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Testamentary Freedom: A Dying (no pun intended) Legal Principle?

One of the hallmarks of the English common law is the notion of testamentary freedom--that each of us is free to pass our property on death as we wish, and to whom we wish, and that we can be as foolish, eccentric or capricious as we choose to be, subject only to minimal legal limitations.

This notion extends throughout the common law countries, and is embraced in Canada and the U.S. where the ethos of rugged individualism and individual rights have traditionally dominated.

In contrast, most civil law jurisdictions in Europe and many other places in the world follow a far different ethic: one based on mandatory rules that obligate a certain percentage of one's estate to pass on death in fixed proportions to family members. In "testamentary freedom-based" jurisdictions we rather pejoratively call this type of regime "forced heirship", but in European jurisdictions it is termed more positively "rights of inheritance". At its root, the difference in approach is grounded in a legal-political and philosophical debate over the primacy of the individual and individual rights versus the family, society, equality and inclusion.

But is the sand shifting in the Canadian setting? With the advent under modern matrimonial legislation of enhanced rights for spouses to ensure an equitable division of property on death in effect in most Canadian provinces, certainly inheritance rights between spouses, whether legal, common law or same sex, have increased substantially over the last two decades.

Recent court decisions have arguably further enhanced rights of unmarried spouses and other dependants to make claims on death for a greater share of property, not just based on financial need but also on "moral obligation". In Morassut v. Jaczynski, the Ontario court recently made a substantial award to a common law spouse on the basis he had been inadequately provided for under the deceased's estate. The court took into account the large size of the estate, the length of the relationship, that there were no other dependants and the inter-dependence--emotionally and financially--of the couple, as well as case law, including from British Columbia, which also looks to moral obligations, not just financial need. The judge concluded the deceased failed to make adequate provision for her spouse's "proper support".

The notion of moral obligation has also been asserted by adult children who have been disinherited or received less than their expectation under a parent's estate in making a dependant's relief claim, and B.C. legislation specifically provides for same.

The courts have also of late provided support to "mutual wills" which have been executed relying on the assumption that each party's will makes certain provisions on their death, and that the survivor is not free to change the intended distribution in his or her will, which is a common concern with second marriages and blended families. Under the mutual wills doctrine, the court has the authority to impose a trust of the property if the survivor changes his or her will.

Are we moving to a more familial model, and a less individualistic one? It seems the concept of testamentary freedom is being increasingly eroded, with the result that there is now more convergence between inheritance rights throughout the world than in the past. Is the world getting smaller and more homogeneous on these issues, perhaps recognizing our increased interdependence and connectivity?

- Margaret O'Sullivan

Please watch for our next blog on the use of cross-border trusts in estate planning.

The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.

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