Estate planning in blended familiesMawdsley v. Meshen, 2012 BCCA 91
Increasingly, marriages in Canada are followed by divorces, not to mention the separation of
common-law partners. These unions and separations result in an increasingly complicated
mixture of families in Canada, subsequently causing estate planning to be more difficult than
Planning becomes even more crucial when considering provincial statutes that allow spouses, common-law partners and children to make claims against estates of deceased persons for maintenance and support. People have been using trusts to avoid such claims.
A recent British Columbia Court of Appeal affirmed its trial decision that dealt with some of the complications that can arise. Joan Meshen had three children from two previous marriages. Her third and final relationship was with Dennis Mawdsley as a common law spouse for 18 years. Ms. Meshen was a wealthy woman. Before her death, she transferred some of her assets by way of outright gifting deeds and most of the remainder into an irrevocable family trust to benefit her children leaving nothing for Mr. Mawdsley who then brought a claim under the BC Wills Variation Act and Fraudulent Conveyances Act.
The BC Court confirmed its 2011 decision in Easingwood v. Cockcroft that the surviving spouse of a 26 year marriage could qualify as a “creditor or other” to negate the trust under the Fraudulent Conveyances Act. However, Mr. Mawdsley’s Fraudulent Conveyance Act claim was dismissed because the Court felt that Ms. Meshen did not intend to delay, hinder or defraud Mr. Mawdsley when she transferred her assets into the trust.
However, with regard to his claim under the Wills Variation Act, the Court considered the Supreme Court of Canada’s decision in Tataryn v. Tataryn Estate on the question whether a testator has acted in light of societal legal and moral norms in making provision for the proper maintenance and support of the testator’s spouse or children. The Court found that Ms. Meshen did not make adequate provision from her estate for Mr. Mawdsley and that her failure to leave anything to him under her Will fell below the moral obligation of a contemporary judicious spouse. Ms. Meshen’s Will was varied and the gifting deeds and family trust were set aside so as to give the entire residue of about $10.5 million to Mr. Mawdsley at trial.
At the Court of Appeal, the decision was changed to award Mr. Mawdsley $280,000, which the Court felt was adequate to satisfy Ms. Meshon’s obligations toward Mr. Mawdsley. The Supreme Court of Canada denied leave to appeal, thereby leaving the Appeal Court’s decision undisturbed.
This interpretation by the BC Courts can be expected to be followed in the Province of Newfoundland and Labrador, since the language of our Fraudulent Conveyances Act and Family Relief Act are similar. Accordingly, extreme care needs to be taken by estate planners and their advisors to ensure that their intentions are not at least partially thwarted by a disaffected dependant claimant. There are ways to ensure this does not occur, but specialized estate planning advice is very important.