The right to equalization of net family property is a core feature of the Family Law Act (“FLA“). It is not only available to a separated spouse as a consequence of the breakdown of a marriage; a surviving spouse has the right to elect to claim an equalization of net family property under the FLA if they are not satisfied with the benefit provided under the Last Will.
It is important to note, however, that the same entitlement is not available to the estate of the deceased spouse.
Rusinek & Associates Inc. v. Arachchilage, 2011 ONCA 112, 277 O.A.C. 391 was an insolvency case where a Trustee sought to make an equalization claim under the FLA. The Court of Appeal (at paragraphs 53 and 54) concluded that the right to equalization is a personal right between spouses:
“The interplay between ss. 5 and 7 of the FLA makes it clear that an estate trustee can continue an equalization claim that has commenced before the spouse’s death. However, a claim for equalization by a spouse having the lesser of the two net family properties cannot be initiated by the estate trustee after the spouse’s death [emphasis added].
In other words, an estate trustee cannot make the personal decision to exercise a right to recovery from a surviving spouse of the deceased spouse’s entitlement to equalization. There is, in my view, no principled reason why “personal as between the spouses” should be applied any differently to trustees in bankruptcy as to estate trustees. While the unexercised claim “vests” in the trustee in bankruptcy, absent the personal decision by a spouse to initiate an application for equalization of net family properties as provided in s. 7(2) of the FLA (the “triggering event”), the trustee in bankruptcy is unable to commence that claim for the purpose of distributing the proceeds of the litigation to creditors.“
In the more recent case of Bradford vs. Kingdon 2022 ONSC 6204 (CanLII), the Court granted a motion for summary judgment brought in response to a claim for equalization advanced by an estate. In finding that an estate trustee could not look to the pandemic as an excuse to belatedly initiate an equalization claim against a surviving spouse, the Court invoked a statement of the Court of Appeal in Rondberg Estate v. Rondberg Estate (1989), 1989 CanLII 4153 (ON CA), 62 D.L.R. (4th) 379 (Ont. C.A.) at p. 383:
“… the Legislature of Ontario must be presumed to have intended to restrict the election (as opposed to the application) to a surviving and living spouse. The failure to specify any right of election in the personal representative under s. 6 coupled with the rights given them under s. 7 and the statement in the latter section that entitlement under s. 5 is “personal between the spouses” lead inevitably to that conclusion. Reid J. thought the omission was deliberate. As he put it, he “could think of few things more personal than the consideration by a surviving spouse whether to respect or to override the wishes of the deceased” [p. 287 O.R., pp. 382-3 D.L.R.]. While the procedure to enforce the decision could be entrusted to a stranger to the marriage, the decision itself could not.”
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