Family Law Act Election
Did you know that under the Family Law Act a surviving spouse has the ability to cause a “rewrite” of the Will of the deceased?
This may come as a surprise to you. You must be wondering how is it that a surviving spouse can cause an alteration of the Will of his or her deceased spouse. Well, the answer lies in what the matrimonial law of Ontario is attempting to do – that is, to ensure that the concept of partnership of property of husband and wife is respected.
Under the Family Law Act, the surviving spouse can elect to take under the Will or to have an equalization of the net family properties of the spouses. Equalization means that if the net family property of the deceased spouse is greater than the net family property of the surviving spouse, the surviving spouse under the election can be entitled to one-half the difference between them.
To illustrate: if a deceased husband had a net family property of $300,000 and the surviving wife had a net family property of $200,000, the difference of $100,000 between the deceased husband and the surviving wife would be divided in two, and the $50,000 would have to be paid over to the surviving wife.
This may not seem like much of a concern to most married couples, because most of such Wills are reciprocal in nature or, as some put, are mirror wills, with each benefiting similarly. However, in some instances one spouse may attempt to disinherit the other by excluding the other spouse altogether from the Will. In such circumstances, the Family Law Act election can be made and equalization required.
In second or third marriages it may be advisable to alter the usual reciprocal Will for many reasons, one of which is to provide financially for children of former marriages. To ensure that equalization does not occur, the parties who intend to get married should agree before marriage that they will elect out of the provisions of the Family Law Act as it pertains to equalization. This requires a domestic agreement whereby each spouse will require independent legal representation, financial disclosure as well as verification by each of the lawyers that their respective clients understand the agreement and that it has been signed without duress.
For some spouses the possibility of a future election under the Family Law Act requires considerable attention. These matters should be discussed with your professional while you do your estate planning, especially if you fail to provide adequately in your Will for your surviving spouse.
All these publications are general discussions, and you should not rely on them as legal advice. If you require legal advice, we would be pleased to discuss with you the issues raised by these publications in the context of your particular circumstances.