Surviving partners and family members face grief and arduous estate administration when a family member dies. Asset distribution can trigger difficult questions, family tension and costly estate litigation, particularly where a surviving spouse’s inheritance is inadequate or different than expected.
What are the rights of a surviving spouse to inherit? This article examines spousal rights in Alberta according to the province’s various acts. (Learn about spousal rights in Ontario from a previous article.)
Adult Interdependent Relationships Act
The Adult Interdependent Relationships Act (AIRA) defines adult independent partners (AIPs) and affords them support, property rights and responsibilities similar to that of married partners. Regardless of gender, two people have AIP status if they live together for at least three years continuously and share in one another’s lives, are emotionally committed to one another, and function as an economic and domestic unit. Alternatively, a couple has AIP status if they live in a relationship of some permanence where there is also a child by birth or adoption, or they enter into a written Adult Interdependent Partner Agreement with each other.
One can simultaneously have both a married spouse and an AIP. For example, a married person may be living with another partner for three years or in some shorter relationship of permanence where there’s a child.
The AIRA also permits those not romantically involved to be potential AIPs, such as siblings. That said, adults related by blood or adoption must enter into an Adult Interdependent Partner Agreement to gain AIP status.
An AIP is considered a dependant under the Wills and Succession Act so may make claims for support or further property provision if they feel they have not been adequately provided for under the deceased’s will or on intestacy.
Wills and Succession Act
In 2012, Alberta passed the new Wills and Succession Act (WSA), consolidating five pieces of legislation. The new WSA covers wills, intestacy, beneficiary designations, survivorship and family support.
Under the act, marriage or entering into an adult interdependent partnership no longer revokes a will. Upon divorce or one-year separation from an AIP, unless the will expresses contrary intention, the ex-spouse or AIP is deemed to have predeceased the testator for purposes of gifts or appointments under the will. What this means is that absent language in the will confirming the gift or appointment even if separated or divorced, the ex-spouse no longer receives a gift under the deceased’s will nor is appointed as executor, guardian or trustee.
Note this change doesn’t extend to beneficiary designations on insurance policies or investments. If the deceased owner doesn’t want an ex-spouse or AIP to receive RRSP or TFSA funds or insurance policy death benefits, the deceased owner must change beneficiary designations.
Also under the WSA, AIPs not on title to the deceased’s home may remain in the home for 90 days, with the estate paying costs.
WSA and intestacy
Under the WSA, AIPs have the same rights as married spouses on intestacy. Where there’s a surviving spouse or AIP but no descendants, the entire estate goes to the surviving spouse or AIP. Where there are one or more descendants, when all children are also children of the sole surviving spouse or AIP, the entire estate goes to the spouse or AIP. If any of the children are from another relationship involving the deceased, the spouse or AIP gets the greater of the preferential share ($150,000) and 50% of the estate’s net value. All children equally share the remainder.
Where the deceased leaves both a surviving spouse and AIP, the surviving spouse and AIP split the estate equally if there are no descendants. Where there are descendants, the split is the same as above.
Note that a spouse or AIP may be disinherited if separated from the deceased for at least two years, or if there is a court declaration of irreconcilability or order to permanently conclude marital affairs.
WSA and family maintenance and support claims
The WSA places a boundary over testamentary freedom, requiring testators to provide proper support for their dependants. “Adequate provisions” requires the deceased meet the “moral expectations of contemporary society” in respect of the dependant. Therefore, family maintenance and support (FMS) claims must reflect the lifestyle of the deceased and dependant up to the date of the deceased’s death.
In addition to accustomed lifestyle, the court considers the following factors when determining the appropriate settlement for a dependant:
- size of testate estate;
- dependant’s age, health and ability to self-support, as well as future needs; and
- applicant’s character and conduct.
The Dower Act applies in Alberta if the deceased spouse was the only spouse on title to the matrimonial homestead. A homestead is defined as “a parcel of land on which the dwelling house occupied by the owner is situated.” The Dower Act gives the surviving married spouse a life interest in that homestead, which allows the surviving spouse to live in or rent the property but not sell it. The surviving spouse is responsible for the property’s maintenance and capital costs while they hold the dower life interest.
Dower rights are an asset of the surviving spouse, not the estate. They trump will provisions and WSA provisions on intestacy and may limit the court’s ability to recalculate property divisions for FMS claims. In the latter case, the spouse must agree to relinquish the dower life interest, wherein the courts typically award the spouse some form of compensation.
The dower life interest as an asset of the surviving spouse may be considered when calculating any award the spouse may receive. The court considers the circumstances of the claimant spouse by estimating the value of the life interest, and may award additional amounts to ensure the spouse can carry property costs during their life. The Dower Act can also include a life estate in some personal property of the deceased’s, such as furniture, appliances, necessary tools, vehicles and equipment related to the practice of a trade.
The following Dower Act rules should be noted:
- Cohabitating, common-law couples and AIPs are excluded.
- When any two names are on title of the property, the Dower Act doesn’t apply.
- If only one spouse has resided on the property, dower may still apply for the non-title spouse.
- Spending even one night on the property during the marriage could trigger dower rights.
- Remarriage doesn’t impact dower rights from a prior relationship.
Talk to clients about the planning landscape, boundaries and opportunities that affect them. Understanding spousal rights arms advisors with talking points to facilitate information-rich, valued-added client conversations for holistic planning.
Rebecca Hett, CPA, CGA, TEP, is vice-president, Tax, Retirement and Estate Planning at CI Investments. Patrick Bieler is a summer student for the Tax, Retirement and Estate Planning team at CI Investments.