You Really Shouldn't Have! - Do You Have To Accept What Is Given in A Will?

What happens if you are named in a will as the recipient of something but you do not want it, or, you want someone else to receive it. Are you allowed to refuse to accept it and, if so, under what conditions.

The short answer is yes, you may refuse or disclaim what you are left by way of a will. You cannot, however, state who should receive the gift instead of you. Rather the gift "fails" and goes into the residue of the estate and is distributed to the residiary beneficiaries.

A Federal Court case from 2000 illustrates how and why a gift may be refused and some of the potential pitfalls. In Biderman v Canada, the wife died leaving her husband as beneficiary to the family home. If he did not want it, the home was to be held in trust for their three children, all of whom were under 18 at the time of death. The husband owed Canada Revenue a significant sum of money and, rather than have the tax people seize the home, decided to disclaim it. Five days before death, he wrote a brief statement saying that he did not want the house and also that he would not act as executor of the estate. Despite that writing, he acted as executor and moved into the house for three years. At that point in time, he wrote another disclaimer, this time stating that he refused the house only.

The issue, of course, was whether either or both of the disclaimers were valid. With respect to the first one, the court ruled that it was not valid. Disclaiming a gift must be done after the death of the testator not before. This left the validity of the second document to be determined. The court noted that the late timing was irrelevant to the issue as a disclaimer takes effect retroactively. In other words, no matter when its signed or communicated, it becomes retroactive to the time of death of the testator.

Despite the retroactivity of the disclaiming, the court found the second document was also not valid because the husband had lived in the house for three years, thereby deriving benefit from it. Disclaiming a gift must occur before any benefit is gained from the gift.

As a secondary consideration, a gift cannot be partially disclaimed. It must be fully accepted or fully disclaimed. This is consistent with disclaiming before any benefit is derived from the gift.

The Lesson: If you are going to disclaim a gift, do so before obtaining any benefit from the gift. Its recommended that you disclaim the gift in writing that is both signed and witnessed.

Biderman v Canada, 2000 CanLII 14987 (FCA) https://www.canlii.org/en/ca/fca/doc/2000/2000canlii14987/2000canlii14987.html?resultIndex=1

Re Skinner, 1970 CanLII 360 (ON H.C.J.) https://www.canlii.org/en/on/onsc/doc/1970/1970canlii360/1970canlii360.html?resultIndex=1

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