Tag: marriage contract
It is not uncommon for dependant’s support claims to be commenced contemporaneously with family law claims after death, with the dependant’s support claim often forming a sort of safety net should the family law claim not be successful. This is likely in part on account of section 63(4) of the Succession Law Reform Act providing that an Order providing for the support of the deceased’s dependants can be made “despite any agreement or waiver to the contrary“, such that the court in certain circumstances can make an Order for dependant’s support notwithstanding that agreements such as marriage contracts may have been entered into prior to death which may otherwise have severely restricted the surviving spouse’s entitlements.
While it is not uncommon for family law and estates claims to be brought contemporaneously, this can sometimes result in an in issue in the form of a multiplicity of proceedings, with multiple proceedings being before the court at the same time, often on different court lists. In Toronto, the family law claims would likely proceed before the Family Court, which is governed by its own “Family Law Rules“, while the estate law claims would proceed before the Estates List of the Ontario Superior Court of Justice, with such a process being governed by the more standard Rules of Civil Procedure. Different courts, different rules, different timelines.
It appears that such a multiplicity of proceedings became an issue in the recent Cohen v. Cohen decision, with the Applicant’s counsel eventually moving to have the family law and estate law proceedings consolidated and heard together before the Family Court. Opposing counsel objected, taking the position that a dependant’s support Application under Part V of the Succession Law Reform Act could not be heard before the Family Court, and that such a proceeding must proceed before the standard Ontario Superior Court of Justice.
In ultimately rejecting the position of opposing counsel, and ordering the family law claims and the estate law claims to be heard together before the Family Court, Justice Maranger provides the following commentary:
“Counsel representing the estate argued that a strict reading of section 57 (1) of the Succession Law Reform Act (“court” means the Superior Court of Justice) statutorily precludes consolidating a dependant’s relief application with a family law act application, because the SLRA does not specify Superior Court Family Branch. I reject that argument, clearly a reference to the Superior Court of Justice can in certain circumstances allow for the reading in of the Superior Court Family Branch. A family branch judge is a Superior Court judge for all purposes including hearing cases under the Succession Law Reform Act.”
Cohen v. Cohen suggests that estates law cases and family law cases can be consolidated and heard together by the same court notwithstanding that such courts may be specialized for a different purpose. What impact, if any, the use of the Family Law Rules would have upon adjudication of an Application for support under Part V of the Succession Law Reform Act remains to be seen.
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Cohabitation Agreements and Marriage Contracts typically operate to ensure that spouses, be they common law or married, do not benefit in the estate of the survivor other than as provided for in a Will. For example, where a Will is not made, and if the parties are married, the domestic contract will need to provide that the surviving spouse is precluded from receiving the preferential share that would otherwise pass to him or her.
Despite the best intentions of the parties to such contracts, difficulties may nonetheless arise on the death of a spouse even where the surviving spouse has every intention of abiding by the agreement.
One such example of a common problem that may arise relates to the purchase or “buy-out” of the surviving spouse’s interest in real estate in which the estate has an equal interest. The problems that the parties may encounter include:
- at what date is the value of the property to be determined? The date of death or the date of the hearing which may be many months later
- Are adjustments to be made for any reason? and
- Should the purchase priced be adjusted to account for occupation rent and, if so, how is the occupation rent calculated?
In Psarros Estate v. Cook, Justice Akbarali of the Ontario Superior Court of Justice considered these questions and, on the facts of the case, concluded:
- It was an implied term of the Marriage Contract that appraisals be carried out “within a reasonable time of the decision to sell one party’s interest to the other.” As such, the fair market value was calculated as of November, 2013 rather than 2017;
- In this case there was insufficient evidence to consider adjustments; and
- Occupation rent, if any, is offset by the estate’s share of the expenses incurred by the surviving spouse and occupant.
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Other blog posts that may be of interest:
Pre-nuptial Agreements, Co-habitation Agreements, Marriage Contracts and Separation Agreements can make for added complexity in any estate dispute. Considering the disproportionate rate of estate litigation in families were there have been second marriages (or spousal relationships), it is inevitable that such contracts will continue to impact our practice.
In the recent edition of the Trust Quarterly review published by STEP, the authors of a paper note that "Pre-nuptial agreements are currently not legally binding in England and Wales, but can be taken into account as one of the circumstances of the case." In contrast, the authors note that agreements made after the date of marriage are likely to be binding, subject to the principles of contract law.
In Ontario, claims advanced under Part V of the Succession Law Reform Act are evaluated based on the existence of a number of factors including, under section 62(1)(m), "any agreement between the deceased and the dependant." Certainly there appears to be a trend towards more careful drafting of agreements which may involve the parties contracting out of statutory entitlements they may assume on the death of the other. Given the gravity of contracting out of such significant entitlements, any challenge to such a contract must consider such factors as: (i) the existence of ILA; (ii) the degree of disclosure; and (iii) the presence of any degree of coercion, to name just a few.
Have a great weekend!
David M. Smith
The impact of Stone v. Stone will clearly have a lasting impact on the practice of family law. This case stands for the general proposition that a spouse can not deplete their assets with the effect of diminishing their spouse’s entitlement under the Family Law Act. Similarly, the estates bar has recently witnessed a similar effect as a result of the decision in Pecore v. Pecore: Transfers of assets into joint ownership between persons other than spouses are inevitably now subject to even greater scrutiny than before.
In the context of the estates practitioner, it can be seen that the principles raised in Stone clearly have some bearing on estates litigation. When a spouse transfers assets into joint ownership with his daughter from a first marriage, the surviving second spouse will no doubt argue that the presumption of resulting trust applies, having consideration to Pecore. But Stone may have relevance as well, particularly in circumstances in which the deceased and the second spouse enter into a Marriage Contract which provides for a guaranteed entitlement of the surviving spouse on the death of the other. To what extent is the spouse who promises such entitlement precluded from gifting assets or transferring assets into joint ownership? A complex overlay of contract, family, and estates law ensues. Unless the assets are significant, the costs of litigating such a dispute inevitably militate in favour of settlement.
David M. Smith
A Separation Agreement or a Marriage Contract between married spouses may contract out of the rights afforded to married spouses by Statute.
If married spouses separate within the meaning of the Family Law Act, their relationship is typically governed by the provisions of a Separaton Agreement. A Separation Agreement is a contract and is governed by the common law as it relates to contracts.
As a general proposition, the intention of a Separation Agreement is generally assumed to be to ensure that the parties, as between themselves, contract to ensure that neither benefits from the other’s property after the termination of the relationship.
If the obligations contained in a Marriage Contract are incorporated into a Will, the obligations will continue notwithstanding the fact that the contract has itself been found to be invalid.
Unless the provisions in a Marriage Contract for the surviving spouse are clear and straightforward, there is a risk that the provisions in the Will may amplify the benefit flowing to the surviving spouse.
As a general proposition, spouses that have entered into a Separation Agreement do not typically intend their spouse to thereafter benefit from their estate. However, unless the Separation Agreement is very carefully worded, the Wills made by the parties to the Separation Agreement, even if those Wills predate the Separation Agreement and appear on their face to be contrary to the intention of the Separation Agreement, will be found to prevail.