Have you had more than one ‘spouse’ in your lifetime? If the answer to that question is ‘yes’, then it is important that you remember to designate your pension beneficiary. The importance of doing so was highlighted in a decision from the Court of Appeal for Ontario in 2012, which interpreted the definition of ‘spouse’ under Ontario’s recently amended Pension Benefits Act.
This important but perplexing decision was Carrigan v. Carrigan Estate (‘Carrigan’). It involved the estate of Ronald Carrigan, who passed away, leaving behind his common law spouse, Jennifer Quinn, and his wife, Melodee Carrigan, who he had separated from almost a decade before his death but never divorced. Melodee had been living in the matrimonial home right up until Ronald’s death, and he had been paying her living expenses since their separation. Melodee was also the executrix of his estate and she and their two children were named beneficiaries under Ronald’s pension plan.
The only issue in this case was determining who Ronald’s ‘spouse’ was according to the Act, in order to decide who would receive his lump-sum pension benefit. The Act defines ‘spouse’ as either of two persons who are married to each other, or are not married to each other but are living together in a conjugal relationship continuously for a period of not less than three years. The Act also allows pension plan members to designate a beneficiary if they didn’t have a spouse, or were living separate and apart from their spouse at the time of death.
Unfortunately, as seen in this case, a dual spouse situation clouds the issue. The trial judge held that Ronald’s common law spouse, Jennifer, was his ‘spouse’ for the purposes of receiving the pension benefit because she was in a spousal relationship with him at the time of his death. Ronald and Melodee, while still married, had separated.The Court of Appeal found however, that neither woman qualified under the definition of ‘spouse’ for the purposes of the Act. Because Melodee was the named beneficiary, she was entitled to receive the pension along with her two children.
This situation would not occur where there are two common law ‘spouses’. If a pension plan member was living with one common law spouse, and had a second common law spouse they had recently separated from, the one they live with would get the pension. This is because in order to fit the definition of ‘spouse’, a common law couple can’t have separated because the law defines a common law spouse as someone who is, not was, living with the member at the time of death. The question is – why should there be a difference if a married but separated spouse exists, particularly if she also loses the pension by virtue of the separation? Leave to appeal to the Supreme Court of Canada was refused on March 28, 2013, so it appears this decision will stand, and there does not appear to have been any legislative effort to clarify the law on this issue since.
So what does this mean for individuals with two (or more) existing ‘spouses’? Where both married (but separated) and common law spouses exist, neither person will be considered a ‘spouse’ for the purposes of the Act and pension benefits will go to the designated beneficiary. It is important to always designate a beneficiary of their pension plans, and to remain mindful of who that person is. Otherwise, your pension benefits may not end up with the person you thought they would.
For more information, read my full article, Dual Spouses Case a Reminder to Designate Pension Beneficiary.