Spousal claims against estates: The utility and impact of domestic contracts

9 juin 2020 | Alexander Swabuk

( Disponible en anglais seulement )

Although marriage is often regarded as a rite of passage that carries with it intense societal significance, a recent survey reported by Statistics Canada has revealed that 41% of all married couples in Canada will either separate or divorce before their 30th anniversary.[1] Results from the 2011 Census of Population have also demonstrated that common-law relationships are the fastest growing family structure in Canada.[2] In British Columbia alone there were more than 160,000 common law couples in 2011, and that number was growing at a rate three times faster than the number of married couples. Statistics Canada has also estimated that the number of common law couples across the country was growing approximately four times faster than the number of marriages.

Clearly, more and more Canadians are deciding to forego the legal formalities that accompany marriage and are instead choosing to live together outside of marriage as common-law partners. Unfortunately, despite this growing trend, many people in common law relationships are unaware that they may still have legal obligations to one another.  Worse yet, statistics demonstrate that common law spouses are much less likely than married spouses to consult a lawyer following the breakdown of a relationship. While 58.2% of separating spouses and 76.0% of divorcing spouses sought advice, only 25.3% of separating common-law spouses did the same.[3]

With so many marriages now ending in divorce, as well as the recent influx in common law relationships that now give rise to legal rights and obligations, it appears that the chances of one encountering the judicial system as a result of a failed personal relationship are at an all-time high.[4]As such, it is highly likely that the majority of British Columbians will still be touched either directly or indirectly by the Family Law Act, S.B.C. 2011, c. 25 (the “FLA”), the Wills, Estates and Succession Act, S.B.C. 2009, c. 13 (the “WESA”) or the Wills Variation Act, RSBC 1996, c 490 (the “Wills Variation Act”) as a result of a relationship breakdown throughout the course of their life.

 As a result of these relationship trends and coupled with the fact that people are living longer than they used to, estate and family law practitioners have seen a significant growth in cases involving competing post-mortem claims made by surviving spouses, former spouses, and dependants against the estate of deceased spouses/former spouses. Under the framework of the WESA, which came into force in BC on March 31, 2014, there are no meaningful distinctions between married and unmarried spouses. Furthermore, a will is no longer presumed to be revoked by marriage or a change in common-law or marriage-like relationships. This particular piece of legislation recognizes and anticipates claims arising from modern blended or complex families. For example, the spousal share on intestacy, which is set at $300,000, is reduced to $150,000 when all the children of the deceased are not also children of the surviving spouse. This reduction seeks to ensure that some assets will be available for the non-common children. The WESA also directly addresses situations where more than one spouse might fit its definitions.[5]

Domestic Contracts

Cohabitation agreements and marriage agreements are two common forms of written domestic contracts often signed by couples who have chosen to live together as a protective measure in case of a relationship breakdown. Cohabitation agreements are utilized by unmarried partners who, at the time of execution, are either cohabiting or intend to cohabit. They generally deal with each partner’s respective rights and obligations during cohabitation, on ceasing to cohabit, or on death. A marriage agreement or what is commonly referred to as a “pre-nuptial contract” is used by those persons that are legally married or intend to be.

For the most part, under the FLA, spouses are free to agree to whatever they wish about the rights and obligations that are to flow from their union, subject only to a few exceptions, such as contracts regarding the education, moral training or custody/access of children.[6] Accordingly, domestic contracts may address property rights in the event of separation, divorce, or death and may specifically opt out of equalization, exclude certain assets from equalization, or provide for a different means of property division. The same applies to spousal support, which can be waived altogether.[7]

It is important to remember that the enforcement and validity of a domestic contract is subject to a variety of factors. Like any other type of contract, a domestic contract is subject to the normal principles of contractual interpretation.[8] Although the common law has always been restrictive as to the terms of a domestic contract that it will enforce, marriage and cohabitation agreements are subject to more stringent rules of fairness than commercial contracts. As a general rule, a valid, enforceable contract, will be upheld by the courts. However, in certain circumstances the courts will intervene and override (or set aside) a domestic contract.[9] Examples of such circumstances include instances where one or more of the following have occurred: fraud, duress, undue influence, unconscionable transactions, misrepresentation or a failure to disclose income/debt.  As a result, those who are facing a relationship breakdown and have signed a domestic contract should always consult with experienced counsel regarding their legal and statutory rights. Additionally, Executors acting for an estate facing a potential spousal claim should act prudently and seek guidance from an estates lawyer, as the enforceability of a domestic contract may impact the manner in which an estate is distributed.

[1] Maire Sinha, “Parenting and Child Support after Separation or Divorce,” Spotlight on Canadians: Results from the General Social Survey, Statistics Canada catalogue no. 89-652-X (page last updated November 30, 2015).

[2] Statistics Canada, Portrait of Families and Living Arrangements in Canada (Ottawa: StatCan, 1 January 2014).

[3] Statistics Canada, General Social Survey – Cycle 20: Family Transitions Survey 89-625-XWE – Navigating Family Transitions: Evidence from the General Social SurveyAccessed October 6, 2015. See also Portrait of Families and Living Arrangements in Canada Accessed on October 6 2015.

[4] Justice Mary Lou Benotto, “Ethics in Family Law: Is Family Law Advocacy a Contradiction in Terms?”.

[5]Kimberly Whaley, “New Spouse/Old Money: Claims Arising out of later in life partnerships”.

[6] Martha McCarthy, “Family Law for Estates Lawyers,” Blending Family Estate Planning, LSUC Continuing Professional Development (June 14, 2011), at 19.

[7] Supra note 5.

[8] Martha McCarthy and Heather Hansen, “Family Issues in Estate Litigation,” Key Developments in Estates and Trusts Law in Ontario, 2010 Ed., Melanie A. Yach, (Aurora: Canada Law Book, 2010) at 65.

[9] Supra note 5.

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