I just read Dagg et al. v. Cameron Estate  ONSC 2597. This case doesn’t change anything. There is no new interpretation of any law here. Still, it highlights the law that we need to know as it relates to dependents’ relief claims under the Succession Law Reform Act and, importantly, the limitations we come up against when employing the widely-used irrevocable designation of a life insurance beneficiary to secure support obligations.
The facts of this case do not stand out in any special way. Stephen Cameron was once married to Anastasia Cameron. They had children together. They separated. They agreed, among other things, that Stephen Cameron would designate Anastasia Cameron as the irrevocable beneficiary of any life insurance policy he had to secure support.
Stephen Cameron then began cohabiting with Evangeline Dagg and they became pregnant. Tragically, Mr. Cameron died prior to that child’s birth. While it was raised as an issue, Bale J. had no trouble determining that Evangeline Dagg qualified as a “dependent” under the Succession Law Reform Act.
As a dependent, the insurance proceeds (of which Anastasia Cameron was named an irrevocable beneficiary) were available to pay support to Evangeline Cameron, even if that insurance was in place to secure Mr. Cameron’s support obligations to his first family.
Justice Bale cites O’Flynn J. in Matthews v. Matthews Estate,  OJ No 729, 2012 ONSC 933 (SCJ):
The law is clear that, under the Succession Law Reform Act, life insurance policies owned by a spouse…even where another beneficiary is irrevocably designated, can be treated as part of the deceased spouse’s estate and available for the payment of support to a dependent.
The life insurance policy, irrevocable beneficiary designation and all, was available to satisfy Evangeline Daag’s claim for support as a dependent.
We so often see separation agreements that provide that a payor spouse’s insurance proceeds will be available to secure support for the other spouse, where that spouse is named an irrevocable beneficiary.
In fact, family lawyers, mediators and financial professionals will want to make sure our clients are aware that there are limits on the availability of these funds to secure support if the payor spouse is the owner of the policy. There are other options, of course. For example, it might make more sense for the recipient spouse to own the policy.
Marian G. Gage
Berry Gage LLP
301-165 Cross Avenue
Oakville, ON L6J 0A9