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Posted on October 1, 2009 | Posted in Collections

Sometimes, the only asset that a creditor can seize from a debtor is a bequest to the debtor under the will of someone who has died. The creditor must move swiftly because once the estate trustee pays the money, the debtor may not be forthcoming as to where it went. The goal is to intercept the payment. An attempted interception was the subject of Ker Estate v. DeRose, a 2009 decision of the Ontario Court of Appeal.

Sisterly Love 

Two sisters engaged in what we assume was bitter litigation relating to their father’s estate. At the end, the court ordered sister Andrea to pay sister Kirsten costs of $145,000, which Andrea failed to pay. Their mother had died in 2006. Her will stated that half of her estate was to be used to purchase a non-commutable annuity (i.e. once purchased, it could not be cashed in) payable to Andrea during her lifetime. The trustees could purchase this annuity in their discretion. Any money left over was to be used to purchase an annuity to be paid to Andrea’s son on Andrea’s death.

Before the estate trustees took the money from the estate to purchase the annuity, Kirsten garnished the estate trustees for the money Andrea owed her. It seems that Andrea did not care, but her son did. If his aunt scooped the money that otherwise could have been used for his mother and him, he would not get it.


The first question that the court had to ask was whether the money had vested in Andrea (i.e. could Andrea call on the trustees to pay the money to her or was payment contingent on the happening of some other event). The court held that the gift had vested in Andrea. The fact that the estate trustees had not yet purchased the annuity did not mean that Andrea could not enforce the terms of the will and ultimately call for payment.


Once the court made that decision, the grandson’s remaining arguments fell one by one. His arguments and the court’s responses follow:

1.   The decision failed to respect the wishes of the mother in her will. – Too bad. If you will your money to a debtor, a creditor can claim it.

2.   The estate had already purchased the annuity. – It had not. The trustees had made the annuity application, but it had not been completed.

3.   There is a difference between a beneficiary being able to call for payment under an estate and a creditor being able to call for payment. – No, there is not.

4.   The decision adversely affects the grandson. – Too bad. His interest was always contingent. Nothing in the will forced the trustees to provide for the grandson.


The court held that the garnishment was effective. That garnishment, we gather, depleted almost the entire amount of the monies that were to be used to purchase Andrea’s annuity.


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