The Effect of Pre-Nuptial Agreements on Estate Administration

On intestacy, can a spouse’s statutory entitlement to a deceased spouse’s estate be curtailed by the terms of a pre-nuptial agreement? Maybe – as you would expect, it depends on the terms of the agreement.

The Ontario Superior Court recently dealt with this issue in the case of Caron v. Rowe. The deceased (Paul) died intestate. Paul and his wife (Andrea) had entered into a pre-marriage agreement which included the following provisions:

The Home shall forever remain in Paul’s personal estate, including, but not limited to, all interest, rents, profits and proceeds of disposition which may accrue from the Home; and,

Paul shall have, at all times, the full right and authority, in all respects the same as he would have if not married, to use, enjoy, manage, gift, sell, assign and otherwise convey the Home without interference, approval or other consent from Andrea and the Home shall remain forever free of claim by Andrea with the exception that she shall have the right to live in the Home for a reasonable length of time following the legal separation of Paul and Andrea, if ever, such occupation not to exceed a term of six (6) months.

The issue for the Court was whether these provisions of the agreement disentitled Andrea to the home on Paul’s death, such that it would go to those next entitled on intestacy, being Paul’s parents. The Court held that, in these circumstances, it did not.

In reviewing the law, the Court found that the terms of a pre-nuptial agreement can disentitle a spouse to her or his right to estate property, but only where there are “direct and cogent words to that effect”. The reason for requiring such specificity arises from a finding that the entitlement of a spouse on death is substantial and is encoded in legislation, in Ontario the Succession Law Reform Act. Therefore, while parties can contract out of that right, they can only do so where the agreement clearly shows such an intention. In other words, the contract must deal with the parties’ rights in the event of death.

Here, the Court found that in reading the pre-nuptial agreement as a whole, it dealt with the respective rights of Andrea and Paul on separation and dissolution of the marriage but did not specifically address Andrea’s rights as a surviving spouse. She is therefore entitled to Paul’s entire estate.

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