This case illustrates the importance of formalizing a Separation with a Separation Agreement or a Court Order. The Court of Appeal dealt with a pure question of law this week by asking:

Who receives the pension death benefit when the member of a pension plan entitled to a deferred pension dies and is survived by both a common law spouse with whom he resided at the time of death and a legally married spouse from whom he was separated but whom he designated a beneficiary of his pension plan?

Who Gets the Death Benefits: The Ex-Spouse or the Common Law Partner?

Ronald Carrigan and Melodee Carrigan were wed in 1973, and remained legally married until his death in 2008. In 2002, Ronald designated Mrs. Carrigan and their daughters as the beneficiaries of the death benefit under his pension plan. The Carrigans were separated by 2000 by which time Ronald was living openly with Jennifer Quinn, whom he continued to live with until his death. Ronald and Ms. Quinn became common-law partners after their third year of cohabitation. The Carrigans never formalized their separation by a separation agreement or a court order.

As such, both Mrs. Carrigan and Ms. Quinn qualified as “wives” under pension legislations for the purpose of determining survivor benefits. Both Mrs. Carrigan and Ms. Quinn claimed the death benefit of Mr. Carrigan’s pension under s. 48 of the Pension Benefit Act (“PBA”).

The trial judge concluded that Ms. Quinn was entitled to the death benefit as “the spouse” under the PBA, rather than Mrs. Carrigan and her daughters as the designated beneficiaries.

The Court of Appeal reversed the trial court’s decision by concluding that Mrs. Carrigan and her daughters are entitled to the death benefit of Mr. Carrigan’s pension.

Section 48(6) of the PBA, states the following;

A member or former member of a pension plan may designate a beneficiary and the beneficiary is entitled to be paid an amount equal to the commuted value of the deferred pension mentioned in subsection (1) or (2) if,

(a)  The member or former member does not have a spouse on the date of death; or

(b) The member or former member is living separate and apart from his or her spouse on that date.

The Judge stated that the PBA provides that the designated beneficiary is entitled to the death benefit if either of the two above mentioned circumstances exists.  Therefore s. 48(6) is triggered, and the result of same, is that neither Mrs. Carrigan nor Ms. Quinn is entitled to the pension benefit as a spouse, rather Mrs. Carrigan and her two daughters are entitled to the death benefit as his designated beneficiaries.

This Court of Appeal decision provides a warning to those who fail to change their beneficiary after finding new spouses and the importance of having a detailed, written, and signed Separation Agreement in order to properly deal with all future entitlements by former spouses.