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Law Times • march 26, 2018 Page 13 www.lawtimesnews.com Court allows pre-retirement death benefit to be divided BY DALE SMITH For Law Times A recent Ontario court decision ensured that a recently deceased man's disabled daugh- ter was eligible for funds from his pre-retirement death benefit rather than them all going to his second wife, in order to ensure that the loss of ongoing support payments was dealt with. Law- yers say this is a significant deci- sion because Succession Law Re- form Act claims are notoriously difficult. Cotnam v. Rousseau, 2018 ONSC 216 dealt with the estate of David Cotnam, who had two children from his first marriage. According to the ruling, his daughter had a developmen- tal delay and was still receiving child support into adulthood to supplement her Ontario Disabil- ity Support Program payments. When Cotnam passed away, the Ontario Superior Court ruled that his pre-retirement death benefit could be added to the estate when it is nominally reserved for the spouse alone. "The case is significant be- cause lawyers drafting wills are going to have to consider the po- tential implications of the claw- back provisions in s. 72 of the Succession Law Reform Act as it relates to a pension beneficiary," says Jeffrey Ayotte of Ayotte Dupuis O'Neill PC in Peter- borough, Ont., who acted in the case for Cotnam's first wife and daughter. Prior to this decision, Ayo- tte says, it was thought that s.48(6) of the Pension Benefits Act determined that the spouse of a person who had a pension would automatically be entitled to the death benefit. "That's no longer the case," he says. Ayotte says the case doesn't mean that a dependent will au- tomatically be entitled to all or a portion of the pension death benefit to the exclusion of the spouse but, rather, that the in- tention of s. 72 of the SLRA is to allow the courts the power and f lexibility to consider all assets of the estate, including the pen- sion death benefit in attempting to satisfy the requirements of all dependents of the deceased. Ayotte adds that there was virtually no case law on this point, with the exception of one ONSC decision, where the judge made a standalone comment with no analysis or contextual background, which was con- trary to this case. "In our decision, Justice [Chris] de Sa said that while there is contrary case law, he wasn't bound by it," says Ayotte. John McGarrity, a sole prac- titioner in Peterborough, who acted on behalf of Cotnam's sec- ond wife, Mabel Rousseau, says the decision will significantly expand the assets that a depen- dent could seek under the relief provisions of the act. "Until then, the law was fairly clear that a pre-retirement death benefit was not capable of being clawed back into the estate," says McGarrity. "In these situations, the main assets are a house and perhaps a pension, so this could have significant implications in the future for that kind of a situ- ation." McGarrity says it could po- tentially become a competition between the adult disabled child who has been left out of the will versus the competing claim of a spouse. Previously, the spouse would always have the claim to the pension and another benefi- ciary couldn't be designated. "In this situation, where there's a spouse, you can't des- ignate a beneficiary — that was our position," says McGarrity. He adds that the decision is not being appealed because the distribution was so equitable. McGarrity also credits his asso- ciate Meryn Steeves for much of the work on the case. "The problem is not going to be in this case where he came to a very fair and equitable out- come," says McGarrity. "The problem is going to be in a future case where that may be the only asset. With this case, if the law is correct, you're going to have the competing claims between the spouse and a dependent." Holly LeValliant, a partner with Eisen Law in Toronto, a firm specializing in estate trust and guardianship law, says this decision highlights how unpre- dictable the area of dependent support claims is. "In most cases, estate litiga- tion lawyers don't want to risk going to a trial because it's com- pletely unknown how a judge will decide the case," says LeVal- liant. "We have no idea whether the court will follow precedent, if most of or all of the assets will go back into the estate or if they're clawed back at all." LeValliant says this will tend to lead to mediation rather than leaving it up to the courts, which is also why there is so little case law in this section of the SLRA. In this case, LeValliant notes, the court was trying to "expand the pie" to get more access to the dependent for support. "If this pre-death benefit hadn't been clawed back, there was little to argue over," says LeValliant. LT With this case, if the law is correct, you're going to have the competing claims between the spouse and a dependent. John McGarrity Holly LeValliant says a recent Ontario ruling highlights how unpredictable the area of dependent support claims is. of accounts, and disputed estate administration. have a proven track record for estate appeals. devrieslitigation.com 416.640.2754 Untitled-9 1 2017-10-31 12:48 PM TRUSTS & ESTATES BOUTIQUES

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