Dependant Support Claims, Limitation Periods and Life Interest Beneficiaries

August 3, 2017 Umair Estate Planning, Executors and Trustees, Litigation, Support After Death, Trustees Tags: , , , , 0 Comments

We have previously blogged about the limitation period that applies to applications for dependant’s relief under Part V of the Succession Law Reform Act, and the circumstances in which the Court will extend the limitation period.

In the recent decision of Habberfield v Sciamonte, 2017 ONSC 4332, the Court was asked to consider whether an application for support by a beneficiary with a life interest in a testamentary trust was statute-barred.

The Law Regarding Limitation Periods and Dependant Support Claims

Section 61(1) of the Succession Law Reform Act (the “SLRA”) provides that an application for dependant’s support must be made within six months from the issuance of probate.

An application may be made beyond the six-month limitation period, with leave. Section 61(2) of the SLRA provides the Court with discretion, if it considers it proper, to allow an application to be made by a dependant “at any time with respect to any portion of the estate remaining undistributed at the date of the application”.

Generally, case law has interpreted s. 61(2) to limit any claim made after six months to the remaining, undistributed portion of the estate, and to bar any claim made after the assets have been fully distributed. Paul Trudelle previously blogged on this application of s. 61(2).

The Facts

In Habberfield, the Applicant (“Joan”) claimed that she was the long-time common law spouse of the Deceased. The Deceased died on April 11, 2012. Probate was granted on October 30, 2012. Joan’s application was heard on June 30, 2017, more than five years after the Deceased’s death.

At the time of the application, the assets of the Deceased’s Estate had an approximate value of $2,000,000.00. The assets primarily consisted of the Deceased’s home and an adjacent rental property.

Under the Deceased’s Will, the home and the rental property were to be held in trust for Joan until she died, no longer desired the properties, entered into a new relationship or moved to a seniors’ or nursing home. Upon such an event, the Will directed for the properties to be sold and for $100,000.00 to be held in a discretionary trust to meet Joan’s needs. The balance of the net proceeds of sale were to be divided amongst the Deceased’s issue. Joan was responsible for the carrying and repair costs for the properties during her life tenancy.

On the application, Joan argued that she had not considered the adequacy of the support she received under the Will prior to the expiration of the limitation period. At the time of the application, Joan was 78 years old, had limited resources to continue to pay the carrying costs of the properties and was considering moving into a care home. The latter option would only provide her with an interest in a discretionary trust of $100,000.00.

The respondent Estate Trustees argued that Joan’s claim was statute-barred, and also argued that Joan’s claim for support was weak on its merits.

Justice Lofchik’s Decision

As in prior cases that have considered the Court’s discretion under s. 61(2) of the SLRA, Justice Lofchik concluded that the discretion should be “exercised judicially in a broad and liberal manner.”

Justice Lofchik noted that the bulk of the Deceased’s Estate remained undistributed, and in fact could not be distributed until Joan’s life interest was extinguished. As a result, Justice Lofchik held that there would be no prejudice to the Estate or to the residuary beneficiaries in allowing Joan’s claim to proceed.

Justice Lofchik’s decision is consistent with prior decisions that have considered s. 61(2), where the Courts have held that the discretion to allow an application to proceed can be exercised at any time as to the assets that are undistributed as of the date of the application.

However, the discretion ultimately rests with the Court. The message to take from this case is that it is generally advisable for potential dependants to consider their present and future needs for support prior to the expiry of the statutory limitation period in order to minimize the additional risk and cost of seeking the leave of the Court.

Thank you for reading,

Umair Abdul Qadir

 

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