to h i s family and dependents, i n part because the deceased no longer requires his estate.20  With  the  a strong  argument  bear  expense  the  argument mentioned the  has by  testator  mounting can of  be  the  Law  cannot  that  caring  particular  costs  for  appeal  Reform  "take  the  of  our  family,  modern not  i t s needy  and  in  of  light  Commission  i t w i t h him".  welfare  state,  state,  should  the  dependent. the  mentioned  This  justification above,  Testamentary g i f t s  that are  winfalls equally  of a kind,  Variation  statutory, or  sanctity  argument  that  right  believe  affairs  from  dismayed  to learn that  the  free  their  of  assets  l i f e t i m e s with  the  beneficiaries of their  it  i s not the v i n d i c a t i v e  punish  a  testator from other  family  member  has l i t t l e  sharing  friends  It  i s these  (which  choice. or  which  to  control and  they degrees  their  t o prevent acquired  of e f f o r t ) to  i s described  here.  which  of  sometimes  have  testator  out that  wishing The  to "cut out" a family Nevertheless,  there  to  average member may be  r e s u l t i n more needy r e l a t i v e s  charities receiving  dispositions  the  The m a j o r i t y  aggrieved  which would  being  to alter  I t must be p o i n t e d  the t e s t a t o r ' s wealth.  o r even  will  power  surprised  varying  o r no d e s i r e  considerations  or  can c o n t i n u e are  o f the  Unfortunately,  tradition.  They  a  t h e government has i n t e r v e n e d  disposition  throughout  t o make  a t any t i m e .  the grave.  i n favour  the l e g i s l a t o r ' s  they  t o more  members.  can be made  i s a strong that  unreasonable  family  the r i g h t  be w i t h i n  o f the w i l l  public  which  Act i s that  i t should  restructure  the  n o t seem  s h a r e t h o s e w i n f a l l s amongst  Another Wills  and i t does  can be  the t e s t a t o r ' s thwarted  by  estate.  the W i l l s  Variation Act.  Whatever the  current  vehicle  reality  the p h i l o s o p h i c a l i s that  f o r testamentary  a will  underpinnings i s no l o n g e r  dispositions.  And y e t ,  o f the a  Act,  guaranteed  t h e freedom o f  testation it  has  People  a  no  be  more  longer  methods  a part  reputation  expect  is  often  has been  their  of  wills  o f our l e g a l being  and  t o be  develops  There  alternatives  to the w i l l of assets  the focus  of this  which  contains  other  alternates i s i n order.  a  ALTERNATIVES  The ment the  majority  than  power  a  will  the  offers.  a will,  which  to  a l s o the appointment  The  nature  and  an  To  timing  ironically, t h e laws a r e  law  a  i n the  number  of  satisfactory  t e s t a t o r ' s wishes.  the i n t e r  vivos  examination  trust o f the  as a t e s t a m e n t a r y  individual  there  what  i n the  i s the personal the choice  t h e needs o f  of  of  e x a c t l y what  control  within  other  disposition  inherent  beneficiaries  t r u s t e e s , and  i s also  instru-  options  to understand  of executors,  of g i f t s  satisfied  determine  i n c l u d e s not o n l y  but  alternate  WILL  i t i s necessary  First,  right. If this  with  law,  our  a brief  i t has t r a d i t i o n a l l y  a r e open  upon d e a t h ,  in  i s upon  to revoke,  testators.  property will  in  that  profession to  to circumvent  p o p u l a r i t y o f the w i l l  of  The  can r e s u l t  thesis  TO THE  i n d i c a t e s that  testator  i n accordance with.the  While  2.  the  exists  which  fundamental  as d r a f t e d .  dispositions.  already  f o r so l o n g  f o r the l e g a l  o n l y because attempts  successful.  a  enforced  provide  f o r testamentary  system  almost  p o s s i b l e , i t i s time  innovative,  disposition  8 -  guardians.  the t e s t a t o r ' s  - 9 power. say  Second,  secret.  time  by  Fourth,  testator  the  will  and  prevent  probate  in light  filing  proceedings  proven  under  the  will  referred  are  f o r the  to  Wills  and  change.21 of  the  vehicle, worldly  properly  drawn).  facilitates upon  open  the  Act.  an  death,  orderly and  can  Whether  this  to  dramatic  mention  to  deceased's  is  is  Variation  to  in  three  question,  increases in potential  However,  a r e o f t e n more  traditional  disposition the  joint  two  more  i s , of  pension  and  under  today  preceived benefits  intestacies, or  the  even  time  death  proceedings.  recent  not  from  comprehensive  assets  valid the  the  it  legal  might  as  for with  important  benefits.  There the  of  fees,23  human a c t i v i t y ,  than  is  a  t h a t the w i l l of  changed  until  that  one  circumstances  a l l of  course,  extended  characteristic  be  her  is  of  disposition and  or  will  matter,  can  effect  the  of  expensive  particularly  any  no  there i s a b e l i e f  inexpensive  private  his  disposition  (provided,  final  as  has  Fifth, the  is a  i t s contents  the  facilitating  Finally,  will  Third,  testator.22  goods  the  vehicles  o f p r o p e r t y upon d e a t h  textbooks  tenancies, course,  alternative  a  insurances  on and  the  subject.  trusts.  fourth schemes  A  option,  generally These  combination and  i s a more  to  are of  designations  recent,  fifth,  option.  Intestacies  result  in  the  distribution  of  the  -  deceased's  estate  legislature. in  Part  7  In  of  according  British  the  Estate  for  W i l l s V a r i a t i o n Act,  the  Law  standards these  Act.2^  philosophical considerations i s designed  Reform Commission  points  set  standards  Administration  based  As  to  Columbia,  scheme, the  on  -  10  by  the  are  set  The  overall  s i m i l a r to  to p r o t e c t  the  out  those  family.  out:  These p r o v i s i o n s a r e i n t e n d e d to d i s t r i b u t e the deceased's property i n the same manner as he would probably have d i r e c t e d had he considered making a will.25  Thus,  the  failure  distribution there thus who  i s no  wishes  estate  be  an  guide  i s also  the  money are in  her  estate  matter  of  expense  results  in  members. and  attractive alternate or  second  option  principle Provided  or  estate  entire  donees.  family  distribution,  his  survivorship.  and  that  still  to  from  i n an  an  the  However,  intestacy is  the  individual  beyond  the  grave.  i n t e s t a c y ; both  requirement  the  provisions  f o r the  settlement  of  time  for court  su-  the  Estate  o f one's  affairs  Act.  simple  structured  will  amongst  administering  The  her  a  expended b e c a u s e o f t h e  Administration  the  execute  c o n t r o l over  to  pervision  is  the  u n l i k e l y to  There and  of  to  such  that  This  of that  to  one  joint the or  a l l assets  method  tenancy testator two  are  with  its  wishes  to  people, held  leave  affairs  jointly  works p a r t i c u l a r l y  right  well  by for  can  the  of his be  donor  spouses.  -  11  -  However, when t h i r d p a r t i e s are c o n s i d e r e d , or where t h e r e i s a marriage  breakdown, c o m p l i c a t i o n s can a r i s e .  a will,  gift.  C r e d i t o r s of  the  proceedings  a g a i n s t the p r o p e r t y .  to  the  prevent  tenant,  with  the  deprive death,  in  a t r a n s f e r o f p r o p e r t y t o j o i n t , tenancy r e s u l t s i n an  immediate  joint  Unlike a g i f t  may  particularly loss  the to  s e v e r i n g of  the  Nor  her the  donor.  donor o f the p r o p e r t y b e f o r e  as i n t e n d e d .  take  Moreover, t h e r e  donee from e x e r c i s i n g h i s or  resulting the  donee  i s nothing rights  joint  Either death  execution  as  a  tenancy  action  may  instead of  at  i s i t easy to a l t e r one's wishes once  the j o i n t tenancy has been c r e a t e d .  Neither pension  or  insurance  testamentary to  joint  tenancies  schemes are  dispositions.  ownership  by  joint  nor  designations  a comprehensive  under  solution  to  Some a s s e t s do not l e n d themselves  tenancies,  and  only  the  pension  or  i n s u r a n c e fund i t s e l f can pass under a d e s i g n a t i o n .  The this thesis,  final  option  to be  discussed,  i s t h a t of the t r u s t .  Although  and  the  focus  of  the concept o f a  t r u s t i s s i m p l e enough, the l e g a l c o n f i g u r a t i o n s o f a t r u s t staggering. overview one  I t would t h e r e f o r e seem a p p r o p r i a t e to p r o v i d e  an  and c l a r i f y terms b e f o r e embarking upon a study o f the  particular  thesis.  are  type  of  trust  which  i s the  subject  of  this  - 12 Footnotes  t o Chapter 1  1.  R.S.B.C. 1979, c  435 and amendments t h e r e t o .  2.  F o r example, see s e c t i o n 2 o f t h e W i l l s V a r i a t i o n A c t , I b i d . , and t h e f o l l o w i n g c a s e s : A l l a r d i c e v. A l l a r d i c e , [ 1 9 1 1 ] A.C. 730 ( P . C ) , Re Jone"s ( 1962) , S.C.R. 2 7 3 , B r a u e r v. H i l t o n ( 1 9 7 0 ) , 15 B.C.L.R. 116 ( B . C . C . A . ) .  3.  S.B.C. 1920, c . 9 4 .  4.  S.B.C. 1948, c . 3 3 6 .  5.  The f i r s t W i l l s A c t was p a s s e d i n 1540, and was e n a c t e d t o m o l l i f y E n g l i s h l a n d o w n e r s who had l o s t t h e r i g h t t o p a s s l a n d t o descendants as a r e s u l t o f t h e S t a t u t e o f Uses, 1535: S i r W i l l i a m H o l d s w o r t h , A H i s t o r y o f E n g l i s h Law, ( L o n d o n : Meuthuen & Co. L t d . , 1 9 3 7 ) , V o l . I V a t 4 5 5 .  6.  Supra,  7.  [ 1 9 3 1 ] S.C.R. 94, [ 1 9 3 1 ] 1 D.L.R. 6 6 2 .  8.  [ 1 9 3 1 ] S.C.R. 94 a t 96.  9.  F o r a b r i e f r e v i e w o f t h e s e c a s e s , s e e The Law R e f o r m C o m m i s s i o n , R e p o r t on S t a t u t o r y S u c c e s s i o n R i g h t s , L.R.C. 70, December 1983, a t 53-55; s e e a l s o S o l j d a v . De N o n i , (1987), Vancouver R e g i s t r y No A870573, an u n r e p o r t e d d e c i s i o n o f Madame J u s t i c e S o u t h i n , and R i c c i , e t . a l . v . F u r l a n , e t . a l . , ( 1 9 8 7 ) , V a n c o u v e r R e g i s t r y No. A852049, an u n r e p o r t e d d e c i s i o n o f t h e H o n o u r a b l e Judge Wong.  10.  Ibid.,  11.  ( 1 9 8 3 ) , 41 B.C.L.R. 2 3 9 , (1983) 14 E.T.R. 3 5 .  12.  S e e , f o r e x a m p l e , Re O s l a n d (1977), 1 E.T.R. 128, Re M i c h a l s o n , [ 1 9 7 3 ] 1 W.W.R. 5 6 0 , Re P a r k s ( 1 9 6 8 ) , 64 W.W.R. 586, t o name a f e w .  13.  S e e , f o r e x a m p l e , Gordon B a l e , " A n n o t a t i o n " ( 1 9 7 7 ) , 1 E.T.R. 128; A r t h u r L. C l o s e , " r e s e r v a t o n " , s u p r a f o o t n o t e 9.  14.  Annotation  f o o t n o t e 1, s. 2 a s amended by S.B.C. 1985 c . 6 8 .  a t 153.  (1983),  14 E.T.R. 36 a t 4 2 .  - 13 15.  Supra, footnote  16.  I b i d . , at  83-84. '  17.  I b i d . , at  84.  18.  I b i d . , at  78.  19.  I b i d . , at  46.  20.  I b i d . , at 75.  21 .  W i l l s A c t , R.S.B.C. 1979, c. 434, s. 15; T h e o b a l d W i l l s , 1 3 t h e d . , ( L o n d o n : S t e v e n s & S o n s , 1 9 7 D , a t 5.  22.  I b i d . , W i l l s A c t , s. 20, 2 1 ( 2 ) .  23.  Schedule 1, #12, A p p e n d i x 1 to Supreme C o u r t R u l e s as amended.  24.  Supra, footnote  23.  25.  Supra, footnote  9 a t 5.  9, a t 88-89-  the  on  Columbi a  -  14  -  CHAPTER  2  TRUSTS GENERALLY  1.  THE  ORIGIN OF  The centuries. tween  at  benefit  least  time  of  good  health,  whereby  a  property, his  the  the  large  the  gifts to  property  existed  for  a relationship  be-  whom h o l d s example  Catholic  to  property  for  of  kind  the  and  Church  Church  in  this  the  the  meant  during  considerable as e a r l y  was  during  given  i t s use  until  at  implicitly,  life  death.'' in  trust  The for  one's  by  in  the  century  Church,  Church the  the  salvation.  seventh the  of  life-  of  sacrifice  to  as  donor was  of  a s the  the  particu-  one's  salvations  probability  developed  in  known  p a r t i c u l a r l y while the  retained least  w h i c h has  - Saxon E n g l a n d ,  assist  gift,  gift  of  Roman  greater  a practice  the  donor  of  i s one  earliest  i n Anglo  These  larger  one  The  recommended  d o n o r , and  the  i s found  trust  a t i t s most b a s i c ,  others.  alms.  The  However,  the  parties,  custom  were  soul.  two  the  the  giving  of  It describes,  of  in  TRUST  concept  relationship lar  THE  held  donor  but the  during  lifetime.  The relationship  Latin between  phrase donor  "ad and  opus" donee  was in  used  to  these  describe  the  bequests,  and  - 15 -  eventually  this  institution grew The  in  known  to  their  behalf.  hazardous  also  lord  was  was  no  avoided  and of  heir by  tenancy,  to  the at  and  from  use  "incidents feudal  relief  the  land  could  transferring the  use  could  heirs of  indevisable  under  was,  of  as  able  existing the  the  to  was  laws.  the  that  incidents  most common r e a s o n  active  the  Land-  death  under and  of  a The  if  the  take  the  age;  the  if  there  lord.  The  land-  others  in  joint  there of  would  the  Holmes  landholders  was who  no By  use,  the  otherwise suggested  f o r a use  use  be  tenure.  property  Professor  Later,  use  employing  and  lord;  several  devise  the  monies)  b e n e f i c i a r i e s of  to  politically  by  guardian  the  ensured  his choice  in fact,  by  himself,  for  on  other  return.  of  heir  by  to  these  also  as  escheated  trigger  development.3  unsuccessfully  act  others  i n s e v e r a l ways.  payment  sold  land  friends  tenure",  i f the  be  land  of  were  Crusades or  their  superior  to  by  obligations  (the  or  held  to  children, until feudal  on. 2  century  vows o f p o v e r t y ,  i n the  lands  legal  relationship  tenth  land  part  i n t o the  opus"  the  of  their  age,  a l l , the  was  earlier  of  heir  landholder  this  a  of  rents  which  including  that  to  "ad  were bound by  certain  feudal  h e i r was  holder,  death  infant  entitled  marriage  who  benefitted his  succeeding profits  England  conveyed  or  Under  landholder  The  Landholders taking  wives  use.  in  use".  income  journies  their  the  the  r e l a t i o n s h i p developed  "the  friars,  enjoy  holders  as  popularity  Fransciscan  able  of  customary  in i t s  employed wished  to  - 16 -  protect  their  lands  from  forfeiture  when  opposing  their  King.4  It ployment  of this  Certainly, gave  i s i m p o s s i b l e t o know j u s t  the  avoiding  the  "use"  use  was  the  many  the  for  a  use  was  variety  institution. nize  the  owner  was  legal  of  simply  from  affected  the  owner,  such  legal  abuses  of  a device  as  had  the  o f C h a n c e r y , t h a t t h e use  of  parties tion  a  for i t  from  i t .  fifteen  cen-  by  landholders  legally  sanctioned  courts refused to concerned, rights  I t was  sought  while  recog-  the and  legal duties  not u n t i l  protection  C h a n c e l l o r , who  those  from  later  the  became  began t o g a i n l e g i t i m a c y as  tool.5  In Court  King's  flowed as t h e  a l l the  use  tool,  em-  rule.  property  employed  i t was  ownership. the  that  not  authority  a legal  o f the  and  of  the  Norman  flexible  t h a t as l a t e  and  far  early  advantages  equitable Court  and  t h e common law  a l l ; as  widespread  under  liabilities  purposes,  sole  which flowed  the  remembered  still  at  the  by  all  In f a c t ,  use  i n England  a convenient  beneficiary  However, i t must be tury  was  how  period  Chancery  to the  o f the  larity. ^  a  approximately  enunciated  use,  use.  of  As  and  legal  effectively  a result,  Unincorporated  the  one  rights  hundred and  c r e a t e d the use  gained  organizations  years,  duties legal  of  as  the  institu-  widespread  such  the  popu-  parishes,  - 17-  lawyers'  inns,  fraternities,  charitable were  notwithstanding owners. family  use  the  popular  most  permitted  f o r wives,  common  children,  f o r the  the estate  terests  and  reversion  The  variety  use  were  became  practically  common.  These  a  certain  event,  beneficiary,  again  of  event,  a certain  The separated legal  and  sponding  sixteenth  of  created  as  century,  o f time  the equitable  as  uses  were  of  then  on  only  l i f e i n -  bestowed  by  the  pass  by  a  uses  one  or  happening  to  the  another  happening  i n perpetuity.  decisions  rights  that  interests.  land  or until  effectively  i n land and  By  widespread  from  the  powers  to the  imposed  corre-  the person  t o uses". so  friends,  and " s h i f t i n g "  que u s e " and  and o b l i g a t i o n s the "feofee  be  interest  certain  the "cestui  and  the  i n an  permitted  or until  would  Chancery's  I t granted  known  known  period  the use  o f time  the use  law  could  and so on t h e o r i t i c a l l y  Court  l i a b i l i t i e s  t i t l e ,  and  period  to provide  or remainder  "springing"  facilitated  f o r a  interest.  beneficiary,  gal  limitless;  legal  was  i n fee simple,  i n t e r e s t s which  beneficiaries f o r a  more of  of "future"  be  application  common  interests i n land: with  landholding  to  relatives  and  I t i s not surprising  limited  fee t a i l s  guilds  of  law  landholders  or death.  popular,  time,  the benefits at  of marriage  became  f o r a  i n a b i l i t y  which  fashion  t h e event  the  perhaps  settlement,  and  t o . enj o y  their  But  innovative in  able  groups  holding l e -  the turn that  the  of the Crown  -  introduced  legislation  to  18 -  stem  the  concern and o p p o s i t i o n to the use Crown's  revenue  forfeiture.8 royal  from Henry  coffers,  and  been  severly  unsuccessful 1535.9 the  legal  of  r e u n i t i n g the l e g a l  in  the  the  estate  interest  By "executing"  of  tenure  liabilities As a r e s u l t ,  for  for  his  was  largely  His s o l u t i o n ,  after  Act was  simple:  cestui  it  vested  que use,  thus  of the e s t a t e i n land with the e q -  satisfied  r e v i v e the  death of the c e s t u i dents  of  which the Court of Chancery had c r e a t e d .  The Statute  ure".  right  was the Statute of Uses i n  i n the  process was c a l l e d "executing the  purpose was to  uses  the  i n c i d e n t s of tenure which use.  1532,  and revenue  against  to r e v i v e the  i n 1529,  tenure  required  campaign  provision  interest  uitable interest  of  undermined by the  attempts  The key  incidents  his  Henry V I I I ' s main  7  stemmed from the l o s s of  desperately  prompted by an attempt had  tide.  the  needs of  the  Crown,  use,  the  statute  ensured  whose  of  ten-  that  the  que use would t r i g g e r the p r o f i t a b l e  for the  use".  revenue-producing " i n c i d e n t s  the  This  the  Crown.  Conversely,  it  triggered  landholder who had r e l i e d upon the  there was a r e d u c t i o n i n the  uses were employed for a time,  until  inci-  use.  frequency with which  lawyers  and the  Court  of  Chancery were able to f i n d methods of i n t e r p r e t a t i o n and a l t e r nate  means  produced.  to This  effect  the  was achieved  same  result  w i t h i n one  which  the  hundred years  use by  had the  o  -  creation use",  of  and  a  eventually  methodology  was  created,  and  Chancery  to  enforcement Court and  to  to  fact,  be of  arrange  "use  upon  Like  the  first  "use  soon  control  to  heirs,  1926.  If  by the  the  law  illegitimate  children  could  wife the of  to  some  freedom  degree, of  primogenture.  transfer  the  that  estate  the  However, estate  would  to  remain  law  there  be  the  door  left  i n the  longer  desired  to  rights  ( o r , i f no  abolished  until  testamentary  the  avoided  They  family,  very  death.  the h a r d s h i p o f  l a n d h o l d e r s wanted death.  In  w i t h b r o t h e r s , and  speaking,  disposition  upon  no  with n o t h i n g at h i s  alleviated  the  became  of promigenture  proper  to  trust.  restricted  make  The  trusts.  still  not  of  relationship,  of  were  were  Court  Uses.  were  The  a  i t . The  of  soon  sons, daughters  generally  testamentary  family  t h e law  upon  uses  the  trust  trusts  estate.  o f dower and  the  landholders  failed  younger  requirements  opened  modern  of coparceny)  wives,  legal  use"  Although  arrangements,  The  Statute  use,  family  landholder  by  became known as a  avoid,  the  "use  enforced  considered  the  a  s u g g e s t s , two  enforce  today  s u c c e s s i o n as p r o v i d e d by  male  a  mediaeval  tenure  Chancery  the  upon  a use"  drafted  phrase  by  actively is  of  was  landholders.  of  and  Lawyers  the  executed  what  -  Court As  the  again  with  incidents  the  this  develop  the  use.  simple.  only  once  popular  of  "double"  19  to  the  exercise  of  the o p e r a t i o n do  wanted  for land  more to  than  ensure  meant  po-  - 20 -  l i t i c a l , teenth each  economic century.  member  members  of  and  accurately,  end  without l i f e  of  A t t h e same  time,  they  the benefit  often and  strict  estates.  England  nation;  land  growth  of  of  not satisfy.  from  an  stocks  simple and  source  bonds  of and  as  was  t o each  utilized,  annuities  either  by  s o n became  event,  a of  i t  to the i t  was  generation..  of  their  centuries, the most  power  affluent and  changing  and concerns  The i n d u s t r i a l  agricultural  food  trust  more  structured  remainders  century,  i n new n e e d s  could  a  the eldest  needs  by t h e nineteenth  became  were  and e i g h t e e n t h  maintaining  factors resulted  changed  than  with  family  established  and provide  the  both  settlement".^  Some  subsequent  satisfied  concerned  settlements  rather  i n each  a  i n  the seventeenth  However,  social  When  nine-  (or perhaps,  firmly  limited  children.13  settlement  landholders  with  remainders  to re-settle  During  were  the  to provide f o r  to protect  so t h a t  i n succession.^  younger  wished  century.11  of a trust,  into  the "strict  settlement  to preserve  well  landholders  created  of the property,  was  necessary  estate,  lawyers)  strict  In order  the seventeenth  children  older  until  the family  his  and  power  their  tenant  widow  social  the family.  These the  and  nation  minerals  and  clothing. 1 *  profitable  2  to  family  economic which t h e  revolution a  trading  factory Moreover,  investment  sites the  eclipsed  - 21 -  the  importance  valuable could  of land  i n i t s own  be done w i t h  as an  right  i t i n an a d v a n t a g e o u s  old  strict  to  settlement  to either  improve  too,  the  greater  of  than  There nineteenth strict  sell  were  They  with  First,  had  possible  to  "variation" positive  not  the  these  a life  what  interest  raising  the  funds  Sometimes,  beneficiaries  produced  consent  a  private  the  Settled  Land  The most Act  to  of  the l i f e  powers  act  was  the  new  p e r i o d s , and t h e power t o trustee.16  of  Secondly, o f t h e new  f o r these  important  tenant  in  created,  powers,  Parliament  to  designed  of t h i s  90.18  to  to e x p l o i t  set-  permit took  reform  legislation i t  i f  i t was  Eventually, Parliament  -  the  o f a d m i n i s t r a t i o n " , and  of l e g i s l a t i o n  1882  in  developed  into  or t h e d r a f t e r  provided  in a series  law g e n e r a l l y .  of  of the  forthcoming  developed  settlement  "powers  of the settlement.17  powers  of  However, t h e  d e f e c t s which  range  called  adequately  land  necessary  manner.  methods  to lease f o r long  obtain  action  less  i t , or otherwise us-  Even  when a new  wide  were  no r e - s e t t l e m e n t was tlement  several  a  t h e power  lands  i n terms  e s t a t e c o u l d be d i f f i c u l t .  t o remedy  inserted  included  and p r o f i t a b l e  became  t h e e s t a t e c o u l d manage.15  century  instrument.  i t , leasing  a n n u i t i e s to other  settlements.  lawyers  valuable  or l e a s e l a n d s .  the e x i s t i n g  debts  more  Land  d i d not g e n e r a l l y permit  sell  burden  and  i t : selling  ing  holder  investment.  granted  was the  the l a n d , but  -  did  not  otherwise  settlement. settlement sale. the  interfere  However,  trust  with  t h e complex  became l e s s  This  22 -  popular  left  with  property,  trust  lawyers  i n the family  and  structure  interests t h e advent  the l i f e  the  by t h e  of the t r u s t f o r to s e l l  i t ,  in  tenant.  landholders  settlement  of  created  and t h e power  hands o f a t r u s t e e r a t h e r t h a n  While  the  were  and t h e t r u s t  utilizing  the  for sale,  the  Court  o f C h a n c e r y was a l s o a p p l y i n g t h e c o n c e p t  o f the t r u s t i n  other  c r e a t i v e ways.  sixteen  and  the late  nineteenth  expanded  the r i g h t s  device.^9  i  developed of  our  n  the trust  protection  constructive principal  of  trust  been  own  women w i t h  i n a similar  common  the  law  the help Canadian  direction, Although  2 0  been  century  t h e c o u r t g r e a t l y enhanced and  times,  trust.  the l a t e  extended  courts  have  i n the enforcement  applied  spouses,  of the trust  the to  initially  concept  become  to  of the  a  general  o f Canadian law.  history  and f l e x i b i l i t y  unsuccessful  fact,  such  trust  law.  suitable,  century,  has  This b r i e f satility  between  o f married  the c o n s t r u c t i v e  the  Thus,  of the t r u s t  of the i n s t i t u t i o n .  in i t s efforts  legislation The t r u s t  i n theory  demonstrates the ver-  has o f t e n would  at l e a s t ,  to confine  Legislation the t r u s t ,  had t h e e f f e c t  therefore  appear  as a r e p l a c e m e n t  has  and i n  o f expanding  t o be  eminently  f o r the w i l l .  - 23 -  2.  DEFINING TERMS  In examining t h i s q u e s t i o n , i t i s important to understand  the e s s e n t i a l  fiduciary force  character  or " t r u s t i n g "  o f the t r u s t .  relationship  I t creates a  which the c o u r t s w i l l en-  notwithstanding laws t o the c o n t r a r y .  Although the l e g a l  ownership o f the property may be i n the hands o f the t r u s t e e , the  courts  recognize  the s p e c i a l  t r u s t e e and the b e n e f i c i a r y , that  between the  and p r o t e c t the l a t t e r ' s r i g h t s i n  relationship.  Perhaps "no  relationship  because  the t r u s t  has such  a long  history,  d e f i n i t i o n o f a t r u s t appears t o have been accepted as both  comprehensive  and exact"21.  S i r Arthur  Underhill's  defini-  t i o n seems t o be the most p o p u l a r l y quoted:  A t r u s t i s an e q u i t a b l e o b l i g a t i o n b i n d i n g a person (who i s c a l l e d a t r u s t e e ) to deal with property over which he has c o n t r o l (which i s c a l l e d the t r u s t prope r t y ) , f o r the b e n e f i t o f persons (who are c a l l e d the b e n e f i c i a r i e s or c e s t u i s que t r u s t ) , o f whom he may h i m s e l f be one, and anyone o f whom may enforce the obligation.22  The  c l a s s i f i c a t i o n of trusts  i s another  matter  again.  There  are  express t r u s t s , r e s u l t i n g  trusts, constructive trusts, p r i -  -  vate  and  trusts, the  public  testamentary  purposes  detail  trusts,  the  of  great  diligence  the  inter  vivos  as  the  living",  viewed  taking  an  "inter  which  could  terms  of  not  a  effect  only  vivos  trust  that  term  a  the  trust  of i s  a  created  can  tate and  in  here  power  of  a  means  simply  donor's The  Americans trust"  to  done be  on  revocation. "between by  the  deed  describe  i t  the takes  the  distinguish  be  trust  within  for  or  can  express  trust,  often  in  been  created  testamentary  examine  lifetime,  only  trust  For  w i l l  expressly  the  charitable  as  inter  "to  also  take  in  be  to  affairs.  are found  the  the  living  somewhat  trusts  alternates  investments),  a  i s  trust  although  they  only  vivos"  Such  (as  The  "living  as  creator".24  field  focus  on.  inter  i t  from  trusts.  "inter  description  i s , a  to  The  the  i s  so  i t has  trusts.  labelled  death.  as  during  and  moreover,  created  vivos"  —  Insofar the  effect  descretionary  unnecessary  vivos"  trust  so  upon  testamentary  "inter  be  will  i s  trusts,  containing  any  and  as  i t  elsewhere.23  term  almost  verbally,  thesis,  trust  trusts,  business  classifications;  with  Insofar  -  sprinkling  trusts,  this  various  24  person  in  the  common the  corporate  in  estate  business  sphere  (the  trust,  denotes  lifetime  structure  a  However,  generally  effect  p o l i t i c a l  create  tautological.  vivos  in  can  that the  planning,  and or  of  the  commerce  .to  f a c i l i -  "blind"  trust),  -  There  a r e two  tate  p l a n n i n g today,  not,  of  vivos  distinguishable  a c l a u s e a l l o w i n g the  trust  w h i c h c o n t a i n s no i n Canada, f o r  unavailable  through  describing not  goal of  i t as  oriented  such  trusts  a  need  to  be  are  thus  i t must  certain  be  designed the  to  Canadian  society. to  judicious.  This  substitute will's  irrevocable will  inter  inter  vivos  been  trust  largely  in  vivos  the  Act.  is  insertion  makes  the  such  a  the  neglected  as  a  power  flexibility a  Implicit  in  income t o  inter  vivos  be  use  is  trust that  strata  must  its  a  poor  part  In  of  fact,  accompanied  a  the by  a  wishes.  to  found  testamentary  and  advantage  trust  recalled  generally  of  i t s use  t h e more w e a l t h y  deal with testamentary  offers  most  i t s changeability.  trust  In  detailed  irrevocable  be  f a r the  that  benefits,^5  tax  inter  advantages  of s u f f i c e n t  because  for i t w i l l  lies  to comprehensively  Although  these  the  Tax  o n l y by  irrevocability  for a w i l l ,  attraction  used  or  instruments.  take  and  Moreover,  attract  The  tax  understood  Income  i n es-  inclusion,  for i t i s a highly  "breaks",  generally  used  revoked.  testamentary  of  f o r tax  irrevocable  has  t h e mere  t a x c o n s i d e r a t i o n s i s t h e enjoyment  generate  of  provisions  by  i t attracts  widespread,  instrument,  particular  trust  vivos trusts  power o f r e v o c a t i o n i s by  other  "popular",  necessarily  -  types of i n t e r  most p o p u l a r  is  25  revoke in  tool  a in  in  an  will,  it  British  -  Columbia.  Indeed,  not  of a w i l l ,  It  emphasized,  be  fundamentally differences  different will  which  follow.  power  to  be  -  only  characteristics must  26  does  however,  legal  explored  will  be  have  many  but a l s o some a d d i t i o n a l that  entity in  For c o n v e n i e n c e ,  revoke  it  than  greater the  referred  a  to  trust  detail  in  is  as  a  a  and  these  the  pages  vivos trust  simply  the  attributes.  a will,  inter  of  with  a  revocable  trust.  3.  THE WILL AND THE REVOCABLE TRUST: A COMPARISON  The advantages o f the w i l l ment have a l r e a d y been mentioned. ble  a particular  legal  instrument  matters.  teristics  of w i l l s  to  dwell  characteristics,  tively.  and  understanding  operates,  and t r u s t s can one begin to  on as  every any  i m i t a t i o n o f the standard  of  offers,  are  Only by a comparison o f the l e g a l  the two are i n t e r c h a n g e a b l e . ate  However, d e s c r i b i n g  l e g a l p r i n c i p l e s and how the i n s t r u m e n t  different  instru-  The advantages o f a r e v o c a -  t r u s t w i l l be d i s c u s s e d i n due c o u r s e .  what the  as a t e s t a m e n t a r y  Nevertheless,  each i s e s s e n t i a l  I t i s unnecessary nuance  such  of  exercise  the would  assess  r e v i e w o f the  f o r the purposes o f t h i s  characwhether  and i n a p p r o p r i -  respective be  only  t e x t b o o k s on w i l l s and t r u s t s  a brief  very  germaine study.  legal a  poor  respecfeatures  -  Although gious  roots,  will to  as we  and  know  bequeath  1540, the valid  Act  property  legal  executed  limits  revival.  the  or and  of  any o t h e r  also  they  disposition necessary  an  that  right  continues  under  requirements  of  in written  of  in  a  form,  capacity.  The  revocation  and  the Act  also  not  do  of a w i l l  is  to  1 states  provide  only  an a p p o i n t m e n t in exercise  a  that by  of a  a  will power  disposition".28  executor,  a l l such  The  the  i n the i n t e r p r e t a t i o n of  a codicil,  in writing,  of property;  terms,26  o f form,  Section  "Testamentary of  will,  reli-  i n England  legal  specific,  o f a man's t e s t a m e n t a r y  are manifested  appointment  a  does  itself.  i n the nature  statute".29  the  with  t o be u s e d  a "testament,  the aggregate  right  matters  Jarman on W i l l s i s more "is  that  of the t e s t a t o r ,  Act  testamentary  granted  forth  altering  Wills  o f the w i l l  writing  sets  to these  strong  of statute.  first  Columbia  Act  had  in contractual  was  witnesses  mode  the  "includes"  by  will  certain rules  What  definition will  by  i n England  i s a creature  capacity  In a d d i t i o n  incorporates wills.  by  The  2 7  wills  structured  in British  Act.  will:  properly  were  i t today  and t o d a y  Wills  mediaeval  27 -  duly  s t a t i n g that intentions  executed  intentions" a  guardian,  a  so f a r as  according  to the  include: or  a  trustee;  and d i r e c t i o n s f o r b u r i a l . i n t e n t i o n s be m a n i f e s t  will  the the  I t i s not  i n a document i n  -  order  that  (assuming Wills  i t  that  Act)  revocable"31  That there  i s  trust,  found of  say  as  in  the  satisfied to  characteristic pursuant  take  i t s own  other  concept  that  i t  effect  nature  which  the  d i s t i l l a t i o n  courts' not  deals  duties  of and  of  hand,  i s  developed  i s  characteristics  to  only  the after  ambulatory  and  not  a  over  many  equitable  regulated with  by  by  today;  aspects  of  of  j u r i s d i c t i o n .  of  the  Nevertheless,  formalities  judgements  years  statute  various  trustees.  creature  the  rendered  the  trust  over  are  hundreds  years.  Like capacity, w i l l ,  as  the  property.  a  w i l l ,  must trust  the  trust,  the  the  insofar  as  that  property,  beneficiaries.32  reduced  to  writing,  contents  not,  must to  Also  These clearly,  the  than  a  a  trust  like  trust a  the  trust,  certainties in  legal a  identify  in  contain  create  have  and  of  stringent  intention  although  must  beneficiaries  more or  trust  i s appointed.  the  are  revocable i s , an  the  i f one  certainties"; and  of  designate  requirements  whether  creator  trustee  will  However,  concerned Any  "in  the  a  legislation  essential  are  e x e r c i s i n g the  to  such  thus  on  rather  not  essential  l i f e .  trust,  judges  i s  The  i n t e n t i o n s are  i s  during  but  w i l l .  the  will  The  -  a l l formalities  The  numerous  a  i s that  death.30  statute  be  28  need  are w i l l .  "three trust not  be  writing  i s  -  easier trust  t o prove property  valid  trust;  than must  29  an o r a l vest  i n other  -  declaration.  in a  trustee  In a d d i t i o n ,  i n order  the  to create  a  words,  t h e s e t t l o r must have done e v e r y t h i n g w h i c h a c c o r d i n g to the nature o f the p r o p e r t y comprised i n the s e t t l e m e n t was n e c e s s a r y t o be done i n o r d e r t o r e n der t h e s e t t l e m e n t b i n d i n g upon him.33  The greater  depth  trust  takes  with  a will,  postpone the  implications later.  effect  and  instrument, academic,  testator  and a  Of c o u r s e ,  be  the death  a  given  point  i s that the  o f the t r u s t ,  and n o t , as  or s e t t l o r .  by t h e i n t e n t i o n  component  testamentary  property  of  only  effects  the w i l l  from  chapter.  the v e s t i n g , ( o f  This may  of settlor  very  nature  distinction ensue  upon  —  the  But in a  o f the may  seem  that i s , the death  of the  vivos creation  i n a fundamental  of the  fashion,  i n t h e u s e o f t h e r e v o c a b l e t r u s t as  instrument.  That  t h e use o f r e v o c a b l e t r u s t s  apparent  the  However, t h e i n t e r i t from  "may  of the d i s p o s i n g party".34  t h a t t h e same r e s u l t receive  discussed in  t h e terms o f a t r u s t  as i t i s i n t h e w i l l .  has u n d e n i a b l e  next  will  the important  the c r e a t i o n  i s caused  distinguishes  prevented is  until  i s not  beneficiaries  trust  upon  rule  t h e p o s s e s s i o n o r e n j o y m e n t , o r even  postponement  trust,  F o r now,  upon d e a t h .  property)  such  of this  these  effects  as s u b s t i t u t e s  t h e American e x p e r i e n c e  have  not  for wills  t o be d i s c u s s e d i n t h e  - 30 -  Footnotes to Chapter 2  1.  Michael M. Sheehan, The W i l l in Mediaevel England, (Toronto: Pontifical Institute of Mediaeval Studies, 1963), at 16; see a l s o F r e d e r i c W i l l i a m M a i t l a n d , Doomsday Book & Beyond, (Cambridge U n i v e r s i t y P r e s s , 1897) at 300.  2.  See, for example, S i r F r e d e r i c k P o l l o c k & F r e d e r i c W i l l i a m Maitland, The History of English Law, (Cambridge University Press, 1923Tj V o l . II at 233-237; Dorothy Whitelock, Anglo Saxon W i l l s (Cambridge U n i v e r s i t y P r e s s , 1930); A . J . Robertson, Anglo Saxon C h a r t e r s , (Cambridge U n i v e r s i t y P r e s s , 1956).  3.  O l i v e r Wendell Holmes, J r . , " E a r l y E n g l i s h Equity" S e l e c t Essays i n Anglo American Legal H i s t o r y , V o l . (Boston: L i t t l e , Brown & Company^ 1907-09).  4.  A u s t i n Wakeman S c o t t , The Law of T r u s t s , Brown & Company, 1956), V o l . I at 17.  5.  S i r W i l l i a m Holdsworth, A H i s t o r y of E n g l i s h Law, Meuthuen & Co. L t d . , 1937), V o l . V at 218.  6.  Margaret E . Avery, "An E v a l u a t i o n of the E f f e c t i v e n e s s of the Court of Chancery Under the L a n c a s t r i a n Kings", (1970) L . R . Q . 86.  7.  Supra,  footnote 4,  V o l . IV at  13-  8.  Supra, footnote 5,  V o l . IV at  455.  9.  For a complete v e r s i o n of s t a t u t e , see Edmund L i n c o l n B a y l i e s , A C o l l e c t i o n of Important E n g l i s h S t a t u t e s , 3rd e d . , (London: Waterman & Amee, 1978) .  10.  Supra, footnote 5,  11.  Ibid .  12.  G.W. Keeton & L . A . Sheridan, The Law of T r u s t s , 10th (London: P r o f e s s i o n a l Book L i m i t e d , 1974)), at 42.  13.  J . H . Baker, An I n t r o d u c t i o n E d . , (London: B u t t e r w o r t h ' s ,  14.  Brian  W.  Harvey,  V o l . VII at  (Boston:  Little, (London:  376.  to E n g l i s h Legal 1979), at 159.  Settlements  in II  of  Land,  History,  (London:  ed., 2nd  Sweet &  -  Maxwell,  31  -  at 3-  1973),  15.  Ibid.,  at  27.  16.  Supra,  footnote  12,  at  41.  17.  Supra,  footnote  14,  at  28.  18.  Supra,  footnote  12,  at  41.  19.  Supra,  footnote 5,  20.  Pettkus v.  21.  Lewin on 1964), at  22.  H . C . U n d e r h i l l , The Law of W i l l s , (Chicago: T . H . Flood & Co. 1970), at 3. The c o n t r o l e x e r c i s e d by the t r u s t e e i s almost always such as to make him or her the l e g a l owner of the p r o p e r t y .  23.  See, for example Canada, 2nd ed., 1984) .  24.  I b i d . , at  25.  See  26.  Supra, footnote mediaeval w i l l .  27.  R.S.B.C.  28.  Ibid.  29.  Jarman's T r e a t i s e on W i l l s , 6th e d . , Canadian (Toronto: C a r s w e l l Company L i m i t e d , 1913), at 8.  30.  Supra,  footnote 22 at  8,  note  3.  31.  Supra,  footnote 29 at  8,  note  4.  32.  Supra,  footnote 23 at  33-  M i l r o y v.  34.  Supra,  V o l . V, at  Becker  (1980),  Trusts, 3.  16th  310-33.  117 D . L . R . ed.,  (3d)  (London:  257.  Sweet  & Maxwell,  Donovan M. Waters, Law of T r u s t s in (Toronto: Carswell Company L i m i t e d ,  431.  Chapter 5 h e r e i n ,  1979  Lord  c.  1,  S e c t i o n 2, for  a  Income  detailed  Taxes. analysis  of  the  434.  (1862),  footnote 29 at  107. 4 De.G.F.& J . 264, 8.  at  274.  Cases,  - 32 CHAPTER 3 THE  1.  INTRODUCTION  The living  both  trust  considerable States  for  estate  following  t o as t h e  popularity  forms  counterpart,  in  many  I t i s used i n  to assist American  i n estate f e d e r a l tax  f o r the revocable  no t a x c o n s e q u e n c e s ,  and i s g e n e r a l l y  neutral  Nevertheless,  i s considerable  litera-  f o c u s i n g on t h e r e v o c a b l e offering  referred  o f America.  and i r r e v o c a b l e  i t s Canadian  "has a l m o s t  and  sometimes  t h e use o f t h e i r r e v o c a b l e t r u s t ,  to taxes".1  ture  trust,  o f the United  Like  favours  vivos  enjoys  i t s revocable  planning. law  inter  trust,  jurisdictions  as  REVOCABLE TRUST IN AMERICA  practical planning  advice  purposes.  there trust,  exhorting  on d r a f t i n g  i t s application  suitable  I t has been  provisions  described  i n the  terms:  A revocable t r u s t i s a l e g a l l y recognized relations h i p where one p e r s o n ( t h e g r a n t o r ) t r a n s f e r s money, s e c u r i t i e s , o r o t h e r a s s e t s t o one o r more p e r s o n s ( t h e t r u s t e e o r t r u s t e e s ) t o be h e l d i n t r u s t under t h e terms o f a t r u s t a g r e e m e n t . The t r u s t agreement t y p i c a l l y p r o v i d e s t h a t : ( 1 ) t h e t r u s t income i s t o be paid to the grantor during lifetime; (2) t h e t r u s t e e o r t r u s t e e s a r e a u t h o r i z e d t o pay t r u s t p r i n c i p a l t o t h e t r u s t o r o r t o use i t f o r h i s b e n e f i t , i f necessary; (3) the grantor r e t a i n s t h e power t o change a l l o r any o f t h e t e r m s o f t h e t r u s t agreement d u r i n g l i f e t i m e ; (4) t h e g r a n t o r k e e p s t h e r i g h t t o end the t r u s t a t any t i m e , and t o r e c e i v e back whatever i s then i n the t r u s t ; and (5) at the grantor's death the t r u s t property i s e i t h e r paid out to, or kept i n further trust for, beneficiaries  -  33 -  p r e v i o u s l y s e l e c t e d by the g r a n t o r .  Although been  used  the revocable  since  at  least  trust  the  a s u b s t i t u t e f o r the w i l l is  partly  own  each  when i t s s p e c i f i c  jurisdiction  and customs have not developed  consistent revocable  trust  with  the  the r e s u l t  courts  approach  to  i t i s clear  general  judicial  while  rulings  century  others  findings  not  from  statutes, Moreover,  always  the e n f o r c e a b i l i t y  trust  a review  which  have  been  of the device.^  o f the a r t i c l e s and o r i g i n a t e d from  acceptance,  at  least  many  in  these  that  them cases  revocable  trusts  enforceable.5 will  be  principal,  T h i s was not always so;  of some s t a t e s i n the f i r s t  found  found  in  examined  half  were The in  Columbia  i s examined.  remain on a general overview  of the invalid,  particular subsequent  c h a p t e r s , when the problem of e n f o r c i n g the revocable British  over  s t a t e s that the revocable t r u s t as a w i l l s s u b s t i t u t e  found  twentieth  that  uniformly. have  p a r t i c u l a r l y i n the past twenty years. the  L i k e our  as a s u b s t i t u t e f o r a testamentary  on the revocable  different has  state,  in their  Nevertheless, texts  matters,  exclusive  caselaw,  each  This  has  and e s t a t e  within  or popular. states.  state  to  use as  o f the American  property  even  i t is difficult  became acceptable  due to the nature  provinces,  i n e s t a t e planning has  192CPs,3  determine with any degree o f accuracy  2  trust in  For the present, the focus  of the American law.  will  2.  34 -  A BRIEF HISTORY  The accepting  the  its  apparent  the  degree  trustee  problem  facing  revocable t r u s t testamentary  of  control  the  as a s u b s t i t u t e  nature.  which  American  the  The e a r l y settlor  judiciary  in  for the w i l l  was  cases  emphasized  maintained  over  and the t r u s t property and refused to uphold the  declaring  the  testamentary. American  Law  relationship  a mere  The 1935 Restatement Institute  agency  and the  the  trust,  disposition  of the Law of T r u s t s by the  summarized  the  state  of  the  law  as  f ollows: Where the s e t t l o r t r a n s f e r s property i n t r u s t and r e serves not only a b e n e f i c i a l l i f e e s t a t e and a power to revoke and modify the t r u s t but also such power to c o n t r o l the t r u s t e e as to d e t a i l s of the a d m i n i s t r a t i o n of the t r u s t that the t r u s t e e i s the agent of the s e t t l o r , the d i s p o s i t i o n so far as i t i s intended to take e f f e c t a f t e r h i s death i s testamentary and i s invalid unless the requirements of the statutes r e l a t i n g to w i l l s are complied with.6  Under t h i s  doctrine,  t r u s t at a l l .  the  revocable t r u s t was found not to be a  As one commentator noted i n  1946,  some c o u r t s simply w i l l not t o l e r a t e a s i t u a t i o n i n which the purported t r u s t e e i s no more than a feofee to uses i n the ancient s e n s e . 7  This first  half  of  intolerance the  seemed to have been the norm i n  twentieth  century  in  most  American  the  states,  although  it  exception the  Courts  the  trust,  were  deposited as  was by no means u n i v e r s a l .  was  Totten  35  so-called after  prepared  in a savings  trustee  for  "tentative  the to  A p a r t i c u l a r l y notable  case  trust",  which  enforce  a  first  trust  time at  was  the  notwithstanding  "tentative"  trust one  death is  of  that the  trust  of it  few  the  and revocable  was created  depositor".9  was f i r s t states,  that  enforced,  namely  the  during h i s  life.  death, .at  which  until  as to  the  The  irony  and i s  New York,  balance of  still  The problem with  results a  Such  1935  was  that  of the revocable t r u s t .  large  until  in  the  degree  death, a  focus  Professor  of  the  control trust  ignores  was the  Scott has pointed  and  law it  in which  there  basic  in  today  revocable  u  as  stated  focused  by the  entirely  Because the s e t t l o r property  found  Totten  enforced,  for the  will.^  on hand  the  trust  Institute  was  depositor  as to the e n f o r c e a b i l i t y of the  Law  it.8  money  remains some question as a s u b s t i t u t e  as  account by an i n d i v i d u a l i n h i s own name  another,  "an absolute  known  permitted  where  could withdraw a p o r t i o n or a l l of the deposit The t r u s t  also  not  to  elements  was be of  not  American upon  the  maintained disposed  a trust trust  of  at  all.  law.  As  out,  It f a i l s to take i n t o c o n s i d e r a t i o n the f o r m a l i t y or l a c k of f o r m a l i t y e v i d e n c i n g the d i s p o s i t i o n of the property.11  In the  trust  Judicial National  time,  itself, Court  the  of  Massachusetts  Shawmut  Bank  the  State  Massachusetts  following  did  shift  p a r t i c u l a r l y after  examined of  focus  36 -  case  law  v. on  to  the  1944,  formalities  when  the  handed down i t s  Joy.1 wills  The  2  and  and other  revocable  Supreme  judgement  court  in  thoroughly  trusts  jurisdictions,  of  in  the  and made  the  assessments:  The d i s t i n g u i s h i n g feature of a testamentary d i s p o s i t i o n i s that i t remains ambulatory u n t i l the death of the one who makes i t . U n t i l he d i e s , h i s t i t l e r e mains unimpaired and u n a f f e c t e d . A testamentary d i s p o s i t i o n becomes o p e r a t i v e only upon and by reason of the death of the owner who makes i t . It operates only upon what he leaves at h i s d e a t h . If the i n t e r e s t i n question passes from the owner p r e s e n t l y , while he remains a l i v e , the t r a n s f e r i s i n t e r v i v o s and not testamentary. The r e s e r v a t i o n by the s e t t l o r , i n a d d i t i o n to an i n t e r e s t f o r l i f e , of a power to revoke the t r u s t , did not make incomplete or testamentary the g i f t . . . ( T ) h e same i s t r u e , a f o r t i o r i , of a r e s e r v a t i o n of the l e s s e r powers to a l t e r or amend the t r u s t , or to withdraw p r i n c i p a l from i t e i t h e r with or without the consent of the t r u s t e e . A r e s e r v a t i o n by a s e t t l o r of the power to c o n t r o l investments does not impair the v a l i d i t y of a t r u s t . 13  Although the reasoning the  of  widely  proposition National legal the  decision the  community, in  Restatement,  it  case  had  Massachusetts  Shawmut  revision  1935  accepted in  did not e x p r e s s l y  Bank  v.  which prior  Joy was  to  Second  did  Restatement  the  "agency"  expressly  overrule  advanced 1944.^  greeted  and has been c r e d i t e d the  criticize  of  the  agency  Nevertheless,  with  as the  the  praise  by  the  main source  for  Law of  Trusts  dealing 1958,  with revocable  37 -  trusts.15  That  revision,  published  in  stated: Where a n i n t e r e s t in the t r u s t property i s created i n a b e n e f i c i a r y other than the s e t t l o r , the d i s p o s i t i o n i s not testamentary and i n v a l i d for f a i l u r e to comply with the requirements of the Statute of W i l l s merely because the settlor reserves a beneficial life i n t e r e s t or because he reserves i n a d d i t i o n a power to revoke the t r u s t i n whole or i n p a r t , and a power to modify the t r u s t , and a power to c o n t r o l the t r u s t e e as to the a d m i n i s t r a t i o n of the t r u s t . 16  Following  this  Second  Restatement,  revocable t r u s t as a n a l t e r n a t i v e to the w i l l in  the  1965,  courts  statutes  of  entitled  importance "The  Practicing by over its  sonable  to  gained  American  Revocable  Lawyer".18  Trust  -  movie  of  the  legitimacy  states.17  first to  four  According to  years  conclude  of  that  form  lawyers  and t r u s t  the  so  called  not  refer  to  to the  trustee  of  one  such  the  number of  fact  that  another  exposure  By  the  trust  i n the  trust".20 persons settlor  individual  the  subject,  Tool  for  it  was  students, It  and  is  resulted  viewed others,  not in  the  unrea-  the  more  trust.  revocable  party  source,  distribution.19  institutions  "two  on  An E s s e n t i a l  t h i r t y thousand people—lawyers,  The  rather  a  produce  widespread use of the revocable  as  many  use  the American Bar A s s o c i a t i o n found the revocable t r u s t of  sufficient  in  and  the  or  traditionally States The  at  "two  this  first  time  parties"  i n v o l v e d i n the (the  used  institution  (the  was does  trust,  party)  by  but  appoints second  party).  However,  Association  produced  Dacey.wrote a Probate".21 grin,  the  posed  to  be mat  Much  the  corrupt  to  the  trust.22 trust,  While  personal  revolutionary, in  the  public Dacey  The  settlor  was  not  ty,  and  least  gam  of  Although simplistic  against  the  creating  a  generally,  writer with  the  the  profession",24  is  by  called  a  of  the  means  "sensitive probate  simplicity. a third  control  been  substitute.25  no  traditional  the  for-  trustee.  has  the  a trust  i s the  forms  of  to  personal  described  of  considered  the  will  it  op-  sometimes  a s s e t s to  awareness  particularly,  a wills  and  strongly  of  advantage  transfer  trust  public  was  trust  been  out  cha-  himself  Dacey's book has tear  and  is  maintained  more as  one  had to  surprise  or  psychologically,  heightened  revocable trust  trust  required  legal  and  what  of  F.  Avoid  use  this  Norman to  party",  settlor  dissatisfied  The  assets.  "one  the  Bar  "How  s y s t e m , w h i c h he  declaration  i t touched  named  Dacey  advocated  the  American  entitled  seller.  where t h e  system.23  at  non-lawyer  wills,  probate  as  the  profession's  best  He  that  Essentially,  of  the  a  and  legal  a  known  year  movie,  expensive.  became  -  same  trusts  traditional  declaration  nerve"  its  became  and  "Dacey",  the  book on  book  which  in  38  as  par-  over "an  and  his  amal-  diatribes  credited  with  revocable  trust  application  of  the  - 39 3.  PERCEIVED BENEFITS AND  Today, trust way  i n the to  the  will,  trust  the  has  1926,  practical  a  living  was  an  say,  guide  vehicle  three  to  life  and  interest  and  enhancement  not  Moreover,  it  In  offers  or  the  ability  to  the  i f necessary,  the  to  trust  as he  opportunity  trust  the  early as  or  not  to  be  He  trust:  as  conserve  which a  of  supplement  "see  carry  and  is  suggested  to  a  i t during  the  his  will  study  and  a l s o to  out  trustee  intentions can  of  needless  i n a c t i o n , but  effectively  settlor's  as  administer  arise,  use  Stephenson  and  t e s t a t o r to  trust  the  affirmative.  particular,  settlor  the  whether  category,  the  for  a book i n t e n d e d  living  to  last  viewed  i f difficulties review  that  estate;  and  every  vehicle  Indeed,  the  the  one's  terms of the  trustee's  to  will.  the  o n l y the  terms.  and  the  for  this  n  agree  in  in  recommend  estate planning,  up  revocable  purposes".27  his  created; j  who  i s "undecided  purposes  once  those  published  issue  build  enables  the  settlor,  this  Stephenson  to  observe  opportunity  or  here,  o p e r a t i o n " . 29  evaluate  of  the  main  benefits.  who  field  death.28  key  man  the  a will  and  serve  to  estate  upon  trust  with  of  i t superior  as  Even  best  general  create  for that  in  will  i n the  care  living  f o r the  find  i t s use  combined  responded  describes  who  Thomas S t e p h e n s o n  trust  he  urge  many a d v a n t a g e s  expert  proponents  literature  and  be  Gilbert  a  legal  dispositions.26  revocable  as  are  American  testamentary  trust  there  DISADVANTAGES  amended  has  those the  with  the  to  more  accurately  reflect  Modern view of  one's the  can  mental he  estate,  as  or  or  however,  trust  she  a  can  physical  provide  the  expense,  for  the one  over  time,  appointment source  whom  will  be  simplier such  a  power  in  trust,  the  death  the  advancing avoids  the  trust the  of  as  British  the  as  an  effects  the  settlor  the  permits  also to  avoids  the  In  choice  the these  only  attorney  court  addition,  and  might  i t must  death  of  the  management American  probate  i s  powers.  assume  but  a  control  conservator.32  or  emphasize  of  of  intervenes,  application  alternative  an  administration of  Columbia,  The  the  conservator.  of  trust,  results  not  guardian  uninterrupted  a  to  benefits  ing managerial  retains  particularly  disruptive  or  with  such  estate,  an  trustee.  many  trustees  of  power  the  infirmity  the  settlor  settlor.  trust  the  provision  guardian  terminates  revocable  revocable  other  enduring  the  of  that  appointed  alternative  of  the  opportunity  While  retain  mental  a  the  an  by  publicity  of  notes,  While  that  and  this  disruptive  in  or  management"31  "uninterrupted  one  the  involved  This  replace  cite  infirmity.30  t r u s t e e or  responsiblities.  as  be  to  employing  against  can a  only  By  physical  either  i s  trust.  insure  or  commentators  operation  revocable  capable,  If,  in  -  intentions,  American  will  individual future  those  40  the  a  remembered  donor.  With  continues  after  proponents this  to  be  appear  of  benefit w i l l ,  proceedings.  the when  for  i t  As  one  - 41 writer  s t a t e s , the  revocable  trust  i s :  a trust that i s f a r b e t t e r than a will a s a way to transfer property to others in that i t avoids the publicity, delay and expense of probate court proceedings t h a t m i g h t be u n d e r t a k e n when p r o p e r t y i s transferred through a will.33  The  three  delay,  disadvantages  and  American with  expense,  the  anyone  By  is  i f not  The apparently each  step  required assets, time  for  to  as  in  the  many  to  four  the  revocable kept  system  the an  be  at  years  practitioner,  only  to  from  in  estate  such  the  For  for  least  and  to  i s  one  delays stress  likelihood  a  found  in  trust,  such  entire  the  public  half 36  out  information  eye.  i s  also  supervision  court  approval  sales  of  one  to  by  challenges  two  years, to  correlation the to  The  Californian  According  direct  i s  estate  accounts.35  by  in  probate  states  and  experienced of  f i r s t ,  set  executor's  have  the  as  example,  unreasonable".  will  estate  American  one  the  the  estimated and  most  to  purchases of  by  access  the  most  of  requiring considerable  passing  "not  anxiety also  deceased's  statements  states  as  respect  gain  publicity,  cited  replacement  With  proceeding.  settling  but  the  namely  problems  the  demand  complicated,  well  the  of  totally,  same  family,  upon  probate  in  practitioner three  can  employing  very  classic  advocate  disclosure  documents. largely,  the  mentioned,  trust.3^  information  required  probate  who  revocable  financial  of  are  commentators  publicity,  the  of  with this not  testator's  the  will  i t -  -  self.37  The  avoidance  of  using the revocable t r u s t  The said and  delay  to i n h i b i t  inherent  generally  Although speaking  the executor riment  conflict  i n probate  the d i s t r i b u t i o n  i s obtained,  state".38  such  and  challenges  by  i s c l e a r l y an advantage.  to the b e n e f i c i a r i e s  probate  42 -  proceedings  o f a s s e t s , both  to c r e d i t o r s  of the e s t a t e , f o r u n t i l  probate  assets  the p r a c t i c e there  are  in  v a r i e s from  i s personal l i a b i l i t y  i s also  a grant of  a  "suspended  state to state, on the part o f  i f he or she d i s t r i b u t e s e s t a t e a s s e t s to the det-  o f c r e d i t o r s or tax a u t h o r i t i e s . 3 9  On the other  hand,  the t r u s t e e o f a revocable t r u s t , while r e s p o n s i b l e f o r c e r t a i n death taxes,  T  does not apparently i n c u r personal l i a b i l i t y when, a f t e r the death of the s e t t l o r and i n accordance with the terms o f the t r u s t , he makes d i s t r i b u t i o n s before the c r e d i t o r has taken a p p r o p r i a t e steps to reach the trust assets.^ u  The in  g e n e r a l l y accepted a revocable  living  conclusion i s therefore that trust  b e n e f i c i a r i e s than probate  It  should  be  may be more r e a d i l y  "property  a v a i l a b l e to  assets".^1  noted  that  the use of the revocable  t r u s t to avoid o f the expense o f probate cepted by the American commentators.  i s not u n i v e r s a l l y ac-  Those advancing  the argu-  ment p o i n t to the cost of executors' commissions and a t t o r n e y s ' fees i n p r o b a t i n g an e s t a t e .  One author, u s i n g E s t a t e Tax S t a -  - 43 tistics  from  the I n t e r n a l  commissions  and  the  value  gross  percentage the  Revenue S e r v i c e concludes  fees amount to approximately of  an  estate. * 1  i n a range from  statistics  somewhat dated  relied  3.9 to  upon  to  Another  2  1 2 . 8 per  determine  argument p o i n t out  inheritance whether  a  that f e d e r a l  or e s t a t e taxes must s t i l l will  addition,  cent  estimates  cent. ^  the  Although  1  these  of  figures  were  i n f a c t , i t i s more l i k e l y that  the f i g u r e s have r i s e n i n recent y e a r s . the  per  these  i n both i n s t a n c e s , there i s no reason to b e l i e v e  that they are not a c c u r a t e , and  of  seven  that  or  a  revocable  However, the opponents e s t a t e taxes be  trust  i t i s open to debate whether  and  determined is  the  state  and  paid  employed.^  In  percentages  quoted  above represent a s u b s t a n t i a l cost to the e s t a t e ; i t would  de-  pend l a r g e l y upon the s i z e and complexity of the e s t a t e .  Those using  the  commentators  revocable  trust  who  as  a  question  the  substitute  for  cost  factor  the  will  of also  point out that there are no s t a t i s t i c s a v a i l a b l e as to the cost of s e t t i n g up and a d m i n i s t e r i n g a revocable t r u s t . would time  vary  quite  i n which  trustees  substantially  the  fees would  trust be  will  depending operate.  much higher  the use of a "one  a realistic  the  Obviously,  in a trust  f o r twenty years versus one which operated While  upon  These c o s t s length the  which  f o r only one  total  operated or  two.  p a r t y t r u s t " would e l i m i n a t e such f e e s ,  comparison of the c o s t s of the revocable t r u s t  a probate proceeding  of  is clearly  difficult.  and  In  light  of  the  the comparative c o s t s , to  the  efficacy  of  44 -  difficulty  in  accurately  assessing  some doubt can be and has been r a i s e d  using  a revocable  trust,  pose i s to avoid the expense of p r o b a t e . most American commentators,  if  its  only  as  pur-  However, according to  the b e n e f i t s of the revocable  trust  are much more e x t e n s i v e than merely a v o i d i n g p r o b a t e .  Some of  these  is  that  have the  ment  already  less  stringent  protect  it  automatically For  the  ties to  of  be  mentioned. legal  from  revoked  the  by  a  fate  a trust.46  Moreover,  been  on the  surveillance  l e s s onerous it  gests that  his  he found i t  and  easier  ( W ) i l l s denoted ized l i f e . 4 8  in  clause  of  dealing  some connection  instruis  divorce.45 formali-  than  a  will  or undue  to prove when "a t r u s t under  the  One w r i t e r clients  donor's  even  sug-  to execute a  for  death.  venue.  or  incompetence  to convince  jurisdictional with  said  which  likely  operation  A trust  Advocates a l s o note that choice  trust  prove the  less  lifetime".47  revocable t r u s t than a w i l l ,  the  is  to  it  will,  marriage  grounds of mental  funded  during  of the the  as such grounds are d i f f i c u l t created,  addition,  of  subsequent  it  attacked  is  In  formalities  same reason,  influence, has  been  4 9  inter  the t r u s t  matters, While  with the t r u s t p a r t i e s  by  vivos  symbol-  instrument  permits  the  such  inclusion  choice  must  or p r o p e r t y , i t  is  of  a  bear noted  - 45 that the er  the w i l l  does  not offer  use of a t r u s t jurisdictions  d i c t i o n . ^  of  also  mortmain  commentators  a  choice  ancillary  i f assets  I t  u  application America  avoids  such  at  probate  are located  i n more  the  statutes  i n certain  also  Similarly,  proceedings  permits  have  a l l .  than  one  circumvention  pointed  i n othjurisof  the  states.  Some  to the possible  control  52 of  marital  property  The revocable needs.  American  trust Like  use  the  by  the writers.  of  as  any  to  ployed,  of  a  the use  sources perfect  legal  there  Whether  i s some  a  loss  there  of  solution there  two  the  not, of  trust,  course,  costs  present  disadvantages  and  these  party  trust.  f o r a l le s t a t e  or  one  and  are  party  the  planning attached  acknowledged trust  discretion  Notwithstanding  are  revocable  are  of control  property.  proceedings,  do  tool,  the revocable  the settlor's  bate  through  i s  em-  i n the use  any  savings  i n  pro-  i n  setting  up  the  incurred  53 trust  —  (These There  would, i s  accurate easily the  lawyer's  also  revocable  5  This  can  procedure  trust  and  amendments  litigious  trust  complicated Dacey  5  time  not  would  to  can  fees,  apply  to  expense  f o r the t r u s t .  amended,  record".  transfer  course,  the  books  potentially  a  of  fees,  5  4  I  a  be  n  of  revoked than  trust  trustee  Dacey  this  do  are changed.  w i l l .  problem  a  and  will  not  i s  "erase  embarassing  i n i t se n t i r e t y , a  trust.)  separate  while  agreement  fees.  form  keeping  particularly  revoking  alleviate  a  addition,  i f beneficiaries be  and  this  Again, somewhat.  and  Although i s a  a  more  the use  of  However,  - 46 the  use o f such  with  respect  breaches  very  to  of  succeeding  a  trust  i t s own  the succeeding  the  fiduciary  trustee  least,  has  will  may be  trustees.  duties  be  liable  under  a  d i f f i c u l t i e s ,  by  I f there  the  f o r such  duty  to  particularly have  been  settlor/trustee,  the  breaches,  review  and  the  at the  acts  of  the  predecessor.^  Another unsuitability d i f f i c u l t fully  f o r  to  hold  effective  transfers  the by  trust a  w i l l  existing  the  by  revocable of  7  S  o  to use  m  the of  and  intent,  or  "pour  A  guardians  will  where  over  not  design"  i s also there  to  t o be  provisions to transfer  trust.  i f the  5  i s a settlor  h i s  own  w i l l "  i s  used  i n  con-  transferred to  9  c  such  a  n  b  caught  e  assets  necessary  are  i t s  more  trust  prior  Assets  i s  are  "a  only  trust a  cited  assets  sources,  trust.  trust  e  others,  substitute  the American  to neglect,  containing  5  than  property  the revocable  "due  appointment  a s s e t s .  testamentary  advised with  to the revocable  " i n trust"  However,  5  junction  some  a l l h i s  death". ^ generally  drawback  minor  to the f o r the children  involved.  The  American  sources  also  note  that  there  are, inevi-  60 tably,  some  example, trusts, taxed  a  tax problems tax  i n using  identification  notwithstanding  i n t h e hands  that  the revocable number  t h e income  of the settlor.  i s of a  trust.  For  required  f o ra l l  revocable  trust  In addition,  i f assets  i s are  held  i n more  than  47 -  one j u r i s d i c t i o n ,  double  t a x i n g may  result.  There are a l s o the l o c a l taxes f o r t r a n s f e r r i n g property to the trust.  But perhaps one of the g r e a t e s t o v e r a l l in  using  that  a revocable  there  trust  i s no "long  as opposed  standing  disadvantages  to a w i l l  body of l a w "  6 1  i s the f a c t t  o  r e l  i n c o n s i d e r i n g the use of the revocable t r u s t f o r t h i s Drafting  must  satisfied. revocable the w i l l be  be  carefully  Notwithstanding trust  i s accepted  i n many American  reviewed,  remains  u  P  o n  purpose.  formalities  such concerns,  i t i s c l e a r that the  and employed  as an a l t e r n a t i v e t o  j u r i s d i c t i o n s today.  t r a n s p l a n t e d to the l o c a l e of B r i t i s h  the circumventing  and  y  Whether i t can  Columbia to a s s i s t i n  of the a p p l i c a t i o n of the W i l l s V a r i a t i o n Act  to be seen.  However,  i t i s interesting  comments of one American expert i n t h i s  to note  the  topic:  Various r e s t r i c t i o n s may be imposed by s t a t e law on 0 ' s freedom to decide who w i l l be the b e n e f i c i a r i e s of h i s bounty when he d i e s and i n what manner the b e n e f i t s w i l l be c o n f e r r e d on h i s b e n e f i c i a r i e s . To the extent that these r e s t r i c t i o n s are a p p l i c a b l e onl y to probate a s s e t s , they can be avoided by a v o i d i n g probate. To the extent t h a t they are not l i m i t e d t o probate, they may be avoided by p l a c i n g the property under the more favourable law of another s t a t e .  -  48  -  Footnotes To Chapter 3  1.  Report of the Committee on E s t a t e and Tax P l a n n i n g , "The Revocable L i v i n g Trust As An E s t a t e Planning T o o l " , 7 Real Property, Probate & Trust J o u r n a l 223.  2.  Edward S. S c h l e s i n g e r , "Seven Case H i s t o r i e s of Revocable T r u s t s " , (1971) 5 U. of M. I n s t . E s t . P l a n . 71-16, at ph. 71-1600.1  3-  See, for example, Gilbert Thomas Stephensen, Living Trusts, (New York: F . S . C r o f t s & C o . , 1928); Paul B. Sargent, "Facts and F a l l a c i e s of L i v i n g T r u s t s " , (1971), 2 U. of M. I n s t . E s t . P l a n . 71-2, at ph. 71.201  4.  Edward C. K i n g , (December 1946),  5.  Ibid.  6.  American Law I n s t i t u t e , (1935), at ph. 57.  7.  Supra,  8.  Matter of T o t t e n ,  9.  A u s t i n Wakeman S c o t t , The Law of T r u s t s , Brown & C o . , 1956), V o l . I , at ph 58.2.  10.  See the  11.  Supra,  12.  315 Mass 457,  13-  Ibid.,  14.  McEvoy v. N . E . 465.  15.  James C. Roth, "Estate Planning i n F l o r i d a : The Revocable I n t e r Vivos T r u s t " , ( 1963) 16 U. of F l o r i d a L . R . 34, at 48.  16.  American Law (1958), at ph.  17.  Supra,  18.  "The Revocable T r u s t , An E s s e n t i a l  "A Reappraisal of the 19 R . M . L . R . 1 at 2.  footnote 4,  at  at  at  of  the  Law:  Trust",  Trusts,  18.  179 N.Y. 112,  d i s c u s s i o n of footnote 9,  Restatement  Revocable  Newman v.  71 N . E . 748  Pore at  (1904).  (Boston: 154-157  Little,  herein.  485.  53 N . E . 2d  113.  122. Boston F i v e  Cents Savings Bank,  Institute, 57.  footnote 2,  at ph.  Restatement  of  201  Mass 50,  Law:  87  Trusts,  71.1600.3Tool for the  Practicing  -  49  -  Lawyer", a f i l m produced by the American Bar A s s o c i a t i o n , as d i s c u s s e d i n Stanley M. Johanson, "Revocable T r u s t s , Widows" E l e c t i o n , W i l l s and Community P r o p e r t y : The Tax Problems", (1969) 47 Texas L . R . 537 and 1247. 19.  Ibid.,  at  20.  A u s t i n Fleming, "One Party T r u s t e e s " , ( 1968) 2 U. of M. I n s t . E s t . P l a n . , at 68-300; see a l s o Johanson, supra, footnote 18 at 541 and S c o t t , supra, footnote 9 at ph. 57.1. ~  21.  Supra, footnote  22.  Herbert E . Marks, "The Revocable D e c l a r a t i o n (1966) 105 T r u s t s & E s t a t e s 1141, at 1141.  23.  M i l t o n R. Meyer, "Revocable Trust as a W i l l Coming of Age", (1967) 39 Colorada L . R . 180,  24.  Supra, footnote  25.  Ibid.  26.  See, for example: William E . Carr, Revocable T r u s t s , (Englewood C l i f f s , N . J . : P r e n t i c e - H a l l I n c . , 1980); George M. Turner, Revocable Trusts, (Colorado Springs: Shepard"s/McGraw-Hill I n c . , 1980).  27.  Stephensen,  28.  I b i d . , at  27.  29.  Ibid.,  47.  30.  W. Schwartz, Future I n t e r e s t s and E s t a t e P l a n n i n g , (1965), at ph 4 . 8 . ; M i l t o n E . Meyer, "Non Taxable Advantages of the Revocable Trust (With Emphasis on Use As A W i l l S u b s t i t u t e ) " , (1960) 37 D i c t a 333, at 334; Turner, supra, footnote 26, at 43.  31.  Carr,  32.  Supra,  33.  Carr,  34.  I b i d . , at chapter 2,  35.  Supra, footnote  36.  T u r n e r , supra,  at  537.  18,  18,  supra,  supra,  at  538.  1,  footnote 3,  at  at  Substitute—A at 191.  at  48.  at  5.  viii.  38-50; see also T u r n e r , supra, and Schwartz, supra, footnote 30, at  Trust",  224.  footnote 26.,  1,  of  538.  footnote 26,  footnote supra,  at  226.  footnote 26,  at  16-17.  footnote 26, at ph. 4.8.  -  50 -  37.  Ibid.,  a t 5.  38.  Supra,  footnote  39.  Ibid.,  a t 120.  40.  Ibid.,  a t 121.  41.  Supra,  footnote  42.  Carr,  43.  Turner,  supra,  44.  Supra,  footnote  1,  a t 225.  45.  Supra,  footnote  3,  a t ph. 71.203.  46.  Edward 1941),  C. K i n g , " T r u s t s As S u b s t i t u t e s 14 Rocky Mtn. L.R. 1, a t 4.  47.  Supra,  footnote  1,  a t 227.  48.  Supra,  footnote  3,  a t p h . 71.201.  49.  James A. C a s n e r , " E s t a t e P l a n n i n g — A v o i d a n c e (1960), 60 C o l u m b i a L.R. 108, a t 125.  50.  Ibid.,  51.  R i c h a r d W. B a r t k e , "Community P r o p e r t y Law Reform i n t h e U n i t e d S t a t e s and i n Canada--A C o m p a r i s o n and C r i t i q u e " (1976), 50 T u l a n e L.R. 213, a t 139-  supra,  18,  1,  a t 110.  a t 226.  footnote  26,  footnote  a t 48.  26,  a t 14.  f o r W i l l s " (Dec.  o f Probate"  a t 134.  52. ' I b i d . ; s e e a l s o  supra,  53-  Supra,  1,  54.  I b i d . , a t 228; see a l s o John Cohen and G e r a l d i n e S. Hemmerling, Inter Vivos Trusts: Planning, D r a f t i n g and Taxation, (McGraw H i l l Book Company/Shepards, 1975) , at"  footnote  footnote  26,  a t 36.  a t 227.  35.  Supra,  56.  John H. M a r t i n and John W. N i c h o l s o n , "The New Phenomenon: S e t t l o r a s T r u s t e e o f a Funded L i v i n g T r u s t " (1971), 110 T r u s t s & E s t a t e s 164, 354, and 458, a t 459.  57.  Supra,  footnote  1,  58.  Supra,  footnote  56,  footnote  3,  a t ph. 71.203.  55.  a t 232. a t 354.  - 51 59.  Supra,  footnote  226,  at  60.  Supra,  footnote  3, at ph. 71.203.  61.  Supra,  footnote  49,  62.  James A. Casnor, E s t a t e P l a n n i n g , . (Boston: L i t t l e , and Company, 1980), 4th e d . , V o l . I , at 331-  at  63.  124. Brown  -  52  -  CHAPTER 4 TRANSPLANTING THE REVOCABLE TRUST TO B. C.  1.  INTRODUCTION  While alternate  the revocable  to a w i l l  s a i d i n Canada. estate  benefit  plans,  in  I t i s c e r t a i n l y recognized  as a u s e f u l t o o l i n  but i t i s most often  blind  trusts  laws  employed  in  for politicians,  are p a r t i a l l y  i n the Income Tax A c t  the hands  estate of  the same cannot be  retirement  and  employee  to blame f o r the underuse o f  r e v o c a b l e t r u s t as a testamentary v e h i c l e .  rules  as an  plans.  Tax the  i n the United  be e s t a b l i s h e d  States,  planning,1  savings  t r u s t may  have the e f f e c t o f t a x i n g  2  o f the s e t t l o r ,  planning.  popularity  The a t t r i b u t i o n  an o f t e n  undesirable  However, i t i s undoubtedly true  income  result in  that  the l a c k  o f the revocable t r u s t as an a l t e r n a t i v e to the  will  i s a l s o due to i n s u f f i c i e n t  the  revocable  trust  a n a l y s i s o f , and exposure t o ,  generally.  In  fact,  a  superficial  examination o f the l i m i t e d caselaw and commentary a v a i l a b l e i n Canada  might  irrevocable is  obviously  revocable  lead  trust wrong  one  to  the  conclusion  i s enforceable.3 (witness  the w e l l  While  that  such  established  a  only  an  conclusion  uses  o f the  t r u s t mentioned above), the s t a t e of Canadian  law i s  by  no means c l e a r  why  this  revocable  is  when i t a d d r e s s e s  so,  trust  53 -  and  is  to  a  erase  legally  such t r u s t s .  any  2.  THE  COMPLETELY CONSTITUTED  It three  will  certainties"  property,  and  be  legally  in  the trustee". * o r by an  done  is  effective what  I f there  i s no  property,  the t r u s t  will  This was  settled  Justices  trust of  Milroy  certain  a  bank  o f what  case,  to  The s h a r e s ,  the  be  vested  only  to a  when i t  constituted of  the  trust  by t h e c o u r t s .  constitutes  decision  wherein  of  The D e f e n d a n t  actually  a  trust  the  Lord  had, d u r i n g h i s he  Defendant,  never  trust  transfer  transfer  purported  to also  s h a r e s and r e c e i v e  however, were  f o r the must  a  the deceased  document  f o r the deceased's n i e c e . these  a  by  "the trust  "completely  completely  Lord,5  shares  to transfer  a  n o t be e n f o r c e d  trust  law.  trust,  of trust,  satisfactory  v.  a  i t is  contain  a  property  i s done  called  must  i n order  declaration  In t h a t  executed  attorney  them.  in  i n 1862.  lifetime, assign  question  of trust  create  However,  this  is  trust".  trust  to  the " t r u s t  Whether  there  a  intention  enforceable,  instrument,  principles  that  objects.  1  trustee  the  that  TRUST  recalled  -  trust  to  is  be  misapprehension  enforceable  n e c e s s a r y t o r e - e x a m i n e some b a s i c  To u n d e r s t a n d  be  held  held  to in  powers  dividends transferred  from to  the  Defendant  ever  him".^ set  Justice  created" The  -  as t r u s t e e .  Lord was  54  Turner  because  principle  that  "no  perfect  the shares  "never  completely  constituting  of  out i n the following  concluded  legally  trust  vested  i n  trust  i s  a  passage:  I take the law of this Court t o be w e l l settled, that, i n order t o render a voluntary settlement valid and effectual, t h e s e t t l e r must have done everything which, according to the nature of the property comp r i s e d i n t h e s e t t l e m e n t , was n e c e s s a r y t o be done i n order t o t r a n s f e r t h e p r o p e r t y and render t h e s e t t l e ment b i n d i n g upon h i m . He m a y o f c o u r s e do t h i s by actually transferring the property t o the persons f o r whom h e i n t e n d s to provide, and t h e p r o v i s i o n w i l l then be e f f e c t u a l , and i t w i l l be e q u a l l y effectual if he t r a n s f e r s t h e p r o p e r t y to a trustee f o r the p u r p o s e s o f t h e s e t t l e m e n t , o r d e c l a r e s t h a t he h i m self holds i t i n t r u s t f o r those purposes . . . but, in order t o render the settlement binding, one o r o t h e r o f t h e s e modes must, as I u n d e r s t a n d the law of t h i s C o u r t , be r e s o r t e d t o , f o r t h e r e i s no e q u i t y i n t h i s C o u r t t o p e r f e c t an i m p e r f e c t g i f t . 7  This in  Milroy  in  subsequent  in  the  v.  three settlor trustee  Lord,  has  cases.  arise  directly i n trust  created  i n  i n the context  some  The  the  of  of  difficulties  revocable  passage  the  quoted  transferring  beneficiary;  applied resulted  trusts.  The  above  sets  property:  from  facts  has  character  from  f o r the beneficiary; or  the  when  i t sm i s a p p l i c a t i o n  distinguishing  methods to  clear  surrounding  i n question.  possible  so  Indeed,  confusion  d i f f i c u l t i e s transfer  principle,  the  of  the  out the from  settlor  the settlor  the to  a  by  a  - 55 personal cases, the  declaration  of trust  the f a c t s , or perhaps only  true  nature  to a b e n e f i c i a r y  argument  can  the  trustee  settlor  can  incomplete  be  The  strength  in  are only  deciding  courts  transfer  to a trustee.  trust the  binding  containing also is  v.  t o mean  only  a deed  less  as  a  The same  force,  in  an  and k e y s  of trust. interpreted The  constitute  an i n c o m p l e t e  gift  a or  e f f o r t s t o do s o , t h e c o u r t s  nature  o f the " t r a n s f e r " .  Bacon,  a donor  V.  C,  or s e t t l o r  parting  case,  interpreted could  make a  with h i s i n t e r e s t i n  the deceased  t o h e r house  a memorandum s t a t i n g  of g i f t . . . "  i s never  of property.  and a c t i o n s  or merely  by " a b s o l u t e l y " In t h a t  there  t o be  a transfer  Rogers,8  that  i s that  and a c t i o n s  words  In t h e i r  Warriner  property.  contained  a deed  of trust  upon t h e b i n d i n g  v. L o r d  trust  words  i f such  declaration  Milroy  find  himself  in a declaration  t h e r e has been  personal  In  argument  of property  determine  have f o c u s e d  should  beneficiary.  somewhat  of this  the donor's  whether  must  with  direct  reason, the  the court  declaring  disguised  i f a  f o r some  many  to a trustee.  verifiable transfer  There  that  f o r the intended  made,  transfer  made  nevertheless  of the property  argument  a  was  F o r example,  i s incomplete  (and h a s ) been  In  t h e a r g u m e n t s , have  of the t r a n s f e r .  transfer  that  f o r the b e n e f i c i a r y .  gave  a box  to the P l a i n t i f f .  It  " ( T ) h e c o n t e n t s o f t h i s box  to the P l a i n t i f f .  However,  t h e box was  . not  to  be  pleaded  opened  that  until  this  court disagreed,  56  the  amounted  -  deceased's to  a  s t a t i n g t h a t the  death.  The  d e c l a r a t i o n of  Plaintiff  trust.  The  donor  should have a b s o l u t e l y p a r t e d with that interest w h i c h has been h i s up t o t h e t i m e o f t h e d e c l a r a t i o n , s h o u l d have e f f e c t i v e l y c h a n g e d h i s r i g h t i n t h a t r e s p e c t and p u t t h e p r o p e r t y o u t o f h i s p o w e r , a t l e a s t i n t h e way o f i n t e r e s t . ? T h i s p a s s a g e l e a v e s open t h e p o s s i b i l i t y o f some o t h e r or  even  interest a  "absolutely some  power parted"  cases,  i n the to  revoke.  which  leading  property,  has  such  However, subsequently  eventually  to  the  " i r r e v o c a b l e " when d i s c u s s i n g c o m p l e t e l y  In  Richards  v.  Delridge,1  l e a s e t h a t " ( T ) h i s deed and from t h i s time a trust.  f o r t h " was  J e s s e l , M.  R.,  0  as  a  it  life is  interest, the  phrase  been  emphasized  use  of  the  in  word  constituted trusts.  an  endorsement  a l l thereto belonging  h e l d t o be  retaining  insufficient  s t a t e s the p r i n c i p l e  on  I give to  a [R]  to c o n s t i t u t e  in this  way:  A man may t r a n s f e r h i s property, without valuable c o n s i d e r a t i o n , i n one o f two ways: he may e i t h e r do s u c h a c t s as amount i n law t o a c o n v e y a n c e o r a s s i g n ment o f t h e p r o p e r t y , and thus completely divest h i m s e l f of the l e g a l ownership, i n which case the p e r s o n who by t h o s e a c t s a c q u i r e s t h e p r o p e r t y t a k e s i t b e n e f i c i a l l y , o r on t r u s t , as t h e c a s e may be; o r t h e l e g a l owner o f t h e p r o p e r t y may, by one o r o t h e r modes r e c o g n i z e d as a m o u n t i n g t o a v a l i d d e c l a r a t i o n o f t r u s t , c o n s t i t u t e h i m s e l f a t r u s t e e , and, without an a c t u a l t r a n s f e r o f t h e l e g a l t i t l e may so d e a l with the property as t o d e p r i v e himself of i t s b e n e f i c i a l ownership . . . 1 1  - 57 The divest the  suggestion  himself"  must  irrevocable  of  T r u s t e e s 1^  other  words, with  Regrettably, declare  always While order  that  the  been  trust  term  and  a  or  which  completely  authoritative,  a  that,  present  The  use  clear  trust  suggest  an  that  the  word  that  the  donor  constitute  The  a  exist,  should  made  the role  a  a  of  intention  and be  final  trustee.  to  declare  declaration.  irrevocable  cases  editors  of , Trusts  i s irrevocable  t h e need  does  "irrevocable"  have  of  a  of  Law  actions  of  i n Re  where  "irrevocable"  i n the Canadian  the d i c t a  further  a  t o assume be  words  understood  the cases to  must  himself  the d e c l a r a t i o n .  t h e d i s t i n c t i o n between a  step  t h e " s e t t l o r must  decision"  there  one  of Underhill's the  "completely  and " d e p r i v e "  f o r i t suggests  t o revoke  that  unequivocal  coupled  to  only  upon,  p r o v e d . 13  edition  counter  t o mean  binding In  a power  or s e t t l o r  suggested  i s relied  be  the t h i r t e e n t h  taken  court  i s unfortunate,  retain  taken  was  the  of trust  declaration  cannot  ownership  There,  declaration  t h e donor  o f the l e g a l ownership  beneficial  C o z e n s 12.  that  on  the  intention has n o t subject.  for irrevocability in  trust  are  by  and s h o u l d  be  no  means  carefully  reviewed.  from during  One  of  the e a r l i e s t  Ontario  in  1892.  his lifetime,  In  gave  reported  Kreh  v.  Canadian Moses, 15  h i s fiancee  a  cases  the  written  dates  deceased, document,  directed and  to  his  bequeath"  at  the  time  purported  life  decisions,  insurance  the  proceeds  that  i t was  to follow in  58  of  company,  the  "as  the M i l r o y  which  policy  good  as  stated  to her. a  v. L o r d and  He  will".  "I  give  told The  her  court  R i c h a r d s v. D e l r i d g e  stating:  Assuming t h a t enough a p p e a r s t o r a i s e some t r u s t — w h i c h , however, I do n o t say i s so — I t h i n k the c a s e s go t o show t h a t t h e t r u s t i n t e n d e d must be i r r e v o c a b l e , b e f o r e t h e c o u r t w i l l e n f o r c e a pure a c t of volition against the donor or his representatives.^  It  i s immediately  clear  intention  found  i n the  writing  apparent to  above  to  be  executed.  a  passage.  is  In  thus  of e a r l i e r  the  circumstances  trust,  testamentary  It  interpretation  create  that  and  indeed  addition,  in  fair  the  nature, to  the  court  and  say  disclose  not  that  c a s e s as r e q u i r i n g  court found  no so the  properly  the  court's  irrevocability  may  be d i s c o u n t e d .  Another said  to  be  Clattenburg to  the  The paid  even v.  and  Plaintiff and  refused  contemporary  less  Morine,17  Defendant  Defendant,  case  in trust  further sought  to reconvey  Kreh  v.  authoritative  on  the  conveyed  as  Plaintiff security  in trust  to revoke  the c h i l d r e n ,  with  for a  f o r the  the t r u s t ,  a l l sui juris,  the homestead.  the  subject. his  debt  as t h e d e b t The  Nova S c o t i a  be In  homestead  owed  Plaintiff's  consented.  The  Moses may  to  the  children. had  been  Defendant  court  said:  -  59  -  ...the grantor did not intend the deed to be i r r e v o c a b l e and, t h e r e f o r e , t h e t r a n s a c t i o n was not a f i n a l and f u l l y c o m p l e t e d one w i t h i n t h e r u l e s t a t e d by L o r d J u s t i c e T u r n e r [ i n M i l r o y v L o r d ] 1 8  As  such,  the  court  the  homestead  not  rest  found  to  so.  is  It  be  and  these  the  entitled  case,  reconveyed  upon  that  revoke not  the  a  certain of not  Court  take the  property  as  the  that  his by  remained of was  disposition" Manitoba  the  was  Wills  in  of  at  the  The  it  does also  Plaintiff  or  Turner,  worst,  court  Plaintiff  of  ordered  decision  the  rule  explain Re  is  had  well  be done  grounded  L.J.,  is  the  rule  may  submitted,  made the  trust.  death  therefore  take  a  property,  was  to  went  be  J.A.,  the the and  disposed concluded  place  of  the  case,  the  The  death;  the  invalid He  that  of  a trust  of T r u s t .  donor's  the  that  n  create  i t clear  Trueman,  "to  A c t . 20  of  i  to  a Declaration  his  decision  Pfrimmer .19 purported  dispose  intended  and  to  until  to  that  and  rule).  however,  effect  that  reasoned  at  lifetime, way  The  well  the  (and  Appeal  right  terms  Declaration  the  of  of  during  retained  to  best  declaration,  to  to  trust,  however.  intended  t r u s t , and  difficult  property  the  had  the  Plaintiff.  alone,  particularly  at  More  deceased,  the  enforce  the  grounds  reference  misinterpretation  to  to  parties  superfluous  Manitoba  refused  a  over  wording  trust  was  settlor only  such  pursuant that  the  testamentary  for  non-compliance  on  to  state  that  with the  deceased binding  did  not  intend  t r a n s f e r of  to  the  60  -  "create  an  irrevocable  p r o p e r t i e s " , 21  a n  d  trust  by  a  concluded:  The law is clear that to give validity to a d e c l a r a t i o n of t r u s t property, i t i s necessary that t h e donor or g r a n t o r should have a b s o l u t e l y parted with his interest in the property, and have e f f e c t i v e l y put such i n t e r e s t beyond h i s r e a c h . 2 2  In J.A.,  using  the  terra " i r r e v o c a b l e  s t a t i n g that  the  t r u s t had  merely  that  Certainly, fact,  the the  method  second  reminiscent  Lord.  The  or  himself  to  interest  as  i n the  irrevocable, the  trust  to  revoke.  "create  as  an  words  must  be  itself is  Trueman,  was  of  is  the  J.A.  irrevocable  The  the  that  but  trust  by  and  in a  with  part  does not  a  binding  not  his  must  be  prevent a  attributable did  v.  trustee,  i f i t contains  deceased  or  i s , in  Milroy  parting  that  se,  irrevocable?  latter, L.J.,  Trueman,  per  i n t e r e s t to  meaning the  be  i n t e n t i o n to  revocable,  surely  the  "absolutely"  parting,  being  to  Turner,  transferring his  trustee,  This  of  by  irrevocable  suggests  t r u s t property.  from  statement  the  be  transfer  passage  of  settlor,  of  to  t r u s t " , was  power to  intend  transfer  the to of  property".  The of  cases  suggestion one  steps  conclusion  is  that  that back  to  there  be is  a t r u s t must from  the  be  drawn  from  very  little  the  irrevocable  particulars  of  foregoing substance  to the  be  review to  binding. cases,  it  the If is  immediately fit  at  trust  apparent  a l l with law.  use,  other  Since  their  that  be  passed  return,  the  his  without  principles  were  it  was  estate.  In  of  first  other  surely modern  is  fair  to  the  trusts  and  the  of Appeal  Wise_23.  The  document  only  conclude  actual transfer reached facts  prepared  by  of h i s property  twenty  the  times,  "temporary"  trust,  in  away on  return.  of  medaeival  A knight  while  with  the  could  Crusade, I f he  did  expectation  of  c r e a t i o n of  employee b e n e f i t t r u s t s ,  can  it  as  flexibility.  d i d not  not  practicalities  employed,  i f he  irrevocability  half  or  does  blind  R.R.S.P.'s  would  be  and  impossible  a power o f r e v o c a t i o n .  It  Court  for irrevocability  hands o f a n o t h e r  for p o l i t i c i a n s ,  myriad  need  to h i s h e i r s  however,  regaining trusts  on  -  lay in their  l e a v e h i s e s t a t e i n the to  the  general  trusts  advantage  61  trust one  cases, creation  for  years  and  arrived  of a  this  revealed his was,  their of  apply  age. at  to of  the trust  that  a  wife,  in fact, children Laidlaw,  suggestion  in Barnett  and  the and the  J.A.,  had  test  Wise  v.  signed  a  that would  youngest  reviewed to  a  Ontario  effect  t h a t he  of  create  The  to  until  to  property.  husband  hers,  following  any  intention  conclusion  dying  the  that  the  one hold  reached English  determine  the  trust:  Do t h e a c t s o f t h e r e s p o n d e n t amount t o c l e a r and d e f i n i t e p r o o f o f an i n t e n t i o n and d e t e r m i n a t i o n by him t o p a r t a b s o l u t e l y w i t h t h e b e n e f i c i a l interest i n one h a l f o f t h e a s s e t s h e l d by him and t o r e t a i n the legal o w n e r s h i p t h e r e o f as a t r u s t e e f o r h i s  wife?  Any entirely  remaining  enforceable cases.  recognized  the  the  -  2 4  additional  in  62  doubt  may  be  d e c i s i o n of  of  Re  a  a  revocable  dissipated  In B r i t i s h  concept  that  Columbia, revocable  by the  trust  reference Court  trust,  is  to  two  o f Appeal  has  albeit  in  obitur,  Mee: ^ 2  A l s o t h e law i s c l e a r t h a t a s e t t l o r c a n n o t r e v o k e a completely constituted trust unless a power of r e v o c a t i o n i s r e s e r v e d , u n l e s s of course, the s e t t l e ment was o b t a i n e d by f r a u d , undue i n f l u e n c e , f u n d a m e n t a l m i s t a k e or t h e l i k e . 2 6  In Costello before "to  the  Estate)  his hold  be  in  paid  out  judge's the  two  the The  finding  monies Alberta  that  there  c r e a t i o n of a t r u s t .  the  the  the  was Ford,  be  of a  the  deceased,  D o l l a r s to  deceased,  to  Court  7  funds  persons.  were  2  (Administratrix  the  deceased.  trust  to  named  al.,  Thousand  for of  Anderson  et.  Five  happened  to  that  demand.  gave  receipt  case,  Patton  trust"  i f anything  provision upon  v.  death,  acknowledging that  second  the  returned  completed  J.A.,  on  Defendant document to  were  to  was  a  there  to  the  confirmed gift  provide  monies  Finally,  Appeal  shortly  The  went  of  inter  deceased the  trial  vivos  by  f o r t h e majority, stated:  The r e s e r v a t i o n of a power o f r e v o c a t i o n i s not i n c o n s i s t e n t w i t h the c r e a t i o n o f a v a l i d t r u s t and does not have t h e effect o f making the document testamentary. 8 2  -  This  conclusion  of  -  the  which  Alberta  introduces  the next  discussion  of using a revocable t r u s t  will.  issue  63  must  be  Court  of  addressed  Appeal i n this  as a s u b s t i t u t e  f o r the  I t i s the very i m p o r t a n t i s s u e o f whether t h e t r u s t  be t r e a t e d by t h e c o u r t s as a t e s t a m e n t a r y d i s p o s i t i o n . is,  then  the t r u s t  compliance Moreover, of  3-  likely  be  unenforceable  the f o r m a l i t i e s  of  execution  f o r non-  for a  even i f such f o r m a l i t i e s were s a t i s f i e d ,  If i t  will.  t h e purpose  a v o i d i n g probate would be d e f e a t e d .  THE TESTAMENTARY NATURE OF THE TRUST  In or  with  will  will  c o n s i d e r i n g t h e use o f a t r u s t , whether ' i t be r e v o c a b l e  irrevocable,  conflicting principle Theobald  as a replacement  principles d e r i v e s from  for a will,  o f law must  be r e s o l v e d .  the law o f w i l l s ,  on W i l l s i n t h e f o l l o w i n g  two a p p a r e n t l y The  first  and i s s t a t e d i n  terms:  A gift i n t e n d e d t o be t e s t a m e n t a r y can o n l y be e f f e c t u a l l y made by an i n s t r u m e n t d u l y executed as a will.29  The second p r i n c i p l e d e r i v e s from t h e law o f t r u s t s , and can be described  as f o l l o w s :  a settlor  of a t r u s t  may d e s i g n a t e a  b e n e f i c i a r y who i s t o r e c e i v e t h e t r u s t p r o p e r t y o n l y upon t h e  -  happening be  of a c e r t a i n  a vested  interest  64  -  event.  The  beneficiary's  or a contingent i n t e r e s t ,  interest  may  depending  upon  the terms of the t r u s t .  Where the t r u s t not  r e c e i v e the g i f t  that  until  there i s " g i f t cited  instrument  "duly executed  to  the  law  the  wills  or  beneficiary  has  no  hand,  is  creation,  and  property,  albeit  created  by  the  present one,  the  death  of  donor  legal  principles.  from  after  there  is  The  The  the  an  distinction  cases, the  i t i s an  trust  does not  have  prospective the  immediately  interest  however  of  A t r u s t , on the  in  and  the  upon trust  limitations  conditional,  is a  testamentary".  is certainly  gift  the  property u n t i l  conditions  gift,  argument  overview  The  enforceable has  the  a considerable  will  death.  "intended to be  --  the e a r l i e r  i s testamentary.  and  to  of  the  and  However, t h i s  formalities  that  beneficiary subject  shall  I f so,  followed,  i n the donor's  effective  i n both the  until  trust.  be  of the two.  The g i f t  not one  While afterall,  trusts  interest  the  and  recalled  and  death of the donor. other  nature  be  effect  should  as a w i l l " .  i n the nature  force  beneficiary  the s e t t l o r ' s death, i t i s arguable  Theobald  It w i l l  of  difference any  in  consider  instrument.  the  intended to be testamentary".  principle  fails  provides that  i s not  entirely  Unfortunately, i t i s  a  fine  possessed  one  until  proper  one  based  one  which  has  — the on not  always part,  been from  easy the  testamentary  are  executed wish  case,  the  the  Cock  a document to  v.  shortly which have  caselaw.  case  This  most  signature  Cooke, 30 before  often  may stem, quoted  attested  to  the  following  to  for  her  by  two  the  and testament.  The Court had to  the  effect  deceased  own  in  executed  the  as  event  a will.  of  death",31  The  deceased "I The  witnesses.  The  decide  and  The court r e l i e d upon the  to determine testamentary  at a l l .  deceased's whether  the  It concluded  the document "should only  her  the  use".  or an out-and-out g i f t .  intended that  in  words:  sought to have the document propounded as the  will  on  1866.  death,  contained  was  dates  her  my bankbook  document was testamentary that  in  that  simple:  deceased's  last  fact  my s i s t e r  sister  find  nature of a t r u s t did not deal with t r u s t s  The facts  to  65 -  was  take  properly  following  test  nature:  It i s undoubtedly law that whatever may be the form of a duly executed instrument, if the person executing i t intends that i s s h a l l not take e f f e c t u n t i l a f t e r h i s death, and i t i s dependent upon h i s death for its vigour and effect, it is testamentary.32  While the p r i n c i p l e enunciated i n t h i s passage can be applied trust,  when its  the  instrument  other  question  is  in  the  form  a p p l i c a t i o n can overshadow the more important  of whether the t r u s t In  in  words,  i s p r o p e r l y created i n the f i r s t instead  of  focusing  on  the  of  a  issue  instance. necessary  prerequisites intentions This  case  o f Appeal  there  the  was  upon  nature.  It  unnecessary  was  result  court  It will  be  not s a t i s f i e d  and  was  noted  vitiated  that  the  on t h e f a c t s o f t h a t trust.  However,  no t r u s t  trust  therefore  that  o f the former  which  the  the  instrument.  recalled  constituted  that  examines  of the  Cock v. Cooke, t h a t  be  case  the  the r e s u l t s  intended  should  in light  and  and  h i s death,  Another intent  trust,  a completely  settlor  only  -  Pfrimmer.  decided, following  because effect  valid  i n Re  Court  that  also  a  o f the s e t t l o r ,  happened  Manitoba  it  for  66  such  existed  document  take  testamentary  in  decision  was  a  finding.  concluded  a trust  that  i s Re  a  testamentary  Beardsmore  Trusts.  34 There,  a husband  and  which  provided,  trust  f o r the wife  the  husband's  effected the  of  adult  High  death  net  who  the  terms  of  children,  to  death.  The  brought  obligations  supported  the  under  and was  Act.35 trust  wife  void  However,  and  to  application  the  The  e f f e c t only  Court found  be  to  agreement.  for failure the  in  predeceased  i n the s e p a r a t i o n  t o have  provision,  trustee,  transfer  application.)  the p r o v i s i o n designed  an  a  agreement  of t h r e e - f i f t h s of  t h e husband's  that  the  transfer  the  subsequently  Wills  separation  death,  of the s e t t l o r " , Ontario  a  upon  t h e t r u s t "was  the  into  for a  t h e i r two  estate  his trust  found  entered  alia,  and  children  Court  creating  inter  upon  husband,  relieved two  only  wife  that  (The  Ontario  agreement a f t e r the  t o comply also  be  with  examined no  trust  e x i s t e d because of  the net  (the  estate"),  deal with  were r e q u i r e d to  have a l s o  -  the subject matter was and  wife having d i e d ) .  which  67  the  the purpose  had  I t i s submitted  formalities  in this  uncertain ("three-fifths  case.  d e c l a r e d the t r u s t  that  of the  I t was  lapsed i n any these  trust,  provision  findings,  were  unnecessary  event  a l l that  f o r the  void  because  Court of i t s  testamentary nature.  The  argument  that  testamentary d i s p o s i t i o n and w i l l has met Corlet trust  v.  Isle  of  for  Man  during  bank as t r u s t e e .  settlor's  inter  vivos  Bank  policies  Ltd.,36  his lifetime,  The t r u s t which  the  were  to  be  deceased  family.  The  settlor  rejected  testamentary d i s p o s i t i o n  upon  life the  in trust  reserved the  insurance premiums, i n  the argument that i n the f o l l o w i n g  a  Defendant  and held  which event the t r u s t would, of course, t e r m i n a t e . of Appeal  as a  executed  collected  to be i n v e s t e d  a  For example, i n  a p p o i n t i n g the  r i g h t to d i s c o n t i n u e payment of the l i f e  Court  is  property c o n s i s t e d of c e r t a i n  death, the proceeds  members of the s e t t l o r ' s  trust  void i f not p r o p e r l y executed  with l e s s success i n other cases.  document  insurance  an  The  Alberta  the document was  a  passage:  The f a l l a c y i n the argument based on the " o f t - q u o t e d " words of S i r J.P. Wilde i n Cock v. Cooke [citation d e l e t e d ] l i e s i n a misunderstanding of what the words "vigour and e f f e c t " are a p p l i c a b l e t o . They are c l e a r l y a p p l i c a b l e not to the r e s u l t obtained by, or to the performance of, the terms of the instrument, but to the instrument i t s e l f . The question i s whether the instrument has vigour to e f f e c t , and does e f f e c t , or i s "consummate on e x e c u t i o n " to e f f e c t , a  -  68  -  gift or create a t r u s t . If "consummate" to c r e a t e a t r u s t i n to be performed a f t e r the death of dependent upon his death for effect.37  Ford,  J.A.,  goes  "testamentary  on  to  intention"  non-compliance  with  identify may  be  the W i l l s  three  effected  Act:  the document is p r a e s e n t i , though donor, i t i s not i t s vigour and  ways  in  which  notwithstanding  a the  a donatio m o r t i s causa,  a  deed promising that one's executor w i l l pay money to named persons a f t e r one's death, and a "conveyance of property to t r u s t ees to hold f o r the b e n e f i t his  death  effect  f o r the b e n e f i t  a  of other persons".38  testamentary  testamentary  because  intention  the  forms  depend upon death f o r t h e i r  Other testamentary  Woodman,39  Anderson  Evans, ^ 1  Hicks  the  Geffen.^3  v.  disposition  compliance closely  Rothermel  There of  are  also  bank  below  in  for  actually  a  trust  may  being do  may  being  not  2 a n <  j  et.al.,^°  Goodman  which  contain  testamentary  Patton  do  Re  (Estate)  dealing not  with  require  These cases w i l l be more context.  v. Patton was  the A l b e r t a Court of Appeal, with Ford, J.A., the m a j o r i t y .  A l l three  a number of cases  another  after  effect".  v.  accounts  and  transactions  itself  with the S t a t u t e of W i l l s .  examined  the  et.al.,^  i n t e r e s t i n g to note that Anderson of  of  r e c o g n i z i n g that without  Re  without  "vigour and  intentions  include  v.  cases  of the grantor f o r l i f e ,  I t i s worth quoting two  However,  i t is  also a decision again speaking  sentences  from h i s  judgment,  f o r they  69  summarize  -  nicely  the  appropriate test  in  t h i s area:  I f the document i s not intended to have any o p e r a t i o n u n t i l the s e t t l o r ' s death i t i s testamentary. I f the document i s intended to have, and does have, the e f f e c t of t r a n s f e r r i n g the property or of s e t t i n g up a t r u s t t h e r e o f in p r a e s e n t i , though to be performed a f t e r the s e t t l o r ' s death, i t i s not testament a r y . 44  This t e s t trusts,  and  testamentary suggesting  the  b e t t e r r e f l e c t s both the laws of w i l l s  and  reconciliation  the  nature that  of  a  intentions  and e f f e c t  number  grounds.  of  a  trust  trust  is  the  in  two  where  question.  instrument  cannot In  of  having  The  cases  testamentary  be v a l i d are d i s t i n g u i s h a b l e  both  Re  Pfrimmer  and  Re  on a  Beardsmore  T r u s t s , the documents were so worded t h a t , to use the words of Ford,  J.A.,  operation  i n Anderson  until  the  v.  Patton, they were not  settlor's  these cases had a l t e r n a t e  death.  In  to have  addition,  grounds f o r the f i n d i n g  any  both  that no  of  trust  existed.  Although  trusts  w i l l not n e c e s s a r i l y be  exercised  that until  study,  the  death  be  testamentary  intentions  be testamentary per se, c a u t i o n must  in drafting  i t cannot  containing  and  construed of  the  i t i s necessary  constituting as having no  settlor. to  any  ask  For  whether  to  "vigour and  the the  trust,  purposes proposed  still ensure  effect" of  this  revocable  trust the  could  70 -  be considered testamentary.  retention  by  the s e t t l o r  o f such  revoke, a power to modify, a l i f e the  administration  powers,  reflect  of  an  a  powers  interest,  trust,  intention  In p a r t i c u l a r ,  or  that  a  as a  does  power to  a power to c o n t r o l  combination  the t r u s t  of  these  i s to have  "vigour and e f f e c t " u n t i l the s e t t l o r ' s death?  no  Canadian c o u r t s  have r a r e l y had an o p p o r t u n i t y to review and analyze an express trust  containing  necessary Canadian  to  rely  cases  a l l of  these  powers.  upon  American  decisions  do not provide answers.  examined i n three separate c a t e g o r i e s : or  modify  has been found  the s e t t l o r r e t a i n s a l i f e where power to c o n t r o l to  It  i s therefore  where  the few  The caselaw  will  where a power to revoke  to be reserved to the s e t t l o r ; interest  the t r u s t  be  i n the t r u s t  where  p r o p e r t y ; and  property or t r u s t e e  i s found  exist.  4.  THE EFFECTS OF A POWER TO REVOKE OR MODIFY  Generally examined  trusts  speaking,  the Canadian  c o n t a i n i n g both  testamentary  power to revoke  f o l l o w the modern American  they  a reservation  revoke  find  that  the  testamentary compliance  trust in  does nature,  not and  cases  intentions  approach.  by the s e t t l o r result  in  therefore  with the Statute o f W i l l s .  which  have and a  That i s ,  o f a power to  the  trust  invalid  for  being non-  T h i s was the c o n c l u s i o n  - 71 in  Anderson  Alberta  v.  Patton,  Court o f Appeal  -  where,  as  previously  mentioned,  the  stated:  The reservation o f a power o f r e v o c a t i o n i s not i n c o n s i s t e n t w i t h t h e c r e a t i o n o f a v a l i d t r u s t and does not have t h e effect o f making t h e document c r e a t i n g i t testamentary.45  The that  neither  making up  Supreme  a  the  trust  trust  the  allowed  t h e r e was  of  no  of B r i t i s h  modification  testamentary.  f o r h i s wife  substitute court  powers  Court  trust  this  and  Columbia  nor  In  Re  daughter,  property,  which  power t o m o d i f y ,  power o f r e v o c a t i o n ,  has  also  revocation  found  result  in  Evans,46  Evans  had  retaining  the  power  were  and  set to  securities.  although  The  i t found  that  i t nevertheless concluded:  Even had t h e s e t t l o r r e t a i n e d a power t o w i t h d r a w t h e s e c u r i t i e s , such a r i g h t o f w i t h d r a w a l would n o t have r e n d e r e d t h e t r u s t document i n v a l i d . 4 7  Dealing Ontario  Court  that  power  a  tetamentary found and  that  cashed  gift.  with  a  of Appeal to  in  revoke  nature.  direct has  also,  does In  gift  not  rather  in obitur,  Campbell  v.  day  prior  t o , the payor's  a  trust,  approved  necessarily  make  Fenwick,48  a cheque g i v e n t o t h e D e f e n d a n t one  than  d e a t h , was  the  view  the the  t h r e e days  the  gift court  prior  to,  an a b s o l u t e  It continued:  It of  may have been and p r o b a b l y was s u b j e c t t o a power r e v o c a t i o n a t any t i m e b e f o r e t h e d e a t h o f t h e do-  - 72 n o r , o r i t may be t h a t i t was s u b j e c t t o a t r u s t i n f a v o u r o f t h e d o n o r , b u t t e r m i n a t i n g upon h e r d e a t h . Neither would make t h e g i f t testamentary ini t s character.  There which or  take  modify  seem  to  are v i r t u a l l y  the opposing will  render  imply  this  interpretations. English  decision  question thus  therefore,  not  argue  with  was  Justice  court  other  British  decision  o f one t h i r d  which to  Columbia In  agreement  of  that  alternate  the t r u s t i n  S i r James  the i n t e r e s t  to a finding  that  that  with  case,  the t r u s t  h i s w i f e which  able  to  conclude,  provision,  that  i t created  on a  the  present  t o imply that  that  the t r u s t  is  the  that  decision  view  of  executed  provided,  inter  of  irrevocable  the  a  alia,  of h i s wife.  wording  Re  of Chief  testator  of h i s estate i n favour  was  one c a n  t o support  Court  the  is  he was i n e r r o r .  testamentary  Supreme  Wigram  bound, and t h e r e i s ,  by t h i s  seems  A few  v. F l e t c h e r , 5 0 an  that  that  revoke  i n nature.  But i f he meant  i t i s submitted  England  to  and t h e r e f o r e n o t t e s t a m e n t a r y ,  equates  Farris.  separation a trust  a  meant  a prerequisite  revocability  Woodman,52  of revocation.  h i s conclusion.  not testamentary,  that  power  found  or  a power  capable  in Fletcher  I f S i r Wigram  constituted,  The  are  f o r t h e argument  fully  was  but  " t h e p a r t y was c l e a r l y  was  irrevocability  i s , that  1841, t h e c o u r t  no  i n Canada  testamentary  result,  ground  testamentary".51  cases  that  a trust  from  that  no  view,  F o r example,  contained  concluded  no  The trust  trust  in  -  favour  of  his  testamentary  wife,  73 -  and  disposition.  that  it  was  not  Again, i f F e r r i s ,  therefore  C . J . , i n u s i n g the  term " i r r e v o c a b l e " , was r e f e r r i n g to the c r e a t i o n o f the rather the  than i t s n a t u r e ,  other  hand,  testamentary seriously  if  only  trust  t h e r e can be no argument w i t h h i m .  his  finding  because  questioned.  it  was was  As S i r  C.  that  B r o w n e ^ over one hundred and f i f t y  the  trust  irrevocable, Pepys  a  said  it  in  was  On not  must  Tompson  be v.  years ago:  The d e c i s i o n i n The A t t o r n e y G e n e r a l v . Jones seems t o have proceeded upon the ground t h a t , under the c i r c u m s t a n c e s o f t h a t c a s e , n o t h i n g passed from the maker o f the i n s t r u m e n t so as t o e n t i t l e any o t h e r person to interfere with his property in his lifetime. I f t h e r e be a n y t h i n g i n t h a t d e c i s i o n to support the n o t i o n , t h a t where a person by deed s e t t l e s p r o p e r t y t o h i s own use d u r i n g h i s l i f e , and a f t e r h i s decease f o r the b e n e f i t o f other p e r s o n s , a power o f r e v o c a t i o n r e s e r v e d i n such a deed a l t e r s the c h a r a c t e r o f the i n s t r u m e n t , and r e n d e r s it testamentary, and c o n s e q u e n t l y s u b j e c t to legacy d u u t y , I can o n l y say t h a t , i f t h i s were l a w , a g r e a t number o f t r a n s a c t i o n s o f which the v a l i d i t y has n e v er been doubted would be l i a b l e t o be impeached.54  5.  THE EFFECT OF A LIFE INTEREST  It modify  which  is is  not, of  of  course,  importance  in  power  employing to  to a  "imitate"  revoke trust  instrument.  settlor  a l s o c l e a r l y want t o r e t a i n a b e n e f i c i a l  i n the t r u s t  order  a  testamentary will  In  only  a will,  as  or a the  interest  p r o p e r t y u n t i l h i s or her death - - i n o t h e r words,  - 74 a  life  interest.  permitted  such  The  an  American  interest  in a  judiciary  revocable  number of cases are c i t e d by P r o f e s s o r a combination of l i f e one  from  fact, with  the  that  court  was  donor's  Supreme Court  case  a direct  interests  did  gift  not  and  of  deal  the  continuing  Raynor  a trust The  was  possession  trust.55  at  Supreme Court  The  fact  that  "safekeeping"  of  the  the  Canada, was  donee  d i d not  became "a custodian  and  Read. 56  life  interest  in  light  revocation. the  deceased  In Goodman  that  the  held  an  lifetime: tenant.  i n her trust  The  of  was in  held court  the  inter  the  gift,  of  the The by  complete. donor  as  the  One  settlor  of  testamentary the  Alberta  the  for  donor  trust entire  rejected  i n t e n t i o n of the s e t t l o r was  the  property  no  the  no  power executor  created  arguments  of of the  advanced  was  the  interest  argument,  a  by  cestui  during  beneficial  containing  but  a trust  because  this  Queen's Bench  vivos t r u s t  sought to set aside  the  to  ( E s t a t e ) v. Geffen,58  lifetime.  interest she  of an  favour  deceased's w i l l  gift  the  affirmed  was  n  rather  property.  gift  completed  d e c i s i o n of  validity in  j_  no more".57  A more recent does address the  the  the  the  of such  a l l , but  subject  that  returned  vitiate  large  i s s u e determined by  complete,  of  v.  d e c i s i o n of the P r i n c e Edward I s l a n d Supreme Court, the  A  Scott i n support  Canada,  with  gift  overall,  powers to revoke, i n c l u d i n g  of s e c u r i t i e s .  whether  has,  finding  que  trust  settlor's as  a  that  not to c r e a t e a testamentary  life the trust  but in  a binding inter the  trustee,  75  -  vivos t r u s t ;  and  "the  the t r u s t  trust  property had  agreement  was  a  vested  valid  inter  this  study  vivos trust".59  No which  other  dealt  Canadian  directly  revoke i n a t r u s t .  with  cases both  were  life  outright  account.  a  joint  bank  pattern  which  emerges  i n these  cases  opens  joint  account  entirely  with  a  second  individual  who of  opened  G e n e r a l l y , the  i s that h i s or  i s named as the j o i n t  by him or her u n t i l  the account.  the account u n t i l  both a l i f e  categories: either those step the  a  gift  which, further,  gift.  or  having  her  tenant.  to  individual  can  which a  be  broken  premise  found  by examining  funds,  of  a valid  and. a  latter is  or agrees that i t individual  u s u a l l y has  sole  use  As such, he or she  has  down  judgment  presumption  fact  individual  The  i n and a power to revoke the  cases  those  That  one  the death of the  h i s or her death.  interest  These  powers  i n connection with the  e i t h e r unaware of the account, or understands i s not be used  and  There are, however, a number of cases which interest  of  for  interests  deal with the subject of a l i f e gift  found  into on  resulting  gift,  gift.  take  two a  general  finding  trust; the  the p o s s i b l e testamentary  6 0  matter  of and one  nature of  6 1  The  cases  i n the  first  category have l i t t l e  bearing  on  the  discussion  following  at  principles  76 -  hand,  of  law,  the Supreme Court of Canada,  dealing as  as  described  they  do  with  by C r o c k e t t ,  the  J.  of  i n Re Mailman:  That both law and e q u i t y i n t e r p o s e such a presumption against an i n t e n t i o n to create a joint tenancy, except where a f a t h e r makes an investment or bank deposit i n the names of h i m s e l f and a n a t u r a l or adopted c h i l d or a husband does so i n the names of h i m s e l f and h i s w i f e , i s now too f i r m l y s e t t l e d to admit of any c o n t r o v e r s y . T h i s presumption, of c o u r s e , i s a r e b u t t a b l e presumption, which may always be overborn by the owner's previous or contemporaneous o r a l statements or other relevant f a c t s or circumstances . . . 62  The  second  deal with t r u s t s examining the e f f e c t  category  i n any form,  of  cases,  interest  the e a r l i e r cases found that a g i f t  of  j o i n t tenancy was testamentary,  it  is  The the  cases  a father  a deposit Hill,  Sr.  survivor". remain  finding  deposited  receipt and  not  question  of  While some  of a bank account by way  the more modern view i s  the  of  father's  testamentary  Hill  c e r t a i n monies  i n the  John  gift  R.  v.  that  Hill,  his  Hill,  start 63.  at a bank and  f o l l o w i n g terms:  It was understood by the  i n the  do  gift.  Ontario High Court d e c i s i o n  case,  approach the  i n a revocable t r u s t .  of  a present  they  are of some l i m i t e d a s s i s t a n c e i n  how a Canadian court might of a l i f e  although  son,  in  that  received  "payable to  William  or  .or  son that  c o n t r o l and subject  with  to  either,  the monies his  the  would  disposition  - 77 until  h i s death.  The f a t h e r advised  the bank manager that the  arrangement was to enable h i s son to r e c e i v e the money when "he was done with".  A n g l i n , J . , found  himself  d r i v e n to the c o n c l u s i o n that the purpose of W i l l i a m H i l l , deceased, was by t h i s means to make a g i f t to his son, the p l a i n t i f f , i n i t s nature testamentary. As such, i t could only be made e f f e c t u a l l y by an instrument duly executed as a w i l l . The f a t h e r retained the exclusive control and disposing power...the r i g h t s of the son were intended to a r i s e only upon and a f t e r h i s f a t h e r ' s d e a t h . 6 4  This Appeal,  case was followed  in Shortill  (1930).  66  v. Grannon  However,  Re Reid, 7  in  1921  had an o p p o r t u n i t y  6  reached an opposite Hill  v. H i l l ) .  his  father,  conclusion  by the New Brunswick Court of ( 1920)65  the Ontario  leave  with  (while  the son's  h i s father  reasoning as and  would  Although in Hill  not draw  Hodgins,  v. T i t u s  o f Appeal, i n  not e x p r e s s l y  funds.  He  overruling  account with  did this  that an e a r l i e r  only  attempt  a blank  cheque  a f t e r the son's death, would be  I t -was understood  the f a t h e r  lifetime.  Court  the same monies by s i g n i n g  to h i s f a t h e r , to be negotiated  that  McKnight  In that case, a son opened a j o i n t  solely  unsuccessful.  j  to examine the same i s s u e , and  a f t e r he had been t o l d by l e g a l counsel to  a n c  between  the f a t h e r  any funds  during  J.A., i n d i s s e n t ,  v. H i l l , 6& the m a j o r i t y 1  evidenced by the opening of the j o i n t  and son  h i s son's  approved the  found that  the g i f t  account was "complete  p e r f e c t " , and that the r i g h t of the donor to draw the money  was only  a "right  and power to d e f e a t "  the g i f t ,  and d i d not  -  78  -  have the e f f e c t of making the g i f t  Re  Reid  v.  Sealey,  of  a survivor  7 0  was  followed  as  authority  to  a joint  testamentary.69  i n the E n g l i s h d e c i s i o n of Young  f o r the account  proposition could  not  be  Supreme Court  v.  Sealey  that  with  case  of  Canada has  approval  there  was  also  cited  i n Edwards v.  insufficient  right  defeated  Re  Reid  Bradley,  evidence  the  as  a completed  attempted testamentary d i s p o s i t i o n , as i t was The  that  to  gift.  and  Young  although  7 1  find  a  an  in  present  gift.  While not it  f o r the  g i f t may  even when the and  a  life  the  beneficial,  the  present, cases  here  interest  would  i t is  the  gift,  fact  joint  passes by way so,  It  should  that  bank accounts  make  no  the  course,  in  as w e l l  as  trust,  the and  it  interest the  clearly  only  more  is  is  a  recent  recognize  that  because of i t s testamentary  difference  of a t r u s t i n s t e a d of an  i t f o l l o w s that  in a  revoke  Nevertheless,  i n t e r e s t which i s c r u c i a l ,  with  Of  a legal,  whereas  vest.  such an i n t e r e s t cannot be defeated qualities.  property.  s u c c e s s f u l donee r e c e i v e d  that  vested  dealing  gifted  i n t e r e s t i n the  beneficial  suggested  the  that  tenancy,  a power to  donor r e t a i n s what amounts to in  study,  have accepted  r e s u l t from the c r e a t i o n of a j o i n t  interest  these cases,  is  purposes of t h i s  i s encouraging that some Canadian courts  a present  a  conclusive  that  the  interest  outright g i f t .  I f that  r e s e r v a t i o n of a l i f e  interest in a  - 79 revocable  t r u s t should  Certainly, in  allowing  life  interest  reserved  of  cases  decision  of  the  White,72  that  i  case,  interest power  s  o  n  e  in  property.  Q  f  contain  to  the  have had  both  power  to  While  there  the  trust  revoke  and  more  this  a  in  trust  Cleveland  degree  cited  agreement  was of  no  difficulty  revoke  and  are  proposition,  popularly  property a  a  settlor.  support  executed  court  courts  Supreme C o u r t  the  The  difficulties.  American  which  Ohio  White  to  the  t r u s t s which  numbers  v  cause no  large  the  Trust  1938  Company  decisions. in  which  reserved,  as  control  over  a  In  a  well  life  as  the  the  trust  stated:  By the weight of authority, a trust, otherwise effective, is not rendered nugatory because the s e t t l o r r e s e r v e s t o h i m s e l f t h e f o l l o w i n g r i g h t s and powers: ( 1 ) t h e use o f t h e p r o p e r t y and the income t h e r e f r o m f o r l i f e ; (2) t h e s u p e r v i s i o n and d i r e c t i o n o f i n v e s t m e n t s and r e i n v e s t m e n t s ; ( 3 ) t h e amendment or modification of the trust agreement; (4) the r e v o c a t i o n o f t h e t r u s t i n whole or i n p a r t ; (5) t h e c o n s u m p t i o n o f p r i n c i p a l . . . . These r e s e r v e d powers a r e g e n e r a l l y r e g a r d e d as c o n d i t i o n s s u b s e q u e n t , w i t h no more t h a n c u r t a i l i n g or d i v e s t i n g s i g n i f i c a n c e . 7 3  The  inclusion  supervision  and  interesting,  particularly  (1938). of  Trusts  This  was  still  administrative  in  direction  a time governed,  this of  list  of  when  First  matters u s u a l l y  powers  investments  in light  and  of  the the  the  law  resulted  and  date  of  income" the  Restatment was  that  of  of  is  decision the  control  i n a f i n d i n g of  "the  Law over  agency,  -  not  trust.  but  the  Co.  v. White i s worth keeping  is  This  comment  i s the of the  80  subject of Ohio  THE  right  of  reservation investments,  to appoint  part of the  mortgage t r u s t right  to  "powers properly  facts".  "It  7 4  principal property  appoint to  reserved  of  the  settlor and  of the and  any  trust  of  The to  the  to  under  is  the  will.  property  until  A  will,  death,  to  and  the  the  category  of  such  powers  may  obviously  of  afterall,  and  the  right  vital  the u s e f u l n e s s of the revocable  the  as  to withdraw a l l  proceeds,  which  settlor  powers  administration,  a p p r o p r i a t e the  extent  such  property,  remaindermen, a l l f a l l  control".  be  by  or remove t r u s t e e s , the r i g h t  substitute for  dispose  Trust  under c o n s i d e r a t i o n must  management  importance i n determining a  i n Cleveland  EFFECT OF A POWER TO CONTROL  The control  following discussion,  i n mind i n that d i s c u s s i o n :  e v i d e n t that cases of the type now  6.  as  the  Supreme Court  be decided on t h e i r p a r t i c u l a r  or  -  until  t e s t a t o r has complete dominion over the p r o p e r t y .  trust  does then,  not the  If a settlor  of a revocable t r u s t does not have s i m i l a r freedom to deal with his  or her  property,  as a testamentary  Of  i t i s not  likely  to be h i s or her  choice  vehicle.  course,  i n suggesting  that  a settlor  has  similar  freedom  to  a testator  property, is  it  of  settlor  must  he or she  very  to  powers  understand  his  or h e r s ,  Failure  with  that  the  the  "same". of  the  within  a  property trust  a beneficiary  to make t h i s  or  "similar"  trust,  is  no  powers  of  with  which  control.  the  If  such  are  powers  as a  i n the t r u s t  deed  concerned  are  longer  (and p o s s i b l y  distinction,  courts  the  property i n which  or i n the day to day a d m i n i s t r a t i o n of the t r u s t , matter  trust  Whatever the p r a c t i c a l  but r a t h e r i s as  devised  expression  control  that  has an i n t e r e s t  trustee). itself  be equated  retaining  absolutely  dealing  must be understood  i n no way to  results  in  81 -  very  in  is  the  examining  extensive,  the  c o u r t s may question whether the t r u s t e x i s t s at a l l .  The the  Second  accumulated  American  Restatement  cases  found  authorities76  of  in  reveal  the  Scott  that  Law of on  the  Trusts,75  Trusts  modern  and  trend  a n  d  other of  the  American c o u r t s i s to permit q u i t e e x t e n s i v e powers of c o n t r o l . This  is  a l i b e r a t i n g move,  part  of  this  Law of  T r u s t s of  agent of the settlor  century  1935),  settlor,  was too  if  from  reflected  the  i n the  when a t r u s t e e the  degree  trend  in  the  Restatement  was  reduced to  early of  the  a mere  of c o n t r o l reserved to  the  extensive.  Although disfavour,  (as  away  failing  the as  requirements of a t r u s t ,  agency it  does  approach to  assess  has the  fallen  into  fundamental  i t has not been e n t i r e l y discounted i n  -  some American have on  jurisdictions.  disallowed  other  overall,  While  they  of  are  Moreover,  by,  judiciary,  these  should  some American  extensive  cases  sufficient  considered  Canadian  -  trusts containing  grounds.  seriously  82  powers to  remain  number  and.  possibly  the  question  courts  in  and  control  the  minority  quality  pursuasive arise  in  to  to,  be the  Canada.  A  review of them i s t h e r e f o r e i n order.  The  preliminary  point  which  must  be  made v i s a v i s  the review of these cases i s that they are r e p r e s e n t a t i v e I t would be on are  virtually  impossible  to l o c a t e every American  t h i s t o p i c , much l e s s review each one. those more p o p u l a r l y mentioned i n the  discounting  some  more recent  cases  second i s that  other.  This  diversity  of  originate. careful  cases  American  in  retains  too  by  must no  discussed  references,  jurisdictions  where  and  noted  when  judicial  one  there  are  i s merely  much c o n t r o l over the which  hold  no  reviewing  an  each  considers  do  those  Restatement of the Law  trust  in  the  minds from whence they  certain categories  First,  decisions  be  means c o n s i s t e n t with  surprising,  jurisdictions  the  which  they are not  f o l l o w the  that  of  fact  Neverthless,  finding  number  is  reading.  basically  pronouncements  The  case  case a u t h o r i t y adopts the modern t r e n d .  The these  older  only.  trust  decisions  which  of T r u s t s of  agency  trust.  emerge upon a  when  the  Second, there was  created  1935,  settlor are in  a  the  -  first  instance  because  missing -- one property which  in  of  the  the  trustee.  the  trust  who  is  entitled  These c a t e g o r i e s  be  one  transfer  first  by be  the  claims ,  in  but  7 7  has  illusionary rights  are  are  (dealing  with  importance t r u s t was open to be or  so  the  those  the  trustee.  cases i n  used  i n which dealt  a  in  formalities.  is  Such f a i l u r e s can  not be  to  may  New  was  spousal York  revocable surviving  the  is  of  second,  only o.-f marginal i n t e r e s t ,  property  trust  and  trust  spouse's  c a t e g o r i e s , i t i s the  cases  or  to  with i n g r e a t e r d e t a i l  The  property  settlor  When a  in  a  study.  it fails  an  made.)  this  lack of  the  which  involving  which  trust  property.  case  argument)  trust  communal  term i l l u s i o n a r y  finding  remaining two  surviving  i s a mere agency, i t  been  cases  trust  the  trustee.  (The a  since  those  f a i l u r e of  agency  attack f o r  the  the  the  found, are  define  against  spousal claims are  poorly worded that  because the  to  the  as  a court.  generally  Of  decisions  the  concerned, they w i l l be  i n Chapter 6.  are  the  in  is  there  m i s s i n g , or  York  trust the  of  to  a  v e s t i n g of  means i n s u l a t e d :  property  elsewhere even when no  as  share  the  no  often  Insofar  or  a  based on  New  elements of  to  " i l l u s i o n a r y " by  coined  key  Third,  of i t s c e r t a i n t i e s  called  the  "illusionary"  are  agency i s found may properly  of  certainties,  find  spouse  has  one  -  8 3  as any  first  particular where  no  trust  is  A revocable t r u s t  pass a present  beneficiary; conveyed avoided by  or  it  interest, may  transferred strict  may  fail to  attention  to  the  f o r m a l i t i e s of  contents  of  in  context.  this  category in  i t .  i s the  Atlantic  Trust  trustees  "from  no  cases of  i n the  the  there  with  trust.  a  mere  $3,000.00  to  Re  Estate  determined  The  that  Pfrimmer  the  may  be  case of  that  operate  Missouri Louis  the  c o n t r o l " the reflected  futuro,  property.  this  decease,  words  in  in  instrument  manage and such  the  cited  St.  trust  settlor's  hold,  trust  It  and  is  an  that  difficult  conclusion.  to  note  only  in  the  to  that  there  do  canvas  which  These  Seeburg  son  agent  This In  Re  her  death. an  the  a  agency  example,  Court,  being  should  instrument.  Surrogate  son  the  "agency" c a t e g o r y  For  upon her  such  drafting  Supreme C o u r t  after"  found  trust  the  in  American  case,  is interesting  trust is  the  an  that  court  d e l i v e r y of  fault  It  The  Re  and  J a c k s o n v i l l e e t . a l . v.  In and  of  of  " f o r t h w i t h take,  property.  find  Bank o f  trust,  case  example  7  were t o  was  a  d e c i s i o n of  that  there to  1948  al. 8  that  creating  An  et.  intention  -  Canadian  National  Co.  specified  trust  The  84  cases  generally  conclude  finding  that  1944  decision  of  Estate, 9  a  7  found  that  no  there the  mother  amongst  a number  "turned  was  that is  New  a l l her  trust  of  the f o r m a l i t i e s  after  distribute  court  are  no  York over"  children  created,  the  only.  d e c i s i o n was  followed  of  Fontanella.80  no  trust  had  been  i n another Again, created  the (in  New  York court  this  case, first  instance,  because any  there  was no express i n t e n t i o n  designated  control  of  beneficiary,  the  only had been  agency  such  category,  exists,  as  and are  "agency"  merely because  retained  by the  the  1935  be r e c a l l e d  do  not  that  do  as  such.  really make  an  there  are  cases  that  this  that  relationship  and recognized  However,  not  all  the  notwithstanding of  have the  continued Second  Pennsylvania,  decided under the F i r s t law,  and c i t e d  the  to  be  in  that  i n the  Restatement,  regularly.  In that  preme Court made the f o l l o w i n g  is  as  Re  still  case,  statements:  control  that  1958.  It  focus a  the  of  settlor  good  the  Shapley  agency And some  authority  For example,  of  an  trust.  cited  decision  an  administration  following  Restatement.  that  basis  p r i n c i p l e were decided before the Second Restatement. before  the  trust of  on the  instead  cases  in  however,  abandoned the  of a t r u s t without thereby i n v a l i d a t i n g the  State  agency  do make such a  Second Restatement  Restatement  a  powers  some can be d i s t i n g u i s h e d to the  finding  label  extensive  Of those  belong  a  and  might r e t a i n powers to c o n t r o l a t r u s t e e  decided  nor  complete  They do not,  Restatement  settlor.  connection,  agency  a trust,  retained  concluded  they  cited  they were decided p r i o r  an  create  donor  then  this  although  follow  will  It  the  to  created.  blindly  causal  and  property).  Cases "agency"  85 -  in  the  Trust,81  regarded as  good  Pennsylvania Su-  - 86 ...where the deed vests a present i n t e r e s t i n the b e n e f i c i a r i e s , i t i s a v a l i d i n t e r vivos t r u s t . It i s not rendered testamentary i n character because the s e t t l o r reserves a b e n e f i c i a l l i f e i n t e r e s t , and i n a d d i t i o n , a power to revoke or modify i n whole or i n p a r t , [ c i t a t i o n s omitted] Where, however, a s e t t l o r , in addition to the reservations above mentioned reserves the power to c o n t r o l the t r u s t e e as to d e t a i l s of the a d m i n i s t r a t i o n of the t r u s t , and thus makes the t r u s t e e merely the agent of the s e t t l o r , the scheme becomes testamentary as to d i s p o s i t i o n s intended to take e f f e c t a f t e r death.82  This Estate,83 trust  decision  where the  agreement  gave  of  trustee  power to  ments "with as  well  as  principle again  the "as  would  clauses;  the  the  the  trust  fund.  alter,  right  of  in  appear to be  might  have  a  settlor  factor  in  previously and  Re  settlor" to  be  the  more  existing  his  require  to  the  invest-  lifetime,  payments The  from moral  i n d r a f t i n g such descretion  appropriate,  as  of the investments.  agency  the  over . the  granted  during  Estate  that  transfer  caution  was  to  would An added  that  relationship  t r u s t e e , l e a d i n g the court  r e l a t i o n s h i p continued,  found  control  or  trustee's  Pengally's  Pengally's  necessary".  to e x e r c i s e  a d v i s i n g rather than approval fortunate  change  opinion  been  Re  agreement  settlor  i t i s suggested that  principle  been  vary,  the  his  complete  The  of the  in  Supreme Court  settlor  approval  may  followed  Pennsylvania  composition the  was  pay have un-  there  had  between  the  to conclude that such a  the t r u s t agreement being merely an  at-  tempt to make a testamentary d i s p o s i t i o n without the b e n e f i t of a  will.  One  d i s t i n g u i s h i n g f e a t u r e of the case should  be  men-  - 87 tioned: in  the  the  court  a p p l i c a n t was  will in  or  any  interesting  the way  to  the widow, who  trust. is  Whether  difficult  in  which  spousal  decision the  found  trust,  controls  a  claims  result  in  the  creditor  were  of  agency.  deceased.  by  sale  mortgage of t r u s t  the  settlor  p r i n c i p l e ) the  reasoning  spousal leads  and But  to  same  ments i n the  State  has  that  is  said  that  which  allowed  extensive  Re  Estate  of  trust  was  considerable  authorization the  right  trust  the t r u s t e e had be  is  Pennsylvania  for  was  of  any  withdraw  valid.  The  clearly  fully  active duties  the  cases  a revocable the  to  agency  to  in  which  trust.  This  argument  i s more l i k e l y to succeed where spousal  the cases may  support  can  cases  Nothwithstanding  found t h a t the  conclusion  The  less  case  and  it  involved  principle  s u c c e s s f u l l y defeated  the  Pennyslvania  same  but  to set aside the  property,  complete, and the  claims  made, and  the  of the case i s sound, f o r the t r u s t was  constituted perform.  influenced  only  n e  were not  (including prior  court  for  E s t a t e have been ones T  The  a p p l i c a n t seeking the  the  an  fact  provided  Pennsylvania  make.84 claims  not  ascertain,  acknowledging the  control or  to  Re Pengally's  where spousal  although  Mason,85 and  this  note that most of the  f o l l o w Re Shapley T r u s t and  was  claims  in are  be d i s t i n g u i s h e d on that b a s i s .  conclusion  applies  of Texas, although  than i n Pennsylvania.  The  to the  judicial  pronounce-  agency argument  Supreme Court  has  i n Texas  d i s a l l o w e d t r u s t s c o n t a i n i n g r e s e r v a t i o n s by the s e t t l o r  of  - 88 a  large  degree  trusts  are  tradition  o f control  referred  of  the  over  to  as  N e w York  the  trust  property.86  "illusionary", judiciary;  following  however,  share  a  applying have  the  been  of  the  agency  "severly  statutory  principal, limited"  such  by  more  the  stands  a s good l a w .  of  Court  a. l i f e  Appeal  interest  the t r u s t p r o p e r t y .  were  "mere  agents  with  to  her  isolated  one,  distinguished.  all  or  Trust  very  National  Baldwin,88  decisions89  and  of  Co.  does not  it  is  Bank95 Shawmut  which Bank  Nalley91  encumber or  Trust in was  of  trustees the  Although  and i s apparently  have been o v e r r u l e d or  interesting  decisions  to  note  from other  that  states,  o v e r r u l e d or  distinguished  followed the  1929 Ohio case of  Hawkins93 which  court  power to  powers".92  appear to  subsequently  Cleveland  v.  a t r u s t deed which  Restatement,  on a number of  v.  of Columbia,  Betker  executed  limited  In p a r t i c u l a r , i t  Massachusetts  Savings .  v.  T h e court concluded that the  Nevertheless,  which were  decision the  it  relied  those s t a t e s . Union  Fleet  of  and the  case was decided under the F i r s t  court  decisions  Earlier  recent  decision  The settlor  sell  the  where spouses  same cannot be s a i d for the D i s t r i c t  where  an  as  of  amendments.90  The  reserved  community p r o p e r t y . 8 7  the  findings  i l l u s i h a r y t r u s t s have b e e n l i m i t e d to s i t u a t i o n s claim  Such  Co. v. 1909,  w a s overruled  overruled Boston  v.  the  White;9^  McEvoy v. by Joy, 96  in  a n c  1944 j  1939  decision  Boston  the  the  Five  of  Cents  case  finally,  in  of the  - 89 Wisconsin  case  Co.(1924)97 later  in  there  was  because  no  Oshkosh  f o r the  was  Moreover,  court  for f a i l u r e  trustee  Savings  interpreted t h i r t y  Estate.98  clear,  trust  v.  narrowly  Steck's  not  the  reads as  Warsco  which was  Re  Warsco was  of  the  the  a mere agent.  trust  The  Trust  three  years  reasoning  simultaneously  to vest  and  found  in that  property  relevant  and  passage  follows:  I f the donor has f u l l c o n t r o l and dominion over the t r u s t property, so that according to the terms of the t r u s t he can use i t as and when he p l e a s e s , the t r u s t e e becomes h i s mere agent to hold t i t l e to the property, i n v e s t , s e l l , and c o l l e c t income f o r him, and pay as he d i r e c t s . The donor has parted with no dominion over h i s property nor any part thereof by the terms of the t r u s t , and such an agreement i s no v a l i d t r u s t agreement.99  The  Supreme Court of Wisconsin  i n t e r p r e t e d Warsco i n  the f o l l o w i n g manner, i n the case of Re Steck's E s t a t e :  In that case the agreement was held not to c o n s t i t u t e a v a l i d conveyance i n t r u s t because the donor had r e t a i n e d f u l l dominion over the t r u s t r e s , the t r u s t e e being a mere agent to hold the p r o p e r t y . 1 u u  It trict agency  of  would be  Columbia  argument  and  fair  to conclude t h a t , both i n the  the  State  would  face  of Wisconsin,  some  considerable  l i g h t of the more recent  cases.  the  same c o n c l u s i o n  be made f o r any  the  States.  in  New  York  An  can  where  a  use  of  case  other  in that  jurisdiction  t h i s conclusion  which  the  opposition,  Moreover, i t i s submitted  i n t e r e s t i n g t w i s t on  State,  the  Dis-  approved  in  i s found  the  agency  - 90 principle  is  regularly  that  reservation  does  not  Re  make  Ford's  the  settlor  the  1 0 2  in  was  was  The the of  trust,  of  trustees, settlor During  and was  the  such  appoint  appointments  only  wills an  The principle,  the  The  settlor  to  be  and  c a s e i s not as  by  case  as  capacity the  in  1958  executed to  a  the to  proper  will  or to  the  Supreme  Court  settlor  nature  their  revocable  and  change  deed.  the  the  where  decision  amend,  exercised  "that  in  the  settlor  In t h e  power  Florida  codicils  First  jurisdiction  "advisor"  ambulatory  agency was  however,  had  settlor  demonstrated  of  Once a g a i n ,  another  interest,  the  the  in that  In  Appellate  of  the  of  overemphasized.  is  as  control  decision  facts  of  of  Court,  the  some s u c c e s s .  designated  activity  1951  entitled  beneficiaries  frequently.  successive that  had  life  lifetime,  appointment that  a  also  his  Florida  Denckla,103  retaining  on  proposition  powers  reasoning  agent  was  the  Supreme  the  mere  and  the  n  York  t r u s t deed c a n n o t be  State  v.  j  c h a n g e s t o them.  agency argument has Hanson  a  for  extensive  i t concluded  not  a p p r o v e i n v e s t m e n t s or the  of  New  a co-trustee,  wording of  followed  principle  However,  trustee  and  invalid.101  a trust  accepted  Restatement.  settlor  the  Estate,  Division,  that  by  cited  -  The  trustee. power  of  concluded considered  exactly  like  o p e r a t i o n " , 104  a n c  j  intended.  e n t i r e l y a u t h o r i t a t i v e f o r the the  court  found,  in  the  agency  alternative,  that  no  interest  therefore very at  in  any  beneficiary,  no  trust.  The  case  unusual  facts:  the  settlor,  the  date  trustee  for  Delaware had  vested  91  to  of the  United  trust.  their  courts  States  had  The  the  came  trust  Supreme  finding  that  ter.  adherence  to  also  be  although chosen  that  the  Court  the  be  added  the  no  agency  Florida  in  in  Florida  invalid.  conclusion, 05 1  affirmed  the  jurisdiction was  and  action  executors  principle  its  situs  brought  was  was  on  in  Delaware  trust  eventually had  there  residing  a  the  opposite  Florida  to  after  that  distinguished  Delaware t r u s t e e  judgment  decision, Its  death,  enforce  obtained  Delaware  his  can  and  in  thus  a n c  The  |  the  Delaware the of  matlittle  consequence.  It 1969  effectively  Denckla. 06 1  trust  should  shall  disposition  it not  overruled  provides be  held  because of  the  that  that  a  the an  invalid  Florida  Statute  decision  in  otherwise or  an  inclusion  of  valid  attempted the  passed Hansen  inter  in v.  vivos  testamentary  following  powers:  1. the power t o r e v o k e , amend, a l t e r or m o d i f y t h e t r u s t i n whole or i n p a r t ; 2. the power t o a p p o i n t b e n e f i c i a r i e s by deed or will; 3. t h e power t o add t o or w i t h d r a w from t h e p r i n c i pal ; 4. the power t o remove and a p p o i n t t r u s t e e s ; 5 t h e power t o c o n t r o l t r u s t e e s i n the a d m i n i s t r a t i o n o f the t r u s t ; 6. t h e r i g h t t o r e c e i v e a l l or p a r t o f t h e income of the t r u s t .  -  The  92  s t a t u t e b r i n g s F l o r i d a law  the  Second  contain  one  Restatement important  t r u s t e e , the t r u s t  of  -  i n t o l i n e with  the  Law  exception.  of  Trusts,  I f the  under the  Whether  Declaration not met a  of  ing, the  still  Trust  jurisdiction be  open  for  be  to  i s the  sole  the  accoror  val-  i n which i t i s executed.  a F l o r i d a court  to  find  a  f o r m a l i t i e s are  I t would seem, however, that such  s t r e t c h i n g the  in effect  settlor  agency  argument  would be  past  appointing  break-  himself  as  agent.  It  should  be  emphasized  that,  notwithstanding  statutory  p r o v i s i o n s , Hanson v. Denckla has  overruled  i n F l o r i d a , and  own  jurisdiction  has  been c r i t i c i z e d  Lane  does  of a w i l l ,  a mere agency where such  i s open to q u e s t i o n .  f i n d i n g would  it  instrument must e i t h e r be executed i n  laws of the  i t would  but  settlor  dance with the f o r m a l i t i e s f o r the execution id  the p r i n c i p l e s of  v.  to  Palmer In  decision,  court  u  original  the  that  The  expressly  it.  It i s true  that  the  i n our  decision  by the F l o r i d a D i s t r i c t Court of Appeal, i n National case,  noted  Restatement,  m i n o r i t y view.  been  i t i s t h e r e f o r e open to courts  follow  First  Sarasota.1 ?  not  the  and  Bank  some ten  that that  i t had i t had  court then went  &  Trust  years  after  beeen decided been  Company the  of  Hanson  under the  criticized  as  a  on:  It i s the o p i n i o n of t h i s court that a v a l i d i n t e r vivos t r u s t may be created i n F l o r i d a even though i t contains a power to c o n t r o l the t r u s t e e , i n a d d i t i o n to being revocable and r e t a i n i n g the l i f e income to the s e t t l o r , i n accordance with the p r o v i s i o n s of  - 93 p a r a g r a p h 57  Nevertheless, Denckla  on  pointment court to  the in  went  day  the  so  the  and  that  f a r as  to  the  the  the  frequent  case  was  conclude  settlor  trust  (Second) T r u s t s  i n Lane m e r e l y  earlier  control,  nothing",  Restatement  court  basis  -  that,  "would  have been  distinguished use  not  1959.108  of  the  evident had  have  nothing  in  there  an  v.  power o f  ap-  Lane.  The  been  divested but  Hanson  such  day  himself  of  agency  agree-  ment. 109  The  conclusion  Denckla  i s that  United  States,  of  one  i t represents  not  but  is  commentator  argues  disallow  revocable  a  commentator only  difficult  forcefully inter  that vivos  of  a minority to there  trust  Hanson view  in  support.110 is on  no  the The  reason  public  v.  to  policy  grounds:  The f o r m a l r e q u i r e m e n t s o f t h e w i l l s s t a t u t e s a r e i n tended to p r e v e n t f r a u d u l e n t c l a i m s a g a i n s t the est a t e of a decedent. I t i s w e l l e s t a b l i s h e d t h a t an inter vivos trust i n s t r u m e n t need not be executed w i t h t h e f o r m a l i t i e s r e q u i r e d f o r a w i l l even though t h e s e t t l o r r e s e r v e s a l i f e i n t e r e s t and a power t o r e v o k e or amend t h e t r u s t . F r a u d u l e n t c l a i m s do not present any g e a t e r danger b e c a u s e t h e s e t t l o r also r e s e r v e s powers o f c o n t r o l o v e r t h e t r u s t e e as t o t h e administration of the trust and a power of appointment exercisable only by an instrument e x e c u t e d and s i g n e d by t h e s e t t l o r and d e l i v e r e d t o the t r u s t e e . 1 1 1  The  reasoning  that  the  danger o f  fraud  does not  increase  by  the  _ retention merit. of the  of  I t again  the trust form  fraud  i n determining  of  an  express  of  certainly  control as  modern  controls  detailed  diminish  approach  i s  there  seems  control  the importance  In fact,  the  of  has of  i t s validity.  and  against  and  -  powers  emphasizes  are minimal.  powers  The  extensive  94  further settlor  formalities  I f the trust  be  who  argued  that  exercises  to  reason  permit why  i si n  the chances  the opportunity  clearly l i t t l e  the  agreement,  i t could  considerable  extensive f o r  those such  they  of  fraud, powers.  extensive  should  not  be  permitted.  The be  entirely  message, trust  cases  discounted,  valuable  as  a  following  wills  to  t h e agency  however,  anyone  f o r they  preparing  substitute.  principle  This  or  i n t h e d r a f t i n g and a d m i n i s t r a t i o n  trustee  should  property  must  trustee,  he  trustee words  from  some  clearly  or  she  the  o f one Ohio  judge  duties  vest.  much  role  active  I f  clearly of  the  i n this  the  to  a  the  o f such  common  to  trusts.  perform;  settlor  not  revocable  i s simply  distinguish  l i f e  contain  using  message  caution  have  do  should  The  the  trust  as  sole  acts  the  role  of  tenant/beneficiary.  context  are particular  use  the The  apt:  With the increasing popularity of the revocable living or inter vivos trust i n modern estate planning, i t shold be made clear that the phraseologoy used i n the trust instrument i s meaningless, i f the so-called settlor or donor a c t u a l l y remains i n v i r t u a l c o n t r o l and t h e s o - c a l l e d  - 9 5trustee f o r fear of losing the business acquiesces i n his every act and wish. Where the trustee continually yields and makes adjustments i n an attempt t o keep a semblance o f a t r u s t , a mere agency or c u s t o d i a n s h i p i s bound t o r e s u l t . 1  1  2  - 96 F o o t n o t e s To  Chapter  4  1.  See, f o r example, the l i s t o f u s e s i n t h e C a n a d i a n E s t a t e Planning and Administration Reports, " T r u s t s " , by Mary L o u i s e D i c k s o n , at 7591-2.  2.  Income Tax s. 75.  3.  For example, T r u s t s , C o n t i n u i n g L e g a l E d u c a t i o n , 7 & 8, 1985, at 8.1.01, s u g g e s t s t h a t "a v a l i d irrevocable".  4.  Donovan M. Waters, Law of Trust ( T o r o n t o : C a r s w e l l Company L i m i t e d ,  5.  ( 1 8 6 2 ) , 4 De  6.  Ibid.,  7.  I b i d . , at  8.  ( 1873), L.R.  9.  Ibid.,  10.  ( 1874), L.R.  11.  Ibid.,  at  12.  [19131  2 Ch.  13-  Ibid.,  at  14.  H.C.  15.  (1892),  16.  Ibid.,  17.  ( 1 8 9 5 ) , 40  N.S.L.R.  18.  Ibid.,  at  198.  19  [1936]  1 W.W.R. 609,  20  I b i d . , [ 1936]  21 .  Ibid.  22.  Ibid.  45  at  Act,  G.F.  E.R.  at  & J . 264,  1185,  at  c.  45  148  and  E.R.  amendments  thereto,  November trust is  i n Canada, 2nd 1984), a t 129. 1185.  1190.  1189. 16  Eq.  11 .  18 Eq.  11 .  348.  14. 478.  486.  Underhill, 22  R.S.C. 1952  O.R.  13  ed.  (London: B u t t e r w o r t h s ,  1979).  307.  310. 193-  [1936] 2 D.L.R. 460  2 D.L.R. 460,  at  464.  (Man.  CA.)  ed.,  - 97 23.  (1960), 26 D . L . R .  24.  Ibid.,  25.  Re Mee (1971), 23 D . L . R .  26.  Ibid.  27.  [1948]  1 W.W.R.  28.  Ibid.,  at 463.  29.  Theobald on W i l l s , at 9 3 -  30.  (1866), L . R . 1 P. & D. 241.  31 .  Ibid.,  at 244.  32.  Ibid.,  at 243.  3 3 . Supra,  (2d) 321.  at 327. ( 3 d ) 491 at 496.  461.  13 e d . , (London:  1971),  footnote 19.  34.  [1951] O.W.N.  728, [1952] 1 D . L . R .  35.  Ibid.,  1 D.L.R.  36.  [1937] 3 D . L . R . D . L . R . 768.  3 7 . Ibid.,  Stevens & Sons,  [1952]  163  41 (Ont. H . C . ) .  41 at 47. (Alta.  C.A.),  at 165.  3 8 .  Ibid.  39.  [ 1947] 2 D . L . R .  40.  Supra,  41 .  ( 1956), 7 D . L . R .  42.  [1949] 2 W.W.R.  43.  (1987), 52 A l t a L . R . (2d) 210.  44.  Supra,  45.  Ibid .  46.  Supra,  footnote 41.  47.  Ibid.,  at 451 .  48.  [ 1934] 4 D . L . R .  797  (B.C.S.C).  footnote 25. (2d) 445  (B.C.S.C).  705 (Sask.  K.B.).  footnote 40, at 463.  787 (Ont. C A . )  affirming  [1937]  1  - 98 49.  Ibid.,  at 763-  50.  (1841)  4 Hare 69,  51.  I b i d . , at 569 .  52.  Supra,  53.  (1835),  54.  Ibid.,  55.  See A u s t i n Wakeman S c o t t , The Law of T r u s t s , (Boston: Little, Brown & C o . , 1956) V o l . 1, at ph. 57.1; also "Annotation", 32 A . L . R . 2d 1270, at ph. 3-  56.  [ 1943] 803  57 .  I b i d . , a t 234.  58 .  footnote  67 E . R . 5 6 4 .  39.  3 My. & K. 31, 40 E . R . 13 at  2 D.L.R.  225  40 E . R . 13.  14.  (P.E.I.S.C),  affd.  [ 1943]  4  D.L.R.  Supra, footnote 43.  59 .  I b i d . , a t 234.  60.  S e e , f o r example, t h e f o l l o w i n g c a s e s : Re D a l e y ( 1 9 0 7 ) , 39 S.C.R. 122; Re Mailman, [1941] S.C.R": 449; N i l e s v . L a k e , [1947] S.C.R. 291, 2 D.L.R. 248; Re A y l e w a r d , [1955] 5 D.L.R. 753 ( N f l d S . C ) ; Edwards v . B r a d l e y ( 1957), 9 D.L.R. 2d 673.  61.  S e e , f o r example, the following cases: Hill v. H i l l ( 1 9 0 4 ) , O.L.R. 710 ( O n t . H.C.); M c K n i g h t v . T i t u s (193377 6 M.P.R. 282 (N.B.C.A.); S h o r t ! 1 1 v . Grannon ( 1 9 2 0 ) , 55 D.L.R. 416 (N.B.C.A.); Re R e i d ( 1 9 2 1 ) , 50 O.L.R. 595 ( O n t . C.A.); L a r o n d e a u v . L a r o n d e a u , [1954] 4 D.L.R. 293, Re F e n t o n ( 1 9 7 7 ) , 26 N.S.R. (2d) 662 ( N . S . S . C . ) .  62.  Re M a i l m a n , s u p r a ,  63.  Hill  64.  I b i d . , a t 711.  65.  Shortill  66.  McKnight v. T i t u s ,  67.  Re R e i d ,  68.  Ibid.,  v. H i l l ,  footnote  supra,  v . Grannon,  supra,  at 604.  60, a t 454.  f o o t n o t e 61.  supra,  supra,  f o o t n o t e 61.  f o o t n o t e 61.  f o o t n o t e 61.  - 99 69.  I b i d . , per Ferguson,  J . A . , at  70.  [19491 L . R . Ch. D.  71 .  Edwards v.  72.  (1938),  73.  Ibid.,  629.  74.  Ibid . ,  630.  75.  American ( 1958) .  76.  Supra, footnote A . L . R . ( 2 d ) 1970.  77.  Newman v.  78.  A t l a n t i c N a t i o n a l Bank of J a c k s o n v i l l e et. a l . v. St. Louis Trust Co. e t . a l . , 357 Mo. 7 7 0 , 21 1 S.W.2d 2 (194"8T7 S.C. Missouri.  79.  Re Seeburg E s t a t e , E r i e County.  80.  In Re E s t a t e of F o n t a n e l l a , (1969), N . Y . S . C . , A . D 7 7 .  81.  Re Shapley T r u s t , 3• 0• •  82.  Ibid,  83.  Re P e n g a l l y ' s Penn. S . C .  84.  See, for example, Re Brown E s t a t e , 284 Pa. 99, 119 A.2d 513 (1956), Re Montague E s t a t e , 403 Pa. 558, 170 A.2d 103 (1961), Re Huested Estate~4~03 Pa. 185, 169 A.2d 57 ( 1961)  85.  Re Estate of Penn. S . C .  86.  see  87.  Westerfield  88.  F l e c k v.  89.  see  278.  Bradley,  supra,  134 Ohio St  at  1,  55,  footnote  15 N.E.2d  Law I n s t i t u t e ,  Pore,  607.  I;  275 N . Y . 371,  353  627.  Restatement  Vol.  46  60.  see  of  also  the  Pa. 499,  32  (1937).  (1944),  33 A.D.2d 29,  Trusts,  "Annotation",  9 N.E.2d 966  N . Y . S . 2 d 412  Law:  Surrogate  Ct,  304 N . Y . S . 2 d  46 A.2d 227  ( 1946),  829  Penn.  48-49.  Land v.  Estate,  Mason,  395  Pa.  Pa.  358,  485,  M a r s h a l l , 426 S.W.2d 841 v Huckaby, 462 S.W.2d 324  Baldwin,  supra,  374  141 Tex.  footnote 86 and  340, 87.  97  150  A.2d  844  A. 2d  (1968),  542  ( 1953),  ( 1059),  Texas.  (1971), Texas C . A . .  172 S.W.2d 975  (1943).  90.  Texas St.  91.  B e t k e r v. N a l l e y ,  92.  I b i d . , at  9 3  -  Union  Trust  Act,  100  -  A r t . 74256-7,  78 App.  D.C.  subd  312,  A,  140  Vernons  F.2d  Ann  171  Civ.  (1944).  173.  Trust  Co.  Trust  v. Hawkins, Co.  161  McEvoy v. B o s t o n F i v e N.E.2d 465 ( 1 9 0 9 ) .  96.  N a t i o n a l Shawmut Bank N.E.2d 1 13 ( 1944) .  97.  Wasco v. Oshkosh Savings ( 1 9 2 4 ) , S.C. W i s e .  98.  Re S t e c k ' s S.C. W i s e .  99.  Supra,  footnote  97,  at  830.  100.  Supra,  footnote  98,  at  732.  101.  S u p r a , f o o t n o t e 55, V o l . 1A, n o t e 2, a t E s t a t e , 34 M i s c . 2 d 58, 227 N.Y.S.2d 128  102.  In Re F o r d ' s E s t a t e , 279 A.D. 152, 108 N.Y.S.2d 304 N.Y. 598, 107 N.E.2d 87 ( 1 9 5 1 ) , N.Y.C.of A.  103.  Hanson v. D e n k l a , o t h e r g r o u n d s , 375  104.  Ibid.  105.  L e w i s v. Hanson, a f f d 375 U.S. 2 3 5  106.  20 West's Florida cumulations.  107.  Lane v. Palmer F i r s t N a t i o n a l Bank and T r u s t Company S a r a s o t a , 213 So. 2d 301 ( 196"B), F l o r i d a D i s t r i c t CA.  108.  Ibid.,  at  303.  109.  Ibid.,  at  306.  110.  James S.  Roth,  St  and  Wise.  v.  Joy,  Trust  290,  315  Co.,  81  135;  "Estate  Ch.  235,  Ann.,  Planning  Mass 196  53  457, N.W.  729  87  829  (1957)  In Re G o u l d ' s N.Y.S.C.  (19627,  128 p.  627  Mass. 20,  N.W.2d  100 So. 2d 378 ( 1956), U.S. 2 3 5 ( 1 9 5 8 ) .  Stats.  15 N.E.2d  S a v i n g s Bank, 201  of Boston  36 D e l . (1958).  1,  App.  95.  275  Ohio  ( 1 9 2 9 ) , Ohio  Cleveland (1938).  Cents  134  548  94.  Estate,  v. W h i t e ,  N.E.  122,  Fl.S.C,  A.2d  819  689.075,  in Florida:  The  affd  rev  on  ( 1957), 1969  and of  Revocable  Inter 111.  Ibid.,  112. Osborn  Vivos  Trust",  101 -  16 U. o f F l o r i d a  L.R.  a t 48-49. v. Osborn,  226 N.E.2d  814  (1966).  34, a t 48.  102  -  -  CHAPTER 5 PRACTICAL CONCERNS IN USING THE REVOCABLE TRUST  1.  INTRODUCTION  Having carefully  determined  drafted  that  and employed,  a  revocable  be used  there remains to be examined c e r t a i n from such use i n B r i t i s h be of  transferred such  beneficiaries  of  practical  more p h i l o s o p h i c a l whether  beyond  individuals  the reach  policy  of those  be  spouses  The  indeterminate  in British  Columbia.  the  practical  matters  the  next, the i s s u e s a r i s i n g  arising  a revocable  residual  trust.  concern i s the question to place  otherwise  In t h i s c l a s s  children.  children.  and  arising  These are some o f the  permitted  who might  c l a i m a p o r t i o n o f those a s s e t s .  will,  be the e f f e c t  i f any, w i l l  concerns o f using  should  of a  matters  What w i l l  rights,  or p u b l i c  can, i f  What assets can and should  have v i s a v i s the t r u s t ?  more important Of  Columbia.  And what  i n place  practical  to the revocable t r u s t ?  transfers?  trust  law  in This  i n using  assets  be e n t i t l e d to o f persons are  this chapter  area will  a revocable  remains examine  t r u s t , and  i n claims advanced by a spouse or  - 103 2.  WHAT ASSETS  In  a  wills  s u b s t i t u t e , c a r e f u l c o n s i d e r a t i o n must be given  to which  assets  should  some assets  not  be  lend  example,  utilizing  transferred themselves personal  the  to  employment, motor  the  easily and  not  t r a n s f e r r e d to the be  accept  and  This  American  sources.  will".2  if  a  to  the  over  by  trust  i n such a way  drafted  incorporated if  any  reference  i n t o the  changes  are  say  that  The  i s the  one  can  either  revocable  trust  will  is  must  held  assets  plan  could  that i t  may  be  settlor's  estate  assets  recommended left  itself.  to  by  to  by the  named If  the  be  used, noted,  the and  doctrine the  will  of and  as to ensure that the t r u s t i s not  will,  but  made to  rather  the  vice  t r u s t , or  p o t e n t i a l problems i n the  incorporation.  specific  jointly  rather  be  for  the American sources a "pour over  will  the  —  from  such  better  do  earnings the  t r u s t , but  r e c o n s t i t u t e d , then a new  If  trustee  for d i s p o s i t i o n of those  assets  incorporation  a  pass through the  i s c a l l e d by pour  to  action  The  1  or  l a t t e r , the w i l l  of  by  perhaps even  so.  will  to arrange  course  beneficiaries,  do  Clearly,  as  possessions,  revocable  to  trust  ownership  i s not  some assets  upon death, will.  That  inconvenient  that  to  v e h i c l e s , and  residence.  would  trust.  household  family be  revocable  should  concern  of  versa.  Moreover,  i t i s revoked  a l s o be executed to  the  settlor  i s to  and avoid  avoid  - 104 claims  under  the  Wills  amount of assets should will.  Beneficiary  insurance, should  the  estate.  be  profit  revocable  an  entirely  to  until  so  then  pension  plans  as  to  particular Indeed,  the  only  transmitted  in  sharing  alternative.)  unfunded  to be  trust,  (Designations  course,  left  Act,  designations  employee  be  Variation  a  a by  way  and  plans  payment  revocable death,  life  similar  avoid  of a  plans,  beneficiaries  settlor's  minimum  trust  i f the  to  the  are,  of  may  be  bulk  of  a s s e t s c o n s i s t of death b e n e f i t s under such p l a n s .  Generally stocks  and  bonds, and  to  the revocable  to  deal  to  fulfill  will  speaking,  with  trust  asset  to  consider  transfer  of  assets  consequences at  3.  the  them to  a  and in  land,  savings,  be t r a n s f e r r e d  I t may  be  necessary  private institutions Clearly,  the  such  institution,  this  revocable  f e d e r a l and  as  should  upon i t s c r e a t i o n .  t r a n s f e r requirements.  possible  such  investments  v a r i o u s p u b l i c and  depend upon the  review  other  assets  provincial  order  requirements and  context. trust  in  i t i s not  However,  the  trigger  tax  may level,  and  a  brief  of these consequences i s i n o r d e r .  INCOME TAXES  The  subject  of -taxing  a  trust  i s an  extensive  d e s e r v i n g of study beyond the scope of t h i s t h e s i s .  one,  In f a c t , a  - 105 thesis also of  was  published  a number of  overviews on  on  other  the  subject  sources a v a i l a b l e .  taxing  a trust  will  these sources recommended for any  On  a  difficult  issue  nature of  the  any  kind.  general for  is  note,  taxing  trust.  It  1985,3 and  in  a  dealt  with  taxation  authorities, an  label  Only the  4  of  because  individual  used  trusts  for  of  or  an  identifying  view  definition there Tax  of  i s no Act  a trust  of  6  of  the  The  testamentary  the  Act  trust,  imposing  income tax  the  The dealing  an  inter  former  is  trust".  definitions, for  for  Canada.5  "includes  trust".  a  legal  law  is a  ignore  the  Act  definition with t r u s t s  vivos defined  essentially  states and  as  trust  of  treats  taxation  in  the  section  trust "a  its  trusts (except  own  Oddly enough,  a trust  Notwithstanding  7  purposes  instead  purposes.  comprehensive d e f i n i t i o n of  subdivision trust  of  can  of  a  statute,  accordingly,  a  very  entity  creature traditional  with  is  the  However, i t i s a t r u i s m that income tax and  briefest  here,  relationship. of  are  indepth review.  the  I t i s not  only  be  there  in  only  a  Income the  that  a  testamentary other  the as  than  lack  a of  individuals  for  certain  deductions) . 8  More important than how under  the  clarity,  Act the  i s the  a t r u s t i s defined or  matter of when the  income tax  trust  treated  i s taxed.  For  consequences for a revocable t r u s t  will  be  discussed  situation personal  with  as  106  reference  to  follows.  property  co-trustees, their  -  to  and  deaths.  The a  his The  a  simple  settlor  trust,  settlor  transfers a l l his  naming  brother  hypothetical  as  himself  a  retains  following  the  have  power  the  the  death of both  b e n e f i t of  their  to  income  generated  as  Family  the  revoke,  some  power  the  "whens"  Trust:  upon  which  up.  With in  is,  available  defines  capital  a  of property  a  to  the  settlor  of  The the  trustees trust  s p o u s e s work and there  trust  will  and  beneficiaries  his wife.  and  The  any  to  this  for  retain  is  no  be  referred  to  the  its  first  aggregate losses  gains under  of  of  business  the  any the  property  are the  operation,  to  the  three Family  and  upon  Income  capital  Tax  gains  "disposition  of  up  to  as  of  $100,000.00  110.6(3).)  property or  for  taxable  from  section  tax  event,  exemption  a trust,  his  income  during  b e n e f i c i a r y under  transfers  discussion, there  trigger  disposition  transfer trust  the  capital  (A  however,  may  respect  income  allowable  of  creation,  property".9  54(c)  trust.  purposes  its  includes  over  Both  to h i m s e l f  the  capital  personally,  the  interest  and  the  tenants.  income by  possible  Act  life  upon  to  Trust.  For  winding  encroach  the  employment  himself  as  a  c h i l d r e n as  names h i s  wife  upon  his  and  his  and  trustee  a life  jointly,  real  replacement  powers o f a d m i n i s t r a t i o n , g r a n t s wife  and  fact  Subsection  including  "any  t r a n s f e r of property trust".^ to  the  u  Family  Thus,  of  when  Trust,  a  disposition Act,  and  has  occurred  increased  consideration  for  settlor  is  section  stipulates  he  d e a l i n g at  fair  market  equal  to  here)  will  market  fair be  deemed  to  date  on  any  capital  consequences  for  the  be  no  return  of  the  trust.  In  addition,  prepared  and  the  should  year  that  a  that  transferring the  exempt t h e  subsection  or  to  recipient  if  the  i s not  of  the  that  he  return  Family  to  the  proceeds  Family  else, Trust  trust  at  fair  of  the the  claim  an  no  income that  the  tax  there  income  will  be  property will  Trust  cost of  say  t r a n s f e r s the for  than  can  be  a  less  value  settlor  by  whom  property  incurred, will  That  with  reap  same as t h e  the  This  or  (the  market  i s the  the  anything  proceeds  deemed  fair  to  have  tax more  to to  the be  filed.  Assuming  arguable  be  received  settlor.  settlor  in  in  f o r no  no  69(1)(b).  to  consequences at a l l ; i f n o t h i n g  complicated  gain  section  Tax  that  trust  a person  the  gain  the  v i v o s , or  of t r a n s f e r  settlor,  fact  of  The  if  from  Income  disposition  have  Only  the  will  of  the  The  flow  shall  value.  to  exemption  inter  of  result. may  the  proceeds,  1 1  purposes  arm's l e n g t h  market  at the  property  gift  value  value.  property  by  may  because  that  either  -  the  property  irrelevant  taxpayer, i s not  for  taxes  the  107  there property  r e t e n t i o n of transfer  54(c)(v).  from  is  a  to  potential the  a life such  It stipulates  Family  interest  taxable Trust, by  the  capital it  settlor  g a i n s under t h e w o r d i n g an  e x c l u s i o n to the  is  of  meaning  of  " d i s p o s i t i o n " as  108  -  follows:  any t r a n s f e r o f p r o p e r t y by v i r t u e o f w h i c h t h e r e i s a change i n the legal ownership of the property without any change in the beneficial ownership thereof...12  Theoritically, revocable  trust  However, any  ownership in  which  has  no  is  the  whether  the  ingredient  of  hypothesized Clearly,  the  example  settlor  as  of  is  duties  to  absence bare  here  has  drafting  m i g h t make t h e  particularly  if  settlor  extensive.  for  tax  certainly  While  the  apply),  an  exemption  i t could  well  agency  the  a  t o be  the  the issue  essential Trust  bare the  as  trust? sole  or  Careful  a bare t r u s t ,  granted be  attack  would  one  trustee  perform.  subsection  destroy  an  not  must  to  as  transfer  of  to  appear  open  in  the  Family  is  However, c a u t i o n  f i n d i n g of  and  is  the  the  beneficial  aside  administration  be  (the  duties  gives  trust  to  here.  "without  a  Leaving  settlor  might  the  such  except  ordinary  Trust  writer  description  Trust  an  words  where  active duties  of  the  One  does  the  Family  powers  trust  the  purposes  active  trust,1 ^  b e n e f i c i a r y and  agency".  to  beneficiary  directs.  to  Family  describes  f i t Raphael's  answer  the  the  transfer  sole  of  residual  as  applied  paid  perform,  beneficiary  a  a  the  no:  drafting,  be  He  is  were  in  must  unchanged.13  active  be  b e n e f i c i a l ownership".  an  the  property of  as  can  contemplated  attention  i n the  trust  subsection  as  careful  change  bare  this  be  to  used as  the  in a  such "mere  advantageous  54(c)(v)  usefulness  would of  the  - 109 Family admit not  Trust that  as  a bare  a  in  substitute.  revocable  that  beneficial  conclusion  trust  cannot  54(c)(v)?  subsection  ownership  Trust,  subsection  and  does  of  i n a  real the  beneficiaries.  constructive  change power  settlor  has  only  to  i s simply  l i f e  method  which  to  the  interest,  the  could  be  f o r the purposes a  only  as  the  as  settlor, there  the and  power  to  been  a  giving the  there  the other  means  over  has  property,  a  the  tenants  there  On  i n the that  control  of  the  constitute  f o r l i f e  ownership.  that  i s  no  hand, i f  to transfer the  pending would  which  clearly  the be  a  ownership.  that  to the settlor  and  whether  the  described  and  may  I f i t i s viewed of  a transfer  altered  revoke  interpretation  ownership  i n the beneficial  disposition grant  a  to  The  ownership.  that  generally,  ownership  determining  back  i s not  provision  i s viewed  ownership  Assuming one  here  arguable  the  i n the beneficial  to revoke  beneficial  change  i n  of beneficial  settlor  better  the exception  trust  power  beneficial  crucial  within  property  The  notwithstanding  change  discussed  i s certainly  the  apply.  property,  i s  f a l l  revocable  continued  revoke  trust  n e c e s s a r i l y mean  I t  effective  residual  I t i s probably  trust.  revocable  Family  wills  the typical  Does to  a  power  latter  interpretation  utilized  to  o f t h e Income  at  least  Tax  o f appointment,  i s correct, delay  Act would  instead  of  the be  to  naming  — 110 — residual  beneficiaries  a stronger  case, change  of  54(c)(v), also  the  disposition would  dealing  be  this  desirable  circumstances  It  should  with  the  trust.  revocable  trust,  not apply  be  until  course  pointed  of  not  commentator transfer  specified  of the three  cases  he c i t e s  a  taxing  ownership".1^ gave  rise  insurance family  with  a situation, provision one  to a r e s u l t i n g  r u n company  were  n  only  that  a  54(c)(v)  the  the  statement dealing  a  transfer  case,19  "absolute which  payment o f  shares  transferred to a trustee,  the  However,  with  third  a  which  interest,  with  a  subsection  i s concerned  and a n o t h e r  cases to  trust  of this  gratuitous  a  the  with  and a l l a r e E n g l i s h c a s e s  with  such  a r e no  person.15  i n support  delay  the t r u s t .  to a life  It  on  specifically  living  trust,1? j  interest  Whether  subsection  only  but  ownership.)  there  argues  which  dealt  monies.18  life  entirely  of property  in a  with  transferor  subsection  interest  o f a c t i o n would  depend  no  as t h e power o f  the wife's  dealing  vesting  such  time  out t h a t  remainder  with  such  would  the  deals  the l i f e  In t h a t  has been  by  i t altogether.  provides  none  there  a t the time o f d r a f t i n g  While  to a  Trust.  required  not only  application  one  that  i n the b e n e f i c i a l  and n o t a v o i d  revocable  does  that  as  (Although  change  be e m p h a s i z e d  particular  holds  to the residue  some  be made  ownership  i s exercised.  represent  delay  could  as t h e s e t t l o r  the r i g h t s  must  argument  beneficial  appointment may  when c r e a t i n g t h e F a m i l y  t o be  of  a  held  - 111 for  fifteen  of  the  years.  shares  restricted  or  absolutely  transfer  was  the right  this  case  both  with  the  such  that  there  i s no  change  to  revocable  trust  may  capital  case of  be  the  assumed f o r  to  to  years  ownership the  settlor.  revoke  to  the  purposes  of  view  transfer  courts  transfers to a  i s  the  i n a  that  i n  insofar  the to  the  submitted  fifteen  support  until  held  I t i s  power  some  was  address revocable  calculating  gains.  provisions  possible  "when"  of f o r  stipulates  on  c o n d i t i o n s , any  certain from  settlor.  lends  Nevertheless,  subsection  loss  to  beneficial  dispositions  The second  the  agreement.  i n a trust,  property  were  accordingly  tax. after  dispose  interests  trust  and  gains  of the shares  pursuant  trust.  be  shares,  of  to  the shareholder  to capital  return  i t should  the  the  the  but  issue,  of  return  only,  this  beneficial  t o revoke  contingent  a  shareholders  t o a power  i n the  the  their  to  to a return  i s analogous  Admittedly,  the  restrictions,  entitled  result  of  terms  not subject  that  as  rights  deal  under  Notwithstanding be  The  that The  that,  property  subsection taxing i n a  loss  shall  c o n d i t i o n s a r e as  (1) the prop may r e v e r t t o (2) the pro determined by of the t r u s t ;  75(2)  revocable  trust  where  or  income,  be  deemed  or to  deal  with  the  trusts. property capital be  that  That i s  held  gain of  or the  follows:  erty (whether original or substituted) the settlor; perty may pass to persons to be the s e t t l o r subsequent t o the c r e a t i o n or  - 112 - • (3) the s e t t l o r has, during h i s or her c o n t r o l over d i s p o s i t i o n of the property r e q u i r i n g h i s consent or d i r e c t i o n . 2 0  The trust,  and  trust,  first  the  other  under  a  administration. Family  Trust  thus  Family  Trust  would  power  of  Certainly,  the  be  encompasses  a l s o o f t e n be appointment  the  above.  such,  the  income and  l o s s e s , of the  property  a  revocable  found or  subsection  As  i n r e c e i p t of the  declare  It can  two  described  deemed to be could  condition clearly  lifetime, e i t h e r by  i n such a powers  applies  to  settlor capital  held  by  of the  would  gains, the  and  trust.  said t h a t , at l e a s t during the e x i s t e n c e of under  discussion  here,  the  tax  position  be  the  of  the  s e t t l o r i s no d i f f e r e n t than h i s p o s i t i o n p r i o r to the c r e a t i o n of  the  trust.  The attribution settlor  of  wording to  the  the  of  subsection  settlor  Family  during  Trust  7 5 ( 2 ) provides his  dies, his  lifetime.  only  for  When  the  s u r v i v i n g wife,  having  only a l i f e i n t e r e s t , w i l l not be deemed to r e c e i v e the income, capital trust  g a i n s , or l o s s e s of the  will  no  longer  be  died with the s e t t l o r . a spousal person  trust  entitled  lifetime,  revocable, The  because the  property.  the  power to  In f a c t , revoke  the  having  t r u s t w i l l , however, not q u a l i f y s u r v i v i n g spouse was  to r e c e i v e the  as s t i p u l a t e d  trust  income of the  in section 7 3 ( 1 )  not  trust  the  during  as  only her  - 113 A practical of  the s e t t l o r ' s  using  the  required but  Family  annual  to remember  tax p o s i t i o n Trust.  to f i l e  also  point  will  This  not only returns  i s that  be more  i s because  annual personal f o r the t r u s t ,  the r e p o r t i n g  complicated the  when  settlor  is  income tax r e t u r n s ,  in his capacity  as a  trustee.  The  third  winding up, w i l l died.  The  distribute will  be  remaining  recalled of a  and h i s wife be  any property  to It  i n the  o f property  of a  However, under  d i s t r i b u t e d by the t r u s t  to a  i n s a t i s f a c t i o n of a l l or any part  i n t e r e s t i s deemed to be disposed  to the cost  have  required  5 4 ( c ) includes  the t r u s t " . 2 2  of the property  of i n an  to the t r u s t .  In  words, there i s no c a p i t a l gain or l o s s by the t r u s t upon  the  t r a n s f e r to the b e n e f i c i a r y .  the  trust,  his  c a p i t a l property  there  Assuming value  then  Trust, i t s  to the named b e n e f i c i a r i e s .  subsection  under the t r u s t  equal  will  d i s p o s i t i o n "any t r a n s f e r  of h i s or c a p i t a l  other  property that  107(2),  beneficiary  amount  trustee  to a b e n e f i c i a r y under  subsection  o f the Family  occur when both the s e t t l o r  the t r u s t  definition trust  event i n the l i f e  would  have been a deemed  had not used  d i s p o s i t i o n of a l l  upon d e a t h . 3 2  that  over the years,  advantageous  I f the s e t t l o r  the property  has been  increasing in  the c r e a t i o n of the t r u s t  can c l e a r l y be  to the s e t t l o r ' s  estate,  for i t "freezes"  the  value  of  the  transferred have  no  capital suffer  captial  to  tax  the  trust.  i s  adverse  tax  retained.  The  beneficiary,  than  fair  market  a  capital  gain  i f a  sale  the the  in  using  immediately such  prior  are  pursuant  the  entitled  extent  death,  Family  that Trust  she  will  interests death,  to  and  be  in  what  the  will the  course,  may  acquires  the  be  liable  for  occurs.  at  upon  i s  that  of  settlor's  certain  evaluated  or  and  may  value  provided  subsequently  dispositions  his  he  value  deemed  to  be  noted  for  in  i t  potential  risk,  death. the  proceeds  because  of  Insofar  as  trust  extent  can  tax  property and  included  should in  the  return?  In  the  has  interests  terminal  wife  the  provisions for settlor  be  that  increases  settlor,  less  savings  date  the  consequences,  should  the  for  at  It  on  Subsequent  property larger  -  property  consequences  property  114  i t to  Family to  a  that  income  must  be  Trust  l i f e has  interest accrued  included  subsection  described,  70(1).  as  settlor  and  in  the  trust  but  not  been  paid  the  terminal  income  That  the  in  section  property. prior  his To to year  states  In computing the income of the taxpayer for the taxation year in which he died, an amount of interest, rent, r o y a l i t y , annuity... remuneration from an office or employment, or other amount payable periodically, that was not paid before his d e a t h . . . s h a l l be i n c l u d e d i n c o m p u t i n g t h e taxpayer's i n c o m e f o r t h e y e a r i n w h i c h he d i e d .  While  the  income  provision, to  the  encroach  that  the  from  the  inclusion  i s more  power  was  115 trust  of  any  so  an  "amount  paid  periodically",  to  apply.  Even  i f i t could  payments,  there  death,  as  s u c h payments are  Until  that  discretion  ascertainable  interest  for  the  power  not  be  and  should  the  definition  to  easily  in  as  of  a  shown  as  so  capital.  The  while  This of  the  not  seem  periodic  taxpayer's discretion.  settlor same  power  produce  were  these  i t i s arguable  interest  to  trustee's the  the  would  there  1  this  established  as  "owing" on  property.  capital  that  i n the  However,  within  be  70(1)  exercised,  the  revoke.  evaluated  subsection  solely  is  i t could  consistently  payment  ascertainable,  be  108(1)(c),  be  falls  p a y a b l e under  Unless  exercised  i s no  clearly  capital  doubtful.  surely  -  has  can  be  no said  interests  that  t h e y do  argument  a trust,  may  exist,  i s based  in  on  subsection  follows:  a right (whether immediate or future and whether absolute or contingent) of the taxpayer as a b e n e f i c i a r y under the t r u s t t o , or t o r e c e i v e , a l l or any p a r t o f t h e c a p i t a l o f the t r u s t .  This  definition  to  encroach  be  made t h a t  rather to  than  encroach  interest  a  may  or  a  the as as  be  s u f f i c i e n t l y broad  power  to  settlor  revoke. holds  a beneficiary. a  potential  property  for  the  A  the  encompass  technical  power t o  T h i s would capital  to  purposes  of  power  argument  might  revoke  still  interest.  a  qua  settlor  l e a v e the Is  this  dispositions  power capital upon  death?  The  provisions that  "the  that  taxpayer before  time  defines  that  the  a  loss,  susection  were  deemed  108(1)(c),  property".  may  be  the  trust.  definition  form  a strong  of  a  impossible, r e v o k e may provided basis market  the  that  t h e power  The  particularly Would  one.  and In  fair  be  value  the f a i r  to encroach  value  market  upon  i t  is  fact,  no  cases  deemed  t o be  remains  that  i f not to  by t h e t r u s t ,  that were  The  fair  i s even  more  i n the d i s c r e t i o n depending  valuation  unlikely  a power t o  value?  capital  fluctuate  The  in  But i f i t i s n o t , what  i f exercisable only the  interest  o f a power  held  a  disposition  difficult,  market  i s exercised.  generosity?  insurmountable,  would  or  Subsection  that  fact  would,  subsections,  property the  other  gain  capital  of a l l the property  to evaluate  o f a power  trustee.  realistic  "property"  be t h e v a l u e  value  trustee's  Nevertheless,  to a s c e r t a i n .  can be used  tenuous,  death.  o f which  three  presumption  54(b)  and any  capital  These  o f upon  such  owned by him a t  g a i n upon t h e  disposed  of  disposed,  Subsection  a  o r a power t o r e v o k e a r e c a p i t a l  value  have  be, o f t h e t a x p a y e r " .  in a  various specifies  from t h e d i s p o s i t i o n of,  on  70(5)  as d e p r e c i a b l e p r o p e r t y  encroach  the  to  property  for a taxable c a p i t a l  with  y e s , based  Subsection  o f each  disposed  interest  together  be  capital  as t h e c a s e  capital  read  a  t o be  Act.  h i s death,  "any g a i n o r l o s s  107(1) p r o v i d e s of  Tax  property  property  capital  appear  shall  was  capital  property  would  o f t h e Income  immediately  if  answer  116 -  upon  problems the  found  problem where  of the seem  is  a  Revenue  Canada  has  power  attempted  to  to  encroach,  m a t t e r has  simply  not  estate  matter which the  Family  from  should  trust  (other  rules  apply)  shall  property  every  immediately the  capital trust  gains (and  to  the  tax  deadline, taxable  be  of  a  in  to  a revocable  of  disposition  the  104(4).  that  spousal  deemed one at  to  trust  have  the  in  settlor  for  and  a the  under  Family  power  to  deemed  case  gains  Trust,  revoke  would  by  probably as  that  taxable  payable  by  the  g a i n s may  the  the  use  the  settlor be  by  allocated  to  the  caught  discussed  trusts.  might  by  one  apply  any  For  and  year no  resettlement  the  earlier,  to  consider  twenty  would  However, be  is clearly  of  settlor  107(2)  result.  property,  it  value,  disposition  prior  subsection  would  a l l capital  104(21).  indefinitely  the  special  Assuming  in  alive,  up  reacquired  taxes  capital  subsection  for this  another  subsection,  of  value.  still  such  deceased  which  have  market  is  that  disposed  years, fair  the trust,  Under  additional  of  or  i n a d i s c u s s i o n of winding  result  trust  revoke  of  revocable  may  which  capital  problems  sufficiently  of  to  conclusion  increased  deferral  the  power  bold  tax  considered  than  reason  purposes  exercising  the  Alternately,  The  the  a  has  beneficiaries  prevent  be  twenty  if  attribution).  to  those  thereafter,  property  either  i s subsection  every  -  arisen.  to  Trust  value  leading  Returning settlor's  117  definition  and  no  real  tax  a d v a n t a g e would  twenty  one  year  considered  ensue.  rule  connection  with  the  of  beneficiaries  before  action that  may  beneficiary capital a  in  rollover  defined  by  extends  this  settlor's cause  the  the  Act.  settlor's  concern,  of  any  such  property  the Tax  Act,24  Subsection  to  if  to  the  this  part  of  be  distribution  trust his  or  such  trust  as  107(4.1), 75(2)  terms o f a  the  trust  apply,  any  during  the  consequences be  a  her  i s made d u r i n g  to  a of  to  subsection  a beneficiary  should  of  recalled  subsection  75(2)  a  course  spousal  which  tax  is  residual  i n a deemed d i s p o s i t i o n income  in  Because  a  words, where t h e  interest  to  from  a  be  trust.  107(4) exempts  is  in subsection  must  Trust  It w i l l  any  the  mentioned  settlor.  rollover  a l l or  trusts  result  Therefore,  about  revocable  Family  to b e n e f i c i a r i e s  rules  will  the  amendment,  In o t h e r  a capital  lifetime  consequences.  to  of  concerned  The  distribution  attribution  a  of  trust  said  be  consequences.  trust.  exemption  lifetime.  of  permits  i n the the  distribution  tax  be  the  should  trust  Income  satisfaction  when  when  up  death  the  107(2)  interest  applies,  the  have a d v e r s e  subsection  which  winding  to  most t h a t can  i t s possible application  transferring  amendment  -  or c o n t e m p l a t i n g  matter  consideration  recent  The  i s that  when d r a f t i n g  Another  118  with are  approached  tax of with  caution.  In  conclusion,  there  are  inevitable  income  tax  consequences  in  consequences may  make  estate  may  the  may  claims  the  Unavoidable the  may  encourage  revocable personal the  property  attractive  Act  to  keep  do  so,  avoiding  need  revocable  of  t o be  increased  While  they  such  records, are  trust  for  methods  i s the  better  vehicle the  will  affairs.  and  Conversely,  other  circumstance  of the  are  level trust.  The  property, second  at  which  pursuant  the to  must  p r o v i s i o n s of the  two  be  first  just  by many  tax the  they  the  Purchase  federal  imposition  a  imposed  are  of  forms  sales  tax  explored. complexity  complexities or  employ  an  as  likely  to  individuals.  upon  a  or  the  Act  at  setting  transfer  Services  Property  large  taxes  when  Social  Income Tax to  of  considered  is in  provincial  d i s c u s s i o n , as  The  least  detailed  is  p r o v i s i o n s o f the  the  and  These  s e t t l o r * taxpayer,  Columbia.  financial  use  more  Variation  to  the  trust.  PROVINCIAL TAXES  provincial  this  negative,  revocable  of a  be  trustee  There  and  trust  a taxpayer  the  a  favour  British  Wills  -  of  in  taxpayer's  discourage  in  in either  institutional  4.  work  planning  under  use  revocable  consequences  of  the  119  Tax  Act.  are not  extent  up  tax  transfer Tax  the a on  Act 5  of 2 6  2  real (The  included in  ancilliary  to  Act.)  a  sales  tax  upon  the  revocable  trust the  a s the r e c i p i e n t  wording  of personal  o f the S o c i a l  upon a p u r c h a s e r  120 property  Services  who i s d e f i n e d  i s unlikely,  Tax A c t .  i n section  Tax  given  i s imposed  1a s  a p e r s o n who a c q u i r e s t a n g i b l e p e r s o n a l p r o p e r t y a t a sale i n the Province f o r h i s own c o n s u m p t i o n o r u s e . . . 27  It  i s unlikely  definition person.  his the  of  person,  the r e c i p i e n t , o r h e r "own transfer  cover  and  Moreover, w h i l e  would  be  considered  not include at  common  i t i s arguable  a  law  trust a  that  consumption the  or use".  revocable  the d e f i n i t i o n o f " s a l e "  the transaction.  "person"  within  trust  the  i s not a might  the property f o r  Finally,  trust  a  the trustee  he o r she i s n o t a c q u i r i n g  to  consideration, not  trust  t h e A c t , a s i t does  under  be  a  that  is  provided made  without  i n the Act c l e a r l y  I t s t i p u l a t e s that  that  does  a sale  i n c l u d e s a c o n d i t i o n a l s a l e and a t r a n s f e r o f t i t l e or p o s s e s s i o n , c o n d i t i o n a l o r o t h e r w i s e , i n c l u d i n g a sale on c r e d i t o r where t h e p r i c e i s p a y a b l e by instalments, a n exchange, b a r t e r , l e a s e or r e n t a l or any other contract whereby at a p r i c e or other consideration a personal delivers to another tangible personal property...(underline added)28  the  i s also  arguable  property  remains  i n the t r a n s f e r o r ,  which p r o p e r l y  falls  within  that,  as a b e n e f i c i a l i n t e r e s t i n  It  the t r a n s f e r  the provisions  must n e v e r t h e l e s s be e x e r c i s e d  in drafting  i s n o t one  o f the Act.  Caution  and c o n s t i t u t i n g t h e  -  trust  t o ensure  valuable  that  121  the transfers  are indeed  made  f o r no  consideration.  The  application  of  the Purchase  c a n n o t be s o e a s i l y d i s m i s s e d . to  -  certain  exemptions,  transactions transaction  at  the  i s defined,  a  Tax A c t  That A c t p r o v i d e s t h a t , tax  Land  Property  i s  Title  i n part,  imposed  upon  subject "taxable  A  Office". 9 2  taxable  as any t r a n s a c t i o n  purporting t o t r a n s f e r by a n y method i n c l u d i n g a d i s p o s i t i o n , an o r d e r o f a c o u r t , i n c l u d i n g an o r d e r a b s o l u t e o f f o r e c l o s u r e , o r by t h e o p e r a t i o n o f any e n a c t m e n t o r l a w , an e s t a t e i n f e e s i m p l e r e f e r r e d t o in section 2 3 ( 1 ) o f t h e Land T i t l e Act, a life interest i n land... 30  The of  $200,000.00  the f i r s t  interest fair be  t a x i m p o s e d upon s u c h t r a n s a c t i o n s  t o be t r a n s f e r r e d ,  market  value.31  registered,32  liability  o  enough  revocable  even  r  registrable,33  period  and even  that to  transfer  a  personal  of the  the transfer attract  a return  the  and p a y  event.  of a taxable  a  value  of the remaining  must f i l e  i n either  the d e f i n i t i o n  t o encompass  trust,  and two p e r c e n t  A transferee  a perscribed  Certainly,  market  i t i s not necessary  of the t a x .  taxes within  broad  of the f a i r  i s one p e r c e n t  transaction i s  to the trustee declaration  of  of a trust.  T h e r e a r e e x e m p t i o n s f r o m payment o f t h e t a x s e t o u t i n s e c t i o n 5 of the Act.  Some t w e n t y  three  transactions  a r e exempt, b u t  only  a few  Much  depends  example,  of  these upon  i f the  could  how  -  possibly  the  settlor  122  revocable  t r a n s f e r s back t o t h e  transaction  may  provides  an  exempt  exemption  of  to  trust  t r a n s f e r s the  concurrently  be  apply  a revocable  i s structured.  property  settlor  under  trust.  to  a life  subsection  For  a trustee  who  interest,  the  5(2)(i).  It  a transfer  o f a l i f e e s t a t e where the t r a n s f e r e e o f t h a t life e s t a t e t r a n s f e r r e d t h e f e e s i m p l e e s t a t e i n t h e same land to the transferor of the life estate in a concurrent transaction. 34  No  mention  i s made o f  suggests  that  trustee)  upon the  taxing where  life  A the  are  is  a  recreational  residence.  parent,  provided  that  he  the  or  the  (in this  fee  exemption simple  exemption  related  family  in  clearly  case,  the  Whether  the  to  be  trust  A  may  arise  individuals,  farm, related  claimed  for  is a  or  i f the and  principle  other  the  citizen  the  land  defined  grandchild,  spouse or  settlor  residence,  individual is  grandparent,  grandchild she  provision  question.  child,  great  the  ( s e t t l o r ' s ) death.  permit  holds  but  "transferor"  tenant's  transferred  grandparent,  the  possible  trustee  spouse,  to  i s open t o  second  remainder,  would  transferor  remaindermen  and  i t passes  authorities the  the  of  any  permanent  or as  a  great of  them,  resident  of  Canada. 35 If person,  the  trustee  i t i s arguable  that  in he  the or  revocable she  can  trust  claim  an  is  such  a  exemption.  The  argument  the  transferee  itself. Act  As  i s based in  the  the  t r a n s a c t i o n " , 36 if  recreation  this  the  assumption  taxable of  third  or  transferred  possible  revocable t r u s t i s a  some  the  in section  It  not  a  is  trust  1 of  under a  merit.  is  trustee  not  is transferred has  family  the  and  a transferee  argument  property  that  transaction  t o whom l a n d  residence  A  the  description  "means a p e r s o n  however,  upon  -  123  the  taxable  is  moot,  principle  or  farm.  exemption  which  might  apply  to  a  transfer  t o t h e P u b l i c T r u s t e e or a t r u s t e e r e g i s t e r e d under t h e T r u s t Company A c t , R.S.B.C. 1979 c. 412, where the a d m i n i s t r a t i o n of the t r u s t e s t a t e i s for the s o l e b e n e f i t o f t h e s e t t l o r and on t h e t e r m i n a t i o n of the t r u s t the l a n d r e v e r t s t o the s e t t l o r - or his e a t a t e o r from t h e t r u s t e e back t o t h e s e t t l o r . 3 7  Leaving  aside  is  recommended  is  the  trust  the or  specified envisaged  Although life  i t may  interest  taxing  of  here be and  for  from  will  b e n e f i c i a r i e s are  but  still  the  may  revert  the  an  institutional  difficulty  of  the "sole  with  is  to  accept  it  utilized,  the  provision  the  revocable  benefit  of  the  settlor"?  it as  is  in light  unlikely  such,  of  the  the  particularly  argument problem  upon  the  that  t r u s t instrument.  Another settlor  this  Is  named i n t h e  marginal. to  revoke,  trustee  trust.  a p r a c t i c a l viewpoint,  power  appointment  whether  the  conditions  stronger, land  of  desired,  authorities  residual power  question  is  is  If a  slightly  that,  termination  if  while if  the  power  of  revert  revocation  to  estate,  the  if  by  (The  Neertheless, of  the  a  the  or  the  the  to upon  settlor  to  Purchase  whether exempt.  of  with  initial  the in  is  from  legal  settlor's the  Act.) terms  are  i s obliged  an  a trustee  to  situations  related  individuals  principle  to  but  of  to  to  exemption  transfer  a  refers  limited  farm,  death,  his  drafted.  a transfer  This  to  where the  specifically  i s a family  settlor's  upon  defined  beneficiary  who  revert which  some v a l u e  which  necessarily  the  may  residence  be  transfer it  is  of the  trust  of  property  some  little  from  the  trustee.  i s not  difficult  Property  transfers Until  possible  reviewed  the  the  It  the  trustee  the  in  be  residence.  the  not  exemption  transferred  recreational  assistance  and  not  property  appropriately  only  The  will  administer  is  exemption  t r u s t deals  land  property  the  only  settlor  assistance  the  t r u s t are  that  to  estate  it  c e r t a i n l y not  meant  e x e m p t i o n may  revocable  vivos  is  will  entitled  beneficiary.38  where and  is term  The inter  It  estate  -  exercised,  settlor.  representatative death.  is  124  to  this  Tax  Act  revocable is  imposition  i n d r a f t i n g the  done, of  to  conclude  did  not  trusts and  that  address should  amendments  purchase property  revocable  the  trust.  or  draftsman  their  should  made tax  minds  to  not  the  must be  of to be  Act, carely  5.  the  a  trustee  t r u s t instrument  trustee.  The  any  certain  trust  duty  to  law  preserve  a d v a n t a g e from hand  between  keep  proper  be  found  the  intention i s the  the  revocable be  of  to the  In  perform recover  a  their  of  For  trust  and  interest.  In  trust  settlor  of  r i g h t s of from t h e include:  the  only  term  the  of  such  and  wrongfully  and  duties  i t is  present  not  purposes, of  such  will  be  s e t t l o r / t r u s t e e of discussion,  retained  of  a  to  the  it  a  will  power refer  revocable  compel  i n a p r o p e r manner, and  property  beneficiaries,  to only  trust  a b e n e f i c i a r y under any  right  even  trust.  a beneficiary r i g h t s of  an  consequences  this  has  the  personal  p a r t i c u l a r , what  of  of  include  to maintain  the  the  that  trustee  "beneficiaries" will  revocable  of  gain  trustees,  the  by  purposes  to  analysis  For  and  the  These  not  trust,  duties  upon  residual  here.  revocable  the  authority,  duties,  the  out  and  t r u s t s and  of  a  imposes  detailed  them  the  the  duties  on  those  breach  remaindermen  broadly  proper  text  set  property,  A  in  obligations.  tenants  addition,  different  These  of  also  and  trust  review  are  that  The no  duties the  appointed  generally  trusts  life  to  trust?  assumed  revoke.  of  i n any  which  effect  will  accounts.  breach  breaches,  is  i t without  the  can  it  -  BENEFICIARIES CLAIMS  Where  to  125  the  transferred.39  trust.  trustees  to b r i n g  are  action  to to  However,  - 126 the  application  may  be  d i f f i c u l t  interest. and  may  while  The be  a  those  rights  i n light  interest  as  a  i n  possession existence  a  of  the  mercy  settlor/trustee's beneficiary  may  present  death  power  vested  may  may  of  lifetime.  a  l i f e  estate,  interest.  not  vest  revocation  i n  However, possession  a  remainder  not  vest  i n  i s exercised.  places at  The  the beneficiary least  Notwithstanding  l a w , he  situation  beneficiary's  additionally  essentially  under  the  following  settlor/trustee,  have  of  trust  of the beneficiary,  trust  t h e power  o f such  revocable  the nature  interest  revocable  because  i n a  remainder  a  remainder  o f the premature  interest  of  i s a  classified  usual  because  the  of  during  any  rights  at the the  or she  is not l i k e l y to invite the revocation of the t by making a complaint about the settlor-trust management o f t h e t r u s t property, even though management may vary from accepted t practices.^  r e t r  u e h u  s ' a s  t s t t  Practically  more  u  l i k e l y to  to  any  eventually  breaches  of  i f complaints  that  the beneficiary some  trust  knowledge  as  a  are  w i l l  the  of  on  part  registered.  f o r a no  beneficiary property  of breaches.  have  the  the trust  i s aware  substitute  beneficiaries existence.  receive trust  than  has  speaking,  of  the  This  w i l l ,  fact,  of  of  f a r  acquiescing  settlor/trustee, of  the  i n using  i t i s more  knowledge  by  assumes,  the terms In  i s  trust, a  l i k e l y  i t sterms  course,  or  and  revocable that  the  even i t s  However, i f the and  complains  of  settlor/trustee, better the  a what  view would  trust  -  beneficiary  breach  of  remedy  does  seem t o  properly  127  be  does have s u c h  trust  that  on  the  the  part  beneficiary  there  i s only  administered. 1  As  4  knowledge, of  the  have?  The  a r i g h t to  Professor  have  Waters  explains,  (T)he beneficiary's principal right i s to require t h a t t h e t r u s t e e s , who have c a u s e d l o s s t o t h e t r u s t t h r o u g h t h e i r b r e a c h o f t r u s t , s h a l l out o f t h e i r own p o c k e t s i n d e m n i f y the t r u s t f o r i t s l o s s . 4 2  This not  right yet  possession  No  damages  he  or  until  b r e a c h , by  an  to  accounting,  or  to  pointless  grant in light  It settlor's  of  may  of  the  safely  death that  the  be be  paid  to  awarded an  In  trust,  the  the  the on  power o f  said  other  the  do  no any  personally  to  the  from  the  actual  loss  less valuable, to  might  receiver, hand,  theory  can  for  court a  beneficiary  trust  addition  appoint  On  A  property  trust property  even  be  trust.  trust  realizes  the  relief,  the  the  all.  trust.  any  of  can  she  at  payable  breaches  to  compensation  receiving  property  compensation  refuse  loss  suffered.  trust  further  the  that  trustee's  that  on  insist  beneficiary  no  based  e n t i t l e d to  more t h a n losses  is  that  ordering also to  the  or  prevent  court it  order  might  would  be  revocation.  that  it  is  b e n e f i c i a r i e s have any  only  after  r e a l remedy  the for  breaches o f t r u s t because held  the  o f the well  responsible  assumed  committed  f o r breaches  succeeding  As  purposes,  the succeeding  settlor/trustee"s trusteeship. succeeding  trustee  settlor's  lifetime,  properly  administered.  relief  from  Act,^5 which  advised  order  sources  as to  joint  ensure  they  not  only  of  the  estate  carefully  appointed  in  sue  of the estate  i s well  c a n be  before  o f the revocable  the value  trustee  the  This i s  trustees  occurring  also  some A m e r i c a n  be  I t may w e l l some  but  accounts  Indeed,  that  b e n e f i c i a r i e s may  the purpose  have been t o m i n i m i z e  as t r u s t e e .  principal of trust  The  trustee,  settlor/trustee. well  by t h e s e t t l o r  established  duties.^3  their  128 -  trust  may  f o r probate  to review the  before  assuming  recommend t h a t t h e trustee that  during  the  trust  the is  ^  be t h a t  the courts  the succeeding  t r u s t e e may  under  98  section  o f the  obtain Trustee  provides  I f i t a p p e a r s t o t h e c o u r t t h a t a t r u s t e e , however, appointed, i s o r may be p e r s o n a l l y liable for a b r e a c h o f t r u s t , whenever t h e t r a n s a c t i o n a l l e g e d t o be a b r e a c h o f t r u s t o c c u r r e d , b u t has a c t e d h o n e s t l y and r e a s o n a b l y , and ought f a i r l y t o be e x c u s e d f o r t h e b r e a c h o f t r u s t . . . t h e n t h e c o u r t may r e l i e v e t h e t r u s t e e e i t h e r w h o l l y o r p a r t l y from t h a t personal liability.  While only this  t h e c i r c u m s t a n c e s can determine t h e a p p l i c a b i l i t y o f  section,  inadvertent  i t may  breaches  offer of  some  trust  by  assistance the  f o r innocent  settlor/trustee.  or The  moral,  however,  instructed  i s  that  as  to  his  or  her  administration  of  the  trust.  129 the  settlor  obligations  must as  a  be  carefully  trustee  in  the  -  130  Footnotes to  Chapter 5  1.  For example, E. William Carr, Revocable Trusts, (Englewood, N . J . : Prentice-Hall Inc., 19B0T^ i t chi 3; George M. Turner, Revocable T r u s t s , (Colorado Springs: McGraw/Hill Book Company, 1 9 8 3 1 , at c h . 16.  2.  Ibid.  3.  P a t r i c i a Anne Johnson, The Taxation of Trust Income: Some Inherent Problems and Comparative P e r s p e c t i v e s , A Thesis Submitted i n P a r t i a l F u l f i l l m e n t of the Requirements for the Degree of Masters of Laws, U n i v e r s i t y of British Columbia, March 1985.  4.  See, for example: Maurice C. Cullity, "Taxation of E s t a t e s , T r u s t s and B e n e f i c i a r i e s " , Chapter 35 of Volume 4, Canadian Income Tax Revised, (Toronto: Butterworth and Co. (CanadaT L t d , 1974); Lloyd F . Raphael, Canadian Income Taxation of T r u s t s , 2nd ed. (Don M i l l s , O n t a r i o : C . C . H . Canadian L i m i t e d , 1982).  5.  Income  6.  Ibid . , s.  7.  I b i d . , subsection  8.  Ibid . , s.  104(2).  9.  Ibid . , B.  s.  38,  10.  Ibid.,  s.  54(c)(iii).  11.  Ibid . , s.  12.  Ibid. , s. 5 4 ( c ) ( v ) - the subsection goes on to make c e r t a i n exceptions to the e x c l u s i o n , where the t r a n s f e r i s by a t r u s t r e s i d e n t in Canada to a t r u s t not r e s i d e n t in Canada, or a t r a n s f e r to an R . R . S . P . , defined profit sharing p l a n , employees p r o f i t sharing p l a n , or r e g i s t e r e d retirement income fund by a b e n e f i c i a r y .  13  Supra,  14  D.W.M. Waters, Law of T r u s t s i n Canada, Company L i m i t e d , 1984), at 27.  15.  Supra,  108(1)(j). f.  and g e n e r a l l y ,  Subdivision  (c)  of  Division  69(1)(b).  footnote 4,  footnote 4,  at  at  70.  69.  (Toronto:  Carswell  -  131 -  16.  Ibid.,  17.  Soul v.  18.  Commissioners of Inland Revenue v. Montgomery T . C . 679. (High Court of J u s t i c e , C D . )  19.  Booth v. (CD.)  20.  Supra,  21 .  I b i d . , s.  22.  Supra,  footnote  11.  23.  Supra,  footnote  6,  24.  Subsection  25.  R.S.B.C.  26.  S.B.C.  1987, B i l l  27.  Supra,  footnote 25,  s.  1.  28.  Ibid  29.  Supra  footnote 26,  s.  2(1).  30.  Ibid  s.  1(1).  31 •  Ibid  s.  3.  32.  Ibid  s.  2(4).  33.  Ibid.  s.  2(5).  34.  Ibid .  s.  5(2)(i).  35.  Ibid .  s.  5(1).  36.  Ibid  s.  1(1).  37.  Ibid .  s.  5(2)(t).  38.  Ibid .  s.  39.  Supra  footnote  15, chapters 18 and 19.  40.  Supra  footnote  1, C a r r ,  41 .  D.W.M.  Waters,  note 97. Irving  (1963),  Ellard  41 T . C . 517  (C.A.).  (Inspector of T a x e s ) ,  footnote 6,  s.  70(5).  s.  70(5).  (1974),  [1978] 1 W . L . R .  49 927  73(1).  107(4.1).  1979,  c h . 388 and amendments. 17, i n f o r c e September 8,  1987.  5(2)(a)(iii).  at  "The Nature  172. of  the  Trust  Beneficiary's  Interest" 42.  Supra,  43.  I b i d . , at  44.  Supra,  45.  R.S.B.C.  (1967),  footnote  132 -  45 C . B . R .  15, at  219.  984.  991.  footnote 1979 c .  1, Turner at c h . 9. 414 and amendments.  - 133 CHAPTER 6 SPOUSAL CLAIMS  1.  INTRODUCTION  assert  a  where  There  are three  claim  to  the s e t t l o r  spouse  dies  because where  is  have  be  When  Columbia equal  a  spouse  revocable  where  i s minimal  the  In  of the s e t t l o r  will  first  also  as  such  refer  s i t u a t i o n , the claim by l e g i s l a t i o n ,  settlor  a s s e t s ; and  the  may  Insofar  trust:  or non-existence  o f the deceased's  breakdown.  might  and w i l l  two  have  a  claims  mainly  to  i s clearly therefore  first.  MARRIAGE  property  intestate;  the d i s c u s s i o n  Columbia  where in a  property.  In t h e t h i r d  in British  reviewed  2.  basis,  claims.  governed  marriage  the t r u s t  common  spousal  the bulk  the c h i l d r e n  against a  a  dies  held  but the e s t a t e  the t r u s t holds  circumstances, claim  the property spouse  testate  there  circumstances  BREAKDOWN  parties  i s an  to a marriage  separate,  the Family  Relations  issue,  i s the governing  division  of  legislation.  "family  assets"  and d i v i s i o n o f Act of  The A c t p r o v i d e s upon  certain  British f o r an  triggering  events: order  declaring  defined  both  a separation  -  agreement, a d e c l a r a t o r y o r d e r ,  f o r d i s s o l u t i o n o f m a r r i a g e or  order are  namely,  134  marriage  in section  spouses  b o t h an  the  which  "interest  45  are  of  used  in a trust"  judicial  null  and  the  Act  for  a  void.  as  or  Family  1  assets  family  owned by  separation,  a spouse,  an  assets  owned by  purpose,  an  and  one  or  include  and  ...where p r o p e r t y would be a f a m i l y a s s e t i f owned by a spouse, p r o p e r t y ( i ) o v e r w h i c h t h e s p o u s e has, e i t h e r a l o n e or w i t h a n o t h e r p e r s o n , a power o f a p p o i n t m e n t e x e r c i s a b l e i n f a v o u r o f h i m s e l f ; or ( i i ) d i s p o s e d o f by t h e s p o u s e but o v e r w h i c h t h e spouse has, e i t h e r alone or w i t h a n o t h e r p e r s o n a power t o r e v o k e t h e d i s p o s i t i o n or a power t o use or d i s p o s e of the p r o p e r t y . 2  If  the  definition  interest  in a trust",  in  i n t e r p r e t i n g the  if  the  a  family  be  settlor  valued had  would  this  be  would  i t be  also  terms  This  family  asset  of  been  limited  issues could  revocable  interest  only,  trust. how  a power t o  "an  interest",  encroach and  to  "an  have a r i s e n For  would  purposes of d i v i s i o n ?  retained as  a  had  example,  such a  I f the upon  i f so,  life  spouse  capital,  again,  how  with  the  valued?  definition  above.  f o r the  included  However, included  asset  some i n t e r e s t i n g  s p o u s e owned a l i f e  interest as  of  these of  definition  questions  family  assets  is clearly  transferred  to  a  become as  broad  revocable  set  moot  out  enough trust.  i n the to  passage  capture While  any there  have as  been  i t applies  believe could for  that  a  the  held  father  Columbia  benefit  wife.  Oppal, L . J . S . C ,  found  non-existence  wife  is  section  45.^  Although  there  Graham  case,  Columbia aside made  to avoid  daughter  action  alleging  relating trusts  determination was  were  used  v.  of  o f t h e Supreme  the  months  before  counterpetitioned Relations  of t i t l e  outcome Court  Oscroft family  part  v.  of  f o r the  under  i n the British  assets i f  Oscroft,6  commencing for division  the  t o her a  divorce  of family  commenced  t r a n s f e r o f the family a trust.  of the  in setting  residence  A c t , and a l s o  and/or  wife's  appeal.5  dispositions of family  transferred  a fraudulent  the  property on  decision  party  to Section  i n favour  as t o t h e f i n a l  vivos  Graham,3  to the existence  affirmed  In  rectification  a trust  the a p p l i c a t i o n .  report  the Family  to  o f t h e Supreme  t o examine  allowed  claims.  The husband  under  court  decision  spousal  assets  seeking  the  inter  and a t h i r d  petition.  the assets  no h e s i t a t i o n on t h e c o u r t ' s  gratuitously  reason  things, t r u s t s created  or b l i n d  to  section  i n such  In Graham  Rules,  of secret  i s no  gratuitous  wife  The  The  reveals  Court  "evidence  another  held  one d e c i s i o n  that  material"  i s no  made an a p p l i c a t i o n p u r s u a n t  amongst o t h e r  the  or  of  this  has i n d i c a t e d a w i l l i n g n e s s t o r e v i e w  Supreme  concerning,  that  f o r a spouse.  husband  t h e B.C.  o f course  with  there  of assets  At l e a s t  in trust  Respondent and  provided  directly  trust,  division  purpose.  of B r i t i s h  dealing  revocable  a judicial  family  property  cases  to a  be a v o i d e d ,  Court  45  no r e p o r t e d  135 -  an  residence,  The c o u r t  found  - 136 that to  the  "object  defeat  the  aside  the  fraud,  and  trust.  But  the  trust  Relations  Act.  useful  in  s p o u s e who  the  future  would  purpose.  Currently, such  estate  potentially  The  point  created  but  to at  the  marriage be  from  been h e l d asset  spouse  upon  death.  It  remember h e r e , or  near  the  that  are  is need  breakdown  a  may  a  only  i s that a  the  trust (It for  a  change  asset.8) to  protect  protect  the  the  trust  used  marriage  be  by  The  does not  of  trust  purpose. be  not  wealthy  Act  used  not  ability  of  a  family  commonly  which w i l l  however,  example,  s u c h use  during the  might  and  a  Family  trust  family  could  the  using  the  assets.  into  depend  in  protect  property  trust  wealthy  a  of  creating  Relations  no  set  finding  under  worded,  for  itself  agreements  latter  Family  use  trust  to  attempt  would  in  claim  For  with  a  trust  revocable  carefully  a revocable  the  a  under t h e  upon  exercised  marriage  the  fulfill  be  or  accordingly  settlor  a spousal  that  such  the  pre-nuptial  of  to  from  I t has of  spouses,  trust  insulated  income  character  to  the  situations.  to  the  have  itself  that  say  claims  based  certainly  matrimonial prior  was  and  a revocable  of  avoid  to  comes i n t o  agreement  family  to  to defeat  husband,  decision  should  i s not  created  spouse from  seems  the  intentions  only  This  property  of  7  The  caution  revocable  be  transfer...was  i t s a p p l i c a b i l i t y to  upon  might  the  interest"  transfer.  largely  be  behind  but  the also  revocable  discussed  next.  a revocable  trust  marriage,  with  the  intention Family  3.  of defrauding  Relations  Current  When or  of  the  there  under  Part  would  of of  and  a  strict  trust.  support"  of  t o apply Section  may o r d e r  t h e t e s t a t o r , where  share  scheme f o r Columbia, i f  from t h e W i l l s  the a u t h o r i t y  i s found  Act.1°  the p r o v i s i o n s  to claims  against  of either Act  property  held  in a  2 o f the W i l l s V a r i a t i o n Act provides " p r o v i s i o n f o r the proper  the w i l l  Administration  amongst n e x t  children.12  In B r i t i s h  Administration  reading,  to a  statutory  with,  whether a  be, e n t i t l e d  the  i s no w i l l ,  o f a s u r v i v i n g spouse  the Estate  arise  the s t a t u t o r y a u t h o r i t y derives  7 of the Estate  the court  estate  virtue  i n conjunction  the questions  i s , or should  i f there  n o t appear  revocable  i s used  o f the deceased's e s t a t e .  Act;9  On  that  r e s by  is a will,  Variation  trust  for, a will,  spouse or c h i l d  distribution  and  Legislation  a revocable  trust  challenges.  INTESTACIES  as a r e p l a c e m e n t  surviving  a spouse o f h i s o r h e r r i g h t s under t h e  Act i s u n l i k e l y to withstand  TESTACIES AND  A.  137 -  o r c h i l d r e n from  fails  Act d i s t r i b u t e s  of kin, beginning  (Protection  t o do so.11  i s also  with  an  maintenance the estate Section  96  intestate's  t h e s u r v i v i n g spouse  provided  f o r common law  - 138 spouses  and  deceased  illegitimate  has  transferred  goods t o a r e v o c a b l e  or  prior  estate.  This  the deceased's  be  r e m e d i e d by e x t e n d i n g  in  some  trust  of  property  children.)  the d e f i n i t i o n  demanded  and  enacted,  look  the  courts  to  disinheritance  for relief  examining  rights  the  to property  trust,  of  part  course,  as has been  such  spouse  against  courts' held  worldly  o f an e s t a t e t o i n c l u d e  But u n t i l  the s u r v i v i n g  her  could,  and  children  complete  or  is  must  partial  trust.  options  in a  done  legislation  t h r o u g h t h e medium o f a r e v o c a b l e  Before succession  vivos  i f the  i t i s no l o n g e r  restriction  legislation.13  event,  a l l o f h i s or  to death,  t r a n s f e r r e d t o an i n t e r  the Ontario  In e i t h e r  for  revocable  applying  trust, i t  would be w i s e t o examine t h e r e a s o n s and p u r p o s e u n d e r l y i n g t h e existing in  statutory  assessing  should  concern  judicial  by  by t h e c o u r t s  f o r the reasons that  Such an u n d e r s t a n d i n g  claims  Moreover, while  suggested  B.  whether  be e x t e n d e d  mandate.  relief.  such  a  surviving  spouse  i n the absence  the courts  may  will  such  important or  child  of a statutory  not c l e a r l y  and p u r p o s e s b e h i n d  considerations  is  express a  relief,  certainly  i ti s  influence  d e c i s i o n making.  The J u s t i f i c a t i o n  Historically,  for Statutory  Succession  Rights  a widow has a l w a y s had some measure o f  protection  from  testation These life  of  real  rights  the  the  in  property  one  all  life  of  the  lands,  Dower  England  land  when  until  For a  sort  personal  with  the  the  widow is  much  goes  to of  of  continued  to  Variation  rules the  apply  the  Act  the  of  husband until  inter  vivos  Curtesy  offered  i t attached  i s s u e r e s u l t e d from to  be  but  a to the  applicable  importance,  was  that  were s u c c e s s i o n  the  Church  gave  a and  potency of upon  by  an  in not  was  ensures  the  While  a will.  However,  the  redistribution  and of  an  succession not  until to a  protection  described:  intestate's  c h i l d r e n and a  the  century  for r e l i e f  Today,  previously  by  deceased's  seventeenth  provided  that  r u l e s of  later  i n t e s t a c y , i t was  legislation there  of  the  testation.  legislation Act  part  and  children.  s u r v i v i n g spouse  permits  an  a  vest  there  widow  freedom  century  by  to  be  by  their  Administration  first  ceased  the  to  1 6  c h i l d r e n where  provided  curtesy  death,  by  by  and  rights.^  d i d not  although  that  to  owned  wife.  husband,  dower  husband's  defeated  provided  first  These  be  alienation  of  interest  the  landless families,  advent  and  Estate  1925.  7  twentieth  the  ceased  property  lost  rules  and  enforced  Parliament. 1  rules  to  her land  the  by  of  form  the  not  consent  marriage.15  abolished  i t could  interest  wife's  the  of  Although  husband's d e a t h ,  similar  in  third  without  freedom  a widow, upon  marriage.  disposition  -  husband's  entitled  interest  during  the  139  testate's  the  the  estate Wills  estate  if  adequate and  provision  children.  Australia  and  This New  The succession  has  rights with  the  financial  financial  She  therefore her  and  in of  there the  in  spouse  England,  of  the  widow needs  wrote the  The need vows t h e and the home.21  need  leave in  to  family  for  modern  concerned  perceive  unit  who to  her  has the  state  and  her  children  i s a strong  following text  on  statement the  the as  an  left  all  husband.20  the  protection  demonstrates t h i s  ends  protecting  suggestion  standard  the  are  the  The  family  these  from  her  being  the  that Act  homemaker  assistance  does not  unit.  the  from  and  security.  generally  undereducated  widow  doubt  and  the  dower  accomplishing  Variation  widow  of  the  of  security  no  Wills  champion  requires  Widow's S h a r e ,  is  protection  management  family  MacDonald, who the  a  Implicit  stereotypical  surviving  d'etre  protected  in  financially.  traditional  they  raison  i t s effectiveness  who  husband  the  counterparts  of  position  the  for  has  measure  same g o a l s  unsophisticated  that  that  gave  provided  Those  made  accepted  questioned,^  as  been  legislation  is  and  While  -  Zealand.  rights  been  not  generally  impecunious, unit.18  has  140  in  ensuring stranded,  that belief of  subject,  this in  the  Professor Fraud  on  emphasis:  for protection i s obvious. By t h e m a r i t a l w i f e assumes her n a t u r a l r o l e o f homemaking husband undertakes to 'provide' for the  While  these  words  liberation"  movement  historical not,  curtesy be  i n former  wives'  rights  to  concept and  that  to  of a  however,  between  the  traditional  ironic sexes  critic  of  states  suggests  women,  the  by  extension to  be  the  attempt  modern  applied of  such  rights  to  the  custom  of  very  be  argued  i t cannot  be  old  vice  no  with  rights  founded  found  It  equality  In  in  fact,  i n many  subservient for  less  versa.  concern  system  an  non-discrimination should  the  from  succession  update  spouses.  legislation  the  to  than  to  the  i t perpetuates  "reinforcing  do  maintenance  of  estate  the  They  statutory  husband  wife's  be  and  of  concerns  this  share  that  an  The  positions  forced  rights.  extension of  support  "women's  reflect  "providers",  that  unequal  widow's  are the  modern  should  undeniably  I f men  sexes. of  the  matter,  seems  share  the  before  (or, for that  The  the  they  financial  society's  equality  is,  days).  husbands  with  entitled  times  estate.  1960,  statutory  justify  t h e y need  in  hold,  for  to  i n modern  argued  their  seem  -  written  took  rationale  however,  widowers  were  141  the one  American role  of  it  is  which  compensating".22  Although of  a spouse  based  upon d i s i n h e r i t a n c e under  upon a d a t e d  sexes, concern  the for  i t may  issues  view are  equality  o f the f a m i l y somewhat within  a  that  statutory  a will unit  more  o r an  and  has  intestacy is  the r o l e s of  complex.  marriage  protection  The produced  the  modern legal  - 142 innovations  which  are  changing  "wife"  to  "spouse"  the  idea,  found  of  important Canada  is  today,  dissolution that  of  an  compensated  for  his  It  is  compensation  should  whether  be  it  compensation statutory  can  speaks o n l y of  not  be  by be  Act.  Law  seen  a  as  rights  the  and  the  whenever  as  upon a  a  belief  that  such  ends  element  in  be that  justification  found  upon  in  marriage This  in  should  roles assert  death. modern  assets  spouse  respective to  most  legislation  family  each  cosmetic  Perhaps  i s based  that  of  for  the  —  the  Estate  although the W i l l s V a r i a t i o n Act support, i t i s asserted  i s considered  by  the  courts  that  in  the  British  the W i l l s V a r i a t i o n Act.  Reform  to  It  the e n t i t l e m e n t  Commission  the j u s t i f i c a t i o n  of h i s estate  of  family  unreasonable  Moreover,  when a p p l y i n g  most  and  her  than  legislation.  sharing  or  compensation  obligations  This  divorce  approach bases  in  available  o f maintenance  The  in  sharing  or  succession  Administration  substantive  i s a partnership,  partnership.  Columbia  equal  of a marriage.  marriage  aspect  more  takes  for statutory  of the deceased's  upon a m o r a l  a  claim.  slightly  different  succession  family  rights.  to the  It distinguishes inter  from o b l i g a t i o n s a t d e a t h as  assets vivos  follows:  A deceased's moral o b l i g a t i o n to provide adequately f o r h i s f a m i l y d i f f e r from i n t e r v i v o s o b l i g a t i o n s he may have owed them. P r i n c i p l e s which determine i n t e r v i v o s o b l i g a t i o n s a r e p r i m a r i l y f o u n d e d upon c o n c e p t s o f m a i n t e n a n c e and s u p p o r t . In some c a s e s members o f t h e d e c e a s e d ' s f a m i l y have a m o r a l c l a i m t o s h a r e t h e a s s e t s o f h i s e s t a t e which i s not n e c e s s a r i l y l i m i t e d  -  143  -  to support.... Obligations arising after the d e c e a s e d ' s demise s h o u l d be d e t e r m i n e d w i t h r e f e r e n c e to the f a c t that the deceased no l o n g e r has any needs.23  The  emphasis  particularly  upon  moral  claims  where  the  deceased  family.  Moreover,  court  little  has  situation. that  it  choice  However,  justifies  succession longer  in  the  protection  moral  as  or  a  combination  thereof,  have made a p u b l i c is  a decision  children  the  worldly  goods  or  decision  has  testator  transfers  with  the  Columbia Variation  yet  not, to  question, answer  Act  predilection  i t will i t .  i s any  statutory  children  he  chooses.  a  moral  indication,  no  testator  or  to  to  This  spouses bequeath  public  determined,  the  courts  interpretation our  of family  courts  Columbia  such r i g h t s .  l e g i s l a t o r s concern up  rights  obligation,  goods t o a r e v o c a b l e  be  are  succession  of s u r v i v i n g  the  If their  f o r the r i g h t s  spouses'  in enacting  of  the  the  in  legislators in British  considered,  until  one  i s comprehensive,  for statutory  h i s worldly  mentioned,  to  be  as  claims,  morality  those  the r i g h t s  freedom  such  than  as a t t h e d a t e o f d e a t h .  decision  prefers  more  the  as  when  difficulties,  upon  compensation,  the  policy  that  over  previously  well  upon t h e d e c e a s e d  security,  by  i t s own  approach  particularly  and  major  adjudicate  but t o impose  Whether t h e r a t i o n a l e be  create  i s survived  to  children's  rights,  dependent  order  may  of  It and his  policy  where  the  trust.  As  themselves in  British  the  apparently  members as opposed  Wills have  a  to the  - 144principal  of  freedom  predilection  will  be  enough  surviving  spouse  to  transferred  to a revocable  or  adopt they  allow The  trust  However, to  result  or  child  i s the subject  whether  this  i n the  re-  of  property  which must  now  matter:  they  examined.  Our can  testation.  strong  allocation  be  a  of  c o u r t s have b u t two o p t i o n s  a legalistic,  can a p p l y  the c l a i m . former  States,  dealing  Both  The  term  caselaw  with  approach  i n New  i n those  jurisdictions.  per s e .  i n a variety  Both  approaches  caselaw.  i n the  because  jurisdictions,  trusts  by  Australia,  i s used  the claim,  a p p r o a c h , and  supported  jurisdictions  Zealand,  arguably  c a n be found  c a n be  i n some  revocable  and deny  c r e a t i v e and e q u i t a b l e options  i s favoured  Alberta. extensive  t e c h n i c a l approach  a more  and a r g u a b l y ,  in this  Ontario there  and  United and  i s no  certainly  not  The c r e a t i v e , e q u i t a b l e  o f forms will  be  i n some  American  examined  i n the  following discussion.  As American in  among  have them  interest in  caselaw,  t h e common  states  a preface,  i t should  the d i s c u s s i o n w i l l  law s t a t e s ,  i s the fact  law s t a t e s ,  different  that  that  be l i m i t e d  as t h e c a s e s  substantially  i n t h e community  common  be n o t e d  i n reviewing to the caselaw  i n community  property  considerations.  (Chief  t h e s u r v i v i n g spouse  property  during  the i n t e r e s t  does  has a  the marriage, not vest  vested whereas  until  the  - 145 death  o f the spouse.)  rights state  considered  such  statutory  rights  surviving  cases  spouse  transferred  case  view legal  that  h a s been  view",25  formalities  i  n  to  here  to  particular  necessary.  or instrument  been  trust  and i t s i m p l i c i t  the court w i l l  belief  scholars  its  the  as t h e  have, refuse  spouse.  emphasis  In  the formal  I f they  of the surviving  of  upon  i s whether  exists  property  i n question.  satisfied.  American  light  have n o t a l l o w e d t h e  exclusively  the issue  have  by  state to  o f the deceased's  focuses  i n favour  described  from  i s made  Reference  a share  constituted trust  vary  statutory  Approach  trust,  for a trust  that  however, be made where  vivos  of a revocable  impeach  discussed  depth.24  to claim  a completely  be n o t e d  and no a t t e m p t  of the transaction  requirements  also  i n which t h e j u d i c i a r y  inter  completeness  to  in  O p t i o n s : The L e g a l  The  and  to country,  provisions w i l l ,  C.  the  i n the caselaw  and c o u n t r y  review  I t should  This  "liberal  upon  legal  i n freedom o f a l i e n a t i o n o f  property.  This theory",26 known be  has  acknowledging  American  recalled  view  cases  that  also the  been  called  state  f o r the p r i n c i p l e  the c l a s s i c  case  from have  the  "Massachusetts  whence  the  emerged.  d e a l i n g with  better It will  the e f f e c t  of  - 146 powers  of  Shawmut That  control  Bank  of  spouse,  view".  It  powers  an  immaterial  the  rule  settlor's  s t a t u t o r y requirements  trust,  from  with  example  of  that  be  The  a  legal trust  considered  a present  the  of  revocable  interest  in  decision discounted  motive of evading  for a w i l l .  claim  "liberal  not  created  Moreover,  the  a  National  Massachusetts.  the  could  trust  beneficiary. the  hails  2 7  control the  vivos  dealing  early  of  provided  t r u s t e e and  the  is  inter  Joy,  not  enunciated  testamentary,  as  v.  although  surviving  the  revocable  Boston  decision,  containing  in a  or  circumventing  court  said:  I f an owner o f p r o p e r t y can f i n d a means o f d i s p o s i n g of it inter vivos that will render a will unnecessary f o r the accomplishment o f h i s p r a c t i c a l p u r p o s e s , he has a r i g h t t o employ i t . The f a c t t h a t the motive of a t r a n s f e r i s to o b t a i n the p r a c t i c a l advantages of a will without making one is immaterial. ^ 2  The applied  to  held  a  in  Kerwin revealed  views  the  revocable  the  disagreement.  daughter  was  created a  who  later  during two  the  between  the  there one  of  revocable  previous  marriage.  settlor's  National  claimed  Although  good,  a l l o f the  in  i n the  relations were  It  from  substantially  trust, 2  that  court  spouse  Donaghy. 9  v.  settlor  the  surviving  husband-settlor  the  of  Shawmut  against  Massachusetts facts  in  surviving was  those trusts The  property,  property case  that  wife  the  and  the  occasional  favour  trusts  of case  and  disagreements in  were  of  that his  comprised  provided  for a  life  interest  were  validly  them. spouse for be  The  court  no more  motive  only  on  to  share,  than  National  as  in  the  can  be  seen  against that,  the t r u s t s  the as  parties  the  surviving  her a t t a c k  on t h e t r u s t s  could  instituted  by t h e s e t t l o r .  the  estate  to  death  was  court  In  found  that  irrelevant.  theory of  from  that  at  Shawmut,  sanctity  found  the s e t t l o r ' s  one  Massachusetts  as  suggest  forced  f o r c r e a t i n g the t r u s t  property, Kerwin  binding  against  following  belief  The c o u r t  claim  successful  The a  and  went  her s t a t u t o r y  addition,  in  to the s e t t l o r . created  could  147 -  i s unquestionably free  the  alienability  following  grounded of  one's  passages  from  v. Donaghy:  He c o u l d not ' c h e a t ' h e r i n any l e g a l s e n s e by means o f t h o s e a g r e e m e n t s u n l e s s she had r i g h t s t h a t were paramount t o h i s r i g h t t o do what he p l e a s e d i n h i s l i f e t i m e w i t h h i s own p e r s o n a l p r o p e r t y . . . . In t h i s Commonwealth a husband has an a b s o l u t e right to d i s p o s e o f any o r a l l o f h i s p e r s o n a l p r o p e r t y i n h i s lifetime, without t h e knowledge o r c o n s e n t o f h i s w i f e , w i t h t h e r e s u l t t h a t i t w i l l n o t form p a r t o f h i s e s t a t e f o r her t o share under t h e s t a t u t e o f d i s t r i b u t i o n s [ c i t a t i o n s o m i t t e d ] , under h i s w i l l , o r by v i r t u e o f a w a i v e r o f h i s w i l l . 3 0  Courts always u n i f o r m l y ) of  alienation.31  i n other  have a l s o a p p l i e d F o r example,  o f Smyth v. C l e v e l a n d  If  American  a valid  Trust  trust  jurisdictions this  (although  preference  i n Ohio,  i n the  inter  v i v o s was  f o r freedom  1961  Co.,32 where t h e c o u r t  created,  not  decision  opined:  valid  title  -  148  -  in the corpus passed t o t h e t r u s t e e , and nothing remained i n the s e t t l o r except the r i g h t to revoke, a l t e r , or amend t h e a g r e e m e n t . At t h e t i m e o f t h e settlor's death, i f the agreement has not been r e v o k e d , a l t e r e d , or amended, t h e t i t l e t o t h e t r u s t property was still in the trustee, subject to d i s t r i b u t i o n under t h e t r u s t i n s t r u m e n t , and i t i s difficult t o see how a p a r t of the t r u s t property could pass to the settlor's administrator or executor.33  The clearly for  The  upon t h e  the  other  emphasis legal  surviving  American  same can  Australia,  spouse  said  Ontario  Ohio  is  not  and  Alberta.  and  i t i s u n c e r t a i n whether one  Paulin,34 of  Paulin  hails the  son, for been  his  they  case  are  New  as  daughter,  W i l l i a m Bruce.-  from  America  monies  in  trustee,  two with  Margaret,  maintenance will.  In  few  deal  Zealand, i n number, trusts,  a  insofar  they  as  revocable reveal  courts.  revocable  as  or  theory.  with  trusts,  trusts Totten  separate the and  in  his  In  bank  Mr.  accounts,  b e n e f i c i a r y on on  the  other,  what  one his  application  e s t a t e , as  discussing  Re  question  trusts.  h i s widow made  from  this  deals with  The  Upon h i s d e a t h ,  his  two  commonwealth  in  Lavinia  p r o v i s i o n f o r her omitted  valuable  Zealand.  known  deposited  himself  only  o f those  in  i n New  are  is  Concern  Massachusetts  These c a s e s as  passage  apparent  the  which d e a l s w i t h  from  variety  Senior  designating being  one  this  transaction.  readily  caution,  leanings of other  The  were  with  Nevertheless,  general  in  for decisions originating  must  the  court  of the  applying  and  trust.  cited  the  formalities  decisions  be  be  of  that  she  had  estate  was,  the  estate,  court and  held  that  149  the  -  monies  did  not  form  part  of  his  that:  In New Z e a l a n d i t has been h e l d t h a t t h e C o u r t c a n n o t d e a l w i t h p r o p e r t y s e t t l e d by t h e t e s t a t o r in his lifetime—Parish v. P a r i s h [1923] N.Z.G.R. 7 2 — a n d in South Australia i t was said i n Re Richardson [1920] S.A.L.R. 24 a t p. 40 t h a t t h e C o u r t c o u l d not t o u c h p r o p e r t y d i s p o s e d o f by t h e t e s t a t o r i n h i s lifetime, even t h o u g h d e p e n d e n t s a r e t h e r e b y left w i t h o u t a d e q u a t e p r o v i s i o n . . . 35  The approach  with  Thomson,36 the  courts  a  New  Zealand  wills-variation inter  n  deceased  children.  in  to  The  vivos  one  of  sons  take  legislation.  transfer  his  c o u r t found  type  apparently  of  the  was  the  In  Thomson  family  attacked  same v.  farm  from  the  other  by  that  . . . t h e r i g h t t o r e l i e f a r i s e s o n l y i f any p e r s o n d i e s leaving a will without making therein adequate p r o v i s i o n f o r t h e p r o p e r m a i n t e n a n c e and s u p p o r t o f the testator's wife, husband or children. The s t a t u t e i n no way a t t e m p t s t o r e g u l a t e d i s p o s i t i o n s in l i f e . 3 7  Closer Division, Act,  transferred  trust  it  1955, to is  contained  income be  home, t h e  reviewed  R.S.A.  a l . .38  to  the to  an  a  determine  power  from to  settlor  Court,  Alberta  the  revoke,  in Collier case but  for l i f e ,  v.  report i t did  with  Appellate  Family  i t s applicability  vivos trust,  clear  p a i d to the  Supreme  p r o v i s i o n s of the  inter  not  Alberta  a gift  to  Relief  property  Yonkers whether provide over  to  et. the that her  children fund  upon h e r d e a t h .  d i d n o t form  Family  Relief  definitions  part  The c o u r t c o n c l u d e d of the estate  Act,  for "will"  150 the t r u s t  f o r the purposes  notwithstanding and " t e s t a t o r "  that  apparently  o f the liberal  i n t h e A c t , as f o l l o w s :  " w i l l " means any deed, w i l l , c o d i c i l , instrument or o t h e r a c t by w h i c h a t e s t a t o r so d i s p o s e s o f r e a l o r personal property that t h e same w i l l pass at h i s d e a t h t o some o t h e r p e r s o n ; " t e s t a t o r " means a p e r s o n who by deed o r w i l l o r by any o t h e r i n s t r u m e n t o r a c t so d i s p o s e s o f r e a l o r p e r s o n a l p r o p e r t y o r any i n t e r e s t t h e r e i n t h a t t h e same w i l l p a s s a t h i s d e a t h t o some o t h e r p e r s o n .  The  c o u r t found  deed v.  and t r a n s f e r Isle  interest  of  Man  review  in  testator applied Court  any  Bank.39  in  Collier  detail  to the t r u s t  Kerslake a life  a third  to the t r u s t ,  There  the  was  gift.  decision  following  thus  no  Grey  Corlet  property  or  the  insurance policy,  p a r t y , were p a r t  purposes  of  Supreme  Court  and  that  they  identical  was  definitions  1950.  whether  said  Relief  In  that  proceeds  not t o the e s t a t e but t o  of the e s t a t e of the t e s t a t o r  t h e Dependant's o f Canada  question  will  f o l l o w e d a Supreme  A c t , R.S.O.  payable  for  t h e argument  reviewed  Relief  e t . a l . d i d not  definitions  The c o u r t s i m p l y which  4 0  Yonkers  to reject  Dependent's v.  v.  broad  i n the A c t , except  the Ontario  from  upon t h e e x e c u t i o n o f t h e t r u s t  o f the funds  court  o f Canada  case,  gift  passing at death.  The  in  a complete  Act.  A  majority  no; n o t w i t h s t a n d i n g  the  f o r the of the extended  meaning  of " w i l l "  entitled  to  look  representatives  against  and " t e s t a t o r " only of  administer".^1  151 -  the  the  The  the insurance  to  i n t h e A c t , "a dependant i s estate  which  deceased  personal  are  personal  entitled  representative  proceeds u n l e s s ,  the  had  the court  to  no  claim  opined,  there  were some g r o u n d s t o s e t a s i d e t h e d e s i g n a t i o n i n t h e i n s u r a n c e policy.  This,  Massachusetts attacked  of  course,  theory—the  o n l y on l e g a l  As  in  is  a  inter  classic  vivos  example  transaction  the  American  cases,  concern  o f , t h e needs  o f the dependants  both  and C o l l i e r .  In a n o t h e r  Public the  Trustee  court  suggested courts. court  et. al. * 2  2  can  be  for,  or  ( t o be  was  ignored i n  A l b e r t a case,  discussed  Dower v .  in detail  below),  a l l u d e d t o the problems o f the s u r v i v i n g f a m i l y , but that  the s o l u t i o n  l a y with  the l e g i s l a t u r e ,  But i f t h e f o l l o w i n g p a r a g r a p h  i n Dower had l i t t l e  surviving  the  formalities.  consideration Kerslake  of  real  sympathy  not the  i s any i n d i c a t i o n , t h e f o r the r i g h t s  o f the  family:  I f t h e r i g h t t o a v o i d g i f t s and o t h e r i n t e r vivos d i s p o s i t i o n s o f h i s p r o p e r t y i s given a f t e r h i s death t o a man's w i f e and o t h e r d e p e n d e n t s on t h e ground t h a t t h e y h i n d e r , d e l a y o r d e f e a t t h e i r c l a i m s under the F a m i l y R e l i e f A c t , t h e y would have a s i m i l a r r i g h t o f a c t i o n d u r i n g h i s l i f e t i m e on t h e ground that they tend t o or w i l l n e c e s s a r i l y have such e f f e c t upon h i s d e a t h . Any d i s g r u n t l e d d e p e n d e n t c o u l d use t h i s r i g h t o f a c t i o n b e f o r e o r a f t e r h i s d e a t h t o p r e v e n t o r s e t a s i d e a man's b e n e f a c t i o n s and gifts and circumvent the object of h i s charity.^3  In or  one's  choice  o f the  caution  court  spouse or decision recent brought  cases be  in in  right  using  the  exercised  these Dower,  by  the  in  Massachusetts  alienate  is  one's  clearly  liberal  the  of  concern  is clearly  where t h e  preferred  for  However,  the  the  spouse  property  approach.  over-emphasizing  This  policy  comments  of  the  surviving  or  considered  illustrated  in  issue of p u b l i c p o l i c y  a was  courts.  Burkin,44  considered  following  surviving  Notwithstanding  a t t e n t i o n of the  v.  the  n e c e s s a r i l y a conscious  judiciary.  Sullivan  i n the  legal  lack  Massachusetts case, to the  freely  latter  cases. the  -  r i g h t s of  to  the  c h i l d r e n i s not  In  spouses  the  between  lifetime,  must  preferences  of  contest  c h i l d r e n , and  during  the  a  152  the  the  modern  Supreme roles  Judicial and  Court  rights  of  passage:  T h e r e have been s i g n i f i c a n t changes s i n c e 1945 in p u b l i c p o l i c y c o n s i d e r a t i o n s b e a r i n g on the r i g h t o f one s p o u s e t o t r e a t h i s or her p r o p e r t y as he or she wishes during marriage. The i n t e r e s t s o f one spouse i n t h e p r o p e r t y o f t h e o t h e r have been s u b s t a n t i a l l y increased upon the d i s s o l u t i o n of a marriage by divorce. We believe that, when a marriage is t e r m i n a t e d by t h e d e a t h o f one s p o u s e , t h e r i g h t s o f t h e s u r v i v i n g s p o u s e s h o u l d n o t be so r e s t r i c t e d as t h e y a r e by the r u l e i n K e r w i n v. Donaghy. It i s n e i t h e r e q u i t a b l e nor l o g i c a l t o e x t e n d t o a d i v o r c e d spouse g r e a t e r r i g h t s i n t h e a s s e t s o f an i n t e r v i v o s t r u s t c r e a t e d and c o n t r o l l e d by t h e o t h e r s p o u s e t h a n a r e e x t e n d e d t o a s p o u s e who remained married until t h e d e a t h o f h i s or her s p o u s e . 4 5  - 153 It  i s interesting  t o note  that  this  reasoning,  which  was  previously described  as a p o s s i b l e j u s t i f i c a t i o n  f o r modern  day  statutory succession  rights,  adopted  by  rights  to  focus  on  the  court  property modern  for justifying transferred  spousal  distinguish decided  the  inter  rights  before  followed  warned  that  amended  i t would  after  the date  Massachusetts the  liberal  D.  theory legal  distribution v.  jurisdictions. claim  property  categories. obscures  the  longer  do  successfully  a l l o f which  family  legislation.  the  in  court  d e c i s i o n o f Kerwin  no l o n g e r  so  were  Sullivan  v.  v . Donaghy, i t  for trusts I t would  created  or  seem t h a t t h e  be an a p p r o p r i a t e  The E q u i t a b l e C r e a t i v e  concern of  a  for  The  more  deceased's  Burkin,  label for  has  cases  been  which  cases  public  in  policy  found  allow  the  Approach  equitable estate,  transferred inter The  might  above,  o f i t s judgment.  may  the  approach.  Options:  The  Sullivan  no  those  Moreover,  cited  although  i t s earlier  of  which  o f modern  Parenthetically, Burkin  one  cases  the advent  so r e a d i l y  attachment  vivos.  is  the Canadian  has been  question  in  fall  other  into  category with  in  the  demonstrated  the s u r v i v i n g  vivos first  as  results  in  American spouse  two  to  general  traditionally  ingenuous  legal  reasoning.  This  "illusionary  transfer  some  defy  Generally, not  only  also  the  that  the  be  legal  argue  than  better  on  judiciary  and  1937  case,  the  right  to  during  his  reasoning  New  term  not  the  as  the  here  with  follow  the  classification. doctrine  vivos  is  examines  transaction  upon of  marital  but  a  transfer  loyal  died  entirely  issue but  considered  the  and  However,  two,  hence  the  in  as  the  one  to  may  be  illusionary  the  American  discounted.  Newman  v.  revocable  substantive He  rights,  of  the  readily  The  than* a  that,  transfer"  of a  label  following  altogether  executed  reasons.  doctrine,  courts.  decision  generally  marital  here  examine  r i g h t s i s a much n e a t e r  "illusionary  and  the  also  but  policy  suggested  a  be  category  public  more  has  lifetime. is  as  own  York  income  to  or  transaction,  fraud  our  cannot  husband  to  i s used  purport  inter  second  for  the  by  doctrine  which  the  vivos  of  It  transfer  the  of  illusionary  received  term  interpretation  the  "fraud"  the  The  in  one  fraud  referred  of i t .  principle. of  That  i t s name i m p l i e s ,  i s done  as  seen,  doctrine  as  inter  this  commonly  cases  easy  cases  described  will  the  formalities  substance  substance of admit  for  however, the  is  -  doctrine".  any  The  is  reasoning  hesitation,  doctrine  154  without  days  popularized  P o r e • ^6  trust,  control  three  was  over later.  ambiguity,  In  retaining the The and  by that the  trustees court's has  been  variously the  courts  point  This  of  trust  one  in  to  be  to  years  by  to  However,  both  academicians  Although the  valid,  divest  commentator  fact.^8  t o be  the  -  jurisdictions.  intended  lead  trust  appear  the  never  has  over  various  assumes  settlor  a  interpreted  155  i t also  himself  the  states  of  conclude  his  that  more  court  at  that  and one "the  property". * 1  there  popular  never view  7  was  would  that  . . . t h e c a s e was a c c e p t e d as h o l d i n g t h a t t h e r e was a r e a l t r u s t but t h a t i t c o u l d not d e f e a t t h e s t a t u t o r y m a r i t a l r i g h t of the s u r v i v i n g spouse d e s p i t e i t s r e a l i t y because a r e t e n t i o n o f c o n t r o l i n the s e t t l o r brought the inter vivos transfer, insofar as the surviving spouse was concerned, too close to a testamentary transfer, which the statute made i n e f f e c t i v e to d e f e a t the s u r v i v i n g spouse.^9  This case.  The  degree  of  property. early an  view  test  American  attempted  difference  with  the  transfer, of  by  be  the a  satisfying  of  this  earlier trust  of  court the  court  was  wills; will claim  set of  a  careful  in  Newman  by  the  be  recalled,'was  device.  testamentary  statute the  use  the  by  in determining  testamentary  in  the  retained  cases  dispositions, to  supported  test, i t will  i n the  doctrine:  found  used  control This  is  whether  cases  i n the of  the the  Pore  over  aside  the  the  a l s o used  a t r u s t was  illusionary  case  t r u s t aside surviving  did  of only  the  is  the  trust in  the  crucial transfer  testamentary  altogether, which  of  really  is a  attempted  disposition in  v.  However, t h e r e  test  set  deceased  reading  an to  if not  it  was  comply  illusionary the  spouse.50  extent While  the  latter  law  result  (either  understand  a  light  court,  without  status  f o r the  the  concept  seems t o c o n t r a d i c t  trust  in  156 -  is  valid  of  admitting  of a valid  or  public  As  trust  i t  is  policy  the f a c t ,  spouse".51  the p r i n c i p l e s of t r u s t n o t ) , i t can  considerations.  i s "legislating  Robert  except  be  C. as  a  Bensing  against  The  preferred  points  the  out,  surviving  spouse i s  simply a r e c o g n i t i o n of the f a c t that the p o l i c y underlying the e l e c t i o n statutes i s stronger in regard to the degree of divestment of control necessary f o r v a l i d i t y o f an i n t e r v i v o s transfer than i s the policy underlying the Statute of Wills.52  Another which  demonstrates  obscure motive clear upon his  legal or  intent.  h i s death, property  of  lipservice  to in  alienation good  intention  to  this  court  his lifetime.  the  the  It  i s an u n s a t i s f a c t o r y  concept  of  subsequent  court  deprive  had  That  the  of  to proceed  wife,  but  stated  the of  had  to alienate bluntly  statement  the  not  rather  a  rights  that  of the v a l i d i t y was is  court  " i n good  was  also  statutory  alienability  finding  Pore  deceased  entitled  test  this  free  emphasized,  the  o f her  he was  but  v.  i t , i s the matter  that  h i s wife that  i n Newman  preference  found  property".53  the  reasoning  to j u s t i f y  but concluded  of property  faith,  the  only  deprive  during  transfer  of  used  The  to  or i n t e n t  however,  not  reasoning  intention  "motive a  aspect  of  mere clear,  that  faith".  any This  related  to  the  referred  to  the  intention  to "divest  Now, abstract  definition",54 definition  h i m s e l f o f ownership o f h i s p r o p e r t y " .  although  quality  "good  with  most  157 -  no  legal  faith  is  technical  an  intangible  meaning  s c h o l a r s would  or  accept  and  statutory  the  suggested  i n B l a c k ' s Law D i c t i o n a r y t h a t  i t encompasses, among o t h e r t h i n g s , an h o n e s t b e l i e f , t h e a b s e n c e o f m a l i c e and t h e a b s e n c e o f d e s i g n t o d e f r a u d o r t o seek an u n c o n s c i o n a b l e advantage...(I)n common usage t h i s t e r m i s o r d i n a r i l y used t o d e s c r i b e that state o f mind denoting honesty of purpose, freedom from intention to defraud, and g e n e r a l l y speaking, means b e i n g faithful t o one's duty or obligation.55  In with of  motive.  create would  i s surely  legal  good  result  that  i n a finding  the extent  i s very  disguising  that  such  motive  to satisfy  oneself with  exists,  legal  concept  and as a l r e a d y  t o be i n v a l i d  a claim  an  of intention to  an a c c e p t e d  no t r u s t  interwoven  to divest  that  i n Newman v . Pore was found  necessary  much  i s , the c e r t a i n t y  However, u s i n g  the t r u s t  faith  i t as an i n t e n t i o n  only  concept,  a trust.  noted,  words,  To d e s c r i b e  property  accepted  to  other  only  by t h e s u r v i v i n g  spouse.  The and  results  New York also  difficulties i n Newman  created  v . Pore  courts' application  known  as t e n t a t i v e  by t h e c o n t o r t e d  become  readily  of the decision  trusts.  It will  reasoning  apparent  i nthe  to Totten  trusts,  be r e c a l l e d  that the  -158nature of death.  the t e n t a t i v e t r u s t As  such,  it  spouse might  succeed  the  in  outcome  is  is  logical  against  the  that  1941  it  that  such  is  not  a claim  a trust.  decision  absolute  of  by  a  This  Krause  by  applying  finding to  such  that  this  the  trusts  later,  in  as  the  trust  spouse  any  i n the  by f o l l o w i n g trust  courts  illusionary  that  as  of  v.  to  Re  the  outcome  not  Pore,  and  Subsequent  and  commentators  categorized  se.57  However,  denied held  applicant a  Totten  years  the  illusionary  the in  ten  Estate,58  nothing  the cases f o l l o w i n g the  following  Krause.56  Newman v.  Halpern's  monies  fact  illusionary.  is  it  in  was  per  "(T)here  such."59  right  distinguished  lower  decision  concluded  Totten  but  tentative  decision,  Totten  court  logic,  surviving  was  However, the New York Court of Appeals reached t h i s  until  same  about  a  surviving trust,  Newman l i n e of  and  reasoning  fashion:  In each of those cases the f i n d i n g of illusoriness was made on a f a c t u a l showing of u n r e a l i t y , and not s o l e l y because the t r a n s f e r s operated t o , and were intended t o , defeat the widow's e x p e c t a n c y . 6 0  A comparison of discussion relying  even  left  in a tentative  had  not  The  trust  seen was  in  years,  set  i n two of  and demonstrate  understanding)  In Krause v.  was  facts  suggest otherwise,  (or  doctrine.  the  Krause, trust  the  part of for  up three  years  after  cases under  the d i f f i c u l t y  illusionary the  settlor's  a daughter  and who r e s i d e d  the  in  transfer property  whom the  a foreign  marriage  to  in  settlor country. a  second  wife  ( t h e a p p l i c a n t ) and  found  to  be  revealed years  before  favour be  judicial  h i s death,  and  mind  in  these  whether the  distant  granddaughter  was  used,  particularly Colorado  case  that  an  irrevocable  trust  was  death control  because from  of the  the  the t r u s t  trust  the  not.  over in  were found  to  the  inter  vivos  v.  settlor's  an  transfer  (thus  enabling  and  infant  of  the  him  to  is  example, surviving  property  t o pay  from  doctrine For  c o l o u r a b l e and  direction  of  equity  in decisions  James,62  transfer  "illusionary,  equities  Krause,  i s discussed.61  Richard  the  spouse.  i s more a p p a r e n t  property).  in  geographically  a separated  of  two  were  Halpern,  illusionary  facts  wife  trusts  In  a  was  terminology,  considered  i t or  motive  res  tentative  It  the  his  These t r u s t s  daughter;  when  Estate, from  whatever  spouse  where t h e  argued  faith",  the  favoured over  jurisdictions  wife  that  that,  This consideration  the  separated  decisions  surviving  other  Halpern's  had  admitting  emotionally  in  Re  granddaughter.  I t i s submitted  facts,  favoured  In  decedent  of h i s infant  valid.  the  the  -  three years before h i s death.  illusionary.  that  159  not  to  an  i n good  h i s debts  at  effectively  However, t h e c o u r t found  that:  (T)here is absolutely no evidence in the r e c o r d . . . t h a t t h e g r a n t o r and t r u s t o r had any evil intention whatsoever, or make and executed said documents w i t h t h e p u r p o s e i n mind o f d e f e a t i n g them by contracting indebtedness in a haphazard and w i l l f u l manner. Such i t would seem t o us would be r e q u i r e d b e f o r e i t c o u l d be r e a s o n a b l y c o n t e n d e d t h a t t h e documents a t t a c k e d were i n any way c o l o u r a b l e o r b e a r t h e earmark o f p r e t e n s e or sham.63  Elsewhere, of  fraud.  While  sham,  and  court  is clearly  at  least  behavior concern  the  fraud,  court  use  o f words s u c h as  do  nothing  concerned  does  illusionary  the  transfer  doctrine,  in  the  tenancy  surviving the  spouse  property.  illusionary  the and  a  is  motive.  certain  6 4  the  It i s ,  standard  identifying  difficulties  one  pretense,  reasoning,  Unfortunately,  and  decision  with  impose  issue  colourable,  faith  Appellate  rationalize  joint  to  the  the  with  good  the  inherent  in  of the the  doctrine.  to  deal  that  simplify  with  resolve  attempted  not  to  willing  Recently,  does  intimates  deceased.  not  -  the  implicitly, upon  160  a  the  Toman  but  her  court,  the v.  rather  deceased's  asserted The  clarify  of  trust,  Court  Illinois  illusionary  with  The  property and  marital  addressing  held  sister. right the  has  transfer  Svoboda.65  mother  statutory in  of  case in The  against  issue  of  transfers, stated:  Under Illinois law, which i s i n accord with the weight o f American a u t h o r i t y , a r e a l i n t e r v i v o s g i f t t o a n o t h e r _is t h u s e f f e c t i v e , even t h o u g h t t h e s a i d r e a l i n t e r v i v o s g i f t i s made f o r t h e p r e c i s e p u r p o s e of minimizing or d e f e a t i n g what would o t h e r w i s e have been the statutory marital right....The confusing f a c t o r i s t h a t I l l i n o i s and t h e m a j o r i t y o f A m e r i c a n s t a t e s a l s o examine t h e g i f t l o o k i n g f o r what t h e y unfortunately c a l l fraudulent circumstances, but by w h i c h t h e y mean c i r c u m s t a n c e s i n d i c a t i n g that the g i f t was not a r e a l g i f t b e c a u s e t h e r e was no p r e s e n t d o n a t i v e i n t e n t C t h a t i s , no d o n a t i v e i n t e n t o f any kind or, at most, a mere testamentary, as d i s t i n g u i s h e d from a p r e s e n t , donative intent), for  -  transfer  a  It  a  which  would  trust  law.  Indeed,  seems  illusionary  if  However,  can  be  gift  may  if  control"  over  surviving  definitely  inter  used  to  vivos,  offering  a  to  that  as  It  accepted such  surviving  suggesting  that  of  retains  "such  a  transfer  of  a  enough  to  somehow  avoid  the  r e d i s t r i b u t i o n of for  basis  as  operation  property  a  surviving  to  why  such  the other  of  the  a  vis  vis can is  of  to  In  doctrine  a  surviving  title  most t h a t  transfer  even  degree  testamentary  a  spouse.  quasi-testamentary".67  illusionary  legal  intention,  how  claim  "the  that  with  the  seems t h a t  provide  of  address  the  by  satisfy  remains  effect  sound  against  further  is valid  the  to  as  fails  lawfully  regarded  about  certainty  to  court  property  spouse.  suggesting  the only  but  lacks  is  doctrine  voidable  Wills,  it  here  r a t i o n a l i z e the  donor  the  court  matters  transfer  of  be  be  be  the  Statute  can  void  the  must  words,  the  the  certainly  spouse,  donee  that  i t confuses  "real"  -  l a c k o f which the a l l e g e d g i f t was s i m p l y a sham or mere c o l o u r a b l e t r a n s f e r o f l e g a l t i t l e . ° 6  is  transfer  161  be  said  that  it  transferred  spouse,  without  redistribution is  proper.  While upon  i t may  marital  rights  redistributing  property  is  certainly easier  doctrine.  While  to  the  be has  argued  that  no  same  doctrine  better  transferred understand  the  to  than  terminology  an the  legal inter  basis  vivos  illusionary  often  of  surfaces  fraud for  trust, i t transfer in  both  doctrines—transactions fraudulent  or  terminology  to  a pragmatic  approach  the to  American public  are  -  called  shams—the  fraud  illusionary,  doctrine  produce a complicated  existence freely  162  of  which  alienate  courts  policy.  i s taken will  In  for certain  factors,  applying  acknowledge t h a t  As  Maryland  Court  upon  the  they  of  the  Instead,  infringing  openly  using  principle.  in searching  property.  the  avoids  legal  justify  colourable,  the  right  doctrine,  are  concerned  Appeal  stated  in  the with 1952,  (T)he d o c t r i n e o f f r a u d on m a r i t a l r i g h t s represent an effort to balance the social and practical u n d e s i r a b i l i t y of r e s t r i c t i n g the f r e e a l i e n a t i o n of personal p r o p e r t y a g a i n s t the d e s i r e t o p r o t e c t the l e g a l share of a spouse.68  Although doctrine with  of  fraud  precise  a  legal  equitable in  L.C.,  fallen  into  disfavour  is  still  in  cases,  i n the  My  suggested  the  The  jurisdiction.  is  it  While  years,69  assistance  are  fraud. has  it  principle  or  of  understanding and  their  The 1914  case of  Lords,  not  distinction  the  was  Nocton  i t i s known  law  fraud  as  is  in  in  in  and  States British  therefore  applicability  Lord  opposed  United  on  by  fraud  legal  fraud  described  that  the  fraud,  good  this  concerned  between  American  v.  overly  i n the  equitable  follow  that  constructive  potential  principle  which  rights  equitable  Columbia.70  rights  upon m a r i t a l  cases  i s an  fraud  recent  American  definitions,  contemplated to  the  Viscount  of  marital our  own  Haldane,  Ashburton.71  cases  of  actual  fraud  - 163 t h e C o u r t s o f C h a n c e r y and o f Common Law e x e r c i s e d a concurrent jurisdiction from the earliest times....But in addition to this concurrent jurisdiction, the Court of Chancery e x e r c i s e d an exclusive jurisdiction in cases which, although c l a s s i f i e d i n t h a t C o u r t as c a s e s o f f r a u d , y e t d i d not n e c e s s a r i l y i m p o r t t h e e l e m e n t o f dolum m a l u s . ...A man may m i s c o n c e i v e t h e e x t e n t o f t h e o b l i g a t i o n w h i c h a C o u r t o f E q u i t y imposes on him. His f a u l t i s t h a t he has v i o l a t e d , however i n n o c e n t l y b e c a u s e o f h i s i g n o r a n c e , an o b l i g a t i o n w h i c h he must be t a k e n by t h e C o u r t t o have known, and h i s c o n d u c t has i n that sense a l w a y s been c a l l e d f r a u d u l e n t , even i n such a c a s e as a t e c h n i c a l f r a u d on a power. I t was t h u s t h a t t h e e x p r e s s i o n " c o n s t r u c t i v e f r a u d " came into existence....What i t really means in this c o n n e c t i o n i s , not m o r a l f r a u d i n t h e o r d i n a r y s e n s e but breach of the sort of obligation which is e n f o r c e d by a C o u r t t h a t from t h e b e g i n n i n g r e g a r d e d i t s e l f as a C o u r t o f c o n s c i e n c e . 7 2  The marital  fraud  Viscount spouse  approach is  Haldane of  property  a  to  of  the  substantially in  share  the in  passage the  whether  the  or  judiciary  same  above.  deceased's  a revocable trust  unconscionable,  American  as  there  that  Depriving estate  i s condemned not  in  by  as  was  cases taken  a  by  surviving  transferring  behavior an  of  that  intention  is to  defraud.  Like the  f r a u d on  highly  any  marital  subjective,  However,  the  identifying  specified  rights and  American the  unconscionable. has  principle  that  seem t o r e s u l t  unpredictable,  decisions of  are  following  series  quite  behavior  example, i n M a r y l a n d ,  the  equitable i n nature,  d o c t r i n e would  hence  indicia  For  substantially  the  factors will  of  in a  cases.  particular' it Court  a l l be  in  considers of  Appeals  considered  -  164  material  i n determining whether  against  the  transfer; motive  of  the  decedent  of  his  or  fraudulent  completeness  and  the  Other  of  whether  These  the  courts  District  in  these  the  the the  transferee  estate  which  may  provisions  in  of  the  also  be  two  made  s u r v i v i n g spouse has  i n t e r v a l between the  the  in  factors  other  the  transferor.74  found  by the  as  the r e l a t i v e moral claims of the s u r v i v i n g  the  in  interest  transferee;  spouse;  and the  participation  her  spouse.73  surviving  is  the  is  and the degree to which the s u r v i v i n g spouse  considered i n c l u d e :  means;  spouse:  transferor;  fraud;  stripped  spouse  a transaction  the extent of c o n t r o l r e t a i n e d by the t r a n s f e r o r ;  the a l l e g e d is  surviving  -  factors of  transfer  have been  states,  the  and the  if  entire  the  independent  adopted  Columbia.75  for  death  of  toto  by  in  marital  transaction  fraud is  set  attempted  to  aside.  The stipulate  courts  similar  of  other  standards,  point of view of c l a r i t y . of  Appeal  case  must  in  Sherrill  be  determined  consideration transfer the  vis  to:  the  but  spouses at the  and  date  with  v.  its  l a c k of  of  own  death,  time of the t r a n s f e r ,  the p r o p e r t y came.  recognized  facts,  consideration, total  assets,  the  success  i n Tennessee,  Mallicote76  on  have  less  For example,  a v i s the s e t t l o r s "  transfer  states  with  the  the  Court  that  each  particular  the  size  of  the  the time between  relations  and the  from  between  source  the  from which  However, the court a l s o suggested that  even  - 165 if  there  was no f r a u d  (G)enerally a gift or t r a n s f e r i n t e r vivos by a husband o f h i s p r o p e r t y , i f a b s o l u t e and bona f i d e and n o t made w i t h a f r a u d u l e n t i n t e n t , i s n o t a f r a u d on t h e r i g h t o f t h e w i f e t o s h a r e i n h i s e s t a t e a t h i s death. However, t h e c o u r t s have v o i d e d such t r a n s f e r s when t h e y have f o u n d them t o be m e r e l y c o l o u r a b l e — a d e v i c e by w h i c h t h e husband i s a b l e t o use and e n j o y t h e p r o p e r t y d u r i n g h i s l i f e t i m e and a t t h e same t i m e d e p r i v e h i s w i f e o f h e r r i g h t s i n t h e property at h i s d e a t h . . . 7 7  This  reference  to colourable  spectre  of the i l l u s i o n a r y  retains  such  is  no  "real"  suggests the  a degree  marital  However, inter more  rights  transfer  and  a l l .  At  least  one  t h e two d o c t r i n e s  set aside, some  that  commentator upon  co-exist. & 7  t r a n s a c t i o n (an  and i t i s t h e r e f o r e variation  there  of fraud  transfers,  the e n t i r e  r a i s e s the  the t r a n s f e r o r  the property  illusionary  t o say t h a t  doctrine  doctrine:  over  v. M a l l i c o t e ,  t r u s t ) was  accurate  at  i n Tennessee,  in Sherrill  vivos  of control  transfer  that,  transfer  transactions  o f the  perhaps  illusionary  e x i s t s i n Tennessee. «  Another is  form  found  i n Missouri.  "consider  a l l facts  o f the fraud There, and  However, s u c h c o n s i d e r a t i o n s intentions Potter in  o f the deceased  v. Winter,  the following  the courts  circumstances are only  rights  are also in  relevant  i n the inter  t h e Supreme C o u r t passage:  on m a r i t a l  vivos  of Missouri  doctrine  willing  to  evidence". 9 7  to e s t a b l i s h the transaction. made t h i s  In  clear  -  166  -  . . . t h e v o l u n t a r y c o n v e y a n c e w h i c h t h e widow may set a s i d e as f r a u d u l e n t i s one e x e c u t e d with the i n t e n t and p u r p o s e t o d e f e a t h i s w i f e ' s m a r i t a l r i g h t s . 8 0  This  emphasis  Missouri  much  Ashburton  called  of  the  courts  have  allowed  that  the  clear  that  of  is  equitable  fraud  fraud  own  courts.  one  party  The is  conscience—that  result  The  courts  in  theory"  a  finding  broadcast  predicated  on  a  specified  term  for  marital  used  the  p r i n c i p l e of to  the  to  the  equitable  equity.  and  In  the  to  the  a  practical  the  solution,  behavior  kinship  to  than  a  equitable  American  doctrine  of  English  concept  of  more fraud  obligated  is  label  unacceptable  doctrine  be  Maryland  It  to  f o r t y i n g the  rights  make  in  rights.  Nevertheless,  ignored,  i s , in  found  attractive simplicity  marital  i s the  considered  as  i s an  catchall  may  behavior,  form,  the  principle.  the  may  invalid.82  there  legal  upon  fraud  deceives".81  tolerated.  of  fraud  such  certain  on  be  descriptive  "Massachusetts  more  not  as  the  Columbia,  should  "fraud  v.  follow  purest  fraud  is  Nocton  generally  its  a  that  in  in  knowingly  that  while  Haldane  fraud  who  In  doctrine:  Lord  marital  person  proof  fraud  places  a  be  of  what  of  not  doctrine  motive  fraud",  will  of  strict  mind  transaction  District  is  to  "legal  which  message  factors,  it  closer  dishonest  Even  upon  to  Canada,  acceptable  to  i s applied another this  has  in  our  where good  included  - 167 relationships agents  and  Whether The  between  their  i t would  English  equitable  employees  and  employers,83  principals,84  and  creditors  apply  authorities  fraud,  to  family  would  and  relationship  suggest  real  Halsbury's indicates  debtors.85  is  i t should.  estate  uncertain.  In r e v i e w i n g  that  (R)elief will be granted i n equity against a transaction which i n v o l v e s injury to t h i r d parties who s t a n d i n s u c h a r e l a t i o n t o t h e p r i n c i p a l p a r t i e s as t o be a f f e c t e d by i t , a r u l e which has been e s t a b l i s h e d on g r o u n d s o f p u b l i c p o l i c y . 8 6  Cases c i t e d i n c l u d e  one i n w h i c h  disposition  o f her p r o p e r t y  rights".87  However,  men  had c o n s i d e r a b l e  upon m a r r i a g e of  these  can  be  made  which  may  that  decision over  be c r u c i a l . there  i s an  t o s a t i s f y moral  fact  that  the  argument:  legislation  the  from  to a s i t u a t i o n  within  i t sintent.  Equity  this,  and e q u i t a b l e  fraud  spouse or c h i l d  For the present, obligation  merely  was c r e a t e d  needs.  well  an  argument  be  from  the  obligation  estate.  The  buttresses  extending  the  by i t b u t c l e a r l y  for situations be  arising  compensation,  codified  not contemplated  might  or  the deceased's  would  an  flowing  children,  i s t o some e x t e n t  courts  property,  when  be s e e n , t h e n a t u r e  financial security  claims,  this obligation  As w i l l  or  marital  t o 1 7 8 9 , a time  h i s wife's  spouse  i s to provide  o f h e r husband's  dates  to death.  to the s u r v i v i n g  today  surviving  i n fraud  rights  as opposed  rights  deceased  or  that  "a woman about t o marry made a  t h e remedy  such that  as the  - 168 The another that  a  equitable  remedy  which  revocable  surviving enunciated  by  deserves  trust  spouse  or  principle  unjust  mention  in  be  aside  should  children.  Dickson,  of  set  The  now  J. in Pettkus  enrichment  making in  argument  favour  classic  v.  the  Becker,88  is  of  the  definition  was  a  s  follows:  T h e r e a r e t h r e e r e q u i r e m e n t s t o be s a t i s f i e d before an unjust enrichment can be said to e x i s t : an e n r i c h m e n t , a c o r r e s p o n d i n g d e p r i v a t i o n , and a b s e n c e of any j u r i s t i c r e a s o n f o r t h e e n r i c h m e n t . 8 9  The  surviving  spouse  or  beneficiaries  under t h e  (once  the  again)  general or  children,  would  then  juristic  then  be  a  reason  variation  matter  of  equitable  unjust  enrichment  rights  as  they  the  spouse  formidable  in  w e l l be  to  light  for  a  that  the  have been e n r i c h e d .  If  the  deceased  h i s or  her  fact  to  is  under  surviving  corresponding  i f there  a  spouse  deprivation.  determine  be  hurtled  fraud/fraud  on  c o n v i n c i n g ' the  part or  that  show  It  was  any  enrichment.  presently  surviving  may  is  is of  f o r the  obstacle  on  provide  certainly  trust  accepts  there  The  obligation  revocable  court  o b l i g a t i o n to  c h i l d r e n can  of  exist the  children. of  that counsel  the  the  arguing marital  courts  give  rise  deceased  to  While  this  Canadian  i n those  in  cases  cases  either rights,  that to  an  provide  d i d not  or  succession equitable for  obstacle  discussed  a  the seems  above, i t  a r g u e , or  argue  forcefully, v.  the  Gray91  rather The  which any  both  focused  the  rights  than  case  of  the  equi'-ties.  Dower  v.  equities  indication.  169  Collier on  an  of  the  Public  is  v.  Yonkers90  interpretation surviving Trustee92  were argued, It  -  if  therefore  the  Kerslake  legislation or  children.  only  Statement  worth  j  of  spouse is  the  a n c  of  reviewing  case  in  Claim  is  in  some  detail.  The P l a i n t i f f was the wife of one John Dower, and the Defendants John  i n c l u d e d the P u b l i c Trustee as Committee of the  Dower,  and  apparently  all  a s s o c i a t e s and other r e l a t i v e s . husband had made g i f t s Trustee,  for  maintenance, death.  She  purpose  also  alleged  specifically  or  argued  the  d e a l i n g with f r a u d u l e n t  Mr. and  the  brought  particularly  share the  Claim  of  her his  gifts  improvident,  of  that  were  her  Public  claims  estate  made  mentally  provisions  upon  for his  incomplete,  under  mistake,  incompetent.  She  13  Elizabeth  Ch.  5,  conveyances.  again  an a p p l i c a t i o n to of  business  other than the  defeating  Dower died during the  Defendants,  Statement  of  that  while  Dower's  The P l a i n t i f f a l l e g e d  and a f a i r  unconscionable,  influence  Mr.  to the Defendants,  support,  illusionary, undue  the  of  said  as  other  strike  course than  out  disclosing  of the  certain no  those d e a l i n g with maintenance  the  proceedings,  Public  Trustee,  paragraphs cause and the  of  in  the  action, fraudulent  conveyances dealing ceased  statute.  with  against  The c o u r t  maintenance,  to exist  170 declined  notwithstanding  when Mr. Dower d i e d ,  the Public  to strike  Trustee  that  out those  such  because t h e c l a i m  as c o m m i t t e e ,  and he  was  a  claim  was made not the  applicant.  The whether  an  surviving made all  action  spouse,  during  that  persons  with  settlor.  court  and  109.  legal  of during no such  court  provision  could  The  stated:  with  or e q u i t a b l e then  claim  followed be made o n l y  their  against  delay,  referred to  a in  l a w , and t h e n R e l i e f Act, cases  out o f the e s t a t e  "to  void  in any  the grantor  t o share  reasoning  property  included  o f the deceased  Zealand  the  of Property,  others"  claim  by  declared  The c o u r t  and  of the Family and New  of  as t o whether  a t common  5  the i n t e n t i o n  claims  or e q u i t a b l e  the l i f e t i m e  or g i f t s  Dispositions  arose  the issue of  Ch.  The s t a t u t e  "creditors  The A u s t r a l i a n  the  court  made  t h e words  review of the p r o v i s i o n s c.  estate.  with  Elizabeth  transfers  and V o l u n t a r y  The q u e s t i o n  found  13  dealt  c r e d i t o r s or o t h e r s " .  had any l e g a l  disposed  under  o r deeds  Fraudulent  finding  spouse  lies  to set aside  or defraud  on  o f t h e judgment  the deceased's  conveyances  hinder May  balance  surviving property  spouse.  The  turned  to a  R.S.A. 1955,  were  in  or  reviewed,  finding  that  o f the deceased.  The C o u r t , t h e r e f o r e , has no j u r i s d i c t i o n t o g r a n t a d e p e n d e n t a s h a r e o f any p r o p e r t y w h i c h was n o t owned by t h e d e c e a s e d a t t h e d a t e o f h i s d e a t h and i s n o t  - 171 comprised  Nor  could  respect  i n h i s estate..93  13 E l i z a b e t h Ch. 5 a s s i s t  t o any i n t e r  vivos  the s u r v i v i n g  spouse  with  transfers, for  (A) w i f e has no a b s o l u t e r i g h t t o an o r d e r under t h i s S t a t u t e [ t h e F a m i l y R e l i e f A c t ] and t h e C o u r t i s n o t here d e a l i n g with l e g a l or e q u i t a b l e r i g h t s o f the widow o r o t h e r d e p e n d e n t b u t w i t h h i s o r h e r m o r a l rights and t h e m o r a l o b l i g a t i o n w h i c h t h e F a m i l y Relief Act recognizes as r e s t i n g upon a man to p r o v i d e f o r h i s widow and o t h e r d e p e n d e n t s a f t e r h i s death.94  This d i s t i n c t i o n claims  i s an i m p o r t a n t  surviving the  spouse  deceased's  should  doctrines? is the  clear  under  has o n l y i s this  the e q u i t a b l e  only  the courts  discussion.  a moral  an  claim  fraud  which  equity  or c o n s t r u c t i v e  can answer  an a f f i r m a t i v e answer  I f the  t o share i n  obligation  would  law as i n c u r r e n t l y s t a n d s i n B r i t i s h  E.  that  be an  trust  question, i t innovation i n  Columbia.  Conclusion  The approaches the  or c h i l d  While  that  one f o r t h e p r e s e n t  estate,  enforce  between m o r a l and e q u i t a b l e o r l e g a l  foregoing  open  discussion  t o our c o u r t s  rights  of  surviving  transferred  by  the  i n determining  spouses  deceased  examined  to  and a  the question  children  revocable  different  to  of  property  trust.  The  - 172 M a s s a c h u s e t t s , or popular that our a  one  i n the  i t i s the own:  liberal  New  doctrine  United  preferred Zealand,  which  traditionally  i s easy  important: family  to  brought apply  rights  the  the  liberal  effectively  case a  is  "best  handled  to  these  problems  convinced several  judicial  that  this  alternate  illusionary equitable trust.  because,  is  of  I t i s suggested  to convince  a court  and  of  as  was  a  less  the  determined if  equitable  for on  the fraud  willing  case  that  Columbia t h a t  there  the  usual  way  can  be  they  have  doctrines right,  the i t will  a  is,  courts  marital  h e r e , however, t h a t  the  such  it the  the  or  to  in  court  approach,  i t :  are  Massachusetts  in  our  claims  rights  The  to  deceased's  moral  the  Burkin.  considers  such  be  appropriate  fraud  in B r i t i s h  ignores  acknowledging  be  justifications and  which  legislation.. .until  will  the  with  perhaps  may  process".95  transfers remedies  while  is  i t does  When  they  v.  It  to  as  society  or  amendment  by  Alberta.  members  estate.  judicial  change  the  surviving  Sullivan  statute  through  modern  approach,  similar  law.  doctrine  attention,  of  and  most  indications  jurisdictions  compensation  legal  made  a  strong  coinciding  which  succession  answers  is  deceased's  courts'  Massachusetts  adopt,  of  from the  in  it  security,  to  approach  p r i n c i p l e s of  have  satisfied  There are  rights  the  i n c e r t a i n l y the  States.  to  acceptable  certain  doctrine  A u s t r a l i a , Ontario,  Nevertheless, defeats  legal,  of  or  the  constructive not  i t should  be  easy  adopt  an  - 173 approach  which  action.  The  insofar  might  "open  equitable  the  approach  floodgates"  to  suggested  applying  here t h a t  vivos  to defeat  very  widespread  contemplated  established  rules  judgment to  new  cause  before  and  children's the  courts  o f f a c t s , as  facts.  the i n i t i a t i v e  r i g h t s would in  of  unpredictable,  It  the p r a c t i c e of t r a n s f e r r i n g p r o p e r t y  spousal  taking  a  i s notoriously  as i t i s e s s e n t i a l l y a s u b j e c t i v e  opposed  of  British  is  inter  have t o  be  Columbia  over the L e g i s l a t u r e .  -  174 -  F o o t n o t e s t o Chapter  6  1.  Family  R e l a t i o n s A c t , R.S.B.C.  1979 c 121, s e c t i o n  43.  2.  Ibid.,  section  3.  Graham v. Graham B.C.L.R. 27•  4.  Ibid.,  5.  59 B.C.L.R. 27.  6.  Oscroft  7.  Ibid.,  8.  Samuels v. Samuels  9.  Wills  10.  E s t a t e A d m i n s t r a t i o n A c t , R.S.B.C. 1979 c 114.  11.  Supra,  f o o t n o t e 9, s e c t i o n  12.  Supra,  f o o t n o t e 10, s e c t i o n  13-  S u c c e s s i o n Law Reform A c t , R.S.O. 1980 c 488.  14.  F o r a r e v i e w o f dower r i g h t s , s e e : B a r b a r a Ann K u l z e r , " P r o p e r t y and t h e F a m i l y : Spousal P r o t e c t i o n " (1972), 4 Rutgers-Canadian L . J . 195; W.D. MacDonald, F r a u d on t h e Wife's Share, (Ann A r b o r : University o f Michigan Law S c h o o l , 1960), c h . 5.  15.  K u l z e r , I b i d . , a t 201.  16.  British Columbia Law Reform S t a t u t o r y S u c c e s s i o n R i g h t s , note  17.  J.H. B a k e r , An I n t r o d u c t i o n t o E n g l i s h ( L o n d o n : B u t t e r w o r t h " s , 197TT, a t 210-11.  18.  s e e MacDonald,  supra,  19.  Kulzer, supra,  f o o t n o t e 14 a t 199 - 200, 202 - 205.  20.  MacDonald, s u p r a ,  21.  Ibid.,  45. (1983),  48  B.C.L.R.  134,  affd.  59  a t 137.  v. O s c r o f t  (1982),  15 F.L.D. 244 (B.C.S.C.)  (1981),  30 B.C.L.R.  a t 248.  2W.  Variation  a t 24.  A c t , R.S.B.C.  186, 22 F.R.L. (2d)  1979 c 435.  2. 96 and  85-86.  Commission 2 a t 46.  Paper Legal  f o o t n o t e 14 a t 24 - 29.  f o o t n o t e 14.  #70, History  22.  Kulzer,  supra,  23.  Supra,  footnote  24.  For a d e t a i l e d r e v i e w , a l b e i t d a t e d , o f s u c h r i g h t s i n t h e United States, see Oval A. P h i p p s , "Marital Property R i g h t s " ( 1 9 5 5 ) , 27 Rocky Mtn L.R. 180; and more r e c e n t l y , concerning New Y o r k , and P e n n s y l v a n i a only, E l i a s Clark, "The R e c a p t u r e o f T e s t a m e n t a r y S u b s t i t u t e s t o P r e s e r v e the Spouse's E l e c t i v e Share: An A p p r a i s a l o f Recent S t a t u t o r y Reforms" ( 1 9 7 0 ) , 2 Conn. L.R. 513.  25.  Rahe H. Von Hoene, " F r a u d on S p o u s e s ' T r u s t s & E s t a t e s 1186 a t 1186.  26.  Smyth v. C l e v e l a n d T r u s t Company, 10 Ohio Ops. 2d 448, 81 O h i o L. Abs. 581, 16"3 N.E. 2d 702 at 705; a p p l . a l l w d . 179 N.E. 2d. 8 8 9 .  27.  N a t i o n a l Shawmut Bank o f B o s t o n N.E. 2d 113.  28.  I b i d . , a t 122.  29.  Kerwin  30.  I b i d . , a t 306.  31.  F o r example, the states of Illinois, Connecticutt, I n d i a n a , M i c h i g a n , Montana, Vermount, W i s c o n s i n , and O h i o , c a s e s c i t e d i n A u s t i n Wakeman S c o t t , The Law o f T r u s t s , ( B o s t o n : L i t t l e , Brown & Co., 1956), V o l . I a t ph 57.5, n o t e 4.  32.  Supra,  33.  I b i d . , a t 67.  3 4  «  v.  footnote  175 -  Donaghy  I n Re P a u l i n ,  Thomson v.  37.  I b i d . , a t s. 62.  Thomson,  Collier v . Yonkers D.L.R. 2d 223. Corlet  317  Joy,  315  Mass. 559,  [1950] V i c . L.R.  36.  39.  (1945),  v.  Rights"  ( 1 9 6 1 ) , 100  Mass. 457,  59 N.E.  53  2d 299.  f o o t n o t e 26.  I b i d . , a t 464.  -  214.  16 a t 7 5 .  35.  3 8  14 a t  v.  Isle  462.  [1933] N.Z.L.R.  et.  al.  o f Man Bank,  s.59.  ( 1967),  61 W.W.R.  [1937] 2 W.W.R. 209,  761, 4 I.L.R.  65  40.  K e r s l a k e v.  41 .  Ibid . at  42.  Dower v. P u b l i c 38 W.W.R. 129.  43.  Ibid.,  44.  Sullivan S.J.C.T"  45.  Ibid.,  at  46.  Newman  v. P o r e ,  at  Gray,  [19571  -  S.C.R.  516.  519. Trustee  et.  a l . (1962),  35  D.L.R.  2d  29,  141-2. v.  Burkin,  390  Mass.  864,  460  N.E.  2d.572  (1984  577.  275  N.Y.  a l s o S m i t h v. N o r t h e r n 54 N.E. 2d 75 (1944) . at  176  371,  Trust  9 N.E. Company,  966  2d 322  ( 1937);  111.  see 283,  App.  47.  Ibid.,  48.  W i l l i a m E. Carr, Revocable Trusts, (Englewood N.J.: P r e n t i c e - H a l l TncTTT9BTjl , a t 54.  49.  John Cornelius Hayes, "Illinois Power and the "Illusionary" T r u s t : The New York I n f l u e n c e " (1952), 2 d e P a u l Review 1, a t 16; MacDonald has r e f e r r e d t o t h e s e t r a n s f e r s as " q u a s i t e s t a m e n t a r y " , s u p r a , f o o t n o t e 14 a t 87.  50.  In Newman v. P o r e , s u p r a , f o o t n o t e 46 a t 969, t h e c o u r t f o u n d t h e t r u s t was v a l i d " e x c e p t f o r t h e p r o v i s i o n s o f " o f t h e s t a t u t e g r a n t i n g a f o r c e d s h a r e ; see a l s o Merz v. Tower Grove Bank & T r u s t Co., 344 Mo. 1 150, 130 S.W. 2d 611 a t 616 ( 1939 S.C. o f Mo.7.  51.  Clark, supra,  42.  Robert C. B e n s i n g , " I n t e r V i v o s T r u s t s Rights of A Surviving Spouse" ( 1 9 5 4 ) , 618, a t 626.  53.  Newman v.  54.  B l a c k " s Law Pictionary, P u b l i s h i n g Co., 1979) at  55.  Ibid.,  56.  Krause v. K r a u s e , N.Y.C.A.).  57.  MacPonald, f o o t n o t e 49  at  970.  f o o t n o t e 24,  Pore,  supra,  at  519.  f o o t n o t e 46 5th 623.  Cliffs,  ed. ,  at  and t h e Election 42 K e n t u c k y L . J .  969  (St.  Paul,  Minn:  West  623-4. 285  N.Y.  supra, footnote a t 19-20.  315,  14  32  at  N.E.  2d  779  ( 1941,  123;  Hayes,  supra,  -  177 -  58.  Re H a l p e r r T s E s t a t e ,  100 N.E. 2d 120 ( 1951)  59.  Ibid.,  60.  I b i d . ; s i n c e f o l l o w e d i n : Re Hayden's E s t a t e , 107 N.Y.S.2d 701; Re P r o k a s k e y ' s W i l l , 109 N.Y.S. 2d 888; Re Leiman's Estate"; 116 N.Y.S. 2d 658, a f f d . w i t h o u t o p i n i o n 281 App. D i v . 764, 118 N.Y.S. 2d 750; Re Z e r n ' s E s t a t e , 138 N.Y.S. 2d 894.  61.  See, f o r example, t h e c a s e o f S m i t h v . N o r t h e r n Trust Company, s u p r a , f o o t n o t e 46; S h e r i l l e v. M a l l i c o t e , 417 S.W. 2d 798"T1967 C.A.); Mushaw v Mushaw, 39 A. 2d 465 (1944 C . A . ) ; A c k e r s v F i r s t N a t i o n a l Bank o f T o p e k a , 387 P. 2d 840 ( K a n s a s S.C. 1964).  62.  R i c h a r d v . James,  63.  Ibid.  64.  s e e MacDonald, s u p r a , f o o t n o t e 14, a t 135-7, f o r a r e v i e w of what the Colorado c o u r t s have meant by t h e term "colourable".  65.  Toman v . (1976).  66.  Ibid.,  a t 673-  67.  Ibid.,  a t 677.  68.  Allender (1952).  69.  K e r r on t h e Law o f F r a u d and M i s t a k e ( 7 t h e d . ) , e d i t e d by Denis Lane M c D o n n e l l and John George Monroe, (London: Sweet and M a x w e l l L i m i t e d , 1986) a t 4.  70.  s e e C.E.D. (Western) Misrepresentation.  71.  Nocton  72.  I b i d . , a t 951-2,954.  73.  W h i t t i n g t o n v . W h i t t i n g t o n , 205 Md. ( 1954) .  a t 122.  Svoboda,  v.  133 C o l o . 180, 292 P. 2d 977  39  Allender,  111. App.  199 Md.  v. Lord Asburton,  15  3d  394,  541, 87  (3rd),  349  A.  Title  [1914] A.C. 932  2d  (1956).  N.E.  608  67:  2d  668  a t 611  Fraud  and  (H.L.).  1, 106 A. 2d 72 a t 72  74.  Ibid.  75.  W i n d s o r v . L e o n a r d e t . a l . , 154 App. D.C. 932 (1973) U.S.C.A.)  348, 475 F. 2d  -  -  76.  Supra,  77.  Ibid.  78.  Casenote,  79.  Supra,  80.  Potter v. Winter, 280 S.W. 2d 27 ( 1955 S . C . of M o . ) ; Re E s t a t e of S i d e s , 119 Neb. 314, 228 N.W. 619 (1930).  81.  Supra,  82.  See,  83-  B i l a n e t . a l . v. Canadian F i s h i n g 3 W.W.R. 123 ( B . C . C . A . T .  84.  Wolfson v. O l d f i e l d 110 (Man C . A T T :  85.  Milne v.  86.  Halsbury s  87.  Ibid . , note  88.  Pettkus v.  Becker  89.  Ibid . ,  at  180.  90.  Supra,  footnote  38.  91.  Supra,  footnote  40.  92.  Supra,  footnote  42.  93.  Ibid.,  at  39.  94.  Ibid.,  at  35.  95.  Supra,  footnote 44 at  419,  footnote  178  61.  36 Tenn. L . R . 604 at  footnote  50.  footnote 71 at  for  608.  example,  955.  Dunnett  v.  123 A. 626 (1923T.  (1911),  Shields  Laws of England,  and  449,  4th e d . ,  578.  19 R . F . L .  97  affd.  V o l . 16,  165.  at  Ve.  [1938]  2 D.L.R.  (1906), 37 S . C . R .  3. (1981),  Conant,  Company L i m i t e d ,  18 W . L . R .  Yorkshire Guarantee Corp. N  In  331.  1232.  -  179 -  CHAPTER 7 CONCLUSION  The  purpose  revocable  trust,  power  revocation.  of  determine  its  jurisdiction was  a  about  of property  in  and  The  vivos  particular  been  Columbia.  to  trust  The  study  has  death,  in light  of  creates  imposition  a  reason  to  freely  judiciary's Act o f  probate to  fees  consider  will.  T h e r e a r e numerous methods o f d i s p o s i n g p r o p e r t y death of  outside  the  t h e ambit  property  and  of a w i l l . the  an i n t e s t a c y , j o i n t  pension  plans,  However,  none  provide one's  of these  upon  to derive  ongoing  personal  tenancies,  plans  methods  comprehensive  property  perceived the  a  insurance  from  or  over  employee  a will.  the  upon  nature  individual  benefit  can under  plans.  or c o l l e c t i v e l y  disposition  Nor do t h e y  using  an  upon  and d e s i g n a t i o n s  separately  control  death.  Depending  beneficiaries,  consider  to  study  Variation  of hefty  subsidiary  to the t r a d i t i o n a l  the  a  i n the  of this  the e f f e c t i v e n e s s of the w i l l upon  been  to the w i l l  genesis  the  containing  interest  as an a l t e r n a t i v e  The r e c e n t  province  alternatives  inter  has  a p p l i c a t i o n of the W i l l s  Columbia.  this  thesis  i s , an  of B r i t i s h  interpretation British  that  this  suitability  concern  dispose  of  provide These  c o n t r o l o f the property  of  can  a l lof  the b e n e f i t s  benefits during  include  life,  the  - 180 ability impose  to  choose  and  change  c o n d i t i o n s upon  guardians  gifts,  and e x e c u t o r s ,  beneficiaries the a b i l i t y  at  whim,  to appoint  and t h e e n t i r e l y  private  and t o  and change  nature  o f the  will.  The  revocable  comprehensively but  can  will. the  also  Such trust  trustee settlor,  gifts, trust  some  upon  provide  force  and  immediately  upon  death,  benefits  o f the  of  f o r the  a power benefit  administration  With c a r e f u l  interest in  and  drafting,  by t h e of  the  alteration  t h e s e t t l o r can  p r o p e r t y , c a n impose c o n d i t i o n s or t r u s t e e s with  as a w i l l ,  and w i t h  has t h e u l t i m a t e  ease.  t h e power o f  freedom  of  changing  a t any t i m e .  one  cannot  been  capital  c a n be as p r i v a t e  o r h e r mind  property  of the s e t t l o r ,  the t r u s t  the s e t t l o r  can not o n l y  generally include a l i f e  powers  over  hand,  the perceived  and can change b e n e f i c i a r i e s  The  has  of  i n favour  encroach  control  revocation, his  would  property  on t h e o t h e r  o f a l l o f one's  many  to the s e t t l o r .  maintain  The  provide  and  granted  upon  dispose  a trust  to  trust,  feature  of  a  i s i t s ambulatory  effect upon  until  are a s c e r t a i n a b l e .  that  nature.  death,  i t s creation,  transferred  will  a  a  revocable  While  trust  a will is  has no  enforceable  t h a t i s , when t h e t r u s t  t o t h e t r u s t e e and t h e t h r e e  trust  property  certainties  This studying for has  the  the  viability  will.  the  nature  in  to  of  the  a  the  for  judiciary  the  the  an  testamentary.  revocable United  and  issue  It  is  in  raised  is  has  the  in  distinction  United  States  used  as  an  the  testamentary  the  settlor,  the  residual  one  substitute  been  that  over  a  the  has  argued  to  as  recognize  trust  control  that  a  to  of  trust  by  property,  beneficiaries  effectively  was  this  argument, was  created  view u n t i l  in  trust  agent  only  only  a  become p o p u l a r  that of  the  American in  trust,  whatever  inter  its  vivos, of  a  will  as  a wills  the  that  such  settlor.  1940s, when the  recognition and  the  found  an the  property  this  century,  and  merely  revocable  interest It  trust  part  this  revocable  courts results,  and  was  not  distinction  permitted  substitute  in  the the  States.  The been  The  trustee  accept  a  the  important  trust  litigation  of  early  established  transferred  between  revocable  f a i l u r e to  death,  accepted  the  to  extremely  instrument.  circumstances  began  the  distribution  settlor's  In  was  degree  -  an  where  will.  large  testamentary  This  cases  trust.  providing  upon  in  the  retaining  of  substantial  years,  alternate  is  I n d e e d , the  resulted  over  and  distinction  181  largely blind  Canadian confined  trusts.  to  There  experience  with  employee b e n e f i t is a  dearth  of  revocable plans,  trusts  pension  authority,  has  plans,  academic  or  - 182 judicial, wills. upon  dealing While  the  with  this  would  modern  revocable  trust  aware  certain  of  as a w i l l s  substitute,  principles  review  the testamentary  i s "dependent  the  trust  has  been c r i t i c i z e d  which  test  should  be  t h i s means t h a t  trustee  inter  does  fact  upon  death  the instrument  may  does n o t n e c e s s a r i l y make  While under  this  grounds.  the  test, There  i t may  the  revocable  trust  replacing  a  drafted  will.  creates  the g i f t  or  effect".  i n the  early  the nature this  of  approach  contain  trust  itself.  to a  interest  and e f f e c t .  testamentary  The  intentions  per se.  may  not be  no C a n a d i a n  some  For  of property  a present  f o r i t s vigour  is  test  or performance  made  i s a transfer  specifically  There  The  and  instrument  nevertheless  are v i r t u a l l y  which  However,  i t testamentary  revocable  of cases  and t h e b e t t e r v i e w i s t h a t  v i v o s , the instrument  not r e l y  that  i f there  might  to distinguish  to  be  which  containing  the mistake  the  should  and t r u s t s .  to the r e s u l t s  cases,  applied  caselaw  i s a line  of the w i l l .  i n other  trusts,  and  test  reliance  considering  f o r i t s vigour  failed  and t h e n a t u r e  to  the cautious  of g i f t s  death  repeating  decisions  when  instrument  have a p p l i e d t h i s  the  the  the upon  instrument,  American  nature  there  substitutes for  t h e door  i n Canadian  In p a r t i c u l a r ,  i s whether  Some c a s e s of  use.  as  t o open  authorities  such  trust  appear  trusts  American  affect  enunciated  revocable  be  testamentary  attacked  cases for  which  the  on  other  review  purpose  authority  for  a of  the  permissibility with  l i f e  o f powers  interests  intentions. would the  be  required  Canadian  American should  control  of  control  the  a l l .  authorities  the validity  l i f e  interests,  will  always  Poor  drafting  an  provide For  revocable  and  agency  by  be of  power  the  the  how  testamentary  of  control  n o t been to  powers  which  argued,  by  upon  the  control.  I t  of control  are  of  i s the  using  revocation,  which  examined  rely  a l l powers  Canadian  American  ultimate  the  that  than many  a  of  i t sown  operation  a  Canadian  powers  trust  the can  of  benefits  using  not  powers  and  only  i n drafting i n support  of control, or  revocable  how  that  they  will  are  expose  trust used. i t to  considerations.  authorities, emulate  available  the revocable  discuss  find  are cited  of the trust  American not  lies  particular  terms,  which  which  trust,  cases  t e s t a m e n t a r y and agency  to  cases  cases  of revocation,  success  upon  the  rather  of a  additional  example,  of  matter  According drawn  broad  combined  permissible.  or poor on  have  that  thus  No  depend  powers  revocation,  powers  matters,  considerations.  based  can  contain  i t i s necessary very  of  importance  i s merely  attacks  I t  will  however,  power  are equally  testamentary  of  permit  approving  The  there  and  i n mind,  to  a  or modification  which  detailed  imitate  which  kept  subsidiary  to  trusts  the  judiciary,  cases  be  of revocation  i n  However,  -  183  trust,  a  when  a  will using  properly but a  can w i l l .  i t i s possible  to  -  184 -  see one's t r u s t e e i n a c t i o n , and to determine the e f f e c t i v e n e s s of  trust  terms.  uninterrupted physical  revocable  trust  is d i f f i c u l t unduly  trust  can  management of one's a f f a i r s  or mental i n f i r m i t y ,  revocable  or  The  also  not only  during any  but a l s o upon one's death.  i s not revoked  by marriage  i t was  The  or d i v o r c e , and i t  to argue that the s e t t l o r was mentally  i n f l u e n c e d when  provide  created,  incompetent  i f he or she was  involved i n i t s operation.  There  a r e , of course,  revocable t r u s t  some disadvantages  as a s u b s t i t u t e f o r the w i l l .  i n using a  Because i t does  e n t a i l a present t r a n s f e r of t r u s t property from the s e t t l o r to the  t r u s t e e , the revocable  at  both  provincial  the  federal  income  trust  and  taxes  provincial  may  result  gains,  and a p r o v i n c i a l  paid.  Income tax r e t u r n s w i l l  each year,  or l o s s e s of the t r u s t  While  the income  committing  revocable  from  tax may  are a t t r i b u t a b l e  tax consequences must  be  may  examined  Problems may a l s o a r i s e  during  i f the s e t t l o r to maintain  and  capital  have  to be  f o r the t r u s t capital  to the s e t t l o r .  be b e n e f i c i a l  trust.  may be d i f f i c u l t  any taxable  have to be f i l e d  a s s e t s to the revocable  trust,  Federal  that the income and taxable  gains  they  tax consequences  level.  purchase property  notwithstanding  circumstances,  may t r i g g e r  carefully  the o p e r a t i o n  i n some before  o f the  a c t s as the sole t r u s t e e . - I t  the standard o f care r e q u i r e d by a  - 185 trustee  in dealing  settlor  may  r e s u l t i n a l l e g a t i o n s of not  be  only  estate.  I t may  position  of  consider  an  be  his  property  the  against  to  with or  her  settlor  understand  breach of trustees  during  practices. his  a  In  any  do  so  the  settlor's  succeeding t r u s t e e to  settlor's  event, role  to  by  by b e n e f i c i a r i e s  also  co-trustee,  her  considered  failure  trust but  the  the  as  or  is still  However,  wise to appoint  institution  and  own.  subsequent  co-trustee  records  which  lifetime, to  maintain  i t is crucial  as  or  trustee  as  be  the  a  even  proper that  opposed  the to  trust beneficiary.  Another trust or  children  under  of  argument can policy  the  that  to  Act  Variation  American  cases  part  These  to  cases  "illusionary rights"  support which  satisfy fall  in a  revocable  that  the  set  aside  into  The  two  claims  doctrine first  the  trust.  A  strong  contrary  to  public  a share  in an  a number  of  t r u s t s i n whole  or  cited  trust  its  the  surviving  spouse.  categories  described  as  and  of  of  or  be  vivos  estate extend  c h i l d r e n of  can  the  will  i n a revocable  inter  broad  Although to  courts  i t w o u l d be  argument  succession  transfer"  doctrine.  the  whether h e l d  of  Act.  that  revocable  s u r v i v i n g spouses  only  a s u r v i v i n g spouse or  testator's assets, In  held  when  c l a i m s by  o s t e n s i b l y apply  marshalled  to deprive  will  to avoid  Wills  property  be  estate.  in  concern  testator, i t i s possible  application  the  of  i s used s p e c i f i c a l l y  provisions the  area  the  i s a hybrid  "fraud of  the  on older  the  marital theory  -  that a revocable find  that  insofar not  -  t r u s t was t e s t a m e n t a r y i n n a t u r e .  the t r u s t  e a s i l y r e c o n c i l a b l e with t r a d i t i o n a l  The principle  popular  fraud of  The c o u r t s  i s t e s t a m e n t a r y and i n e f f e c t i v e ,  as the s u r v i v i n g spouse i s concerned.  i s nevertheless  the  186  The d o c t r i n e i s  t r u s t p r i n c i p l e s , but  i n some American  jurisdictions.  on m a r i t a l r i g h t s d o c t r i n e equitable  or  British  Columbia j u r i s p r u d e n c e .  actual  fraudulent  intent,  but o n l y  constructive  i s similar to fraud  found  in  I t i s unnecessary t o f i n d an  the focus  being  rather  upon t h e  i n e q u i t a b l e r e s u l t s which may occur when moral o b l i g a t i o n s are ignored. the each  The American d o c t r i n e takes  a pragmatic approach t o  r i g h t s o f the s u r v i v i n g spouse, and r e v i e w s the f a c t s o f case  t o determine  a s i d e the t r u s t .  whether  i t would  be e q u i t a b l e  to set  The d i f f i c u l t y w i t h t h i s approach i s t h a t i t  i s somewhat s u b j e c t i v e , and makes the law u n p r e d i c t a b l e .  There i s no evidence t h a t e i t h e r d o c t r i n e s would be adopted by the c o u r t s here  and  another  i n other  American  in British  Canadian  doctrine  "Massachusetts" theory.  Columbia.  jurisdictions  known  The focus  as  not  set i t aside  f o r the s u r v i v i n g  favours  the f r e e  spouse  alienability  akin  to  legal"  or  i s upon whether t h e l e g a l  notwithstanding  results  i s more  the " l i b e r a l  r e q u i r e m e n t s o f a t r u s t have been f u l f i l l e d . will  Indeed, the t r e n d  or  I f so, the c o u r t s  possible children.  of property  over  inequitable This moral  view claims  upon t h a t  in  liberal the  not  with  legal  ignored  intended small  the  to  and  when  defeat  bequest  indication  d o c t r i n e , the  marital fraud  be  drafting  claims  for  the  considerable practitioners client's little  developed  by  a  potential to  needs.  reason  as  under  to our  the  i n the  the  ignore American  Act,  equitable  revocable  the  Wills  claimant should  be  courts prefer approach  doctrines trust  in  a  right  of  for  the  revocable  colleagues.  in  Act.  A  coupled  considered.  methods  i t s application  should is  will,  to  will,  circumstances.  the  found  which  Variation  p o s s i b l e drawbacks  innovative  case  own  transfer  substitute  consider In  more  a  potential  Nothwithstanding trust  i s t h a t our  illusionary  a d e c l a r a t i o n under t h e  revocable  -  property.  Although the  187  of  it  the has  I t behooves satisfying  trust,  estate  using  a  there  is  planning  as  

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