SPOUSAL RELATIONSHIPS AND ESTATE LITIGATION – PART III

A Separation Agreement or a Marriage Contract between married spouses may contract out of the rights afforded to married spouses by Statute.

If married spouses separate within the meaning of the Family Law Act, their relationship is typically governed by the provisions of a Separaton Agreement. A Separation Agreement is a contract and is governed by the common law as it relates to contracts.

As a general proposition, the intention of a Separation Agreement is generally assumed to be to ensure that the parties, as between themselves, contract to ensure that neither benefits from the other’s property after the termination of the relationship.

If the obligations contained in a Marriage Contract are incorporated into a Will, the obligations will continue notwithstanding the fact that the contract has itself been found to be invalid.

Unless the provisions in a Marriage Contract for the surviving spouse are clear and straightforward, there is a risk that the provisions in the Will may amplify the benefit flowing to the surviving spouse.

As a general proposition, spouses that have entered into a Separation Agreement do not typically intend their spouse to thereafter benefit from their estate. However, unless the Separation Agreement is very carefully worded, the Wills made by the parties to the Separation Agreement, even if those Wills predate the Separation Agreement and appear on their face to be contrary to the intention of the Separation Agreement, will be found to prevail.

This is because the Court is loathe to override the testamentary dispositions contained in a Will unless the words used in the Separation Agreement are direct and cogent that such is the intention of the parties to the Separation Agreement.

A Separation Agreement is not a testamentary disposition. Rather, it is a contract whereby, insofar as the death of the parties is concerned, the parties contract out of their entitlements to receive statutory rights and testamentary dispositions if the Agreement uses direct and cogent language to effect such a result.

A Separation Agreement will rarely expressly address the situation in which the parties to the Agreement have not changed their Wills to exclude each other. However, it is not uncommon for just such a situation to arise. Although the intentions of the parties to the Separation Agreement is, typically, to exclude the other from any interest in their property and for such exclusion to be binding on their respective estates, the Court will not construe the intentions of the parties in their Separation Agreement to have contracted out of entitlements received as a beneficiary of the other’s estate.

So, for example, where the Court found that the parties had not contracted out of the benefits conferred upon them by the other’s Will which predated the Separation Agreement. Specifically, the Court reasoned that “the Wife had no right to claim to be named as beneficiary of her former husband’s estate, but she did not by the agreement waive her right to claim if her husband chose not to alter his Will so as to eliminate her as a beneficiary.” (Goldfiled v. Koslovsky [1976] 2 W.W.R. 553).

Put another way, the Court will construe the fact that a married spouse did not change his or her Will to be “an affirmation of the intention to benefit his spouse.” Accordingly, what is typically an inadvertent omission will be interpreted by the court as an act committed with the intent to benefit.

Put still another way, there is effectively a presumption that the Will has not been revoked by the terms of the Separation Agreement. Such presumption is rebuttable but only if there are direct and cogent words in the Separation Agreement which specifically contemplates the situation in which the parties fail to change Wills which predate the Separation Agreement and leave their respective estates to the other.

Have a great day, David.