Protecting Estate Inheritances from Family Law Claims

Most parents intend to leave at least a portion of their estates to their children. What some parents may not realize is that the inheritance they leave their children could turn into “divisible family property” down the road in the event a child’s spousal relationship ends. That reality means that if your child goes through a divorce, their ex-spouse may have a legal entitlement to some of the inheritance. This may produce a result that you never intended.

The intention of this article is to provide practical tips to try and avoid this result.

Firstly, the timing of the inheritance is an important factor.

If your child receives their inheritance prior to marriage or entering a common-law relationship, then they can claim an exemption for the inheritance pursuant to section 23 of The Family Property Act (Saskatchewan). What this means is that if your child later separates from their spouse they can claim that the value of their inheritance at the start of the spousal relationship should not be shared since they received it prior to the relationship.

However, if the inheritance is received after your child’s spousal relationship commenced they cannot claim an exemption for the inheritance i.e. they cannot claim that it should not be divided at all with their spouse in the event of separation. However, they can claim an unequal division of the inheritance under section 21 of The Family Property Act (Saskatchewan), which can help ensure that they keep more than half of the inheritance.

Secondly, it matters what your child does with their inheritance.

Homes and household good are treated specially under the law. For example, if they invest the inheritance into a house for their family to live in, they would lose the ability to claim an exemption even if the inheritance was received prior to the start of the relationship. The home would be, presumptively, equally divided between the parties. As another example, if your child uses their inheritance to purchase furniture (which is technically considered a household good under the legislation) they will not be able to claim that portion of the inheritance as exempt.

As a result, it’s a good idea to explain to your children that they should be careful how they spend their inheritance, and potentially seek legal advice before making any large purchases.

Because of how these items are treated differently, in general the best thing your child can do with their inheritance is keep it in a separate bank or investment account and not use the funds for family spending or purchases. This is, understandably, not practical in many cases. However, ideally if they have another source of funds to use for these purchases then those funds should be used rather than their inheritance, where possible.

Thirdly, your intention matters.

If there are ever disputes in the future over how much of an inheritance your child’s estranged spouse may be entitled to, one factor the court examines is what your intention in leaving the gift to your child was. This is why it becomes very important that you have a specific clause in your Will indicating that you only intend for your child’s inheritance to benefit your child, and not their spouse. We recommend you seek legal advice in drafting your Will to ensure the proper wording is included in this clause.

Read more on our blog.

The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

James Steele Presents at Canadian Bar Association (Sask) Mid-Winter Meeting

Join James Steele at the Canadian Bar Association (Saskatchewan)’s Mid Winter Meeting in Regina on January 25, 2024. James will be addressing amendments to Part 16 of the King’s Bench Rules and their implication on estate administration.

 

2024 Mid-Winter Meeting

Delta Regina | Regina, SK
 
To register, click here.

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James Steele to present at Webinar – When Estates Go to Court: Recent Saskatchewan Decisions (CPD 368)

Several recent Saskatchewan decisions provide guidance on various estate law topics. These include issues related to estate administration, as well as more contentious issues such as will challenges. This webinar summarizes some of the recent Saskatchewan decisions within the past one to two years. James will outline the facts of each decision and then offer a practical takeaway from each.

When Estates Go to Court: Recent Saskatchewan Decisions

Presented by: James Steele

Oct 12, 2023 | $90 + GST LSS Members

To register for the webinar, click here.

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Can I Keep My Engagement Ring?

Upon the breakdown of a marriage, there are defined laws addressing how marital property is to be divided. But what happens if an engagement doesn’t result in marriage? And who gets to keep the engagement ring?

Each province addresses ring ownership upon the breakdown of an engagement differently. Theoretically, courts have grappled with the concept of gifting and whether an engagement ring should be considered an absolute or conditional gift. Courts have even imported contract law principles in their determination of ownership.

The relative lack of clarity with which this area has been approached by the courts and in the common law has led to some jurisdictions drafting legislation to deal with gifts exchanged before marriage.

For example, section 33 of Ontario’s Marriage Act has codified the common law principle that fault may not be considered where an engagement ring is given in contemplation of marriage or given as a “conditional gift”:

Where one person makes a gift to another in contemplation of or conditional upon their marriage to each other and the marriage fails to take place or is abandoned, the question of whether or not the failure or abandonment was caused by or was the fault of the donor shall not be considered in determining the right of the donor to recover the gift.

A simple application is: if no marriage follows, the ring must be returned to the donor. The justification being that return of the ring puts both parties in the position they were in before the engagement.

Other jurisdictions do not have similar legislation and remain bound by common law. Saskatchewan courts continue to follow precedents which retain historical foundations from 1917 (see Jacobs v Davis, [1917] 2 K.B. 532 at p. 533). Despite the old principle being adapted to apply to all relationships (not just those between a man and a woman), the basic idea is this:

If an individual who has received a ring refuses to fulfill the condition of the gift, they must return it. On the other hand, if the donor of the ring, without “recognized legal justification”, refuses to carry out their promise of marriage, they cannot demand the return of the engagement ring. It does not matter if the breaking of the promise turns out to be the ultimate advantage of both parties (D’Andrea v Schmidt, 2005 SKQB 201).

The legal effect of this common-law principle means that practically, if you break off an engagement, you are not entitled to the ring. Using the heteronormative example, boy proposes to girl, girl ends engagement, he gets to demand return of the ring. Alternatively, boy proposes to girl, boy ends engagement, she gets to keep the ring. In a way, the court has imported some level of fault (at least relating to the relationship ending) as being relevant in determining ring ownership.

As always in the law, there may be exceptions to the rule, but it is easy to see that certain inequities may exist where legislation is strictly adopted. Concepts of fairness may be compromised where a donor is allowed to demand the return of a ring, despite otherwise questionable actions or behaviours leading to the breakdown of an engagement. Alternatively, punishing an engagement ender by denying them the ability to retain an engagement ring might swing too far in the other direction, especially when considering the potential magnitude of cost.

A final option is that an engagement ring may be treated as a true and perfected gift. A judge may consider this the case where the donor says, “even if we never get married, this is a gift to you to remain yours”. This leaves no condition to be ‘fulfilled,’ and the recipient would likely retain ownership of the ring.

Despite this confusing and inconsistent area of the law, courts are apt to consider each case on its merits. We recommend seeking professional legal advice where there are questions related to engagement ring ownership.

This article is intended to provide legal information only, not legal advice.

For further information, please contact:

Tessa Wall
Student at Law
Direct: 306-933-1368
Email: [email protected]

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The Evolution of Contract Acceptance in the Digital Age

The recent Saskatchewan King’s Bench decision of South West Terminal Ltd. v Achter Land & Cattle Ltd., 2023 SKKB 116 has made national Canadian news, being the first of its kind regarding core contract interpretation principles – a thumbs-up emoji can signify...

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Tessa Wall joins Robertson Stromberg as Associate

Congratulations to Tessa Wall on her call to the Saskatchewan Bar and on joining the firm as an Associate.Tessa received her Juris Doctor degree from the University of Saskatchewan in 2022. She also holds a Bachelor of Arts Honours degree in Psychology from the...

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Binding Pre-Trial Conferences: What You Need to Know

Binding pre-trial conferences are a relatively new process option in Saskatchewan, which are available in civil law matters, including family law. Given that there have been few conducted in Saskatchewan to date, there are few decisions from the Court discussing your options if you are dissatisfied with the outcome. A recent decision, Nemetchek v Nemetchek, 2022 SKQB 165 (“Nemetchek”), provides valuable insight. The case may be found here: 

https://www.canlii.org/en/sk/skqb/doc/2022/2022skqb165/2022skqb165.html?autocompleteStr=2022%20SKQB%20165&autocompletePos=1

As background, a pre-trial conference is the final stage in a court proceeding before a trial of the matter, where a judge makes a final decision for the parties. 

The pre-trial conference is the parties’ last court-facilitated option to settle the matter prior to proceeding to a trial. A judge is present at pre-trials to hear the parties’ respective positions on the issues and offer insight to try and move the parties toward settlement. If the parties cannot reach an agreement at the pre-trial, they move on to a trial. The judge does not make a decision. 

However, in general civil and family law matters, binding pre-trials are now available under parts 4 and 15 of The King’s Bench Rules of Saskatchewan. The binding pre-trial functions similarly to a regular pre-trial, as described above, except that if the parties do not reach an agreement, they leave it to the judge to make a final decision on the matter. Rather than proceeding to a trial, the pre-trial judge makes the call. This can save parties ample time and money in avoiding the trial process while still being provided with a final decision from a judge. 

One important thing to bear in mind when considering a binding pre-trial is the nature of the issues in your case. A judge is limited in their ability to assess credibility since the parties do not provide sworn evidence to the Court as they would during a trial, where they provide verbal testimony under oath. Therefore, if there are conflicting stories between the parties, a binding pre-trial may not be a good fit for your case since the judge is limited in their ability to assess credibility to determine who is more believable.    

Another consideration is that your ability to appeal a decision resulting from a binding pre-trial is very limited. You must seek permission from the judge who made the decision in order to appeal it, which is not likely to be granted absent an obvious error. If you proceed to trial instead of a binding pre-trial, you would be able to appeal the decision much more easily. 

On this note, an appeal of a binding pre-trial decision cannot be brought under the guise that you are seeking clarification regarding the decision or that you think parts of the decision were wrongly decided. In Nemetchek, the husband asked the Court to “revisit” aspects of the decision reached at the conclusion of the binding pre-trial, essentially asking the judge to revise her decision in the husband’s favour.  

The Court concluded that writing to the Court to “clarify” parts of a decision was unacceptable. Further, while a judgment may be amended to correct clerical errors, accidental slips, or inadvertent omissions, the process cannot be used to reconsider a decision on the merits as the husband sought to do.  

In short, you cannot request a judge to reconsider a binding pre-trial decision simply because you are unhappy with the results.

The Court concluded that the application was unnecessary and without merit, awarding costs of $3,000 against the husband to be paid to the wife.

This article is intended to provide legal information only, not legal advice. 

For further information, please contact:

Curtis P. Clavelle
Direct: 306-933-1341
Email: [email protected]

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Protecting Estate Inheritances from Family Law Claims

Most parents intend to leave at least a portion of their estates to their children. What some parents may not realize is that the inheritance they leave their children could turn into “divisible family property” down the road in the event a child’s spousal...

read more

James Steele presents at the Saskatoon Estate Planning Council

willemien-kruger-lawyer-robertson-stromberg

James Steele will present an update on recent Saskatchewan court decisions affecting estate practitioners at the Saskatoon Estate Planning Council (SEPC) on October 18, 2022. SEPC promotes the discussion of topics and problems in estate and tax planning by professionals working in the field today. Learn more: http://www.saskatoonepc.com/

Related News and Articles

Protecting Estate Inheritances from Family Law Claims

Most parents intend to leave at least a portion of their estates to their children. What some parents may not realize is that the inheritance they leave their children could turn into “divisible family property” down the road in the event a child’s spousal...

read more

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