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How Crime Affects Estate Planning

Posted: 09/26/2013 8:40 am

Crime doesn't pay -- at least, it shouldn't. Thankfully, for the most heinous and clear instances of criminal activity, crime does not pay. However, Canada has yet to establish laws that reflect contemporary societal values and clarify circumstances which may give rise to the disinheritance of convicted felons from the estates of their victims.

The two sensational murder cases of Helmuth Buxbaum and Peter Demeter both involved husbands who hired contract killers to assassinate their respective wives with the aim of collecting lucrative life insurance benefits. These cases serve as frank reminders that, in Canada, such brutal acts will result in the disinheritance of convicted criminals from their victim's estates. In both instances, the convicted parties were denied the receipt of any benefits flowing from the estates of their murdered spouses, even in the face of the felons' previous entitlements to their spouse's estates.

In such dramatic situations, the law is quite clear: a murder conviction, where all rights of appeal are exhausted, will prevent any claim on the estate of the victim by the convicted felon. Unfortunately, other criminal convictions in Canada do not have as clear of an effect on an otherwise valid inheritance or estate claim. It appears that Canada is currently lagging behind the United States with regards to the role that criminal convictions play in estate matters.

Forgery is another criminal act relevant to estate administrations. Section 366 of the Criminal Code deals with a will, codicil or other false testamentary instrument that is intentionally created by an individual, in the hopes of gaining a personal benefit arising from the fraud committed on the victim's estate.

Instances of forgery include a judicial determination that a signature on a will was placed improperly on behalf of the testator or where it is determined that the testator did not personally sign the purported will at all, resulting in the will's inapplicability and the deceased thereby possibly dying intestate.

One of a number of areas which requires legislative and judicial attention are situations involving spousal abuse. While such activity is criminalized with regards to physical, emotional and financial abuse, inherent gaps in current legislation and precedent in Canada raise issues when determining the impact of domestic violence on estate dispositions.

It appears that Canadian legislatures are shying away from direct intervention in the area of spousal abuse and its effect on estate entitlements; however, the judiciary may still develop precedent in this regard, and learn from the tone currently being set by American courts. As noted by Justice Gerard V. La Forest of the Canadian Supreme Court of Canada, "The greater use of foreign materials by courts and counsel in all countries can, I think, only enhance their effectiveness and sophistication."

What Canada currently lacks in the form of legislation and judicial precedent in relation to this issue may be plucked from American courts and applied domestically, allowing for domestic violence convictions to play a greater role and affect estate dispositions where appropriate. The use of American precedents as persuasive authority in Canada is by no means a new or novel concept, and may be a desirable approach as the methods and policies have already been tried and tested in the United States, and are likely easily applied, modified and developed further in Canada.

Currently in Canada, previous convictions of elder abuse and domestic violence may go unnoticed by courts hearing subsequent challenges to a will's validity. Many think this should change. It is unlikely that previous convictions of abuse will see application in related cases regarding estate distributions and will challenges any time soon, certainly not to the same degree as a previous murder conviction; however, American trends may encourage Canadians to push legislatures and the judiciary to adopt policies that prompt courts to look to previous convictions and behaviour as a guide to interpreting a will's validity.

Examples of previous behaviour affecting a future inheritance can also be found in the US where, if an individual interferes with another's testamentary dispositions, the surviving relatives may have a claim in tort against the abusing party after the death of the testator, over and above undue influence claims.

As these unique claims develop, it is likely that such destructive behaviour will, at the very least, be discouraged. If similar policies are adopted in Canada, many more instances of will challenges may be raised due to the proliferation of grounds upon which to raise such a claim. However, it is likely that such changes will arise slowly, and be dependent upon judicial action with an eye to our Southern neighbours.

*Ian Hull and Suzana Popovic-Montag are partners at Hull & Hull LLP, an innovative law firm that practices exclusively in estate, trust and capacity litigation. To watch more Hull & Hull TV episodes, please visit our Hull & Hull TV page.

 

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