Dependant Support and Pre-Retirement Death Benefits:

January 19, 2018 Hull & Hull LLP Beneficiary Designations, Elder Law, Estate & Trust, Estate Planning, Hull on Estates, Uncategorized, Wills Tags: , 0 Comments

Is a deceased’s Pre-Retirement Death Benefit to be included in the calculation of the value of an estate for the purposes of determining dependant support? That was the question asked and answered in Cotnam v. Rousseau, 2018 ONSC 216 (CanLII). There, a child of a deceased made a claim for dependant support as against the father’s estate. The estate had a nominal residual value. Accordingly, the applicant sought a determination that a Pre-Retirement Death Benefit payable to the deceased’s spouse was deemed to be part of the estate for purposes of determining the quantum of dependant support.

Section72(1) of the Succession Law Reform Act expands the potential assets available for the support of a dependant making a claim as against the estate. Section 72 lists a number of assets that are deemed to be part of the estate. The list includes “Any amount payable under a designation of beneficiary.”

The wrinkle with respect to the Pre-Retirement Death Benefit was that it was paid to the spouse pursuant to s.48(6) of the Pension Benefits Act. The spouse argued that she received the Pre-Retirement Death Benefit as a “spouse”, and not as a “designated beneficiary”. The Court referred to two decisions, Smallman v. Smallman Estate, 1991 and Quinn v. Carrigan, 2014 ONSC 5682 (CanLII), which cases held that a spouse’s entitlement to a Pre-Retirement Death Benefit flows from marital status, and not by designation, and thus, the benefit cannot be clawed back by virtue of s.72(1)(g) of the Succession Law Reform Act.

The Judge in Cotnam, however, disagreed with those interpretations of the interaction between s.48 of the Pension Benefits Act, and s.72 of the Succession Law Reform Act. The Judge did not agree that “this spousal priority” under the Pension Benefits Act shelters Pre-Retirement Death Benefits paid to a spouse from the “claw back” provisions of the Succession Law Reform Act.

The Judge went on to note that the provisions of the Succession Law Reform Act specifically contemplated a balancing of the assets between spouses and other dependants. To ignore the Pre-Retirement Death Benefit all together would not only be arbitrary, but may unduly skew the “balancing” envisioned under the Succession Law Reform Act. The Judge went on to state that the purposes of the Succession Law Reform Act could easily be thwarted all together if the Pre-Retirement Death Benefit was not deemed to be part of the estate. In many instances, the Pre-Retirement Death Benefit may be the only asset available to the deceased at the time of death.

Thank you for reading.

Paul Trudelle

 

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