An Alberta court recently found that the estate of a deceased payee spouse is entitled to continue receiving spousal support payments from the payor spouse under the terms that had been agreed to in a separation agreement.
The Separation Agreement
The parties had been married for approximately 14 years prior to separating in 2012 and eventually divorcing in 2015.
In 2014, they entered into a Separation and Property Agreement (the Agreement) which settled all outstanding issues of spousal support and matrimonial property. At the time the Agreement was signed, the ex-wife had been ill for several years.
The Agreement provided that the ex-husband would pay $3000 per month in spousal support to the ex-wife until October 2019 (60 payments in total) and included a non-reviewability clause that stipulated that “entitlement, quantum, and duration of spousal support is non-reviewable and may not be varied on any material change of circumstances.”
The agreement also included a provision that stated that if the ex-wife were to die before all spousal support payments agreed to were made, the ex-husband’s obligations were secured through an insurance policy with the ex-wife as beneficiary.
Lastly, the Agreement included an enurement clause, generally included in most separation agreements which provided that the Agreement “…shall be binding upon and shall enure to the benefit of the parties hereto, their respective heirs, executors, administrators, successors, designates and assigns.”
The ex-wife passed away after only 8 of the agreed to 60 payments had been made. Her estate sought to enforce the remaining payments (52 payments of $3000= $156,000).
The Ex-Husband’s Position
The ex-husband argued that the ex-wife’s right to spousal support under the Agreement was extinguished upon her death. The very nature of support means that it is only payable during the recipient spouse’s lifetime.
He noted that since the ex-wife no longer has any economic need for support, the Agreement should be varied on the basis of a material change in circumstances. Moreover, the sole basis for the support payments he had been making was non-compensatory and was intended to “ensure that [the ex-wife] lived a comfortable life.”
Courts have generally recognized spousal support as a personal right, which cannot be passed on to the estate.
An early decision by the British Columbia Court of Appeal concluded that the right arising from an order for spousal support is a personal right and only enforceable by the spouse during his or her lifetime. This was later followed by courts in other jurisdictions, such as the Manitoba Court of Queens Bench which concluded that there was nothing in the family law legislation in that province which authorized a personal representative of an estate to continue (or start) proceedings for spousal support and upheld the proposition that spousal support is a personal right to be acted upon by the spouse during the spouse’s lifetime.
The Court in this case noted that while it appeared as though the caselaw supported the ex-husband’s position, there is an important distinction between a court order for spousal support and a contractual agreement to provide spousal support. Court have, historically, recognized that a contract can be enforceable after death.
The Court went on to say that there were several “juristic reasons” to continue the spousal support obligation, including:
- The enurement clause;
- The non-reviewability clause;
- The comprehensive nature of the Agreement;
- The fact that the Agreement was silent on the payments being contingent on the ex-wife’s needs.
The court expanded on some of these reasons. For instance, the Agreement was very comprehensive, outlining how property, real estate, an employment pension, and other assets were to be dealt with. The court noted that it was clear that the spousal support had been negotiated in the full context of all financial issues stemming from the marriage. To not consider the entirety of the Agreement as enforceable would therefore detract from the policy objectives of a negotiated settlement and contractual autonomy of the parties to the contract.
In addition, the court identified its problems with the ex-husband’s assertion that the entire premise underlying the spousal support payments was the ex-wife’s need and that since there was no further need following her death he should be relieved of his ongoing obligation. The court noted that if the ex-wife had lived and demonstrated need beyond the agreed upon 60 payments, the Agreement would be relied upon to prevent her from collecting any further support. Alternatively, if the ex-wife had won the lottery the day after the Agreement was signed and no longer had a need for the support, the ex-husband would still be obligated to make all 60 payments as agreed to.
The court went on to say that both parties had turned their minds to the possibility that either one of them would die as there were clauses that provided for the mutual release of obligations in the event of either of their deaths. The fact that the contract was silent on what would occur if the ex-wife were to die before the 60 payments had been made in a situation where other death scenarios had been explicitly outlined suggested that the ex-wife’s death was not intended to have any effect on the ex-husband’s agreed to spousal support obligations.
The court concluded that, from a purely contractual perspective, nothing suggests that the ex-wife’s death had the effect of extinguishing the ex-husband’s obligation to pay support in accordance with the Agreement.
If you are a high-net worth individual, an entrepreneur, or own your own business or practice and have questions about your obligations to ex-spouses or other matters related to separation or divorce, or have questions about enforcing your rights in an estate dispute, contact Financial Litigation in Toronto. Eli Karp and his team focus specifically on the financial aspects of family law and estate litigation. We help high-net worth clients minimize the financial impact of family and estate disputes, offering insightful legal advice so they can resolve matters as quickly as possible. With our niche skill set, our clients can be confident that their financial well-being is protected. Respond to a legal crisis with Financial Litigation, and let our unique experience guide you through your financial or family law dispute. Schedule your consultation online, or by calling us at 416 769 4107 x1.