Reviewing the validity of wills while a testator is still alive

A Case Review of Rubner v. Bistricer¹

In Rubner v. Bistricer, Justice Myers of the Ontario Superior Court of Justice appeared to determine the validity of a will notwithstanding the fact that the testator was still alive.  Let’s review what led to this finding, ²

What is unique about this decision is that Justice Myers addressed the validity of the wills while the 90-year-old Eda Rubner (“Eda”) was still alive.  As Charles Wagner and Brendan Donovan noted in their presentation at the 17th Annual LSUC Estates and Trusts Summit, the law did not used to contemplate the validity of wills prior to death. They wrote:³

“Will a court in Ontario set aside the last will and testament of a testator who is still alive? For the short answer to this question, we can turn to some of the well-loved Victorian eloquence of Lord Chancellor Hardwicke in the case of Duke of Marlborough v. Lord Godolphin:

‘[T]he law says that a testamentary act is only inchoate during the life of the testator from whose death only it receives perfection, being until then ambulatory and mutable, vesting nothing, like a piece of waste paper …’

In other words, no. As a piece of waste paper, a will is immune to challenge prior to death. The logic is simple to follow: the court should not be called upon to determine the validity of a document that could, at least in theory, be revoked by a new will the very next day.”

But, this is the middle of the story – let’s start at the beginning.

The Rubner case is instructive for those dealing with elder issues, will drafting and the creation of trusts.  Accordingly, we decided to write several blogs with a focus on how Justice Myers of the Ontario Superior Court of Justice dealt with these separate issues.  This particular blog reviews how and why His Honour went about determining the validity of a will while the testator is still alive.

Let’s first review the facts of the case that are relevant to this blog in order to to provide some context to Justice Myer’s analysis.  In the late 1960s, Eda’s late husband purchased a 10% interest in a joint venture to develop land referred to in the court decision as “Lower Fourth”.  The purchased interest was put in the name of “Eda Rubner Realty Limited”.  One problem – there was no such company.  So everyone in the case agreed that when the property was purchased, Eda personally owned the 10% interest.  Eda and her husband had intended that each of their children would ultimately receive a 1/3 interest in that 10%.

In paragraphs 7 – 10 of his judgment, Justice Myers explains how it came about that Brenda renounced her ownership interest in her 1/3 share:

“….Brenda Rubner married sophisticated American businessman Alex Bistricer and moved to New York. For US tax reasons, it seems to be important to Brenda and Alex Bistricer that Brenda Bistricer is not seen to own or control assets in Canada. It has been to her advantage to keep assets and funds in the name of her family trust or in her mother’s name until such time as she needs to use the funds.

Brenda Bistricer’s US tax problems were affected by issues involving the ownership of her one-third share of the family’s interest in Lower Fourth. The tax problems have been of sufficient importance to her that she has taken positions in relation to her Lower Fourth interest and the income derived on that interest that drive the outcome of these proceedings.

Since Brenda Bistricer realized the scope of her US tax problem and obtained advice, she has denied that she owns the one-third of the family’s interest in Lower Fourth that had been earmarked for her by her parents. As a result, it is agreed by all members of the Rubner family that Eda Rubner now owns that joint venture interest both legally and beneficially.

In December, 2014, after Brenda Bistricer denied owning her one-third interest in Lower Fourth, Eda Rubner commenced receiving income distributions referable to Brenda’s one-third interest. Prior to being declared incapable, Eda Rubner transferred funds by wire as directed by Brenda Bistricer from the income earned on that one-third interest. Eda Rubner also signed blank cheques that Brenda and Alex Bistricer used to obtain those funds.

In paragraphs 80-85, Justice Myers outlined what led to the execution of the 2014 Wills:

In 2013, Joseph Rubner contacted lawyer Zev Zlotnick to write a new will for Eda Rubner. Mr. Zlotnick met Eda Rubner with Joseph Rubner and Brenda and Alex Bistricer on January 18, 2014. Eda Rubner executed a new will at a second meeting with Mr. Zlotnick, Joseph Rubner, and Brenda and Alex Bistricer on March 8, 2014.    It is clear from email correspondence that between the two meetings the structure and contents of the new will were dictated by Joseph Rubner and the Bistricers without reference to Eda Rubner. What actually happened was disclosed by Joseph Rubner …. He feared that his brother would be controlling their mother’s estate. He and Brenda Bistricer were then acting together and knew they could outvote Marvin. Joseph Rubner therefore instructed Mr. Zlotnick to add them as executors knowing that the new will provided for a majority to govern in the event of a dispute.The 2014 will included a new clause providing that Eda Rubner continued to hold legal and beneficial title to the remaining one-third interest in Lower Fourth and that she intended to bequeath it to Brenda Bistricer.

While Brenda and her brothers agreed their mother no longer had capacity and she could no longer make her own financial decisions, there was a concern about the income flowing from Eda’s ownership interest. Brenda wanted the gifts to continue and she wanted her brothers to account for what they had now done with that money.  Moreover, they disagreed about who would own this interest upon their mother’s demise.

Brenda asserted and her brothers denied that all funds flowing from Eda’s joint venture interest belonged to Brenda as the proceeds of a gift from Eda.⁴

What does this have to do with the wills executed by Eda in 2014?

Marvin and Joseph argued that any interest once owned beneficially by Brenda is now owned by Eda because Brenda renounced her interest. Accordingly, on Eda ’s death that interest will vest in equal parts in each of the siblings under Eda’s 2003 will. They denied Eda gifted to her all the net income distributions after tax because Eda did not have the capacity to make such a gift.  As such, they wanted Brenda to repay all sums that she and Alex Bistricer had taken by wire and by cashing pre-signed blank cheques.  As far as the new wills that their mother signed in 2014, the brothers claim they were invalid.⁵

Brenda argued that her mother has already gifted to her the net proceeds after tax of all distributions of income received and to be received in the future on the remaining one-third interest in Lower Fourth. She argued that her position was supported by the wills drafted in 2014. Because the remaining one-third interest and its proceeds are subject to a specific bequest under the new wills.   Brenda also relied on  s. 35.1 of the Substitute Decisions Act, 1992  for the proposition that her brothers must account for all money that they have withdrawn from Eda’s Lower Fourth accounts.

Justice Myer’s decided that Brenda could not rely on the 2014 Wills as evidence corroborating her mother’s intention to bequeath the remaining one-third interest and to gift to her the proceeds of distributions by Lower Fourth.  Not relevant to the subject matter of this blog is an interesting analysis of whether s. 35.1 of the Substitute Decisions Act prohibits the brothers from accessing the money pursuant to their powers of attorney.⁶  Suffice to say that Justice Myers concluded that there was no need therefore to consider the circumstances under which the 2014 wills were created for the purposes of considering if they could be relied upon under s. 35.1.  The statute is clear that section 35.1 does not apply to the money spent by Eda’s attorneys whether or not the wills are likely valid.  However, Brenda also relied upon the 2014 wills as corroboration of her positions on the ownership of her share of the joint venture interest and the alleged gift of the income. That is why Justice Myers looked at the validity of the 2014 wills.

His Honour concluded:

1. Capacity aside, Brenda did not establish that the wills had Eda’s knowledge and approval.⁷
2. Overall, the evidence demonstrated that the 2014 wills were the product of Joseph Rubner and Brenda and Alex Bistricers’ intentions and actions.
3. The wills represented the Bistricers’ implementation of their tax planning and not Eda Rubner’s act. There was no finding that Eda lacked capacity or that the gift of the joint venture interest did not reflect her ultimate intention just as gifting cash to Brenda did. But as Justice Myers observed, wills are more complex documents. While His Honour seemed to believe that giving cash to Brenda Bistricer was a fulfilment of Eda’s wishes, He concluded that she did not decide or intend to revamp her wills, change her executors, and gift the joint venture interest or its proceeds as dictated by Alex and Brenda Bistricer and Joseph Rubner. His Honour would not agree for it to be used as any form of independent corroboration of Brenda Bistricer’s self-serving evidence. Rather, the wills were a product of the Bistricers’ very planning for which they seek to use them as corroborative.

Conclusion

As Justice Myers stated in paragraph 173 of his decision, “While this is not a formal will challenge, Brenda Bistricer relies on the new wills as corroboration and to support a finding under s. 35.1. I am satisfied that the 2014 wills cannot be relied upon for those purposes.”  Clearly, the “wasted paper” argument did not preclude Justice Myers from examining the Wills, but his comments suggest he was mindful of the case law and the difficulties the issue raises.

From our perspective it is only a matter of time before disputes involving the Substitute Decisions Act (the “SDA”) leads to increased litigation about the validity of wills while the testator is still alive. As Charles Wagner and Brendan Donovan pointed out in their paper:

“The provisions of a person’s last will and testament are an important concern in the context of the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (the “SDA”). Under section 33.1 of the SDA, a guardian of property must make reasonable efforts to determine whether or not the incapable person has a will and, if so, what the will contains. Subsection 35.1(1) then requires the guardian of property not to dispose of property that the guardian knows is subject to a specific testamentary gift in the incapable person’s will.”

How can a fiduciary comply with his/her duties under 33.1 when there are doubts as to the validity of a testamentary document?  How can he/she make proper decisions about disposing of property for the incapable person’s benefit without first determining whether the will in question with a specific bequest is the last valid will and testament?

Perhaps Mr. Justice Cullity said it best in paragraph 18 of Stern v. Stern⁸

“The court should not, I think, close its eyes to the fact that litigation among expectant heirs is no longer deferred as a matter of course until the death of an incapable person.”