Family law and estate law often function independently. However, when a spouse dies, features of both practice areas quickly become interconnected. The foundations of estate law that remain relevant today predate the practice of family law. Family law originally operated according to doctrines of estate law. Now, with a strong family law regime, these two areas that can function distinct from one another frequently interact to provide financial support for surviving spouses.
In Ontario, the Family Law Act governs how an estate may be distributed, notwithstanding the terms of the deceased's will. The surviving spouse is able to treat a partner's death as a separation if this treatment is preferential to what would otherwise be provided to the spouse by the will.
Absent the limitation of a surviving spouse's rights by a domestic contract or extenuating circumstances, the Family Law Act preserves the right upon the death of one's spouse to be treated just as fairly as the surviving spouse would have been on a separation from the deceased spouse. Regardless of the terms of the deceased spouse's will, a surviving spouse can plead his or her rights under the Family Law Act and elect to instead obtain equalization.
When determining whether it makes sense to proceed with equalization or to instead collect under the relevant will, it is a good idea to consult an estate lawyer who is knowledgeable about how an equalization calculation will be made. The concept of equalization requires the determination of the growth in family assets that took place during a marriage and an equal division of that growth into two shares, in each of which one spouse has an interest. In effect, a surviving spouse can claim one half of the growth in family property instead of receiving whatever is left to the spouse pursuant to the will.
Family assets are not typically dealt with while both spouses are living and married to one another in anticipation of a calculation of net family property. Following a separation or death, there may be inconsistencies with respect to what opposing parties consider to be an asset to which a surviving or separated spouse is entitled.
An estate plan can be made in such a way that it avoids a spouse's election for equalization and subsequent frustration of the property distribution outlined within a will. For many testators, life insurance is an attractive option to provide for a surviving spouse, where other property is intended to be distributed to other beneficiaries in accordance with a will. Life insurance is also a transferable asset that can benefit a spouse and secure support in the event of separation.
One major problem with the potential of equalization to provide for surviving spouses, however, is that the remedy is not available to unmarried spouses. In the 30 years leading up to 2011, the number of common-law couples in Canada more than quadrupled. While married and unmarried spouses may no longer be treated differently by society, there is still a significant difference in their treatment by the law. Unable to rely on provisions of the Family Law Act following the death of an unmarried spouse, the survivor can instead turn to the Succession Law Reform Act for support.
When adequate provision for dependants is not made by an estate plan, assets may be brought back into the estate. This includes assets that would otherwise pass outside of the estate, such as jointly-held property or insurance proceeds, to fund support obligations. One common issue is that, upon an individual's death, his or her income generally ceases, leaving only a fixed sum to cover all obligations of that person's estate. Although we do encounter individuals who attempt to do so in the practice of estate litigation, a testator cannot effectively disinherit the people whom he or she is obligated to support.
Ideally, estate planning documents will be drafted in recognition of the testator's obligation to support his or her dependents, whether they include married or unmarried spouses. In fact, over 90 per cent of wills executed are admitted to probate without being subject to dependent support applications or other claims. However, from a policy perspective, it is a good thing that wills are not the only documents that matter and that the Family Law Act and the Succession Law Reform Act provide support to otherwise unsupported dependents, regardless of marital status.
Ian Hull and Suzana Popovic-Montag are partners at Hull & Hull LLP, an innovative law firm that practices exclusively in estate, trust and capacity litigation. To watch more Hull & Hull TV episodes, please visit our Hull & Hull TV page.