A jointly owned life insurance policy does not vest with the deceased’s estate, but accrues to the owner of the policy

A husband was the sole owner of one life insurance policy, and owned a second policy jointly with his wife.  He died.  His children claimed that both policies formed his estate and that they were entitled to a two thirds of both the solely owned policy and the jointly owned policy.  The Ontario Superior Court and Divisional Court Agreed.  The wife appealed to the Court of Appeal who determined that the jointly owned policy did not vest with the husband’s estate at his death, but rather vested solely to the wife.  The wife was entitled to a third of the solely owned policy and all of the jointly owned policy.

Madore-Ogilvie (Litigation guardian of) v. Ogilvie Estate, [2008] O.J. No. 170, Ontario Court of Appeal, E.A. Cronk, E.E. Gillese and R.P. Armstrong J.J.A., January 21, 2008

Appeal by two minor children of the deceased Insured from a decision of the Divisional Court finding that they were not entitled to a portion of the proceeds from a life insurance policy owned jointly by the Insured and his wife.

The Insured and his wife jointly owned a life insurance policy which provided that on the death of one, the other was entitled to a lump sum payment of $109,000. The Insured was the sole owner of another life insurance policy which named his wife as the beneficiary. The Insured had made inadequate provision for his dependents, three of whom were minors at the time of his death. The three minors and the Insured’s wife fell within the definition of “dependents” under the Ontario Succession Law Reform Act (“SLRA”).

Two of the minor children brought applications against the Insured’s estate claiming entitlement to a share of the proceeds under the policies. The Insured’s wife brought a cross-application seeking an order directing the insurance company to pay her the proceeds of both policies. The applications judge held that both policies were caught by the wording of the provisions in the SLRA, namely s. 72(1)(f), and were therefore deemed to be part of the Insured’s estate for the purpose of funding the dependents’ support order. The net proceeds were ordered divided into three equal shares for the support of the three minor children. The wife’s appeal to the Divisional Court was allowed in part and the jointly owned policy was excluded from the Insured’s estate. An appeal and cross appeal were brought from this decision.

The Ontario Court of Appeal held that, on a proper interpretation of s. 72(1)(f) of the SLRA, the jointly owned policy was not caught because it was not “owned” by the Insured. At the instant of his death, the wife’s joint ownership interest became an absolute entitlement to the proceeds of the policy. The Court of Appeal stated that an interpretation of s. 72(1)(f) which would encompass the jointly-owned policy was not consistent with the overall scheme of s. 72 of the SLRA, which was to capture property owned by the deceased. The Court of Appeal did not interfere with the exercise of discretion by the applications judge in ordering support for the three dependent children given that the policy solely owned by the deceased fell squarely within s. 72(1)(f) and was, therefore, available for the purpose of an order for dependent support.

This case was originally summarized by Shanti Davies and edited by David W. Pilley.

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