YARED v. KARAM, 2019 SCC 62

Quebec’s Family Patrimony will also include Family home or residents which are purchased or held by a trust.

Ms. Yared and Mr Karam was a married couple, after Ms Yared was diagnosed with incurable cancer. Both the spouse’s decided to make sure that their four kids will get family assets and for that they set up a trust. In which kids and Ms.Yared were the beneficiaries and Respondent with his mother to be the trustees. Further the trust was used to buy a family home in Montreal for over $2 million and after two year the couple decided for separation and Ms. Yared decided that estate will be divided into four trusts wherein each child gets its own. But before finalisation of the divorce Ms. Yared died, leaving the liquidators to be her brothers (appellants). Further, the appellants claimed that the family home held by the trust should be included in the family Patrimony.

Under Civil Code of Quebec (CCQ), a “family patrimony” is formed after marriage of a couple, and which will include properties such as: family home, cars, furniture, and pension plans etc. If a marriage in future gets dissolved, then the ownership of the family patrimony, regardless of who holds what assets, is shared, and evenly distributed between the partners/couple. The aim of family heritage or family Patrimony is to shield vulnerable female partner, and the laws are for public policy and cannot be ignored. But in this case the court found an unusual aspect and that was the family residence was not owned by either of the spouse rather it was purchased by the trust they had set up together.

The trial court ruled that, considering the fact that the property at question is held by a trust it would still be included in the estimation of family patrimony. Respondent appealed the ruling to the Court of Appeal, which reversing the lower court’s decision stated that neither the property nor its market value should be counted in the family patrimony if held by a trust. Appellants appealed to SCC who upheld trial court’s verdict which used an analogy of “lifting up of the corporate veil” and also, article 415 of the CCQ “rights which confer use”.

SCC stated that the estimated value of the resident should be included in Family Patrimony because even though neither of the spouses owned the property, but respondent had its “rights which confer use” to it. Means that the respondent here had full control over the trust property (residence), he had every power to decide as to how and who can have right to the value of the trust held property, its usage, appointment and removal of trustees which proves the rule under Article 415 of CCQ. It also declared that the rules regarding the Family Patrimony are rule of public order and no one can get away or around it. Hence, residence here purchased by trust and its value was ordered by the court to be added to the value of family Patrimony.