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Disinherited Second Wife’s Lawsuit Against Her Stepchildren Dismissed

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Transferring property into joint tenancy for estate planning purposes often leads to family disputes and in some cases, litigation. For example, a parent may add their adult child as joint tenant on title to real property or include their child as a joint bank account holder. This may be done to avoid probate fees and to facilitate the property passing to the child on the parent’s death—but there are a variety of other reasons a parent may do so (e.g., so the child can help the parent with banking during the parent’s lifetime).

Gratuitous property transfer can result in estate disputes

If the property transfer was gratuitous—in other words, no money was paid and no consideration was given when the child was added to title—the central issue is whether the parent intended to make an outright gift. If a gift was intended, the property in question does not form part of the parent’s estate. On the death of the parent, the property passes to the child or children on title by right of survivorship. This leaves other potential beneficiaries with no entitlement to inherit a share of that property.

Vancouver estate litigation after father’s gratuitous property transfer

Real property is often the most valuable asset a person owns. In Lee v. Chau, 2021 BCSC 70, a BC man added his two adult children as joint tenants on title to his Vancouver property shortly before his death. When he died, the $1.1 million property passed to his children by right of survivorship, leaving assets in his estate of about $20,000. The man’s second wife, Ms. Lee, was displeased with this state of affairs and sued her stepchildren to set aside the gratuitous property transfer. She also sought to vary the Will in her favour, arguing that her husband failed to make adequate provision for her.

Property held on “resulting trust” for deceased’s estate?

When property is transferred to an adult child for no consideration, a rebuttable presumption of a resulting trust arises. However, the presumption will determine the result only when there is insufficient evidence to rebut it on a balance of probabilities. The child to whom the property was transferred bears the onus of rebutting the presumption of a resulting trust by adducing evidence that the parent intended the transfer to be an outright gift. If they fail to rebut the presumption, the property is held in resulting trust for the transferor (i.e., the deceased parent’s estate).

Actual intention is the governing consideration  

If the presumption of resulting trust is displaced, the person to whom the property was transferred lawfully becomes the full owner of the property by right of survivorship on the death of the other joint owner. The actual intention of the transferor is the governing consideration. In the Chau estate litigation matter, the central issue was what the deceased intended when he transferred the property to his son and daughter. The children said their father knew he was terminally ill when he made the transfer and did so in order to avoid probate fees and to facilitate the property passing to them on his death. Accordingly, they said the property never formed part of his estate and that Ms. Lee had no claim to it under the Wills, Estates and Succession Act (WESA).

Stepmother’s property claim dismissed by BC court

In Chau,the BC court sided with the children of the deceased and dismissed Ms. Lee’s lawsuit. These are the key facts that persuaded the Court that the deceased father intended, at the time of the transfer, to gift the property to his children:

  • The son and daughter were the only beneficiaries under their father’s Will at the time of the transfer in February 2014. In his Will, the deceased appointed his son and daughter as his joint executors and trustees and bequeathed his entire estate to them, stating as follows:

“I am giving nothing to NU LEE whom I married on May 30, 1995, as although we were married, she refused to consummate our marriage or live with me as husband and wife and on March 1, 1996, she left me and returned to Taiwan, China and has not returned. I believe that she married me for the sole purpose of facilitating her entry into Canada as a landed immigrant. She has never and refused to consummate our marriage and we have at no time lived together as husband and wife relationship”.

  • The deceased had been diagnosed with cancer before the transfer. He had personal knowledge of the right of survivorship and the legal implications of creating a joint tenancy, based on his own experience which resulted in him becoming sole owner of the property by right of survivorship on the death of his first wife in 1994.
  • All evidence established that Ms. Lee was estranged from her husband at the time of the transfer. In fact, Ms. Lee had been absent from the property for many years before the deceased’s death in July 2013. Ms. Lee’s full­time residence was in Taiwan for more than three years before his death and she and the deceased had essentially no communication in the years leading up to his death. Ms. Lee was unaware of his terminal illness and he died without her knowledge.

The court concluded that the children lawfully became the full owners in a joint tenancy of the property by right of survivorship on their father’s death.

Estranged wife also not a “spouse” at time of her husband’s death

In Chau the court further concluded that Ms. Lee was not a “spouse” of the deceased at the time of his death, leaving her with no standing to vary his Will to provide her with a share of his estate under the Wills, Estates and Succession Act (WESA). Under WESA, a separated spouse no longer qualifies as a “spouse” and has no variation rights. The evidence established Ms. Lee had been estranged from her husband for an extended period of time and that they had been living separate lives for many years prior to his death. In the end, Ms. Lee’s disinheritance was left undisturbed by the court. All of Ms. Lee’s claims were dismissed and she was ordered to pay costs to the deceased’s son and daughter.

Do you have any questions about disinherited spouse matters? Our team of experienced estate lawyers can help.

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