Lovejoy v. Lin

Re: The Lake (2022)/Trusts and Estates

What is a trust?  Why would someone use a trust to transfer property?  Can you inherit less than a complete interest in real property?  If you do have a less than absolute interest does that put limits on what you can do with the property?

Sources:

Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, s. 5 (1), 10, 29-30.

Succession Law Reform Act, R.S.O. 1990, c. S.26, s. 2-3, 29-30.

Gertzbein v. Winer, et. al., [1970] 3 O.R. 676, 1970 CANLII 330 (ON SC).

Melms v. Pabst Brewing Co., 79 N.W. 738 (Wis. S.Ct. 1899).

Written, Researched, and Recorded by Céleste Young, 2023-2025.
Music: Out On My Skateboard - Mini Vandals

Waitisthatlegal@gmail.com

Transcript

A heads up for spoilers for the first season of The Lake on Amazon Prime. 

            Imagine an old man faced with his mortality and trying to put his affairs in order before the end.  His biggest worry is the fate of the family lake house.  His second wife never liked it and there was even talk of selling the cottage to buy a condo in Florida for her.  His only biological child, his son from his first marriage is estranged and living in Australia.  His stepdaughter loves the cottage and relies on it as a familiar place for her family to spend their summers because they move around a lot as her hockey-playing husband gets traded.  It would make sense to leave the stepdaughter the cottage, but then there is his biological granddaughter.  This granddaughter is the only child of his son and the reason for their estrangement.  The son gave his daughter up for adoption which the man believed was unforgiveable, and yet, now at the end of his life he wants to make it right and maybe provide a means for that granddaughter to share in her family’s legacy.  So, the man names his second wife as his heir, but gives the lake house to his stepdaughter, but in an addendum to the will he puts the lake house property into a trust.  The trust names the stepdaughter as the owner of the lake property until such time as she leaves the property permanently or her death; then the son becomes the owner of the property.  The man believes he has solved his dilemma, allowing his stepdaughter to enjoy the cottage potentially for her entire life, but then allowing it to go back to his biological heirs.  And it does work, up until the son returns to Canada and the lake to get to know the daughter he gave up to an open adoption and the stepdaughter wants to demolish the cottage to build a brand new structure on the property.

            This is the premise of the Amazon show, The Lake starring Julia Stiles.  In the show, Justin and his high school best friend give up the baby they had as teenagers to an open adoption.  Justin leaves Canada as soon as he graduates to move to Australia.  He gets married there and only communicates with his biological daughter through video calls and e-mails.  He is now divorced and decides to come back to Canada in order to make up for lost time with his daughter and to introduce her to the lake he loved as a child.  He then discovers that his stepsister, Maisy-May, now owns his family’s cottage and she is trying to get a permit to do drastic renovations to the cottage built by Justin’s grandfather.  Justin does not want the renovation to happen and the two stepsiblings spend the summer fighting over the cottage.

            What interest do Justin, Maisy, Billie, and Maisy’s kids Opal and Killian have in the cottage?  Can Maisy alter the cottage and can Justin stop her?  These are some of the questions that we can answer by exploring the topics of estates and trusts.

            First let’s look at the issue of trusts.  A trust is a legal relationship where one party arranges for property to be held and managed by another for the benefit of a third party.  The person who creates the trust is called the settlor or grantor; they are the original owner of the trust property.  The grantor creates the trust to benefit a third party or a class of people, known as the beneficiary or beneficiaries.  The person appointed to manage the trust is known as the trustee. There are many kinds of trusts, some are defined by how they are created, like a testamentary trust, or a constructive trust; others are defined by their purpose, like a charitable trust or a support trust.  Express trusts are created with a specific purpose or beneficiary in mind.  An express trust can be created during the lifetime of the grantor (known as an inter-vivos trust) or be created within a will or as part of a deceased grantor’s estate (a testamentary trust).  We will be dealing exclusively with an express testamentary trust, so I will not be expanding on the other types of trusts.  The biggest difference between an inter-vivos trust and a testamentary trust is that while the grantor is still alive they are still able to revoke or amend the trust at will, but if it is a trust formed by the grantor’s death, then the trust is usually irrevocable, unless the trust document provides otherwise.

            Express trusts are usually formed by writing, but could be created by an oral pronouncement of the grantor’s intent.  In order for a trust to be valid there must be the intent by the grantor to create a trust, the existence of the trust property, a valid purpose for the trust’s creation, ascertainable beneficiaries, and a designated trustee.

            In The Lake, the trust was created by Justin’s dad, whom I will refer to as The Dad, in an addendum to his will.  The trust is made for the express purpose of preserving the cottage for Justin’s heirs.  So, The Dad created an express testamentary trust that is in writing.  Ontario case law is very clear that the intent to create a trust is the most important factor in determining whether there is a valid trust.  Here, we know The Dad had the intent to create a trust because of the addendum’s use of the magic words, that it is called a trust.  This is above and beyond what the case law requires.  The trust property exists because the cottage is a physical building on real property that was owned by The Dad at the time of his death.  As the original owner of the lake property The Dad is the grantor and he has named Justin and Justin’s heirs as the beneficiaries.  By the time the trust was created, Justin was an alive and ascertainable beneficiary, so regardless of the status of his heirs; the trust can exist for his benefit.  The Dad designated Maisy-May as the trustee.

            There is an express purpose stated for the trust’s creation, to allow Maisy to enjoy the cottage, but for the property to ultimately pass to a blood relative.  It is the implication of The Dad wanting his biological heirs to inherit the cottage that might not be seen as a valid trust purpose.  Generally, modern courts are hesitant to honor conditions in a will or trust that names heirs of the body or blood relatives only, because modern families come in all forms and legal relationships are not always ones formed by blood.  However, when it comes to writing a will the courts will honor express terms even if they are discriminatory towards certain relatives.  Basically, the difference between a will granting property to a specific child or children, but expressly disinheriting other children, for example: the family farm will go to Alice and Bob, but Charlie is not to inherit any portion of the farm.  This is contrasted with a will that says something like: To my biological children I leave the family farm, and to my adopted son I leave nothing.  The court would likely accept the expressly named versions even if it turns out that Charlie is adopted and that is the real reason he has been left out of the inheritance; but when the will leaves it vague as to who are biological children and who is adopted, the court would likely entertain challenges made to the will’s validity.  Or if the testator is particularly bigoted and tries to disinherit their gay son’s adopted children, I leave the Family farm to my son and to my son’s heirs of his body.  In this case the Court would likely just strike out the heirs of his body language, because the son’s adopted children are legally his heirs anyway.

            Here, the fact that the Dad is trying to leave the cottage to his biological child, Justin, will not affect the validity of the purpose of the trust.  Maisy is not mentioned once as having been adopted by The Dad.  She refers to him as dad, but it seems that everyone is in agreement that Justin and Maisy are step-siblings.  This means that there is no legal relationship between Maisy and The Dad; she is not a legal heir to the estate.  She has inherited a limited interest in the cottage only by being named as a trustee.  The Dad’s legal heirs are his surviving spouse, Maisy’s mom, and Justin, his only child.  This was The Dad’s way of removing his wife from having any interest in the cottage she never enjoyed visiting and giving his stepdaughter a chance to enjoy the cottage before it would ultimately pass back into The Dad’s family.

             The interesting part of all of this is that Justin thinks his dad was trying to ultimately leave the cottage to Billie, the granddaughter The Dad never met but was upset with Justin for giving up for adoption.  If this had been the real purpose of the trust, The Dad needed to expressly name Billie as the beneficiary of the trust, because despite her being Justin’s biological daughter, she is not legally his child or heir.  This is for the same reason Maisy is not The Dad’s legal heir.  When a biological parent gives up their child for adoption they have to sign away their parental rights.  The adoptive parents then become the legal parents of the adopted child.  Adoption severs all legal ties between the biological parents and the adopted child, including inheritance rights.  This is because the child is now part of a new family and, presumably, they will inherit from their new parents, grandparents, etc. and it would be unfair, and illogical, for them to also inherit from the biological family that severed ties with them.  Of course, this does not prevent them from being named in a will by a biological family member.  A person writing a will can leave their estate to anyone they wish, from family members, friends, organizations, strangers, and even pets, so long as the court can identify who the entity is that is named and that they are real and alive.  So nothing was stopping The Dad from expressly naming Billie as a beneficiary of the trust or including her in the will, she was already born when The Dad died.  Similarly, nothing would prevent Justin from writing a will and naming Billie as his heir.  Billie would have to be expressly named as an heir in either situation to have any stake in the cottage, because she is not legally related to Justin or The Dad.

            This is a valid trust and because the grantor is now deceased it is likely irrevocable.  An irrevocable trust is exactly what it sounds like; it is a trust that cannot be revoked.  This means that there is no way for the trustee or beneficiaries to dissolve the trust and access the trust property.  Basically, an irrevocable trust allows the grantor to continue to control the trust property even in death.  The trust is only ended if there are conditions in the trust document that terminates the trust or upon the completion of the trust’s purpose.  In the Lake, the addendum is very clear that the ultimate purpose of the trust is to transfer ownership of the cottage to Justin.  The trust will not terminate until Justin is given full ownership of the cottage, which the addendum provides will happen either upon Maisy’s death or upon her abandonment of the cottage.

            Of course, because this is a legal concept it is not always so concrete and there are ways to revoke an irrevocable trust, but it would not be as easy as Justin and Maisy make it seem in the show.  To revoke an irrevocable trust there needs to be complete agreement by all designated trustees and beneficiaries of the trust.  Then that agreement would need to be signed off on by a judge.  Before the judge agrees to dissolve the trust there might be a hearing.  Overall, the judge is going to have to decide if the grantor’s intent and purpose in creating the trust is more important than the trustees and beneficiaries’ reasons for wanting to dissolve the trust.  The Dad’s intent is completely rational and reasonable, plus it is a simple purpose to execute.  The motivations of Maisy, to keep the cottage, massively renovate it, and ultimately pass it on to her children; and Justin, to cash out his future interest in the property so he can buy another property on the same lake; are not in keeping with the spirit of the trust purpose, nor are they even in either party’s best interests.  In particular, Maisy, as the designated trustee, would benefit much more from this arrangement and Justin, as the beneficiary of the trust, is essentially asking to sell his stake in his family’s cottage in order to potentially be able to buy a cottage on the same lake.  I do not think a judge would sign off on this agreement.  It would be different if Justin’s motivations were different; for example, if he wanted to stay in Australia forever or if he wanted to use the money to buy property somewhere else.

            Usually, a trust is dissolved because the trustee no longer wants to manage the property and the beneficiary would prefer to have full access to the property now, not in the future.  It is strange that Maisy and Justin thought this was how the trust would be dissolved.  In reality, if the judge agreed the cottage would have ended up either being distributed to the intended beneficiary or being placed back into The Dad’s estate.  Neither of these scenarios benefits Maisy and she would no longer have any interest in the cottage.  What happens in the show is that Maisy and Justin apparently sign an agreement and before Justin can tell Maisy it’s done, Maisy’s mother shows up to take ownership of the cottage as the heir to The Dad’s estate.  As her mother’s only child, Maisy appears to be her mother’s only legal heir and would eventually inherit the cottage from her.  This is only if Maisy’s mother doesn’t sell the cottage, get remarried, adopt another child, or expressly disinherits Maisy.  This scenario eliminates both Justin’s entire interest and Maisy’s present interest in the cottage which is so wildly against the express purpose of the trust that no judge would ever have agreed to it.  It also happens way too fast.  The more likely outcome in the real world would be that the Court would dissolve the trust and give the cottage to Justin, the beneficiary.  This is simply an acceleration of the trust’s purpose and is in keeping with grantor’s, The Dad’s, wishes for the property.

            The better way that Justin and Maisy could have resolved this conflict would have been for them to make an agreement that Maisy would abandon her interest in the cottage which would transfer ownership to Justin and terminate the trust.  Then Maisy could buy the cottage from Justin or do what Justin was planning and buy a different property on the lake.  This would be risky for Maisy because Justin wouldn’t have to sell her the cottage if he didn’t want to.  At least one of them would actually end up with possession of the cottage in this scenario.

            Really the best case scenario for Maisy would have been to stick to the status quo.  She would have been able to enjoy the cottage for her lifetime and could have saved the money she was going to use for the renovation or that she was saving by not having to buy or rent a cottage after her stepdad’s death; and given that money to Opal and Killian to buy their own cottage for after Maisy’s death.  Or, wild thought because they are both still in high school, but maybe Billie and Killian end up getting married and Justin names Billie as his heir and then both families end up owning the cottage in the distant future.

            So everyone’s interests in regard to the trust are: Justin is the beneficiary of the trust.  Maisy is the trustee and has control of the trust property in so far as to maintain it for Justin and Justin’s heirs’ future use.  Billie has no interest in the cottage, unless she is expressly named as Justin’s heir and even then would not have an interest until Justin dies.  Maisy’s husband and children have no interest at all.  Maisy’s mom has no interest in the trust, but if Justin were to die as he was in season one, divorced, single, no legal children, or surviving parents or siblings, then, barring a will naming his intended heirs, the trust property would have to revert back to The Dad’s estate.  Maisy’s mom as the heir to The Dad’s estate would then inherit the cottage.

            Now, let’s go back to before Justin and Maisy blew up their interest in the cottage in order to explore the exciting world of defeasible estates.  For the majority of the first season of the Lake the main conflict involved a massive renovation project Maisy had planned for the cottage.  This made Justin upset because his grandfather built the cottage and he doesn’t want to see it changed.  Maisy’s plans aren’t even just small upgrades, she essentially wants to tear down the cottage and build something new on the land.  Armed with the trust document Justin and Billie try to figure out a way to stop the renovation or get Maisy to abandon the cottage to trigger the transfer to Justin.  What no one seemed to ask was whether Maisy could even do the planned renovation due to Justin’s future interest in the cottage?  To answer this question we need to figure out exactly what kind of interest all parties have to the lake property and the cottage.

            In property law, when a grantor (the original owner of property) conveys property all at once, totally intact, and with no restrictions they do so in fee simple absolute (usually referred to as just fee simple).  So if Owen (the original owner, seriously law school, the bar exam, all examples ever are like this using the same first letter for the name as the letter of the role they have in the scenario) owns Blackacre (also all the properties are in the form of colour plus acre) and wants to give it to his son Abel, no strings attached, he would do so by stating in his will something to the tune of: I, Owen, grant Blackacre to my son, Abel (technically that is all he has to say, it is implied that it really says: I give Blackacre to Abel and his heirs in fee simple absolute).  As an owner of a fee simple interest, Abel has the full present and future possessory interests of the property and the complete freedom to do what he wants with the property or to sell it.  

            Courts prefer transfers to be in fee simple absolute, because they prefer that property be freely alienable, which just means that it can be sold, leased, or used however the new owner sees fit.  That being said, this is law we are talking about so nothing is ever quite as simple as fee simple absolute.  This is going to get really detailed, sorry about that.  I am going to do my best to simplify it.  [See Instagram, user Waitisthatlegal]  There are 4 ways a grantor can convey their property that puts restrictions on the grantee’s interests.  All 4 of these ways create both present possessory estates and future interests.  The present possessory estates can be in 1) a life estate; 2) fee simple determinable; 3) fee simple subject to condition subsequent; and 4) fee simple subject to executory interest.  The potential future interests are categorized as rights of reentry, reversions, possibilities of reversion, executory interests, and remainders.

            If Owen has a girlfriend (let’s call her Gretchen) he wants to provide for but ultimately wants Blackacre to go to his son, Abel, it could take the form of: I grant Blackacre to Gretchen for life and then to Abel (if Abel is Owen’s only child and heir, it would be implied he would get it when Gretchen dies, but it is always good to be specific).  This is a Life Estate, where the property is devised to someone for the span of that person’s life and then the property either reverts back to the grantor’s estate or goes to another named party.  The future interest in a life estate is called a remainder.  Alternatively, a testator can also grant a life estate to someone for the period of someone else’s life, this is a Life Estate pur autre vie.  So let’s say Gretchen is elderly and being cared for by Gretchen’s daughter, Barbara.  Gretchen might need to be put in a care facility, but Owen wants to make sure the property is available for her and that Barbara has somewhere to stay.  Owen could give Blackacre to Barbara for so long as Gretchen is alive.  After Gretchen’s death, the property would revert back to Owen’s estate and Barbara would no longer have any interest in Blackacre.

            Life estates are sort of in between the fee simple estate and the other defeasible estates because they have a lot less restrictions on the person who holds the present interest.  For example, a life estate is transferable.  So, in the example above, if Gretchen doesn’t want to continue living at Blackacre, she can sell her interest to the remainderman (Abel) or a third party.  If she sells to the remainderman then the life estate is over and Abel would have the full fee simple estate.  If Gretchen sells to a third party, they are only receiving the interest that Gretchen has in Blackacre.  So the third party is buying a present possessory interest in Blackacre for the life of Gretchen.  When Gretchen dies, the third party would no longer have any interest in Blackacre.  Life estates can also be treated like a fee simple estate and have defeasible interests attached.

            Now let’s say Owen and Gretchen are a bit younger, but both came to the relationship with children of their own.  Owen’s son Abel is already an adult and has moved out, but Gretchen’s younger daughter, Chloe, is still a minor.  Owen would like the house to go to his son but he doesn’t want Gretchen to have to move while Chloe is a minor.  Owen could give Blackacre to Gretchen until Chloe turns 18, and then to Abel.  This is a fee simple determinable interest where the estate terminates automatically at a named future event, in this case Chloe’s 18th birthday.  A fee simple determinable creates a possibility of reverter in the grantor, which is a future interest that allows the property to revert automatically back to the estate.

            Now let’s imagine that Blackacre is a centuries old family farm and Owen has been fighting local developers wanting to buy the land.  Owen’s son Abel has already purchased an adjacent piece of land and is farming it, so Owen wants to leave Blackacre to Gretchen and her kids, but only if they continue to farm it.  That would look like: Owen grants Blackacre to Gretchen, provided she continues to farm the land.  This is a fee simple subject to condition subsequent.  The grantor is conveying a fee simple interest in the land with a condition attached and should the condition occur the grantor has a right of reentry.  If the condition never occurs, then the grantee will have a fee simple absolute interest in the property.  In this example, Blackacre is conveyed to Gretchen with the condition attached that it continues to be used as a farm.  As long as Gretchen continues to farm the land she has a fee simple absolute interest.  If Gretchen tries to sell Blackacre to the developers, then Abel (as Owen’s heir) has a right of reentry and can prevent the sale and retake Blackacre.

            If Owen wants Blackacre to remain a farm, or at least undeveloped, and he does not trust Abel to do so; he could do something like: I, Owen, grant Blackacre to Gretchen, so long as the land continues to be used as a farm, if it ceases to be used as a farm or is sold to developers, then Blackacre should be donated to the local 4H chapter.  4H is an agriculture and livestock organization for kids (most often found in rural areas of the U.S. and Canada).  This is a fee simple subject to executory interest.  The grantor conveys the property with a condition attached to it, but instead of the grantor retaining a right of reentry the grantor names a 3rd party as having a possible future interest.  Here, Gretchen and her heirs have the present possessory interest in Blackacre and they continue to have it so long as they farm Blackacre.  The local 4H chapter has an executory interest in Blackacre and if Gretchen, or her heirs, stops farming or tries to sell Blackacre to the developers, then they can exercise that interest and take the property.  And because 4H is an organization they can be ascertained for as long as they exist and they would maintain the executory interest in Blackacre against all future owners of the property.  In theory, anyway, eventually there would likely be a point where the court would no longer enforce the condition because it is a restraint on the alienability of the property.

            Which of the previous types of present possessory estates does Maisy have?  And what type of future interest does Justin hold?  Using the addendum to his will, The Dad granted the cottage to Maisy essentially for life, but with the condition that should she abandon the property that it would then go to Justin.  Maisy has a life estate as a present possessory interest and interestingly it is also subject to an executory interest.  So as long as Maisy is alive and using the cottage she will maintain her life estate interest in the lake property.  Should Maisy ever choose to abandon the property, which would likely also include trying to sell it, then she severs the life estate.  Justin holds a future executory interest and is the remainderman of the life estate.  He would automatically receive the cottage in fee simple absolute at the end of Maisy’s life estate.  If Maisy abandons the cottage prior to the end of her life estate, then Justin would have the right to take the property in fee simple ahead of the natural termination of the life estate.  With a normal life estate, Maisy would have the ability to sell her interest to someone else, but in this case her selling the cottage would likely be interpreted as abandoning her interest in using the cottage which would trigger the executory interest.

            As the holder of a life estate, Maisy has certain duties that all revolve around not harming the future interests in the property.  These duties include general upkeep and repair of the property, paying mortgages and taxes, and the duty not to commit waste.  Waste is any action taken by the present possessory interest holder, here that is the life tenant, which adversely affects the future interests that follow the life estate.  Common law has 3 main categories of waste: Voluntary, Involuntary, and Ameliorative.  Voluntary Waste is any purposeful act that affects or changes the property.  It generally prohibited, especially when natural resources on the property are consumed, unless: the waste is committed in order to do repairs or maintenance, the life tenant has the permission of the remainderperson, or it is part of an ongoing operation begun by the grantor (ie. logging contracts approved by the grantor, or mining operations begun by the grantor can continue).  Involuntary waste occurs by the life tenant’s inaction like failing to do repairs and maintenance which allows the property to fall into disrepair.  The failure to make mortgage payments, to pay taxes, or to deal with special assessments levied by the local authorities are also forms of involuntary waste.  Ameliorative waste is an action that increases the overall value of the property but negatively affects the remainderperson’s future interest.  At common law, these changes were not allowed because it was assumed that the grantor intended the remainderperson to end up with the land exactly as it was before the life estate.  Modern courts generally allow ameliorative waste to happen when the action does not impair the market value of the remainderperson’s interest; or when the life tenant has the permission of the remainderperson; or if there has been a substantial and permanent change in the neighbourhood that has deprived the life tenant of the current value of the property.

            The Lake takes place in the Canadian Province of Ontario.  According to the laws of the Province of Ontario, a life tenant is impeachable for waste and liable for damages to the party injured.  Impeachable just means they can be sued.  Ontario also recognizes life estates without impeachment for waste (where the life tenant cannot be sued for waste).  However, even without impeachment the life tenant is not allowed to commit equitable waste, unless it is expressly provided for in the document creating the life estate.  Equitable waste is an English law concept that includes the types of permissible waste under common law, but allows that waste to be brought to a court of equity should the life tenant go too far.  Going too far is subjective, but is essentially destruction that is inconsistent with the fruitful use of the land.  Courts of equity are distinguishable from Courts of law because they focus on remedies that grant relief instead of compensation.  So where a court of law would likely deal with waste by compelling the life tenant to pay the victim for the lost value of the property; a court of equity could issue an injunction to prevent waste from happening, compel the life tenant to restore the land to its original condition, or even end the life estate early in favour of the remainderperson.

            The remainderperson of a life estate has several remedies available when a life tenant commits waste.  These include: monetary compensation for the loss in value due to the waste; forcing the life tenant to restore the property to its original condition; or accelerating the passage of title to the remainderperson by ending the life estate.  Some examples of remedies for voluntary waste: the life tenant (let’s call them Lou) discovers gold on the property and digs it up; the remainderperson (Ron) could sue for the decrease in the value of the property now that it has been excavated.  If Lou is simply continuing a mining operation begun by the grantor and they clear out all the gold; then Ron has no remedy or right to the gold.  Or in an example of involuntary waste: if Lou fails to repair damage to the roof of the house and it eventually causes major water damage; then Ron can sue the life tenant for the decrease in the value of the house caused by the damage or for the costs of fixing the damage and repairing the roof.  For an example of ameliorative waste: all the houses in the neighbourhood pave their gravel driveways and install solar panels on their roofs; so Lou also paves the driveway and installs solar panels which ensures the property value increases the same amount as the other houses. Ron is upset because the paved driveway and solar panels will require more upkeep in the future.  Ron will likely not be able to sue because the overall market value of the property has increased in line with the rest of the neighbourhood and it is not a change that alters the use of the property.  

            An example of how far this type of waste can go is illustrated by a Wisconsin Supreme Court case decided in 1899 (which is notably American, but still grounded in common law property principles).  In Melms v. Pabst Brewing Co., the Court found that Pabst did not commit waste when they demolished the Melms Mansion.  Pabst had mistakenly believed that they owned the mansion in addition to the property they owned around it, but they only had a life estate pur autre vie.  The Remaindermen of the estate sued Pabst for waste because they would have inherited the mansion.  The Court found that Pabst had not committed waste because the property where the mansion stood was now much more valuable without the mansion.  Pabst had demolished the mansion because the upkeep costs and taxes were more expensive than the property was worth and the neighbourhood had begun to rapidly industrialize.  So Pabst ended up tearing down the mansion and building the Pabst Brewing facility on the Melms property and his adjoining land.  The Court stated this was ameliorative waste and Pabst was not liable to the remaindermen because the property had increased in value and was being used in a manner consistent to the now industrialized neighbourhood.

            The Pabst case is unusual because as a general rule, tearing down the residence on residential property would be considered voluntary waste.  However, the Wisconsin court chose to look at the big picture and focus on the monetary perspective.  Keeping the mansion was not a fruitful use of the land and Pabst was losing money trying to maintain a residence in an industrial area, not to mention that the future enjoyment of the property as a residence would also be affected when your house is surrounded by factories and warehouses.  So, tearing down the house and building the Pabst Brewery was more in keeping with the common law idea of a life tenant using the land in a manner consistent with its fruitful use.  There might have been a different outcome if the remaindermen had sued Pabst before he demolished the mansion.  And Pabst would have been liable for waste if he had bulldozed the mansion and built a brewery in a largely residential area, even if it was more profitable.

            So how does this all tie in to the scenario in the Lake?  As the life tenant of the cottage, Maisy has the duty to pay all property taxes.  The cottage has been in Justin’s family for at least 2 to 3 generations and it seems that The Dad owned it outright, so there are likely no mortgage payments for Maisy to make.  There is a lake board that seems to include all the properties on the lake, so there are probably dues that have to be paid and Maisy would be responsible for those.  Maisy believed all this time that she inherited the cottage outright so she has probably been keeping up with the bills and repairs.  Maisy also has the duty not to commit waste and this is the real issue because of the massive renovation that Maisy has planned.  Maisy wants to tear down the old cottage and build a brand new one in its place.  This would likely increase the overall value of the cottage because of all the updates and the increase in square footage, but it is detrimental to Justin’s future interest.  So, Maisy would be committing Ameliorative waste.  Justin likes the family cottage the way it is because it has sentimental value to him.  He has not given his permission for Maisy to do her renovation nor has the lake changed in any substantial or permanent way that makes the renovation necessary.  From what we see of the other cottages on the lake, none of them are McMansions, so if anything Maisy is going against the current aesthetics of the lake.  Tearing down the cottage would also be equitable waste because it goes too far by destroying the one thing that makes the property unique and what makes it special to the future interest holder because it is the fact that the cottage was built by the grandfather that the Dad wanted to keep it in the family.  Justin’s only course of action would be to petition a local court for an injunction, which would prevent Maisy from tearing down the cottage.  The trust aspect of the situation would probably bolster this remedy because The Dad put the cottage into a trust to preserve it for Justin and tearing down the current cottage would run contrary to this stated purpose.  Not to mention that as the trustee of the property, Maisy also has certain duties that involve maintaining the trust property in favour of the beneficiary.

            Also, it doesn’t make sense for Maisy to commit the resources to the renovation.  As Justin points out, she would just be spending the money for the benefit of Justin’s heirs because once she dies it will not be passed on to her kids. This should be especially troubling for Maisy because it seems that Opal is doing most of the design work and though he may just enjoy the design process, he will only get to enjoy the finished product for a limited time because he and Killian have no future stake in the cottage.  Also, any of the time Maisy and her family have to spend not enjoying the cottage because it is under construction is ultimately just wasted, because they have a time limit on their enjoyment of the property.

            So what interests do all the parties have in the cottage?  And can Maisy go through with her renovation?  The cottage is the property of an express testamentary trust created, in writing, by The Dad as an addendum to his will.  The trust is likely irrevocable because the original settlor is dead.  Justin is the beneficiary of the trust and Maisy is the designated trustee.  The stated intent behind the trust is that Maisy can enjoy the cottage for the rest of her life and at the time of her death or her abandonment of the cottage, the trust property is transferred to Justin and Justin’s heirs.  Maisy was given a present possessory interest in the cottage in the form of a life estate subject to executory interest.  So long as Maisy continues to enjoy the cottage and make use of it she will have possession of it until she dies.  Should she abandon her interest in the cottage at any time before her death, then the executory interest would be activated.  Maisy’s kids, Opal and Killian, and Maisy’s husband have no legal interest in the cottage.  They can enjoy it as guests of their mother/wife for as long as she continues to enjoy the property or till she dies, but beyond that they are no longer entitled to any part of the cottage.  Justin is the remainderman of the life estate and holds the executory interest in the event the life estate terminates early.  Justin’s heirs also hold these future interests, but currently Justin does not have any legal heirs.  Billie is Justin’s biological child, but she is adopted so she no longer has any legal ties to Justin.  Justin could write a will and name Billie as his heir to the cottage, but that does not seem to have happened, he seems to believe that Billie still has legal rights of inheritance as his biological daughter, but he is sadly mistaken.  Without action taken by Justin, Billie does not have any legal stake in the cottage.  Maisy’s mom has no interest in the cottage, unless Justin dies without heirs and his remainder and executory interest revert back to the Dad’s estate.

            Maisy and Justin’s attempt to revoke the trust would not have been successful because it would have taken a lot more than a handshake and a bet, and more than a signed piece of paper.  The trust has a clear purpose and an ascertainable beneficiary so the only way it could be revoked would be if a judge agreed with Maisy and Justin’s agreement, which is just not likely.

            And finally, Justin might be able to get an injunction to stop Maisy from demolishing the cabin but he wouldn’t be able to stop her from making changes and improvements within the current structure.  Any money Maisy puts into cottage at this point will benefit her enjoyment of the cottage and Justin’s future enjoyment, her kids and husband cannot recoup those costs even if it increases the value of the property because it is ameliorative waste.  Overall, the deal Justin and Maisy make would not have been in either of their interests.  Justin wants a cottage to stay at on that lake to be connected to his family history and create new connections with his daughter, Billie.  Maisy May wants a cottage as a home base for her family in the hockey off season and that will be passed to her sons to enjoy with their future families.  She also wants to be able to design and build her dream house and let Opal be a part of that process. The easiest solution here is to let Justin have his family’s cottage and for Maisy to buy land on the lake to build a new cottage.  Of course, all of this could probably have been avoided if The Dad had been more upfront about his intentions for the cottage.

Thank You for Listening.  This show is researched, written, and recorded by me, Céleste Young.  None of the legal advice or opinions expressed in this episode are intended as specific or individualized legal advice.  Please like, subscribe, rate, or review this podcast if you enjoyed it.  If you have any questions or comments, please e-mail them to Waitisthatlegal@gmail.com.  You can find the Podcast on Twitter, Facebook, and Instagram.

Again, wills are very important when you have assets you want to control the future of, but it is also important to make sure anyone involved is aware of what those intentions are.