Death During Divorce: Impact On Spousal Inheritance

What happens when a divorce proceeding is interrupted by the death of a spouse? How is the estate divided or undivided? This question has plagued Canadian courts in a wide variety of circumstances.

Ontario: White v White’s Clarification

Ontario courts most directly dealt with this challenge in White v White, 2015 ONCA 647. The husband Neville had filed for divorce, which the judge mistakenly granted without reviewing the wife Sonia’s motion opposing the divorce. The judge subsequently granted an order staying the Divorce Order “pending further court order” to address this mistake. Unfortunately, Neville passed away before any further orders were made. The motion judge dismissed Sonia’s motion seeking a declaration that she and Neville had not divorced and their marriage terminated upon his death. She found that Rule 11.01 of the Rules of Civil Procedure barred her motion and the issued orders spoke for themselves. Sonia appealed, seeking to have this decision overturned. In opposition, the couple’s children sought a declaration lifting the stay of the Divorce Order.

The Ontario Court of Appeal was tasked with deciding whether the marriage was terminated by the stayed Divorce Order or by the husband’s death. The former option would preclude Sonia from inheriting Neville’s assets. In the short opinion, the Court quashed the motion judge’s ruling and allowed Sonia’s appeal. The court reasoned that Section 12(1) and 14 of the Divorce Act makes any divorce take effect on the 31st day after a judgment granting the divorce, and the marriage dissolves when the decision takes effect. Until then, jurisprudence has established that the couple remains married until an order takes effect. This date of divorce was previously used in Re Kindl, 1982 CanLII 2049 (ONSC) to interpret a will’s gift to “my wife,”  in Re Laur, 1975 CanLII 536 (ON SC) to allow the spouse’s claim for widow support, and in Minister of Social Development v. Riddell, 2006 CarswellOnt 6120 to deny a claim for spousal support when the ex-husband died on the 31st day after the divorce judgment. In this case, the stay remained at Neville’s death, and thus the parties were still married. Since Neville’s death terminated the marriage, the widowed Sonia could inherit his estate.

Subsequent SLRA Changes

Those who find the above decision unjust will be satisfied by the recent legislative changes in Ontario. At the time of White, the Succession Law Reform Act (SLRA) only barred a spouse from inheriting if they were formally divorced. The new and improved 2022 SLRA expands this criterion to include separated spouses. Subsections 17(4) and 43.1(2) consider a spouse predeceased if, at the time of the decedent’s death, the couple lived “separate and apart as a result of the breakdown of their marriage.” Had White been litigated after these changes, the court would have barred Sonia from inheriting from her ex-partner’s estate.

However, even with this change, those planning their eventual passing should remember that many of their assets may pass outside their estate. Any property with rights of survivorship granted to their spouse would remain in effect despite separation. Examples include when the spouses still hold their title to real property in joint tenancy, joint accounts with rights of survivorship, a beneficiary designation on life insurance, etc. Separated spouses must make sure to keep these designations up to date with their intentions.

Joint Tenancies Limitation in Hansen Estate

Yet even in cases of joint tenancies, Ontario jurisprudence has tended to analyze the living situation of divorcing spouses to determine if they had lived in a tenancy in common prior to one spouse’s death. The Ontario Court of Appeal accelerated this Canada-wide trend in Hansen Estate v. Hansen, 2012 ONCA 112. At issue was whether the divorcing spouses’ matrimonial home would pass to the surviving spouse by right of survivorship or if the property was held in common and thus split between the Estate and the surviving spouse. This determination was not abated by death since it analyzed the state of the property at the time of the deceased’s life. The Ontario Court of Appeal held that the property was a tenancy in common due to the separation of the spouses’ assets during the marriage breakdown. In doing so, the Court instructed future lower courts to look at all relevant factors in making such a determination, seemingly encouraging the severance of joint tenancies upon a divorce filing. Even if a spouse passes away with a property held in joint tenancy, Ontario courts can use the spouses’ behavior during the divorce to consider the asset a tenancy in common. This safeguard helps prevent the unjust transfer of property to a former partner upon one’s death.

Quebec: Death During Divorce

Quebec Court of Appeal case Droit de la famille – 2574, 1997 was one of the few White citations and heavily influenced the Divorce Act’s statutory interpretation. Under Section 12 of the federal Divorce Act, “a divorce takes effect on the thirty-first day” after the judge issues an order granting the divorce. In this case, the husband had successfully filed for divorce and received the judgment he sought. Unfortunately, he passed away thirteen days later. The Quebec Court of Appeal had to decide whether his death or the divorce ended the marriage per article 516 of the Civil Code of Quebec. Its decision overturned the lower court’s judgment which upheld the divorce as the marriage’s terminating cause. In its opinion, the appellate court considered that the spouses were still married within the thirty-one days, and thus the husband’s death ended the marriage. The wife was entitled to inherit.

Continuing the Divorce?

A few years later, in G. (Ma.) c. G.T. (L.), 2001 (QC CS), a husband was in the process of ending his separation of property marriage when he died. The Quebec Superior Court had to determine whether the children or executors of a deceased parent could continue the divorce proceedings on their behalf. The court highlighted that divorce was a personal right belonging exclusively to the two spouses; the representatives of a spouse can not continue the divorce proceedings after their death. The children argued that this view does not make sense in light of the new additions to the civil code, which allowed spouses to continue or initiate alimony proceedings against the estate of their deceased spouses (arts. 684-685 of the current CCQ).

Nonetheless, the clear language of the Divorce Act does not allow the transfer of proceedings; the children could not continue the divorce. The husband’s death ended the marriage. If the wife’s subsequent will contest was successful, she would be entitled to inherit from his estate as his spouse. Separation on its own does not end a spouse’s entitlement to inherit either from the will or intestacy in Quebec.

Non-probateable Assets?

Without joint-tenancy ownership, Quebec does not struggle with matrimonial property claims like its Canadian counterparts. Whether death or divorce, the court divides the shared property between the spouses, and no right of survivorship can take effect. Even joint bank accounts will be frozen and apportioned equally between the estate and other owners of the account.

Alberta: A Different Approach

Alberta differentiates estates governed by a will from those that are intestate. In Parchen Estate (Re), 2016 ABQB 345, the husband Alexander died testate while undergoing a divorce from his wife, Ailie. Aillie applied to the court, stating that the will did not adequately provide for her. The court analyzed Section 25 of the Wills and Successions Act which revokes an ex-spouse’s beneficial interest in a deceased testator’s property upon a divorce judgment. In contrast, intestate estates require (1) the living apart for two years prior to death, (2) being parties to a declaration of irreconcilability under the Family Law Act, or (3) an agreement or order finalizing the separation of property to treat a separated spouse as predeceased. This difference effectively allows separation to void the spouse’s share in intestate estates, but only formal divorce decrees can revoke gifts of a testate deceased. The court summarized that this regime grants more power to a deceased’s final testamentary disposition.

In this case, Alexander’s will remained in effect due to the lack of a formal divorce. The court also noted that the couple had only been separated for five months. Even if Alexander died intestate, their separation had not reached the two-year minimum threshold, and Ailie could inherit. Ultimately, the court decided that the matrimonial home should be sold, half the proceeds should go to Ailie, and she may later petition the court with an adjusted and calculated amount for future maintenance that the home’s proceeds can not cover.

Matrimonial Property Division or Survivorship?

Alberta jurisprudence extensively addresses what happens to matrimonial property in the event of a death. Section 16 of the Matrimonial Property Act (MPA) allows their estate to continue an action for matrimonial property division made by the deceased. The rights conferred to a person by the MPA survive their death for the benefit of their estate. Obradovic Estate v Obradovic, 2013 ABQB 470 explains Section 16 best: “The clear intent of the legislature is to crystallize the parties’ interests in the context of the matrimonial property action as at the date of death.” The later case of Stalzer (Estate) v Stalzer, 2019 ABQB 658 acknowledged that marriage is terminated automatically by the death of a spouse and abates a Divorce Order. Yet the question of matrimonial property is still at issue since the deceased estate can continue the action.

 Obradovic analyzed the rights of survivorship within a matrimonial regime. The husband Janko and his wife Dara decided to get divorced. The division of the joint tenancy matrimonial home division caused some issues, and Janko applied for a division by the court. While he was entitled to half the equity equaling $25 000, the soon-to-be-former spouses reached an agreement in which the Dara would buy out Janko’s portion for $10 000. Before the payment, Janko passed away. The surviving wife claimed that the entire house passed to her by survivorship.

The court disagreed. In its analysis, the legislature intended that a matrimonial property action and interest continue past the date of death. With this intention, the court can not allow the right of survivorship of a joint tenant to supersede the deceased’s rights under the matrimonial property action. A title transfer through joint tenancy must still be subject to the deceased’s estate’s right to claim an interest in the property. As long as the deceased had initiated an action to divide the matrimonial property, a surviving spouse’s right of survivorship can be overridden.

Later cases such as the recent Flock Estate v Flock, 2021 ABQB 502 further softened the existence of joint tenancies. The line of cases outlined in the decision demonstrates Albertan courts’ trend to treat a divorcing couple’s estate to be tenancies in common, even if they were initially joint tenancies. In this case, Arlene did not take formal steps to sever the joint tenancy of the matrimonial property despite having separated from her husband William for approximately thirty years. When she passed away, William sought to take exclusive property ownership through the right of survivorship. The court rejected this attempt. The commencement of divorce proceedings and matrimonial property proceedings, the couple’s separation, and Arlene’s new partner’s habitation and upkeep of the property all demonstrated an intention to sever the joint tenancy. With this determination, William was only entitled to half of the property’s appraised value which would be bought by the Estate and retitled.

British Columbia

For a review of recent case law concerning spousal estate litigation, please read our article The Rise in Spousal Succession Litigation in British Columbia.

Conclusion

In summation, those going through the divorce process should be mindful of the impact their sudden death may have on their estate. Depending on the province, initiating divorce or separation will often not be enough to disinherit your spouse. Quebec and Ontario courts have officially ruled that spouses may still inherit if their partner passes away before the thirty-first day of the divorce judgment. Furthermore, divorcing spouses should retitle their joint assets as soon as possible to avoid them passing by survivorship. Nonetheless, common-law courts have shown great flexibility in changing joint tenancies into tenancies in common for the benefit of a deceased’ estate.

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