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WHAT THE FAMILY LAW ACTMEANS FOR ESTATE PLANNERSAbbotsford Estate Planning CouncilAnna Laing - Fasken Martineau LLPMay 15,...
Changes of Interest to the Estate PlannerChanges of Interest to the Estate Planner• Division of assets – Part 5• common-la...
The Old Law – the Family Relations ActThe Old Law – the Family Relations Act• Division of “family assets” available only t...
Definition of “Spouse” (section 3)Definition of “Spouse” (section 3)Spouses are persons who:• (a) are married,• (b) have l...
Property Entitlement (section 81)Property Entitlement (section 81)• Unless modified by an agreement or order,• spouses are...
Family Property (section 84)Family Property (section 84)Family property is:• all property that either spouse owns on the d...
Excluded Property (section 85)Excluded Property (section 85)• Property owned by a spouse before the relationship began• Gi...
Family Debt (section 86)Family Debt (section 86)• Includes all financial obligations incurred by a spouse• during the peri...
9Section 85(1)(f) TrustSection 85(1)(f) Trust• Excluded property includes property held in a discretionarytrust to which t...
Unequal Division (section 95)Unequal Division (section 95)• Court can order unequal division of both family property and f...
When to Divide Excluded Property?When to Divide Excluded Property?(section 96)(section 96)• When it increases in value dur...
Triggering eventTriggering event• FRA: the triggering event was the making of a separationagreement, an order for divorce ...
Valuation (section 87)Valuation (section 87)• The value of family property must be based in its fair marketvalue• The valu...
Marriage and Cohabitation AgreementsMarriage and Cohabitation Agreements• All provisions of the Act are subject to the spo...
Continued. . .Continued. . .Agreements that are procedurally fair may also be set aside ifit would be “significantly unfai...
TransitionTransitionThe old Act continues to apply where:• the issue is an agreement regarding property made beforethe FLA...
Support Obligations and EstatesSupport Obligations and EstatesSections 170-171•Court can order as between spouses that a s...
Sections 53-55•A guardian can appoint a successor in the event of theappointing guardian’s death (section 53) or an additi...
Guardian appointments, cont’d• Section 55(5) provides that a standby guardian continues asguardian after the appointing gu...
ChildrenChildren’’s Property (sections 176-178)s Property (sections 176-178)• Prima facie, a guardian is not a trustee of ...
ChildrenChildren’’s Property (conts Property (cont’’d)d)• Exception: child/guardian cannot receive smallproperty if that w...
Court Appointed Trustees (section 179)Court Appointed Trustees (section 179)• Empowers Court to appoint a trustee of prope...
Financial Abuse (Part 9)Financial Abuse (Part 9)• These are the “Family Violence” provisions• The Court can make orders pr...
Financial Abuse (contFinancial Abuse (cont’’d)d)• Key definitions:• “family member” with respect to a person includes aper...
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Family law

  1. 1. WHAT THE FAMILY LAW ACTMEANS FOR ESTATE PLANNERSAbbotsford Estate Planning CouncilAnna Laing - Fasken Martineau LLPMay 15, 2013
  2. 2. Changes of Interest to the Estate PlannerChanges of Interest to the Estate Planner• Division of assets – Part 5• common-law spouse rights• family property/excluded property• trusts• transition• Support obligations binding estates – sections 170-171• Appointment of guardians – sections 53, 55• Guardian’s ability to receive certain funds for children andprovide a valid discharge – section 178• Appointment of trustees for children’s funds – sections 179, 180• Financial abuse – Part 9
  3. 3. The Old Law – the Family Relations ActThe Old Law – the Family Relations Act• Division of “family assets” available only to legally marriedspouses or those spouses who have opted in under s. 120.1of the Act• “Family assets” are assets ordinarily used for a familypurpose• Business assets are excluded in the absence of direct orindirect contribution by non-owning spouse• Family assets can be reapportioned if the prima facie 50/50division is unfair
  4. 4. Definition of “Spouse” (section 3)Definition of “Spouse” (section 3)Spouses are persons who:• (a) are married,• (b) have lived in marriage like relationship forcontinuous period of at least 2 years, or• (c) have lived in marriage-like relationship [noduration specified] if they have a child – but (c) is onlyrelevant for spousal support purposes
  5. 5. Property Entitlement (section 81)Property Entitlement (section 81)• Unless modified by an agreement or order,• spouses are both entitled to family property andresponsible for family debt regardless of theirrespective use or contribution• upon separation, each spouse is entitled to anundivided one-half interest in all family property astenants in common and is equally responsible forfamily debt
  6. 6. Family Property (section 84)Family Property (section 84)Family property is:• all property that either spouse owns on the day theyseparate that does not qualify as excluded property• property acquired after the date of separation derivedfrom family property• Includes:• the amount by which the value of excluded propertyhas increased since the later of the date therelationship began or the excluded property wasacquired
  7. 7. Excluded Property (section 85)Excluded Property (section 85)• Property owned by a spouse before the relationship began• Gifts and inheritances• Settlement and damage awards from tort claims – exceptawards meant to compensate both spouses or to replacewages• Non-property related insurance proceeds• Property referred to above that is held in trust for a spouse• Property held in certain discretionary trusts – s. 85(1)(f)trust• Property traceable back to excluded property
  8. 8. Family Debt (section 86)Family Debt (section 86)• Includes all financial obligations incurred by a spouse• during the period beginning when the relationshipbetween the spouses begins and ending when thespouses separate• after separation if incurred to maintain family property• In the case of spouses who cohabited before marriage,will the Court define the beginning of the period as thedate cohabitation began or the date of marriage?• Prima facie, both spouses will be liable for debt incurredin relation to excluded property
  9. 9. 9Section 85(1)(f) TrustSection 85(1)(f) Trust• Excluded property includes property held in a discretionarytrust to which the spouse did not contribute, of which thespouse is a beneficiary, and that is settled by a personother than the spousee.g. the trust established to hold common shares after anestate freeze where the children and grandchildren arebeneficiaries• Note: it is the property in the trust, not the beneficiary’sinterest in the trust, that is the excluded property. Per s.84(2)(g), the increase in value of excluded property – theentirety of the trust property – is family property.
  10. 10. Unequal Division (section 95)Unequal Division (section 95)• Court can order unequal division of both family property and familydebt but NOT excluded property• Pre-requisite for unequal division is significant unfairness• Factors to consider substantially different from factors forreapportionment under FRA and include:• whether family debt was incurred in the normal course of therelationship• whether a spouse not acting in good faith substantially reducedthe value of family property or negatively affected the otherspouse’s interest in family property by disposing of it• whether a tax liability may arise from the sale or transfer ofproperty• any other factor that may lead to significant unfairness
  11. 11. When to Divide Excluded Property?When to Divide Excluded Property?(section 96)(section 96)• When it increases in value during the relationship – then theincrease is divided• If family property/debt located out of BC can’t practically bedividedOR• It would be significantly unfair not to divide excluded propertyon consideration of …• the duration of the relationship, and• a spouse’s direct contribution to the preservation,improvement, operation or management of excludedproperty
  12. 12. Triggering eventTriggering event• FRA: the triggering event was the making of a separationagreement, an order for divorce or judicial separation, themaking of a declaration under section 57 that there was noreasonable prospect of separation, or an annulment ofmarriage.• FRA actions end if a spouse dies before the triggering event• FLA: the triggering event is simply the date of separation
  13. 13. Valuation (section 87)Valuation (section 87)• The value of family property must be based in its fair marketvalue• The valuation date of family property is date an agreement issigned after separation or the date of a court hearingregarding the division of property, unless the spouses agreeotherwise• In the case of excluded property, another relevant valuationdate is the date the parties’ relationship began or the date theexcluded property was acquired during the relationshipbecause the increase in value from that date to therelationship’s end is family property.13
  14. 14. Marriage and Cohabitation AgreementsMarriage and Cohabitation Agreements• All provisions of the Act are subject to the spouses’agreement otherwise• Agreements may be set aside due to defects in the processof making the agreement:• failure to make proper disclosure• a spouse takes improper advantage of the other’svulnerability, ignorance, need• a spouse did not understand nature and consequences ofagreement, or• other circumstances existed which would make all/part of acontract voidable at common law
  15. 15. Continued. . .Continued. . .Agreements that are procedurally fair may also be set aside ifit would be “significantly unfair” not to do so, having regard to:• length of time that has passed since the agreement wasexecuted• intentions of the parties to achieve certainty• the degree to which the spouses relied upon the terms ofthe agreement
  16. 16. TransitionTransitionThe old Act continues to apply where:• the issue is an agreement regarding property made beforethe FLA comes into force – e.g March 18, 2013 – unlessspouses agree otherwise• a proceeding respecting property division has already beenstarted under the FRA (does not apply to unjust enrichmentclaims started by common law spouses prior to March 18)
  17. 17. Support Obligations and EstatesSupport Obligations and EstatesSections 170-171•Court can order as between spouses that a support obligationsurvives the payor’s death and is a debt of the estate•If payor dies, personal representative can apply to Court tovary/terminate an order/agreement that makes support bindingon an estate•If order/agreement is silent as to whether support is binding,the recipient can apply to Court for an order that support isbinding
  18. 18. Sections 53-55•A guardian can appoint a successor in the event of theappointing guardian’s death (section 53) or an additionalguardian (a “standby” guardian) in the event the appointingguardian is facing terminal illness or permanent mentalincapacity (section 55).•If the appointment of a guardian is made outside of a will,there is a prescribed form of appointment that must beexecuted in the same manner as a Will – see Family Law ActRegulation, B.C. Reg. 347/2012.18Guardian Appointments
  19. 19. Guardian appointments, cont’d• Section 55(5) provides that a standby guardian continues asguardian after the appointing guardian’s death,notwithstanding any other instrument made by the appointingguardian, unless the appointing guardian specifically revokedthe appointment while capable or the appointment providesotherwise.
  20. 20. ChildrenChildren’’s Property (sections 176-178)s Property (sections 176-178)• Prima facie, a guardian is not a trustee of a child’s property orentitled to give a valid discharge simply by virtue of being aguardian• A person having the duty to deliver property to a child can bedischarged in relation to the delivery of property worth lessthan the prescribed amount of $10,000 (“small property”) – s.178• Discharge occurs upon:• delivery of the small property to a child who has the duty tosupport another person, or to a guardian with parentalresponsibilities for the child, and• receipt of an acknowledgment in the prescribed form fromthe recipient of the small property.
  21. 21. ChildrenChildren’’s Property (conts Property (cont’’d)d)• Exception: child/guardian cannot receive smallproperty if that will cause the child/guardian to holdmore than $10,000 in aggregate• The guardian who receives small property for achild is a trustee of that property for the child• The small property can also be delivered to thePGT if the PGT will accept it
  22. 22. Court Appointed Trustees (section 179)Court Appointed Trustees (section 179)• Empowers Court to appoint a trustee of property for a childand to fix the terms of the trust• Outlines what the Court is to consider including the suitabilityof the trustee, the views of the child (if appropriate),consider), wishes of the guardians, the written comments ofthe PGT• Court can make orders as to accounting, investment policy,remuneration, security, duration of the trusteeship, and anyother order the Court considers appropriate• PGT’s suggestions as to the information it wants to see arefound atwww.trustee.bc.ca/services/youth/protective_services.htmlunder the heading “Minor’s Property”
  23. 23. Financial Abuse (Part 9)Financial Abuse (Part 9)• These are the “Family Violence” provisions• The Court can make orders protecting a person determinedto be an “at-risk family member” from “family violence” when itdetermines that family violence is likely to occur. Thedefinitions are broad enough to capture an adult childfinancially abusing a parent.• The application can be brought by an at-risk family memberor by a person on that at-risk family member’s behalf or bythe Court on its own initiative (s. 183) and can be brought ona standalone basis (i.e. not as part of an FLA proceeding) (s.183(1)).23
  24. 24. Financial Abuse (contFinancial Abuse (cont’’d)d)• Key definitions:• “family member” with respect to a person includes aperson who lives with and is related to the person andincludes the person’s child (s. 1)• “at-risk family member”: a person whose safety andsecurity is or is likely to be at risk from family violencecarried out by a family member (s. 182)• “family violence” includes “psychological or emotionalabuse of a family member including . . . unreasonablerestrictions on, or prevention of, a family member’sfinancial or personal autonomy” (s. 1)
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