When someone dies, his surviving spouse isn’t necessarily bound by the provisions of the deceased spouse’s will (or the distribution scheme set out in the intestacy provisions in Part II of the Succession Law Reform Act). In many circumstances, instead of taking an entitlement under a will or pursuant to the intestacy laws, the survivor has the option to trigger a property division scheme set out in in Part I of the Family Law Act (“FLA”) (referred to as electing to equalize net family property (“NFP”)).
Before I go further, there are a few things I want to point out. Firstly, the right to equalize NFP exists solely when the spouses were legally married – meaning that it is not an option available to common law spouses. Secondly, the reason I say that an equalization is available in “many circumstances” is because it is possible to contract out of the option in a domestic (or separation) agreement. Thirdly, if a spouse elects to equalize NFP then she releases her rights under the will (or the intestacy laws) – she doesn’t get to benefit under both.
An equalization of NFP is the same property division scheme that’s available when married spouses divorce (the difference being that, in the estates context, the triggering date is the date of the spouse’s death, rather than the date of separation). In the case of the death of a spouse, it involves determining the value of the assets that each spouse acquired during the marriage. If the value of the assets acquired by the surviving spouse is lower than the value acquired by the deceased spouse then the survivor (should she elect to equalize) in entitled to half the difference. Believe me when I say that this explanation is incredibly simplistic!
Determining each spouse’s NFP can involve complex mathematics – because the FLA allows spouses to exclude various assets (both that they owned at the date of marriage and that they acquired during marriage) from the calculation – and at times determining NFP can be a highly contentious procedure.
It’s essential for any spouse considering whether to equalize NFP to know that the FLA imposes a deadline of 6 months after the death of a spouse to file an election (otherwise the spouse is deemed to take under the will – or intestacy rules). The court has the discretion to extend time (and will frequently agree to do so in appropriate circumstances) – however, an extension should be sought prior to the limitation period elapsing, not afterwards.