On the death of a spouse, the surviving spouse has the right to choose between accepting his / her entitlement under their partner’s will (where there is a will) or claim an equalization of net family property (an “equalization payment”) under section 6 of the Family Law Act.[1]
Where there is no will, the surviving spouse has the right to choose between their entitlement according on an intestacy pursuant to the Succession Law Reform Act[2] or the equalization claim.
The equalization payment election must be made within six months of the spouse’s death, unless a court grants an extension. An application for an equalization must also be made within six months of the date of the death of the deceased spouse.
Married (not common law) spouses are entitled to make the election.
Calculating Net Family Property
An equalization of net family property entitles the surviving spouse to 50 percent of the difference between the net family property (“NFP”) of each spouse. The NFP equals the net value of each spouse’s property just before the date of death minus the net value of each spouse’s property on the date of marriage.[3] The following is an example of the calculation of a net family property equalization:
| FMV of Property at Date of Marriage
|
FMV of Property at Date of Death | Net Family Property | ||
| Spouse 1 | $50,000 | $550,000 | $500,000 | |
| Spouse 2 | $60,000 | $700,000 | $640,000 |
|
| Difference: | $140,000 | |||
| Spouse 1 would have a claim against Spouse 2’s estate in the amount of $70,000 so that the difference in NFP would be equalized so that each spouse has NFP in the amount of $570,000. | ||||
Choosing under the Will or Equalization
The surviving spouse has less than six months to choose whether to take their entitlement under the will or under the Family Law Act. The surviving spouse needs to weigh each option against the other. In order to do so, the surviving spouse may need to evaluate information which they do not have. The estate trustee (executor) has the responsibility to gather that information and work with the spouse to resolve the issues.
In the end, obligations under family law cannot be circumvented through a Will.
[1] RSO 1990, c. F.3.
[2] RSO 1990, c. S.26.
[3] Certain adjustments are made and certain property / amounts (eg, inheritances) are excluded from the calculation.