2016-08-16

Part 3: Five things I want you to know about Estates Law in Ontario

When I speak to audiences about estates law, the same incorrect assumptions keep coming up. Here are five things I want you to know.

#1. FACT: A common-law spouse in Ontario will not inherit when the other spouse dies without a Will.

People mistakenly assume that long-term common law spouses inherit from each other as if they were married to each other, even when there is no Will. This is INCORRECT. Yes, the law has changed for common-law spouses with respect to family support and other benefits. However, the law on intestacy inheritance (when there is no Will) has not changed in Ontario. A common-law spouse can only inherit from the other spouse when that spouse has signed a valid Will making that intention clear.

#2. FACT: A marriage ends a Will signed before the marriage.

Unless the Will states that it is being signed ‘in contemplation’ of the marriage, getting married in Ontario automatically ends (revokes) a Will signed before the marriage. This can create unexpected hardship for the children of the first marriage when a parent re-marries. For example, an elderly parent may re-marry, automatically revoking the existing Will. A person who may be incapable of managing property could meet the legal test of capacity to marry. There has been considerable discussion in recent years about vulnerable seniors and ‘predatory marriages’, but the law hasn’t been changed. Thinking about getting married? This is a good time to talk to a lawyer about your Will.

#3. FACT: Separated spouses can sometimes inherit from each other.

When a married couple separates, they are still legal spouses of each other, even if the separation occurred decades ago. One spouse will inherit from the other unless they have signed an agreement that waived all interests in each other’s estates. It does not matter if the former spouses are living with new partners. Without a divorce or a waiver in place, the no-longer-living-together but still-legally-married spouses will inherit from each other when there is no Will.   Practically speaking, drawing up a new Will after separation would help to limit inheritance rights, as long as there are no outstanding issues as to division of the family property at the date of separation.

Divorce ends a former spouse’s status in a Will unless the writer of the Will (the testator) has made it clear that inheritance rights continue even after divorce. The rule is that a Will is read as if the divorced spouse died first. The divorced spouse cannot take a bequest under the Will or act as estate trustee. All the other dispositions and powers in the Will continue to be valid.

#4. FACT: A power of attorney has no further authority after the grantor dies.

People holding powers of attorney (‘POA’) may wrongly assume that they continue to have authority to act after the grantor, the person who gave them the POA, died. In Ontario the authority ends at the time of death of the grantor. The person with the POA cannot continue to manage the property of the deceased and does not have authority to plan the funeral. That authority shifts immediately to a named executor if there is a Will. If there is no Will, you will need legal advice to determine who has authority to act.

#5. FACT: People make mistakes about who is an heir to an estate.

What if there is no Will? Does the government get all the money? Ah – NO! Your spouse (if any) or closest next-of-kin will be your legal heirs. It may take a lot of work and expense to find them, especially if they are in another country. Someone will have to apply to the court to be named as the estate trustee. If there is no one in Ontario willing or able to do so, the Office of the Public Guardian and Trustee may take on this role. Whoever is named has a legal duty to conduct appropriate and reasonable searches for the heirs. You will save a lot of trouble by having a Will and choosing to whom you wish to leave your property.

Many couples assume that their spouse will inherit all their assets even when they die without a Will. However, this is only correct for legally married spouses where the deceased didn’t have any children or the estate value is less than $200,000.  If the estate is greater than $200,000, the spouse will receive the first $200,000 and share the excess over $200,000 with the deceased’s children.

Sometimes the family doesn’t bother to get legal advice on how to pay out an estate, and will make mistakes.   For instance, I have seen cases where the closest survivors of the deceased were brothers and sisters, who thought they shared the estate together, and did not know to include the children of a predeceased brother or sister.

Another common error is assuming that step-children or relatives by marriage (‘in-laws’) are also included as heirs. In fact the right to inherit when there is no Will is limited to a legally married spouse or to next-of-kin by blood or legal adoption.

There are so many reasons to have a properly drafted Will that suits your family situation and gives effect to your wishes. I would welcome the opportunity to discuss your options with you.

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