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Most of the U.S. states have, through legislation, allowed for something called the “pour-over will”. Here’s how that works. A person sets up something called a living trust. (Lawyers call this an “inter vivos” trust.) Sometimes that trust is set up with as little as $5, and sometimes the figure is much larger. It is not uncommon, for example, to transfer investment accounts into the trust.

The trust is usually set up so that the creator of the trust (we call that person the “settlor”) can remove assets from the trust during his or her lifetime. The trust document usually provides what is to happen to the trust assets once the settlor dies—often those go to the settlor’s surviving spouse for the spouse’s lifetime, and then to the settlor’s children.

When the settlor dies, it is the trust document that determines the distribution of the trust assets. Not the settlor’s will. And, because of that, one can avoid the court process associated with probating a will. By avoiding the probate courts, one is avoiding the cost and delay associated with the probate process. And, for the rich and famous, one also avoids having the size and distribution of the assets known to the public and to disappointed beneficiaries.

Ideally, when the settlor dies he or she has already placed all of his or her assets into the trust, leaving no personally owned assets in the settlor’s name alone. But, if there are still assets in the settlor’s name alone, there is a need to probate the will. Under the typical pour-over will, once estate debts are paid, what is left over is given to the living trust and added to whatever assets are already there. In the U.S., due to their legislation, the probate courts are just fine with this. They consider the trust to be a person, and once the estate monies get into the trust, the U.S. probate courts consider the matter closed. The court does not concern itself with who might be the ultimate beneficiaries of the estate.

For hundreds of years, wills in England, Canada, and the U.S., have needed to be executed in front of two independent witnesses in order to be valid.

Almost always, the living trust document that sets out the distribution is not executed in front of two witnesses. And, almost always, the settlor reserves the right to later amend the trust document, also without requiring two witnesses. This is never a problem regarding the assets that made it into the trust during the settlor’s lifetime. Nor is it, in the U.S., a problem with respect to those assets that get added to the trust through the probate process. The states have legislation that permit this very thing.

Canada is different though. Very different. Probate courts in Canada do not like the pour-over will because the ultimate distribution of the estate is not governed by a properly executed (two witness) will. When the will says, “Give my estate to my living trust”, the Canadian probate court says, “A trust is not a person; I need to know who the ultimate beneficiaries are.” When an applicant responds, “You will find that in the trust document”, the probate court replies, “I can only look at a properly executed will, and this trust document is not that.”

Imagine a properly executed will that says, “distribute my furniture amongst the people mentioned in a handwritten, unwitnessed list that I will create in the future.” A probate court will refuse to enforce that provision on the basis that the will-maker is attempting to bypass the legal requirement of a two witness will. The same principle applies to the pour-over will.

Problems arise where Americans set up a living trust and a pour-over will, and then relocate to Canada. Or, where they own land in Canada. A set-up that was perfectly legal in the U.S. now becomes illegal in Canada.

Vancouver Canucks general manager Pat Quinn had a pour-over will when he died in B.C., and the B.C. courts refused to give effect to it. Had he died in the U.S., undoubtedly the result would have been different.

As usual, this article very much over-simplifies the law. Due to changes in B.C.’s legislation, it might be the case that a probate court will give effect to a “distribute my furniture per my handwritten note” provision. And, it might be the case that a court will give effect to a pour-over where the trust document is executed in front of two witnesses. Also, it might be that a Canadian court will follow some law out of England and give effect, in certain limited cases, to a will that pours over to an amendable trust which existed when the will was executed.

The undoubted advice in a case like this is: if you reside in Canada or if you have real estate in Canada, do not use a pour-over will. Get, instead, an ordinary will. If it is too late for that, contact the lawyers at Gibraltar Law for further advice.