Section 24 of the Pension Benefits Act establishes a joint and survivor pension in the case where a former member has a spouse on the day that the first instalment of the pension is due to be paid. Because the first instalment of the pension was due at the time that the ex-husband was married to his second wife, the pension became a joint and survivor pension.

However, the separation agreement does not resemble the statutorily required Form 3. As such, the ex-husband cannot rely on the Act’s exception that would have been grounds for a declaration that there was a waiver of the wife’s entitlement to the pension. Justice Cornell remarked that “given the mandatory requirement that in order for the waiver to be valid, the prescribed form must be used, Mr. King has found himself in the unfortunate position of being caught in a trap for the unwary”.

To avoid such problems, those drafting separation agreements should be aware of the specific legal requirements regarding particular types of pensions.

Note also that Form 3 was revoked in 2000, so going forward, this is not likely a restriction.

Sarah Halsted - Click Here For More Information About Sarah Halsted

In Burgess v. Burgess Estate, the deceased had designated his first wife as beneficiary of his deferred pension sharing plan (DPSP), which he held with his employer, during the course of his marriage. He subsequently entered into a Separation Agreement in which he reduced her entitlement to one half of the DPSP. He subsequently remarried and made a new Will leaving his entire estate to his second wife and the children of his first marriage.

On an application before Madam Justice Haley, the first wife sought a declaration that she was entitled to the whole of the DPSP. The first wife essentially made the same argument which was accepted by the courts in the line of cases in which Wills which were inconsistent with Separation Agreements were found to prevail: in her submission, she did not, by the Separation Agreement, "waive the right to claim if the deceased spouse chose not to alter his or her beneficiary designation so as to eliminate her as a beneficiary." Madam Justice Haley accepted the reasoning: the contract between the employer and its employee was separate from the marriage. Not being a party to the Separation Agreement, the employer, with whom the deceased filed his beneficiary designation, could not be said to have been bound by the Agreement. If the deceased truly intended to eliminate or reduce the entitlement of his spouse, he would have changed the beneficiary designation at the source.

In Klassen Estate v. Klassen (1998) 22 E.T.R. (2d) Man. Q.B.), the Court considered a situation in which a second wife was named as beneficiary under several instruments notwithstanding the fact that: (i) she was divorced from her deceased husband, (ii) she had entered into a Separation Agreement; and (iii) he had made a new will leaving all his property to the children of his first marriage. The Court in this case considered parol evidence of the deceased's intention which was clearly to exclude the benefit to his second wife. Although the Court could not find a legal basis to set aside the beneficiary deisgnation, it found that the second wife, as designated beneficiary, held such assets on a resulting trust for the benefit of the estate. Klassen therefore provides a creative option to litigation counsel to seek to find a way out of the dilemma posed by a defective Separation Agreement.

In summary, if spouses, when they separate, wish to disentitle their surviving spouse from any interest in their estate, consideration must also be given to the status of their Wills. Counsel of caution suggests that a new Will (or a first Will!) should always be made after a Separation Agreement. The use of direct and cogent wording would appear to be a requirement in any Separation Agreement that also seeks to sever a joint tenancy or revoke a beneficiary designation.

Ian and Suzana will return on Monday.

Have a great day, David. --------

If married spouses separate within the meaning of the Family Law Act, their relationship is typically governed by the provisions of a Separaton Agreement. A Separation Agreement is a contract and is governed by the common law as it relates to contracts.

As a general proposition, the intention of a Separation Agreement is generally assumed to be to ensure that the parties, as between themselves, contract to ensure that neither benefits from the other's property after the termination of the relationship.

If the obligations contained in a Marriage Contract are incorporated into a Will, the obligations will continue notwithstanding the fact that the contract has itself been found to be invalid.

Unless the provisions in a Marriage Contract for the surviving spouse are clear and straightforward, there is a risk that the provisions in the Will may amplify the benefit flowing to the surviving spouse.

As a general proposition, spouses that have entered into a Separation Agreement do not typically intend their spouse to thereafter benefit from their estate. However, unless the Separation Agreement is very carefully worded, the Wills made by the parties to the Separation Agreement, even if those Wills predate the Separation Agreement and appear on their face to be contrary to the intention of the Separation Agreement, will be found to prevail.

So, for example, where the Court found that the parties had not contracted out of the benefits conferred upon them by the other's Will which predated the Separation Agreement. Specifically, the Court reasoned that "the Wife had no right to claim to be named as beneficiary of her former husband's estate, but she did not by the agreement waive her right to claim if her husband chose not to alter his Will so as to eliminate her as a beneficiary." (Goldfiled v. Koslovsky [1976] 2 W.W.R. 553).

Put another way, the Court will construe the fact that a married spouse did not change his or her Will to be "an affirmation of the intention to benefit his spouse." Accordingly, what is typically an inadvertent omission will be interpreted by the court as an act committed with the intent to benefit.

Put still another way, there is effectively a presumption that the Will has not been revoked by the terms of the Separation Agreement. Such presumption is rebuttable but only if there are direct and cogent words in the Separation Agreement which specifically contemplates the situation in which the parties fail to change Wills which predate the Separation Agreement and leave their respective estates to the other.

Have a great day, David. --------