In the recent Alberta decision of Duhn Estate, 2021 ABQB 35, the Court of Queen’s Bench has confirmed that, absent a sufficient evidentiary basis, the Court will not displace a testator’s right to keep her pre-death financial life private and confidential.
The applicants in Duhn Estate were two of the Testator’s children and beneficiaries of her estate. The applicants sought a full financial disclosure regarding inter vivos transfers of money and real and personal property during the last four years of her life. The value of the Testator’s estate had decreased significantly in the four years preceding her death, which the Court noted raised prime facie concerns. The applicants alleged that the Testator may have lacked capacity, was unduly influenced, and that certain transactions may have been made without her knowledge.
The evidence showed, however, that the Testator was competent throughout her life right up until her death. Although the Testator had executed an Enduring Power of Attorney, it was never activated, and the Testator lived on her own immediately prior to her passing. The Testator was actively involved in her financial affairs and kept meticulous notes of her financial activity, even going so far as to request a more detailed reconciliation than that which was typically provided by the bank. The Testator had declared her intention to gift her estate prior to her passing, and the large gifts made prior to her death were consistent with that intention. The evidence established that she regularly consulted with her doctor and her lawyer to ensure that her wishes about who and why she gifted her property were protected.
The Court confirmed that the accounting period is generally for the period of the administration of the estate, being the period after the Testator’s death: “Rarely, if ever, will the court order an investigation into a competent testator’s private pre-death financial affairs without an evidentiary threshold that raises a ‘significant concern’ that there has been some potential abuse that needs to be investigated further, and then, only after considering a testator’s privacy rights.”[i]
The Court also confirmed that a joint account holder is not required in all cases to account for transactions in the joint account. A joint account holder can be ordered to account if there is some evidence that it is warranted, such as intermingled funds, or if he or she has used the account to pay his or her own debts, however in circumstances where the Testator is competent, and has been making most if not all of the decision regarding the account, the Court points out the impossibility of asking the joint holder to explain transactions for which they had no influence or involvement.
In certain circumstances a personal representative may be required to account for pre-death financial transactions of a competent testator in order to properly administer the estate, however the Court in Duhn emphasized these circumstances should be extremely limited and allowed only when balancing the testator’s right to privacy and control over their estate. Competent testators are permitted to keep their financial decisions private and confidential, and absent a sufficient evidentiary basis for potential abuse, a testator’s death does not open up their pre-death decisions to scrutiny by the beneficiaries. The decision is Duhn Estate is a reminder that testators are entitled to privacy in regards to their financial decisions, and a competent testator is generally permitted to arrange their affairs and dispose of their estate however they wish.
[i] Duhn Estate, 2021 ABQB 35 at para 20