Will kits can create recipe for disaster


thestar.com
Bob Aaron
Bob Aaron bob@aaron.ca

Posted On: Saturday, November 28, 2009
Whatever money Pauline Rudling saved by using a will kit instead of a lawyer to prepare her last will and testament was spent hundreds of times over on legal fees so that a judge could figure out what she meant.

Shortly before she died in January 2003, Pauline Rudling made a will using a will kit. In it she left her two properties on Shaw St. in Toronto to her two sons, one house to each. Because of some ambiguous wording in the will, her sons wound up in a seven-day trial back in 2007, spending tens of thousands of dollars on lawyers to try to determine how the estate should be divided.

The blanks on the will kit document were filled in, in Pauline's presence, by her son Larrie. Pauline read it before she signed it.

The standard form pre-printed wording directed that all of Pauline's debts, estate expenses, inheritance and death taxes be paid by her executor following her death.

The will then provided that one of her houses on Shaw St. be left to her son Ron, "with all loans, liens, mortgages attached." The other house was left to Larrie, "free and clear of all debt."

Essentially, there were no other assets in the estate.

The sons disagreed on whether taxes and estate expenses were to be shared equally between them or deducted only from the value of Ron's house.

Ron's view was that all taxes and estate expenses, except for the mortgage on the house he inherited, were to be taken off the top and shared equally between the brothers.

Larrie wanted his house "free and clear of all debt," and took the position that all estate costs, taxes and expenses were to be paid from the value of Ron's house.

In the end, Justice J. Patrick Moore agreed with Ron and ruled that all expenses of the estate, except for the mortgage on the house Ron inherited, had to be shared equally between the brothers. Larrie was ordered to pay legal costs of $43,000.

Larrie appealed to the Court of Appeal but failed to attend the hearing earlier this year, and was ordered to pay an additional $10,000 in costs.

I was reminded of the Rudling litigation when a client came into my office earlier this month with the will of her late mother. She wanted to obtain a court certificate of appointment of estate trustee, formerly known as probate.

The will had also been prepared using a will kit widely promoted to the public. The kit included a power of attorney for property and a power of attorney for personal care, also known as a living will.

Someone in the family had photocopied the documents in the kit, but instead of using only one side of the paper, the photocopies used both sides. That wouldn't have been a serious problem if the pages had all matched in the right order, but when the will was finally signed and witnessed, it contained several pages of the power of attorney mixed in with the bequests in the will. One set of signatures is (improperly) in the middle of the document, and another set at the end.

Hopefully, the court will be able to figure out what parts to consider and what parts to ignore.

Over the years, will kits have produced a bonanza of work and fees for lawyers trying to sort out the mess caused by these little time bombs. An online Quicklaw database search of American and Canadian court cases using the phrase "will kit" will yield hundreds of cases like the Rudling one.

Using a will kit is like reading a cookbook. All the ingredients for the recipe may be listed, but if they aren't used in the right way, the result can easily be a disaster.

Ask any lawyer experienced in wills and estates: There is really no such thing as a simple will. If you use a will kit, make sure the estate has enough money to blow on legal fees to figure out what it really means.

 THREE DECISIONS FOLLOW:

Rudling Estate v. Rudling, 2007 CanLII 51794 (ON S.C.)

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Date: 2007-12-03
Docket: 01-4429104
URL: http://www.canlii.org/en/on/onsc/doc/2007/2007canlii51794/2007canlii51794.html
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COURT FILE NO.:  01-4429104

DATE:  2007/12/03

 

ONTARIO

 

SUPERIOR COURT OF JUSTICE

 

 

B E T W E E N:

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Ronald William Rudling, Estate Trustee With a Will of the Estate of Pauline Rudling

 

 

Plaintiff

 

 

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Larrie Michael Rudling

 

 

Defendant

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R. D Ambrosio, for the Plaintiff

 

 

 

 

 

 

 

K. Power, for the Defendant

 

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HEARD:  November 20, 21, 22, 23, 26, 27, 28, 30, 2007

 

 

Moore J.

 

 

[1]          Pauline Rudling is survived and fondly remembered by her two sons, the parties in this action, Ron and Larrie.

[2]          Pauline died on 18 January 2003. Shortly before she passed on, she made a will and left her two properties, 887 and 940 Shaw Street to her sons, one property to each. The sons cannot agree upon the appropriate interpretation of the will. In essence, they disagree on whether taxes and other estate expenses are to be shared between them.

[3]          There has now been a trial of an issue to determine the brothers dispute.

 

The Will

 

[4]          The Last Will and Testament of Pauline Rudling is a standard form, fill in the blanks will kit document dated 30 November 2002. It is witnessed and bears Pauline s mark, an X, on the signature lines on the final two pages and, it is initialed with her mark and the initials of the two witnesses on each of its four pages.

[5]          The hand printing was added into the will in Pauline s presence by her son, Larrie. Pauline read the will in its entirety before executing it.

[6]          In paragraph 3 of the will, in the standard form text, this wording appears:

                        I DIRECT all my just debts, funeral and testamentary expenses, all succession duties, inheritance and death taxes, and all expenses necessarily incidental thereto, to be paid and satisfied by my Execut ( or added in hand printing) as soon as conveniently may be after my death.

[7]          The following paragraph provides that any beneficiary who dies within 365 days of Pauline s death will be deemed not to have survived her and provides for the following distributions of her assets:

                        a) To Ron Rudling I leave 940 Shaw St. Toronto Ont. With all loans, leins, mortgages attached.

                             To Larrie Rudling I leave 887 Shaw St. Toronto free and clear of all debt.

                        b) I DISTRIBUTE any residue of my estate as follows:

                             To my two sons Ron Rudling & Larrie Rudling to be divided evenly 50 50

The Positions of the Parties

 

[8]          There is no contest about the validity of the will. There is no other will competing for consideration in this case. The properties were worth approximately equal amounts at the time of Pauline s death.

[9]          Although the true size and shape of the estate at the time of death and the expenses arising in connection with the estate after Pauline s death were not the subject of evidence at this trial, I understand that there is considerable controversy between the parties on these matters. For purposes of this trial, it appears that the parties are content that the only estate assets of relevance are the two Shaw Street properties.

[10]      The plaintiff s primary position is that the will is clear in its language and that a fair reading of the will and particularly of these quoted excerpts supports the interpretation that all the expenses of the estate, other than the mortgage registered on the 940 Shaw Street property, must be paid out of the assets of the estate.

[11]      The parties agree that at the time of her death, Pauline was debt free, but for any mortgages that were registered on title for 940 Shaw Street. The plaintiff s position is, therefore, that the funeral and testamentary expenses incurred following upon Pauline s death, inheritance and death taxes, capital gains taxes and all properly incurred estate administration expenses must be paid by the estate and, if no other assets exist but for the two properties on Shaw Street, paid from borrowings made in equal proportions against the equity in those properties.

[12]      The plaintiff submits that the word debt in the bequest of 887 Shaw Street has a specific and narrow meaning; he asserts: 

                        that when the word debt as used by the testatrix is examined along with the will as a whole and read in the light of the circumstances known to the testatrix at the time the will was made, the word debt should be interpreted by this Court to mean Ronnie s debt . More so, the Last Will and Testament of Pauline Rudling should be read as 887 Shaw Street going to Larrie Rudling free and clear of all Ronnie s debt .

[13]      Arrangements are in place in order that funding of estate expenses can be accomplished in the manner sought by the plaintiff.

[14]      The defendant is confident that the will can be interpreted upon its terms without reference to extrinsic circumstances and that the language of the will can be considered to be clear and compelling; the defendant asserts that the wording of the will supports the outcome he seeks, which will visit all costs, expenses and taxes generated as the result of Pauline s death solely upon that portion of the estate that excludes the asset left to him, 887 Shaw Street.  

[15]      Put another way, the defendant seeks to take 887 Shaw Street intact and without having to pay anything toward mortgage or other debts attaching to 940 Shaw Street at the time of Pauline s death or afterwards nor anything toward estate related expenses either.

[16]      To the extent that the language of the will might be considered ambiguous and in need of amplification or explanation by reference to the circumstances surrounding the making of the will, the parties hold opposite views.

[17]      The plaintiff asserts that the whole of the relevant circumstances support the view that Pauline intended to leave her estate to her sons in equal shares, net after appropriate estate expenses were satisfied.

[18]      The defendant asserts that Pauline intended to favour him in her bequest of 887 Shaw Street such that he would be insulated from any expense that might diminish its value at the time of Pauline s death.

[19]      Whether extrinsic circumstances are to be considered or not, the plaintiff submits that, as the defendant assisted Pauline in the preparation and execution of the will and that as Larrie, in his capacity as the original executor of the estate, propounded the will and still to this day supports its reasonableness and validity, the will must be interpreted against Larrie s interests, as a matter of law. The plaintiff asserts, in particular, that:

                        if the rules of construction are inconclusive and if the court is attempting to decide between two possible meanings, one being as probable as the next, the rule of contra proferentem should be applied to settle the dispute against the interests of the draftsman of the document.

[20]      Finally, the plaintiff relies upon the provisions of section 22 of the Succession Law Reform Act R.S.O. 1990, c. S.26 in support of the proposition that the bequests made in the will are fixed at the time of death and that they are subject to reduction by taxes, charges and other expenses arising after death and payable by the estate. That section reads as follows:

Except when a contrary intention appears by the will, a will speaks and takes effect as if it had been made immediately before the death of the testator with respect to,

 

 

(a) the property of the testator; and

 

 

 

(b) the right, chose in action, equitable estate or interest, right to insurance proceeds or compensation, or mortgage, charge or other security interest of the testator under subsection 20(2).

 

[21]      On this issue, the plaintiff frames his submission as:

                        As there is no contrary intention in the Will, it is to be construed as at the date of death. When this rule is applied to the case at bar, the term debt should be taken to mean debt as at the date of death, and not debt that subsequently arises.

[22]      The plaintiff says that the defendant has failed to establish his position and has failed to corroborate his own evidence. The plaintiff asserts:

                        Broadly stated, the Plaintiff s evidence was supported by the documents or the application of common sense and probability. However, and more importantly, the evidence of the Plaintiff was corroborated on every material point of evidence, as is required under section 13 of the Evidence Act.

                        The Defendant did not provide any admissible evidence to support his suspicions and beliefs. Furthermore, most if not all of his evidence was not corroborated by the documents or any of the other witnesses. In the end, all the Defendant s case is based on unsubstantiated evidence and allegations.

Court Orders

 

[23]      By order dated 8 February 2006, Bellamy J. ordered that a trial of the issue is the interpretation on the will of Pauline Rudling.

[24]      From the description of the Application before Her Honour, it appears that Ron had applied, in his capacity as Estate Trustee, for an interpretation of the phrase free and clear of all debts as it appears in the will.

[25]      Additional relief sought in this application was adjourned pending the result of the trial of the issue and Bellamy J. added directions and timelines for proceedings to precede the trial of the issue.

 

[26]      By order dated 30 November 2006, Belobaba J. ordered that there be a trial of an issue on the interpretation of the will.

[27]      Belobaba J. also made directions on procedural matters, including that the parties exchange pleadings.

[28]      The pleadings define the issues for this trial more broadly than the wording apparently used in the original Application.

The Central Issue

 

[29]      Both because of and despite the assertions contained in the pleadings, the central issue in this case is whether the will can be fairly construed upon the language contained within its four corners and without need of extrinsic evidence?

[30]      In my view the answer to that question is yes; the answer is clear, so clear in fact that I view the trial of this action to have been wholly unnecessary.

[31]      It would require a tortured interpretation of the word debt , as used in relation to the bequest of 887 Shaw Street to include within its meaning all of the taxes, expenses and other charges that the Estate Trustee is directed by the will to satisfy in addition to debts of the estate.

[32]      I have no hesitation in finding that all reasonable charges against the estate arising from the death of the testatrix are, by the terms of the will, intended to be paid from the estate before the specific bequests of the two properties are made at the 365 day mark after Pauline s death.

[33]      In light of the Orders earlier made by this court and of the broader statement of the issue in the pleadings, however, and because I am aware of the recent tendency of Canadian courts to apply the armchair rule to the interpretation of wills, I will also address the interpretation of the will in light of the circumstances surrounding the will.

The Armchair Rule

 

[34]      In his 2 volume  book on and entitled Estate Litigation (volume 2, Second Edition, Thomson*Carswell, c. 18.6)  Brian Schnurr confirms that:

                        Courts in Canada have generally taken a more liberal approach with respect to the issue of the admissibility of evidence of surrounding circumstances, i.e. the circumstances of which the testator was aware when he made the will.  Under the rule which has come to be known as the "armchair rule", the evidence of surrounding circumstances is admissible in construing each and every will ..

                        However, while evidence of surrounding circumstances is admissible, direct evidence of the testator's actual intention is not admissible.

Extrinsic Circumstances - the Challenge

 

[35]      This court heard evidence from 10 witnesses over the course of 7 days, ostensibly on the circumstances surrounding the making of this will. If that was the object of the exercise, much of the evidence missed its mark.

[36]      Both parties sought to retrace the family history and inter-personal relations back through several decades with the inevitable result that the margins of relevance to the issue of the circumstances surrounding this will became very blurred.

[37]      The parties hold differing recollections of life within the Rudling family. They and some of the witnesses, notably Donna Rudling, were clearly challenged in their attempts to maintain objectivity and to resist recounting revisionist views of the family history.

[38]      What seemed to be lost on the parties is that the court is not assisted by evidence of the management of the estate of their father, who passed away in 1972. Neither brother has ever seen their father s will and yet they disagree about the extent to which Ron may have obtained assets their father left behind. This case, however, is not the proper vehicle by which to settle issues or resentment lingering from the father s passing.

[39]      Nor is this court helped by finger pointing by the parties and others about who attended more often upon or exhibited more compassion or provided more care and comfort for Pauline during her last years of life.

[40]      Both sons cared for their mother when they could. Both knew that they each played an important role in looking after Pauline s care and feeding. It was not a contest, particularly as the evidence clearly established that Pauline enjoyed around the clock monitoring and care from nannies and other health care professionals during the many years that she was burdened with the very severely disabling effects of rheumatoid arthritis, until her death in January 2003.

[41]      Similarly, much time and attention was focused on Ron s business dealings and with an assault upon him that apparently arose from a business venture ongoing in 1992. Admittedly, Ron was beaten and left for dead and undoubtedly Pauline was upset, traumatized and even annoyed by the event and concerned, as a mother, for the well being of her son. That said, however, there was no evidence that Pauline was ever afraid to be with Ron or that such a concern could reasonably have been a circumstance relevant to the making of her will on 30 November 2002. Indeed, even Larrie confirmed his belief that his mother did not fear Ron, at least not physically.

[42]      These are but a few examples of the tangents traveled in some of the evidence. Apparently the disagreements between the parties are many and ongoing, some in litigation before this court.

[43]      Upon the whole of the evidence it is clear to me that Pauline loved both of her sons. Rupert Feurtado was a long time friend of the family and a witness to the will. In his cross-examination, Rupert agreed that he heard Pauline say that she has two boys and that one should get one house and the other should get the other house.  He interpreted that to mean that she intended to treat her sons equally.

[44]      He stated that she loved both of her boys and added, with refreshing objectivity and emphasis, very much so . On leaving the stand, Rupert volunteered: "if I may say so, Mrs. Rudling would like to see her two boys share everything in peace, no fussing or fighting". If only they had listened to him.

[45]      Accordingly, the challenge in this case is to sort through the evidence and separate out accusations grounded in suspicion and anger from those that inform a fair view of the meaning of the words appearing in the will.

Pauline s Health

 

[46]      Pauline was described, uniformly by witnesses in this case, as strong . She was physically well and active through much of her life. She developed rheumatoid arthritis and it became worse over time.  She began to use a wheelchair in about 1983, within about 10 years of the death of her husband.

[47]      Over the ensuing years, she became more disabled physically but remained bright and, as Ms. Reeson put it, Pauline was intellectually quite alert, very strong, caring and very inclusive of new people.

[48]      Another witness, Coral Sym, Pauline s friend and bookkeeper for many years, an articulate and credible historian, described Pauline as very strong willed and old-fashioned.  She added that she "says exactly what's on her mind" and was plain spoken .  She also used the words "very sharp as a tack".  No games, no word play , she said. She added that Pauline knew right down to the last dime where the money went .

[49]      Although he added precious little to the case, certainly Aaron Rudling, Pauline s grandson, was well positioned to describe Pauline s mental acuity. He confirmed that Pauline's mind was sharp at all times.  They joked together.  She was "definitely on the ball all the time", he said.

[50]      There is no issue of testamentary capacity before this court but the evidence about Pauline s mental acuity is helpful for it demonstrates that she continued to enjoy a fairly high level of cognitive functioning over the years until the time she placed her mark upon the will, her arthritic condition having robbed her of the ability to write her name.

[51]      Indeed, both sons saw their mother after the will was made; they visited and spoke with her in hospital in the weeks before her death. Almost until the end, she knew her own mind and was quite sharp. On this one thing, both parties agreed.

[52]      Until at least November of 2002, Larrie believed that his mother remained capable of managing her financial affairs. Larrrie asserts that Pauline was hindered in that regard by the fact that Ron aggressively assumed and managed those affairs for their mother. That, even if true, is a matter very different from Pauline s ability to understand her affairs or the meaning of simple words in a document such as this will.

[53]      Ron spoke to a different version of the extent to which Pauline was active in managing her affairs in the years leading toward the end of 2002. He asserts that Pauline knew of the mortgages in place over those years on her rental income property, 940 Shaw Street. According to Ron, Pauline willingly allowed Ron to use that property as collateral for his business and personal financial dealings. Clearly, Ron was also of the view that Pauline was mentally fit and active at all relevant times.

[54]      Ron was not aware that his mother had made the will but he raises no concern here that she was unable to understand any language in the will, quite the contrary.

[55]      When asked whether Ron would ever steal money from Pauline, Coral Sym laughed and said that she was too smart and too sharp and she didn't have any money for Ron to steal in any event.

[56]      Without reservation, I accept the evidence clearly and convincingly given by Ms. Sym that Pauline understood the content of the tax returns Ms. Sym prepared for her over the years. Whenever Pauline had any questions arising from her review of the tax returns, she asked those questions of Ms. Sym and continued to ask questions until her concerns were satisfied.

[57]      It follows that, even as an octogenarian, Pauline well understood her assets, liabilities, income and expenses as detailed in the many tax returns Ms. Sym prepared.

[58]      Ms. Sym also said, and I accept this to be so, that Pauline was very proud that she had two properties to leave, one to each of her boys. She added that Pauline was aware that there were mortgages on number 940 Shaw Street.  Pauline allowed Ron to use the house as collateral for his loans. 

[59]      In the result, upon the evidence and in view of the fact that there is no evidence suggesting, let alone establishing, that Pauline was unable to understand her financial affairs, the question becomes: Do the relevant extrinsic circumstances support an interpretation of the will that turns the will into a vehicle aimed at redressing financial wrongs perceived by the defendant, wrongs created by Ron s business dealings and allegedly adversely affecting either Pauline or Larrie or both of them? The answer must be: No.

[60]      Clearly, Pauline was not shy about expressing her views nor unable to intelligently articulate them. Conspicuous by its absence in this case is any evidence that Pauline wished to treat her sons otherwise than equally. A fair reading of the language Pauline endorsed as appropriate at the time she placed her mark upon her will requires application of the concepts of equality and balance, concepts clearly established by reference to the extrinsic circumstances.

[61]      To interpret the will as the defendant seeks will result in an outcome that spares the defendant and visits the estate s necessary and proper expenses upon the plaintiff. Relevant extrinsic circumstances in evidence in this case simply do not support the defendant s interpretation of Pauline s will.

The Key to this Case

 

[62]      In my view, the key to this case is found within the read-ins from the transcript of the Examination for Discovery of the defendant, now a part of the plaintiff s case. Relevant portions follow and they clearly contradict the position of the defendant and speak volumes about the reasonable interpretation of Pauline s will called for in this matter:

 

Relevant Excerpts:

 

P 102   Q 651 ..she was worried about things we didn't know that Ron had probably, or may have put, or may not have put in her name, or her married name .. we were very worried more about what we didn't know then what she knew.  And made it clear that Ronnie was to get 940 Shaw, because he had-- I guess he had a mortgage on it.  I wasn't really aware of what, or how much, or what any details were.  That's Ronnie's business-- and I was to get 887 free and clear of all debts and monies

 

P 103   Q 652 .Ronnie gets one house, I get the other house, and that was it

 

Q 655 whatever bills and mortgages and problems he's created for himself would be his problem, not mine.  It seemed at the time very simple and perhaps now I think it was too simple

 

p 109   Q 689 no, my mother said we've got to keep it simple

 

Q 690... then she said Ronnie gets 940 Shaw St with all the money owed . so let's make that part clear.  "Free and clear of all debt".  Which didn't make me, we thought, responsible for any of Ronnie's debts.  That seemed to be my mother's main concern.

 

(Emphasis added)

 

[63]      Larrie stated at trial that his mother was petrified of losing her houses and yet his description at discovery of her concerns shows no sign of that. Rather, it seems more likely that she was interested in sparing Larrie any mortgage debt outstanding on 940 Shaw and leaving that property to Ron with whatever mortgage indebtedness upon it for Ron to manage.

[64]      In my view, the language selected and used in the devises of the two properties accomplishes the spirit and object of Pauline s intention as described by Larrie. There is no suggestion in this evidence or elsewher

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Bob Aaron is a Toronto real estate lawyer and frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.

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