Distribution on Intestacy: The Preferential Share
In Ontario, if a person dies without a will, the Succession Law Reform Act (“SLRA”) dictates how the person’s estate is to be distributed. Part II of the SLRA provides that if the person dies with a married spouse, that spouse receives a share of the estate. If there are no children, the spouse receives the estate outright. If the deceased has children, may be entitled to receive a share of the estate. If there is only one child, the spouse receives the “preferential share”, and half of any estate in excess of the preferential share goes to the spouse and the other half goes to the child (or the child’s issue, if the child has predeceased). If there is more than one child, the spouse gets the preferential share and one-third of the excess and the other children share the remaining two-thirds. Again, if a child has predeceased the deceased, the child’s issue enjoys that child’s share.
Things get a little more complicated where there is a partial intestacy. If the spouse receives assets under the will, the spouse’s preferential share is reduced by the value of the property received under the will.
Note that the intestate provisions pertaining to spouses in Ontario apply to married spouses only. Common-law spouses are not entitled to a share of the estate on an intestacy. However, they may be entitled to dependant support under Part V of the SLRA.
In Ontario, the value of the preferential share is not referred to in the SLRA. The value of the share is set by regulation: O. Reg 54/95. Since 1995, the value of the preferential share has been $200,000.
British Columbia intestacy legislation is somewhat different. The relevant legislation is the Wills, Estates and Succession Act, SBC 2009, c 13.
Firstly, in B.C., a spouse is defined as including a married spouse AND a person with whom the deceased lived in a marriage-like relationship for at least two years immediately before the death.
Secondly, in B.C., there are different calculations of the “preferential share”. If all of the children are children of BOTH the deceased and the surviving spouse, then the preferential share is $300,000. If all of the children are NOT “common” to the deceased and the surviving spouse, then the preferential share is only $150,000.
Thirdly, in addition to the preferential share, the surviving spouse is entitled to the “household furnishings”, which is defined as being the “personal property usually associated with the enjoyment by the spouses of the spousal home”. In Ontario, the value of the preferential share presumably includes the value of any household furnishings.
Fourthly, the B.C. legislation provides that if the estate is greater than the preferential share, then the surviving spouse gets half, and the deceased’s descendants get the other half, regardless of how many children there are.
Fifthly, the WESA provides for situations where there are more than one “spouse’. In such a case, the surviving spouses are to share the preferential share in the portion to which they agree, or failing agreement, as may be determined by the court. The WESA does not appear to give any guidance as to how that determination is to be made.
If you are short of things to think about this weekend, consider:
- Whether it is time to reconsider the value of the preferential share?
- Whether it makes sense to allow the spouse to have the household furnishings in addition to the preferential share. This personal property usually has nominal resale value, is difficult to evaluate, and often has sentimental or practical value to the surviving spouse.
- Whether Ontario should adopt a definition of “spouse” that includes common-law spouses for intestacy purposes, or whether resort to dependant support provides sufficient protection for common-law spouses?
- Whether the fact that the surviving children of the deceased are also the surviving children of the surviving spouse should impact on the value of the preferential share, as it does in B.C.?
- Whether the percentage of the estate in excess of the preferential share that the surviving spouse gets should vary depending on how many children the deceased had (that is, 50% if only one child, but only 33% if more than one child)?
Thank you for reading. Have a great weekend.