Preferential share and de facto spouses ab intestate: it’s time to make some updates – Family and matrimonial

Canada: Preferential share and de facto spouses ab intestate: it’s time to make some updates

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In the event of an intestate (when a person dies without a will), each province and territory in Canada has a mandatory scheme for dividing a deceased person’s property, which is usually between their surviving spouse and their children, if any. , and alternatively to other relatives.

Some provinces and territories give the spouse a “preferential share” before dividing the rest of the estate between the spouse and the children. For example, in Ontario, under the Law reforming inheritance law (“SLRA”), if the testator died leaving a spouse and children, the first $350,000 of the estate is paid to the spouse and the rest of the estate is divided between the surviving spouse and the children. The preferred share increased from $200,000 to $350,000 effective March 1, 2021.

Before the preferential share was recently increased, I wrote a blog about the need for an update.

The increase in the preferred share is greater than it would have been if the previous amount had been adjusted in accordance with the consumer price index published by Statistics Canada, which would be approximately $310,000. This update was certainly overdue and is a positive step, but is it really enough?

I mentioned in my previous blog that the preferred share amount was historically based on the average home value in the Toronto area to allow the surviving spouse to acquire the home as part of their preferred share. . Interestingly, the average selling price of homes in Toronto in December 2021 is around $1,160,000. In light of this, a bigger increase should be considered and hopefully it won’t take another 26 years to review the amount of the preferred share!

In addition to updating the amount of the preferred share, it’s time to revise Ontario’s definition of spouse under the RBCA, which only refers to married spouses.

The definition of “spouse” differs according to the intestate rules of each province and territory:

  • In Ontario, Quebec, New Brunswick, Newfoundland and the Yukon, only married spouses are considered “spouses,” including same-sex married spouses.

  • In British Columbia, Alberta, Saskatchewan, Manitoba, Prince Edward Island, Nova Scotia and the Northwest Territories, common-law partners are considered “spouses” more married spouses.

  • Nunavut is also included in the second category, but only if registered as a domestic partner under Part 2 of the Vital Statistics Act.

In Ontario, although a common-law partner is not entitled to a share of the estate intestate, a common-law partner may have other equitable remedies available to them to make a claim against the estate. However, these remedies are subject to the discretion of a court and are not an automatic absolute right provided by the intestate rules. The surviving spouse will instead have to make a legal claim to assert their right where there is no certainty of success and which is expensive.

Times have changed and relationships are different. According to a 2016 census78.7% of people living in a couple were married, while 21.3% lived in a common-law union.

It is time for Ontario to reconsider the definition of “spouse” intestate and consider following the example of most other provinces and territories.

Bottom Line: Until changes take place in Ontario, it is important that married and common-law partners understand their status and the rights that come with it. They need to get proper legal advice and ensure that proper planning is in place in light of our current laws until the law is reformed to reflect the current social reality of married spouses, but also the significant number de facto spouses.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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