In a recent estate litigation case, the Ontario Court of Appeal reviewed the concept of the “armchair rule” in the interpretation of wills.
Grandchild Disputes Estate Distribution
The testator passed away in 1971. Under her will, her two daughters were given life interest of her cottage property. However, both daughters subsequently died and the cottage was sold in 2013. From the sale, net proceeds of approximately $1.66 million were realized.
Under the testator’s will, upon the death of her two daughters, the property was to be transferred to her grandchildren as joint tenants. At the time of the testator’s death, she had five living grandchildren. However, one grandchild passed away in 1992.
As such, the proceeds from the sale were to be distributed equally between her four grandchildren. However, one grandchild objected, claiming that the proper interpretation of the testator’s will required the net proceeds from the cottage property be divided into five equal shares, with distribution of two of the five shares to him. Under such distribution, the objecting grandchild would receive 40% of the net sale proceeds, instead of 25%. He based his argument on the fact that one of the other grandchildren had failed to survive the expiration of the life estate granted to the testator’s daughter and the fact that the daughter’s will granted the residue of her deceased child’s estate to the objecting grandchild.
The three other surviving grandchildren argued that the testator’s will required the net proceeds of the sale of the cottage property to be divided amongst those grandchildren alive at the time of the sale of the property. Since one grandchild had died prior to that event, the proceeds should be divided equally amongst the four surviving grandchildren.
Lower Court Divides Proceeds Four Ways
Adopting the “armchair rule”, the motion judge held that the testator’s will disclosed that she had intended the net sale proceeds of the cottage property to benefit only those grandchildren alive at the end of the life interests of her daughters.
The “armchair rule” calls on the court to put itself in the position of the testator when she made her will, armed with the same knowledge that she had, based upon the evidence available.
The motion judge therefore stated that the proper question to ask was whether at the time the testator made her will she had intended to permit the beneficiaries of one or more deceased grandchildren, whoever they might be, including a spouse, to take an interest in the cottage property or its sale proceeds. Based on his review of the circumstances surrounding the creation of the will, he concluded the testator had not.
Court of Appeal Reviews ‘Armchair Rule’
On appeal, the court began by setting out the governing principles of the “armchair rule”. It cited legal commentary, which describes the “armchair rule” as follows:
“In the first instance, the court may not be convinced that the testator’s intention can be discerned from the will itself. In such a situation, since the testator must be taken to have used the language of the will in view of the surrounding circumstances known to him or her when he or she made his or her will, evidence of such circumstances is necessarily admissible, at least insofar as it corresponds to the facts and circumstances referred to in the will. It seems obvious that a court might conclude that admissible evidence of surrounding circumstances is not helpful in determining meaning….
The court puts itself in the position of the testator at the point when he or she made his or her will, and, from that vantage point, reads the will, and construes it, in the light of the surrounding facts and circumstances. This approach is commonly referred to as the “armchair rule”.”
Thus, the court explained that in applying the armchair rule, sitting in the place of the testator, the court assumes the same knowledge the testator had, at the time of making the will, in regard to the nature and extent of her assets, the makeup of her family, and her relationship to its members.
The court also noted that, in the past, courts have resorted to the “armchair rule” where the testator’s intention could not be ascertained from the plain meaning of the will’s language. However, more recently, courts have treated the “armchair rule” as an over-arching framework within which a judge applies the various tools for will construction at his or her disposal.
In this case, both parties argued that the motion judge erred in finding that the directions in the will were irreconcilable and there was a need to resort to the “armchair rule”. In their view, the testator’s intention could be discerned from her will’s plain language, although they advanced diametrically opposed interpretations of that language.
The court disagreed. First, it found that the motion judge’s interpretative methodology was sound. He had tried to discern the testator’s intention from the plain meaning of the will’s language. However, because he was not able to do so, he then took a step back to consider the “bigger picture” of the surrounding circumstances, applying the “armchair rule”.
Second, the court was not persuaded by the parties’ submission that the motion judge erred in perceiving an inconsistency, or irreconcilability, between the will’s clauses.
The court also rejected the cross-appeal and other ground of appeal.
As a result, the court found nothing to justify overturning the motion judge’s decision and therefore dismissed the appeal.
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.
At Campbells LLP, we are proud of the strong, long-lasting relationships we build with the clients for whom we craft Wills and estate plans. With our help, you can ensure that your family and loved ones are taken care of, that your wealth is distributed as you wish, and that the risk of any potential litigation is minimized. Our overall mission is to provide the right solution for each and every one of our clients. Contact us online or at (905) 828-2247 to learn more about our services.