Tag: Spousal Support
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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The answer is no according to Borges v. Santos, 2017 ONCJ 651.
In Borges v. Santos, a garnishment proceeding was commenced by Maria, who was entitled to child support from Antonio. Maria sought to garnish a trust that was established from the Estate of Antonio’s mother. Pursuant to the Will of Antonio’s mother, the Trustees were given an absolute and unfettered discretion to pay any part of income or capital for Antonio’s benefit and to keep Antonio’s comfort and well-being in mind in exercising their discretion. In this case, the Trustees also happened to be Antonio’s brother and sister as well as the gift-over beneficiaries of this Trust such that they will be entitled to all income and capital that were not distributed to Antonio 21 years after their mother’s death.
In one of her arguments, Maria contended that the Trust was not truly discretionary because of the non-arm’s length relationship between the Trustees and Antonio since they were siblings. The Court in case clarified that Tremblay v. Tremblay, 2016 ONSC 588, “does not stand for the proposition that all familial relationships between trustees and beneficiaries automatically demonstrate that the trust is under the control and hence the property of the beneficiary” for the purposes of the Family Law Act.
Interestingly, Antonio gave evidence in this proceeding that he wanted the Trustees to honour his child support obligations to Maria, although they chose not to comply with his wishes. Ultimately, as obiter, the Court also asked the Trustees to consider making a distribution to Antonio for his comfort and well-being by supporting his son, Christopher, while acknowledging that he could not order them to do so.
For those of you who are interested in the essential elements of a Henson Trust, click here, for a previous blog on this topic by Ian Hull.
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I am often asked what effect child and/or spousal support obligations have on an estate. Do they cease as a result of the payor’s death or does the payor’s estate owe an obligation to continue the payments?
In Ontario, the law is clear as to an estate’s obligation to continue making support payments. According to section 34(4) of the Family Law Act, “an order for support binds the estate of the person having the support obligations unless the order provides otherwise”.
The rationale is explained by the leading decision of Linton v. Linton where the Ontario Court of Appeal held that as long as no contrary order is made, a support order is binding on the payor’s estate. Specifically, “…the practice of the family law bar…in which support is an issue…is to provide for the continued payment of support by the estate of the payer, or the payment of a capital sum, usually through life insurance, as a substitute”. Otherwise, the Court of Appeal states that if a support order is not binding on an estate, the needs of the survivor remain intact without any payments to satisfy them.
In the context of the Linton decision, the Court of Appeal states that the surviving spouse has every reason to expect that she is to be looked after in a financial way in the event her husband predeceased.
So what’s the bottom line? When seeking an order or negotiating in a separation agreement for the payment of child and/or spousal support, parties must be explicit as to whether support continues post death and whether that obligation is secured by life insurance.
Find this topic helpful? Please also consider these related Hull & Hull LLP Blogs:
- Dependants’ Support and the Spousal Support Guidelines
- Support Orders and the Limiting Role of the OCJ
- When Does a Separation Agreement Release an Entitlement Under a Will?
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This week on Hull on Estates, David Smith and Jonathan Morse review some of the recent podcasts and hone in on some of the evidentiary requirements of a common-law spousal relationship as it relates to dependant support claims under the Succession Law Reform Act. They look at some recent case law and some of the requirements under the Ontario statute.
Comments? Send us an email at email@example.com, call us on the comment line at 206-350-6636, or leave us a comment on the Hull on Estates blog.
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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.
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During Hull on Estate and Succession Planning Podcast #57, Ian Hull and Suzana Popovic-Montag discuss tax considerations to keep in mind within the context of separated spouses.
They cover such issues as tax liability, spousal support and child support deductability and the deductability of legal fees.