You Be the Judge – Life Insurance Under a Separation Agreement – Part I
Today I will set out a fact situation and let you determine the outcome. Tomorrow I will let you know how the trial judge and Court of Appeal decided the matter.
(As observed by a judge in Newmarket recently, being appointed a judge is like going to heaven – all lawyers want to go there, but just not yet.)
Albert and Dilia separated. They entered into a Separation Agreement whereby Albert was to pay spousal support to Dilia until she turned 65. He was also required to maintain a policy of life insurance benefitting Dilia in the amount of $100,000 until Dilia turned 65. The policy also provided that in the event that Albert died without insurance in effect, then his support obligations would be a first charge on the estate.
Albert died before Dilia turned 65. At the time of his death, he didn’t have the required life insurance. Dilia only received insurance proceeds of $43,507.15. She then sued Albert’s estate and his second wife, claiming the difference between the $100,000 that she was to receive under the Separation Agreement, and the amount that she in fact received.
Albert’s estate and second spouse argued that the policy of insurance was only security for the spousal support that Dilia was to receive, and that the insurance proceeds that Dilia received were in excess of her support entitlement. (It was an agreed fact that the support obligations until the age of 65 were less than the insurance proceeds received.) They argued that an award of $100,000 would be a windfall to Dilia.
What did the Court (and Court of Appeal) do? Tune in tomorrow.
(For those who can’t wait, see Turner v. DiDonato (2009), 95 O.R. (3d) 147 (Ont. C.A.).)