Mother Attempts To Circumvent Estate Administration In Accessing Estate Of Former Husband

Written on behalf of Arbesman Hamilton LLP

Disputes can often arise when one person in a relationship comes into significant money just prior to a separation or divorce. A recent case before the Supreme Court of British Columbia examined such a situation where the former wife of a man attempted to acquire his estate after he had passed away.

The marriage and the separation.

The couple were married on March 6, 1999. They had two children before separating in 2012. The husband was involved in a serious motor vehicle accident in February 2005. Just over seven years later, in August 2012, he received an award totaling nearly $1.9 million.

The husband had developed a serious drug addiction following his injuries. The parties separated two months after he was awarded his damages when the wife fled the home with their children for fear of being harmed by the husband. The wife has had sole responsibility of the children since the separation. She had also commenced proceedings in court to obtain protection and other orders.

A number if ex parte orders were granted on November 6, 2012. Included in those orders was one granting the wife interim sole custody and guardianship of their children. There was also an order requiring the husband to pay $300 per month in interim child support. This was based on an imputed annual income of $19,000. Another order was made pertaining to any funds the husband might obtain through any other lawyers, including the personal injury law. The order was for the money to be held in trust pending the outcome of the divorce and the final determination of support obligations.

Divorce proceedings commenced on March 18, 2013. The wife sought a divorce, spousal support, division of family property and debt, and restraining  and protection orders. Only a few of these issues were dealt with (particularly the occupation and sale of the former family home) before the husband died on October 15, 2015. He did not have a will at the time of his death.

When he died, only $322,654.52 of his original $1.9 million remained held in trust. At the time of the trial, the wife was unaware of how he spent the nearly $1.6 million that was unaccounted for.

Applications to the court

The wife attempted to acquire the remaining funds, asking the court to order them to be paid to her in full as a lump support payment. The judge, however, was concerned about dispensing this money before the husband’s estate had been administered. His particular concerns were that the children might be deprived of any direct entitlement they may have ad, adding “skipping over the administration of the estate is fraught with difficulty.”

The decision being discussed in this blog was the result of the wife brining another application seeking payment from the trust in order to provide a lump support payment. Her application relied on s. 170(g) of the province’s Family Law Act, which allows the courts to provide money for support obligations even if other (possibly unrelated) issues are being litigated at the time.

The court’s analysis

The court did not agree that the funds were not an asset of the husband’s estate, adding the mother’s “attempt to obtain these funds using this approach really asks the court to circumvent the proper procedural and substantive law.” Many of the situations outlined in the s. 170(g) can only occur if both parties are alive. The court found that a holistic interpretation of the wording could only lead to the conclusion that it was meant to apply to situations where both parties are still alive.

Like in the first decision, the court did not agree that the funds held in trust should be made available without the estate being administered, writing “…it must be said that circumventing the proper administration of (the husband’s) estate fails to recognize or consider the legitimate direct interests of the children on an intestacy distribution. As (the husband) died without leaving a spouse, the children would have a direct claim to their father’s net estate on such a distribution. Their interests need to be considered.”

The exceptional family and estate lawyers at Arbesman Hamilton LLP assist our clients in all areas of estate and family law, including issues around separation, divorce, child support, and spousal support. We also estate and trust planning, wills, estate litigation, and more. Our experience working in both of these fields makes us especially well positioned to assist clients who need help in both these areas of the law. If you are dealing with an estate or family law issue, please call us at 416-481-5604 or reach us online to see how we can help you today.