Review your estate plan regularly

Written on June 19, 2013 – 9:21 am | by Jasmine Sweatman

We all know and remind clients that it is important to review and update Wills and Powers of Attorney regularly.  This review should also include a review of your beneficiary designations.  The recent Ontario Superior Court of Justice decision in Stevens v. Fisher is a good reminder of what can happen when you neglect to do so.

Mark Fisher passed away in May 2010.  His estate was insolvent, but he had three life insurance policies.

The first policy went to his disabled son, in trust.  Camille, who was Mark’s common law spouse for 11 years, his caregiver, and who had worked without pay at a lodge he owned, was the designated beneficiary of the second policy, which was worth only $1,900.00.  The third policy, worth $84,000, was left to Constance, who had been Mark’s common law spouse 12 years earlier, but who remained his friend after the break-up.

Camille objected, arguing that Mark had not sufficiently provided for her.  The Court found that Camille had a strong moral claim and a legal claim as a dependent, against Mark’s estate.  Section 72(1) of the SLRA, which gives the Court the power to deem assets as included in the estate in order to satisfy a request for support, was used by the court to deem the third life insurance policy to be part of the estate and therefore the proceeds of this life insurance policy was used to satisfy Camille’s support claim.

Regardless of the policy justification behind the court’s reasons, this and other similar cases always beg the question: does this reflect Mark’s wishes.  He may have wished to benefit Constance. He may not have in that he may have forgotten to make further changes during his 11 years of his relationship with Camille.  It is definitely the case however, that he did not review them or receive any legal advice as to his potential moral or legal obligations.

When a client reviews his or her estate plan with a lawyer, that review includes a review not only of the Will, but also of beneficiary designations, including insurance, RRSPs, and tax free savings accounts.

Lesson Learned: This case reminds us that not only planning but review is critical.  Failure to review your estate plan regularly can result in your loved ones being put through litigation that could otherwise have been prevented.

Until next time

Jasmine Sweatman/Bethany Anderson

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