A Will and a Prenuptial Agreement: A Tale of Two Properties

While the time leading up to marriage is often full of optimism and excitement, many couples are also aware that even the healthiest relationships sometimes come to an end. It is becoming more common for parties to take proactive steps to protect their rights and property should the relationship break down, such as by preparing a marriage contract. However, despite sufficient planning, sometimes things sometimes go differently than planned.

In a recent decision from the Alberta Court of King’s Bench, the Court was asked to settle a dispute between the estate of a husband who left behind his wife. The estate and the deceased’s wife could not agree on what should happen with the two properties the couples lived in before their separation.

Couple signs prenuptial agreement prior to marriage

In Amyotte v. Lefever Estate, the applicant and her deceased husband (“RL”) met in 2008 and began living together in 2010. The parties signed a prenuptial agreement (the “contract”) and were married in 2012. RL had also executed a will in 2007. Both parties agreed that each document was valid.

The contract stated that the couple’s respective assets and debts would belong solely to each of them unless otherwise provided for in the contract. For example, RRSPs, investments, and vehicles in one’s name would be split equally with the other in the event of separation or divorce. While the parties did not hold any joint property at the time they signed the contract, they agreed that any jointly acquired property would be divided equally between them and would be presumed to be held in joint names with a right of survivorship upon death.

Parties separate and reside in separate residences

When they signed the contract, they lived in a house referred to as the “Kensington property.” It was owned solely by RL, but the contract stated that if the couple separated and divorced, it would be transferred to the applicant free and clear of any encumbrances and that the mortgage would be paid off in full by RL. The contract also indicated that RL agreed to change his will to ensure the house and furniture would be gifted to the applicant in the event of his death. However, RL failed to update his will in time to reflect this agreement.

In 2014, RL began to experience issues with addiction. Two years later, he executed beneficiary designations naming the applicant as the beneficiary of his RRSP and TFSA accounts. In 2019, the parties acquired another house, which was referred to as the “Carter property.” Less than one year after this property acquisition, the parties separated. RL continued to live in the Carter property, which the applicant paid the mortgage on, while she lived in the Kensington property, which RL paid the mortgage on.

At the time RL passed away in 2020, the applicant was still living in the Kensington property. She promptly transferred the Carter property into her name alone, sold it, and retained the proceeds from the sale. She also filed a Certificate of Lis Pendens and a dower interest concerning the Kensington property, which indicated that she would be claiming her right to occupy a house owned by her spouse.

Estate stops paying mortgage on the house the applicant resides in

RL’s estate was not happy with the applicant’s decisions regarding the Carter property, the registration of a dowry on the Kensington property, and her retention of RL’s RRSP and TFSA accounts. As a result, the estate stopped paying the mortgage on the Kensington property, which resulted in foreclosure proceedings. The estate told the Court that because the applicant had filed her dower election, she was choosing to receive a life estate and was thereby taking on the responsibility of paying the mortgage. The estate further argued that the foreclosure of the Kensington property was the applicant’s fault.

The Court disagreed with this argument and noted that the contract provided for the Kenginston property to be transferred to the applicant free and clear of any encumbrances in the event that the parties separated or divorced. While the deceased did not update his will as stipulated in the contract, his failure to do so did not release the estate from that promise. The Court held that the estate was required to pay the mortgage on the Kensington property and deliver clear title to the applicant.

The Court also found that the Carter property had been purchased in both parties’ names after marriage. The contract stated that in the event of separation or divorce, the property would be presumed to be jointly owned with a right of survivorship upon death. Therefore, the Court held that the applicant was required to pay RL’s estate one-half of the proceeds received from the same of the Carter property.

Contact the Estate Litigation Lawyers at DBH Law in Calgary for Advice on Estate Disputes and Property Rights

The experienced estate planning and litigation lawyers at DBH Law will help you with all of your estate planning and administration needs. Our compassionate lawyers understand that planning for the future provides a sense of safety and protection for your and your family’s future. We also recognize that planning for the future can be costly, so we offer our clients cost-effective fee structures. While comprehensive estate planning cannot always prevent future disputes, our team is prepared to advocate on your behalf in the event of litigation. To learn more about how we can help you plan for the future, contact us online or call us at 403.252.9937.