Estate litigation can be costly in many ways – it can delay the estate administration, change relationships between family members, and alter the ultimate estate value to be divided amongst beneficiaries. Despite the costs, many estates enter litigation to debate the true wishes of the deceased or ensure the required support is provided for the deceased’s dependents.
Fortunately, there are steps that testators and personal representatives can take to help avoid estate litigation. We asked Judd Blitt, Leader of the Estate Litigation group at Lindsey MacCarthy LLP in Calgary, to provide practical tips to those undergoing the estate planning or settlement processes.
What advice would you give testators when planning their estates?
“From a litigation perspective, I would encourage individuals to thoughtfully consider who might have a reasonable expectation of being included in their Will. To the extent any of those people are not included in the Will, or if their share of the estate is limited in some manner, it is often useful to have an explanation for why that is so. An even-handed disposition of one’s estate among the logical beneficiaries (i.e. spouse and children) is very unlikely to be challenged. The greater the deviation from this standard, the higher the probability of discontent and, potentially, a challenge. In those cases, the focus isn’t so much on avoiding litigation as it is ensuring your testamentary wishes are upheld should such a challenge occur.
“Secondly, I would advise testators to be mindful of who they are appointing as the Personal Representative (executor) for their estate. You want to be confident that the person you appoint will: (a) be willing to take on that responsibility; and (b) be up to the task. Many estate disputes arise when a personal representative is not acting in a timely manner or is simply out of their depth in dealing with the administration of a complex estate. This is where the services of a professional can be of enormous benefit to an estate of even moderate size and complexity.
“Lastly, even after a will is made, individuals should periodically revisit their estate plan to make sure it is still relevant. To that end, the estate plan and Will should always be revisited when there is a significant change in their personal or financial circumstances. An update to a Will should be done with the help of a lawyer – simply marking up an existing Will may not achieve the desired result and will ultimately require your executor to bring a court application to validate those changes thereby incurring unnecessary expense for the estate.”
What advice would you give personal representatives to minimize potential disputes or litigation?
“Communication is key. Consistent and transparent communication will go a long way to ensuring that beneficiaries feel secure knowing that everything is being taken care of. The vast majority of disputes regarding personal representatives centre around either a lack of communication or a failure to administer the estate in a timely manner. Some more complex estates will take a long time to wind up. In those cases, setting expectations and communicating often will save the personal representative from being accused of stalling or not attending to their duties.”
What are the top reasons an estate goes into litigation?
“As I alluded to earlier, wills that are seemingly “unfair” tend to generate the most litigation. This is particularly so where substantial assets are involved, but even modest estates can plunge into litigation when beneficiaries are not treated equally.
“Beyond that, the most common themes in estate litigation relate to questions of testamentary capacity and allegations of undue influence. By their nature, many Wills are often done later in a testator’s life and perhaps at times when their physical and/or cognitive state is declining. This means that they may be vulnerable to influence by a particular family member or someone else close to them. This is why engaging a professional is so important. Lawyers perform an important function in assessing whether or not a person has the requisite capacity to create or vary a Will and they can also mitigate the possible influence of third parties in the estate planning process. The good news (for testators) is that challenging testamentary capacity is a very difficult task – testators have been found to have had testamentary capacity even after being found medically unfit to manage their affairs. A medical diagnosis is only one piece of the puzzle that the Court considers in its analysis.”
What impact does litigation have on the estate assets and stakeholders?
“There are usually no winners in estate litigation. Litigation is expensive, time consuming, and antagonizing. Although litigation usually arises where family relationships are fraught to begin with, in most of those cases litigation serves only to damage those bonds even further. That said, litigation serves an important function because there are many instances where a beneficiary or other family member has no other recourse to protect their interests and there is often a power imbalance being taken advantage of. Litigation must never be undertaken lightly, however, and people must understand that a significant financial investment is likely necessary. There is a persistent belief, based on how the courts used to treat estate disputes, that all litigation costs (for all parties) are simply borne by the estate. This is no longer how it works. Costs in estate litigation are now treated in the same manner as any other civil claim: a litigant will, in most cases, be required to pay costs if they are not successful. This is an important part of the risk analysis for anyone contemplating (or being faced with) a court action in an estate matter.”
Do you have any final comments to those involved in estate disputes?
“Estate disputes can often seem to be very binary win or lose propositions. This is particularly so because of the personal relationships and family dynamics at play. However, there are a number of private and public resources that should not be overlooked to help resolve these types of issues. Mediation and arbitration can be very successful where the participants are able to put some of their personal feelings aside and take a more objective view of what their dispute is really all about. Getting out of the winner vs. loser mindset can go a long way to saving everyone a lot of money, time, and frustration. I always urge my clients to consider alternative dispute resolution at all stages of litigation, including even before a court action is commenced. A negotiated resolution is almost always better than a decision handed down by a Judge following a trial. This path has the added benefit of potentially preserving family relationships where they otherwise might be irreparably damaged.”
Judd Blitt is the leader of the Estate Litigation group at Lindsey MacCarthy LLP in Calgary. Over his 13 years in practice as a litigator, Judd has developed both the skills necessary to manage any dispute, big or small, as well as the perspective and experience to know when and how litigation can be avoided. Judd has narrowed his focus to estate litigation because of the novel and interesting legal issues that can arise and because of the satisfaction he gets from helping people through difficult times in their lives. Judd can be contacted at 403-536-1320 or jblitt@linmac.com.
The above is for informational purposes only. It is not intended to be legal or financial advice. We accept no liability for any losses arising from use of the above information. We recommend you speak to your lawyer to obtain specific advice or guidance regarding your unique situation.