Tag: separated spouses
According to a 2007 Yahoo survey, the upcoming holiday season is a time when some people are twice as likely to consider breaking up with their significant other. This is partly because the individual may want to begin the new year with a fresh start.
An effective way of ensuring a fresh start after the end of a long-term relationship is to sign a separation agreement. A separation agreement allows parting spouses to contractually set out each party’s rights and obligations regarding issues with respect to property, debts and child and/or spousal support.
By the same token, a well drafted separation agreement can include provisions that allow former spouses to essentially contract out of any benefit conferred to them under each other’s Will. From an estates perspective, it may be useful for a separation agreement to include clear and unambiguous terms with respect to whether the surviving spouse:
- is entitled to take as a beneficiary upon death, whether by way of will, intestacy or beneficiary designation;
- has any rights to make a claim against the estate of the deceased spouse; and
- may act as the estate trustee or personal representative of the deceased spouse.
The decision in Makarchuk v. Makarchuk, 2011 ONSC 4633 is a great example of the importance of a well drafted separation agreement.
In Makarchuk v. Makarchuk, the spouses had been married for over 40 years. After separation, the couple entered into a separation agreement but they did not divorce. Five years later the husband died without changing his will, which named his former wife as the sole executor and beneficiary of his estate.
The separation agreement included the following provision:
“Except as provided in this agreement, and subject to any additional gifts from one of the parties to the other in any will validly made after the date of this agreement, the husband and wife each release all rights which he or she has or may acquire under the laws of any jurisdiction in the estate of the other and in particular:….”
Following the husband’s death, the wife sought directions from the Court as to whether, by virtue of the separation agreement, she had released her right to be the sole estate trustee and beneficiary of the estate.
The Court found that the wording contained in the separation agreement did not clearly address the terms of the deceased’s Will. In particular, the husband and wife only released all rights that they may acquire under the law. It was the Court’s view that such language was too broad to oust the wife from receiving her entitlement under the deceased’s Will.
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Whether a property is held as a joint tenancy or as a tenancy in common can have a significant impact on the overall value of an estate.
Where a property is held as a joint tenancy, and one of the owners dies, his or her interest passes to the surviving owner by right of survivorship.
Where a property is held as tenants in common, the deceased owner’s share of the property passes to his or her beneficiaries pursuant to the terms of his or her Will or, where the deceased dies without a Will, in accordance with the laws governing an intestacy in Ontario.
The severance of a joint tenancy can often become a disputed issue in context of estate litigation.
A joint tenancy can be severed and converted to a tenancy in common in one of three ways:
- one owner unilaterally acting on his or her own share, such as selling, transferring or encumbering it;
- a mutual agreement between the co-owners; or
- any course of dealing sufficient to suggest that the interests of the joint tenants were mutually treated as constituting a tenancy in common.
Severance by course of dealing can occur without the knowledge of the registered joint owners and is particularly relevant in the context of property held by spouses who had separated, or were in the process of separating, prior to death.
The legal test for severance by course of conduct is set out in the Ontario Court of Appeal decision in Hansen Estate v. Hansen, 2012 ONCA 112 at para 7 as “whether the parties indented to mutually treat their interest in the property as constituting a tenancy in common.” It operates so as to prevent a party from asserting a right of survivorship where doing so would not do justice between the parties.
The test does not require proof of an explicit intention or communication regarding severance of a joint tenancy, rather the party asserting severance must prove that the owners by their conduct treated their respective interest in the property as no longer being held jointly.
The cases in which severance by course of conduct has been successfully upheld generally involve couples who have taken formal steps to separate their interests. For example, where one spouse has moved out of the property, both spouses have retained lawyers in connection with their separation, a valuation of the property has been sought and/or one spouse has made an offer to purchase the other spouse’s share of the property.
However, each case will turn on its own facts. In Jurevicius v. Jurevicius, 2011 ONSC 696, the Court found that the mere fact of separation was insufficient to establish severance, and in, Gorecki Estate v. Gorecki, 2015 ONCA 845, the Court found that while the relationship between the parties was falling apart, it had not yet reached a point at which they formed a mutual intention to treat their interests in the property as a tenancy in common.
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This week on Hull on Estates, Ian and Suzana bring us up to date on what has been happening at Hull and Hull over the summer. Jordan Atin appeared on Canada AM to talk about how to avoid The Family War. They have also added two books to their recommended reading list:
Duct Tape Marketing by John Jantsch
Endless Referrals by Bob Burg
Ian and Suzana then discuss issues to consider in estate planning for the newly separated spouse. They talk about the two different types of claims that can be made: Equalization and Claim for support.
A new Hull and Hull breakfast series will take place on Wednesday, October 8, 2008 and participants are encouraged to attend either via webcast or in person. You can also contact Hull and Hull by leaving a message or question with any of the following:
Send us an email at firstname.lastname@example.org, call us on the comment line at 206-350-6636, or leave us a comment on the Hull on Estates blog.
Separation Agreements in the Context of Estate Planning – Hull on Estate and Succession Planning Podcast #59
Listen to "Separation Agreements in the Context of Estate Planning"
Read the transcribed version "Separation Agreements in the Context of Estate Planning"
During Hull on Estate and Succession Planning Podcast #59, Ian and Suzana discuss Separation Agreements and the general elements of estate planning upon separation from a spouse.
They cover many important aspects of a separation agreement that should be considered when turning your mind to estate planning, including joint assets, joint debts, property, and disability planning.
Read the transcribed version "Separated Spouses and Estate Planning Issues"
During Episode #58, Ian and Suzana discuss estate planning and separated spouses including the equalization process, the importance of valuation on the day of separation, and how issues of spousal support and child support can dovetail into estate planning.
Suzana mentions the case of A.A. v. B.B., 2007 ONCA 2 from the Ontario Court of Appeal, wherein a child may have three parents.