Written on behalf of Feigenbaum Consulting
As we navigate and continue to adapt through unprecedented times, it’s only fitting that the laws of Ontario adapt and change gears. This blog explores some of the changes to Ontario’s estate laws that occurred in 2021 and what is on the horizon for 2022.
Increased spousal entitlement on intestacy
When an individual dies without a will, they have died “intestate.” In other words, the deceased did not leave any instructions as to how they would like their assets to be divided. When this happens, Ontario’s Succession Law Reform Act (SLRA) controls how the deceased’s assets are distributed amongst their surviving relatives.
In Ontario, a preferential share is the money a surviving spouse inherits when the deceased spouse dies without a valid will. As of March 1, 2021, a surviving spouse receives a preferential share of $350,000 instead of $200,000 where a deceased has died intestate. For an individual who died before March 1, 2021, the amount of the surviving spouse’s preferential share remains at $200,000. If the deceased’s assets are equal to or under $350,000, the surviving spouse inherits the entire estate.
What if children are involved?
The circumstances are different if the deceased has children. Where there is only one surviving child, the balance of the estate is shared equally between the spouse and the child. Where there are two or more children, the spouse takes one-third of the balance of the estate, and the rest is divided equally among the children. There have been no changes to this rule.
Does the surviving spouse have any other options?
A surviving spouse still can choose an equalization payment under the Family Law Act. In short, the equalization payment is half of the difference between the Net Family Property (NFP) of the deceased spouse and the NFP of the surviving spouse. The surviving spouse is entitled to half of the difference between their NFPs only if the deceased’s NFP is more than the surviving spouse’s NFP. This option is best suited for a surviving spouse who believes the division of property would be more favourable than the $350,000 preferential share.
The surviving spouse has six months from the date of the deceased’s death to decide how they wish to inherit the estate. However, the Ontario Superior Court of Justice has previously confirmed that a court may grant additional time where there is a good faith, explainable reason for needing an extension.
Simplified procedure for small estates
The Estates Act now defines an estate valued under $150,000 as a small estate. As of April 1, 2021, an individual seeking to act as an administrator or executor of a small estate can now apply for a Small Estate Certificate instead of a Certificate of Appointment of Estate Trustee.
This new definition introduces new, simplified procedures for administering small estates. Before the introduction of this new procedure, the process to administer an estate was the same regardless of the value of the estate.
The procedures for small estate administration include the following:
- New and simpler application forms;
- In some instances, there will be no requirement of the applicant to provide certain supporting documents (such as an affidavit of service for the notice of application); and
- There will no longer be a requirement to post a bond in most circumstances.
Estate administration tax is still required on small estates.
If additional assets are later discovered that push the estate’s value over the $150,000 threshold, the estate trustee will need to apply for a Certificate of Appointment through the traditional process. When deciding whether to use the simpler procedure, the risk of potential assets resurfacing should be weighed against the efficiencies and cost-savings of the simplified procedure.
The new simplified procedure is optional and may not be ideal for all small estates. It may be helpful for estates with many debts and liabilities or estates of individuals who have not acquired much wealth (for example, a recent graduate).
Succession Law Reform Act Changes on the Horizon for 2022
Marriage no longer revokes a will
Starting in January 2022, a will made before marriage will continue to be valid. Previously, if a person made a will before getting married, their subsequent marriage would invalidate the will. This reduces the risk of spouses unintentionally becoming intestate once they are married.
Courts can save invalid wills
The new laws provide room for the courts to decide on a case-by-case basis whether a will should be valid or not. These changes aim to bring Ontario in line with most other Canadian provinces that employ a “substantial compliance” regime – i.e., a court in those provinces can declare a will valid even when it does not comply with all legal requirements.
For many years legislation and caselaw confirmed that a will must comply with the required formalities to be considered valid. For instance, without a witness signature, the courts would be forced to invalidate a will, and the deceased would be intestate. As of January 2022, the amended Succession Law Reform Act will allow the courts to save and validate wills that would otherwise be invalid due to technical errors.
Separated spouses lose property rights
Currently, an ex-spouse can apply for part of their deceased’s spouse’s estate under the Family Law Act if they are not yet legally divorced. As of January 2022, the ex-spouse of a deceased person will no longer have property rights, even if they are only separated and not yet divorced. A separation will be treated the same as a divorce so long as the spouses have lived apart for three years and have a valid separation agreement or court order.
Contact Feigenbaum Law for Advice on Estate Planning
Comprehensive estate planning ensures your wishes are carried out after your death or in the event of your incapacitation. As a knowledgeable lawyer and tax professional, Mark Feigenbaum helps clients minimize their legal and financial risks while planning for their future. To find out how Feigenbaum Law can help you with wills and estates matters, call 905-695-1269 or reach out online.