One of the unfortunate realities of marriage breakdown is that the spouses often do not promptly update their estate plans to reflect the dramatic changes in circumstances. If one of the spouses passes away leaving an outdated Will, the legal representative of the deceased spouse faces the daunting challenge of attempting to correct the provisions of this Will.
This article will briefly comment on what kind of relief can be found in the Wills Act, Wills Variation Act and the Wills, Estates and Succession Act (“WESA”), which is scheduled to become operational on March 31, 2014, and the effect of a Separation Agreement on an outdated Will.
Some relief for an outdated Will may be found in the Wills Act, but only if a certain triggering event has occurred, as outlined in sections 16, 19 and 20. The Courts in British Columbia have consistently adopted a strict interpretation of the Wills Act with respect to these sections. Thus, if you cannot legally establish (i) a judicial separation, (ii) divorce, or (iii) a declaration that the marriage was void or annulled, then the Wills Act will not be of any assistance in rectifying the outdated Will. A separation without one of those three events, even if evidenced by a written Separation Agreement, is not sufficient to obtain relief under the Wills Act. The Wills Act will continue to apply up until the point where WESA comes into force.
Wills Variation Act (“WVA”)
The WVA gives standing to spouses and children to apply to the Courts to vary the terms of a Will if a testator dies leaving a Will that does not, in the Court’s opinion, “make adequate provision for the proper maintenance and support of the testator’s spouse or children …”
In hearing a WVA action, the Courts will consider all relevant facts, including the fact that the surviving spouse was separated from the deceased spouse. There are numerous cases in British Columbia dealing with the WVA, but the Courts have been consistent in holding that the Courts will consider, but are not bound by, the provisions of a Separation Agreement. For example, if a Separation Agreement contains the usual language that the surviving spouse is not to share in the estate of the deceased spouse, then in the WVA action, the surviving spouse will be arguing that the Separation Agreement is of little evidence in determining what is fair, whereas the legal representative of the estate and the applicant (often children from another marriage) will be arguing that the Separation Agreement is material to the extent that the surviving spouse should not receive anything.
The British Columbia Courts have been clear that an express renouncement of rights in a Separation Agreement is not a bar to a WVA application, but is merely one factor to be considered.
Generally, Separation Agreements can be drafted so that the benefits and obligations of the parties are binding not only on the parties but also on their respective estates. Separation Agreements must be carefully considered and clearly drafted if they are to be useful in correcting an outdated Will.
Firstly, the Courts distinguish between a “right to make a claim” and a “right to receive a gift”. Many Separation Agreements prohibit the surviving spouse from making a claim against the estate of the deceased spouse, but do not specifically prohibit the surviving spouse from receiving a gift. These Separation Agreements will not affect or cure the provisions of an outdated Will as the executor will still be bound to carry out the terms of the will.
Secondly, the case law is clear that it is much easier for a Separation Agreement to revoke a beneficiary designation than it is to change the testamentary intention of the deceased spouse. This is reasonable because the written documentation required to change a designated beneficiary and its due execution is less legally onerous than it is for varying a Will.
In order for a Separation Agreement to be an effective instrument to alter the rights under a Will, it must express a deliberate or fixed and final intention as to the disposition of property on death. Keep in mind that even if properly drafted, the Separation Agreement does not in fact change the Will. It only creates the legal framework whereby the legal representative of the deceased is not legally obligated to make payment to the surviving spouse under the Will and the surviving spouse is legally estopped from enforcing payment.
To be effective to achieve its intended results, the Separation Agreement must contain the following covenants and agreements:
- the surviving spouse will not make a claim against the estate of the deceased spouse;
- the surviving spouse will not accept any appointment as a legal representative of the deceased spouse, whether under a Will or on an intestacy;
- the surviving spouse will not receive any benefits as a consequence of the death of the other spouse, whether under a Will or on an intestacy or under a beneficiary designation, and the surviving spouse renounces any such benefits;
- at the request of the legal representative of the deceased spouse, the surviving spouse will forthwith execute and deliver to the legal representative, in a form satisfactory to the legal representative, a renunciation or disclaimer of any such benefits;
- the surviving spouse will forthwith pay to the legal representative the amount of any benefits paid by any third party to the surviving spouse resulting as a consequence of the death of the deceased spouse; and
- the surviving spouse agrees that the estate of the deceased spouse will be distributed as if the surviving spouse had died first.
The likelihood of the estate of a deceased spouse being stuck with an outdated Will will be greatly reduced by the introduction of WESA.
The relevant provision in WESA, section 56(2), eliminates the categories of judicial separation, divorce and nullity under the Wills Act and simply states that an appointment of or gift to the surviving spouse is revoked if the spouses had ceased to be spouses. Under subsection 2(2), spouses who are married cease to be spouses if (i) they live separate and apart for at least two years with one or both having an intention to live separate and apart permanently, or (ii) if any event occurs that leads to a division of assets under the Family Law Act. In the case of a marriage-like (common law) relationship, the parties cease to be spouses when one or both of them terminate the relationship. Thus, if spouses separate and neglect to renew their Wills, the outdated Wills will automatically become updated in the circumstances described above, and any appointments and gifts to the former spouse made thereunder will be revoked.
Additionally, section 58 of WESA introduces a significant change to what is traditionally considered to be a Will. Under Section 58(3):
“…the Court may, as the circumstances require, order that a record or document or writing or marking on a will or document be fully effective as though it had been made
(a) as the will or part of the will of the deceased person,
(b) as a revocation, alteration or revival of a will of the deceased person, or
(c) as the testamentary intention of the deceased person.”
Thus, from the date WESA becomes law, a well-crafted Separation Agreement may be held not only as a statement of the spouses’ testamentary intentions but, by virtue of 58(3), may be declared by the court to be a valid will or alteration to a will in its own right.