Court of Appeal decision highlights importance of estate planning

A Court of Appeal for British Columbia case where the panel dismissed a woman’s claim against a former partner’s $21-million estate underscores the importance of consulting with a lawyer to ensure that your estate planning documents are carefully drafted.

In the high-profile matter of Mother 1 v. Solus Trust Company Limited, the appellant sought to overturn a decision by the Supreme Court that she was not a spouse of the deceased, rendering her unable to claim a preferential share of the man’s multi-million dollar estate.

The deceased died in May 2015 without a will and had five children from relationships with five different women. The trial judge described him as living a “playboy” lifestyle. Court documents show he did not marry any of the women but provided various financial support and expensive gifts.

Although these relationships overlapped in time, the appellant did not know about the other women until after the deceased’s death. The court was tasked with deciding whether the woman and the deceased “had lived with each other in a marriage like relationship for at least two years” and, if so, whether “one or both persons terminate[d] the relationship” before his death.

Ultimately, the Court of Appeal agreed with the trial judge and dismissed the appeal.

Marriage-like relationships

Under the Wills Estate and Succession Act (WESA), spouses in a common law or “marriage-like relationship” can inherit the deceased’s entire estate if that person dies intestate — without a will — and there are no direct descendants. If there are descendants, the common-law spouse could receive the first $300,000 of the estate, plus a portion of any remainder.

However, determining what constitutes a “marriage-like relationship” is not cut and dried. At a minimum, the appellant had to prove on the civil standard that she lived with the deceased in a marriage like relationship for at least two years. If the parties ceased to be spouses before the intestate’s death because their marriage like relationship was “terminated” by one of them, there would be no legal entitlement to advance a claim against the estate as a spouse.

However, varying factors come into play when considering what establishes these types of relationships. The judge described it as an “elastic” concept that engages a multi faceted analysis at trial. He spoke about the list of factors as set out in 1980’s Molodowich v. Penttinen but cautioned against taking a “checklist approach.” Instead, the trial judge said it was his obligation to consider the matter “holistically” and examine all relevant factors in deciding whether there was a marriage like relationship of at least two years between the appellant and the deceased.

Every relationship is different — and so is every analysis. This is one of the main reasons couples in similar scenarios should consult with a lawyer to make sure they understand if their relationship is common law or “marriage-like.”

In this case, both levels of the court concluded the couple never lived in a marriage like relationship. Perhaps if they had consulted with a lawyer and had a cohabitation agreement drafted, there would be less doubt about the status of their relationship.

Dying intestate

Another troubling aspect of the case is that the deceased died without a will with an estate worth $21 million. No matter the size of an estate, when someone dies intestate, their assets are distributed according to the rules set out in WESA.

For example:

  • If you have a spouse and no children, your estate passes to your spouse, although it is interesting to note, as in this case, a deceased person can have more than one spouse who would then share the estate equally.
  • If you have a spouse and children with that spouse, the spouse receives the first $300,000 of the estate and then the spouse and any children split the balance into equal shares.
  • If you have no spouse, your estate is divided equally among your children.

While the average person probably isn’t sitting on a multi-million-dollar estate, it is still important to draft a will that dictates how you would like your assets distributed. In an age of blended families, common-law relationships and second or third marriages, WESA’s distribution rules may not align with your intentions.

While I believe everyone should have a will, I think it is crucial if you have minor children. Each spouse may make assumptions about who will care for their children if both spouses die at the same time. Maybe you assume your parents will become the guardians, but your spouse told his sister she would look after the child if something tragic happens. Unless explicitly laid out in a will, family members will spend time and money disputing who should look after the child. In this scenario, the one who suffers the most is the child.

There are also trust provisions in wills for minor children where they have access to the entire trust at age 19, the legal age of an adult in B.C. Handling over a million dollars to a 19-year-old could be problematic. It’s not uncommon for clients to hold the funds in trust until their children turn 25 or 30. Of course, the children will have access to the trust fund for education, health care, living expenses, etc., but they don’t get complete control until they turn the age noted in your will.

By thinking these issues over and setting them out in your will, you leave fewer issues open to interpretation or chance.

Distribution of the estate

Whether you have a will or not, there is a distribution process. However, going through the distribution of the estate without a will is much more expensive than going through the same process with one.

There are two different avenues. If you die without a will, someone will have to apply for a grant of administration. When you die with a will, your executor (or court-appointed person) applies for a grant of probate. Of course, a grant of administration takes longer and costs more (ranging from $5,000 to $10,000+ depending on the size of the estate) than the grant of probate.

When you consider that the average cost of a will is $500 plus tax, it is worth it for probate savings alone. I frequently hear that people don’t want to spend their money and time on drafting a will. Maybe they don’t want to think about death, or perhaps they don’t want to spend the money on something that won’t affect them while they’re alive.

When you die intestate, that extra money spent on a grant of administration is money your family members could have had in their pockets. And it’s not just the lost costs — by having a valid will, you can save your loved ones the headaches and heartaches associated with court challenges and dealing with lawyers. By detailing exactly where you want your assets to go, you are providing the gift of clarity and peace of mind to your family members.

If you have questions about estate planning and would like to explore your options, we would be happy to help you.

*This post is not intended to be legal advice and should not be taken as such. Please contact McConnan Bion O’Connor & Peterson if you have any questions regarding this post or require assistance or legal advice regarding a cohabitation agreement.