The Effect of a Carefully Drafted Separation Agreement

December 20, 2016 Lisa-Renee Estate Planning, General Interest Tags: , , , , , , , , 0 Comments

According to a 2007 Yahoo survey, the upcoming holiday season is a time when some people are twice as likely to consider breaking up with their significant other. This is partly because the individual may want to begin the new year with a fresh start.

photo-1444427169197-de497742b62dAn effective way of ensuring a fresh start after the end of a long-term relationship is to sign a separation agreement.  A separation agreement allows parting spouses to contractually set out each party’s rights and obligations regarding issues with respect to property, debts and child and/or spousal support.

By the same token, a well drafted separation agreement can include provisions that allow former spouses to essentially contract out of any benefit conferred to them under each other’s Will. From an estates perspective, it may be useful for a separation agreement to include clear and unambiguous terms with respect to whether the surviving spouse:

  • is entitled to take as a beneficiary upon death, whether by way of will, intestacy or beneficiary designation;
  • has any rights to make a claim against the estate of the deceased spouse; and
  • may act as the estate trustee or personal representative of the deceased spouse.

The decision in Makarchuk v. Makarchuk, 2011 ONSC 4633 is a great example of the importance of a well drafted separation agreement.

In Makarchuk v. Makarchuk, the spouses had been married for over 40 years.  After separation, the couple entered into a separation agreement but they did not divorce.  Five years later the husband died without changing his will, which named his former wife as the sole executor and beneficiary of his estate.

The separation agreement included the following provision:

Except as provided in this agreement, and subject to any additional gifts from one of the parties to the other in any will validly made after the date of this agreement, the husband and wife each release all rights which he or she has or may acquire under the laws of any jurisdiction in the estate of the other and in particular:….

Following the husband’s death, the wife sought directions from the Court as to whether, by virtue of the separation agreement, she had released her right to be the sole estate trustee and beneficiary of the estate.

The Court found that the wording contained in the separation agreement did not clearly address the terms of the deceased’s Will.  In particular, the husband and wife only released all rights that they may acquire under the law.  It was the Court’s view that such language was too broad to oust the wife from receiving her entitlement under the deceased’s Will.

Thanks for reading!

Lisa-Renee Haseley

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