Estate Planning for the Newly Separated Spouse – Hull on Estates Podcast #125
This week on Hull on Estates, Ian and Suzana bring us up to date on what has been happening at Hull and Hull over the summer. Jordan Atin appeared on Canada AM to talk about how to avoid The Family War. They have also added two books to their recommended reading list:
Duct Tape Marketing by John Jantsch
Endless Referrals by Bob Burg
Ian and Suzana then discuss issues to consider in estate planning for the newly separated spouse. They talk about the two different types of claims that can be made: Equalization and Claim for support.
A new Hull and Hull breakfast series will take place on Wednesday, October 8, 2008 and participants are encouraged to attend either via webcast or in person. You can also contact Hull and Hull by leaving a message or question with any of the following:
Send us an email at email@example.com, call us on the comment line at 206-350-6636, or leave us a comment on the Hull on Estates blog.
Estate Planning for the Newly Separated Spouse – Hull on Estates Podcast #125
Posted on August 26th, 2008 by Hull & Hull LLP
Suzana Popovic-Montag: Hi and welcome to Hull on Estates. You’re listening to Episode #125 of our podcast on Tuesday, August 26th, 2008.
Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada. Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and wills. Now, here are today’s hosts.
Suzana Popovic-Montag: Hi and welcome to another episode of Hull on Estates. I’m Suzana Popovic-Montag.
Ian Hull: And I’m Ian Hull. And I want to welcome everyone and remind you to please give us your feedback. Call-in number is 206-350-6636, that’s 206-350-6636.
Suzana Popovic-Montag: Or you can feel free to give us an e-mail at firstname.lastname@example.org and of course you can visit our blog, our daily blog, at estatelaw.hullandhull.com.
Ian Hull: Well Suzana, we are going to cover a few topics today on Hull on Estates. One of them is our post-Olympic wrap-up, more or less, our summer wrap-up. We’ve had a busy summer here at Hull & Hull. Been working through some new technology on Hull on Estates and Succession Planning. For those of you who are interested, we’re trying to launch and certainly will have up shortly if its not up by the time this podcast is launched, is our other podcast is going to be on YouTube and we’re trying to do it in the format of video and audio. So we’re having some fun with that and trying that out this summer.
We’ve also had a busy summer, our associate counsel Jordan Atin spent the week on Canada AM in early August, having some interviews and dealing with the age-old question of how to avoid the family war. We had a great summer dealing with some of the media. Actually generally at Hull & Hull, one of the things that we were able to do was have an interesting interview with the magazine called CARP. And that’s the Canadian Association of Retired Persons. We were good enough to be quoted in the August, 2008 edition and it was all about the family feud. We talked a lot about some of the different problems that arise in the context of the family feud and the author really dove into, Jennifer Walker was the author of the article. And she talked about the fact that boomers are set to inherit a trillion dollars over the next years, in the next decade from their parents, and dealt with how to plan your estate the right way to avoid the battle royale. So we’ve been spending a lot of time this summer trying to get out our message of equal isn’t always fair and ways to somehow make your intentions clear.
Suzana Popovic-Montag: We’ve also done a lot of reading as well, Ian, as you know. And we’ve added to our recommended reading heading under our web page some of the great books that we’ve come across over the course of the summer, including Duct Tape Marketing, which talks about the world’s most practical small business marketing guide, by John Jantsch as well as Endless Referrals: Network your everyday contacts into sales, a great book by Bob Burg.
Ian Hull: So you can hit our web page under the links and we continue to update our recommended reading list. We’ve got quite a few books on there now. I know I also finished up Blink this summer, The Power of Thinking Without Thinking, by Malcolm Gladwell. And that was one of those books that I read in the spring and then had to re-read parts of it in the summer when I had some more time because it was a terrific book.
So for today’s podcast, we’re going to talk about sort of in brief, some issues to consider in the context of estate planning for the newly separated spouse. We know that historically here in Ontario, we work with a community of property regime. And that regime is consistent throughout many, many, well all provinces and many, many states in the United States. And it is coming into vogue in many other European countries such as in the UK for sure. So this community of property, basically the concept is that a newly separated spouse is entitled to sit down and do the math and the spouses are supposed to equalize their net worth at the end of the day, based on the increasing value during their relationship. Now that’s the historic sort of framework that here in Ontario we are always working from. But we wanted to talk a little bit today about the nature of the claim, who can make that claim and maybe some protective steps that can come about that.
So Suzana, when we’re dealing with the nature of the claim, there are sort of two types of claims that a newly separated spouse may want to consider. The first is what I’ve talked about, and that is the idea of an equalization.
Suzana Popovic-Montag: And the second, of course, is a claim for support under, here in Ontario, the Succession Law Reform Act. And that claim arises in situations where someone, namely a dependant, someone who fits within the definition of that term dependant, can demonstrate that they have not been adequately provided for by the deceased, either in his or her Will, or by virtue of an intestacy.
Ian Hull: And so if we’ve got these two core claims, the equalization claim itself, of course, is made through what is a relatively cumbersome process of sitting down and creating sort of a list of all of your assets and liabilities, looking at the value of those assets and liabilities as at the date of marriage, and then looking at them as at the date of separation. And when we talk about the newly separated spouse, of course we don’t want to forget that a separated spouse could be permanently separated by death, of course. So that calculation comes into our world fairly regularly. And it’s interesting when you do that calculation, how much of a difference the detail makes. And one of the things that we like to tell our clients is that if you are in a situation, whether you are happily married or you about to be newly separated, there is a lot of good reason to keep careful records of your own personal records, because then you can really sit down if you’re forced to this because of an untimely death on a more positive note, sit down and calculate this, you will have your record. So it’s worth holding on to some bank records and holding on to your personal affairs records as best you can.
Suzana Popovic-Montag: And when you talk about records, Ian, I think you’re referring to lists of, for instance, assets and liabilities, as of the date of marriage, so that when it comes to doing this cumbersome calculation at the end of the day, you’ve got a listing of everything that you own, both personal and real property wise, together with mortgages or a listing of all other liabilities that you’ve incurred prior to marriage.
Ian Hull: So that’s the way you make a claim, and you do it, in our jurisdiction, under the Family Law Act. And making a claim as a dependant is done almost similarly. You bring an application into the Court and you put to the Court your circumstances, your financial circumstances. And you apply to the Court for support.
Suzana Popovic-Montag: And one of the things that we try to keep in mind when we’re dealing with newly separated spouses is that whether or not someone has actually been married does matter for the purposes of an FLA or Family Law Act election, whereas a spouse is defined differently under the Succession Law Reform Act.
Ian Hull: And its defined more broadly, which of course is sensible and picks up on things like same-sex relationships, things like common-law relationships. If it’s a relationship of three years of some permanence, the right to pursue a claim is eliminated if you’re in a common-law situation under the Family Law Act but you’re saved, so to speak, or preserved, under the Succession Law Reform Act. So that’s an important, sort of, stepping stone into the process.
Now one of the things that people often ask us is how important is a domestic contract in both these claims, in the family law context and in the dependant’s relief context? And we want to sort of carefully look at the contract in each situation. In the family law context, obviously if the claim is, if the contract is created in the right environment, I mean by a properly, independently advised situation with lots of disclosure, these contracts when you go to elect, can be very cumbersome and can be very strong and enforceable.
Suzana Popovic-Montag: And you can sort of contrast that to a dependant’s relief situation when you’re making an application for support where, at least here in Ontario, the existence of a domestic contract is one of the factors that a Court will take into consideration when determining whether or not support ought to be awarded. And so we’ve come to sort of view domestic contracts and support situations as not quite as iron-clad as they are in a Family Law Act situation but certainly of persuasive effect for a judge.
Ian Hull: And the culture really is that the domestic contracts, done properly, are seen by the Courts as sensible contractual relationships within a marriage situation or, of course, in situations when you pass away. Most family law contracts will also include a clause to say that you can’t make a claim against the estate. But the culture in a dependant’s relief case, whether you’re married or not married, is very different because the Act simply says you can apply, you can enforce the contracts or you can ignore the contracts. And its funny, I mean the Act expressly says, Section 62 says the Court should take into account the contracts and Section 63 says you can ignore the contracts, or vice versa, I haven’t got them right in front of me, that’s the theme. So the whole concept is that your entitlement can be limited and the last point is that we want to watch very carefully on any of these types of claims, is that we want to press on with some vim and vigour because you have very strict limitation periods. Under the Family Law Act the claim to make an election under the Family Law Act is 6 months from death.
Suzana Popovic-Montag: And under the Succession Law Reform Act its 6 months from the date that probate has been granted.
Ian Hull: So that’s just a summary review of some of the family law considerations in a newly separated spouse. We want to remind everyone that our next Breakfast presentation will be on Wednesday, October 8th, 2008, that’s the Hull & Hull Breakfast, which we hold 3 times a year. We do it by way of web cast and we do it by way of personal attendance or phone-in. So please feel free to join us in any one of those forums. And if you have any questions about that, you can hit our web page or, of course, call or send us an e-mail at email@example.com.
Suzana Popovic-Montag: Or just pick up the phone or leave us a message on our comment line at 206-350-6636. Thanks very much, Ian.
Ian Hull: Thanks Suzana.
This has been Hull on Estates with the lawyers of Hull & Hull. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.
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