Keywords: Divorce, Death, Pensions, Survivorship Benefits
Summary: This one is super-important for family law practitioners, and not just in B.C.; and in speaking with a couple of senior family law lawyers in Ottawa, here’s why:
- not every lawyer thinks of pension survivorship benefits when drafting a Separation Agreement, particularly if client(s) are young
- getting ahold of detailed and accurate pension information from a pension administrator (and often several, because people do change jobs) can be a pain
- pension inquiries may be outside of client instructions—but are they?
- Separation Agreements are sometimes done fast (someone wants to ‘be done with it’; someone wants to remarry; someone wants to be with someone else, that someone else wants to know the new person in their life is legally separated, even if not yet divorced; whatever), and often ‘cheap’
- would a general release provision that’s in most separation agreements be directly specific enough to meet the test (in this B.C.C.A. decision)?
- also, I’m told, one of (sometimes the) most valuable assets the parties have is the pension—I’m aware of some that’re $100K per year ( for the survivor of the deceased spouse with the pension)
Basic Facts (there’s a lot more to it than this, but here’s the basic building blocks):
- 38 year marriage
- husband retires, designating wife beneficiary of survivorship interest in pension
- parties separate and do a Separation Agreement
- husband remarries, dies 2 years later
- wife no. 2 applies for a declaration that pension benefits are held in trust for the estate.
At first instance:
- wife no. 2 wins
- wife no. 1 wins
- looking at the jurisprudence and applicable (provincial) legislation (paras. 39-58), and also looking at the Separation Agreement, here’s what’s needed/not needed:
a) “…a clear and unambiguous waiver of the survivorship interest must be incorporated into a separation agreement in order to effect the waiver contemplated…”
b) “This at least requires specific mention of the separate survivorship interest”.
c) “Mere inadvertence, inattention or a failure of the parties to turn their mind to such an interest, would…not amount to a valid waiver…”
d) “…a degree of explicicity is required.” (para. 59).
(I didn’t know that word either, “explicicity”; don’t play scrabble enough. Emphasis above added).
- the court, in its “conclusion” section, noted: “The accrual of pension benefits is usually a significant matrimonial asset, and the entitlement to a survivorship benefit can often be critically important to the designated recipient”…[by quotation] ‘…it is important that a former spouse not accidentally waive entitlement to the benefit.’ … In my opinion, in whatever context the conveyance of a vested survivorship interest is made, it must be explicit, and leave no doubt as to what it is the spouse is relinquishing. …such language is lacking in the Separation Agreement [herein]”. (paras. 68-69).