How does Ontario’s family law and estate law regime maximize the financial position of a surviving spouse upon her or his partner’s death? In this blog, we consider the options facing Wendy, who is recently widowed from the death of her husband, Hank. Let us assume that Wendy and Hank were not in a divorce proceeding and were not separate prior to his demise.
In accordance with section 6 of the Ontario Family Law Act, R.S.O. 1990, c.F.3 (the “Family Law Act”), Wendy, as Hank’s surviving, married spouse has the option of taking under his last will and testament or receive an equalization payment if Hank’s net family property (“NFP”) is higher than Wendy’s. If Hank died intestate, Wendy has the option of receiving her entitlement in accordance with the laws of intestacy or seeking an equalization payment. If Hank died partially intestate, Wendy has the option of taking under the will and on intestacy or seeking an equalization payment. In Wendy’s case, the relevant valuation dates, for the purposes of calculating NFP, are the date of marriage and the day before Hank’s date of death. For a brief explanation of what NFP is and how it is calculated, please refer to our earlier blog in this series as well as other blogs on family law topics.
If, based on what she knows about Hank’s assets and liabilities on the date of marriage and as of the day before her death, Wendy decides that it is more advantageous to her to take under Hank’s last will or in accordance with the laws of intestacy, then no positive step is required of her. Wendy will simply wait to receive her inheritance from the executor.
If Wendy decides that it is financially more advantageous to her to seek an equalization payment, she must take the steps required of her under section 6 of the Family Law Act, which, briefly, are as follows:
- No later than 6 months after Hank’s passing, Wendy shall file an election with the Office of the Estate Registrar for Ontario using the prescribed form; and
- Wendy shall, thereafter, commence an application for an equalization of NFP. The application must also be commenced no later than 6 months following Hank’s death.
Sometimes, the surviving spouse is unable to make an informed decision as to whether to elect for equalization or take under the deceased spouse’s will or the laws of intestacy. On a motion by the surviving spouse, the court has jurisdiction, pursuant to subsection 2(8) of the Family Law Act, to extend the 6-month limitation period if the court is satisfied that:
- There are apparent grounds for relief;
- Relief is unavailable because of delay that has been incurred in good faith; and
- No person will suffer substantial prejudice by reason of the delay.
If Wendy fails to follow the election and application regime prescribed by section 6 of the Family Law Act, she will be deemed to have elected to take under Hank’s last will or the laws of intestacy, as the case may be.
In the next blog, we will discuss the effect of Wendy’s election and application on the estate.
