Professionals involved in the preparation of Wills should be made aware of the potential\u00a0consequences of the doctrine of ademption. Put simply, the doctrine provides that you cannot bequeath what you do not own.\u00a0 For example, if a testator\u2019s Will gives the family cottage to his son, but the cottage is sold prior to the testator\u2019s death, there is no cottage to give to the son and the gift fails.\u00a0 Although the result may seem harsh, it is logical.<\/p>\n\n\n\n
The doctrine has, however, been expanded tomore technical levels that many testators would not expect, especially where a testator\u2019s assets are held by corporations.<\/p>\n\n\n\n
Using the previous example, if the testator owns a holding company which owns the cottage, a gift by Will of the cottage to his son will also fail. This is because the testator does not own the cottage directly; he owns the shares of a corporation, which, in turn, owns the cottage. The same rule applies to holding companies that own operating companies.<\/p>\n\n\n\n
The ademption doctrine has long been the law of the United Kingdom and throughout Canada. Recent cases in British Columbia, Alberta and Saskatchewan have applied the doctrine of ademption in the case of personal holding companies that owned the underlying assets purportedly bequeathed by the testator, thereby causing the gifts to fail.<\/p>\n\n\n\n
In Ontario, there is some indication that Courts are unwilling to be so rigid. In the recent case of Re Kaptyn Estate<\/i> (2010), 102 O.R.(3d)1, the testator owned three commercial malls and a vacation property through corporations that directly or indirectly owned the properties. Justice Brown found that, notwithstanding the bequest in the Will was of the properties and not the shares, Mr. Kaptyn\u2019s intention was clear. Justice Brown determined that the language of the Will could be rectified to permit the transfer of the properties to the named beneficiaries.<\/p>\n\n\n\n
In spite of this decision, the law of ademption remains a landmine for the unwary. Given the increasing prevalence of using corporate structures as a means of reducing probate fees and generally organizing one\u2019s affairs, it is important to take the necessary steps to guard against its consequences. It is prudent practice to:<\/p>\n\n\n\n
Professionals involved in the preparation of Wills should be made aware of the potential\u00a0consequences of the doctrine of ademption. Put simply, the doctrine provides that you cannot bequeath what you do not own.\u00a0 For example, if a testator\u2019s Will gives the family cottage to his son, but the cottage is sold prior to the testator\u2019s […]<\/p>\n","protected":false},"author":5,"featured_media":14379,"parent":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[547],"insight-format":[416],"class_list":["post-5056","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client"],"acf":[],"yoast_head":"\n