Summaries Sunday: OnPoint Legal Research

One Sunday each month OnPoint Legal Research provides Slaw with an extended summary of, and counsel’s commentary on, an important case from the British Columbia, Alberta, or Ontario court of appeal.

Tarr Estate v. Tarr, 2014 BCCA 315

1. CASE SUMMARY

Areas of Law: Estate Law; Survivor Pension Benefits; Waiver

~The waiver or conveyance of a survivorship interest in pension benefits must be explicit and leave no doubt as to what is being relinquished~

BACKGROUND: The Appellant, Colleen Tarr, was married to Michael Tarr for 38 years before the two separated in July 2002. Around the same time, Mr. Tarr retired from teaching. He signed a Teachers’ Pension Plan spousal declaration in which he elected a 100% joint life option naming the Appellant as the beneficiary of the survivorship interest in the pension plan. The spousal declaration declared that the Appellant was Mr. Tarr’s spouse at the time of signing. Later that month, Mr. Tarr received confirmation that he had been granted a pension. The confirmation letter stated that he could only change his pension option by giving notice in writing by September 15, 2002. Otherwise, his choice of option was “irrevocable”. In 2007, the couple signed a Separation Agreement. The Agreement affirmed that each spouse would retain pension and pension rights “for his or her own use absolutely, free of any claim by the other”. Mr. Tarr remarried in 2008, and passed away in 2010. Following his death, the Appellant received the pension benefits payable pursuant to the joint life option. The Respondent, Kathleen Gabelmann, was Mr. Tarr’s second wife and the executrix of his estate. She brought a summary trial application seeking a declaration that the Appellant held the pension payments in trust for the estate. The chambers judge considered the Agreement and the Form 89 Financial Statements the spouses had exchanged in accordance with the Family Relations Act (“FRA”). The Appellant did not list the survivorship interest in the pension plan as an asset in her Form 89. The chambers judge found that the Appellant had waived her entitlement to the survivorship benefits in the Agreement.

APPELLATE DECISION: The appeal was allowed. The Appellant argued that the chambers judge failed to understand the legal nature of her survivorship benefits, and because of this misinterpreted the Agreement. The FRA provides that a pension constitutes divisible matrimonial property. Under the FRA, at the time the spousal declaration was signed the Appellant was presumptively entitled to the whole of the pension benefits should Mr. Tarr predecease her. The FRA also provides that in the absence of an order of the BC Supreme Court, a designation of post-retirement survivor’s benefits may not be changed without the survivor’s consent. Entitlement to the survivorship interest crystallizes at the time of a triggering event, which in this case was the execution of the Agreement. Waiver of the statutory entitlement to survivorship interests may be done through a written agreement. The Pension Benefits Standards Act (“PBSA”) similarly contains specific protection for a spouse’s survivorship interest in a member’s plan, unless the beneficiary spouse waives entitlement. The PBSA allows a standalone waiver, which must be delivered to the plan administrator within 90 days prior to pension commencement, or waiver as part of a court order or settlement agreement. If the waiver is part of a court order or settlement agreement, it can be received at any time prior to commencement. The Court of Appeal found that under the PBSA, the Appellant’s survivorship interest in the pension plan vested in July 2002 when Mr. Tarr irrevocably elected a joint pension with her as the beneficiary of the survivorship interest and commenced receipt of his pension. Even though whether the Appellant would ever receive any benefit from this right was conditional upon Mr. Tarr predeceasing her, the right itself was not an inchoate or conditional. She was thus the owner of the survivor benefits at the time the Agreement was executed, and so a waiver of interest in assets belonging to Mr. Tarr did not affect her entitlement to the survivorship benefits. The Court declined to determine whether the owner of a survivorship interest could effectively waive that interest to create a trust in favour of the pension plan member’s beneficiaries.

2. COUNSEL COMMENTS:

Counsel Comments provided by Douglas M. King, Counsel for the Appellant