Who Bears the Burden: Estate Litigation Costs in BC

In BC, estate litigation costs traditionally fell on the estate itself, but modern approaches have shifted toward “costs follow the event,” where unsuccessful parties typically pay the successful party’s costs. However, special circumstances exist where the estate bears costs, such as when unclear will provisions necessitate court intervention or when reasonable capacity claims are brought. You will need to contemplate executor responsibilities, potential financial consequences, and litigation alternatives before proceeding with estate disputes.

The Traditional Approach: Estate Pays Litigation Costs

Historically, estate litigation in British Columbia followed a traditional approach where the estate itself bore the financial burden of legal proceedings. This principle was based on the rationale that when a will-maker’s actions—such as creating an ambiguous will—necessitated court intervention, the resulting costs should be considered administrative expenses of the estate.

Estates traditionally absorbed litigation costs when testator actions necessitated court intervention in British Columbia.

Under this approach, you would not be personally responsible for legal costs when participating in legitimate disputes over will validity, testator capacity, or document interpretation.

Courts recognized that interested parties should not face financial penalties for raising reasonable concerns. This policy encouraged all relevant voices to be heard without fear of devastating financial consequences.

The key question courts asked was whether the litigation was forced by the testator’s conduct or by the actions of primary beneficiaries, rather than simply who “won” the case.

The Modern Shift: Costs Follow the Event

While the traditional approach dominated for decades, BC courts have undergone a significant shift in how they allocate costs in estate litigation matters.

Today, the default position is that costs “follow the event,” meaning the unsuccessful party typically pays the successful party’s legal expenses.

This shift was cemented in Singh Estate (2019), where Justice Silverman outlined the current approach. Courts now have discretion to award costs against unsuccessful litigants unless special circumstances exist.

You will only avoid paying costs if the litigation arose from the testator’s actions (like unclear wording) or if you would reasonable grounds to question capacity or undue influence.

As a litigant, you should understand this fundamental change—courts now treat estate disputes more like regular civil litigation regarding cost consequences.

When Testators Create Their Own Problems: Unclear Will Provisions

Sometimes will-makers themselves create the very circumstances that lead to estate litigation, particularly through unclear or ambiguous will provisions. When this happens, courts often revert to the traditional approach of having the estate bear the litigation costs rather than the unsuccessful party.

The rationale behind this approach includes:

1. The will-maker’s conduct (ambiguous wording or instructions) necessitated the court’s intervention
2. All interested parties should have the opportunity to be heard without financial penalty
3. The cost of clarifying the will-maker’s intentions is considered a reasonable administrative expense of the estate

This principle acknowledges that beneficiaries should not be penalized financially when forced to seek judicial clarification of a will’s meaning due to the testator’s lack of clarity or precision in expressing their final wishes.

Special Circumstances: Capacity and Undue Influence Claims

Claims involving testamentary capacity and undue influence represent a distinct category in estate litigation cost allocation.

When you challenge a will on these grounds with reasonable justification, you are typically protected from adverse cost consequences even if your claim is unsuccessful. Courts recognize that these inquiries serve the public interest in ensuring wills genuinely reflect decedents’ wishes.

According to the Singh Estate decision, if you have reasonable grounds for bringing an action regarding capacity or undue influence, costs will not be awarded against you despite an unsuccessful outcome.

However, you must demonstrate that your concerns were legitimate and not frivolous. The court maintains discretion in all cost awards, weighing factors such as the reasonableness of your position and whether the decedent’s conduct contributed to confusion.

Executor Responsibilities and Cost Recovery

Executors shoulder significant fiduciary duties in estate litigation, including their obligation to defend the will when its validity comes into question. When challenges arise, you are required to prove the will in solemn form, fundamentally validating it through formal court proceedings.

Your key responsibilities include:

Executors must administer assets properly, manage real estate under WESA, and may recover reasonable expenses while fulfilling their duties.

1. Administering the estate properly by collecting assets and paying debts before distribution.
2. Managing real estate as personal property in accordance with Section 162 of WESA.
3. Seeking reasonable cost recovery from the estate for expenses incurred while performing your duties.

The courts generally recognize that reasonable litigation costs should be reimbursed from the estate when you are acting in good faith.

However, you will not recover costs if you have behaved unreasonably or if the litigation resulted from your own misconduct.

Failed Claims and Financial Consequences

When parties pursue unsuccessful claims of undue influence, fraud, or other challenges to a will’s validity, they face serious financial consequences.

Unlike standard estate disputes, where costs might be paid from the estate, failed challengers typically bear their own legal expenses plus those of other parties. This approach was confirmed in cases like Morton and Kouwenhoven Estate, where courts held that unsuccessful plaintiffs should be responsible for the entire cost of their actions.

If you are considering contesting a will, you should evaluate your evidence carefully before proceeding.

The BC Supreme Court Rules (particularly Rule 25-15(4)) offer some protection for respondents seeking proof in solemn form, but this will not shield you from costs if your position is deemed unreasonable or frivolous.

Practical Considerations Before Initiating Estate Litigation

Before rushing into estate litigation, you should carefully weigh several practical considerations that could greatly impact both the outcome and your financial situation. The modern approach to costs typically follows the event, meaning unsuccessful parties often bear significant financial burdens.

1. Evaluate the strength of your claim by considering whether the dispute stems from the will-maker’s actions (unclear wording, questionable capacity) or from beneficiary disagreements.
2. Assess your financial capacity to withstand potential adverse cost orders if you are unsuccessful, as litigation can deplete both personal resources and estate assets.
3. Consider alternative dispute resolution methods like mediation, which can preserve family relationships and estate assets while avoiding the unpredictability of court-awarded costs.

How Vest Estate Law Can Help

Steering through the complex landscape of estate litigation costs requires specialized expertise that Vest Estate Law is uniquely positioned to provide.

As a boutique firm dedicated exclusively to wills and estates law across Alberta and BC, our team brings focused knowledge to your specific situation.

When you are facing potential litigation, we will help you understand cost implications before proceeding, evaluate the likelihood of success, and develop strategic approaches to minimize financial exposure.

Our specialized experience allows us to navigate the nuanced rules governing estate litigation costs, whether advocating for traditional estate-paid costs or defending against personal liability.

You do not need to tackle these complex legal and financial challenges alone.

Work with a firm that concentrates solely on Estate Law and excels at litigation when necessary.

Frequently Asked Questions

Can Mediation Reduce Litigation Costs in Estate Disputes?

Yes, mediation can reduce your litigation costs by promoting early settlements, avoiding trial expenses, and keeping disputes out of court, while preserving family relationships during estate conflicts.

How Are Costs Calculated When Multiple Parties Are Involved?

When multiple parties are involved, courts apportion costs based on who “won” or “lost” on specific issues, or assign blame proportionally if there is no clear winner in the dispute.

Are Litigation Costs Tax-Deductible for Estate Beneficiaries?

No, you cannot deduct estate litigation costs as a beneficiary. These expenses are not considered tax-deductible for personal income tax purposes under Canadian tax laws.

Can Litigation Costs Be Paid From Specific Estate Assets?

Yes, you can pay litigation costs from specific estate assets, but this typically requires court approval and must comply with the executor’s fiduciary duty to manage estate funds responsibly.

How Long Do Cost Assessment Proceedings Typically Take?

Cost assessment proceedings typically take 3-6 months after the order, but you will find this timeline varies depending on case complexity and court schedules in your jurisdiction.

Conclusion

You are now facing a more complex cost landscape in BC estate litigation. Courts typically award costs to successful parties, though exceptions exist when testators create confusion. Before proceeding, carefully evaluate your position, evidence strength, and financial risks. Understanding these cost implications will help you make informed decisions about whether to pursue litigation or seek alternative resolution methods for estate disputes.