Saturday, November 30, 2013

Significant Changes to the Rights of Separated Married Spouses Under the New Wills, Estates and Succession Act.

British Columbia's new Wills, Estates and Succession Act (WESA) will significantly change the succession rights of a separated married spouse when the new legislation comes into effect on March 31, 2014.

The Wills Act provided that unless a contrary intention appeared in a will, if a spouse makes a will leaving a gift to the other spouse, and after the will is made, there is a divorce, a judicial separation, or the marriage is found to be void or declared a nullity by the court, the gift to that spouse in the will is revoked. By far the most common of these occurrences is a divorce, and for convenience I will only refer to divorce.

Without a divorce, if you are just separated from your spouse, even for many years, the separation does not revoke any gifts to you in his or her will. You would each have to make new wills to disinherit each other.

Under the old law, a separated married spouse may apply to vary a will under the Wills Variation Act, even if he or she had been separated from the now deceased spouse for decades.

Under the Estate Administration Act, a separated spouse was entitled to a spousal share if his or her spouse died without a will, and they had not been separated for more than one year at the time of death.

Al of this will change shortly.

Section 56 of WESA provides that a gift in a will to someone who is or becomes a spouse is revoked if “after the will is made and before the will-maker's death the will-maker and his or her spouse cease to be spouses under section 2 (2)”

As with the Wills Act, revocation of the gift is subject to a contrary intention expressed in the will. You can say that you wish for your spouse to receive a gift, even if you later cease to be spouses.

The new Act, as amended by section 465 of Bill 16 (the Family Law Act), provides in section  2 (2) (a) that

(2) Two persons cease being spouses of each other for the purposes of this Act if,

(a) in the case of a marriage,

(i) they live separate and apart for at least 2 years with one or both of them having the intention, formed before or during that time, to live separate and apart permanently, or
(ii) an event occurs that causes an interest in family property, within the meaning of the Family Law Act to arise, or….

This begs the question: when does an event occur that causes an interest in family property to arise?

Section 81 (b) of the Family Law Act provides that “on separation, each spouse has a right to an undivided half interest in all family property….”

On the other hand, under section 83, they are not considered to have separated for the purpose of determining rights in property if they begin to live together within one year to reconcile and continue to do so for one or more periods totally at least 90 days.

What is required for a married couple to be considered to have separated?

Section 3(4) of the Family Law Act provides:

(4) For the purposes of this Act,

(a) spouses may be separated despite continuing to live in the same residence, and 

(b) the court may consider, as evidence of separation,

(i)  communication, by one spouse to the other spouse, of an intention to separate permanently, and 
(ii)  an action, taken by a spouse, that demonstrates the spouse's intention to separate permanently.

Reading the WESA and the Family Law Act together, the effect is that if spouses separate, and at least one of them demonstrates by words or action an intention to separate permanently, the separation will be sufficient to revoke a gift in a will to the separated spouse.  You don’t need a divorce.

Section 83 of the Family Law Act implies that the gift will not be revoked if the spouses reconcile and live together again within a year, and they do so for one or more periods for a total of at least 90 days. At least that is my interpretation.

But unless section 83 of the Family Law Act applies such that the spouses are not considered to have separated, a future reconciliation does not revive a revoked gift. This is because section 56 (3) of WESA says:

(3) The operation of subsection (2) is not affected by a subsequent reconciliation of the will-maker and the spouse.

So if spouses have wills in which they leave everything to each other, then separate for say two years, and then reconcile without making new wills, and one of them dies, the gift to the survivor will be revoked by the separation. This so even if they were married for 50 years, with just the one period of separation. This stands in contrast to the law before WESA, which required a divorce to revoke the gift. I expect that this change will catch many unawares.

There are other implications when someone ceases to be a spouse under WESA. He or she will no longer have any entitlement if his or her former spouse dies without a will. Nor will he or she have the right to apply to vary the will under Division 6 of WESA, which is the successor legislation to the Wills Variation Act.

I am not sure what the point is of maintaining subsection 2(2)(a)(i) of WESA which provides that married spouses cease to be spouses when “they live separate and apart for at least 2 years with one or both of them having the intention, formed before or during that time, to live separate and apart permanently.” I find it hard to wrap my head around what situations would be covered  under that subsection that are not caught by subsection 2(2)(a)(ii).

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