So much seems to have been going on lately that, this month, I’ve been tempted to pass on a little more information than normal.
The Canadian Institute of Actuaries released a study in July that says we are now living so long that mortality tables (which actuaries use to measure how much money will be needed to pay current and future pensioners) are going to change. How long are we talking? Well, a 60-year-old man is now projected to live another 27.3 years. A 60-year-old woman is projected to live another 29.4 years. Most of the data used came from our CPP and the Quebec Pension Plan.
The effects could be wide. For example, annuity payouts may soon change (read, be reduced) because, if people are going to live longer, annuity payouts will have to adjust accordingly.
I recommend that anyone looking to purchase an annuity get some financial advice as soon as you can. There is now a lot to consider.
The Federal Government has issued a license to the Standard Life Assurance Company of Canada to administer a Federal Pooled Registered Pension Plan (known as the “PRPP”).
Our government created the PRPP in 2012 to help Canadians, especially those working in small- to medium-sized companies that don’t tend to offer workplace pensions. As with our CPP, the employer and the employee pay into it regularly. Once people retire, they will receive what is called a supplementary pension based on several factors, including how long they paid into the plan.
Each province wishing to adopt the plan requires enabling legislation. However, only four provinces (Alberta, Saskatchewan, Ontario and Quebec) are right now on their way to adopting the legislation. The PRPP is an important initiative, especially if we’re living longer!
Last week, the Supreme Court of B.C. released reasons for judegment for the Wills Variation case Eckford v. Van Der Woude and others. In it, a common law spouse sought variation of the Will of the Testator, who died in tragic circumstances in 2010. Their relationship had lasted four years. The deceased was survived by two children and his mother (and, before he died, he had been helping his mother pay her own expenses).
The Plaintiff had known the deceased in high school, but they went their separate ways until their marriages both ended, and then started a new relationship. The Plaintiff left her job and moved cities to live with the deceased.
She paid for a half interest in a house they purchased together, which was ultimately registered as a joint tenancy. In the Will, the Estate was distributed to the mother (who was bequeathed 20%) and the two children (each of whom was bequeathed 40%).
Aside from the house, the Estate was not large. The claims of the mother and the two surviving children were significant. The deceased’s mother, who was fairly elderly and could not work, needed the financial assistance. One of the two children, an adult son, lived and worked in Montreal but did not earn well, and had no savings. The daughter, also an adult, is a student with some student loans and other debt, and needed the Estate bequest as well.
Meanwhile, the Plaintiff did have work at the time of her spouse’s death but has since suffered some illnesses, rendering her unable to work. However, the Court found that since the Plaintiff received the deceased’s interest in the house (by right of survivorship), and it was the most valuable asset the Plaintiff owned, the distribution of the Estate was fair. The Court therefore did not vary the Will.
The Court also held that the Plaintiff was not entitled to her costs, but although she was unsuccessful, she did not have to pay the costs of the defendants. The Estate was ordered to pay those costs.
The Plaintiff had argued that she should receive costs from the Estate because she was disinherited, and so the Will in essence “invited” the litigation, but the Court disagreed.
There is no necessary connection between the three parts of this column, except for the importance of planning. It is significant that there is now discussion in the media about the many implications of our living longer. These issues need to be addressed, but it’s only starting now.
The Eckford case illustrates how an apparent lack of planning has affected the Plaintiff. Consider that the Plaintiff left a good job to live with the deceased. It does not appear from the case reasons that there was a Co-Habitation Agreement or any other financial planning, except that the couple had an account that they used to pay common expenses.
Notably, after the Trial, the Plaintiff had to sell the house to pay debts and is living elsewhere. Though we of course don’t know when we might pass, the tragedy of loss is often amplified for the survivors when the deceased has done little or no financial or Estate planning.
This column ran in the Richmond News on September 27, 2013.