As part of one’s estate planning, a testator often incorporates terms to address their dependents, including what will happen if their spouse survives them. In some cases, however, the deceased has not left a will. Either way, questions about the surviving spouse’s rights to the deceased’s estate may arise. In Ontario, there is a procedure for a surviving spouse to make a decision (an “election”) on how they want to proceed. They can choose to proceed based on the will, provincial intestacy laws if there is no will, or through the Family Law Act.

In this post, we will discuss the procedure that a surviving spouse must undertake to make their election on how to proceed. We will also discuss some case law to examine when a court may grant or refuse an extension for a surviving spouse to make their election. This post provides valuable insights for surviving spouses concerning their claims to their deceased partner’s estate.

Scenario 1: Deceased Has A Will

If the deceased dies with a will, the surviving spouse may choose to either proceed under the terms of the will or the Family Law Act. The surviving spouse has six (6) months from the deceased’s death to make their election. If they do not make an election after six months, they are deemed to be operating under the terms of the will.

Scenario 2: Deceased Does Not Have a Will

If the deceased dies without a will, called intestacy, the surviving spouse may choose to proceed under the provincial laws regarding intestacy (in Ontario, the Succession Law Reform Act) or the Family Law Act.

Again, the surviving spouse has six (6) months from the date of the deceased’s death to make their election. If they do not make an election, the intestacy laws will apply.

Also, if some property is not addressed in the will, the surviving spouse can make an election to proceed under the will and intestacy laws or the Family Law Act.

Spousal Rights to an Estate Under the Family Law Act

Under the Family Law Act, the parties are entitled to equalization of net family property upon separation, divorce, or death. Net family property is the growth of the parties’ net value from marriage to the deceased’s death, which requires an assessment of the parties’ net worth values at the start of the marriage and at the deceased’s death.

To determine the net family property, some categories are not included, such as:

• Property that was gifted to or inherited by a spouse during the marriage, other than the family home;
• Income arising from gifts or inheritances to a spouse, which is excluded from net family property as expressed by the testator;
  • Note, however, that income from the family home cannot be expressly excluded as net family property;
• Court settlement funds or insurance proceeds from personal injuries, mental distress, etc.;
• Life insurance proceeds;
• Any property that can be traced to other categories of excluded property;
• Property that the spouses have agreed upon to be excluded from net family property; and
• Unadjusted pensionable earnings under the Canadian Pension Plan.

The spouse with a lower net family property is entitled to half the difference between each party’s net family property value. For instance, if the deceased spouse had net family property of $400,000, exceeding the surviving spouse’s net family property of $200,000, the difference would be $200,000. The surviving spouse would be entitled to $100,000 from the estate, half of the $200,000.

When Will An Extension for a Spousal Election Be Granted?

A common issue is that a surviving spouse may not make their election in time but realize later that they should have chosen to proceed differently. Generally, the court will consider if the surviving spouse had a good faith reason for delaying to make an election and whether granting the extension will significantly prejudice any party.

Extension Granted After Spouse’s Grief Caused Delay in Election

As in the case of Aquilina v. Aquilina, a court may find that an extension to the 6-month limitation period to make a spousal election is appropriate where the estate assets are complicated. In Aquilina, the parties were married for 47 years. The surviving wife was primarily a homemaker and had little knowledge of the family’s financial affairs. The deceased died shortly after his cancer diagnosis and did not leave a will. The court acknowledged the deceased’s estate would be challenging to administer, as he had various business interests in corporations based in his home country, Malta.

The court in Aquilina found that the spouse did not have sufficient time after grieving to fully understand the estate assets due to their complexity. Therefore, she did not have an opportunity to fully consider whether or not she should make an election and how that would affect her interests. However, the court further noted it is not required for the surviving spouse to have the entire, complete picture of the estate before making an informed decision on their spousal election. The court found that the surviving spouse’s delay, in this case, was made in good faith as she needed time to grieve the loss of her long-time partner, look for a will, and seek information from the deceased’s lawyers, which would take a long time due to the deceased’s interests in Malta and obtaining appraisals.

The court did not find that the delay prejudiced any party, as none of the beneficiaries opposed the surviving spouse’s claim, and no administrator had been appointed yet. The court ultimately granted the spouse an extension to make her election.

Extension Granted Where Court Found Resulting Trust in Favour of Adult Children

In McManus v. Argiro, the court also granted an extension to make a spousal election. The dispute was between the deceased’s adult children and his new wife. The deceased died suddenly and did not leave a will. One of the properties at issue was held in the wife’s name. The other property was held by the deceased and his wife as joint tenants. Other assets, including safety deposit boxes and bank accounts, were held jointly by the deceased and his wife. This meant that all of the property would pass to the wife, leaving the children with nothing. The court found that the wife held the property on a resulting trust to the estate, meaning that she held the property on behalf of the estate. However, given that the wife assumed that she would be receiving all of the property, she was given a 90-day extension to make her spousal election in light of the court’s conclusion in this case.

Extension Denied Where No Reason for Delay, Spouse Was Executor & Could Obtain Counsel

In Webster v. Webster, the court denied a request to extend the surviving spouse’s election. While the court found the surviving spouse did not act with dishonesty or ulterior motives in delaying to make the election, it determined the delay did not occur in good faith. In Webster, the surviving spouse did not apply for equalization under the Family Law Act until 15 months after the deceased’s death, which the court found was well over the 6-month limitation period. There was no reason put forth regarding why the delay continued after the son became aware of the mother’s rights, eight months after the deceased’s death. Also, the deceased’s son and his mother were co-executors who had access to lawyers. The son was also an accountant and was expected to make proper inquiries for legal advice, given that he was a relatively sophisticated party. The mother also had the financial means to obtain a lawyer. The court concluded that the delay was not made in good faith and denied granting the extension.

Contact NULaw for Multi-Faceted Family Law & Estate Advice in Toronto

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