The Canadian Court System

Every Canadian province and territory has three court levels:

• a provincial or territorial court (the lower trial court);
• a superior trial court (the highest trial court); and
• a Court of Appeal (the highest court in the jurisdiction).

Superior trial courts generally preside over wealth disputes involving matrimonial property, wills and estates, trusts, powers of attorney and guardianship. Wealth disputes are governed by legislation and the common law in most Canadian jurisdictions, but Quebec uses a civil law system to handle wealth disputes.

Appeals from a superior trial court decision go to the Court of Appeal. In some jurisdictions, including Ontario and Saskatchewan, leave is required to appeal interlocutory decisions.

Probate Courts

Most probate matters are heard by superior trial courts. Only Nova Scotia and New Brunswick still maintain separate probate courts.

Family Law Courts

Canada does not have standalone family courts, although New Brunswick, Nova Scotia and Prince Edward Island operate fully unified family courts that handle all family law issues. Saskatchewan, Manitoba and Newfoundland and Labrador also have unified family courts, but only in certain regions. In Ontario, the Superior Court of Justice includes a Family Court Branch, but not in all locations.

In British Columbia, Alberta, Quebec and the territories that have no unified family courts, family law matters may fall under the jurisdiction of both the superior trial courts and the provincial or territorial courts. Divorce falls under federal jurisdiction, while separation and support for married and common law partners fall under provincial or territorial authority.

Power of Attorney Disputes

In Ontario and the Yukon, certain disputes relating to powers of attorney and guardianship – specifically whether an individual has mental capacity to manage their affairs – may be handled by specialised tribunals. Ontario’s Consent and Capacity Board determines disputes regarding capacity to consent to medical treatment, and the Yukon’s Capability and Consent Board reviews the decisions of care providers and substitute decision-makers.

Both arbitration and mediation are used to resolve private wealth disputes across Canada, with mediation being more common, and mandatory in some jurisdictions.

Jurisdictions Requiring Alternative Dispute Resolution (ADR)

The following jurisdictions require some form of ADR before a wealth dispute may be litigated.

• Alberta: parties to a wealth dispute must engage in ADR, like judicial dispute resolution or mediation, before a trial can be scheduled in the Court of King’s Bench. This requirement may be waived under certain circumstances, such as situations with a significant power imbalance.
• Saskatchewan: mediation is mandatory in civil proceedings, and the Court of King’s Bench may also order further mediation.
• Ontario: mediation is mandatory for contentious estates, trusts and substitute decision-making proceedings commenced in Toronto, Ottawa or the County of Essex, with discussion of the expansion of mandatory mediation through civil rules changes in the coming years. Elsewhere, the court may order mediation of such disputes.
• Quebec: under the Code of Civil Procedure (CQLR c C-25.01), parties must consider private dispute resolution before they may proceed to court.

Jurisdictions Encouraging ADR

In jurisdictions where ADR is not mandatory, it is usually encouraged by the courts. For example:

• in Nova Scotia and Prince Edward Island, judicial settlement conferences are available at any stage with the parties’ consent;
• during case conferences in British Columbia, New Brunswick and the Yukon, the court may direct the parties to participate in ADR; and
• in Newfoundland and Labrador, Nunavut and the Northwest Territories, the court may order mediation.

The parties may apply for ADR in the following jurisdictions.

• British Columbia: a party may compel mediation by issuing a notice to mediate, although the mediator may find that mediation is inappropriate, or the court may exempt one of the parties.
• Newfoundland and Labrador: parties to a wealth dispute, excluding family law proceedings, may seek a mediation order.
• Yukon, Nunavut and the Northwest Territories: parties may request conferences focused on settlement, including mediation. In the Yukon, the parties may also agree to binding arbitration.

ADR in Family Law Proceedings

Domestic contracts may require the parties to use ADR if they separate, and many jurisdictions also mandate family dispute resolution (FDR) before a family law dispute may be litigated.

Several jurisdictions and pieces of legislation mandate the use of FDR, including the following.

• The Divorce Act (RSC 1985, c 3) (2nd Supp): divorcing parties must attempt FDR where appropriate, and counsel are required to encourage its use.
• New Brunswick: FDR is required by the Family Law Act (SNB 2020, c 23), similar to the Divorce Act.
• Saskatchewan: parties must attempt dispute resolution by the close of pleadings, and the court may also order the parties to try again.
• Newfoundland and Labrador: mediation is mandatory for child support matters, but not for property division or spousal/partner support.
• Nova Scotia: court-assisted “conciliation” is mandatory in Halifax and Cape Breton for support disputes.

A different approach is taken in other jurisdictions.

• Manitoba, New Brunswick, Newfoundland and Labrador and Prince Edward Island: the courts may order mediation or FDR.
• Ontario, Nunavut and the Northwest Territories: the court may appoint a mutually agreed-upon mediator.
• Nova Scotia: mediation or settlement conferences require the parties’ consent.
• Quebec: an information session on family mediation is mandatory, plus parties are entitled to three to five free hours of mediation.
• Yukon: mandatory family case conferences ensure the parties are informed about ADR. Such conferences may proceed to a binding or non-binding settlement conference, or a case management conference.

The Modern Rule

While cost awards remain discretionary, the prevailing rule in civil proceedings – including wealth disputes – is that the losing party pays the successful party’s costs on a partial indemnity scale. Such cost awards must reflect a fair and reasonable amount, and are intended to promote settlement and discourage improper litigation conduct (see Lang-Newlands v Newlands, 2025 ONSC 2739).

The Impact of Settlement Offers

Where the successful party obtains a judgment equal to or better than a formal settlement offer extended to the losing party, the losing party may be required to pay higher costs for all steps taken after the offer was extended, so long as the offer complied with the procedural rules.

Elevated Costs

Courts may award substantial indemnity costs, full indemnity costs or solicitor-client costs, to deter and sanction litigation misconduct. Such awards are exceptional – solicitor-client costs require reprehensible, scandalous or outrageous conduct.

Elevated costs may also be awarded for:

• unproven allegations of fraud or undue influence;
• taking an unreasonable position during the litigation on relevant evidence or the admission of facts; or
• delaying the litigation.

Estate Litigation

The modern costs rule has been extended to estate litigation, to protect estates from being depleted by costs awards and discourage meritless litigation. However, the court must first assess whether public policy considerations require costs to be paid out of the estate. Such an order should be made where the deceased’s actions caused the dispute, or where the will’s validity was reasonably in question (see McGrath v Joy, 2022 ONCA 119).

The costs of the estate’s representative are also still usually paid out of the estate, to indemnify the representative for costs properly and reasonably incurred while acting within the scope of their office.

On appeal, the modern rule also applies. A successful appellant may receive full indemnity costs from the estate, if warranted, while an unsuccessful appellant generally will not receive costs. Courts may also order partial indemnity costs, so long as public policy considerations are not applicable, or a blended costs award.

Costs May Be Payable Out of a Trust

Trustee legislation in Ontario, Alberta, New Brunswick, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island authorises the courts to order that legal costs related to trust administration are paid from trust property, an estate or its income.

Under the common law, as per Kerry (Canada) Inc v Ontario (Superintendent of Financial Services), 2009 SCC 39, costs may be payable out of a trust where:

• the trustees seek the court’s advice regarding trust administration; or
• the beneficiaries raise genuine issues about the trust’s interpretation or administration.

However, costs for adversarial disputes between the beneficiaries should generally not be paid out of the trust property.

Trustees may also be denied indemnification if it would be inequitable to use trust assets this way, or if the litigation is ongoing and adversarial (see DeLorenzo v Beresh, 2010 ONSC 5655).

Family Law

The modern costs rule applies in family law but is flexible. The court may direct the parties to bear their own costs, depending on the circumstances (see Routkovskaia v Gibson, 2021 BCCA 463).

Courts may also award interim costs to ensure access to justice for parties who lack the resources to proceed. Relief is limited to cases where:

• the prima facie claim shows merit; and
• the exercise of this power is appropriate.

There is limited jurisprudence addressing the extent to which parties are inclined to litigate wealth disputes in Canada as compared to other jurisdictions. However, Canadian courts are well positioned to adjudicate disputes involving assets located inside or outside of Canada due to the recognition and acceptance of conflict of law rules.

A Canadian court may assume jurisdiction over a wealth dispute involving property located outside of Canada where there is a real and substantial connection to Canada. In Van Breda v Village Resort Ltd, 2012 SCC 17, the Supreme Court of Canada confirmed that once jurisdiction simpliciter is established, the court must take jurisdiction unless the doctrine of forum non conveniens is invoked. If invoked, the relevant criteria for assessing the forum conveniens will include:

• the location or residence of the parties, witnesses and evidence;
• the desirability of avoiding multiple proceedings and conflicting court decisions;
• the substantive law to be applied to the issues;
• geographical factors that suggest the natural forum; and
• any juridical advantage or disadvantage to the parties in each jurisdiction.

If the instrument at issue in a wealth dispute indicates that disputes are to be litigated in a particular jurisdiction, commencing proceedings in Canada is generally inadvisable. In Canada, it appears that choice of law clauses are more common in trusts or agreements, as compared to wills.

Limitation periods may also influence forum selection. Most provinces (including Ontario and Western Canada) impose a general two-year discovery-based limitation period. Recent case law confirms that even will challenges in Ontario and Manitoba are subject to these statutory limits. Where a claim is discovered outside that period, parties ought to consider pursuing relief in another jurisdiction, if possible.

Alternative Modes of Adjudication

Traditional trials remain available in Canada, but wealth disputes may also be determined through streamlined litigation procedures, including the following.

• Summary proceedings, like summary judgment, which permit disputes to be resolved on documentary and affidavit evidence. They are available where no genuine issue requires a trial. However, if there is conflicting evidence, incomplete records or issues of credibility, a dispute may be unsuitable for summary determination.
• Tailored hybrid procedures – in Cepuran v Carlton, 2022 BCCA 76, the British Columbia Court of Appeal encouraged the use of hybrid procedures if a party seeks to convert a petition into an action so it can be tried. Ontario courts have also used hybrid procedures in estate litigation, such as submitting evidence-in-chief by affidavit with limited cross-examination before the court, and submitting will-say statements from non-party witnesses.

These developments reflect the culture shift endorsed in Hryniak v Mauldin, 2014 SCC 7, where the Supreme Court encouraged the adoption of proportionate procedures to improve access to justice and reduce the cost of litigation.

Motions in Writing

Motions arising from wealth disputes may also be addressed entirely in writing in some jurisdictions. In Ontario, rule 37.12.1 of Ontario’s Rules of Civil Procedure (RRO 1990, Reg 194) allows motions to be decided entirely in writing when the motion is on consent, unopposed or made without notice. If a motion involves non-complex issues of fact or law, the applicant may also propose a written hearing, but the responding party retains the right to request oral argument.

Similar procedures exist in Prince Edward Island and New Brunswick.

Dismissal for Delay

The following provinces also allow dismissal of an action where litigation is not pursued diligently:

• Alberta and Manitoba – dismissal is mandatory if no significant step has been taken for three or more years, unless an exception applies;
• Ontario – an action may be dismissed for delay if it is not prosecuted in a timely manner; and
• British Columbia – an action may be dismissed for want of prosecution when progress is unreasonably delayed.

Discovery rules vary across provinces and territories, but all jurisdictions recognise two primary forms of discovery:

• document discovery; and
• examination for discovery, also referred to as questioning.

Document Discovery

The parties to a dispute must generally provide document discovery once the pleadings close. However, will challenges in many jurisdictions (including Ontario, Manitoba, Saskatchewan, Alberta and British Columbia) require the case to first satisfy a threshold screening process before document production is required.

When the threshold is met, the courts encourage proportionate document discovery, rather than “standard form fishing expeditions”. Document discovery in estate litigation often focuses on the deceased’s estate planning, medical records and similar personal documents.

For other wealth disputes, such as the division of matrimonial property or passing accounts for a trust or a power of attorney, comprehensive disclosure related to the assets at issue in the litigation, and their movement, is usually required.

Production of non-party records may also be available in some cases.

Examination for Discovery

The parties to the litigation may be questioned by each other on matters relevant to the issues in dispute. Corporations must designate a representative to speak on their behalf.

Third parties may also be examined if they have sworn an affidavit in the proceedings, or if leave of the court is granted.

Proportionality in Discovery

Courts will only compel discovery that is proportionate to the litigation. In Ontario, key factors include:

• the time and cost required to comply with the request;
• any risk of the request causing undue prejudice;
• whether compelling discovery will impact on the orderly progress of the action; and
• whether the evidence is available from another source.

This is not applicable in Canada.

Three primary forms of privilege arise in Canadian wealth disputes:

• solicitor-client privilege;
• litigation privilege; and
• settlement privilege.

Solicitor-Client Privilege

This type of privilege automatically protects confidential communications made for the purpose of seeking or giving legal advice, and normally survives the client’s death. In estate and trust disputes, courts may apply a wills exception to allow the disclosure needed to give effect to the deceased’s intentions. This exception generally applies only where a cause of action has been pled.

While the executor of an estate may waive the deceased’s privilege in estate litigation, the deceased’s lawyer may require a court order before they will disclose the client file, given that solicitor-client privilege is “as near to absolute as possible” (Allison v McBride, 2025 ONSC 2828). An order waiving privilege may be needed in order to provide for the production of lawyer files in the context of a will challenge, where there is no executor in a position to waive privilege or otherwise obtain and produce the records.

Solicitor-client privilege may be waived expressly or implicitly, depending on whether:

• the disclosure was repeated;
• retrieval of the record was promptly attempted; and
• preserving the privilege would cause unfairness.

However, inadvertent disclosure will not automatically extinguish solicitor-client privilege – for example, in Barbieri v White, 2024 BCCA 225, information regarding legal advice provided to an estate remained privileged despite its accidental release.

Litigation Privilege

Litigation privilege protects documents and communications created for existing or anticipated litigation, and usually expires once the proceeding ends.

In trust disputes specifically, a beneficiary may inspect a trustee’s legal advice related to the administration of the trust, but not communications related to defending the litigation (Cook v The Canada Trust Company, 2005 BCCA 112).

Settlement Privilege

To encourage frank and open settlement negotiations, settlement privilege protects communications intended to settle a dispute, plus settlement agreements. This form of privilege applies if:

• a dispute exists or is within contemplation; and
• communications are made with the intent that they would not be disclosed if the negotiations fail.

This privilege belongs to all participants, and may only be waived with unanimous consent, unless the court orders disclosure because it is in the public interest.

The burden of proof for will challenges is the balance of probabilities. Except for undue influence, the persuasive burden lies on the propounder of the will.

In Canada, a will can be challenged on the following grounds.

Lack of Testamentary Capacity

For a will to be valid, the testator must have capacity when it is executed. Both duly executed wills and valid holograph wills give rise to a rebuttable presumption of capacity. Evidence of suspicious circumstances will rebut this presumption and shift the burden of proof to the estate. Evidence used to challenge testamentary capacity often includes medical records, physicians’ testimony, expert opinions, and information from family and friends about the testator’s cognitive state.

Lack of Knowledge and Approval

A duly executed will or valid holograph will also give rise to a rebuttable presumption that the testator knew and approved of the contents of their will. Knowledge and approval is required for the will to be valid. Suspicious circumstances may rebut this presumption, and evidence indicating that the testator did not understand the will, or did not understand the extent of their estate, may be used to attack the testator’s knowledge and approval.

Undue Influence

While the burden of proof under the common law is on the will challenger to establish undue influence, in British Columbia, Section 52 of the Wills, Estates and Succession Act (SBC 2009, c 13) places the burden of proof on the person alleged to have unduly influenced the testator, so long as that person was in a position to dominate the testator.

Undue influence is usually proven through circumstantial evidence, as there is rarely direct evidence establishing that the testator was subject to coercion when they made their will.

Similarly, a will may be challenged on the basis of fraud, if a lie affected the testator’s testamentary intentions and motivated them to dispose of their property in a specific way.

Forgery

A will may be challenged on the basis that the testator’s signature is not genuine. Handwriting expert evidence is generally required, along with samples of the testator’s writing.

Revocation

A will can be attacked on the basis that it was either:

• revoked by a later will, in which case evidence establishing that a later will was executed will be necessary; or
• destroyed by the testator, in which case the challenger should establish that the original will was last in the testator’s possession and cannot be found. Under these circumstances, destruction of the will is presumed, unless the presumption is rebutted through other evidence.

Absence of Due Execution

Failures in witnessing or signing formalities may invalidate a will. However, because most jurisdictions now permit improperly executed wills to be validated by the courts, challenging a will on this basis may not be effective.

A will challenge may be commenced in Canada once a probate application is submitted, provided the challenger has standing – meaning they have a legal or financial interest in the estate. Generally, creditors lack standing. Will challenges are often brought by beneficiaries under a prior will or on intestacy.

Threshold Requirements

Many provinces require challengers to satisfy a preliminary threshold before the estate is required to defend the proceeding, including the following.

• Ontario and Manitoba – will challengers must provide some evidence which, if accepted, would call the will’s validity into question (see Neuberger v York, 2016 ONCA 191). If the propounder of the will provides a complete answer to the challenge, however, the threshold will not be met.
• Alberta, Saskatchewan and Newfoundland – a will challenger must show a genuine issue for trial in order to proceed with their challenge. Frivolous disputes may not proceed.
• British Columbia and Nova Scotia – these provinces do not have a threshold for will challenges that are heard summarily. However, in order to proceed to trial with viva voce evidence, a will challenger must obtain an order converting the matter into an action.

Document disclosure will not usually be ordered, unless the threshold is satisfied.

Limitation Periods

In Ontario and Manitoba, will challenges must also be commenced in time under each province’s legislation governing limitation periods. Courts elsewhere in Canada have not yet addressed this issue.

Wills in Canada may include in terrorem clauses, which place conditions on a beneficiary’s entitlement to receive a testamentary gift. To be enforceable, these clauses must provide positive direction for distributing the gift if the condition is not met, such as a gift-over, the gift vesting in another, or the gift being distributed as part of the estate residue.

While in terrorem clauses are commonly used as no-contest clauses, under which beneficiaries will be disinherited if they challenge the will, such clauses will be unenforceable where they seek to:

• restrict a beneficiary’s right to apply for dependant support (or to vary the will in British Columbia); or
• prevent court applications for guidance on will interpretation.

Such clauses are contrary to public policy in Canada; in terrorem clauses that restrain marriage are also invalid.

Every jurisdiction in Canada has legislation permitting a person to appoint a substitute decision-maker to manage their property and financial affairs if they lose capacity. Either a power of attorney or an enduring power of attorney may be executed. In most jurisdictions, an enduring power of attorney continues to operate after an individual loses capacity, but in Ontario a power of attorney for property also continues after the donor loses capacity if the document explicitly provides for this.

To be effective, the donor must have capacity when a power of attorney is executed. Powers of attorney must also be executed in the presence of witnesses, like a will. Some jurisdictions, such as British Columbia, New Brunswick and Nova Scotia, also require notarisation if the document will be used for property management.

If a person who does not have a power of attorney loses capacity, the court may appoint a substitute decision-maker, such as a family member or friend, or a government body such as a Public Guardian and Trustee.

In Quebec, substitute decision-makers may be appointed through either a mandate for property or a power of attorney.

In New Brunswick, the Supported Decision-Making and Representation Act (SNB 2022, c 60) also permits multiple levels of substitute decision-makers to be appointed. Donors may appoint a decision-making assistant, while the court may appoint decision-making supporters or representatives.

Attorneys cannot make wills or change beneficiary designations on behalf of a donor. However, a limited exception exists in New Brunswick – court-appointed decision-making supporters or representatives may make a will for a represented person if expressly authorised by a court order.

The most popular family business structures in Canada are sole proprietorships, partnerships and corporations.

Sole Proprietorships

With sole proprietorships, there is no legal separation between the owner and the business, making succession relatively straightforward. Through a will, the owner may leave the business to beneficiaries, direct the executor to wind it up or sell it, or grant an option to purchase or a right of first refusal to a beneficiary. Disputes may arise over the terms of an option to purchase, especially if the sale price is set below market value and the other beneficiaries object.

Partnerships

A partnership agreement is essential for succession planning involving a partnership. Without an agreement, the partnership will dissolve on a partner’s death. When that happens, both profits earned by the partnership and partnership property will be shared equally, regardless of differing contributions. Disputes may arise regarding:

• the valuation and distribution of partnership property and profits;
• who may purchase the partnership property; and
• how debts incurred prior to the partner’s death are to be allocated.

With a partnership agreement, on the other hand, a partner may be permitted to name their successor in their will, or the surviving partners may be required to buy out the deceased’s interest.

Corporations

Because a corporation exists as a separate legal entity, control of the corporation following a shareholder’s death may be governed by corporate documents, like a shareholders’ agreement, rather than the shareholder’s will.

A common technique in succession planning is an estate freeze, which fixes the value of the current owner’s interest in corporate shares at the date of the freeze. The owner typically exchanges their shares for fixed-value preferred shares, and new common shares are issued to successors so that future growth accrues to them. Estate freezes support intergenerational planning and may reduce probate fees.

If a shareholder separates from their partner, disputes may arise as to whether new common shares issued through an estate freeze are matrimonial property or are to be excluded as gifts or inheritances, and whether any increase in value should be shared. Disputes may also arise where documentation of an estate freeze is deficient or family members are excluded. An estate freeze may also be challenged on a variety of bases, including lack of capacity or knowledge and approval, and undue influence.

Canadian law is divided as to whether corporate assets may be disposed of through a shareholder’s will. Courts in Ontario and Manitoba allow this if the testator is the sole shareholder, whereas court decisions from Alberta and Saskatchewan suggest the opposite.

Transferring assets into a trust, foundation or similar structure will not automatically protect them from creditors. A transfer made solely to defeat creditors, such as an asset protection trust, may be set aside as a fraudulent conveyance.

Trusts can shield property from creditors, but only if they are valid and the settlor does not retain effective control over the trust property. Where the settlor continues to exercise such control, the trust may be considered a sham, in which case the property will revert back to the settlor and be available to creditors. The criteria for identifying sham trusts are addressed in Resendes v Maciel, 2025 ONSC 3263.

Two types of trusts may protect assets from creditors:

• irrevocable trusts, as the property is no longer considered the settlor’s; and
• discretionary trusts, where the beneficiary only holds a discretionary interest and no enforceable right to distributions – creditors of the beneficiary generally cannot compel payment unless property is distributed to the beneficiary.

If a spouse brings existing family wealth into a marriage, the other spouse may generally claim a share of any increase in that wealth during the marriage upon divorce. Matrimonial property legislation provides for the equal division of property acquired during the marriage, including growth in pre-marital assets, unless an unequal division is justified – for example, where one spouse dissipates assets.

Inheritances are treated differently. In Ontario, an inheritance received during the marriage remains excluded from division, including any growth in value, unless it becomes the matrimonial home or is co-mingled with joint property. In other provinces, in comparison, a spouse may not share in inheritance so long as it is kept separate, but may share in the increase in value of assets inherited during the marriage.

Where one spouse is a settlor or beneficiary of a trust, the other spouse’s entitlement to share in trust property may depend on the factors discussed in 5.1 Trusts, Foundations and Similar Entities.

Spouses may also set their own terms for the division of matrimonial property through prenuptial, postnuptial or separation agreements. In Anderson v Anderson, 2023 SCC 13, the Supreme Court of Canada emphasised that domestic contracts should generally be respected unless there is a compelling reason to depart from them, even where the parties did not obtain independent legal advice.

However, courts may decline to enforce an agreement if it is found to be significantly unfair. For example, in Bradley v Callahan, 2025 BCCA 69, a prenuptial agreement was set aside because it failed to account for the unanticipated substantial growth of the husband’s business and did not reflect the wife’s indirect contributions to the accumulation of wealth during the marriage. The courts may assess fairness both when the agreement was made and at separation.

Less serious flaws may lead a court to vary an agreement rather than void it entirely, as was the case in Davis v Jane, 2025 ONCA 752, in which the court adjusted the spousal support terms of a separation agreement to align with the objectives of the Divorce Act.

Domestic contracts may also be set aside for undue influence (see Lemoine v Griffith, 2014 ABCA 46).

If estate or trust property is distributed before pre-existing creditors are paid, the estate representative or trustee may face personal liability. However, trustee legislation in most provinces allows courts to relieve a trustee from liability where they acted honestly and reasonably and ought fairly to be excused for the breach or for not seeking court directions.

Where creditors emerge after the distribution of estate or trust property and the payment of other creditors, the defence of plene administravit may be available. This defence asserts that there are no assets left to satisfy the new creditor’s claim. Once raised, the creditor must prove that assets existed or should have existed to cover the debt.

A trustee may also argue that they cannot be held liable because they resigned before an estate distribution occurred. However, this defence will not succeed without clear evidence of a renunciation, as demonstrated by the court’s decision in Mingle v The Queen, 2022 TCC 34.

Limitation period defences may also defeat untimely creditor claims.

Beneficiaries of trusts and estates may pursue claims against fiduciaries, including trustees and estate representatives, for losses resulting from a breach of their obligations. Examples include:

• negligently or intentionally mismanaging or wasting estate/trust assets (devastavit) – honest mistakes should not attract liability, as the standard to be met by fiduciaries is honesty and reasonable skill and prudence;
• failing to act impartially among beneficiaries;
• conflicts of interest or self-dealing that prioritise the fiduciary’s interests at the expense of the beneficiaries;
• failing to pay legitimate estate or trust debts;
• carrying on the deceased’s business without an authorisation; and
• failing to properly account for assets.

To bring a claim, beneficiaries may sue a trustee or estate representative in their representative capacity in the jurisdiction where the fiduciary was appointed (see Hill v Hill, 2010 ABQB 528). Alternatively, the beneficiaries could also challenge the fiduciary’s accounts during a passing of accounts.

Beneficiaries may also seek to remove a fiduciary, so long as there is clear evidence that the estate or beneficiaries’ interests will be jeopardised if they remain in office. Refusal to provide accounts may also justify removal.

Creditors may bring claims against fiduciaries if a breach of their duty causes a financial loss.

Secured creditors of an estate may also pursue the estate’s representative personally if:

• debts are paid out of order;
• legacies are paid despite insufficient funds to pay the estate creditors; or
• the executor personally contracts to satisfy estate debts.

In British Columbia, individuals entitled to child or spousal support from the deceased may also sue the estate representative if the estate is distributed before confirmed support obligations are met (see Bouchard v Bouchard, 2018 BCSC 1728).

The Canada Revenue Agency (CRA) may also pursue an estate representative for the estate’s tax debt if any part of the estate is distributed before those taxes are paid (see Mingle v Canada, 2022 TCC 34).

Other third parties may also sue a fiduciary in a representative capacity where the claim relates to estate or trust obligations. For example, in Public Trustee v Guaranty Trust, 1980 CanLII 52 (SCC), the Supreme Court held that third parties may pursue an estate representative for wrongs committed by the deceased.

Piercing the Veil

In Canada, piercing the veil is traditionally associated with corporations, not trusts. The law regarding piercing the veil with a trust is currently developing in the family law context, and varies from province to province.

In Spencer v Riesberry, 2012 ONCA 418, the Ontario Court of Appeal held there is no veil to pierce in the context of a trust because trustees hold legal title of the trust property, whereas the beneficiaries hold equitable interests – unlike corporations, a trust cannot hold property. The court also noted that if it were to conflate or ignore the separate entities, “it would destroy the foundation of the trust relationship”.

In contrast, in Grosse v Grosse, 2015 SKCA 68, the Saskatchewan Court of Appeal held that the court must “pierce the veil” of a legal entity or device used to hold property, including trusts, when dividing family property.

On this point, Ontario courts have also recognised that trust property may be treated as family property where one spouse effectively controls it (see Tremblay v Tremblay, 2016 ONSC 588). Courts may also disregard a trust, thereby “piercing the veil”, if it is a sham trust or was created for an improper purpose, such as concealing ownership of property during the division of family property (see Resendes v Maciel, 2025 ONSC 3263).

Protection From Liability

While trustees may rely on exemption or exculpatory clauses for protection from liability, such clauses generally do not protect losses resulting from gross negligence (see Poche v Pihera, 1983 CanLII 1152 (AB KB)). Alberta and New Brunswick’s trustee legislation also allows courts to declare exemption clauses ineffective where the trustee’s conduct is unreasonable, irresponsible or incompetent.

Most Canadian trustee statutes also allow courts to relieve trustees from liability for breaches committed honestly and reasonably, where it would be fair to excuse them. Salient factors include whether the trustee was a professional or relied on expert advice, and the seriousness of the breach (Klaptchuk v Johnson, 2023 SKCA 25).

Trustee legislation in Western Canada, Ontario and Nova Scotia also protects trustees from liability for investment losses when their conduct is consistent with a plan or strategy and aligns with the prudent investor standard, even where investment functions are delegated.

Canada has no forced heirship regime. However, in many provinces, a surviving spouse may elect to receive an equalisation of family property rather than inherit under the deceased spouse’s will.

In Ontario, Section 5(2) of the Family Law Act (RSO 1990, c F.3) allows a married spouse to elect an equalisation payment within six months of death. Unless the will provides otherwise, this election will revoke any testamentary gifts left to the surviving spouse. Similar legislative provisions are in force in the Northwest Territories and Nunavut.

Similar relief also exists in Manitoba, Saskatchewan, Alberta, Nova Scotia, New Brunswick, and Newfoundland and Labrador:

• Manitoba and Saskatchewan allow both married and common law spouses to apply for equalisation;
• Alberta extends the right to married spouses and adult interdependent partners, so long as the claim could have been brought before the deceased spouse passed;
• Nova Scotia allows married spouses and those in registered domestic partnerships to apply for equalisation; and
• in New Brunswick and Newfoundland and Labrador, only married spouses may seek an equalisation payment.

British Columbia does not provide for equalisation payments. Instead, spouses may apply to vary a will under the Wills, Estates and Succession Act. This is seen as a limitation on testamentary freedom, rather than forced heirship, as eligibility to apply does not guarantee entitlement.

In Prince Edward Island, a married spouse may only continue an equalisation claim if it was commenced before death.

The entitlement to receive an equalisation payment is personal to the surviving spouse; the estate of the deceased spouse cannot initiate the claim (see Rondberg Estate v Rondberg Estate, 1989 CanLII 4153 (ON CA)). In some provinces, including Ontario, property that passes outside the estate may also be included in the equalisation calculation.

It also appears that a surviving spouse and the deceased spouse’s estate could enter a settlement to resolve a claim to equalisation. For example, in Gibbons v Livingston, 2018 BCCA 443, a mediated settlement between an estate and a common law spouse was upheld, as the outcome aligned with family property rights. A settlement may be appealing to a surviving spouse if it would be difficult to prove their entitlement to receive an equalisation payment.

Disputes regarding an election to receive an equalisation payment from the deceased’s estate may arise when:

• the spouse attempts to make an election after the statutory deadline has expired – courts may extend the time for making an election where the delay is in good faith and causes no prejudice to the estate or other parties (see Lundy v Lundy Estate, 2017 ONSC 2101);
• the surviving spouse seeks more than one-half of the family/matrimonial property; or
• the surviving spouse lacks capacity and a substitute decision-maker makes the election on their behalf – in such cases, the substitute decision-maker must show that the election benefits the spouse (see Lockhart v Lockhart, 2020 ONSC 7620, aff’d 2021 ONCA 807).

Disputes may also occur where the estate lacks sufficient assets to satisfy both the equalisation payment and testamentary gifts included in the deceased’s will. The equalisation payment will take priority, as equalisation payments are considered an estate debt, and the common law rules of abatement will determine the order in which gifts fail, unless the will directs otherwise (see Leith v Eccles, 2024 ONSC 4769).

If a surviving spouse elects for equalisation but the estate property is located outside Canada, enforcement becomes more difficult. A Canadian court can only enforce an order against assets within its jurisdiction; foreign enforcement requires proceedings to be commenced in the country where the assets are located.

If not all estate assets are relocated outside of Canada, the estate may be required to use the assets remaining in Canada to satisfy the equalisation payment, even if that means selling testamentary gifts left to other beneficiaries. This outcome could deter attempts to move assets abroad. Alternatively, if assets have already been distributed to beneficiaries in Canada, they may be compelled to return them. Creditors, including spouses, may pursue common law remedies to recover property received by beneficiaries, as noted in Peyton v Peyton (Estate of), 2014 MBQB 66.

Domestic contracts, such as marriage or prenuptial agreements, can limit or exclude equalisation rights if they are valid and enforceable, offering a means to avoid forced heirship.

Inter vivos transfers may also reduce the size of equalisation payment to which the surviving spouse is entitled, by shrinking the estate. This strategy is only effective, however, if the surviving spouse does not successfully challenge the validity of the transfers.

In Ontario, an equalisation payment may also be reduced if full payment would be unconscionable – for example, if the marriage was short or if the survivor dissipated assets recklessly.

In Canada, the CRA is responsible for ensuring tax compliance with the Income Tax Act (RSC 1985, c 1 (5th Supp)). Canada’s tax system is based on self-assessment; false or misleading filings may be penalised to ensure compliance.

In the context of private wealth, key CRA functions include:

• assessing and collecting personal and corporate tax, including capital gains;
• reviewing filings to detect discrepancies and undeclared foreign assets;
• auditing high net worth taxpayers to address avoidance or evasion; and
• imposing penalties and, in serious cases, pursuing criminal proceedings.

The CRA may enforce unpaid tax liabilities by placing liens on real property and seizing or selling assets. Garnishment of income or bank accounts is also available.

A legal representative, like a trustee or executor, may be held liable for unpaid taxes. Under Section 159 of the Income Tax Act, a legal representative is jointly and severally liable for a taxpayer’s outstanding taxes if they distribute assets without first paying tax.

Gatekeepers like lawyers and accountants who assist with tax planning or preparation may also face civil penalties under Section 163.2 of the Act for false statements leading to understated tax. These penalties aim to deter misconduct by advisers and are not intended to punish legitimate tax planning or good-faith errors, or differences of opinion where there is bona fide uncertainty.

Other civil regulators, like the Office of the Superintendent of Financial Institutions and provincial and territorial securities commissions, also indirectly influence private wealth management through market oversight.

In Canada, criminal enforcement pertaining to private wealth focuses primarily on financial crimes such as money laundering, terrorist financing and tax evasion. The CRA’s Criminal Investigations Program refers evasion and fraud matters, including those with international elements, to the Public Prosecution Service of Canada. Upon conviction, taxpayers must repay tax plus interest, and may face fines and imprisonment of up to five years for tax evasion and up to 14 years for fraud.

Gatekeepers, including lawyers and accountants, may also be prosecuted if they participate in or are wilfully blind to tax evasion. Under Section 239 of the Income Tax Act, assisting in evasion is punishable by up to five years’ imprisonment and fines of up to 200% of the tax evaded. Fraud offences under Section 380 of the Criminal Code (RSC 1985, c C-46) may result in imprisonment for up to 14 years. The CRA also targets promoters of sophisticated tax avoidance schemes, including offshore structures.

Gatekeepers also have a duty under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (SC 2000, c 17) to report suspicious transactions linked to money laundering or terrorist financing. Triggering activities include handling funds or virtual currency, and transactions involving securities, real property or business assets.

Canada is also establishing a new Financial Crimes Agency, announced in the 2025 budget, to lead investigations into complex financial crime and to improve the recovery of illicit proceeds.

Private criminal prosecutions may be initiated under Section 504 of the Criminal Code, but they are uncommon and often progress slowly or do not advance.

Under Section 504, anyone who reasonably believes an indictable offence has been committed may lay a private information by filing a form with a justice of the peace or provincial court judge. If the form is sufficient, a formal information setting out the alleged offence is prepared.

An ex parte preliminary hearing usually follows, where the informant must present credible evidence supporting the charge. The court then decides whether to issue a summons or warrant. The Attorney General may participate at this stage, and can cross-examine witnesses or present evidence. Legal representation is advisable at this stage, but informants cannot recover their costs, even if successful.

If the matter proceeds, the Attorney General will typically assume conduct of the prosecution, but may withdraw it if there is no reasonable prospect of conviction or if the public interest does not support continuing. In some cases, the Attorney General may also permit the informant to continue.

Private prosecutions motivated by retaliation or punishment risk being struck as an abuse of process, and may expose the informant to liability for malicious prosecution (see Ferreira v Marco, 2014 ONSC 1536).

Canadian courts may assume jurisdiction over cross-border wealth disputes where there is a real and substantial connection to Canada. In Van Breda v Village Resorts Ltd, 2012 SCC 17, the Supreme Court identified salient factors to consider, including where the defendant is domiciled or carries on business. Once jurisdiction simpliciter is established, the court must assume jurisdiction, unless a party successfully invokes the doctrine of forum non conveniens.

Another forum may be more appropriate based on a number of factors, including:

• the location of the parties, witnesses and evidence;
• the desire to avoid parallel proceedings;
• the applicable law;
• geographic considerations; and
• potential juridical advantages related to each jurisdiction.

If a judgment is issued in another jurisdiction, it may be enforceable in Canada if enforcement proceedings are commenced. However, Canadian courts will not generally enforce foreign tax or penal judgments due to the “revenue rule” and the rule against enforcing foreign public law. In Pro Swing Inc v ELTA Golf Inc, 2006 SCC 52, the Supreme Court held that orders to pay foreign taxes or penalties are not enforceable in Canada because they are a matter of public law, which Canadian courts cannot adjudicate on behalf of a foreign national. Provincial legislation may also bar enforcement of a foreign judgment where doing so would offend Canadian public policy.

Canadian courts may rectify mistakes in wills under the common law, although the evidence available to the court depends on whether it is sitting as a court of probate or a court of construction. A probate court may consider surrounding circumstances and direct evidence of the testator’s intent if approval of the wording is in question. When sitting as a court of construction, direct evidence of intent is not admissible.

Where an error is obvious on the face of the will, rectification may be granted if the language shows “the testator’s intention so strongly that no other contrary intention can be supposed” (see Isard Estate v Gunn, 2025 ONCA 139).

Where there is no ambiguity on the face of a will, rectification may only be ordered if there was a typographical or clerical slip, if the testator’s instructions were misunderstood, or if those instructions were not carried out (see Ihnatowych Estate v Ihnatowych, 2024 ONCA 142). Evidence from the drafting solicitor is usually needed to obtain rectification. If this relief is granted, the court may strike words or, in limited cases, add language.

Statutory rectification is available in British Columbia, Alberta and the Yukon, permitting courts in those jurisdictions to correct accidental slips, omissions, misdescriptions and failures to implement the testator’s instructions. In Alberta and the Yukon, the courts may add or delete words or provisions to carry out the testator’s intent.

Rectification is also available for trusts with drafting errors, or where the instrument does not reflect the settlor’s true intention (see Canada (Attorney General) v Fairmont Hotels Inc, 2016 SCC 56). If the trust appears to be unambiguous, the courts may review the surrounding circumstances (see RP Johnson Family Trust v Johnson, 2014 BCSC 1889).

In Canada, trustees and other fiduciaries may seek rectification or rescission to correct errors that cause unintended consequences. Rectification corrects documents that fail to reflect the parties’ true agreement or intent; rescission reverses a transaction affected by a vitiating factor such as mistake, duress or undue influence.

However, these remedies are restricted where the only issue is an unanticipated tax outcome. In Canada (Attorney General) v Fairmont Hotels Inc, the Supreme Court held that rectification cannot be used solely to avoid an unforeseen tax liability that results from the proper application of tax legislation. In Canada (Attorney General) v Collins Family Trust, 2022 SCC 26, the Court affirmed that rescission is likewise unavailable in such circumstances. Equitable relief cannot be used to rewrite or undo transactions simply to eliminate tax consequences.

Federal legislation, First Nations laws, treaties and cultural factors may apply where a private wealth dispute involves an Indigenous person. In fact, lawyers in many provinces are now required to receive Indigenous cultural-competency training.

If a status Indian lives on reserve or is entitled to be registered in the Indian Register, the validity of their will and the disposition of possessory interests in reserve land are governed by the Indian Act (RSC 1985, c I-5), but the disposition of other assets, such as cultural property, may instead be governed by First Nations law or modern treaties.

Matrimonial property disputes involving reserve land fall under the Family Homes on Reserves and Matrimonial Interests or Rights Act (SC 2013, c 20) (FHRMIRA), which provides specific rules for dividing the value of family homes or structures on reserves. First Nations may also enact their own laws under this statute.

In Canada, wealth disputes commonly arise where:

• an individual expects to receive or share in another’s wealth and that expectation is unmet;
• a person seeks to protect or transfer their wealth to prevent others from claiming against it; or
• there is insufficient transparency about the management of wealth, particularly by fiduciaries or spouses when they separate and divorce.

As Canada enters a period of significant intergenerational wealth transfers with the aging baby boomer population, such disputes are likely to increase. Longer life expectancies also mean that more litigation concerning mental capacity to manage property or make testamentary decisions is probable.