Estate Planning And Wills In Quebec For The New Millennium - Part 2

What is the nature of a spouse's rights in the family patrimony?

To answer that question, it is important for us to fully grasp the underlying notion that the family patrimony rules are not to be construed in any way as conferring on the spouses a right of ownership in any of the property making up the family patrimony.

Each of the spouses, therefore, remains the absolute owner of the property of the family patrimony with respect to which he or she has title.

In the case of Droit de la famille-97732, the Court of Appeal stated in no uncertain terms that the rights of the spouses in the family patrimony are not real rights conferring a right of ownership, but constitute instead a general and personal "droit de crance".

The nascent debt that the family patrimony rules create in favour of each of the spouses becomes crystallized on the death of one of them.

This is another reason why a survivorship requirement in a will in order to qualify a spouse to inherit is useless. The rights accruing to the spouses with regard to the family patrimony arise by the sole operation of law on the death of one of them, not 30, 60 or 90 days thereafter.

From the moment of death, both the survivor and the estate become entitled to an amount equal, in effect, to one-half of the net FMV of any property of the family patrimony owned by the other, calculated as at the date of death. Expressed in another way, each of the survivor and the estate (subject, in the latter case, to the latest jurisprudence regarding the rights of the heirs as creditors of the survivor, to be discussed later) has a right to claim an amount equal to one-half of the total FMV of all of the assets of the family patrimony, regardless of who has title to them. That calculation is made in accordance with the provisions of Articles 417 and 418 of the CCQ.

Thus, for example, if the net FMV of certain assets of the family patrimony owned by the surviving spouse is equal to, say, 100, and the FMV of the assets owned by the estate is 200, the total FMV of the family patrimony is 300, and each of the surviving spouse and the estate is entitled to receive one-half of that total, or 150. If the net FMV of the property owned by the estate exceeds 150, the excess amount may become a debt due by it to the survivor.

This crystallization of debts can produce some very interesting results if the will is not carefully drafted. For instance:

Consider a situation in which a husband has a $2,000,000 estate, made up in part of assets of the family patrimony having a net FMV of $800,000. He wishes to leave one-half of the estate to his wife, to whom he was married after 1989 under the regime of separate as to property, and the remaining half to their children. The testator's intention is for his wife to receive $1,000,000 and for the children to share in the remaining $1,000,000. For the sake of this example, the wife has no assets of the family patrimony.

In this situation, since under the family patrimony rules, the testator's wife will be entitled, off the top, to one-half of the FMV of the family patrimony property owned by the deceased, or $400,000, instead of there being $2,000,000 in the estate for distribution among the heirs, there will only be $1,600,000. If that remaining amount is then divided on the basis of one-half to the wife and the remainder to the children, in accordance with the terms of the will, then the wife will have received $1,200,000 instead of $1,000,000, and the children $800,000 instead of the $1,000,000 that the testator intended them to have.

Let's call that situation "Problem #1".

Now let's look at the genesis of a second problem.

Where the spouses are married under the regime of partnership of acquests, there exists the potential for a spouse to "triple dip" into the assets of the other spouse upon the latter's death.

Before explaining what I mean by a "triple dip", we should refresh our memories a bit about the nature of the spouses' rights under the marital regime of partnership of acquests.

With regard to this topic, Me Pierre Ciotolo, in his excellent study of this and related topics,33 sets out 34 the essential distinctions between the rights of the spouses under the family patrimony rules and those that apply by virtue of the partnership of acquests rules to which they are subject.

The main differences for our purposes are these.

As we have seen, the family patrimony rules give each spouse a right to claim an amount equal to one-half of the total net FMV of all the assets making up the family patrimony, regardless of which of them has title to the assets, without giving them any real rights on or in that property. Also, the assets comprising the family patrimony are relatively few, being restricted to residences, their garnishments, motor vehicles and certain retirement plans.

The regime of partnership of acquests, on the other hand, confers a right of co-ownership on the spouses at the time of dissolution of the marriage on all property that the law considers to be the acquests of each of them.35

There are two types of property that are dealt with under this regime: acquests and private property. Briefly, any and all property that is not deemed by law to be private property or that cannot be proven to be so, is, by definition, an acquest.36

In the process of partitioning the property of the partnership of acquests, the rights of the spouses under the family patrimony rules are determined first, followed by a determination of their rights under their marital regime.

This is where the potential for "triple dipping" arises.

Consider a situation in which the spouses were married after 1989 under the regime of partnership of acquests. One spouse dies, bequeathing half of the estate to the surviving spouse and the remainder to their children. Assume, for the purposes of this illustration, that the surviving spouse has no assets to speak of, (which is not necessarily so unusual among the women of society's older generations).

The first dip: the surviving spouse has a claim against the estate under the family patrimony rules to one half of the net FMV of the property of the patrimony owned by the deceased.

The second dip: the surviving spouse has real rights in the assets of the estate that are deemed to be acquests of the deceased.

The third dip: the surviving spouse has a right to one half of the remainder of the estate of the deceased under the terms of the will.

That's "Problem #2", unless, of course, the testator desires this result.

Before attempting a solution to these problems, let's prepare some groundwork.

As we will recall, Article 423 CCQ stipulates, in part, that, although the spouses may not by way of their marriage contract or otherwise, renounce their rights in the family...