Death is difficult to control. It has also proved impossible to avoid. However, married spouses are given greater options than the rest of us – they can choose to inherit their deceased partner’s estate under the Succession Law Reform Act or the Family Law Act.
When a married spouse dies without a will, the default is that his or her estate will be distributed pursuant to the rules set out in Part II of the Ontario Succession Law Reform Act, RSO 1990, c S.26 (the “SLRA”). Depending on whether there are sufficient funds in the estate, the SLRA guarantees that the surviving spouse will receive the first $200,000 of the residue. Then, depending on whether the deceased has surviving children/issue, the spouse will receive between 33% to 100% of the remainder of the estate.
If the deceased has two or more children, then the surviving spouse may not be satisfied with receiving $200,000 plus 33% of the residue. Instead, the surviving spouse may elect to inherit under sub-section 5(2) of the Ontario Family Law Act, RSO 1990 c F.3 (the “FLA”). Sub-section 5(2) reads: “When a spouse dies, if the net family property of the deceased spouse exceeds the net family property of the surviving spouse, the surviving spouse is entitled to one-half the difference between them.”
The surviving spouse is given six months to make an election to inherit under the FLA (see sub-section 6(10)). It is presumed that within these first six months, the spouse will have gained enough information about the estate assets to make an informed decision about whether to inherit under the SLRA or the FLA. However, this is not always the case. In that event, the surviving spouse may bring an application to extend the time to make an election.
The circumstances under which a court will grant an extension was dealt with by Justice Dunphy in Aquilina v Aquilina, 2018 ONSC 3607. In that case, the deceased owned multiple properties located in Canada and Malta, including at least one business operated out of Malta. As a result, it was anticipated by his surviving wife and children that it would take longer than usual to collect the information about the estate assets and liabilities. The deceased had also died without a will so, as the six-month anniversary of the deceased’s death approached, the family was only at the beginning stages of applying to have an estate trustee appointed. For all these reasons, the surviving spouse sought to extend the deadline to elect to inherit under the FLA. The deceased’s children did not oppose the extension.
Justice Dunphy carefully considered the three criteria set out in section 2(8) of the FLA for extending a deadline:
(i) whether there are apparent grounds for relief;
(ii) whether any delay that has occurred has been incurred in good faith; and
(iii) whether anyone will suffer substantial prejudice as a result of the delay.
In reaching his decision, Justice Dunphy found:
(i) The legislature intended to give the surviving spouse time to consider whether or not to make an election; this is necessary because it takes time to gather information about the estate.
(ii) Six months was chosen by the legislature as an appropriate balance between the interests of the surviving spouse in making an informed decision, and the interests of the other beneficiaries of the estate who want the estate to be administered in a timely manner. However, the six-month deadline is not absolute.
(iii) In choosing to extend the deadline, the standard is not to give the spouse time to collect perfect knowledge of the estate assets. Rather, an extension should be granted if the surviving spouse does not yet have sufficient knowledge to make an informed choice.
Because the deceased’s assets were spread out across several countries, the court agreed that it has and will take more than six months for the spouse to have sufficient knowledge of the estate to make an informed decision about an election. As a result, the court extended the deadline to the one year anniversary of the deceased’s death. The spouse was given permission to apply for a further extension should circumstances warrant.