In Ontario, when a married spouse dies, the surviving spouse is often tasked with determining whether to elect to accept their entitlements under the usual Estate administration process or instead elect an equalization of net family property as if the marriage had ended immediately before death, pursuant to the Family Law Act. Understanding how foreign assets are treated in the calculation of net family property is essential for electors and legal professionals involved in determining whether to make this election.
Foreign Assets can be Included in Net Family Property Calculations
The value of foreign assets can be considered when calculating the division of net family property (Knight v. Knight, 2018 ONSC 4027). The statutory basis for this in found within Section 4 of the Family Law Act. In Section 4(1), net family property is defined as “the value of all the property” owned on the valuation date, and lists exceptions which do not include foreign assets. Section 4(2) lists excluded property classes, which does not include foreign assets.
Ontario courts do not require the jurisdiction to make orders with respect to foreign immovable objects, which jurisdiction they broadly do not have. Ontario courts have the jurisdiction to enforce the inclusion of the value of foreign assets in net family property through their in personam jurisdiction over the parties. Put more simply, Ontario courts may lack jurisdiction to determine property rights respecting foreign land but can exercise their jurisdiction over the parties, to the extent that it exists.
In practice, when there is sufficient value, Ontario courts will often rely on the value of the domestic assets to ensure an equal division of the net family property. When a party attempts to shield foreign assets from the jurisdiction of Ontario courts, the assessed value of the foreign property will be deducted from their allocated portion of the domestic assets which are plainly subject to the jurisdiction of Ontario courts.
In summary, there is a legal framework which provides that foreign assets are to be included in the calculation of net family property and enforcement mechanisms to ensure this is done.