Pursuant to section 6 of the Family Law Act, when a spouse dies leaving a will, the surviving spouse shall elect to take under the will or to receive the entitlement under section 5. This section of the Act deals with equalization in the normal course, but what happens if the spouses were separated prior to death? Is the equalization calculated based on date of death values, or date of separation?
Section 4(1) of the Family Law Act is instructive on this issue. It defines valuation date as the earliest of the following dates:
1. The date the spouses separate and there is no reasonable prospect that they will resume cohabitation.
2. The date a divorce is granted.
3. The date the marriage is declared a nullity.
4. The date one of the spouses commences an application based on subsection 5 (3) (improvident depletion) that is subsequently granted.
5. The date before the date on which one of the spouses dies leaving the other spouse surviving.
Therefore, in the event that a couple has separated from one another as defined in the Act and one of the spouses dies, the valuation date for the purposes of the election will be the earlier date rather than the date of death. As in family law litigation, one of the issues that the parties may litigate over is when exactly the date of separation was for valuation purposes.
It is interesting to note that per Re Van der Wyngaard, until an election is actually made, it is open to a surviving spouse to conditionally elect pending the results of a challenge to the validity of a will. The surviving spouse can then decide whether their entitlements are better on equalization, or by taking under the will.
It is important to consider the relevant limitation period in which to either make an election or bring an application to extend the time to make an election in order to preserve the spouse’s rights. Consultation with a lawyer is critical in determining whether to elect to equalize net family property, take under a will, or pursue other statutory entitlements.
Thanks for reading,