Family businesses often present unique estate planning challenges. When ownership, income, and management responsibilities are shared among family members, misunderstandings can arise about who owns what and who is ultimately entitled to benefit from business assets.
The Alberta Court of Appeal's decision in Ferguson Estate (Re), 2025 ABCA 94 serves as a valuable reminder of the importance of documenting lifetime gifts, maintaining accurate corporate records, and ensuring that estate planning documents clearly reflect a person's intentions.
The Dispute
The case centered on a family-owned corporation that generated royalty income from oil wells in Texas.
The deceased had long received income from the corporation and relied on it as a significant source of financial support during her lifetime. After her death, a dispute arose between two of her children concerning ownership of the corporate shares and the proper interpretation of her will.
One child argued that their mother had gifted the corporation to her years before the will was signed. The other maintained that the corporation remained part of the estate and that the deceased intended all four children to share equally in the economic benefits generated by the business.
The disagreement ultimately required the Court to examine both the alleged lifetime gift and the deceased's intentions as expressed in her will.
Informal Gifts Can Create Significant Problems
A central issue was whether the deceased had gifted the corporate shares to one child during her lifetime.
Claims involving lifetime gifts often arise after death, when the person who allegedly made the gift is no longer available to explain what happened.
In many cases, the outcome depends heavily on documentary evidence.
When someone genuinely intends to give away significant assets during their lifetime, it is generally wise to create clear records of the transaction, including:
- Gift documents;
- Share transfer records;
- Share certificates;
- Corporate resolutions;
- Tax records; and
- Other supporting documentation.
The absence of such records can make it difficult to prove that a gift was ever intended.
Actions Often Speak Louder Than Words
One of the most important aspects of the decision was the Court's focus on how the deceased continued to treat the corporate assets.
The evidence showed that, long after the alleged gift, the deceased continued reporting the business income as her own for tax purposes and continued to benefit from the existing income structure associated with the company.
Courts frequently look beyond claims made after death and examine objective evidence that existed during the deceased's lifetime.
Financial records, tax filings, business documents, and conduct often provide some of the most persuasive evidence of ownership and intention.
When those documents are inconsistent with a claimed gift, establishing the gift can become very difficult.
The Importance of Corporate Record Keeping
The case also demonstrates how poor corporate record keeping can complicate estate administration.
Many family-owned businesses operate informally for years. While this may seem manageable during the owner's lifetime, problems often emerge after death.
Corporate records should accurately reflect:
- Share ownership;
- Director appointments;
- Share transfers;
- Corporate resolutions; and
- Changes in control.
When ownership records are incomplete or inconsistent, the resulting uncertainty can create years of litigation and significant expense.
Interpreting a Will in Context
Another major issue involved the interpretation of the deceased's will.
The court's task in any will interpretation case is to determine the testator's intention.
This requires consideration of:
- The language used in the will;
- The will as a whole; and
- The surrounding circumstances known at the time the document was prepared.
The Court concluded that the deceased intended all four of her children to benefit equally from the royalty income generated by the family business.
Importantly, the Court evaluated the practical and commercial realities of the corporate structure rather than focusing solely on technical distinctions between related entities.
The decision demonstrates that courts will often look at the broader context when determining what a testator intended to accomplish.
Estate Administration Requires Neutrality
The case also highlights the responsibilities of personal representatives.
When a personal representative is also a beneficiary, conflicts can arise.
A personal representative must administer the estate:
- Honestly;
- Transparently;
- Even-handedly; and
- In the best interests of all beneficiaries.
That duty exists even when the personal representative believes they have a stronger claim to certain assets.
Proper disclosure and communication are essential to maintaining trust throughout the administration process.
Lessons for Business Owners
Business owners can draw several practical lessons from this decision.
Document Lifetime Gifts
If shares or other business interests are being gifted, ensure that the transfer is properly documented and reflected in corporate records.
Keep Corporate Records Current
Incomplete share registers, missing resolutions, and outdated records can create significant problems after death.
Review Tax Reporting
Tax filings should align with the ownership structure being asserted.
Draft Wills Carefully
Business interests should be described clearly and accurately. Ambiguity can create unnecessary disputes among family members.
Consider Succession Planning Early
Succession planning should form part of a comprehensive estate plan rather than being addressed informally over time.
The Bottom Line
Ferguson Estate (Re) illustrates how disputes can arise when estate planning, family relationships, and business interests overlap. The decision reinforces the importance of consistency. Lifetime gifts, corporate records, tax treatment, and estate planning documents should all work together to tell the same story.
When they do not, courts may be left to reconstruct the deceased's intentions years later through costly litigation.
MerGen Law is Here to Help You
At MerGen Law, we assist clients throughout Alberta with estate planning, family business succession planning, shareholder disputes, estate administration, will interpretation issues, and estate litigation. Whether you are planning for the future or dealing with a dispute involving business assets after a loved one's death, we are here to help.
This article is intended for informational purposes only and does not constitute legal advice. Individuals facing concerns about wills and estates should seek professional advice tailored to their specific circumstances.