All About Estates

Support, Divorce, and Insolvency

Even when a dependant’s entitlement to and need for support is clear, there simply may not be enough money in the estate to provide assistance. For this reason, the Succession Law Reform Act (“SLRA”) allows certain assets passing outside of the estate (often to a designated beneficiary) to be clawed back into the estate for the limited purpose of providing a dependant with support. The designated beneficiary may be tempted to spend all the money before the support application is heard in the hope that the court will not make an order to pay over money that no longer exists. However, the designated beneficiary that follows this reasoning may be disappointed in the results. Such was the case in Bormans v Bormans Estate.

Mr. and Mrs. Bormans were married in 1972. During their marriage, Mrs. Bormans raised their two daughters and worked at her husband’s business as an administrator and bookkeeper. On their separation in 2009, Mrs. Bormans’ position at her husband’s business was terminated. When their divorce was finalized in 2010, Mrs. Bormans was awarded $500/month in spousal support.

Due to significant health problems, Mrs. Bormans was unable to work after the divorce. She lived below the poverty line, often using the food bank because she could not afford to pay her bills and buy food. Besides her husband’s support payments, her only source of income was $1,000/month CPP disability benefits.

Following his diagnosis of cancer in March 2013, Mr. Bormans stopped paying spousal support and moved in with one of his daughters, Jessica. He died a year later, in March 2014, at the age of 61.

Mr. Bormans named Jessica as his estate trustee and left his entire estate to his two daughters. Unfortunately, his estate was insolvent: the estate had approximately $19,000 in assets and close to $38,000 in debt. However, he also named Jessica the beneficiary of a $70,000 life insurance policy which passed outside of the estate directly to her.

Mrs. Bormans initially wrote to Jessica asking to be paid the $70,000 insurance funds as a dependant of Mr. Bormans. Jessica never replied, so Mrs. Bormans brought an application for dependant’s support.

Prior to being served with the support application, Jessica spent approximately $15,000 of the insurance funds on a hairdressing course, tickets to Wonderland, food for her family (she was married with three children), and a $5,000 retainer to a lawyer to assist with administering her father’s estate. She kept the remaining $55,000 invested or in her bank account.

After being served with her mother’s support claim, Jessica immediately spent the balance of the insurance funds to the benefit of herself and her family. She did this despite the obligation on estate trustees pursuant to s. 67(1) of the SLRA to keep funds frozen until the dependant support application is determined.

Because of the limited financial resources of Mrs. Bormans and Jessica, the parties requested that the application be heard on the written record, without cross-examinations or a trial of the issues. Less than a year after Mr. Bormans’ death, the application was determined by the court.

The judge held that Mrs. Bormans was clearly a dependant of the deceased because of her ex-husband’s legal obligation to support her and her own financial need. In contrast, Jessica was not a dependant of the deceased, nor did she have a moral claim to his assets. The court held that even if she had, Mr. Bormans’ legal obligation to provide for his ex-wife took precedence over any alleged moral claim.

In determining the amount of support owed to Mrs. Bormans, the court took into consideration her extremely limited means, her poor health, her age (63), the length of her marriage (38 years), and the fact that she contributed to the deceased’s business and career. The court also considered, as a significant factor, the deceased’s warranty to Mrs. Bormans to provide her with life insurance coverage as security for his support payments (despite his assurances, Mr. Bormans terminated the life insurance policy benefiting Mrs. Bormans on their separation).

On the other hand, the court also considered factors in favour of providing Jessica with the life insurance proceeds. The court was sympathetic that Jessica had spent some of the funds before receiving notice of the support application. The court was also cognizant of the fact that Jessica was required to pay for the legal costs of administering the estate. Nevertheless, the court held that there should have been $50,000 remaining from the insurance proceeds after these allowable expenses.

Weighing all the factors, the court awarded Mrs. Bormans $40,000. The award was payable by Jessica personally because she had failed to comply with her obligation, as estate trustee, to keep the money frozen (the court held she was under this obligation even though she would have received the money in her personal capacity, not as estate trustee). The court also considered, but ultimately rejected, a proposal to pay the $40,000 support award in periodic payments. Based on her rush to spend the insurance proceeds, the court found Jessica to be untrustworthy. As a result, the judge held that there was little likelihood Jessica would honour a payment plan. Instead, the court ordered a lump-sum payment of $40,000 to Mrs. Bormans, due immediately, along with costs of the proceeding (in an amount to be determined).

There is always the temptation to hide assets or dissipate funds in order to prevent them from being recovered by the applicant. However, as this case shows, the court takes a dim view of this type of action.

About Gillian Fournie
Gillian is a lawyer with de VRIES LITIGATION LLP. Her practice focuses on the area of trusts and estates litigation. More of Gillian's blogs can be found at