Equalize an inadequate inheritance

The emotional devastation caused by the death of a spouse can be compounded by serious financial worries when you’re left with only a small portion of your spouse’s estate and little or no life insurance or other benefits upon their death. But you may be entitled to more.

The Family Law Act (Ontario) allows married (not common-law), surviving spouses to make equalization claims when their partners die.

The resulting payment is meant to compensate you, as a surviving spouse, for approximately half the increase in the value of any property acquired during the marriage.

Get a valuation of your partner’s assets, and your own, as of one day before your spouse passed away. Then, to determine your respective net family property value, subtract the value of your property on the date of your marriage from the value of your property determined in the valuation.

If your net family property is less than your spouse’s net family property, you can claim half the difference between the two— if your net family property was greater, then no claim can be made by you or your spouse’s estate.

The law excludes certain assets from net family property, including gifts and inheritances from someone other than your spouse after the marriage date, and income from those gifts and inheritances if the person making the gift or will so stated.

Domestic contracts can also exclude some property.

The act doesn’t deduct the value of your matrimonial home— any family residence owned by you or your spouse in which both of you, or one of you and your children, live — from your net family property at the date of marriage. Instead, it’s included on the valuation date if it’s still the same matrimonial home.

If you do make an equalization claim, you lose all entitlements under your spouse’s will (or intestacy, if they didn’t make a valid will), and making the claim requires detailed valuations of your property. Those valuations can become public through the court process, which is something you need to weigh against the benefits of a claim.

If you decide that equalization is right for you, then as long as you make your claim within six months of your spouse’s death, you”ll receive what’s rightfully yours during this already difficult time.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.