A W Prociuk (orally):—The executors and trustees of the Estate of Adolphina Thornton Tassie appeal from an assessment by the respondent dated June 19, 1972, wherein federal estate tax in the sum of $2340.60 was levied on the net value of the estate, being established at $94,328.72.
The testatrix, domiciled in Vernon, British Columbia, died testate on or about February 3, 1970. She was survived by her husband, Gilbert C Tassie, aged 86, and two adult sons, William J and Peter — they being the principal beneficiaries under her last will and testament.
The point in issue is whether or not the deceased, by her will, created a trust within the meaning of section 7 of the Estate Tax Act of the entire estate for the benefit of her surviving husband during his lifetime. The appellants contend that she did. The respondent has taken the position that only a portion of the estate was so created — namely, the house, the land contiguous thereto, household furnishings and a sum of $2,500 payable to the husband pursuant to a court order to which I shall make reference later; and, the remainder of the estate is taxable.
By her will, dated May 19, 1964, which was duly probated on August 20, 1970 in the Supreme Court of British Columbia, the deceased gave all her estate in trust to the executors and trustees, with directions, the pertinent portions of which are:
(a) To pay my just debts, funeral and testamentary expenses.
(b) To hold my home and the land contiguous thereto, together with all articles of personal, domestic and household use or ornament, for the use of my husband until his death or until he shall in writing advise my Trustees that he he no longer desires to have such home, property or articles held for him, whichever shall first occur, when the said property shall fall into and form part of the residue of my estate. The specific bequests hereinafter provided shall be subject to this provision in favour of my husband, which shall have priority. I WILL AND DECLARE that my Trustees may in their uncontrolled discretion make payments for taxes, insurance, repairs and any other charges or amount necessary for the general upkeep of the said property while it is held for my husband, and may make them out of capital or income, or in such proportions as they think fit.
There then follow certain small specific bequests of $100 each. Paragraph (d) reads as follows:
(d) SUBJECT to the provisions hereinbefore made for my husband, to deliver the following specific bequests:
and here follows a list of personal items, such as silverware, paintings, recordings, etc to various beneficiaries. The trustees are also empowered to invest any moneys in securities. The final paragraph of the will, being paragraph (i), reads as follows:
(i) I make this will with the full knowledge that my sons will insure that their father at all times has a comfortable, pleasant and dignified home for the balance of his lifetime.
The executors and trustees are the Royal Trust Company of Kelowna, British Columbia and the two sons mentioned above.
It appears that the husband required some cash, and a dispute arose as to whether or not he was entitled to any under the will. The husband—the said Gilbert Tassie—then petitioned the Supreme Court of British Columbia under the Testator's Family Maintenance Act, RSBC 1960, c 378, and, by consent of all parties then present, Mr Justice Hinkson, on February 9, 1972, ordered the executors and trustees as follows:
(a) To pay the sum of $2,500.00 cash to the Petitioner, GILBERT CULLODEN TASSIE, from the residuary estate referred to in said paragraph (e) of the Last Will and Testament of ADOLPHINA THORNTON TASSIE, deceased; and
(b) To pay the net income from the remainder of the residuary estate referred to in said paragraph (e) after payment of the said $2,500.00, to the Petitioner, GILBERT CULLODEN TASSIE, during his lifetime, said payment to be made from date of death of ADOLPHINA THORNTON TASSIE, deceased; and
(c) To encroach upon the capital of the estate of ADOLPHINA THORNTON TASSIE, deceased, for such sum or sums as may in the discretion of the Executor, THE ROYAL TRUST COMPANY, after consultation with the other Executors, William Joseph Tassie and Peter Tassie, be required for the need of the Petitioner, GILBERT CULLODEN TASSIE.
It appears that, initially, the respondent took the position that a limited trust was created by the said court order, but, at the hearing, learned counsel for the respondent advised that he was not relying on the court order, but on that portion of the will found in paragraph (b). He further submitted that the inclusion of $2,500 as an exemption in the assessment was a generous inadvertence on the part of the respondent, and properly ought to be added to the aggregate taxable value. In my humble opinion, if the testatrix did not intend to give a life interest of her entire estate to her husband, then what is the meaning of the sentence in paragraph (b) of the said will and testament which states unequivocally:
... The specific bequests hereinafter provided shall be subject to this provision in favour of my husband, which shall have riority. . . .
Clearly, the size of the estate is many times more than substantial to pay taxes, insurance and repairs on the house, which was valued at approximately $22,000. If she had not intended her husband to use the money as he required it, she would not have placed this rider on the several small hundred-dollar specific bequests. There would be no need to hold these and other specific bequests till the husband passes on or signifies in writing that he no longer desires to have such home, property or articles held for him.
The final direction to her sons is another point which indicates that she did not intend her husband to live in her house hungry and penniless.
In conclusion I find that the testatrix, by her will, gave her husband a life interest in her estate, and thereby created a trust within the meaning of section 7 of the Estate Tax Act.
The appeal is allowed, and the matter referred back to the respondent for reassessment accordingly.
Appeal allowed.