Common Law vs Married Spouses - Part 2: Estates Law

In Ontario, there are significant differences between the rights of common law spouses and the rights of married spouses regarding inheritance upon death.

Married spouses have an automatic right to inherit.  When a married spouse dies leaving a Will, the living spouse can elect to take under the Will.  If the Will does not provide for the spouse, or does not sufficiently provide for the spouse, the spouse can instead elect to take an equalization payment.

Similarly, when a married spouse dies without a Will, the living spouse can elect to either take under the intestacy rules or take an equalization payment.

Briefly, an equalization payment is a monetary payment made by one spouse to the other in order to “make equal” the Net Family Property (NFP) of the spouses acquired during the marriage. The spouse with the higher net worth is required to make a payment (or property transfer of corresponding value) to the spouse with the lower net worth so that both spouses end up in comparable positions with an equalized net worth. 

Determining the Net Family Property, particularly taking into account possible exclusions and deductions, may be quite intricate.  It is recommended that individuals seek legal advice from an experienced family law lawyer to determine the equalization payment that one spouse may owe to the other, and that they do so before they make an election.

The rules are very different for common law spouses. Specifically, there is no automatic right to inherit for a common law spouse.

When a common law spouse dies leaving a Will, the living common law spouse can only inherit what is left to him or her in the Will.  If nothing is left to the common law spouse in the Will, he or she will not be entitled to inherit anything.

If a common law spouse dies without a Will, the intestacy rules apply and the living common law spouse will not be entitled to anything.  Instead, the estate will be divided amongst the deceased’s relatives, in accordance with the intestacy rules.

Common law spouses can avoid these problems by knowing their rights and organizing their estates accordingly.

For more information or for estate planning assistance, please contact SMG and consult one of our Wills & Estates lawyers.

By Vera Dokter, Student-at-law
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