In a demonstration of the courts’ discretion to limit testamentary freedom, a Superior Court judge has rewritten the will of a deceased Ontario man who left nothing to his common law wife of 11 years by reallocating life insurance money from a policy naming a previous spouse the beneficiary.
Camille Nancy Stevens went to court after discovering her late common law spouse Mark Fisher had left her out of his will upon his death. Instead, Fisher’s life insurance policy named his ex-common law spouse, Constance Alice Margaret Eagles, the beneficiary. As the designated beneficiary, Eagles claimed entitlement to the entire proceeds of Fisher’s insurance policy. Eagles had been Fisher’s common law spouse for 13 months about 12 years ago.
In a recent decision, Superior Court Justice Guy Di Tomaso ordered that Stevens, not Eagles, should receive the insurance funds despite the beneficiary designation. Stevens was Fisher’s dependant, said the judge, and should therefore receive the money.
“Mr. Fisher did not adequately provide for her support and she has need for support. If the issue of support had arisen during Mr. Fisher’s lifetime, Mr. Fisher would have had a legal obligation to pay support to Ms. Stevens,” wrote Di Tomaso.
The ruling is significant, according to Hull & Hull LLP’s Ian Hull. “It’s a remarkable decision from the perspective of what most people understand to be the rights that they have in testamentary freedom and estate planning,” says Hull, a certified specialist in estates and trusts law.
“This is a great attack on testamentary freedom. At the end of the day, the dependant is going to prevail when the facts are right. And beneficiary designation, which most people would think has solved [their] problem, is clearly not enough,” adds Hull, who calls the decision “a good, solid message” to estate planners and individuals about the difficulty of hiding from their dependants.
The decision is also a demonstration that the courts will look for moral claims as carefully as they consider legal ones. In Stevens v. Fisher, the court found Fisher had a moral obligation toward Stevens.
“I find she was absolutely devoted to him,” wrote Di Tomaso.
“For 11 years, they had a loving and caring relationship. She placed his needs above her own.”
He added: “But her sacrifice was even greater. In addition of providing income and household services, she took care of Mr. Fisher in his declining health up until his death. She drove him to appointments, attended to his medication, and did the things he could not do for himself.”
Di Tomaso valued Stevens’ moral claim at $10,000. In addition, she’ll receive $75,000 as a dependant claim, an amount comprising a huge chunk of Fisher’s $84,000 insurance coverage.
The judge noted Stevens worked for free at a resort Fisher had purchased. When he sold the resort, there was no money for Stevens. “Despite her efforts, she saw none of the proceeds of sale,” wrote Di Tomaso. “Rather, Mr. Fisher told her that it was none of her concern.”
“This judge felt the deceased had a moral obligation to satisfy that financial connection,” says Hull, who calls moral claims “pretty powerful” in Canadian courts.
“The courts aren’t going to tolerate it if you haven’t canvassed fully the concept of a moral obligation.”
The case sends a message to lawyers and individuals about the importance of carefully reviewing financial dependants, adds Hull.
“When you’re doing your intake in the estate planning stage, you need a really careful review of all those people around the deceased who have any financial connection to the deceased and then the lawyer will give advice on whether they are a dependant,” he says. Sometimes, cases aren’t as clear as they are in Stevens. The deceased person may have established a financial dependency by regularly sending money to someone overseas, he says.
“It comes down to if you’re not going to carefully consider who you owe financial consideration to upon death, then the court is going to do it for you.”
Fisher’s will dated back to February 1999. That was months before he started living with Stevens. It may simply be the case that he never thought to review his will, says Felice Kirsh, partner at Schnurr Kirsh Schnurr Oelbaum Tator LLP. Many people simply enrol in an insurance policy, select a beneficiary, and forget it, says Kirsh, who’s also a certified specialist in estates and trusts law.
“People do forget that they have old insurance policies — I’d say that’s common — and they forget who their beneficiaries are in all policies,” she says.
“That’s why it’s important for people to check — I’d say every year — who are the beneficiaries of your RRSP or your life insurance policy or your group life insurance policy and are you still OK with it?”
Di Tomaso’s ruling, says Kirsh, is “an expected decision. It’s in accordance with the provisions of the law.”
Section 72 of the Succession Law Reform Act prioritizes the rights of dependants over those who stand to receive an individual’s property by way of a beneficiary designation. Creditors of the deceased can’t make a claim under the provision but dependants can.