All About Estates

The Intersection between Family Law and Estates Law

The Family Law Act, R.S.O. 1990, c. F.3 provides that when a spouse dies and the surviving spouse’s net family property[1] is less than the net family property of the deceased spouse, the surviving spouse may elect to take one-half of the difference between the net family property of the deceased spouse and the net family property of the surviving spouse (“equalization”).

Will vs. Equalization:

The general rule is that the surviving spouse must elect either equalization or to take under the deceased spouse’s will (or under intestacy, if he/she died without a will, or partial intestacy, if he/she died with a will which did not fully dispose of his/her assets), unless the will expressly provides a contrary intention.

Property Outside the Estate:

A surviving spouse who elects to take under the will (or under intestacy or partial intestacy) is entitled to receive any property passing to him/her outside the estate as a result of the first spouse’s death in addition to any gifts made to him/her under the will. This includes property that the spouses own jointly with right of survivorship as well as any property that passes to the surviving spouse as a result of beneficiary designation, such as proceeds of a life insurance policy or a registered retirement savings plan/registered retirement income fund.  However, if the surviving spouse elects equalization, he/she is not entitled to receive property passing to him/her outside the will in addition to the equalization payment, unless the deceased spouse indicated a contrary intention in writing.  The value of the property the surviving spouse receives outside of the estate, less any contingent tax liabilities in respect of the payment, is credited against the surviving spouse’s entitlement under equalization.

Process for Making the Election:

The election must be made in the prescribed form and filed with the office of the Estate Registrar within 6 months following the spouse’s death, unless the court orders an extension of time. If no election is made within the time period, the surviving spouse is deemed to have elected to take under the will/intestacy/partial intestacy.

Effect of Spouse Electing Equalization:

If the surviving spouse elects to receive equalization, then he/she is deemed to have predeceased the spouse and forfeits any gifts under the will, unless the will expressly provides otherwise. Further, if the surviving spouse is appointed estate trustee under the deceased spouse’s will and the surviving spouse elects to receive equalization, he/she is in an immediate conflict of interest with the estate and, therefore, cannot act as estate trustee.

Factors to Consider When Making the Election:

When determining whether a surviving spouse should elect equalization or to take under the deceased spouse’s will, it is important to consider the surviving spouse’s entitlement under the will as well as the assets he/she is recovering outside the will. If a surviving spouse has been left a life interest in the deceased spouse’s estate, he/she may wish to elect to receive equalization so that he/she receives a lump sum payment immediately, rather than be subject to income distributions throughout his/her lifetime.

There may also be non-financial reasons in making the decision. For example, if the surviving spouse elects to receive an equalization payment, any specific gifts of jewellery or other valuable or sentimental items which he/she would have received under the deceased spouse’s will would be forfeited.

Conclusion:

The decision to elect equalization or take under the will may be complex. It is recommended to obtain professional advice to assist in making the decision to elect equalization or take under the will.

[1] The computation of each spouse’s net family property is complex and requires a determination of each spouse’s property on the date of their marriage and on the day prior to the date of death of the first spouse. It is recommended to obtain professional assistance in ascertaining each spouse’s net family property.

About Brittany Sud

Brittany Sud is a member of the Trust, Wills, Estates and Charities Group in Fasken Martineau’s Toronto office.
Brittany is developing a broad estates and trusts practice with a focus on planning and administration matters. As part of her practice, Brittany assists high net worth clients, entrepreneurs and professionals with Wills, powers of attorney, domestic contracts and trusts. She has experience developing and implementing cohesive estate plans that reflect the financial objectives and short and long-term goals of clients, including advising on probate planning, family business succession planning, asset protection strategies and disability planning. Brittany’s estate administration practice includes preparing applications for probate and administering the Canadian estates of non-residents.
Outside of the office, Brittany enjoys playing softball and tennis, travelling and cooking. She is a dedicated volunteer of the United Jewish Appeal, Jewish National Fund, One Family Fund and Baycrest Foundation.
Community Involvement
• Host, Baycrest Foundation – Game Night for Baycrest, 2015
• Chair, Pitch for Israel Softball Tournament, 2014-2016
• Vice-Chair, United Jewish Appeal Young Lawyers Leadership Campaign Canvassing Team, 2016
Memberships and Affiliations
• Member, Canadian Bar Association
• Member, Ontario Bar Association – Trusts and Estates Law Section
• Member, Ontario Bar Association – Young Lawyers’ Division
• Student Member, Society of Trusts and Estates Practitioners (STEP) Canada

4 Comments

  1. Dan Majewski

    May 12, 2017 - 3:20 pm
    Reply

    I assume this applies only in Ontario. Do you know if it applies under the BC Family Act?

    • Brittany Sud

      May 16, 2017 - 7:01 pm
      Reply

      I am not familiar with BC law but I would suggest checking the statute.

  2. David Serber

    May 12, 2017 - 4:56 pm
    Reply

    What if there is a domestic contract betwen the spouses which specifies a split of the difference between the net family property of the deceased spouse and the net family property of the surviving spouse which is not 50/50? Does the provision you refer to in the Family Law Act, R.S.O. 1990, c. F.3 override the terms of the domestic contract?

    • Brittany Sud

      May 17, 2017 - 1:27 pm
      Reply

      No, the domestic contract would take precedence.

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