The Changing Landscape of Dependant Relief Claims and the Effect of Such Claims Upon Your Estate

When someone has died Part V of the Succession Law Reform Act, RSO 1990 c.S.26 permits a broadly defined class of dependants to seek a support order from a Court where the estate has not made adequate provision for a dependant.

Definition of Dependant

A dependant, under that Act is defined as a common-law spouse, same-sex partner, married spouse, parent, grandparent, child, grandchild or sibling to whom the deceased was providing support or was under a legal obligation to provide support immediately before his or her death. Unless the person seeking relief comes within that category and that condition a Court has no jurisdiction to grant relief under that Act.

Assets the Court Can Consider in Deciding the Question of Adequate Support

Virtually any asset over which the deceased could exercise control prior to death is available for consideration with respect to a dependants’ support issue. Section 72 (1) of the Succession Law Reform Act allows a Court to consider and utilize the value of the following transactions in deciding adequacy of support -- assets in the deceased's sole name of the date of death, gifts made by the deceased in contemplation of death, accounts held in trust by the deceased for another, accounts of the deceased held jointly with another or property held jointly with another prior to death, trust dispositions if the deceased had a right to revoke the disposition, amounts payable under a beneficiary designation under an insurance policy, a RSP, investment fund or benefit plan.

Cummings v.Cummings

The decision of Cummings v.Cummings (2004) 5 ETR (3rd) 97 is a decision by the Ontario Court of Appeal which has added, to the Court's deliberations, the question of not just legal but also moral obligations in questions of dependant relief. Now when a Court reviews the question of whether adequate provision has been made for a dependant both of those sets of obligations, legal and moral, must be considered. Not only that the Court must consider the question of fairness of support in light of the deceased's obligations to all of his or her dependants at the time of their death.

When Bruce Cummings died his children by a previous marriage, Paul 24 and Elizabeth 18 were dependants within the meaning of the Succession Law Reform Act. Elizabeth was in the process of completing a degree course in social welfare at University and hoped to enroll in a graduate program which would take two years to complete. Paul was a university graduate however he suffered from a progressively debilitating neuromuscular disease for which there was no known cure. The nature of the disease affected every muscle in his body and particularly his heart and lungs. By the time of trial he was no longer able to work and his prospects for long-term employment were not good. Paul would eventually require full-time care and expensive modifications would be necessary for his residence. His future care would exceed the total value of Mr. Cummings estate. If a court only considered adequate provision for Paul under the legal claim that was made by his mother, Mr. Cummings former wife Mary, for dependant' s relief all of the assets of Mr. Cummings' estate would be needed to satisfy that claim.

Mary and Bruce Cummings were married in 1968, separated in 1986 and divorced in 1992. Under the divorce judgment, which incorporated the terms of a separation agreement, Bruce Cummings was ordered to pay support for the children in the amount of $2000 per month and there was recognition that Paul might need support for the remainder of his life. The agreement was binding on Mr. Cummings' estate and his obligation to support, in that agreement, survived his death and was a first charge on the assets of his estate.

At the time of his divorce, in 1992, Mr. Cummings was earning $300,000 per year. Two years later his employment was terminated and two years after that his annual income was $12,000 and in 1997 he earned less than $1500. He died in 1998.

Bruce Cummings met Ruta Cummings in 1986. In 1988 they lived common-law and they were married in October 1997. Ruta Cummings was an extraordinary woman. She had a career and made no claim for herself for dependant's relief. From mid-1996 until Mr. Cummings' death it was Ruta Cummings who was the breadwinner. She contributed to his support payments for his children and following his death she continued to pay $600 per month for the support of his children out of her own pocket.

At the time of Bruce Cummings death Mary Cummings, his former wife, was a vice principal and earned approximately $76,000 per year.

In Bruce Cummings' last will which was executed on December 15, 1997, with a codicil in mid-1998 he named Ruta as his executor. At the time of his death the net value of his estate was about $650,000. His will recognized his obligations to his dependant children. Under his will he provided that a testamentary trust, in the amount of $125,000, be established to provide support payments of $600 per month for his children, reducing to $400 per month when either child ceased to be a dependant. If the support obligations were terminated any remaining amount of that trust was to be split equally between Paul and Elizabeth. The remainder of his estate was left to Ruta Cummings. It is interesting to note that one of the assets considered by the Court in assessing the value of his estate was the deceased’s former joint interest with Ruta in their home.

In determining the allocation of the assets of Mr. Cummings' estate for dependant relief purposes the application judge took into account not only the needs of Paul and Elizabeth but also the moral obligations Mr. Cummings had toward his dependants including his second wife Ruta. The judge did that even though Ruta did not need support at the time and was not claiming relief under the Act. In reviewing his judgment, the Court of Appeal decided that the application judge was entitled to do so.

The Court of Appeal quoted the application judge as follows:

"The issue of the weight to be given to moral considerations is relevant in this case: it is posed quite directly by the Respondent's (Ruta's) concession that she is not in need of support. On a strictly needs based approach, I might well be justified in ordering that the entirety of the net testamentary estate be transferred for the support of Paul and for the assets of the notional estate to be charged for their full value. I do not think this would be a correct disposition of the case. I believe that... moral considerations continue to have a part to play in the analysis..."

The Court of Appeal decided:

"In short, when examining all of the circumstances of an application for dependants' relief, the court must consider, a) what legal obligations would have been imposed on the deceased had the question of provision arisen during his lifetime; and, b) what moral obligations arise between the deceased and his or her dependants as a result of society's expectations of what a judicious person would do in the circumstances"

The application judge, affirmed by the Court of Appeal, decided that the testamentary trust would be dispensed with and ordered a lump-sum payment for child support of $250,000 to the first wife. Such amount was be held in trust by Mary to the extent of the $10,000 for Elizabeth's expenses and the remainder for care of Paul during his lifetime. There was also an award to Mary Cummings of support arrears to the date of Bruce Cummings’death. The balance of the assets of the estate which in effect consisted of the deceased's half interest in the matrimonial home, were left to Ruta. In making that its decision the Court of Appeal also reinforced its opinion that:

The view of dependants relief legislation as a vehicle to provide not only for the needs of dependants (thus preventing them from becoming a charge on the state) but also to ensure that spouses and children receive a fair share of family wealth, was also..." an important part of the court's analysis.

The Effect of This Decision

How may these considerations affect your estate plan? If you are supporting or owe a duty of support to a dependant as defined under the Succession Law Reform Act at the time of your death your estate plan may be reconsidered by a Court on an application by or on behalf of that dependant.

This means that, to the extent that you are able, notwithstanding how you may feel about this issue, you must weigh, as fairly as possible, the moral and legal obligations you have to such dependants and attempt to make provisions in your will or otherwise in your estate plan which will provide adequate support. What is adequate financial provision is not an exact science and unfortunately there are no monetary guidelines. Nonetheless you, your lawyer, your insurance adviser and your financial adviser must do the best you can in order to come to terms with such a potential claim.

The foregoing should not be considered to be legal advice and should not be relied upon as such. Please consult a lawyer to get advice and an opinion on your unique circumstances.