Analysis
Reginald Easingwood (Reginald) was married to Kathleen Easingwood (Kathleen) from 1983. He had four children by his first wife, who had died in 1976. In April 2001, Reginald executed an enduring power of attorney in favour of his two children acting together. Three years later, in March 2004, Reginald made a will. Under that will, Kathleen was to have an entitlement to income in a fund of $525,000 (plus adjustment for each year), which upon her death would be divided between his children, his step children, and his grandchildren. He also gave his wife a life interest in the matrimonial home.
By 2007, Reginald was suffering from dementia, and one of the attorneys, Hank, was diagnosed with cancer. There were concerns about how Reginald’s finances would be managed if one of the attorneys were to die, as the enduring power of attorney could only be exercised jointly. Accordingly, the attorneys settled the bulk of Reginald’s assets in trust for his benefit. Reginald was entitled to the income during his lifetime, and on his death, the terms of the trust mirrored the will.
Reginald died in 2009. Hank had predeceased him. Kathleen subsequently brought a claim challenging the creation of the trust and the transfer of Reginald’s assets thereto, and she also brought an application to vary his will under the Wills Variation Act. The trial judge found against her and she appealed.
Held:
- 1) Attorneys operating under a valid general power of attorney had the power to create an inter vivos trust or transfer to such a trust assets held by the principal, provided the trust created did not otherwise step into territory prohibited by other general principles of law or statutory prohibitions.
- 2) An attorney did not have power to make a testamentary disposition. Doing so runs afoul of the Wills Act 1996, c489. This safeguarded the true wishes of the testator as to dispositions after death. But the settlement was an inter vivos disposition in respect of which the three certainties were met, and which was immediately effective and irrevocable.
- 3) The judge had not erred in finding that the settlement mirrored the terms of the will. He had referred to the concordance of the terms of the will and the trust as demonstrating that the attorneys had acted in conformity with Reginald’s intentions. That was an appropriate line of reasoning, given the predominant requirement that attorneys considered the best interests of the principal. An understanding of the principal’s demonstrated intentions is relevant and material to that question. It was however not necessary to infer that Reginald would have consented to the creation of the settlement and the transfer thereto of his assets.
- 4) Reginald was a man of business who had executed a will that complied fully with the terms of a marriage agreement. The settlement, in turn, was entirely consistent with the marriage agreement, the will, and business prudence, and the trust secured Reginald’s assets for his use during his lifetime. It would be a fiction to say the attorneys were acting in breach of their duty to Reginald in the creation of the settlement, when it conformed to all the arrangements which he had made.
- 5) Nor were the attorneys to be prohibited from taking a prudent step as would be taken by a reasonable business person, such as tax planning, which incidentally benefited all the beneficiaries including themselves by preserving the value of assets.
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