By Barrie Hayes, Partner
Anyone who has an employment pension should, following a separation, discuss with the pension plan the legal effect of the separation or a divorce on the status of the beneficiary the pension plan holder has designated on the pension.
The recently decided case of Carrigan v Quinn warns that beneficiary designations in pensions must be changed following separation to avoid potentially unintended results. In the Carrigan case Mr. Carrigan, the pension owner, was married in 1973 and separated in 1996. The Carrigans, following separation, did not enter into a separation agreement and were never divorced. Mr. Carrigan, in a will dated 1986 which he never changed ,named Mrs. Carrigan his estate trustee and sole beneficiary of the residue of his estate.
In 2000 Mr. Carrigan commenced a common-law cohabitation with Mrs. Quinn which relationship continued until Mr. Carrigan died in 2008.
The issue at trial was who, between Mrs. Carrigan and Ms. Quinn was entitled to receive Mr. Carrigan’s pension death benefit.
The trial judge found that at the time of Mr. Carrigan’s death the statutory definition of “spouse” in the Pension Benefits Act included both Mrs. Carrigan because she was legally married to Mr. Carrigan and Mrs. Quinn because she was living with him in a conjugal relationship for more than three years prior to his death.
After a review of the pension benefits act the trial Judge held that Mrs. Quinn was entitled to receive the pension death benefit.
Mrs. Quinn appealed the trial decision and, on appeal, the Court of Appeal held that Mrs. Carrigan and her daughters were the proper designated beneficiaries for the pension death benefit.
There was a dissenting judgment in the Court of Appeal decision which favored Ms. Quinn as the proper designated beneficiary. There has been much legal discussion following the decision questioning why the court did not declare both Mrs. Carrigan and Ms. Quinn co-beneficiaries of the death benefit. I suspect there may be future legislative changes to the Pension Benefit Act addressing the issue.