The Family Law Act (the “FLA”) provides that if the surviving spouse’s “net family property” is less than the “net family property” for the deceased the surviving spouse may elect to take one half of the difference between the “net family property” of each of them.
The computation of each person’s “net family property” is complex and requires a determination of the net value of each spouse’s property on the date of their marriage and on the date prior to the date of death of the deceased. Such property includes pensions, life insurance, and other property that might not ordinarily be considered to be assets. In addition, certain property, such as the matrimonial home, inheritances and gifts receive special treatment under the FLA. Since the computation of a person’s “net family property” and determining the value of certain assets may be difficult to ascertain, it may be necessary for the estate trustees to obtain professional assistance.
It is possible for the surviving spouse to have waived their right to elect under the FLA pursuant to the provisions of a domestic contract entered into between the deceased and the spouse. Therefore, it is important to determine whether such a contract exists.
It is wise for the estate trustees to inform the surviving spouse of their right to obtain independent legal advice with respect to making election if they are not a sole beneficiary under the will.
The election must be made within six months of the date of death unless an extension of time is ordered by the Court. If no election is made within the six month period, the spouse will be deemed to have elected to take under the provisions of the Will. If the surviving spouse elects to take under the FLA, then the spouse will be deemed to have predeceased the testator and will forfeit the right to any gifts under the Wills (unless the Wills provides that the gifts to the surviving spouse are in addition to their entitlement under the FLA) and they will not be able to act as Estate trustee. In addition, the amount of any life insurance proceeds from a policy owned by the testator and payable to the surviving spouse will be credited to the surviving spouse’s entitlement under the FLA. If the surviving spouse is named as an Estate trustee in the deceased spouse’s Will, it is important for the surviving spouse to realize that they may be in a position of conflict of interest with the Estate and that upon electing to take under the FLA, they should take immediate steps to be removed as Estate trustee of the Estate.
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Regardless of whether there is an election to take under the FLA or under the Will, the FLA gives the right to remain in the matrimonial home rent free for 60 days following the death of the deceased spouse (even though the surviving spouse is not on title to the matrimonial home and may not be inheriting the matrimonial home). In addition, the spouse may apply for support under the dependant’s relief provisions of the Succession Law Reform Act even though has elected to take entitlement under the FLA.
While the estate trustees may settle the claim of the spouse as long as they are acting in good faith, it is prudent, if possible, for the estate trustees to have all adult beneficiaries execute releases and indemnities before settling such a claim. However, this will not fully exonerate the estate trustees of liability if they act improperly.
The recommendations contained in this section dealing with the FLA should not be implemented without further review and consideration.
This article is not intended to be relied upon as legal advice but only to give the reader an overview of the law in Ontario. You need to consult your legal representative to determine the best procedure in your particular circumstances.
