Tag: Creditor’s Relief Act
Two weeks ago, I blogged about the priority of assets out of which an Order for dependant’s support might be paid. Today, I’ll look at the priority of claims for dependant’s support in relation to other claims against an estate.
Priority of Net Family Property Equalization Claims
Section 6(12) of the Family Law Act, RSO 1990, c F3, as amended, provides a statutory priority when it comes to a spouse’s entitlement to an equalization payment out of a deceased spouse’s estate. Such a payment has priority over gifts made in the deceased spouse’s will or the rights of a person to inherit on the intestacy of the deceased. Interestingly, such payments also have priority over any order for dependant’s support, except an order in favour of a child of the deceased spouse. Thus whether a dependant support claim will prevail over a claim to equalization of net family property will depend on whether or not the dependant is a child of the deceased.
Priority of Support Claims over Other Claims
In Grieco v Grieco Estate, 2013 ONSC 2465 (Grieco), the Court considered whether claims for dependant support might have priority over other claims against an estate. In that case, multiple family members, including the Deceased’s estranged wife, his common-law spouse, and his adult children claimed to be dependants of the Deceased. There were also various persons or entities with other claims and actions against the Estate (referred to as the “aviation claimants”).
The Court looked to section 4(1) of the Creditor’s Relief Act, 2010, SO 2010, c 16, Sched 4, and found that, where the estate is not bankrupt, the Creditor’s Relief Act applies such that Orders for support, including dependant’s support, prevail over other judgment debts. Where the estate is bankrupt, the claims of unsecured creditors rank equally such that the claims for an equalization payment would rank equally with other claims against the estate (see Thibodeau v Thibodeau, 2011 ONCA 110).
Thus where an estate is not bankrupt, the following hierarchy appears to exist among unproven claims brought against an Estate:
- Dependant support claims of children of the deceased;
- Equalization claims of the surviving spouse of the deceased;
- Dependant support claims of dependants who are not the children of the deceased; and
- other claims brought against an Estate.
The Creditor’s Relief Act, 2010 also speaks to the priority of certain other claims, such as judgment debts owing to the Crown in right of Canada.
Thanks for reading!