Estate litigation is often thought of with respect to beneficiaries, or would-be beneficiaries, disagreeing over what should happen to the deceased’s assets that have been left behind. Sometimes, however, issues can arise about whether the testator had the necessary capacity to execute their will or provide someone with power of attorney. While it is not uncommon for a party to challenge the validity of a will after an individual has passed away, it is rare to challenge someone’s capacity while they are alive.

In a recent decision from the Court of Appeal for Ontario, the Court was asked to determine whether the appellant could overturn the application judge’s decision to decline her request to contest her living mother’s capacity to sign estate planning documents. In addition to considering an uncommon will challenge, this decision also serves as a good example of the importance of producing sufficient evidence.

Daughter Asks Court to Find Mother Incapable of Managing Her Property and Personal Care

In the matter of Palichuk v. Palichuk, the appellant’s daughter, “LP”, brought an application asking the Court to declare her mother incapable of managing her property or personal care. The appellant’s mother, “NP,” and sister, “SP,” were the respondents in this case. The issues began in September 2020, when the appellant’s mother signed four estate planning documents, which included:

• a will that disinherited the appellant and named her sister, SP, as the sole beneficiary;
• a continuing power of attorney for property naming SP the sole attorney;
• a power of attorney for personal care naming SP as the sole attorney; and
• a transfer and declaration of trust that transferred the appellant’s mother’s home to SP as a bare trustee.

After considering the evidence, the application judge dismissed the appellant’s request and accepted NP’s argument, who had made a cross-application to remove the appellant from a joint bank account they shared.

Decision appealed to Court of Appeal for Ontario

The appellant appealed the trial judge’s decision on the basis that the judge erred in his assessment of NP’s capacity at the time of the hearing, as well as when she executed her estate planning documents. Among other things, the daughter claimed that the application judge failed to address undue influence issues.

The appellant did not provide an expert witness at the original hearing. Instead, NP retained an expert doctor to conduct a capacity assessment and provide evidence regarding her capacity. NP told the Court that she knew the appellant had commenced a guardianship application over her and that it was akin to the appellant “kicking her in the teeth.” NP argued that she did not need a guardian, but in the event that she did require one, she preferred it to be the appellant’s sister, SP.

Mother’s Doctor Finds that Mother has Capacity to Execute Estate Planning Documents

Dr. Shulman, who NP retained, shared his findings at the original hearing. Dr. Shulman found that NP had the capacity to manage her property with some assistance, and she could understand relevant information about her property management. Further, Dr. Shulman found that NP was aware of her finances and understood her limitations regarding managing her affairs. Dr. Shulman also deemed NP to have the capacity to make decisions concerning her personal care. The Court heard that NP was upset with the appellant because of the way she treated her and that NP told Dr. Shulman that she would consider writing the appellant back into her will if she treated her better.

The final piece of evidence provided by the doctor concerned the issue of the appellant’s claims of undue influence. Dr. Shulman found that NP denied having been dominated or manipulated by SP, and he believed that she was cognitively intact enough to resist any attempt at coercion if they had arisen.

The application judge ultimately determined that NP had the necessary testamentary capacity, in addition to the capacity to manage her property and personal care, to give a power of attorney, and to make an inter vivos gift.

Did the trial judge err in finding the mother had capacity to manage her property and personal care?

In its decision, the Court of Appeal noted that the only capacity issue to be reviewed was the application judge’s finding that the mother had the capacity to manage property and personal care.

The Court found that the appellant’s position regarding her mother’s capacity had been a “moving target.” During the application hearing, the appellant focused on the issue of undue influence, but in her written submissions she focused on capacity. The expert evidence provided by NP’s doctor found the mother to have capacity both at the time of the assessment and when she executed the documents in question. The application judge believed the evidence the doctor gave and found her ability to make decisions about property and personal care was “incontrovertible.” However, the appellant claimed that the application judge only focused on the capacity of the mother at the time of the examination by the doctor but not at the time the documents were signed.

Litigation Before Testator’s Death Not Usual in Common Law

The Court held that litigation among expectant heirs may only occur before the testator’s death when a present dispute comes between the courts; otherwise, “the common law insists upon the death of the testator before litigation.” The Court found that questions regarding NP’s capacity at the time she executed the documents could only arise if she showed signs of incapacity now. Overall, because she had capacity at the time of the hearing, she, therefore, has the capacity to change her will and powers of attorney should she wish.

The Court dismissed the appeal with costs payable by the appellant.

The Estate Litigation Lawyers at Campbells LLP in Oakville Provide Trusted Advice on Will Challenges and Estate Disputes

At Campbells LLP, our team of estate planning and litigation lawyers provides comprehensive advice and representation in all estate-related matters. The estate administration process can sometimes be fraught with disagreements, even when a sound estate plan has been developed. Our lawyers work closely with our clients to help them understand their options, whether they are planning for the future or are involved in a complex estate dispute. To learn more about how we can help you protect yourself and your loved ones, contact our office at (905) 828-2247 or reach out to us online.