Tag: Support After Death
Family law has long been clear on the question of spousal support in that it is provided to satisfy the needs of the spouse during his/her lifetime and the entitlement to support does not survive the death of the recipient.
Whether this remains the status quo may have been put into question with the recent Alberta’s Court of Queen’s Bench decision in Marasse Estate. In this case, the couple’s separation agreement required the husband to pay monthly support to the wife for five years. The wife passed away after the husband had made only a few payments, and her estate trustee sought the remaining payments. The husband resisted the claim, asserting that the premise underlying the support was the wife’s need. As she no longer had need, he should not be required to make further payments.
The Court concluded that the estate was entitled to continue to receive the support payments. It reasoned that the contractual agreement of the parties created a juristic reason to continue support for the following reasons:
1.The separation agreement contained the fairly standard enurement clause, which provides that the agreement enures to the parties’ heirs, executors etc.
2. The separation agreement contained a non-reviewability clause that states: “entitlement, quantum, and duration of spousal support is non-reviewable and may not be varied on any material change of circumstances.”
3. The separation agreement was comprehensive, negotiated with give and take on both sides, and it should be considered as a whole.
4. Actual need is not expressed in the agreement to be a precondition to payment. For instance, if the converse to the husband’s argument were true, being that the wife remained in financial need and lived longer than five years, the wife would not have been able to collect any further amounts.
Notably, the parties had also turned their minds in the agreement to what would happen if the husband died before all payments were made, as he agreed to maintain life insurance to secure support in the event of his death.
The Court found that the agreement was unambiguous, and could not be set aside as the parties to it (1) intended it to be a full and final resolution, and (2) there were no new circumstances not reasonably anticipated that led to a situation that could not be condoned.
A recent article found here discusses the Court’s decision.
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In Ontario, if two people die at the same time or in circumstances rendering it uncertain which of them survived the other, the property of each person shall be disposed of as if he or she had survived the other (see s. 55(1) of the SLRA). In short, each person’s Will is administered as if the spouse predeceased. This outcome can be particularly problematic in various circumstances, a few of which I touch upon below.
Spouses with mirror wills. Without a common disaster clause that would address circumstances where both spouses die simultaneously, there may be certain bequests that are triggered twice. For instance, mirror wills may provide that (i) the residue of the testator’s estate is to be transferred to the spouse if he/she survives the other by 30 days, and (ii) if the spouse predeceases or fails to survive the other by 30 days, a specific bequest is gifted to Child #1, with the residue going to Child #2. Since neither husband nor wife survived the other for30 days, Child #1 would get two specific bequests, one from each of the parents’ estates, reducing the entitlement of the residuary beneficiary, Child #2.
No alternate executor. Spouses often name the other as their executor. If no alternate is named and they die simultaneously, the executor appointment would go on an intestacy (see s. 29 of the Estates Act), and the testator has lost the power to control who administers the estate.
Joint assets. Where joint tenants die at the same time, unless a contrary intention appears, the joint tenants are deemed to have held the property in question as tenants in common (see s. 55(2) of the SLRA).
Insurance proceeds. If the insured and the beneficiary die at the same time, the proceeds of a policy are to be paid as if the beneficiary predeceased the insured (see SLRA s. 55(4), and Insurance Act ss. 215 and 319). If there is no alternate beneficiary, and unless the insurance contract provides otherwise, the proceeds would be payable to the estate and subject to probate fees.
These examples serve to illustrate the value in having simultaneous deaths form part of your checklist when advising estate-planning clients. For more on this topic, I encourage you to read this article and to watch/listen to my recent podcast with Rebecca Rauws.
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Other Articles You Might Be Interested In
This week on Hull on Estates, Jonathan Kappy and Laura Betts discuss a recent decision of the Supreme Court of British Columbia, Eastman v Eastman Estate 2016 BCSC 1728 (http://bit.ly/2dhsgeu)
Should you have any questions, please email us at firstname.lastname@example.org or leave a comment on our blog.
Click here for more information on Laura Betts.
As previously discussed in last week’s blog, marriage contracts are often entered into in order to contract out of the rights afforded to married spouses by the Family Law Act.
Spouses may decide to enter into a marriage contract for various reasons. For instance, one spouse may be bringing in significant assets into the relationship and wishes to protect these assets.
When entering into a domestic agreement such as a marriage contract, it is often prudent to ensure that the marriage contract coincides with one’s estate plan. Accordingly, it may be wise for a domestic contract to be drafted in conjunction with one’s estate plan.
It is important to note s. 63(4) of the Succession Law Reform Act, which gives the court discretion to make an order for support, even though the dependant released or waived his or her right to support. This release or waiver may be contained in a domestic agreement such as a marriage contract. Therefore, even if the deceased and his or her spouse entered into an agreement intentionally releasing one another’s claims, if the deceased was a dependant, the court has discretion to order support notwithstanding the agreed upon provision in the marriage contract. However, the domestic agreement is a factor the court must consider on an application for support.
Moreover, the court may set aside a marriage contract while both parties are living if the provision respecting support “results in circumstances that are unconscionable”, if the dependant receives public support, or if there is default in support payments under the agreement. Further, marriage contracts can be set aside if one party fails to provide proper financial disclosure to the other party, if one spouse did not understand the nature and consequences of the marriage contract, or if there was mistake, undue influence or fraud by one or both of the spouses when entering into the marriage contract.
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In Stevens v. Fisher Estate, 2013 ONSC 2282, 227 ACWS (3d) 905, the Deceased’s common law spouse brought an application for dependant support under Part V of the Succession Law Reform Act. The Applicant had cohabited with the Deceased for eleven years. After the Deceased, who already suffered from spinal stenosis and diabetes, had a heart attack, the Applicant became his primary caregiver and performed all of the housekeeping and yard work at their home. She had earlier quit her job to work at the Deceased’s business and withdrew from paid employment again to provide caregiving services to her sickly spouse.
Her future employment prospects were limited. She had gone back to school to obtain her high school diploma, but could not continue when the Deceased’s health began to fail. Justice DiTomaso referred to the Applicant’s great "sacrifice" (para 90) in providing caregiving services in addition to other work around the house. At para 91, he writes that "Without her, his life would have been substantially diminished."
The Court took into account moral and legal obligations to provide support, as well as the Deceased’s legal obligation as a "’judicious father and husband’" (para 132). The cost that would have been paid for caregiving services provided by the Applicant was also considered.
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Estate planning when you have children can be stressful enough, but when you have a child with a developmental disability, the worries surrounding that child’s future once the parents are gone is enough to keep one up at night. Thanks to organizations like Reena, parents in this situation no longer have to see their adult children institutionalized when they are no longer able to adequately care for them, whether due to illness or age.
Reena is a non-profit social service agency available to care for children with developmental disabilities right from infancy all the way through adulthood and into senior years. Established in 1973, the organization has grown to now support almost 1,000 adults and children with developmental disabilities and their families through an assortment of programs.
Such programs include residential living opportunities, where individuals with developmental disabilities can live on a full-time basis in one of a variety of residential settings, such as in an apartment, group home or triplexe. The needs of individuals with developmental disabilities vary from supervised independent living to 24-hour-a-day care.
Similarly, Reena has built and operates two specially designed homes for older individuals with developmental disabilities who require significant medical and/or physical support. In these homes, Reena continues to provide staffing care for seniors whose increasing needs have made it impossible for them to continue living in an ordinary residence and who require care in a long-term care setting.
Reena might not the best option for every family where a child with developmental disabilities is involved. Nevertheless, it is important for parents of such children to be aware that such options exist. In this way, parents can start planning for their child’s future when thinking of their own mortality and, in turn, perhaps prevent some of those sleepless nights.
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A new survey finds that 19% of the people polled would risk their own financial security to support their adult children, according to a recent article in the Toronto Star.
The rising cost of post-secondary college is one of the factors causing adult children to be increasingly reliant on their parents for financial assistance. According to the Government of Canada, a student attending CEGEP, trade school, college or university full-time today can expect to pay between $2,500 and $8,000 per year or more in tuition alone—not including books, supplies, student fees, transportation, housing and other expenses. In fact, full-time students in Canada paid $14,500 on average to cover a year of post-secondary expenses in 2003-2004. That’s roughly $58,000 for a four-year program.
John Tracy, a senior vice president at TD Canada Trust cautioned in a release, “As a parent, it’s natural to want to help when children struggle with finances, but it’s important this support does not compromise your own financial stability and retirement savings goals.”
Financial dependence can also compromise your estate planning goals. The financial dependence of an adult child on your financial support can lead to potential litigation through a dependant’s support claim after your death. For more information about recent case law in a dependant’s support claim, check out Paul Trudelle and Noah Weisberg’s podcast here.
In making an award of dependant support, the court has a broad discretion under s. 58(1) and 63(2) of the Succession Law Reform Act.
Once a determination is made that a claimant is a dependant, and has not been adequately provided for by the deceased, the court has broad powers when ordering that provision for the dependant be made out of the estate. In addition to an expanded definition of the “estate” under s. 72, the court may make orders for lump sum payments, annual payments or otherwise, for a limited or indefinite period, or lump sum payments in addition to periodic payments, in addition to other powers.
A good example of the creative power of the court is demonstrated in Sorkos v. Sorkos Estate, 2012 ONSC 3196 (CanLII). There, the deceased died having an estate of approximately $2.6m. The claimant and the deceased appear to have been married for less than 10 years. The claimant was 69 years old, did not speak English, and was unable to work for medical reasons. The deceased had no other dependants.
In his Will, the deceased left the claimant $250,000. He also named her as the beneficiary of his RRIF, having a value of $287,000, and paying the claimant $1,200 per month. The residue of the deceased’s estate passed to the deceased’s siblings.
The court found that the claimant was a dependant, and that the deceased did not provide adequate support for her. In so finding, the court noted that it was not to undertake a strictly needs-based economic analysis. Further, the assessment of proper support was to be measured over the course of the dependant’s anticipated lifetime.
In making its award, the court reduced the bequest to the claimant from $250,000 to $150,000. However, the court awarded the claimant support of $3,000 per month ($36,000 per year) for the rest of the claimant’s life. As security, the estate was to purchase an annuity, payable to the Applicant, with a reversionary interest to the estate.
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Paul Trudelle – Click here for more information on Paul Trudelle.
When commencing dependant support applications that involve minors, a few things to keep in mind are:
· In Toronto, applications are to be brought on the Estates List;
· Although it is a good idea to commence an application within the six-month limitation period from the issuance of probate, minor children’s claims are not bound by this limitation period; that said, if an estate is administered prior to the claim being commenced, the relief sought may be difficult to obtain;
· Where one dependant commences a claim, insofar as the limitation period is concerned, it is deemed to be an application on behalf of all persons who might apply;
· Minor children can not sue or be sued without a litigation guardian in place – the title of proceeding should reflect this and the materials filed should comply with the requirements of Rule 7 of the Rules of Civil Procedure;
· The proper respondent in a dependant support application is the estate trustee, not the beneficiaries, although the beneficiaries must be served with the application materials; and, where a minor is a beneficiary, The Children’s Lawyer must be served with the materials; and
· If writing to The Children’s Lawyer prior to commencing a dependant support claim, it is helpful to include a family tree, the names and birthdates of the children, copies of relevant documentation, a copy of probate, detailed financial information about the child’s surviving parent and a summary of the facts.
Additional information about The Children’s Lawyer and its role in respect of dependant support claims can be found in the materials from The Dependant’s Support Application: From Notice of Application to Trial, held on September 27, 2011.
Have a good day,
Natalia R. Angelini – Click here for more information on Natalia Angelini.
The British Columbia Supreme Court in Laing v. Jarvis 2011 BCSC 1082, recently spoke of the issues surrounding the moral obligations of a Deceased.
This matter was brought before the courts by the plaintiff, Ms. Laing, the daughter of the Deceased. The Deceased had passed away on June 3, 2007 and was survived by her son, Mr. Jarvis, the defendant, and Ms. Laing. The Deceased left a Last Will and Testament dated December 10, 2003, which named her son as the sole beneficiary and Estate Trustee. Ms. Laing was completely disinherited.
Ms. Laing sough a variation of the Will under the Wills Variation Act, RSBC 1996, c. 490, s. 2, which section provides the British Columbia courts with the jurisdiction to amend a will, where it is determined that the Deceased made inadequate provision for the maintenance and support of her children or spouse under her Will.
As Mr. Jarvis did not take steps to obtain Probate, the Province was appointed as the official administrator with a Will annexed on June 8, 2010. This matter appeared before the court with little documentary evidence, and without the benefit of Mr. Jarvis’ presence. Upon a thorough review of the family history, the Court determined that the two children of the Deceased ought to be treated equally. However, the Court went further and commented on Mr. Jarvis’ actions and lack of involvement in the administration of the Estate, and made an order that the costs incurred as a result of his inaction ought to be borne by him personally and not by the Estate. This matter is to be brought back before the Court for a determination as to the final disposition of the assets of the Estate, once they have been fully identified.
Although Ontario does not have legislation in the exact same vein as the Wills Variation Act, we are certainly seeing the Courts give more credence to the ‘moral obligation’ consideration.
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Nadia M. Harasymowycz – Click here for more information on Nadia Harasymowycz.