Tag: Ontario’s Succession Law Reform Act
In Ontario, if a person dies without a will, the Succession Law Reform Act (“SLRA”) dictates how the person’s estate is to be distributed. Part II of the SLRA provides that if the person dies with a married spouse, that spouse receives a share of the estate. If there are no children, the spouse receives the estate outright. If the deceased has children, may be entitled to receive a share of the estate. If there is only one child, the spouse receives the “preferential share”, and half of any estate in excess of the preferential share goes to the spouse and the other half goes to the child (or the child’s issue, if the child has predeceased). If there is more than one child, the spouse gets the preferential share and one-third of the excess and the other children share the remaining two-thirds. Again, if a child has predeceased the deceased, the child’s issue enjoys that child’s share.
Things get a little more complicated where there is a partial intestacy. If the spouse receives assets under the will, the spouse’s preferential share is reduced by the value of the property received under the will.
Note that the intestate provisions pertaining to spouses in Ontario apply to married spouses only. Common-law spouses are not entitled to a share of the estate on an intestacy. However, they may be entitled to dependant support under Part V of the SLRA.
In Ontario, the value of the preferential share is not referred to in the SLRA. The value of the share is set by regulation: O. Reg 54/95. Since 1995, the value of the preferential share has been $200,000.
British Columbia intestacy legislation is somewhat different. The relevant legislation is the Wills, Estates and Succession Act, SBC 2009, c 13.
Firstly, in B.C., a spouse is defined as including a married spouse AND a person with whom the deceased lived in a marriage-like relationship for at least two years immediately before the death.
Secondly, in B.C., there are different calculations of the “preferential share”. If all of the children are children of BOTH the deceased and the surviving spouse, then the preferential share is $300,000. If all of the children are NOT “common” to the deceased and the surviving spouse, then the preferential share is only $150,000.
Thirdly, in addition to the preferential share, the surviving spouse is entitled to the “household furnishings”, which is defined as being the “personal property usually associated with the enjoyment by the spouses of the spousal home”. In Ontario, the value of the preferential share presumably includes the value of any household furnishings.
Fourthly, the B.C. legislation provides that if the estate is greater than the preferential share, then the surviving spouse gets half, and the deceased’s descendants get the other half, regardless of how many children there are.
Fifthly, the WESA provides for situations where there are more than one “spouse’. In such a case, the surviving spouses are to share the preferential share in the portion to which they agree, or failing agreement, as may be determined by the court. The WESA does not appear to give any guidance as to how that determination is to be made.
If you are short of things to think about this weekend, consider:
- Whether it is time to reconsider the value of the preferential share?
- Whether it makes sense to allow the spouse to have the household furnishings in addition to the preferential share. This personal property usually has nominal resale value, is difficult to evaluate, and often has sentimental or practical value to the surviving spouse.
- Whether Ontario should adopt a definition of “spouse” that includes common-law spouses for intestacy purposes, or whether resort to dependant support provides sufficient protection for common-law spouses?
- Whether the fact that the surviving children of the deceased are also the surviving children of the surviving spouse should impact on the value of the preferential share, as it does in B.C.?
- Whether the percentage of the estate in excess of the preferential share that the surviving spouse gets should vary depending on how many children the deceased had (that is, 50% if only one child, but only 33% if more than one child)?
Thank you for reading. Have a great weekend.
Few histories are as rich and riveting as the history of Ancient Rome, from the uncertain rise of the Roman Republic to the terrible civil wars that brought its ruin, and from the mad reigns of all-powerful Caesars to the eventual collapse of the Roman Empire, owing, generally, to invasions from without and corruption from within. Its history also shows us many of the roots of our legal traditions, including – as will be the focus of this blog – some precursors to modern-day estates law.
“It was customary with the Romans of that age, when they were moving into battle array, and were on the point of taking up their bucklers, and girding their coats about them, to make at the same time an unwritten will, or verbal testament, and to name who should be their heirs, in the hearing of three or four witnesses.”
Ontario’s Succession Law Reform Act only requires two witnesses for proper execution of a will (section 4), although soldiers on active service may proceed by writing their wills without witnesses (section 5).
In Ontario, we have instruments at our disposal to prevent or reverse dispositions tainted by incapacity. One may challenge an incapable testator’s will, or one may pre-empt abuse or needless loss with a guardianship application. In Ancient Rome, similarly, those individuals who attempted to give away everything they possessed (what we might call a “spendthrift” the Romans called a “prodigus”) were dealt with as though they suffered from a distemper of the mind.
Under Augustus – of whom it was justly said that he “made a desert and called it peace” – an inheritance tax of 5% was introduced (with some restrictions, such as that it applied only to well-off individuals). A little over a century later, the Emperor Severus increased this inheritance imposition to 10%. While these figures may seem high (or not high enough, depending on where you stand), they may be much lower than inheritance taxes elsewhere, such as in the United States, United Kingdom, France, Japan and South Korea. In Ontario we do not have an inheritance tax, but there are inheritance-like taxes, like capital gains taxes and probate taxes.
There is a marked difference between Ancient Rome and our common law system with respect to gifting between spouses. Unlike modern Ontario, wherein couples often use joint tenancy as a tax-saving estates planning strategy, Roman spouses were prohibited from gifting to one another. While the rationale for this law is moot, it was likely intended to keep apart the property of each spouse’s bloodline.
The Romans, as well as their civil-law descendants of today, operated under what has become known as “forced heirship”, whereby testators are legally required to give to their children. As a previous blog notes, in modern France, a parent with one child must give that child one-half of his or her property. In Rome, the historian Gibbon says that “if the father bequeathed to his son the fourth part of his estate, he removed all ground of legal complaint”. This is in stark contrast to the common law, in which testators may plan their estates with near-total freedom.
Thank you for reading and enjoy the rest of your day!
Suzana Popovic-Montag & Devin McMurtry
Recently, Stuart Clark blogged about the film Knives Out and its relation to estate law. Another popular movie, Murder Mystery, which aired on Netflix last year, also offered some thoughtful considerations for those interested in estate law. The film, starring Adam Sandler and Jennifer Aniston, was the most popular title on Netflix in 2019. In its first three days on the streaming service, it was viewed by 30,869,863 accounts.
Just as Stuart gave a spoiler alert in his blog, this blog also contains spoilers.
In Murder Mystery, Nick Spitz and his wife, Audrey Spitz, embark on a trip to Europe. On the plane, Audrey meets billionaire Charles Cavendish, who invites them to join him on his family’s yacht for a party to celebrate Malcolm Quince’s (Charles’ elderly billionaire uncle’s) upcoming wedding to Charles’ former fiancée. While on the yacht, Malcolm announces that he will be changing his will to leave everything to his soon-to-be wife. After this surprise announcement, the lights suddenly go out, a scream is heard, and when the lights come back on, the guests are surprised to see that Malcolm has been killed. Nick and Audrey are framed for Malcolm’s death. To prove their innocence, they must find Malcolm’s real killer.
Throughout the movie, French inheritance law is heavily emphasized. As summarized by Nick in the film: “The French law states that a man’s estate must be divided equally amongst his children.” This type of estate plan is referred to as a “forced heirship.” France’s succession law is based on the Napoleonic Code introduced in the 1800s. Under France’s succession law, children are reserved a certain portion of their parents’ estate. If a parent has one child, at least one-half of the estate must be reserved for them. If a parent has two children, at least two-thirds of the estate must be reserved for them and if a parent has three or more children, at least three-quarters of the estate must be reserved for them.
Those who have watched the film may find themselves wondering if the succession laws in Ontario are similar to that of France. Unlike French inheritance law, in Ontario, a testator does not have an obligation to leave a share of their estate to an adult, independent child. Under subsection 58(1) of the Succession Law Reform Act (the “SLRA”), a testator is only under an obligation to provide support for their “dependants”.
According to subsection 57(1) of the SLRA, a “dependant” includes the deceased’s spouse, parent, child, brother or sister “to whom the deceased was providing support or was under a legal obligation to provide support immediately before his or her death.” Therefore, if a testator was not under a legal obligation to provide for an adult child, that child may not have an entitlement to share in their parent’s estate.
Just something to think about the next time you watch the film.
Thanks for reading!
Ian Hull and Celine Dookie
Most people know that if a person dies without a Will, the laws of intestacy govern the division of his or her estate. Specifically, it is Part II of the Succession Law Reform Act, RSO 1990, c S.26 (the “SLRA“) that is titled “Intestate Succession” that comes into play.
The question of who inherits where there is no Will is easily answered in some of the following scenarios:
- Where there is a surviving spouse (limited to married spouses, by the way), said spouse is entitled to the entirety of the property of the deceased (section 45(1));
- Where there is a surviving spouse and one child, spouse receives a preferential share of the estate of the deceased (i.e. $200,000.00 as of today) and if anything is left over, it is divided equally between spouse and child (section 46(1));
- Where there is a surviving spouse and two or more children, the spouse is entitled to a preferential share of the estate of the deceased and 1/3 of what is left over. The remainder is then divided between the issue of the deceased (section 46(2)).
The SLRA further addresses how the division of assets is to take place where the only surviving relatives are parents, brothers and sisters and nieces and nephews (in respective order of preference). If the deceased has no surviving parents, brother/sisters or nieces/nephews, the next of kin provision (section 47(6)) applies.
Despite the fact that the SLRA attempts to bring clarity to the division of one’s intestate estate, it appears that certain situations may arise that would lead to confusion, absent case law that would provide some guidance.
In Farmer Estate v Karabin Estate, an executor of a niece who predeceased the deceased commenced an application in respect of her alleged share in the estate of the deceased. The Ontario Court of Appeal found that the SLRA is confined to nieces or nephews who do not predecease the deceased and does not extend to more remote issue. The Court of Appeal relied on section 47(4) of the SLRA which is worded as follows:
“Where a person dies intestate in respect of property and there is no surviving spouses, issue or parent, the property shall be distributed among the surviving brothers and sisters of the intestate equally, and if any brother or sister predeceases the intestate, the share of the deceased brother or sister shall be distributed among his or her children equally.” [emphasis added]
In interpreting this provision, the Court relied on the definitions of “child” and “issue” as defined in the SLRA, namely the definition of “child” includes a child conceived before and born alive after the parent’s death and the definition of “issue” includes a descendant conceived before and alive after the person’s death.
In another matter, Kiehn v Murdoch, the Ontario Superior Court of Justice found that grandnieces and grandnephews are excluded from sharing in the estate of a deceased by operation of section 47(4).
Unfortunately in the circumstances where a particular scenario arises that has not been clearly addressed by the SLRA and subsequent case law, an application for directions may need to be commenced to receive some clarity from the Court as to how a particular intestate estate is to be divided.
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Testamentary freedom is a core tenet of estate planning in Ontario. In general, testators are at liberty to set up their estate plan to include or exclude whomever they wish. Where part or all of a testator’s estate plan fails as a result of an intestacy, Ontario’s Succession Law Reform Act (the “SLRA”) steps in to provide the parties who will benefit as a result. Occasionally, the principles of testamentary freedom and intention and the laws of intestacy intersect in peculiar ways. This intersection came to a head in the Eissmann v Kunz (2018 ONSC 3650) decision.
In Kunz, the testator, Siegfried Kunz, died leaving no fewer than four testamentary documents purporting to be wills, briefly summarized as follows:
- A will drawn in 1967, which divided Mr. Kunz’s estate between his wife and their daughter, Petra;
- A will drawn in 1982 in Mr. Kunz’s handwriting, which stated that the “beneficiary after [his] death is Petra”;
- A will drawn in 2000, again in Mr. Kunz’s handwriting, which purported to modify the 1967 will and listed a number of specific legacies to various beneficiaries. Mr. Kunz appears to have later written over the original bequests to increase the amount of each. Petra was once again listed as the sole residuary beneficiary; and
- A will drawn in 2009, also in Mr. Kunz’s handwriting, which provided that Petra would “not receive a single Euro of out [the] Estate.” In the margin of the 2009 will, Mr. Kunz expressly indicated that the 2009 will was to be an “amendment” to the 2000 will.
The Court was first tasked with determining which will was to govern. The Court concluded that the 2000 will was a valid holograph will, though noted that the subsequent handwritten amendments were of no force and effect as they did not comply with the formal requirements for valid alterations under the SLRA. The Court concluded that the 2009 will operated instead as a codicil to the 2000 will as it did not dispose of any property on its face and, therefore, could not function as a standalone will.
The interplay between the 2000 will and the 2009 codicil is such that a conflict arose with respect to the disposition of the residue of Mr. Kunz’s estate. The 2000 will names Petra as the sole residuary beneficiary. The 2009 will revokes Petra’s interest entirely. The 2009 codicil therefore created a partial intestacy with respect to the residue of Mr. Kunz’s estate, and the Court looked to the SLRA to determine who would inherit.
The hierarchy of beneficiaries on an intestacy is set out in Part II of the SLRA. Mr. Kunz died leaving no surviving spouse, and so the next intestate beneficiaries were to be his children, that is, Petra. In an ironic twist of fate, the Court concluded that Petra was solely entitled to all of the residue of Mr. Kunz’s estate, notwithstanding that he had intended to expressly disinherit her under the 2009 codicil. The Court declined to give effect to Mr. Kunz’s apparent intention to exclude Petra.
Simple estate planning steps, such as the appointment of an alternate beneficiary under the 2009 will, could have prevented this great irony. Ensure the effects of your testamentary dispositions are properly understood by taking time to review your will with a lawyer.
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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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Occasionally, a person finds themselves in a situation in which, following their spouse’s death, they were either not adequately provided for under their spouse’s Will or were not provided for at all.
Especially in situations where the deceased fully supported his or her spouse, one viable option is for the surviving spouse to assert a claim for support under Part V of the Succession Law Reform Act, RSO 1990, c. S. 26 (the “SLRA”).
A surviving spouse, either married or common-law as defined in the SLRA fits into the definition of a “dependant” and is thus entitled to support from the deceased spouse’s estate. The question for the Court is whether the deceased made adequate provision for his/her surviving spouse and, if not, what ought to be the quantum of support.
Under the SLRA, a “dependant” includes not just married spouses, but also either of two persons who,
- were married to each other by a marriage that was terminated or declared a nullity; or
- are not married to each other and have cohabited,
- continuously for a period of not less than three years, or
- in a relationship of some permanence, if they are the natural or adoptive parents of a child.
It is important to keep in mind that such a claim under the SLRA must be brought within six months of obtaining probate, unless the Court allows for an extension of time. Probate is another term for a Certificate of Appointment of Estate Trustee with a Will that is usually obtained by the Estate Trustee for proper administration of the Estate.
The Court may consider various factors in assessing the nature, amount and duration of support, including the eighteen factors listed under section 62(1) of the SLRA some of which are:
- The Dependant’s current assets and means;
- The Dependant’s capacity to contribute to their own support;
- The Dependant’s age and physical and mental health;
- The Dependant’s needs – with regard to accustomed standard of living;
- Any agreement between the Dependant and the deceased spouse; and
- The proximity and the duration of the Dependant’s relationship with the deceased spouse.
If a claim for dependant’s relief is successful, the Court has broad discretion and can make a variety of orders for support, including but not limited to:
- A monthly or annual payment, for an indefinite or limited period of time or until the occurrence of a specific event;
- A lump sum payment;
- The transfer of specified property, either absolutely, for life, or a specified number of years; or
- The possession or use of any specified property for life or for such period as the Court considers appropriate.
In any event, if a person believes that they may have a good case for a Dependant’s Support Claim under the SLRA, it is important to consult with a lawyer as soon as possible so as to file the claim within the allotted limitation period and discuss any other options.
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It is not uncommon to encounter situations where an individual dies without a will, having never been married, widowed, separated or divorced and without children. It can, however, be uncommon to come across situations where an individual dies under these circumstance but also leaves behind no known close relatives or next of kin. When this occurs, the question that immediately arises is: who will inherit the deceased person’s estate?
In Ontario, the distribution of the estate of an unmarried, childless person who has died without a will is governed by Part II of the Succession Law Reform Act (the “Act”). The Act provides a statutory scheme that sets out classes of individuals who will inherit on such a persons’ intestacy. The order of entitlement is as follows:
- Nieces and Nephews; and finally,
- Next of Kin.
When none of the above individuals can be identified or located, section 47(7) of the Act states that the property of the deceased person becomes the property of the Crown, and the Escheats Act, 2015 applies.
Depending on the circumstances, individuals without a family may wish to consider if there is a charitable organization or community activity that they belong to that they would prefer to benefit from their estate under a will. In the alterative they may wish to take proactive steps to locate their distant relatives during their lifetime.
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This week on Hull on Estates, Paul Trudelle and Umair Abdul Qadir discuss limitation periods for dependant’s support claims, seeking leave to extend the limitation period under the Succession Law Reform Act and the recent Ontario Superior Court Justice decision in Weigand v Weigand Estate, 2016 ONSC 6201 (http://bit.ly/2dBTomV).
Should you have any questions, please email us at email@example.com or leave a comment on our blog.
Last week we discussed the doctrine of republication, which makes an older valid will operate as if it had been executed on the (later) date of republication. A codicil that refers to a prior unrevoked will is the most common example of republication.
Republication must not be confused with revival of a revoked will, which requires clear evidence of an intention to make valid a previously revoked will. (We have written before about revocation of a will, which can be effected by marriage (depending on the will), making a new will, a proper written revocation, and destruction of the will with an intention to revoke.)
Section 19(1) of the Succession Law Reform Act provides that a revoked will can be revived by: (a) another duly executed will, (b) a codicil that shows an intention to revive, or (c) re-execution of the will with the required formalities. Re-execution also requires intention, so merely signing a revoked will does not revive it.
If there is a codicil that refers to a validly revoked will, the court will look to see whether there is evidence of intention to revive. If a codicil is ambiguous, the court will consider extrinsic evidence of whether the testator had an intention to revive the will. Whether or not extrinsic evidence is admitted, the court will place itself “in the position of the testator” and consider the codicil in light of “surrounding circumstances.” In this way, the court will try to find the testator’s true intentions from the codicil (Hale v Tokelove (1850), 2 Rob Ecc 318 at 325).
Intention to revive can be a significant issue if a testator does not know that his or her will was revoked in the first place. A properly executed codicil that would republish a valid will might not be sufficient to revive a revoked will. For example, a testator might not be aware that his or her marriage revoked their previous will. If that testator makes a codicil referring to the earlier will, without understanding that the will was revoked by operation of law, then the codicil may not show the necessary intention to revive the will. If the testator dies without making a new will, his or her estate will pass on either full or partial intestacy, despite having made a will.
Thank-you for reading.