Tag: family law act
In January 2021, a decision was made by the Ontario Superior Court regarding a motion in the ongoing Cohen v. Cohen Estate matter. This case involves a widow making a claim against the estate of her late husband on several grounds, including a decades-old marriage contract, an application for equalization of net family property, and a claim for dependent support.
As this matter demonstrates, a surviving spouse who believes themselves to have been unfairly left out of the will of their late spouse has several options in terms of litigation against the deceased’s estate. If a marriage contract existed between the spouses previously, providing for one spouse in the event of the death of the other, then the surviving spouse could move to enforce the marriage contract and make an appropriate claim upon the estate.
In the alternative, the surviving spouse can bring an application under the Family Law Act (“FLA”) to effect an equalization of net family property. This would be functionally similar to the process of asset equalization after a divorce or separation, only that the claim would be against the estate of the deceased spouse, rather than against their living person.
Also in the alternative, the surviving spouse can also bring an application under the Succession Law Reform Act (“SLRA”) for dependent support. Essentially, if the surviving spouse were to sufficiently prove to the Court that he or she was financially dependent upon the deceased while they were still living, then the surviving spouse could be entitled to an appropriate amount of cash to support their former lifestyle with their late spouse.
Finally, a surviving spouse can also make equitable claims of unjust enrichment, promissory estoppel, or proprietary estoppel. The essence of all three of these claims is that the deceased benefitted disproportionately from work that their spouse contributed to their relationship, and that the surviving spouse is therefore entitled to financial compensation, as a result.
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The great thing about having a Last Will and Testament is that it clearly spells out what happens to your estate upon your passing. Conversely, the terrible thing about not having this document in place when you die is that you have no control over how your assets are distributed, which may cause anguish and hardship to loved ones you would have otherwise chosen as beneficiaries.
When you die without a will, or intestate, Ontario’s Succession Law Reform Act (the “SLRA”) sets out how your estate is distributed. It provides that unless someone who is financially dependent on the deceased person makes a claim, the first $350,000 is given to the deceased person’s spouse.
A problem that immediately arises is defining the meaning of spouse. For the purposes of intestacy, the SLRA adopts the definition of spouse found in section 1 of the Family Law Act, which reads: “‘spouse’ means either of two persons who: (a) are married to each other, or (b) have together entered into a marriage that is voidable or void, in good faith on the part of a person relying on this clause to assert any right.”
As such, only married spouses are entitled to benefit under the intestacy regime. You may have had a long and loving common-law relationship with a person you regarded as a spouse, but if there is no formal wedding declaration, they could be denied the inheritance you wanted them to receive. A common-law spouse may potentially seek redress by making a dependant’s support claim against your estate, though it is an effort and expense that could have been avoided with a proper will.
If you have no spouse, your children will inherit the estate. Sounds simple enough, but again there may be an issue with the way in which the SLRA defines child, as it only accepts biological offspring or those who were adopted as children. With blended families, many people have developed loving and long-lasting relationships with their step-children. In the eyes of the SLRA, however, they are not given the same inheritance rights as biological and adopted children.
Things get a bit complicated from here. Allow me to summarize:
- If any children have died, that child’s children will inherit their share.
- If there is no spouse or children or grandchildren, the deceased person’s parents inherit the estate equally.
- If there are no surviving parents, the deceased person’s brothers and sisters inherit the estate.
- If any of the brothers and sisters have died, their children (the deceased person’s nieces and nephews) inherit their share.
- If there are no surviving brothers and sisters, the deceased person’s nieces and nephews inherit the estate equally. (If a niece or nephew has died, their share does not pass to their children.)
- When only more distant relatives survive (cousins, great-nieces or nephews, great aunts and uncles), the rules are complex and a lawyer’s advice is a good idea.
There are many other problems that arise with those who die intestate, such as deciding who will be executor and oversee the estate distribution. The closest relative is usually chosen by the courts for the position, which may mean that your children are in charge and not your common-law spouse, which could create tension and expensive legal battles.
If you have minor-age children and there is no other legal parent alive, the appointment of the guardian will be out of your control.
Perhaps you have promised your grandson that he will inherit your valued coin collection when you die. That probably won’t happen, since all assets of the estate will be valued and divided up under the SLRA rules. However, in a will you can leave specific instructions, directing who receives what items you are leaving behind.
You may feel indebted to a charity, church, or hospital for their work while you were alive, and you want to leave that institution some money. Again, that can’t happen without a will.
The final point to consider is that if you have no next-of-kin and you die without a will, your entire estate goes to the Ontario government, with the Office of the Public Guardian & Trustee stepping in to administer your estate and seize your assets.
Drawing up a Last Will and Testament is a simple way to avoid all these issues, saving anguish and needless paperwork when the time comes.
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We have previously blogged on the discussion between Ontario Attorney General, Doug Downey, and the Estates Bar regarding legal policy reform. This discussion occurred on August 6, 2020, and was facilitated by the Ontario Bar Association. Our post focused on virtual witnessing of wills as a result of Covid-19 and considered the possibility of making this provision more permanent.
The focal point of today’s post will be s. 16 of Ontario’s Succession Law Reform Act and whether it should be repealed.
Section 16 provides for the revocation of a will upon marriage. At the August 2020 meeting, many participants were in favour of repealing this provision. Both British Columbia and Alberta have already amended their legislation to repeal this exact provision. Proponents of legislative change associate this provision with the rise in predatory marriages. The devastating consequences resulting from a predatory marriage generally impact the vulnerable elderly and their heirs.
The rationale underlying the provision’s enactment dates back hundreds of years to a time where the father of the bride was required to pay a dowry to the groom. Revocation of a prior will was required in order to protect the bride from any previous obligations laid out in the groom’s will and to ensure a “clean slate.” There are concerns by some that a new spouse might not be protected if a prior will remains valid after marriage. For example, if a valid will is upheld at marriage, a current spouse might not inherit if he/she is not included in that will.
Section 16 is debatably antiquated and historically redundant as there are now additional statutes in place to protect a new spouse in the event of a death, including the Family Law Act. Furthermore, s. 58 of the Succession Law Reform Act allows a spouse of a deceased to claim appropriate and adequate support as a dependant. It is apparent that revoking a will upon marriage is not the only protection available for a subsequent spouse.
With the demographics in our society rapidly changing and the obvious need to protect those most vulnerable, now is as good a time as ever to reconsider the necessity of s. 16.
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Suzana Popovic-Montag & Tori Joseph
A recent decision of the Ontario Superior Court of Justice highlights the importance of preserving a surviving married spouse’s ability to elect for an equalization of net family properties within the six-month limitation period.
Upon death, a surviving married spouse in Ontario can elect for an equalization of net family properties under Sections 5 and 6 of the Family Law Act instead of taking under the predeceasing spouse’s will or, if the spouse has not left a will, on intestacy. Subsections 6(10), 6(11), and 7(3)(c) of the Family Law Act provide that the surviving spouse must ordinarily make an election within six months of date of death and not after that date. The Court may, however, extend the election deadline in the event that: (a) there are apparent grounds for relief; (b) relief is unavailable because of delay that has been incurred in good faith; and, (c) no person will suffer substantial prejudice by reason of the delay (subsection 2(8) of the Family Law Act).
Courts have reviewed the circumstances in which an extension is typically ordered. The requirement that the delay be incurred in good faith has been interpreted as meaning that the party has acted honestly and with no ulterior motive (see, for example, Busch v Amos, 1994 CanLII 7454 (ONSC)).
In Mihalcin v Templeman, 2018 ONSC 5385, a surviving spouse had commenced two claims with respect to the estate of her late husband and an inter vivos gift made to a live-in caregiver. However, neither of the proceedings had sought any relief relating to an equalization of net family properties, nor did the wife take any steps to make an election or to extend the time within which she was permitted to do so. The Court reviewed whether the delay in making the election was in good faith. The evidence regarding the reasons for the delay in electing for equalization were considered to be vague and insufficient to satisfy the evidentiary burden that the delay was incurred in good faith. Accordingly, the applicant was not permitted to amend her pleadings to incorporate this relief.
Justice Bruce Fitzpatrick commented as follows with respect to the importance of limitation periods, generally (at para 48):
I am mindful of the general importance of limitation periods for the conduct of litigation. There is an obligation on parties to put forward all known legitimate claims within certain time limits. In this case, the time limit was relatively short. I think it cannot be readily ignored. The evidentiary record is not sufficient for me to say that justice requires me to exercise my discretion in favour of allowing [the applicant] to amend her claim so as to include a claim for equalization in all of the circumstances.
Where an equalization of net family properties may be sought at a later time (for example, pending the outcome of a will challenge or dependant’s support application), it is prudent to seek an extension well before the expiry of the six-month limitation period as courts may or may not assist a surviving spouse in seeking this relief down the road, if and when it may become advisable.
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Other blog entries/podcasts that may be of interest:
- When is it Appropriate to Extend the Time Granted in Favour of Equalization Under the Family Law Act?
- Equalization Claims and Unequal Division of the Net Family Property
- Family Law Equalization Claims and Bankruptcy
- Consolidation of Family Law Act and Dependant Support Claims
As anyone who has ever watched the show Friends can attest, “breaks” can happen in any relationship. For those attempting to claim common law spousal status however, what impact, if any, do such “breaks” have upon the length of time that the couple has to be together? Do you have to re-set the clock of the relationship after every “break”, or can the “breaks” be ignored?
Part V of the Succession Law Reform Act incorporates the definition of “spouse” from section 29 of the Family Law Act. Section 29 of the Family Law Act in turn defines “spouse” as including “two persons who are not married to each other and have cohabited continuously for a period of not less than three years“. This definition is often what is being referred to when someone says that a relationship is “common law”, with significant corresponding legal rights potentially being given to the two individuals if they are found to be “spouses”.
As the word “continuously” is included in the definition, one would be forgiven for thinking that there cannot be any “breaks” in the relationship, and that you must have a continuous three year period of “cohabitation” for two people to be considered spouses. As we will see below however, this may not necessarily be the case.
I have previously blogged about the factors that the court may look to in determining whether two people are “cohabitating”, with the Supreme Court of Canada in M. v. H. having confirmed that you look to the factors listed in Molodowich v. Penttinen to determine whether to individuals are “cohabitating” to the extent that their relationship becomes spousal. For the purpose of this blog however, the interesting question which follows is whether a couple who otherwise meets enough of the factors from Molodowich to be considered to be “cohabitating”, but had a “break” in their relationship during the three year period, could still be considered “spouses”.
In Boothe v. Gore,  O.J. No. 4376, the Ontario Court of Justice (General Division) provides the following commentary regarding the effect of a “break” on a relationship:
“The law in Ontario recognizes that a man and a woman are considered to have continuously cohabitated, despite that while living together, there might have been separations for varying periods of time before reconciling. Cohabitation does not terminate until either party regards it as being at an end, and, demonstrate convincingly that this is the party’s intent. A brief cooling off period does not convincingly show a settled state of mind that cohabitation has terminated…
The effects of temporary separations depends on the intention of the parties. When one party leaves the other and provides an objective basis to believe that they do not intend to resume cohabitation and the separation lasts for a meaningful period of time, the period of cohabitation could well have been interrupted.” [emphasis added]
As Boothe v. Gore suggests, a “break” in a relationship should not necessarily preclude a finding that two persons are common law spouses. Rather, the court is to attempt to ascertain the intentions of the parties at the time of the “break”, with the spousal status only coming to a close if either of the parties regards the relationship as being “at an end“, or the period of separation lasts for a “meaningful period of time“.
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Does an attorney, or guardian, have the power to change a grantor’s estate plan?
According to section 31(1) of the Substitute Decisions Act, a guardian of property (or attorney for property) has the power to do on the incapable person’s behalf anything in respect of property that the person could do if capable, except make a will.
The statute, however, is deceptively simple. Can a guardian transfer property into joint tenancy? Can a guardian sever a joint tenancy? Can a guardian change a beneficiary designation on a RRSP, RRIF or insurance policy? Can an inter vivos trust be established or an estate freeze undertaken to save taxes? There are numerous cases which have tested these issues.
For instance, in Banton v Banton, Justice Cullity found that although the grantor’s attorneys had the authority to create an irrevocable inter vivos trust, they nonetheless breached their fiduciary obligations owing to the grantor, in creating the trust.
The irrevocable trust provided for income and capital at the trustee’s discretion for the grantor’s benefit during his lifetime and a gift over of capital to the grantor’s children, who were also the attorneys. The scheme of distribution of the irrevocable trust was the same as provided for in the grantor’s will. However, the court found that the fact that the remainder interest passed automatically to the grantor’s issue defeated the grantor’s power to revoke his will by marriage and would deprive his common law spouse of potential rights under Parts II and V of the Succession Law Reform Act and Part I of the Family Law Act. The court found that the gift of the remainder of the interest went beyond what was required to protect the grantor’s assets.
Justice Cullity stated:
“I do not share the view that there is an inviolable rule that it is improper for attorneys under a continuing power of attorney to take title to the donor‘s assets either by themselves or jointly with the donor . This must depend upon whether it is reasonable in the circumstances to do so to protect or advance the interest, or otherwise benefit, the donor.”
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When is it Appropriate to Extend the Time Granted in Favour of Equalization under the Family Law Act?
Applications for an extension of time (beyond six months from date of death) to elect under the Family Law Act (“FLA”) are regularly brought before the Court. Decisions with respect to that are often dealt with by way of short endorsements.
Justice Dunphy, in Aquilina v Aquilina, 2018 ONSC 3607, a recent court decision, made some interesting comments regarding applications for an extension of time in such circumstances.
The Deceased passed away in December, 2017, leaving the Applicant (his wife) and their three adult children. The Applicant was primarily a homemaker and as such, her level of information regarding the family financial affairs was imprecise. The Estate was not a simple one to administer, in part due to a number of business interests the Deceased had in the family’s native country, Malta, held through various corporations, real estate holdings and an active business.
At the time of the hearing, the Estate did not have an administrator. It was determined that the Deceased did not leave a Will.
The Applicant in this matter had two options – making a claim under the Succession Law Reform Act (“SLRA”) or the FLA.
Under the SLRA, in the event of an intestacy, the beneficiaries of the Deceased’s estate are the Applicant and their three adult children. Under s. 46(2) of the SLRA, where there is no Will and there is more than one child of the Deceased, the surviving spouse is entitled to 1/3 of the Estate plus the “preferential share” prescribed by s. 45 of the SLRA.
In contrast, s. 5(2) of the FLA provides that the surviving spouse will receive 1/2 of the difference between the value of the net family property of each of the spouses where the Deceased had the higher of the two amounts.
The Applicant has a period of six months from the date of death to make the election as per s. 6(10) of the FLA. Absent an election, the surviving spouse takes under the SLRA.
Criteria for Extension
The Applicant requested that the court: (i) extend the time to make an election until two years from the date of the application; (ii) extend the time for the deemed election to the same date; and (iii) extend the time during which distributions from the Estate are suspended until the same date.
In making a finding, the Court must consider:
- Whether there are apparent grounds for relief;
- Whether delay, if any, was incurred in good faith; and
- Whether anyone will be substantially prejudiced by the delay.
It is important to note, that the surviving spouse does not have to have precise and accurate information but that he or she must have sufficient information to make an informed choice. Justice Dunphy noted that extensions are intended to be the exception and not the rule.
Analysis and Decision
Justice Dunphy held that it was going to take a period of time – very likely a year or more – to be able to gather the facts necessary to understand the value of this Estate and the Applicant’s intersecting interests within (meaning the consequences flowing from her different roles as a shareholder, widow and spouse). Therefore, Justice Dunphy held that there are some grounds for relief in the circumstances of this case.
In considering whether there was any delay that was not incurred in good faith, though Justice Dunphy noted that the Application was brought very close to the six month anniversary of the Deceased’s date of death, he placed weight on the fact that the death was “sudden, unexpected and shocking” and the relative complexity of the Estate. He held that the delay was incurred in good faith.
Justice Dunphy found that there would be no substantial prejudice in this case if an election was granted because the only other beneficiaries of the Estate are the three adult children of the Deceased and the Applicant, who confirmed that they did not oppose the motion. He did balance against that finding, however, the inherent prejudice in having all or a substantial portion of the Estate frozen. In making this consideration, Justice Dunphy found that any prejudice in this matter was slight.
Based on the facts, Justice Dunphy held that more time would be required to consider the rights of the Applicant, as the surviving spouse, under the SLRA as compared to the FLA. As such, he granted the Applicant all the relief sought, but reduced it to one year from the date of the Application instead of the two years that the Applicant was seeking.
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Today on Hull and Estates, Stuart Clark and Umair Abdul Qadir discuss the recent decision in Cohen v Cohen, 2018 ONSC 1613, in which the Honourable Justice Maranger discussed the Ontario Superior Court of Justice’s jurisdiction to consolidate applications for equalization commenced pursuant to the Family Law Act with applications for dependant’s relief under Part V of the Succession Law Reform Act. You can read more about the Cohen decision on our blog.
Should you have any questions, please email us at firstname.lastname@example.org or leave a comment on our blog.
The recent Ontario Superior Court of Justice decision of Zecha v Zecha Estate, 2017 ONSC 1972, 2017 CarswellOnt 4882, raises the issue of how separation agreements ought to be interpreted in circumstances where one party to the contract has predeceased the other.
In this case, a separation agreement was entered into by the plaintiff and her husband, who had since died. With respect to the sale of the couple’s matrimonial home, the separation agreement, dated May 31, 2012, stipulated as follows:
- The plaintiff and the deceased would advise one another of all offers to purchase the matrimonial property;
- If the plaintiff received an offer to purchase the property for less than $1,500,000.00, the deceased could require that the plaintiff accept the offer, but, upon compelling her to do so, would be responsible for paying any shortfall between the sale amount and $1,500,000.00;
- If the property had not been sold within 18 months of the date of the agreement (and the plaintiff had not declined an unconditional offer to purchase the property for a price higher than $1,500,000.00):
- The deceased would assume carriage of the sale;
- The plaintiff would cooperate with the sale process and sign any documents to give effect to the sale; and
- If the property sold for less than $1,500,000.00, the deceased would be responsible for any shortfall between the purchase price and $1,500,000.00.
The plaintiff listed the matrimonial property for sale on October 29, 2012. On April 30, 2014 (23 months after the execution of the separation agreement), the plaintiff entered into an agreement of purchase and sale, and sold the property for $1,180,000.00. There was no evidence before the Court that the plaintiff had advised the deceased that she had received or accepted an offer to purchase the property for less than $1,500,000.00. The deceased died on November 28, 2014, and the plaintiff commenced proceedings against the deceased’s estate for the difference between the sale price of $1,180,000.00 and $1,500,000.00, relying upon the terms of the separation agreement.
At trial, the plaintiff submitted that, pursuant to the terms of the separation agreement, she was entitled to $320,000.00, representing the difference between the sale price of the property and $1,500,000.00, because the property had been sold more than 18 months from the date of the separation agreement. The deceased’s estate asserted that the plaintiff could not enforce the terms of the separation agreement, as she had not complied with its terms as to which party would control the sale of the property if it took place more than 18 months after execution of the separation agreement. Pursuant to the separation agreement, the deceased was only responsible for paying the shortfall if (a) he had compelled the plaintiff to accept an offer to purchase the property for less than $1,500,000.00 within 18 months of the date of the separation agreement, or (b) he had assumed control of the sale of the property 18 months after the date of the separation agreement and accepted an offer to purchase the property for less than $150,000.00.
The Court found that the separation agreement was a properly executed contract and should be interpreted as a whole, giving meaning to all of its terms and avoiding an alternative interpretation that would render a term ineffective (in a manner consistent with commercial law principles). Accordingly, the Court dismissed the action, declining to order payment of the $320,000.00 shortfall by the estate to the plaintiff. The Court stated that the plaintiff had interpreted the terms of the contract too narrowly, in an attempt to obtain a greater payout from the proceeds of sale of the matrimonial property. The Court found that, pursuant to the separation agreement, the deceased had a clear right to decide if an offer to purchase the property for less than $1,500,000.00 would be accepted at the time of its sale, being more than 18 months after the execution of the separation agreement, and the plaintiff could not rely upon the corresponding provisions of the separation agreement.
Circumstances like these, in which one party to a separation agreement has died and the assistance of the Court is required in interpreting the contract for the purposes of considering a claim made (or if an entitlement is apparently limited) under the contract, are not uncommon. It can be important for estate lawyers who may encounter this issue to understand how separation agreements are most likely to be interpreted by the courts.
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Under the Family Law Act, R.S.O. 1990, c. F.3 (the “FLA”), section 6(1), when a spouse dies leaving a will, the surviving spouse can elect to take their entitlement under the will, or to receive their entitlement pursuant to an equalization of net family property pursuant to section 5 of the FLA. If a surviving spouse wishes to make an election for an equalization payment, they must file such election within six months after the deceased spouse’s death in accordance with s. 6(10) of the FLA, and if they do not do so within the prescribed time, pursuant to s. 6(11), the surviving spouse is deemed to elect to take under the will.
Pursuant to section 2(8) of the FLA, the court may extend the time prescribed by the FLA, in this case being six months after the date of death, if it is satisfied that,
(a) there are apparent grounds for relief;
(b) relief is unavailable because of delay that has been incurred in good faith; and
(c) no person will suffer substantial prejudice by reason of the delay.
In Lundy v Lundy Estate, 2017 ONSC 2101, a recent Ontario decision, the court considered a motion by a surviving spouse to extend the limitation period for an equalization election under the FLA. The spouse’s husband (the “Deceased”) died on June 29, 2015. Accordingly, the spouse would have had to make her FLA election by December 29, 2015. The motion in question was not brought until January 2017. The Deceased’s son, the residual beneficiary of the Deceased’s estate (the “Estate”) opposed the relief sought by the spouse.
The spouse claimed that she had not been provided with timely or complete information regarding the value of the Estate as at the dates of marriage and death, which is required in order to calculate a possible equalization payment. She claimed that she did not have a complete picture of the assets of the Estate until July 2016, and that she still needed valuation information regarding the Deceased’s company.
On the other hand, the son claimed that the spouse was aware of the Estate assets, as she was the named co-estate trustee of the Estate, along with the son, and was also in possession of the Deceased’s financial records. There was evidence that the spouse had accepted her role as co-estate trustee, accepted bequests made to her under the Deceased’s will, and had not expressed any intention of making an equalization claim or seeking an extension to make such a claim. Furthermore, there was evidence of an email from the spouse’s son from October 2015 in which he provided his preliminary estimate of the market value of the Estate assets and expected tax liability, indicating that the spouse did have some information regarding the size of the Estate and her share of it.
The court in this case dismissed the spouse’s motion for an extension, concluding that the spouse did not show that her delay in bringing the motion was incurred in good faith. The court held that the spouse did not explain why she failed to assert a claim or failed to seek an extension of the FLA limitation periods if she believed she needed further time and information in order to investigate and evaluate her FLA claim. In denying the extension sought by the spouse, however, the court noted that doing so would not leave the spouse without any remedy, as she may still be able to pursue a claim for dependant’s support under the Succession Law Reform Act, R.S.O 1990, c. S.26.
The decision in Lundy Estate v Lundy provides a reminder to surviving spouses to act quickly and diligently with respect to their entitlement to their deceased spouse’s estate, and any potential claims they may have in this regard. It is advisable for a surviving spouse to seek advice from a trusted legal professional to ensure that they are aware of their rights, assert them within the applicable limitation period, and do not lose the opportunity to pursue any potential claims.
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