Lam Vs Law Estate Case: The Importance of Estate Planning

At FH&P Lawyers, we believe in the importance of informed estate planning to prevent family disputes and ensure that your wishes are upheld. In this edition of the "Law Talk Podcast," our partners, Clay Williams and Tanvir Gill, sit down with Associate Kevin Cheung to discuss a recent BC Supreme Court case, Law vs. Lam Estate. This compelling case examines the complexity of wills variation claims, especially when cultural values, asset division, and fairness collide. Through real-life examples, we explore how the courts approach these sensitive issues, and why careful planning is essential to protect both your intentions and family harmony.

Clay: Welcome to another edition of FH&P Lawyers Law Talk! I'm Clay Williams, A partner here at FH&P Lawyers in the beautiful Okanagan Valley. We're sitting here recording from Kelowna with me, as per usual, is Tanvir Gill.

Tanvir: Hi Clay! Hello, and how are you?

Clay: Doing great, Thank you, how are you?

Tanvir: I'm doing great!

Clay: I didn't appreciate your comments about my sweater.

Tanvir: "Grandpa Sweater"

Clay: Yeah, so in any event, today, we are not only good-looking podcasters but also current and cool. We are talking about a recent case from the British Columbia Supreme Court called "Law Vs Lam Estate," which is a very recent case regarding a Wills Variation Action. Our associate Kevin, who is an Estate Litigator, is here to help us understand.

Kevin: So this is a recent case, August 26, 2024, is when it came out or when the decision came out. The estate seems to have been a long-winding process, but it looks like it ultimately ended up in trial, so we have a written decision by the Supreme Court of BC - Will's Variation Claim.

Clay: Let's do baby steps. Let's start at the beginning. What is the issue that brought it to court?

Kevin: The issue was, we've got a mother who drafted a will, and she drafted the will in a way where her daughter received a lot less than her son, but it's not only the will that was important. It was all the gifts that she had given, and how she had treated the children before she had passed away. She had a number of houses, she had a number of bank accounts, all of which she pretty much gave to her son or a portion of them to her son before she passed away, and so when she passed away, all she left was one rental house which is split between her daughter and her son.

And so, her daughter brings this Wills Variation Action or lawsuit saying that the gift that her mother has given her is unfair. That's basically what it's about.

Clay: Well, there are 50 pages! What I got out of that was there's 50 pages of what this was about, was that the mother really felt that everything should go to the son, and so that was really the impetus behind why she'd given all these gifts to the son.

Kevin: The interesting thing about this case is that it wasn't just the will. That's kind of common in those Variation Actions because if you look at just the will, in this case, it's 50/50. I've got an asset I'm going to split it 50-50 between my children, and that, on the surface, looks fair. But in the totality of this woman's life, she had given so much to her son, like almost $3 Million, I think is what the figure was, whereas she had only given her daughter roughly $120,000. So if you add, if you just weigh that out, the daughter is saying that is completely unfair, and so I should get more out of this, out of Mom's estate...

Clay: Which had already been dissipated.

Kevin: Yeah, exactly.

Clay: So I guess one takeaway here is that the court is going to look at not just what's in the estate when mom dies but what's happened beforehand as well.

Tanvir: What that looked like was bank accounts that were registered in the name of the mom and the son, so he had immediate access to pull the money out, and Registered Investments that had the son as a beneficiary, so at death, that investment and the funds that were within that investment immediately flowed to the son, property that was registered as joint tenants…

Kevin: So an interesting thing is that as part of estate planning, a lot of clients ask you, "What if I put my children on, or one child on as a joint account holder, can I do it that way and just give it to them?”

In cases like this, although it wasn't specifically dealt with in this case, Wills Variation Claims do look at transactions like that, where a joint account or a child is getting a joint asset.

Clay: So how could I keep things out of my estate and not get a Wills Variation Action? This type of case makes it pretty tough.

Tanvir: Or how you can move an asset into a joint name but still have that asset be subject to a Wills Variation Claim?

So we have people all the time that ask us to put a child on a property with them or a child into a bank account with them because they think that at that point, if the property or that asset immediately flows to that child, that child will then distribute it in a fair manner between all the siblings, and you know they'll save this 1.4% probate fee. And we always have to let our clients know that realistically, at that point, you're gone, so you can do as much coaching as you want and tell your kids what they should do but simply, you know, moving that asset over into their name doesn't mean that that's going to be what happens. And it doesn't mean that you're going to save a variation claim.

Clay: You said something there that I just wanted our listeners to understand—putting a child jointly into a property means that when the person who did it dies, the child gets it; it doesn't pass through the estate. But what are they saving, did you say? 1.4%?

Tanvir: Probate fees.

Clay: So that's it? It's a 1.4%?

Tanvir: Well, currently, it's a 1.4% tax on the value of your estate at death.

Clay: And maybe buying yourself a lawsuit!

Kevin: Because you can't always trust the child you're giving it to, to do what you're asking them to do. There's a pretty famous Supreme Court of Canada decision, Pecore Vs Pecore, where in that exact situation, the child who gets the joint asset, they are deemed to be holding that asset for the estate, and so the other children would come forward with claims saying Hey, that asset belongs in the estate, so put it back in the estate. And so, you might think you're saving probate fees, but after that lawsuit and after the asset gets claimed back into the estate, you're going to be paying the probate fees on that anyway, after paying all this litigation.

Clay: Yeah, after being in at least a dispute with maybe your siblings or something like that it seems to me.

Tanvir: And we also will have those clients that do have a property that is specifically meant for a child, not all the children, and there might be a really good reason why – in which case we talk to them about whether what they're doing is a gift or something else, and how to essentially avoid, after death, that sort of transfer that gift being shown as a constructive trust.

Clay: I just think 1.4% that's not very much money!

Tanvir: It's not very much if your estate isn't that big, right? But if you get into the higher values and larger sums, then it could be quite costly.

Clay: But you sure hear about it all the time, "I'm going to put one of my kids on, and then I'm going to avoid 1.4%.

Tanvir: Or the clients that say I need a Family Trust so I can funnel my things differently and cut out a child... It doesn't work like that, either.

Kevin: So in this case, circling back to this case, That happened. The Mom put her son on her joint assets, not because she wanted to avoid probate fees, but because she just wanted her son to have the property outright, and interestingly, it was because of cultural reasons for her. She came from a background where sons are preferred to daughters, and so, throughout her life, she treated her son, she gave preferential treatment to her son that ranged from giving better food to her son as opposed to her daughter or giving her son more money so that habit of hers, that belief of hers was tested in this court, and it didn't hold water before our courts.

Clay: Which I found interesting because, you know, she is coming from maybe very reasonable standards from the culture that she came from, but it was still tested against kind of Western standards, you know…

Kevin: Against what's just in Canada, tested against Canadian norms, and it didn't meet the Canadian norms, so it was altered by the courts to meet Canadian norms, or the will was altered to meet the Canadian norms. And I don't know about you, but I come from a background as well where sons are preferred to daughters and even firstborns are preferred to younger siblings, and so this definitely resonated with me.

Tanvir: And culturally, I want to say it has a lot more to do with just a son versus a daughter. I think a lot of cultures just worked differently, you know, might have had children to carry on a business or might have had children to help make money for the family and for a lot of cultures, the firstborn son is going to or is expected to take the role of taking care of the parents. So really, what they're doing for the lifetime, up to where they're at a certain point where they're seniors, and they're aging out, is to with the expectation that they're then going to have that son take care of them. So you know, all that to say that there's a lot of reasons why people do the things they do, and our job is to really have all the different clients we have, whether you know they're from that specific culture or not, understand how it works in Canada and how it works in BC specifically, and how those cultural norms won't really correlate to an unjust sort of division through an estate.

You can try to do whatever it is that you're aiming to do, and what we as lawyers are going to do is really work for our clients and what your wishes are – we can put on paper, but we have to have that discussion on whether this will actually play out the way that you want it to play out at the end or if a lot of what you're doing is going to lead in lawyer fees, a lot of time wasted and essentially the money that should be going to your beneficiary is going into other things.

Clay: It was actually interesting evidence in this case, that there was a will where she gave it all to the son, and then she changed it to make it 50/50 after dissipating most of the assets, and the testimony was, Why did you do that? So that the lady won't sue her, so they won't sue each other.

Tanvir: I had a client that came in once and said they wanted to do a very similar thing, they had a daughter and a son or maybe two daughters and a son, but they essentially wanted to leave the mass majority of what they had to their son and really just nothing to the daughters. And they said, we've paid for school, we've paid for weddings, this is what we've already done throughout their lifetime, so they don't need anything else. Their rationale was that our daughters are going to have what's coming to them through their in-laws because they're married, and so their husbands will be inheriting through their parents, so then it's only right that our son is inheriting through us.

So once we had that sort of our Wills IC, we call it, where we do an initial consult with our clients (they never came back), I tried to explain to them how it works, and they said, "Our daughters know!" and I was like, “Trust me, when it's multi-million dollars, they're not going to know.”

What you think they know and what they're telling you they might understand is not actually going to happen. So yeah, they never came back.

Kevin: The sad thing that often happens is – and that happened in this case, is that it destroys the relationship between the children and they stop speaking to each other. They're suing each other, and it's all over money.

Clay: Well just looking at it from these contemporary or whatever standards you're looking at the Canadian Values, it's so unfair! This poor lady, really took care of her mom. She did just as much as the son did, and so I mean, if there was an expectation that the son was going to look after her, that really didn't happen in this case.

Tanvir: And I think these types of cases especially for our generation, we're going to see so much more of this. I think that with the generation before us, they might have still either been born here or come to the country still sort of with that understanding that this is just how we do things, but I think with our generation, that's going to be a full stop. You know, with the amount of wealth and with the amount of assets that the generation before us has accumulated, once that's actually down on paper and siblings see where assets are flowing and what they're not inheriting essentially, and what a brother might be getting, I can expect this to be a booming practice field for lawyers when it comes to litigation.

Kevin: This was gender-based discrimination, and that did not meet the cultural norms of Canada I could see other cases where maybe there's sexual orientation-based discrimination from an older generation and that affecting their Estate Planning, and so yes, I agree that's just going to be.

Tanvir: Cases just changed with time, I don't know about you and when you went to law school, but when I went to law school, one of the leading cases at that time and a case that everyone in law school learned about, I forget the name, but it was the case where a daughter had married outside of their race and so because of that marriage she was completely disinherited that was varied by the court, but you know, and that was years back

Clay: I was bringing a human rights perspective into Estate Litigation. So, where does that leave our testator? Surely the courts would show some difference to what the testator wants!

Kevin: They do, they do, and in this case, as in a lot of cases, their "Testamentary Autonomy" is what they call it. That is really, really important, but it's not going to override the law or a will if there's something unjust about the will. But they're not going to completely rewrite the will; they're just going to vary it so that it's fair. So, in this case, instead of a 50/50.

Clay: That's a tough one, – what is fair, it's kind of like, in Personal Injury, we used to say, "Dealing with the future income loss - we're gazing into a crystal ball here".

Kevin: I don't envy judges with that task, but yeah, in this case, it was a 50/50 split originally for that one asset ended up being an 85 split. 85/15 split in favour of the daughter,

Clay: So she got most of what was left in the estate

Kevin: Which still wasn't a lot compared to what her brother got.

Clay: I think I wrote that down, what did she end up with? Like $600,000, I mean, these are obviously quite wealthy people that we're talking about, she ended up with, I think, about $600,000,

Tanvir: And he ended up with north of $2 million, he received through the mom's lifetime and through what she had left about $2.3 million, but it was all the daughter could get, could do.

Clay: Well, that's a good point. I mean, if the mother had gone that step further and sold the rest of the assets out of the estate, I guess there wouldn't be anything to argue about.

Kevin: So yeah, it would be much harder. Maybe approach it differently rather than doing it this way.

Clay: So I'm glad to hear though, that the courts are still looking at the wishes of the testator - not just overriding it based on some formula or something. I mean, this was what 50 or 60 pages of trying to think, figure out what was fair in the circumstance, so wishes of the testator versus kind of contemporary values, almost it sounds like and in competing claims, brother and sister who now hate each other, I'm sure so it's really sad too, isn't it?

Kevin: So, this case indicates or underscores the importance of proper planning and talking to your lawyer about how to plan your estate properly, and yeah, it is important.

Questions? We're ready to help. Please contact Clay Williams or Tanvir Gill, or any of the team at FH&P Lawyers.

Disclaimer: This material is provided for informational purposes only and should not be construed as legal advice on any subject matter. Consult with a qualified lawyer for advice on specific legal issues.