All About Estates

Divisional Court agrees life insurance policy part of estate

The Divisional Court recently released its decision in Dagg v. Cameron Estate (the trial decision was previously discussed on this blog here). In brief, the appellant Anastasia Cameron married the deceased, Stephen Cameron, in 2003. They had two children. Stephen took out a life insurance policy in 2010 and named Anastasia as the beneficiary.

The couple separated in 2012. Stephen began a relationship with the respondent Evangeline Dagg. Divorce proceedings began in 2012, and Justice Roswell made a temporary consent order that Stephen would maintain Anastasia as irrevocable beneficiary on any life insurance policy. A later court order in 2013 made the interim order permanent.

After Stephen was hospitalized and diagnosed with cancer in 2013, he executed a will and amended the designations on his insurance policy to divide the proceeds between Anastasia, his two children, and Evangeline. Just over a week later, Anastasia successfully brought a motion that she should be restored as beneficiary on the policy. Stephen died 3 days later.

Evangeline brought a dependent support application under the Succession Law Reform Act (SLRA). She sought to be declared a dependant of the estate and for the insurance policy to be deemed a part of the estate under section 72(1)(f) of the SLRA. At trial, Justice Douglas ruled in Evangeline’s favour.

The issue on appeal was whether the insurance policy was properly deemed to be part of the estate. The court held that because the insurance policy identified Stephen as the owner, it therefore was captured by section 72(1) of the SLRA and should be deemed to be a part of the estate for the purpose of the dependent support application. This was despite the fact that the irrevocable designation was to be in favour of Anastasia alone. The court noted that a spouse who wishes to exclude a life insurance policy from the SLRA “can do so by transferring ownership to the dependent spouse or to a trustee” or by transferring it into their joint names, with right of survivorship.

The court rejected an argument that the parties intended to create a trust, with Stephen as bare trustee and Anastasia as beneficial owner of the policy. Orders made directing a party to make an irrevocable beneficiary designation of a life insurance policy, either under the Family Law Act or Divorce Act, and whether they are temporary or final, can always be “varied or terminated based on changed circumstances.” It was open to Stephen to vary or terminate the orders, and the SLRA should be interpreted broadly to reflect its purpose.

The court then turned to the question of whether Anastasia could be considered a creditor under section 72(7) of the SLRA. That section provides that section 72 “does not affect the rights of creditors of the deceased in any transaction with respect to which a creditor has rights.” The court accepted that Anastasia was an unsecured creditor of the estate, but held that she had no priority over the other dependants. While an order to maintain a spouse as an irrevocable beneficiary could potentially be used as security for post-mortem support, there must be some reference “security” in the order. The court supported that interpretation on the basis that the insurance was taken out while Stephen and Anastasia were still together, and because the order did not allow for the variation of the insurance amount (as the present value of future support obligation diminishes over time).

Finally, the court rejected Anastasia claim for damages for breach of contract from the consents signed by the parties. Anastasia claimed that there was a common intention that the insurance proceeds provided her with security. For this reason, her claim failed. Damages may only be awarded  if there was a common intention that the surviving spouse was to receive the full amount even if there was no ongoing support claim.

The case highlights the extent to which courts are willing to interpret Part V of the SLRA in a broad and purposive interpretation. Even though the appellant may have seen the life insurance policy as a fundamental part of her separation agreement, those proceeds were still found to be caught under the SLRA’s provision and were deemed to be part of the estate for the dependent support applications of the parties.

About Michael Rosen
Michael Rosen is a lawyer at de VRIES LITIGATION LLP. He practises in the area of estates, trusts and capacity litigation. He is a graduate of York University and the University of Western Ontario’s Faculty of Law. Email: