In the years that I have been practicing I’ve come to realize the importance of having a team approach to addressing a client’s estate plan. Whether the team includes the accountant, who suggests an ‘estate freeze’, the insurance advisor who considers the extent and type of insurance needed to best fulfill the client’s goals, the investment advisor who works to achieve both the client’s retirement and legacy goals or other lawyers who are involved in the client’s legal affairs, all the advisors have a role to play in ensuring the client’s estate play is properly implemented. No where is the team approach perhaps more paramount than when the areas of family and estate law intersect.
Most separation agreements will include mutual releases by the parties and renunciations to all rights and claims in the other spouse’s estate. They may even go on to include a general pension release or a general waiver of rights to insurance. However, with respect to life insurance and pension rights, both of which have express legislation governing the rights and obligations of the parties, compliance with the relevant legislation is critical.
With respect to life insurance policies, the recent case of Richardson Estate v. Mew reaffirmed that a former spouse who, after a separation, continues to be named in a beneficiary designation, will be entitled to the proceeds of the life insurance policy. This is so even if the separation agreement includes mutual releases and renunciations. The only means for a former spouse to cease to be entitled to life insurance proceeds is if a change in the beneficiary designation is executed.
More recently in King v. King Justice Cornell had to consider whether a general pension release in a separation agreement amounted to a waiver by the then Mrs. King (at the time of the hearing she was Mrs. Raines) of her entitlement to Mr. King’s OMERS survivor’s pension benefits.
The matter came to Mr. King’s attention only when he tried to appoint his new wife as the beneficiary of the OMERS survivor’s pension. Imagine his surprise when OMERS replied that the general language in the separation agreement was not sufficient evidence that Mrs. Raines had given up her survivor’s benefits. Rather, Mrs. Raines would have to complete OMERS version of the current spousal waiver form approved by the Financial Services Commission of Ontario pursuant to the Ontario Pension Benefits Act.
Not surprisingly, Mrs. Raines refused to sign the prescribed form. This led to Mr. King having to bring an application to the court. More surprising though was that the court did not order Mrs. Raines to sign the prescribed form. This was despite the fact that the separation agreement included an agreement by her to sign any documents required to give effect to the intent of the agreement.
The upshot is that involving a lawyer specialized in estate planning matters to confirm that the separation agreement would effectively deal with all future property rights could have avoided the time, expense and, I suspect, frustration Mr. King incurred.