CBA CLC 2014 NEWFOUNDLAND

1. Until Death Do Us Part? Estate Claims Arising Out of Re-Partnerships: A Cross-Provincial PerspectiveCo-Presented by Kimberly Whaley & Heather Hogan Whaley Estate Litigation CBA CLC – NewfoundlandAugust 15-17, 2014

2. CBA CLC 2014 NEWFOUNDLAND Until Death Do Us Part? Estate Claims Arising Out of Re-Partnerships: A Cross-Provincial Perspective Kimberly Whaley & Heather Hogan

3. Introductory Comments: Societal Context • Complexity in estate and trust planning: rising divorce rate, second and third marriages or older adult co-habitations, recognition of same-sex partnerships, step-children, genetically procured children etc……. • Increasing number of estate disputes arising from later in life partnerships • Volume of court cases with blended, fractured, complex family units has exploded • Rapidly aging population

4. Societal Context • Ageing Statistics: • By 2036 there will 11 million seniors in Canada • 14% of our population is already over 65 • Life expectancy is at an all time high - age 83 for women and 80 for men • Dementia affects 20% of seniors by the age of 80, and well over 40% by 90 • 1 in 11 Canadians over the age of 65 currently has Alzheimer's or related dementia • In the US, Alzheimer’s is the 6th leading cause of death with no cure

5. Societal Context • In Canada, changes and shifts as a result of : • the increased prevalence of unmarried cohabiting partners; • equality of same-sex partnerships • remarriages and re-partnerships • children from multiple relationships, children, step children adopted children and children procured through genetic assistance with many parents • all results in disputes between different factions of the complex family connected to each other often only by a deceased person

6. Societal Context • Rise of complex family: • The 2011 Census - people choosing family structures that create more complicated personal and legal relationships • 2006 – 2011: common-law couples rose 13.9% to nearly 3 million couples • Increase for married couples was only 3.1% • 12.6% are stepfamilies with one or more children not biologically related to one of the parents • 41% of stepfamilies are “complex” stepfamilies

7. Litigation Sampling of disputes that can arise after death: • Intestate succession • Family Law Act elections/applications/division of property • common law spouse claims • enforcement of spousal support orders, domestic contracts • dependant’s support claims • unjust enrichment and its legal and equitable remedies • pension, beneficiary, and other designations • jointly held assets, accounts, real property • inter vivos transfers • revocation of Will on marriage (in some provinces) • claims by biological children and other “children” • predatory marriages and relationships for financial exploitation

8. Overview Of LITIGATION A Cross-Provincial Review of Recent Cases

9. Intestacy/Revocation Upon Marriage • Historically, few rights for a surviving spouse • Main protection: rule that marriage revoked a Will • Could produce windfall for a surviving spouse: Ontario, married person dies intestate, no issue, spouse entitled to property absolutely • Intestacy rules are strict

10. Intestacy/Revocation Upon Marriage • Not all Provinces: • Alberta – Wills and Succession Act - February 2012 - no Will or part of Will is revoked by marriage or testator entering into independent relationship • Fuchs v. Fuchs2013 ABQB: Will declared valid after marriage, even though no declaration that it was made in contemplation of marriage • Prior legislationapplied re revocation of Will, however, new legislativeprovisions on interpretation also applied • Court: lack of declaration was due to misunderstanding or error of his lawyer

11. Intestacy/Revocation Upon Marriage • British Columbia – Wills, Estates and Succession Act, March 31, 2014 • Will is not presumed to be revoked by marriage or a change in common-law or marriage-like relationships • New Brunswick – hybrid approach • Will revoked on marriage, subject to certain exceptions • Person who would have received a gift under revoked Will, can apply to court to receive gift

12. Spousal Division of Property • In most Canadian common-law jurisdictions, married spouse entitled to division of property following separation • Upon the death of a spouse, in Ontario, within 6 months, a surviving spouse can: • Make an election for an equalization application of NFP under FLA; or • Take under a Will (or under intestacy legislation if no Will)

13. Spousal Division of Property British Columbia • Division of property between spouses not triggered by death of spouse • Broad discretion to reallocate a deceased’s estate under the Wills Variation Act Alberta • New legislation contains proposed to implement regime for division of matrimonial property following death of spouse • Proposed changes to legislation, not proclaimed in force yet (Attny. Gen. website states further research to be conducted)

14. Enforcement of Domestic Contracts • Claims may be made for enforcement of spousal support orders from previous marriages, separation agreements with former spouses and other domestic contracts • Not enforceable: prohibited provisions, failure to make full and final financial disclosure, unconscionable

15. Enforcement of Domestic Contracts • McCain v. McCain 2012 ONSC 7344 • Son told to have his wife execute a domestic contract or be disinherited by father • Wife executed contract in which she waived all of her property rights and right to equalization under the FLA • In divorce proceedings wife argued that terms of contract were “unconscionable”; she did not know what she was giving up, she was vulnerable and husband took advantage of her • Court: Agreed it was unconscionable and offending provisions were severed

16. Enforcement of Domestic Contracts • Caron v. Rowe 2013 ONSC • Wife executed pre-marital agreement forfeiting her right to family home • Husband died intestate with no children • Wife filed her election under FLA for equalization and applied for declaration – sole intestate heir under SLRA • Mother of deceased sought interest in house, wife had waived her right to it • Court: Agreement not clearly drafted. Did not contract out of right to home

17. Enforcement of Domestic Contracts • Yukon: MacNeil v. Hedmann 2014 YKSC 16 • Agreement to revoke a marriage contract had no legal effect • Husband unduly influenced wife to sign “revocation agreement”: • asked her to sign it ‘out of the blue’, • threatened he would not pay her money owed unless she signed it; • witnessed by two sons who were high on marijuana at the time • Good overview of enforcement of domestic contracts in Yukon

18. Unjust Enrichment • Kerr v. Baranow, Vanasse v. Sanguin2011 SCC • Reviewed and expanded remedies available to unmarried spouses • Recently Ontario court has expanded the analysis to married spouses (Barrett v Barrett) • Important for estate lawyers as u/e equally applicable against estate of deceased spouse as a living one

19. Unjust Enrichment • “Joint Family Venture”: • Mutual effort of parties • Economic integration • Actual intent • Priority to the family or detrimental reliance • Award not restricted to fees for service approach • Remedy calculated on share of assets proportionate to contribution • Flexible approach

20. Unjust Enrichment • Barrett v. Barrett 2014 ONSC • Court applied Joint Family Venture analysis for question: Who benefited from the increase in value of matrimonial home between date of separation and date of trial? • Court: It was specific intention of parties that matrimonial home remain outside the joint family venture

21. Proprietary Estoppel • British Columbia: Scholz v. Scholz 2013 BCCA • Mother paid to build coach house on son and daughter-in-law’s property • Sold property (w/o mother’s knowledge) and refused to share any proceeds of the sale • Denied proprietary estoppel, resulting trust, constructive trust but made finding of a family relationship with an implicit agreement that mother would receive fair measure of compensation

22. Proprietary Estoppel • Ontario: Schwark v. Cutting 2010 ONCA • COA confirmed test for P/E: • Owner of land induces claimant to believe he or she will have a right to the land • Claimant acts on this belief to his/her detriment, with knowledge of owner • Owner denies claimant expected right to land

23. Proprietary Estoppel Clarke v. Johnson 2012 ONSC • Clarke and his wife built a cottage on his wife’s parents’ land • Divorced but Clarke kept using cottage for 20 yrs until ex-in-laws told him he had to stop • Court: Successful on proprietary estoppel (and U/E) • In-laws induced Clarke to believe he would have use of land until he died; Clarke relied on this belief to maintain and improve cottage; would be unconscionable to allow in-laws vacant possession for their own use or to rent it out

24. Dependant’s Support • All Canadian provinces and territories have some form of legislation dealing with dependant support • See CBA website for a Table of Concordance of the legislation: • http://www.cba.org/CBA/sections_wills/main/Tables_2013.aspx

25. Dependant’s Support • Ontario: Part V of the SLRA - deceased, prior to death, was providing support to a dependant but failed to make adequate provision for proper support of dependant on death • Needs to prove provided support and failed to provide adequate and proper support • List of 19 factors to determine adequate support • Not just legal but moral factors as well (Tataryn v. Tataryn 1994 2 SCR 807 and Cummings v. Cummings 2004 CanLII 9339 ONCA)

26. Dependant’s Support British Columbia – Wills Variation Act • If a testator dies leaving a Will that does not make adequate proper maintenance of testator’s spouse or children, court has discretion to order adequate, just and equitable provision out of the estate for spouse or children • Potentially broad application, no need to show legal obligation to support or that the deceased was supporting immediately prior to death

27. Dependant’s Support • Lalonde v. Moore 2013 ONSC • Factors in establishing “spousal” relationship: • location of applicant’s belongings; • address on bank accounts; • who paid household bills; • declarations of common law living on CRA filings; • evidence of intimate, sexual or romantic relationship

28. Dependant’s Support • British Columbia: Griese v. Syret2013 BCSC • Deceased had been in common-law relationship for over 15 years when executed Will • Left her “friend” (her husband) a dining room suite • Court: dining room suite not adequate support, “modest spousal support” owed; but “significant” moral obligation

29. Dependant’s Support • Alberta: Re Malkhassian Estate 2014 ABQB • Deceased grandfather did not stand in place of a parent to his granddaughter, granddaughter not a dependant • Court: grandparents should be free to provide benevolent emotional support and childcare without it affecting the ultimate disposition of his or he estate

30. Dependant’s Support • PEI: MacDonald Estate 2014 PESC • Dependants of a Deceased Person Act • Second marriage, wife told she would be beneficiary of a $100,000 life insurance instead of being provided for under husband’s Will • No life insurance existed • Court: looked to intentions of parties and awarded $100,000.00 lump sum support award

31. Pensions • Carrigan v. Quinn 2012 ONCA • Who receives the pension death benefit when the member of a pension plan dies and is survived by both a common-law spouse and a legally married spouse from whom he was separated and was designated beneficiary? • Court concluded: common-law spouse denied benefit if only separated from married spouse and not divorced

32. Pensions • But note different outcome in Vladescu v. CTV Globemedia Inc. 2013 ONCA • Dealt with Federal legislation: Pension Benefits Standards Act • Deceased entered into separation agreement that explicitly gave former spouse his pre-retirement death benefit as part of negotiated agreement • Court: Agreement was insufficiently clear. Awarded benefit to new wife • Apparent harsh results – intentions/public policy thwarted

33. Pensions • Saskatchewan: Love v. Love2013 SKCA • Deceased attempted to change beneficiary of pension from ex-wife to son but improperly filled out form and failed to sign it • Court at first instance: ex-wife rightful beneficiary • Court of Appeal: applied doctrine of rectification • Looked to intentions of deceased • Evidence showed son was intended beneficiary

34. Pensions • British Columbia: Wilson v. Wysoski 2014 BCSC • Deceased and ex-wife executed separation agreement / court order dismissed any claims she had to pension • Deceased committed suicide shortly thereafter, did not change beneficiary • Court: whether or not he intended to make a change to the beneficiary he did not do so, ex-wife was proper beneficiary

35. Pensions • Nova Scotia: MacEachen v. Minniken2014 NSSC • 3rd wife unsuccessfully challenged second wife’s entitlement to pension benefit • Deceased husband and 2nd wife had separation agreement where wife agreed to execute documents to release herself as beneficiary • Husband never asked her to sign documents • Court: 2nd wife valid beneficiary

36. Joint Asset Challenges • In re-partnership/re-marriages, expectant heirs have incentive to prevent joint assets from passing to surviving spouse • This gives rise to challenges over jointly held assets such as joint bank accounts and property held in joint tenancy

37. Joint Asset Challenges • Jointly held bank accounts between deceased and children particularly give rise to litigation, and whether or not “right of survivorship” applies to the accounts • Pecore v. Pecore2007 SCC: presumption of resulting trust for bank accounts between parents and adult children. • Adult children must prove on balance of probability that deceased intended to gift assets in joint account • Absence proof, assets form part of the estate

38. Joint Asset Challenges • Sawdon Estate v. Watch Tower 2014 ONCA • 7 bank accounts held jointly with a right of survivorship with 2 of 5 children • Advised children, on his death to be divided equally between all children • In his Will, deceased left residue of estate to “Watch Tower” and they argued bank accounts formed part of the estate • Court: children successfully rebutted presumption of resulting trust

39. Joint Asset Challenges • Lowes Estate v Lowes 2014 ONSC • Deceased and nephew joint bank account with instruction that upon death money to go to university, granddaughter and son • Signed note to this effect • Left wife residue of estate in Will • Court: Relied on Sawdon – deceased set up trust with his nephew as trustee • University, granddaughter and son were beneficiaries. • Onus to rebut presumption was met

40. Joint Asset Challenges • Severance of Joint Titles:Hanson v. Hanson 2012 ONCA 112 and Su v. Lam2012 ONSC • “Three rules”: • unilateral acting on one’s own share such as selling or encumbering it; • mutual agreement between co-owners to sever j/t; and • any course of dealing sufficient to intimate that the interests of all were mutual treated as constituting a tenancy in common

41. Joint Asset Challenges • Newfoundland: Chafe v. Hunter et al2013 NLTD • This case looked at the third “rule” and how it is interpreted/applied in Newfoundland • Court: joint tenancy was severed between father and 2 sons by their “course of dealing” • Their actions included: • Fencing off portions of land • Building houses • Cultivating gardens • Harvesting hay

42. Predatory Marriages • Unscrupulous opportunists prey upon older adults for financial gain • Such unions are not easily challenged • ‘Test’ or factors of assessment for determining requisite capacity to marry at common law- a ‘simple’ test not requiring high degree of intelligence • Currently – minimal understanding of nature of contract of marriage • Common law considerations not kept pace with the development of property legislation • Statutory complications – SLRA • Banton1998, 164 D.L.R. (4th)

43. Predatory Marriage • Juzumas v. Baron2012 ONSC • 89 year old older adult – 65 year old “caretaker” • Older adult feared moving into assisted facility, caretaker preyed on that fear • Provided “care” in exchange for marriage and promise never to put him in facility • Day before wedding, visited lawyer and executed Will • Lawyer never met older adult alone

44. Predatory Marriage Juzumas ………………….. • After marriage – caretaker was abusive, controlling and domineering • Had older adult execute agreement to transfer his home into the name of caretaker’s son • Older adult’s neighbour explained the transfer to him – older adult attempted to stop it but lawyer told him it was already “in the computer”

45. Predatory Marriage Juzumas …………….. • Justice Lang – cluster of remedies • Presumption of undue influence: older person and caretaker • Doctrine of unconscionability – onus on defendant to establish fairness of transaction • Substantial costs in favour of older adult • Unique as older adult himself brought action (with help of neighbour)

46. Predatory Marriage • Other jurisdictions: New York:In the Matter of Berk 2008 • Similar facts to Juzumas – caretaker and older adult • Marriage kept secret until death of older adult • Caretaker sought statutory share of estate as “spouse” • Motion judge granted summary judgment motion – caretaker awarded share as a “right” • Appeal – trial of an issue – Did the caretaker forfeit her statutory right of election?

47. Predatory Marriage • Campbell v. Thomas A.D. 3d 897 N.Y.S. 2d 460 • These cases highlight the potential of other rights and remedies : Other concepts: • Doctrine of unconscionability • Tort of deceit • Equitable estoppel • Unfair advantage

48. What do we learn from this review of cross-provincial litigation? • As professionals providing advice to clients in estate, family and succession planning it is important to consider: • the complete family dynamics and full knowledge of relationship and history • if possible avoid appointment of a new spouse or children of a former relationship where there will be a temptation for the estate trustee to not act neutrally

49. Necessary to identify all people who may make a claim under the applicable dependant’s support legislation • Advise client on adequacy of provisions in a proposed Will and disposition of other assets based on the most up-to-date trends in the cases • Determine if the client had any former common-law spouses, or spouses of sort, especially relationships that ended without the involvement of lawyers, and status of each • Determine children and obligations to children of the relationship(s) and ages and extended family

50. Determine what legislation might be operative upon death and whether the deceased and his or her partners are “spouses”: • in family law • succession law • pension, • tax • banking, and other legislation • At common-law, a person is not limited to having only one spouse at a time