Estates & Wills & Trusts

Without a will, assets may go to unintended beneficiaries

By Matthias Duensing

Having a lawyer draft your will is essential to ensure your assets are distributed according to your wishes. Not doing so can result in loved ones having to invest significant time and money to resolve an estate dispute later on.

As the recent case Prince v. Nytschyk Estate, 2016 ONSC 7459 (CanLII) illustrates, not having a will can even result in assets being distributed to unintended beneficiaries, rather than those you care most about.

Cherie Lewicki and Joseph Nytschyk lived together in a common-law relationship for 15 years. They shared a home together, but Joseph held sole title to it. Joseph died without a will in November 2013. Court documents indicate his two sons agreed to act as the estate’s trustees, and also agreed with Cherie that they would not distribute the estate’s assets until a court had approved the distribution.

By January 2015, the estate’s assets had still not been distributed, and Cherie began an application for dependent’s relief under the Succession Law Reform Act. If successful, the estate would have had to pay her money for her support. As part of her application, Cherie also sought a declaration that the home she had shared with Joseph — valued at $400,000 — was held for her in trust, and would be transferred to her once the estate was distributed.

Court documents show Joseph’s sons opposed this application and began negotiating with Cherie, seeking to have her drop the application:

  • On June 5, 2015, their lawyer offered to transfer title of Joseph’s home to Cherie in exchange for Cherie agreeing that the estate would otherwise owe her no money.
  • On June 15, 2015, Cherie’s lawyer agreed to these terms, but sought clarification regarding certain tax and insurance obligations.
  • On June 16, 2015, the trustees’ lawyer addressed these ancillary matters, and asked Cherie’s lawyer to provide a draft settlement agreement.
  • The lawyers subsequently exchanged a series of emails regarding the exact terms of the settlement agreement.

A final settlement agreement was never signed. Cherie died unexpectedly in October 2015. She was 54 years old.

Thereafter, Joseph’s sons asserted that the parties had never finalized the terms of settlement, court documents indicate. They argued the lawyers’ email correspondence amounted to counter-offers between the parties. Cherie’s estate disagreed. It argued that the lawyers’ emails were evidence of a binding agreement.

The decision
The court considered whether the parties had reached a binding settlement, despite not having signed an agreement. For a contract to exist, the contracting parties must: (i) mutually intend to create a legally binding relationship; and (ii) have reached an agreement on the essential terms of the settlement. The fact that an agreement is not written or signed does not necessarily mean a binding contract does not exist.

The court concluded that Cherie and the trustees had agreed to the essential terms of the settlement. In a candid statement, the court observed:

“It is clear what happened: the estate was prepared to resolve the litigation on the basis that Ms. Lewicki would release all claims in exchange for the transfer to her of (Joseph’s house). Based on the fact that she was 52 years of age at the date of Joseph Nytschyk’s death, she had a potentially large claim for dependent’s relief and possibly a constructive trust claim against the premises. As a result of her death, the claim may well have been drastically reduced. It was no longer a good deal, and the respondents preferred not to proceed with the settlement that they had been insisting was enforceable until a month or two before.”

Having determined that a binding agreement existed, the court then considered whether to exercise its discretion to set the agreement aside, because Cherie’s death meant she no longer required the benefit of Joseph’s home. The court decided against setting the agreement aside: while it recognized that allowing the settlement to stand amounted to a windfall for Cherie’s heir, Mr. Prince, it concluded it would be unfair for Joseph’s heirs to benefit from Cherie’s death.

If Joseph had left a will, this costly dispute could have been avoided. In a will, he could have specified that Cherie should be taken care of for the remainder of her life, but that upon her death all of his assets transfer to his loved ones.

The case also serves as a reminder that, in the event that an estate dispute arises, the courts strongly favour settlements (because they minimize litigation, reduce costs and promote certainty).

If you are involved in an estate dispute, it is essential to engage a lawyer at the earliest stages of negotiations to ensure your interests are properly advanced and your settlement intentions clearly communicated. A binding agreement may be formed sooner than you think.

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