Court of Appeal Decision of the Week

Waiving Pension Benefits in Family Law Cases

Tarr Estate v. Tarr, 2014 BCCA 315

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

At B.C.C.A.:

  • 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).

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Posted: Wednesday, November 05, 2014