Wills Variation: a spouse who was almost disinherited
Last month, reasons for judgement were handed down by the Supreme Court in the case McHale v. McHale Estate.
The Honourable Madam Justice Harris wrote a well reasoned, thorough judgement in this most interesting case, involving a claim by an almost disinherited surviving wife.
There is more Wills Variation litigation now in British Columbia than ever before, for several reasons. A deceased person’s spouses (married or common law) and children (biological and adopted) are eligible to challenge the Will where they feel they are not left a just, adequate and fair portion of the deceased’s Estate.
In the McHale case, the parties had made a marriage agreement 30 years earlier, where each agreed they would not pursue the other’s Estate. How the Court handled this aspect is of particular interest.
The Plaintiff (now 85) and the deceased met in the 1970s, each having been married before. Each had children from a prior marriage.
One of the deceased’s intentions, described in his Will and in the marriage agreement, was to leave most of his Estate to his children.
The disparity in their assets was significant when they made the agreement. The deceased had purchased a lot before the parties married and built their matrimonial home on it. The Plaintiff was not a registered owner, but had contributed some of the effort in building and a lot in maintaining the home while they lived in it.
At the deceased’s request, the Plaintiff stopped working and earning an income. That prevented her from building some savings. The deceased had various pensions which paid him a reasonable monthly income, from which the parties lived.
The deceased gave the Plaintiff a monthly allowance for food and other home expenses, but not her personal expenses. She had to finance those from her own modest income.
Before they married, in 1983, the deceased insisted on a marriage agreement and one was drawn up. The Plaintiff was given independent legal advice.
The parties lived a modest but comfortable lifestyle. There was no separation and no apparent discord over the 38 years the parties lived together.
After the deceased died in August 2013, the Plaintiff’s intention, as she expressed it, was to move into a retirement home in Penticton.
The case raises several issues. The main one, in my opinion, is the effect of the couple’s marriage agreement.
While it was clear that the deceased wanted to bequeath his Estate to his children, the law states that the Court must examine the circumstances of the parties at the time of death, not at the time the agreement was made.
This was a lengthy relationship: 38 years, including eight years before the marriage. By not working, the Court noted, the Plaintiff was unable to put herself in a better financial position.
So, to put it one way, the deceased couldn’t leave his Estate mostly to his children while leaving the Plaintiff financially precarious. The Plaintiff looked after the deceased, and was held to be eligible to a division of assets had the parties separated before the deceased died.
The Court held that the deceased owed legal duties to the Plaintiff, which superseded any such duties owed to his children. The deceased also owed moral duties to the Plaintiff, which were significant and also superseded those owing to his children.
The Plaintiff received CPP survivor benefits from the deceased, and was the named beneficiary of his RRIF. She was also awarded the value of half of the net sale proceeds from the matrimonial home.
The rest of his Estate was divided equally among his two children. The Court felt that this division did not significantly depart from the deceased’s wish to leave most of his Estate to his children.
The longer a marital relationship, whether marriage or common law, the more financially settled a couple will become. In this case, the Plaintiff had become financially dependent on the deceased: he controlled the couple’s finances and she did not work outside the home.
It seemed that this factor, above all, accounted for the variation of the deceased’s Will. A good marriage agreement is desirable, but if possible, it should take into account the parties’ financial futures.