In handling estates, it is important to understand the potential claims against an estate by the surviving spouse. This is a claim that arises more often with re-marriages. However, before I get into that, I want to stress that the Family Law Act (Ontario) does not give any formal property rights to common law spouses, regardless of the length of the relationship. In other words, in Ontario, only married spouses have the right to make formal property claims. Generally, these property claims, which include all assets, not just real estate, are known as “equalization claims”. Why equalization? Because the claim is about equalizing the net family properties (assets after deducting debts). Think of it as comparing the net worth for each spouse. Basically, the spouse with the higher net family property owes the other spouse one half of the difference. As an example, if John Doe’s net family property is $400,000 and Jane Doe’s net family property is $500,000, Jane owes John $50,000 as an equalization payment. There are a number of deductions and exclusions in the Family Law Act to be considered. Also, there may be a marriage contract which is applicable. It is important to note that the equalization claim also applies when a spouse dies and there was no separation prior to the death (ie the spouses were happily married prior to the death of one of them).
This gets me back to the point of this article. The surviving spouse has the option of taking what is provided to him or her under the will of the deceased spouse or making an equalization claim under the Family Law Act. If the surviving spouse does not elect to take the equalization claim within 6 months of the death of his or her spouse, the claim expires. An election form must be filed in the court office. In deciding whether or not to elect to make the equalization claim, calculations must be made to determine whether it is beneficial or not. Thus, it is important for surviving spouses to seek legal advice as soon as possible after a spouse’s death. It might also be necessary to get advice from an accountant and/or financial advisor as well.