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Thursday, July 16, 2020

Secret trust is upheld by BC Court of Appeal

The British Columbia Court of Appeal has handed down an interesting case with respect to how verbal instructions from a testator can affect an estate.

Angelika Stuhff was dying of cancer. She planned to make a will, but didn't do so. In the final few days before her death, Ms. Stuhff discussed her estate with her common-law partner, Bernd Odenthal, and with her sisters. The estate was to go to Mr. Odenthal. She told Mr. Odenthal that if he began a relationship with a new partner, he must transfer her estate to her niece, Susanne Bergler. He agreed to do that.

Ms. Stuhff passed away. Her estate went to Mr, Odenthal. The estate consisted of some small amounts of cash and an interest in two real properties. Eventually he met someone else and married her. At this point, Ms. Stuhff's family expected to see the estate moved to Ms. Bergler, but it didn't happen. Mr. Odenthal denied that there was any obligation on him to carry out the verbal wishes made by Ms. Stuhff before her death.

Ms. Bergler asked the court to say whether or not she had a claim to the estate based on the facts. She claimed that Ms. Stuhff's instructions set up a "secret trust". At the trial court level, the judge said there was no trust and no obligation, but the court of appeal reversed that.

The appeal court examined whether the elements of a secret trust had been established. First, did the deceased communicate her wishes for her estate to Mr. Odenthal? Second, did he accept the instructions and agree to carry them out? The court stated that both of these elements existed and therefore there was a trust, even though Ms. Stuhff herself never used the word "trust" in her instructions. In other words, Odenthal agreed to give the estate to Ms. Bergler if he entered into a relationship and therefore he was a trustee for her.

In the end, the court ordered that Mr. Odenthal  had to pay Ms. Bergler $177,604 as her entitlement to the estate. This sum included $22,200 for breaching his trustee duties.

This is an interesting case partly because we don't see many secret trusts these days. This case does give a pretty precise discussion of what needs to be proved if someone is alleging that type of trust exists, which is important when there is no written trust document.

Anyone who'd like to read the case in its entirety can do so by clicking here.

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