Tag: dependant relief

10 Apr

The Policy of Setting Policy: Cotnam v Rousseau and Judicial Activism

Garrett Horrocks Beneficiary Designations, Estate & Trust, Estate Planning, Litigation, Pension Benefits, Public Policy, RRSPs/Insurance Policies, Support After Death Tags: , , , , 0 Comments

The practice of injecting policy considerations into court decisions has long been a tenet of the Ontario judiciary.  However, such considerations may arguably raise questions that go beyond the scope of the decision.  Cotnam v Rousseau, 2018 ONSC 216, is one such case.

In Cotnam, the Court was tasked with determining whether a pre-retirement death benefit received by a surviving spouse was available to be clawed back into an Estate pursuant to section 72 of the Succession Law Reform Act (the “SLRA”).  The Respondent took the position that section 48 of the Pension Benefits Act (the “PBA”) sheltered the death benefit from being clawed back given that she was the spouse of the Deceased.  The Court disagreed and held that such benefits ought to be available for claw back in order to prevent irrational outcomes resulting from their exclusion.

In the context of the facts at play in Cotnam, the Court reasoned in favour of equity, in particular, to ensure a dependant disabled child of the Deceased was properly provided for. However, the Court’s reasons appear to gloss over a fundamental conflict between the SLRA and the PBA, a clash about which the estates bar might have appreciated some judicial commentary.  Specifically, the Court held that the provisions of the SLRA ascribing pension death benefits as available to satisfy a claim of dependant’s relief ought to prevail over the PBA’s provisions sheltering them from claw back.

Section 114 of the PBA provides that, “[i]n the event of a conflict between this Act and any other Act […] [the PBA] prevails unless the other Act states that it is to prevail over [the PBA].”  The SLRA, in contrast, is silent as to whether its provisions are to prevail over those of the PBA.

However, the Court’s reasons make no mention of the interplay between section 114 of the PBA and the equities of ensuring the dependant daughter in Cotnam was properly provided for.  While we may opine on the fact that the outcome in Cotnam favours equity over rote statutory interpretation, the estates bar is left to grapple with the apparent inconsistency with the intention of the Ontario legislature, and whether it will affect similar decisions going forward.  As of this date, no written decisions have yet interpreted Cotnam, nor has the decision been appealed.  Accordingly, it may be some time before the impact of the decision, if any, is felt.

Thanks for reading.

Garrett Horrocks

If you enjoyed this blog, please consider these other related posts:

Dependant Support and Pre-Retirement Death Benefits

Rehel v Methot: Life Income Funds and Spousal Entitlements

03 Aug

Dependant Support Claims, Limitation Periods and Life Interest Beneficiaries

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

 

02 Mar

Withdrawal from Parental Control and Dependant’s Relief

Suzana Popovic-Montag Support After Death Tags: , , , , , , 0 Comments

In Ontario, F181E30B40 (1)minors who are 16 years or older may choose to withdraw from parental control under section 65 of the Children’s Law Reform Act. This means that these minors have the ability to leave home prior to reaching the age of majority without obtaining the permission of their parents or the courts. However, this is not a decision that should be taken lightly as it can be accompanied by serious consequences.

Aside from practical concerns such as living arrangements and limited employment prospects for minors, withdrawing from parental control carries potential repercussions regarding entitlement to financial support. In short, a minor who has voluntarily withdrawn from parental control may inadvertently disentitle him or herself from receiving financial support.

This is an issue that is commonly raised within the context of child support. Section 31(2) of the Family Law Act provides that the obligation of a parent to support his or her child does not extend to a child who is sixteen years of age or older and has withdrawn from parental control. The question that the courts have struggled with is whether the minor’s withdrawal is voluntary or not. In many cases, the minor did indeed make the decision; however, if the minor was driven to this decision as a result of difficult circumstances in the home, it is likely that the decision will be viewed as a necessity.

Withdrawal from parental control can similarly impact a minor’s ability to claim dependant’s support after the death of a parent. According to section 62(1)(q) of the Succession Law Reform Act,

62(1) In determining the amount and duration, if any, of support, the court shall consider all the circumstances of the application, including,

[…]

(q) if the dependant is a child of the age of sixteen years or more, whether the child has withdrawn from parental control

Accordingly, withdrawal from parental control is one of a variety of factors that the court will look at in determining dependant’s relief claims (including the importance of moral claims which is discussed in more detail on our podcast here).

Thank you for reading.

Suzana Popovic-Montag

10 Feb

What’s in a Name?

Suzana Popovic-Montag Estate & Trust, Estate Planning, Support After Death, Wills Tags: , , , , 0 Comments

In most common law jurisdictions, the devolution of an estate begins with the principle of testamentary freedom. That is, that a testator is free to dispose of his or her property in any way he or she sees fit. However, in practice, this is rarely the case. Testamentary freedom has many restrictions that significantly curtail a testator’s ability to freely dispose of his or her assets.

For instance, family law legislation provides certain rights to a surviving spouse which allow for an election to be made to receive an equalization of net family property rather than taking an  interest under the estate. Dependant’s relief legislation also steps in to provide relief to dependants who were not adequately provided for by the deceased’s estate. Furthermore, there are contractual arrangements, such as cohabitation agreements, as well as equitable claims in unjust enrichment, constructive trust, and quantum meruit, that may be available to further restrict the testator’s dispositions made in a will or under the laws of intestacy.

In contrast, in many civil law jurisdictions, there exists what appears to be a more rigid system of forced heirship. Forced heirship essentially starts with the premise that there are certain individuals to whom a testator has a moral and legal obligation to support after death, notably their descendants and spouse. Accordingly, it limits the ability to disinherit these protected heirs by setting out that a specific percentage of an estate’s value is to be reserved for their benefit. This amount can vary widely depending on the number of descendants as well as other variables such as whether any of them are disabled.

Provided that the will respects these percentages by making dispositions that provide at least the minimum required, there will be no issue of a claim against the estate. However, in circumstances where the testator has not met the minimum requirement, the protected heirs have the ability to make a claim against the estate enforcing their rights to the reserved portion.

It is important to note that a protected heir enforcing his or her forced heirship rights is not automatically an heir. He or she simply has a pecuniary claim against the estate which can be satisfied by the estate’s assets. In the event that the estate does not have sufficient assets, the protected heir can seek to enforce various clawback provisions. These vary by jurisdiction but may include inter vivos gifts made within a period of time prior to death or with the intention of subverting forced heirship rules, as well as the creation of any trusts for similar purposes.

There are similarities between forced heirship regimes and our own dependant’s relief legislation. For instance, section 72 of the Succession Law Reform Act (“SLRA”) provides for a similar clawback provision in order to ascertain the value of an estate in making an award for support. Forced heirship claims are also subject to strict limitation periods much like dependant’s relief and equalization claims. Moreover, forced heirship is not an automatic transfer of wealth upon death simply by virtue of being a descendant of the deceased. In many jurisdictions, the protected heirs have the ability to renounce these rights prior to death or may choose not to make a claim after death at all.

The main distinction is that in a dependant’s relief context, the claimant has the additional burden of proving that the testator owed them support, whereas under forced heirship, simply being a descendant can be sufficient. However, the common law courts have construed the test of whether a dependant was owed support under the SLRA quite broadly. Moreover, the definition of a dependant under the SLRA encompasses many more potential claimants then most definitions of a protective heir will permit.

Despite the fact that forced heirship starts from the opposite end of the spectrum of testamentary freedom, it reaches a similar end result. Where forced heirship applies a more rigid starting point and then gradually loosens its grip, testamentary freedom begins with an open ended proposition that is subsequently restricted. Regardless of the approach taken, both systems seek to address a shared concern of public order: the duty to provide for your dependants after death.

Thank you for reading.

Suzana Popovic-Montag

19 Oct

Spousal and Dependant Support – The Family Law Act versus The Succession Law Reform Act

Ian Hull Estate & Trust, Support After Death Tags: , , , , , , , , 0 Comments

Both the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”) and the Succession Law Reform Act, R.S.O. 1990, c. S.26 (“SLRA”) contemplate the support of spouses. The FLA is focused specifically on spouses, while the SLRA deals with support of dependants, which includes a spouse of a deceased, as well as a parent, child, or sibling, to whom the deceased was providing support or legally obligated to provide support. Should these regimes be kept separate, or is there some meshing of the two, allowing for the FLA to influence the determination of spousal support under the SLRA?

The relevant sections of the FLA and the SLRA are as follows:

  • FLA 30: “Every spouse has an obligation to provide support for himself or herself and for the other spouse, in accordance with need, to the extent that he or she is capable of doing so.”
  • SLRA 58(1): “Where a deceased, whether testate or intestate, has not made adequate provision for the proper support of his dependants or any of them, the court, on application, may order that such provision as it considers adequate be made out of the estate of the deceased for the proper support of the dependants or any of them.”

As far back as 1984, in Mannion v Canada Trust Co., (1984) 24 ACWS (2d) 363, the Ontario Court of Appeal considered the predecessor to the FLA, the Family Law Reform Act, holding that “[a]lthough the matters to be considered under the Family Law Reform Act in the case of a spouse parallel in many respects the matters to be considered under the Succession Law Reform Act in the case of a widow, they are not identical. In many aspects the Succession Law Reform Act is broader.”

There have also been attempts to apply the Spousal Support Advisory Guidelines to the determination of quantum of support payable to a surviving spouse. In Fisher v Fisher (2008), 88 OR (3d) 241 (Ont CA), it was held that the Spousal Support Advisory Guidelines are not applicable in every case, and are intended to be a starting point in determining the amount of support that is fair. However, four years later in Matthews v Matthews, 2012 ONSC 933, the Court remarked that “the Spousal Support Advisory Guidelines do not have any relevance…because those guidelines are based on income sharing and the formulas in the Advisory Guidelines generate ranges of outcomes rather than precise figures for amount and duration. Here the Respondent is deceased and there is no income on his part to share.”

Ultimately, the major distinction between the family law context and the succession law context is that in family law both parties continue to require support and sustenance to live on, while in the succession law context, only one party remains in need of such support. Therefore the balancing act that must often be undertaken in order to consider the needs of both spouses in a divorce, is not present in the case of a deceased and a surviving spouse. This is a significant difference between the two statutes, and it cannot be assumed that the FLA can be applied in the estate law context.

Thanks for reading.

Ian Hull

13 Mar

Battle Brewing Over Heath Ledger Estate?

Hull & Hull LLP New Media Observations Tags: , , , , 0 Comments

Recently departed actor Heath Ledger (A Knight’s Tale, Brokeback Mountain, The Dark Knight) left behind a young daughter.  But based on news reports, Ledger appears to have neglected to include his daughter in his Will, perhaps unintentionally.  It appears Ledger last filed a Will in 2003, before the birth of his daughter Matilda in 2005 and before his hit film Brokeback Mountain.  This Will reportedly leaves Heath Ledger’s estate entirely to his father, mother and sisters, obviously with nothing to little Matilda.

Heath Ledger’s father Kim has stated that little Matilda "will be taken care of".  However, Kim himself has been in litigation with his brothers, who accused him in 1994 of mishandling their grandfather’s estate to the extent of $2 million.

This intriguing story also illustrates the importance and difficulty of valuing an estate.  News reports contain estimates from $2.5 million to $20 million, quite a range for an estate that spans at least two countries. 

No word yet on whether litigation will be launched on little Matilda’s behalf against her exclusion from her father’s estate.  Of course, other Wills may emerge…

Stay tuned.

Chris Graham

 

 

22 May

Interim Support – Dependant’s Relief

Hull & Hull LLP Archived BLOG POSTS - Hull on Estates Tags: , , , , 0 Comments

Section 64 of Ontario’s Succession Law Reform Act ("SLRA") allows for interim support to a dependant’s relief applicant "in need of and entitled to support". 

The language of the section can cause difficulty to applicants due to the need to prove entitlement.  Entitlement is often in issue based on disputed facts, so the Estate Trustee defending an application can argue that only a trial can resolve that question. 

Often dependant’s relief applicants have little or no means to support themselves on an ongoing basis, let alone fund litigation.  Denial of interim support to applicants can have serious repercussions on their day-to-day lives and can give the Estate Trustee considerable economic leverage.

Re Puliver (1982), 39 O.R. (2d) (High Court of Justice) described the problem succinctly:

"I must pay heed to the requirement (under section 64) that the applicant be in need of and entitled to support"…

"Such an interpretation would effectively deprive dependants of any interim relief if any question were raised as to entitlement except as to quantum."

Moving on to a solution, Justice Van Camp decided that:

 "where the applicant has put forward substantial evidence to support her claim as a dependant, and that the testator was domiciled in Ontario, application for interim relief should be heard even if [status as a dependant] are in issue on the final hearing of the substantive application."

Re Puliver provided much needed ammunition when arguing for interim support for alleged dependants where entitlement is not admitted by the Estate Trustee.

Thanks for reading.
Sean Graham

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