Recent reports suggest that divorce and separation rates are on the rise during the pandemic (with rates of separation cited as having increased as much as 20% to 57% from last year, depending on the jurisdiction). This has been in part attributed to the stresses of lockdown and worsening financial situations.
Many Canadians may not be fully aware of the legal impact that separation and divorce have upon an estate plan, mistakenly believing that there is no real difference between marriage and a common-law partnership. However, the distinction in Ontario remains important from an estate planning perspective – for example:
- A common-law or divorced spouse does not have any automatic rights upon the death of a spouse who does not leave a will, whereas married spouses take a preferential share and additional percentage of a predeceasing married spouse’s estate on an intestacy;
- A married spouse has the right to elect for an equalization of net family property pursuant to the Family Law Act on death, whereas common-law spouses have no equalization rights on death;
- Marriage automatically revokes a will (unless executed in contemplation of the marriage), whereas entering into a common-law relationship has no such impact; and
- Separation (in the absence of a Separation Agreement dealing with such issues) does not revoke a will or any gifts made to a separated spouse, whereas gifts under a will to a divorced spouse are typically revoked and the divorced spouse treated as having predeceased the testator.
While top of mind for estate lawyers, lawyers practising in other areas of law and their clients may not necessarily turn their minds to the implications that separation and divorce may have on an estate plan, particularly soon after separation and prior to a formal divorce. With the potential for family law proceedings to be delayed while courts may not yet be operating at full capacity, combined with elevated mortality rates among certain parts of the population during the pandemic, it may be especially worthwhile in the current circumstances to remind our clients of the importance of updating an estate plan following any material change in family circumstances, including a separation or divorce.
Thank you for reading and stay safe,
In the recent decision of Gabourie v Gabourie, 2019 ONSC 6282, the court considered a motion for (among other things) interim support by the deceased’s separated spouse.
The applicant wife had separated from her spouse (now deceased) approximately two years prior to his death in March 2018. At the time of the deceased’s death, he and the applicant had been in the process of negotiating the terms of their separation and divorce. They had already entered into an interim separation agreement, which dealt with the proceeds from the sale of their matrimonial home. After the deceased’s death, the applicant and the respondent (who was the deceased’s sister, estate trustee, and sole beneficiary) were able to agree on the issue of equalization of net family property, and a payment was made to the applicant. The issue of spousal/dependant’s support remained outstanding.
The applicant sought a lump sum interim support payment of $50,000.00. Ultimately, the court awarded the applicant interim support of $30,000.00.
Providing Support or Under a Legal Obligation to Provide Support
The fact that the spouses had been separated at the time of the deceased’s death was considered as part of the court’s determination of whether the applicant was a “dependant” (specifically as to whether the deceased was providing support to her, or was under a legal obligation to provide support to her, immediately before his death) and whether the deceased made adequate provision for the applicant’s support.
The court found that there was no evidence that the Deceased had been actually providing support to the applicant prior to his death. They had been separated for two years; in that time the deceased had several health complications and lost his job. He was not supporting the applicant, nor was the applicant relying on him for support. However, spousal support remained an issue to be resolved as part of the separation between the deceased and the applicant. The court stated that there was no evidence that the applicant had waived her right to spousal support, and that, as a married spouse, the deceased was under a legal obligation to support the applicant.
Amount of Interim Support
In arriving at the amount of interim support awarded to the applicant, the court considered the financial circumstances of the deceased’s estate, and of the applicant. Based on preliminary disclosure from the respondent, the Deceased’s estate had a value of approximately $650,000.00, as well as an insurance benefit of $75,000.00. The applicant’s net worth was around $220,000.00, and she earned only a modest part-time income. The applicant also had a significant amount of debt relative to her assets, which the applicant submitted she was required to incur as she was not receiving spousal support and was unable to meet her expenses.
However, the court was mindful of the amount of support sought relative to the value of the estate. The applicant sought $50,000.00, stating that this amount was sought for legal fees that she had incurred in pursuing her dependant’s support claim.
The court was disinclined to award the applicant the full amount sought given the stage of the proceeding, and that it was not yet known whether the applicant would succeed on her application, stating that it was nearly seven percent of the value of the deceased’s estate.
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Recent amendments to Canada’s Divorce Act will come into effect on July 1, 2020. While many of these changes may not be directly relevant to estate law, estate practitioners may nevertheless wish to familiarize themselves with these developments before July.
The amendments introduced under Bill C-78 serve a number of objectives, including the advancement of the best interests of the child and increased access to justice. They can be briefly summarized as follows:
- New criteria, independent of the Children’s Law Reform Act, in respect of the best interests of the child, taking into account the child’s views and preferences;
- Updates to terminology designed to enhance access to justice and focus on the responsibilities of parents owed to their children: for example, custody orders will soon be referred to as “parenting orders”, and access will instead be known as “contact”;
- The removal of presumptions as to equal parenting time and maximum contact being in the best interests of the child.
The new Divorce Act also imposes a duty upon counsel to encourage family dispute resolution unless clearly inappropriate in the circumstances, in a manner consistent with Rule 3.2-4 of the Law Society of Ontario’s Rules of Professional Conduct. Some provinces are expected as a result to introduce legislation providing judges with the discretion to direct parties to family mediation and/or parenting coordination (as has already happened in British Columbia).
Bill C-78 has also resulted in updates to the Family Orders and Agreements Enforcement Assistance Act. This act, which already facilitates access to information held by financial institutions with respect to the assets of debtors, will soon permit access to income information from Canada Revenue Agency for the purposes of recalculating support. The enhanced act is expected to reduce costs to parties and to courts of obtaining necessary disclosure.
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The recent Ontario Superior Court of Justice decision in F.K. v. E.A. addresses limitation periods and discoverability in the context of setting aside a marriage contract.
By way of background, husband and wife began their relationship in 2000, cohabitating in June of 2004, and marrying on July 20, 2005. Shortly before marriage, on July 14, 2005, the (soon to be) husband and wife entered into a marriage contract. The marriage contract was prepared by the wife who obtained a template off the internet. The husband and wife eventually separated on August 13, 2012. A dispute arose over certain terms of the marriage contract. The husband thereafter brought a claim on August 24, 2017 for spousal support, equalization, as well as setting aside the marriage contract. Two of the issues that the Court addressed included whether (i) the relief sought to set aside the marriage contract is subject to the two year limitation period and, if so, (2) whether the husband brought his claim in time.
Regarding the first issue, the Court found that the husband’s claim to set aside the marriage contract is a claim as defined in section 1 of the Limitations Act and therefore subject to the two year limitation period.
As it relates to the second issue of discoverability, evidence was adduced that the husband met with a lawyer in October 2012 to discuss the dispute with his wife and certain legal issues arising with respect to the marriage contract. Based on this evidence, the Court established that by that date at the latest, he first knew: that the injury, loss or damage had occurred; that the injury, loss or damage was caused by or contributed to by an act or omission; and, that the act or omission was that of the person against whom the claim is made. The Court dismissed the husband’s claim finding that the two years began running the date he met with his lawyer.
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As anyone who has ever watched the show Friends can attest, “breaks” can happen in any relationship. For those attempting to claim common law spousal status however, what impact, if any, do such “breaks” have upon the length of time that the couple has to be together? Do you have to re-set the clock of the relationship after every “break”, or can the “breaks” be ignored?
Part V of the Succession Law Reform Act incorporates the definition of “spouse” from section 29 of the Family Law Act. Section 29 of the Family Law Act in turn defines “spouse” as including “two persons who are not married to each other and have cohabited continuously for a period of not less than three years“. This definition is often what is being referred to when someone says that a relationship is “common law”, with significant corresponding legal rights potentially being given to the two individuals if they are found to be “spouses”.
As the word “continuously” is included in the definition, one would be forgiven for thinking that there cannot be any “breaks” in the relationship, and that you must have a continuous three year period of “cohabitation” for two people to be considered spouses. As we will see below however, this may not necessarily be the case.
I have previously blogged about the factors that the court may look to in determining whether two people are “cohabitating”, with the Supreme Court of Canada in M. v. H. having confirmed that you look to the factors listed in Molodowich v. Penttinen to determine whether to individuals are “cohabitating” to the extent that their relationship becomes spousal. For the purpose of this blog however, the interesting question which follows is whether a couple who otherwise meets enough of the factors from Molodowich to be considered to be “cohabitating”, but had a “break” in their relationship during the three year period, could still be considered “spouses”.
In Boothe v. Gore,  O.J. No. 4376, the Ontario Court of Justice (General Division) provides the following commentary regarding the effect of a “break” on a relationship:
“The law in Ontario recognizes that a man and a woman are considered to have continuously cohabitated, despite that while living together, there might have been separations for varying periods of time before reconciling. Cohabitation does not terminate until either party regards it as being at an end, and, demonstrate convincingly that this is the party’s intent. A brief cooling off period does not convincingly show a settled state of mind that cohabitation has terminated…
The effects of temporary separations depends on the intention of the parties. When one party leaves the other and provides an objective basis to believe that they do not intend to resume cohabitation and the separation lasts for a meaningful period of time, the period of cohabitation could well have been interrupted.” [emphasis added]
As Boothe v. Gore suggests, a “break” in a relationship should not necessarily preclude a finding that two persons are common law spouses. Rather, the court is to attempt to ascertain the intentions of the parties at the time of the “break”, with the spousal status only coming to a close if either of the parties regards the relationship as being “at an end“, or the period of separation lasts for a “meaningful period of time“.
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A recent decision of the New South Wales State Supreme Court considers allegations of suspicious circumstances and undue influence within the context of marital separation and subsequent reconciliation.
Colleen McCullough, an Australian author famous for having written The Thorn Birds and a number of other novels, died in January 2015, leaving an estate of approximately CDN $2 million. McCullough also left a series of testamentary documents executed during 2014 and 2015, several of which contained technical defects. Most of the documents named McCullough’s long-time husband, Ric Robinson, as sole residuary beneficiary. One document executed in July 2014 (and a subsequent purported codicil), however, directed the distribution of the entire estate to the University of Oklahoma Foundation (of which McCullough was a founding member).
The plaintiff, McCullough’s friend and agent who had been named as estate trustee in the Oklahoma Will, challenged the subsequent documents on the basis of lack of knowledge and approval and undue influence. She relied, in part, upon the fact that Mr. Robinson had an affair of which McCullough had become aware in or about 2010, and that, in July 2014, she wished to disinherit him as a result of the state of their relationship around the time of their separation. Further, the plaintiff argued that Mr. Robinson’s request of McCullough that she execute a new Will later in 2014 represented suspicious circumstances.
Notwithstanding the concerns raised by the plaintiff, the Court found that the October 2014 Will naming Mr. Robinson was valid. Evidence in support of such finding included the involvement of McCullough’s lawyer in the preparation of the Will. The Court acknowledged the absence of evidence that Mr. Robinson had pressured or coerced McCullough or her lawyer into preparing/executing the October 2014 Will or that her testamentary intentions remained unchanged following a reconciliation with her husband in late July 2014. The plaintiff’s submission that a request by Mr. Robinson that McCullough make a new Will leaving him an interest in her estate after their relationship had improved was not considered to constitute suspicious circumstances and fell far short of the coercion necessary for a finding of undue influence.
This decision emphasizes the difference between influence and undue influence. Among spouses, a degree of influence is to be expected in respect of estate planning. Such influence does not in itself invalidate a testamentary document and may not even satisfy a judge that suspicious circumstances surround the execution of a will.
Thank you for reading.
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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On August 15, 2011, I blogged on the decision of Hennessy J. in Makarchuk v. Makarchuk, 2011 ONSC 4633 (CanLII). There, the court found that a separation agreement did not preclude the surviving spouse from benefitting under the deceased’s will.
On Monday this week, the Ontario Court of Appeal dismissed the appeal, and upheld the decision of the lower court. In a brief endorsement, the Court of Appeal stated “We have not been persuaded that the application judge erred in her interpretation of the Separation Agreement. Since the deceased never revoked his will, the gift in the will to the respondent stands.”
The Court of Appeal also dismissed a motion to admit fresh evidence. No particulars of this motion were given.
As I stated in my prior blog, separated spouses must consider their estate plan, including terms of their wills and beneficiary designations to ensure that their intentions are properly reflected. In the case of Makarchuk, it is not clear whether the husband intended to benefit his separated spouse. However, as the lower court noted, had he wished to not do so, there were a number of means available to him to effectively revoke the gift he had made to his spouse prior to their separation.
Have a great weekend.
Paul E. Trudelle – Click here for more information on Paul Trudelle.
The effect that separation agreements may have on the entitlements of spouses upon the death of one of the parties has fuelled a great deal of litigation.
One of the issues that can arise is the effect that the separation agreement has on the last will and testament of the deceased spouse. While the Succession Law Reform Act provides that a bequest in a will to a former spouse is revoked upon the termination of a marriage by judgment absolute of divorce, that is not the case where there is only a separation.
In Makarchuk v. Makarchuk, 2011 ONSC 4633 (CanLII), the parties separated, and entered into a separation agreement. The separation agreement provided that, subject to any additional gifts made in any will validly made after the date of the agreement, the parties released all rights that they may acquire under the laws of any jurisdiction in the estate of the other.
The husband died, without making a new will, and without revoking a prior will which provided that his entire estate was to pass to his now separated spouse.
The court was asked to interpret and apply the separation agreement so as to exclude any benefit to the surviving spouse. The court refused to do so. The court held, applying Eccleston Estate v. Eccleston, 3 R.F.L. (5th) 54, that the language of the separation agreement was not broad enough to apply to rights acquired under the will. The release in the separation agreement applied only to statutory rights. The release did not “trump” the will.
It is important for separating spouses to consider bequests made in prior wills, and consider revising their estate plan.
Thank you for reading.
Paul E. Trudelle – Click here for more information on Paul Trudelle.