Dying Intestate: The Inheritance Rights of Spouses & Children

What inheritance rights does a family have when a loved one passes away without a Will? In Ontario, your rights may differ, depending on whether you’re a married spouse, a cohabiting spouse (also known as a common-law spouse), or child. In today’s blog post, we will examine the similarities and differences of each category and help underscore the importance of having a properly drafted Will and estate plan.

Legally Married Spouses

When a person dies without a Will, they are said to have died “intestate”, i.e. in the absence of a Will, the rules of intestacy apply to determine who gets what from a deceased’s estate.

Upon the death of a loved one, the surviving spouse (now widowed) should first determine whether they are better off making an election for an equalization payment under the Family Law Act (FLA) or seeking an entitlement to the deceased’s estate under the rules of intestacy. 

If you are a surviving spouse, you should essentially ask yourself: “under which scenario will I receive a greater inheritance? Do I stand to make more if I opt for an equalization payment under Family law? Or am I entitled to a larger share of my deceased spouse’s estate through the rules of intestacy?”

If the surviving spouse elects to inherit under the former option (i.e. an equalization payment), then they will receive half the difference when compared to the net family property of both spouses at the date of death of the deceased spouse. To determine which option grants a larger inheritance, the surviving spouse must value both their and the deceased spouse’s assets and liabilities. 

This calculation is to be determined at the dates of marriage and death of the deceased spouse. The former date is then subtracted from the latter date and the difference is to be divided between the estate and the surviving spouse. 

For example:

1. Assume that when they got married, one spouse had a value of $20,000 and the other $4,000;
2. Later, when one spouse died, their value was $520,000, but the other’s remained $4,000;
3. The deceased’s net value is now $500,000 (520,000 – 20,000). The surviving spouse’s net value would be $0 (4,000 – 4,000).
4. If the surviving spouse elected to receive an equalization payment under the FLA, they would receive $250,000 (500,000/2).

However, what if the surviving spouse elected to inherit under the rules of intestacy pursuant to the Succession Law Reform Act (SLRA) instead? If the deceased had no children conceived before and born alive after the spouse’s death, then the surviving spouse would receive the entirety of the deceased’s estate.

On the other hand, if the deceased did have children, then the surviving spouse would only be entitled to a preferential share of the first $350,000 of the estate (the balance is then split depending on how many children the deceased had). It should be noted, however, that $350,000 is the prescribed amount for the preferential share of an estate of anyone who dies on or after March 1^st, 2021. For those who died before March 1^st, 2021, the prescribed amount for the preferential share is $200,000.

For example:

1. Assume that when they got married, a couple had two children, and the deceased died after March 1^st, 2021, leaving behind an estate valued at $500,000;
2. The surviving spouse would be entitled to the first $350,000, leaving a balance of $150,000;
3. The surviving spouse then also gets one-third of this balance, i.e. $50,000 (150,000/3), for a total payout of $400,000;
4. The two children will then divide the remainder of the balance between them, i.e. each would receive $50,000.

Cohabiting Spouses (aka Common-law spouses)

Unfortunately, cohabiting spouses do not enjoy the same inheritance rights as legally married spouses. In fact, cohabiting couples have no legislative right to inherit any assets. Indeed, they aren’t even entitled to make an election for an equalization payment under the FLA, nor are they entitled to a preferential share.

However, a surviving common-law spouse is not without recourse. One option they have is to bring a lawsuit against the estate for support if the deceased never made adequate plans to properly support their dependents after they die. In this circumstance, a court order may be obtained to have the estate pay out a dependency and support claim for the proper support of the dependents in question.

Another option is to bring an unjust enrichment claim against the deceased’s estate (aka a quantum meruit claim). For this type of claim to be successful, the surviving common-law spouse has to be able to show that they contributed to the estate of the deceased and, as a result, they deserve compensation for their contribution. This entails proving that the deceased spouse received an “enrichment” (for no legal reason) that resulted in a parallel deprivation to the surviving common-law spouse.

Children

Pursuant to the SLRA, children are entitled to support and property rights. If, after paying the surviving spouse their preferential share, the monies the children received from the estate are inadequate to support them, then the child may seek a court order against the estate for support as a dependent. In a nutshell, the child would argue that their deceased parent had a legal obligation to support them at the time of the deceased parent’s death. If successful, a court could order access to the assets of the deceased’s estate to fund support for the dependent children.

Conclusion

Losing a loved one is never easy. Dying without a Will or estate plan further compounds the issues that a family must deal with in the aftermath of a death. Absent a Will, although spouses and children enjoy a certain degree of inheritance rights, these rights aren’t shared across the board, nor are they comparable in effect. The difference in outcomes and entitlements underscores the importance of having a properly drafted Will and estate plan that provides clarity, certainty and that helps families navigate the difficult aftermath of dealing with the loss of a loved one.