ARTICLE
23 January 2025

Navigating The Intersection Of Rights Arising Under The Family Law Act And The Succession Law Reform Act

SB
Sorbara Law

Contributor

The Accelerating Access to Justice Act 2021 ("AAJA") was a major piece of legislation that made changes to a number of areas of law.
Canada Ontario Family and Matrimonial

Treatment of Separated Spouses

The Accelerating Access to Justice Act 2021 ("AAJA") was a major piece of legislation that made changes to a number of areas of law. One of those changes was to estates law, including the treatment of separated spouses under the Succession Law Reform Act, which deals with and estates law in Ontario.

Prior to this new amendment to the Succession Law Reform Act, separated spouses retained the same benefits as married spouses, in the absence of a separation agreement, a divorce order or an arbitration order. A person who had been separated from their spouse for decades could, upon the death of the other spouse, still make a claim as a spouse pursuant to Ontario Succession Laws, despite their separated status. The only way to protect an estate was to push for a separation agreement, deal with it in a court or arbitration order or to get divorced.

This changed with the AAJA's amendment to the Succession Law Reform Act, which has now finally taken effect as of January 1, 2025. Instead of treating separated spouses like they are still married, the law has changed to treat separated spouses like divorced spouses. Separated spouses who have been living apart for three years as of January 1, 2025 will be considered separated regardless of whether there is a separation agreement, court order or arbitration order. However, it is not wise to wait for the three-year window to be triggered and separating spouses should still consider having a separation agreement, seeking a court order or an arbitration order, as well as updating their estate plans, including their Will, so as to protect themselves and their estates from their newly separated spouse.

Spouses should always seek legal advice upon the dissolution of a marriage to ensure they understand their rights both under Ontario's family laws and estate laws. Although this change to the Succession Law Reform Act can make things more straightforward between separated spouses, it is still prudent to be proactive to make sure your estate is divided exactly as you wish.

Entitlement of Married Spouses to Estates

Married spouses have certain rights within estates law that protects their interests. There is also the issue of property entitlement to a surviving spouse where the deceased's Will leaves nothing to a surviving spouse. The courts have held that family law trumps estates law and that a Will that leaves nothing to a surviving spouse does not extinguish that person's entitlement to equalization. It is advisable that prospective married spouses execute a marriage contract and/or that separating spouses execute a separation agreement or obtain a court order, dealing with equalization as soon as possible. Such agreements can create certainty with respect to a surviving spouse's entitlement and can contribute to a more orderly administration of the estate. Unlike a Will, which can be changed at any time without the other spouse's knowledge or consent (sometimes), a marriage contract requires both parties to agree to any changes.

In a recent case, a husband of a 46-year marriage who lived in the matrimonial home worth approximately $2.4 million with his wife, and had an estate consisting of five other properties, had a Will that did not bequest any interest in any of the properties to the surviving wife. The widow estimated her entitlement to equalization to be in the range of $2.1 to $2.4 million and conversely, her entitlement under her husband's will was substantially less. The widow chose the equalization payment.

This case highlights the conflict between the family law and succession law. Under the Family Law Act (FLA) a married couple shares in their growth of their net worth between the dates of marriage and separation (called equalization) and this right extends to a surviving spouse in the event of the death of their wife or husband. In such circumstances, the FLA gives the surviving spouse the right to choose equalization or to receive their entitlement under the deceased's Will. Both cannot be chosen. The final order of Justice Wilkinson of the Ontario Superior Court of Justice granted the widow equalization pursuant to the FLA, and in doing so, deprived the husband's intention set out in his Will of transferring the entirety of his property to his children.

In sum, the legislated right under the FLA to choose between entitlement under a Will versus entitlement to equalization ensures that a spouse cannot use a Will to undermine the surviving spouses right to sharing of property.

The family law and wills and estates departments at Sorbara Law work closely together to address the intersectionality between family law and succession planning in a "one stop shop," service to our clients.

For further education on the Accelerating Access to Justice Act 2021 ("AAJA"), please refer to our previous article entitled "Updates In Estates Law Legislation – Part II" found here: https://www.sorbaralaw.com/resources/knowledge-centre/publication/updates-in-estate-law-legislation---part-ii.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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