In my experience many matrimonial practitioners may well do a very good job in their respective field, but upon drafting separation agreements to finalize the marriage, many of the agreements are very poorly drafted with respect to inheritance issues between the spouses that may arise in later years.
For example while most separation agreements are drafted very well to prevent the former spouse from making a claim against the estate of the deceased, the agreements rarely provide that the former spouse does not have the right to receive the gift in the event that the spouses do not divorce, and failed to revise his or her will as is often the case.
Many spouses have each other’s as the named beneficiary of various insurance policies, and may well forget to change the designated beneficiary of that policy after the marital breakdown. A properly drawn agreement would prevent the former spouse from being the named beneficiary and receiving the funds from an insurance policy.
It must be noted that a separation agreement has no effect whatsoever on the terms and validity of a will, but it well may provide the legal framework for an executor to for example to not be legally obligated to make payment to the surviving spouse under the will and the surviving spouse is legally estopped from enforcing payment.
The separation agreement should have the following provisions with respect to estate issues:
The surviving spouse agrees that the estate of the deceased be distributed as if the surviving spouse had died first;
if the executor requests it, the former spouse will provide a disclaimer of any interest in the estate;
that the former spouse will make no claims against the estate of the deceased;
that the former spouse agrees to not receive any benefits as a result of the death of the deceased, whether by way of intestacy, will or trust
the surviving spouse will not accept any appointment of being the personal representative of the deceased.
The Ontario case of Makarchuk v Makarchuk 2011 ONSC 4633 ( Appeal to Court of Appeal dismissed January 23,2012, and leave to appeal to the SCC refused) isnillustrative of the problem.
The Makarchuks were married for over 40 years and separated, but did not divorce in 2003.
They signed a separation agreement in 2003 and the husband died 5 years later in 2008.
The last will of the deceased, a retired lawyer, was one he prepared himself and signed 5 months prior to signing the separation agreement.
The wife was appointed executor and sole beneficiary.
The separation agreement contained a release of all claims provision that stated inter alia:
” –the husband and the wife each release all rights which he or she has or may acquire under the laws of any jurisdiction in the estate of the other–”
The issue was whether the wife had released her entitlement to share as a beneficiary and executor of her late husband’s estate.
An adult son of the marriage said that the separation agreement “thrumped the will”, but the Courts disagreed and allowed the wife to inherit.
The Court found that the wording of the release in the separation agreement ,made only 5 months after the will, was not broad enough include rights acquired under the will- the release only speaks of “rights acquired under the law.”
Many clients and even some lawyers do not appreciate the legal distinction between a separation and divorce.
Under the provisions of the Divorce Act, s 16, had the parties being divorced the widow why would not have been allowed to inherit and would have been treated in law as if she had predeceased her husband.
Since they were merely divorced, and the provisions of the release in the separation agreement were not exact enough to preclude the widow from inheriting, the court concluded that the deceased had ample time to change his will had he wished to do so, and allowed his wife to inherit.