In a recent decision, a British Columbia court used a legal doctrine called “cy-près” to fulfill a testator’s gift to a charity, despite the fact that the named charity had dissolved prior to her death.
Testator Leaves Money to Charities
The testator passed away in Vancouver, British Columbia on May 3, 2020, when she was 96 years old. She never married and had no children. Her will was dated August 15, 2008.
Pursuant to her will, 25 percent of her estate was to pass to her twin sister, and the remainder of her net estate was to be distributed equally to the specifically named charities in therein.
However, her twin sister had passed away in 2010. Therefore, her estate was to be distributed among the named charities.
The testator’s estate was estimated to be worth about $2.144 million.
Executor Applies to Court for Directions
The executor of the will applied to court, seeking directions arising from issues with respect to some of the named charitable beneficiaries of the estate.
Specifically, there were issues with regard to the Pacific Coast Public Television Association (“PCPTA”). The testator had named the charity in her will; however, it had ceased to exist in the form described in her.
PCPTA had been a Canadian charity organized by CPM, an American broadcasting company that operated a commercial-free educational channel. Donations to PCPTA therefore indirectly went to CPM. However, in 2018, PCPTA had been dissolved. CPM therefore currently receives donations directly, rather than through PCPTA.
Because PCTPA had been dissolved when the testator passed away in 2020, the issue was whether it could receive the proceeds from her estate.
CPM argued that the testator’s overarching intention in making the residual gift to PCPTA in her will was to benefit the programming previously operated by KCTS’s successor, CPM. On the basic principles of construction, CPM argued that it should share in the residue of her estate with the eight other charities named in her will.
However, the British Columbia Attorney General opposed the distribution, relying on the introductory language to the residual clause in the will which provided that the testator was giving the balance of her net estate in equal shares “to such of the following charitable organizations that are in existence as at the date of my death”. Because the PCPTA was not in existence as of the date of her death, the Attorney General submitted that the gift to the PCPTA did not become subject to the estate’s distribution.
Court Orders Distribution to Charity
The court began explaining the doctrine of cy-près, citing previous case law which explains it as follows:
“Cy-près is a significant doctrine in the law of charities. It determines what happens when property that has been dedicated to charitable purposes cannot be applied in the manner intended by the donor… Where the purposes or objects of a charitable trust have become impossible or impracticable to achieve, the court, relying on its inherent jurisdiction, may intervene and alter the purposes of the trust, and in doing so, depart from the stated intention of the settlor. The courts may implement modernized or modified objects that are “as near as possible” (cy-près) to the original purposes.
A cy-près order “must depart from the intentions of the [settlor] only to the extent required to remove the problem that has caused the future administration of the Trust to become impracticable.” It is also imperative that the relative efficiency of the proposed amendments be considered.
The threshold requirement for invoking the cy-près doctrine is a finding that carrying out the existing trust terms is either impossible or impracticable. In the absence of such a determination, the court must refuse to exercise its cy-près scheme-making jurisdiction. Despite the narrow ambit of the doctrine, courts have, at times, interpreted impossibility and impracticability broadly…. “Impracticability” is not to be construed as “absolutely impracticable”.”
While the court accepted that CPM was not a successor to PCPTA in strict corporate terms, it held that PCPTA had no other purpose than as a charitable vehicle for funnelling money to CPM for its use in non-commercial public broadcasting. As such, a gift to PCPTA was a gift to CPM with a Canadian tax receipt.
Taking the testator’s wishes into account, the court held that she had wanted to support PCPTA, and her intent would be fulfilled if the distribution was made to CPM.
As a result, the court concluded that the share of the testator’s net estate left to the PCPTA should be distributed to CPM under the cy-près doctrine.
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Protecting your assets and ensuring your family and other loved ones are provided for in the future is not something most people want to think about. However, effectively managing your wealth and protecting your spouse, children, and your estate is something that everyone should do at some point to ensure that your express wishes are carried out.
An effective estate plan goes far beyond just creating a will. You should also consider securing other important legal tools including powers of attorney (for personal care and for property), trusts (including Hansen trusts if you have disabled children or other dependants), as well as the designation of beneficiaries on life insurance policies, pensions, and other key documents.
The best way to guarantee that your wishes will be carried out exactly as you would like them to is to consult with an experienced estate lawyer. At Campbells LLP in Oakville, our wills lawyers have been helping clients with Wills and estates matter since 1999. We will meet with you to help you clarify your long-term objectives and will create a personalized, effective estate plan designed to meet those goals. As your family grows or changes, we will ensure your estate plan is amended as required to ensure it continues to protect your ultimate objective.
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