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Rights of spouses and children during an intestacy

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What rights does the family have when the deceased has no will? Ontario law has evolved both in terms of the common law and the legislation to provide a structure for the inheritance rights of legally married spouses, children and common law spouses. There is some overlap in those rights and some big differences.

Imagine two scenarios.

  1. John and Jane Murphy who were married 30 years.They had two children Jake and Jill who were 20 and 25 years of age respectively. John dies and has no will.
  2. Next door Fred and Ethel lived together as common law spouses and had two minor children. Fred dies and has no will.

RIGHTS OF LEGALLY MARRIED SPOUSE IN AN INTESTACY

By passing away without having made a will John has died intestate. There are a number of things that Jane, his wife, should consider.

Jane should consult a lawyer and calculate whether she would be better off by making an election under section 5 of the Family Law Act and compare it to Jane’s entitlement under the laws of intestacy. Before making the election Jane has to calculate under which scenario she would receive the greater inheritance.

To exercise this option Jane is essentially saying “instead of my taking my inheritance under the laws of intestacy I want an equalization payment from the estate.” What does that mean? It means that Jane will receive ½ the difference when comparing the net family property of both John and Jane at the date of death. To figure out which option is preferable Jane’s lawyer will have to value both the spouse (Jane) and the deceased’s (John) assets and liabilities. This valuation has to be determined at the date of marriage and the date of death. The former is subtracted from the latter and the difference is divided between the estate and the surviving spouse. This process is called the equalization payment. For example,

  1. let us assume that when they married John’s value (assets – liabilities) was $10,000 and Jane’s was $2000.
  2. When John died John’s value was $610,000.00 and Jane’s was $2,000.00.
  3. John’s net value would be $600,000.00 ($610,000.– -$10,000.00). Jane’s net value would be $0 ($2,000.00 – $2,000.00).
  4. If Jane elected to under section 5 for a division of net family assets she would receive an equalization payment of $300,000.00 which represents ½ the difference between their net values ($600,000.00/2)

The other option for her would be to take under the laws of intestacy as set out under the Succession Law Reform Act. If there were an intestacy where there was a legally married spouse, but the deceased had no children conceived before and born alive after the deceased death then the spouse receives the entirety of the deceased’s property. However, in our case scenario, with children, Jane (the legally married spouse) is entitled to a preferential share of the first $200,000.00. The balance is split in different ways depending on how many children, if any, the deceased had. In our example, where the deceased had two children, John’s estate of $610,000.00 would be divided as follows:

  1. The first $200,000.00 goes to Jane leaving 410,000.00;
  2. Jane then gets $136,666,67 representing 1/3 of the balance ($410,000.00/3) and the deceased’s two children divide the balance with each receiving $136,666.67

RIGHTS OF COMMON LAW SPOUSE IN AN INTESTACY

In an intestacy, common-law spouses, do not have the same statutory rights. Even if Ethel and Jane’s husbands had exactly the same amount of money and children, Jane (the married spouse) would have property rights while Ethel (the common law spouse) would have no statutory right to inherit any assets. Furthermore, Ethel does not have a right to make an election under the Family Law Act.This is different than Jane (a married spouse) who has the right to a division of property from the estate. So what are Ethel’s options as a common law spouse? By statute she has comparable rights to support.

The legislation does not provide a common law spouse with a preferential share to the deceased’s assets in an intestacy. The only thing a common-law spouse may do pursuant to the provisions of the statute is to sue the estate for support. Where a deceased person has not made adequate provision for the proper support of his dependants, the court may order that such provision as it considers adequate be made out of the estate of the deceased for the proper support of the dependants. In this way, the Succession Law Reform Act treats married and common law spouses the same – they are both considered dependants for the purpose of obtaining support from the estate.

While statute has limited the property rights of common law spouses against the estate – the courts have opened a possible window for them to still make such claims. A common law spouse could look to equity and say that she has a quantum Meruit claim for unjust enrichment. The spouse would have to prove that she contributed to building up the estate of the other spouse and that she deserves compensation for the work done. To win, the common law spouse would have to show that the deceased received and enrichment with a parallel deprivation to her. The surviving spouse would also have to show that there was no legal reason for such an enrichment.

Rights of Children

As described above, under an intestacy, children have rights to both property and support under the Succession Law Reform Act. But what happens if an estate is worth $200,000.00 or less? The law of intestacy suggests that all the money goes to the spouse of the deceased. What happens if the estate is worth more then $200,000.00 and the children receive some money, but it is not enough to support them? The children have the right to bring an application against the estate for support because children are also defined as dependants under the legislation. The child is basically saying, “My parent had a legal obligation to support me at the time of his or her death. I need to be continued to be supported”. And the courts under those instances may access the assets of the estate (and other assets as well such as insurance proceeds, joint assets etc.) to fund an order for support of those dependent children.

Comparative Rights of Family upon demise

Family Law Act Section 5 ElectionSuccession Law Reform Act Intestacy Property RightsSuccession Law Reform Act SupportQuantum Meruit Claim for Unjust Enrichment
Legally Married SpouseYes. Equalization payment of net family property.Yes. Preferential share and % of balance.Yes. Defined as dependant for purposes of support.Possible.
Common Law SpouseNo statutory right to Equalization payment of net family property.No statutory right to property upon spouse’s demise.Yes.Defined as dependant for purposes of support.This is only possible route for property claims.
ChildrenNo statutory right to Equalization payment of net family property.Yes. After spouse takes preferential share they are entitled to % of balance.Yes. Defined as dependant for purposes of support.Possible.

Charles Wagner

The author of this blog is Charles B. Wagner. Charles is a Certified Specialist in Estates and Trusts and partner at Wagner Sidlofsky LLP.

This Toronto office is a boutique litigation law firm whose practice is focused on estate and commercial litigation.

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