When creating a will, it is important to carefully consider the phrasing of each term. If a dispute arises among the beneficiaries or your estate trustees after your death, the ultimate resolution might hinge on a single term, phrase or word, as happened in a recent Ontario decision. The case also demonstrates the importance of updating one’s will as circumstances change, as outdated information can lead to costly litigation for the estate.
Term Provides Testator’s Son Option to Purchase “Farm Business”
The testator created her will in 1985. At the time, she lived on and operated a farm in rural Ontario along with her husband. The property was comprised of over 60 acres, containing a residential home, a barn, and a drive shed. While each spouse was employed elsewhere, the income generated by selling animals and produce from the farm helped to supplement their primary income. The couple had six children, but only one, their son Howard, had worked on the farm and shown an interest in operating it in the future.
When they created their wills, they each included a term to give their son Howard the option to purchase “the farm business carried on by [the Testator]” for the price of $85,300 “or such lower price to be agreed upon by [the Estate Trustees] and [Howard] having regard to the assessed value of the lands included hereby at the time of [the Testator’s death] and the assistance given to [the Testator] by [Howard] in the conduct of the farming business. ”
If Howard chose not to exercise his option to purchase the farm, it would form part of the estate to be divided equally among the testator’s six children.
Son Had Been Generating Income by Renting the Farm to Third-Party Farm Operations
The husband passed away in 1994, but the wife lived to the age of 95, passing away in 2019, 34 years after the will was created. In those intervening years, Howard had rented a large portion of the farm property from his mother, generating income by subleasing the property to third-party farmers, instead of operating the farm himself. After his mother’s death, Howard indicated he wished to continue this practice, by paying rent to the estate. The current value of the land was not indicated but acknowledged to be well in excess of $85,300. The estate trustees, one of whom was one of the testator’s children, applied to a court to interpret the clause granting Howard the option to purchase the property.
Court: Clause Required Narrow Interpretation of the Term “Farm Business”
The clause granting Howard the option to purchase specifically included the term “farm business”, and went on to include the “assets, stock, plant, liabilities, in connection therewith”. The Court interpreted this, as well as the phrase “the farming business carried on by me” to show that the intent was for Howard to continue active control of a farming business, rather than simply generating passive income through the rental of the property. As a result, it was held that Howard could not exercise the option to purchase as set out in the will, allowing the property to form part of the residual of the estate.
Similar disputes can be avoided by ensuring the terms of a will are very clear and specific as to their intent.
Review and Update Wills to Reflect Changes in Circumstance
Given the time that had passed between the creation of the will in 1985 and the testator’s death in 2019, it’s understandable that her life had changed significantly in the intervening years. This highlights the fact that just because you have a will in place, does not mean you are ‘done with the estate planning process. Many people opt to create wills early in life, which is important to ensure the protection of children and other dependents. However, as things change you should also be updating your will. You may add or lose family members, get married or divorced, or experience a significant change in your financial situation. All of these changes should be incorporated into your will to make sure your estate is distributed as you intend in each phase of your life.
Contact the Estate Lawyers at Tierney Stauffer LLP in Ottawa or Arnprior for Comprehensive Estate Planning, Administration & Litigation Services
This case highlights the importance of clear and concise language when drafting a will, to avoid costly litigation among the eventual beneficiaries. Tierney Stauffer LLP uses a client-focused approach and provides innovative guidance through the estate planning and administration processes. Our lawyers provide practical and honest advice to clients and represent their interests in all levels of court in addition to other forums. We have extensive experience working with clients in estate planning matters and representing them in litigation should it become necessary. Call us at 1-888-799-8057 or contact us online to set up a consultation with a member of our team.