When a Gift Cannot Take Effect Who is the Recipient?

Wills, Estates and Succession Act

When a gift in a Will cannot take effect, section 46 of the Wills, Estates and Succession Act, SBC 20

09, c 13, sets out a distribution list in order of priorities, with the first being a named alternative beneficiary. As established in Re Burke, [1960] OR 26 (CA), it is also important for the court to follow the armchair rule of construction of Wills which requires that the Court put itself in the position of the testator at the time when he or she made the Will and construe the language from this vantage point in order to determine the actual or subjective intent of the testator.

Re Terezakis Estate, 2018 BCSC 805

In this case, Ms. Terezakis died on September 3, 2016. Of her five children, two of them predeceased her and left children of their own. It was agreed to by the parties prior to the hearing that the residue of Ms. Terezakis’ estate was to be divided equally among her children and if a child predeceased her, that child’s share would be given to that child’s children (Ms. Terezakis’ grandchildren).

After the Will was made, one of Ms. Terezakis’ children, Sophocles Terezakis, died on September 17, 2004. He had two children, Victor and Katrina. On September 17, 2005, Victor also died. He was survived by his mother and sister, Katrina. At issue for the court to consider was the interpretation of the residue clause of the Will. Specifically, what would have happened to Sophocles’ share had he and his son not predeceased Ms. Terezakis?

The executor of the estate argued that the share should go to Katrina, based on section 46(1) of the Wills, Estate and Succession Act which sets out a scheme of priorities for distribution when gifts cannot take effect. This position was based on the information sheet that was used by the lawyer who 

drafted the Will which indicated that the residue of her estate was to be divided among her “children equally, with grandchildren to take share if parent is dead”. The executor prepared Ms. Terezakis’ Will based on these instructions.

In contrast, Tony Terezakis, one of Ms. Terezakis’ surviving children, argued that the share should go back into the residue and be shared by the remaining children of Ms. Terezakis. Alternatively, Tony also argued that Katrina should only be entitled to half of Sophocles’ share as she was only one of his two children. Tony based his position on the fact that the Will provides $2,000 to each of Ms. Terezakis’ grandchildren and that these gifts indicated her desire to leave the bulk of her estate to her children, not her grandchildren.

Wills, Estates and Succession Act, SBC 2009, c 13

42 (1) This section is subject to a contrary intention appearing in a will.

(4) A gift of property to a class of persons that:
(a) is described as a will-maker’s “issue” or “descendants” or by a similar word; and
(b) encompasses more than one generation of beneficiaries;
must be distributed as if it were part of an intestate estate to be distributed to descendants.

46 (1) If a gift in a will cannot take effect for any reason, including because a beneficiary dies before the will-maker, the property that is the subject of the gift must, subject to a contrary intention appearing in the will, be distributed according to the following priorities:
(a) to the alternative beneficiary of the gift, if any, named or described

by the will-maker, whether the gift fails for a reason specifically contemplated by the will-maker or for any other reason;
(b) if the beneficiary was the brother, sister or a descendant of the will-maker, to their descendants, determined at the date of the will-maker’s death, in accordance with section 42 (4) [meaning of particular words in a will];
(c) to the surviving residuary beneficiaries, if any, named in the will, in proportion to their interests.

(2) If a gift cannot take effect because a beneficiary dies before the will-maker, subsection (1) applies whether the beneficiary’s death occurs before or after the will is made.

Analysis

[13] Specifically, the question is what happens to the share that Victor would have received had he not predeceased Ms. Terezakis.

[14] The first priority in s. 46(1)(a) contemplates an alternative beneficiary of the gift if one is named or described by the will maker. The will of Ms. Terezakis does not contemplate an alternative beneficiary. It would have been highly unlikely that an alternative beneficiary would have been named in the circumstances where a mother, Ms. Terezakis, outlives not only her son, Sophocles, but also one of her grandchildren, in this case Victor. The will understandably does not describe Katrina or any other person as an alternative beneficiary in these unusual and most unfortunate circumstances.

[15] The next priority is set out in s. 46(1)(b) and is instructive. 

Applying it to these facts, Sophocles is a descendant of Ms. Terezakis and at the time of Ms. Terezakis’s death on September  3, 2016, the only descendant of Sophocles Terezakis was his daughter, Katrina. Accordingly by the operation of s. 46(1)(b), the share of Ms. Terezakis’s estate that would have gone to Sophocles goes to Katrina.

[22]     The armchair rule of construction of wills requires that the Court put itself in the position of Ms. Terezakis at the time when she made the will and construe the language from this vantage point in order to determine the actual or subjective intent of testator: Re Burke, [1960] O.R. 26 (C.A.), cited with approval in Davis Estate v. Thomas, [1991] B.C.W.L.D. 124 at para. 8 (C.A.). 

Estate Litigation Lawyer Angela Price-Stephens

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