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Be Mindful Before Pursuing Estate Litigation

There are many unpleasant surprises that can come in life, but few can sting as badly as a will that does not say what you expected. Let’s say you were expecting to inherit a certain portion of a loved one’s estate. If you meet with the estate’s lawyer after their passing, only to learn that their will says something else, understandably your first instinct is shock.

The next question is likely ‘why?’ Why were you led to believe that you would receive something that you weren’t? Did they change their will after speaking with you to redistribute their estate? Did they have capacity at the time that they made those changes?

Capacity is crucial in the Wills and Estates world – a testator (person writing a will) must have mental capacity to issue those instructions. If their mental faculties have declined or are not present, they are not legally sound to make those decisions. However, if there’s no proof that they lacked capacity, the terms of the Will may very well stand. 

In one recent case, the son of the deceased was surprised to find that his mother had redistributed her estate to include her grandchildren. His revenge? He attempted to bury his sister in paperwork. When he was unsuccessful, it cost him nearly everything. 

The Case

In Fanelli v. Fanelli-Bruno, 2023 ONSC 6501, the mother, Lina Fanelli, changed her will roughly a year before she passed to redistribute her estate. Her previous will distributed her estate between her son and daughter evenly. Instead, she chose to give each of her children a 25% share and divide the remaining 50% between her daughter’s two children, with her daughter as the executor.

This changed the Applicant, Bruno Fanelli’s inheritance from $160,000 to about $75,000, a decrease of $85,000. However, Mr. Fanelli sued, claiming that his mother lacked both the mental capacity to make these changes and that Ms. Fanelli-Bruno had unduly pressured her to make the changes. The parties were ultimately able to settle most of the issues, with Mr. Fanelli accepting that the estate structure remained intact. 

However, the parties could not agree on the issue of legal costs incurred to reach the settlement. Mr. Fanelli first demanded some 9,000 pages of his mother’s medical records, along with an affidavit prepared by Ms. Fanelli-Bruno’s lawyer, before settling. With the estate’s fund’s frozen, Ms. Fanelli-Bruno was forced to cover the costs of the litigation herself and did not want those costs to be borne by the estate, which would have also burdened her and her children. Mr. Fanelli argued that the costs should be paid by the estate. 

The Analysis

In assessing the costs awarded for the initial litigation, the Court looked at a Court of Appeal decision from Johnson v. Johnson, 2022 ONCA 682 from the previous year, which stated: 

“to avoid putting an estate to the needless expense and delay of a fishing expedition brought by “a disgruntled relative”…a claimant ought not be permitted to deplete an estate and delay its administration by seeking documentary discovery or other directions without meeting the minimal evidentiary threshold of “some evidence” that would call into question the validity of a will and that is not successfully answered by the responding party.

In other words, a claim that a testator lacked capacity and the will should be invalidated cannot be brought baselessly. One can’t simply start a fishing expedition. Rather, to make those sorts of claims, there needs to be at least some degree of valid supporting evidence.

Here, the numbers simply did not make sense. Mr. Fanelli spent nearly $60,000 of his own money, and some $90,000 of his sister’s money, to protect a relatively small inheritance. His own costs alone would deprive him of all but $15,000 of his share of the estate.

This is what the Court calls “scorched earth litigation.” As the Court stated, “it’s a lose-lose all around unless the applicant pays the respondent’s costs.” The Court determined that Mr. Fanelli was essentially throwing good money after bad; he had seriously depleted the estate by pursuing his claims, and now wanted the estate to cover the cost of his efforts. 

The Court turned to another earlier case to determine how to handle the issue of costs, which posed questions such as “did the testator cause the litigation? Was the challenge reasonable? Was there an allegation of undue influence? Was the conduct of the parties reasonable? Were there offers to settle?” 

Here, Mr. Fanelli claimed that his mother caused the litigation by not discussing the change with her whole family. He put forth evidence that she was ill with cancer when she made her changes and had taken morphine pills for pain the day prior. However, the Court found that Mr. Fanelli provided “no evidence at all about his mother’s actual mental state,” and there was “not a hint of evidence to rebut the presumption that Mrs. Fanelli had capacity.” Moreover, as Mr. Fanelli was living with his mother, the Court noted that he would have known this. Any allegations of undue influence were, in the Court’s view, ‘bald assertions.’

Mr. Fanelli went on a ‘fishing expedition,’ and, to his minimal credit, “he agreed to walk away once his fishhook came back empty.” Instead of discussing matters with his sister, the Court noted that there was “no evidence of him taking any step to seek a more consensual process or discussion before launching the parties to DEFCON 1.”

Ultimately, Mr. Fanelli was held to pay his sister’s costs on a substantial indemnity basis of $74,000, leaving him walking away from his estate battle with a total of $1,000.

The Takeaway

The circumstances here may be extreme, but they are not unheard of. In this case, the applicant chose to fight over a relatively small amount of money and should have reasonably known that his sister would be spending even more than he would. More damning is that he had no evidence to support his position – only a grudge to bear. That grudge ended up costing him almost everything.

If you plan on making significant changes to your will, it’s important to work with an estates lawyer so that next steps can be made clear. If you have an estate dispute to settle, a lawyer can work with you to look at reasonable next steps and review the evidence before the costs become more trouble than they’re worth.

We routinely support clients with their estate matters in the Cambridge, Kitchener, and Waterloo Regions. Contact our office today to set up a consultation.