When to make a marriage agreement part of your estate planning

I recently came across this article from Donna Neff, a lawyer in Ontario. It very clearly talks about how a marriage agreement can help a married couple meet their estate planning goals. The issue that Ms. Neff addresses is how the husband and wife can ensure that should one of them pass away, the other won't make unilateral changes to their estate planning. Click here to read the article.

Pension benefits on death - who is a spouse?

The Ontario Court of Appeal has recently dealt with the question of who is a spouse of a man who died while married to one woman but living common law with another woman, for the purposes of figuring out who should get his pension benefits. For those of you who think it's "easier" not to get divorced and just live with someone else while you're still married, take a lesson from this case and realize what a mess you're leaving behind. It took many months, thousands of dollars and an appeal to the higher court before the question was answered.

The court decided that both the married wife and the common law wife fit the definition of spouse under the law, but found there were reasons to disqualify both of them.

Click here to read a report on the case of Carrigan v. Carrigan from Ontario lawyer Chris Staples.

House in the wife's name only - what if she passes away?

Most married couples own their homes as joint tenants, so that if one of them passes away, the other one automatically owns the home. This arrangement helps to give assurance that the surviving spouse and the family's children will legally and financially be able to continue living in the home.

But there are sometimes reasons why couples set up other arrangements. Often those reasons are related to finances or poor credit, but it could also be to avoid unwanted legal consequences or to protect assets from potential creditors. Not owning the home jointly may be the best arrangement available for a particular couple, but it tends to leave them wondering about who would own what should one of them pass away.

A reader left me this question about their home:

"After being married for almost 3 years, husband and wife put down payment together to purchase a house, but the title of the house is only under the wife's name. What will happen if the husband or wife pass away during marriage?"

If the husband passes away first, really nothing is going to happen about the house, as he doesn't own it. If the wife should pass away first, the answer could be much more complicated. Here are some of the factors that would be taken into consideration when dealing with the home:

Did the wife leave a will? If so, the will should address the question of what is to happen with the home. She might have left a will leaving the house directly to her husband. More likely, she may have left a will leaving her entire estate to her husband. If she has left the entire estate to him, that will of course include the house. Her will might also have done something entirely different, such as putting the house into a trust for their children, or directing that it be sold. The will should also address the household and personal items in the home.

Does the couple live in a province with Dower rights (such as Alberta)? If so, the Dower Act states that on the passing of the wife, the husband would have the right to live in the house for the rest of his life. He would always have a roof over his head, but he would not be able to sell or mortgage the house as he would not own it.

Who else is in the picture? In the absence of a will, the husband would receive whatever the law of the province of residence says he will receive from his wife's estate. He may have to share with the family's children and/or with any children the wife had in a previous relationship. Intestacy laws tend to work on fractions as opposed to specific assets, and would not necessarily include or exclude the home from the husband's share.

Is the husband adquately provided for, either by the wife's will, or by intestacy law? All across Canada, surviving spouses have the right to claim a larger portion of an estate if they have not been properly provided for. This is true whether or not the deceased spouse left a valid will behind. The husband might launch a claim of this sort and through that receive the house. Again, this might depend on who else is in the picture with competing claims.

Does the wife have a lot of debt? Depending on the type and amount of debt, the house might have to be sold to pay the wife's liabilities. Debts and taxes must be paid before any beneficiaries receive anything from the estate, even if that means selling the home.

Is the husband in bankruptcy? If so, his inheritance, including the house, may be seized by the receiver and used to satisfy his debts.

As you can see, nothing good is going to happen without some effort by the wife to protect her husband in the event of her death. She should prepare a will that sets out her intentions for the house. She should also speak with an estate-planning lawyer in her province who can inform her more specifically about her options and consequences.

Common law couples - till death do they part

How do common law relationships compare to legally married relationships when it comes to inheriting under the estate of a deceased partner? Married people still have an advantage but the law is slowly changing to boost the rights of common laws, according to this excellent article from http://www.canadianlawyermag.com/. Click here to read the article.

Alberta's new Wills and Succession Act - part 4

As I mentioned in parts 1 through 3 of my posts about Alberta's new laws, the changes will be enormous. The change I'd like to tell you about today has to do with marriage, divorce, common law relationships and what they do to your will in Alberta.

[Note: in Alberta common-law relationships are called adult interdependent relationships. They can be either opposite-sex or same-sex, and the couples in these relationships are referred to as adult interdependent partners or AIPs.]

The old law (which is still in effect through 2011) says that any will you made before you were married is automatically revoked when you get married. The only exception was a case in which the will was specifically made in contemplation of a specific marriage and referred to the marriage in the will. It also said that if you got divorced, there was no effect on your will. All of this is changing.

Under the new law, your will is not going to be revoked just by getting married, no matter when your will was made. Your will is not going to be revoked just because you become an AIP.

The new provisions about what happens when a relationship ends are also radically different from what they were before. If your marriage or adult interdependent relationship ends, your will is still valid, but any gift to your ex-spouse or ex-AIP will be revoked, unless your will specifically says otherwise.

The gift that would have gone to the spouse/AIP will be treated as if the spouse/AIP had died. Most wills have - or should have - directions for paying out the estate if the spouse has already died, and those directions will be followed.

This rule applies no matter when the will in question was made, but only applies to divorces or termination of AIP relationships that happen once the new law comes into effect.

It would be a good idea to take out your current will and read it over with these changes in mind. Many clients will be making appointments to review their wills with their lawyers once the new law comes into force, and I strongly recommend that you do that as well.

Holy Matrimony! Time to review your will

This is a good reminder to all of you who tied the knot over the summer. Marriage revokes a Will. Time to take a look at it with your new family in mind. Click here to read this Globe & Mail article.

Does getting married always revoke a Will?

As a general rule, getting married voids any Will that you currently have in place. This makes sense, given that once you get married, you have created a new legal responsibility for yourself to look after that spouse financially in your Will.

You can make a Will before getting married and prevent it from being revoked by including a clause in the Will that says it is made in contemplation of marriage to the person you intend to marry. You don't necessarily have to marry that person immediately afterwards, but if you marry anyone else instead, the Will is revoked. For example, if you make a Will in contemplation of marriage to John and then marry Bill, your Will is going to be revoked by the marriage.

Moving in with someone, even if you intend this arrangement to be a common-law marriage, does not revoke your Will. All jurisdictions include common-law spouses in the definition of spouse, but the right doesn't generally arise immediately. Usually there has to be some time spent living together, or a child of the union, before it's considered a common-law arrangement in law. In Alberta, the law of the unique Adult Interdependent Partner, a couple must live together for three years to be considered spouses. Even once a couple has reached that point, the Will is not revoked, but the spouse has the legal right to contest it.

People in common-law relationships are strongly urged to have Wills prepared, and to keep them up to date. Legally married couples should either make new Wills shortly after their wedding, or make Wills in contemplation of marriage before they tie the knot.

Re-visiting the Dower Act - or, what happens to the family house

Because I get so many questions about what happens to the family house when one spouse passes away, I thought I'd touch on this subject again.

First of all, the Dower Act has been repealed in almost every province in Canada but is still in place (for now) in Alberta, so these comments only apply in Alberta.

The Dower Act gives certain property rights to married spouses. They do not apply to common law spouses.

When a married couple lives in a home that is only in the name of one spouse, and that spouse dies, the surviving spouse has the right to live in the house for the rest of his or her life. The surviving spouse does not own the house and does not have the right to sell or mortgage the house. It is simply a right to live there.

In estate planning, this sometimes affects couples who are in second marriages, because the spouse who owns the house may wish to leave the house to his or her children from the first marriage. He or she usually makes a Will to that effect, not realizing that the children can't get title to the house until the suriviving spouse passes away. That could be years later. This tends to disappoint the children, who have been told by their parent that they will inherit the house and weren't expecting to have to wait.

The basis for the Dower right is that only one spouse owns the house. None of this applies if both spouses have their names on the title.

Can a minor make a valid Will?

The general rule is that a person has to be an adult to make a Will. However, one of my favourite general rules is that general rules have exceptions (we won't debate the logic of that last sentence!). A minor may legally make a valid Will if:

• he or she is a member of the Canadian Forces and is on active service;


• he or she is a mariner or seaman on active service;


• he or she is a member of any other naval, land or air force on active service;


• he or she is married;


• he or she has an adult interdependent partner (Alberta only);


• he or she is in a common law relationship; or


• he or she has children.

A person in the Forces should obtain a certificate or other proof that he or she was actively serving at the time the Will was made. To make sure it stays with the Will, simply staple them together.

Where a person is a minor, is not married or in a common law relationship and has children, he or she can make a Will only to the extent that he or she is making a bequest to the children or to the benefit of the children.

As with people over the age of majority, a minor who makes a Will must have the mental capability to make a Will.