Estate Planning

OH NO, the Residual Gift Has Lapsed. Now What?

By Hull & Hull LLP

Yesterday, I considered the issue of failed bequests and devises, however I was left scratching my head when I considered the issue of residual gifts that have failed. As I considered yesterday, Section 23 of the Succession Law Reform Act, does not apply to failed residual gifts. So, what happens to a failed residual gift?

As I dig deeper into the issue of failed gifts, I have learned that there is a presumption against intestacy. The presumption is consistent with the golden rule, which was described by Lord Esher M.R. in Re Harrison (1885) 30 Ch. D. (C.A.). The golden rule states when a testator has executed a will in solemn form it is presumed that he did not intend to die intestate when he has gone through the form of making a will.

The presumption against intestacy is also apparent in our statutes as the "anti-lapse provision" of the Succession Law Reform Act could be utilized to save a residual gift if the residual beneficiary was a child, grand-child, brother or sister of the testator and the pre-deceased beneficiary died leaving a spouse or issue who survived the testator.

However, what happens in a situation where the anti-lapse statute cannot be used? What will a court be likely to do? In such a scenario, the court is likely to look at the subject-Will to determine whether they can gather any evidence of the testator’s intention that would suggest an intention to avoid intestacy.

In Mladen Estate v. McGuire, the courts held that in determining whether there is an intention in the Will that is contrary to the general rule (a lapsed residuary gift passes on intestacy), the court is not limited to the four corners of the Will, rather the court can sit in the “testator’s armchair”, assume the knowledge the testator had with respect to the extent of his or her assets, the size and makeup of there family and the relationship to its members, so far as such things can be ascertained by the evidence and in this way, determine and give effect to the testator’s intention.

Until tomorrow,

Rick Bickhram

Full post as published by Toronto Estate Law Blog on August 06, 2008 (boomark / email).