Priority of Assets out of which a Dependant Support Claim will be Paid

June 12, 2018 Sayuri Kagami Uncategorized Tags: , , , 0 Comments

As most of our readers know, when a person dies without leaving adequate support for their dependants, the courts may intervene to ensure that such dependants receive a fair share of the estate. Furthermore, pursuant to subsections 63(2) and 68(2) of the Succession Law Reform Act (SLRA), the Court has flexibility in the form of support ordered and against what portion of the Estate such support will be charged against.

Although the SLRA provides the Court with flexibility in the types of orders it can make, case law in Ontario also provides some guidance as to the priority of assets to be used in making support orders.

Priority of Support from “Traditional Estate Assets”

In Matthews v Matthews Estate, the Superior Court considered the issue of which assets should be used in making an order for dependant’s support. The assets available were both assets falling inside the estate (being mainly a ½ interest in a matrimonial home) and assets falling outside the estate, but subject to the clawback provision of section 72 of the SLRA (being a $1,000,000.00 life insurance policy). In that case, the Court made it clear that:

where property not normally part of the Estate is brought into the Estate by virtue of the provisions of the Succession Law Reform Act to the detriment of those designated beneficiaries, care must be taken to insure that the burden of any support order in favour of the Applicant be borne by the traditional assets of the Respondent’s estate before any encroachment is made on the life insurance policy proceeds.

No Priority Among Section 72 Assets

While the Court has set out that traditional estate assets should be used to satisfy dependant support claims before section 72 assets, there is no priority among section 72 assets, or even any requirement that an applicant seek to obtain support from all section 72 assets.

In Stevens v Fisher Estate, the estate itself was insolvent due to the debts of the Deceased. The Deceased, however, had three life insurance policies: a $84,000.00 group life insurance policy naming a lifelong friend/former common law spouse as beneficiary, a $50,000.00 insurance policy naming his 32 year old daughter as beneficiary, and a $250,000.00 life insurance policy to be held in trust for his two younger (but still adult) children. The common-law spouse of the Deceased commenced a claim but sought support only from the $84,000.00 group life insurance policy. While the beneficiary of the $84,000.00 group life insurance policy argued that the Applicant should look to the other life insurance policies before resorting to the group life insurance policy, the Court found that there was no priority of estate assets for the Applicant to look to before turning to the $84,000.00 policy.

While Stevens v Fisher Estate indicates that there is no requirement that an applicant for support look to all section 72 assets, it’s important to consider the implications of seeking support from only some, as opposed to all, section 72 assets.

Thanks for reading!

Sayuri Kagami

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