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The Preferential Share and Common Law Spouses on an Intestacy: Time for Some Updates

On an intestacy (when a person dies without a will), each Canadian province and territory provides for a mandatory scheme to distribute a deceased person’s property, which is typically between their surviving spouse and children, if any, and alternately to other relatives.

Some provinces and territories provide a spouse with a “preferential share” prior to dividing the rest of the estate between the spouse and children. For example, in Ontario, under the Succession Law Reform Act (“SLRA”), if the testator died leaving a spouse and children, the first $350,000 of the estate is paid to the spouse and the remainder of the estate is divided among the surviving spouse and children. The preferential share was increased from $200,000 to $350,000 as of March 1, 2021.

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

The increase to the preferential share is more than what 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 amount of the preferential share has been historically loosely based on the average value of a home in the Toronto area in order to allow the surviving spouse the ability to acquire the home as part of his or her preferential share. Interestingly, the average selling price of houses in Toronto as of December 2021 is approximately $1,160,000. In light of this, a greater increase should be considered and hopefully, it does not take another 26 years to revisit the amount of the preferential share!

In addition to updating the amount of the preferential share, it’s time to review the definition of spouse in Ontario under the SLRA, which refers to married spouses only.

The definition of “spouse” differs under intestacy rules across the provinces and territories:

  • In Ontario, Quebec, New Brunswick, Newfoundland, and Yukon, only married spouses are considered “spouses,” including same-sex married spouses.
  • In British Columbia, Alberta, Saskatchewan, Manitoba, Prince Edward Island, Nova Scotia, and Northwest Territories, common law partners are considered “spouses” in addition to married spouses.
  • Nunavut is also included under 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 spouse will not be entitled to a share of the estate on an intestacy, a common law spouse may have other equitable remedies available to him or her to make a claim against the estate. However, these remedies are subject to a court’s discretion and are not an automatic absolute right which the intestacy rules provide. Rather, the surviving spouse will have to make a court application to assert his or her right where there is no certainty of success and which is expensive.

Times have changed and relationships are different. According to a 2016 census, 78.7% of persons living as a couple were married, while 21.3% were living common law.

It is time for Ontario to reconsider the definition of “spouse” on an intestacy and to consider following the lead of the majority of other provinces and territories.

The takeaway: until changes take place in Ontario, it’s important for married and common law spouses alike to understand their status and the legal rights that stem from it. They need to get proper legal advice and ensure adequate 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 as well the significant number of common law spouses.

— Marly Peikes

The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.