Recent cases demonstrate the increasing overlap between Estates and Family Law, and the common issues which touch upon both areas of practice.
The question put to the Ontario Court of Appeal in Carrigan v. Carrigan Estate was whether a current common law spouse, or a separated but legally married spouse, should be entitled to receive a pension death benefit upon the passing of the member of a pension plan. Significantly, the separated spouse was still designated as the beneficiary of her late spouse's pension plan at the time of death.
The court's ruling overturned the equitable notion of "the spouse in the house" being given preferential treatment, finding instead that although the separated spouse was not living with the pension member, her continuing legal entitlement to the pension death benefit won the day. The common law spouse was therefore unable to rely on cohabitation with the pension member to successfully claim title to the benefit in the face of a legal entitlement in favour of the separated spouse.
Carrigan serves as a reminder to individuals and estate planners to periodically update beneficiary designations when significant changes in lifestyle, or indeed life partner, warrant such an alteration. This is especially noteworthy as pensions often comprise the largest asset of an estate after the matrimonial home.
A further illustration of the intersection of Family and Estates law is the case of Spencer v. Riesberry, which raised the issue of whether assets held in trust prior to separation are likely to be included as marital assets during divorce proceedings.
Here, the Appellate Court found that a family home can escape being designated as a "matrimonial home" via the Family Law Act ("FLA") if held in trust prior to separation. Therefore, in addition to acting as a method of passing a life interest in property to children, the trust has been upheld as a valid mechanism by which one can shelter property from future claims during divorce proceedings.
In the seminal decision of Reid v. Reid Martin, the court reaffirmed that surviving spouses are unable to simultaneously act as executors as well as claim entitlement to equalization under the FLA. Practitioners must advise clients that initiating proceedings against their late spouse's estate will lead to sacrificing control they might otherwise have as executors of that same estate.
Lastly, Hansen Estate v. Hansen describes the concept of "course of dealing," where the conduct of spouses can lead courts to infer that they have severed ownership of jointly-held property.
Practitioners must ensure they revisit and understand the influence of these precedents, and inform clients of the potential impact that their actions, or omissions, can have on estate planning in the context of divorce, separation and the termination of common law relationships.
*Ian Hull and Suzana Popovic-Montag are partners at Hull & Hull LLP, an innovative law firm that practices exclusively in estate, trust and capacity litigation. To watch more Hull & Hull TV episodes, please visit our Hull & Hull TV page.