Inheritance under Ontario’s Family Law Act

Ontario’s Family Law Act (FLA) came into effect on March 01, 1986 with changes to the act as recently as 2010. FLA covers many areas of family law and much of this act deals with the distribution of property and child support/custody issues when a marriage breaks down. I applaud the act as ensures that in the case of marriage breakdowns there is fair treatment to both spouses. I can still remember the day (1960’s) when a wife could not leave a husband without harsh consequences. If she physically moved out of the family home, she was not entitled to support. The only way to get compensation was to have the husband leave.  We have come a long way!

Under the FLA the value of the net family property is determined (after all debts are paid) and equalization is determined between the spouses. In the case of death without a will (intestate succession) the surviving spouse determines how much they contributed to the families net worth. The difference is then equalized so that each spouse receives one half of the increase in value of the assets over the term of the marriage.

For example:

A man dies and leaves behind a new wife and one child from a previous marriage. The families net worth is valued at $200,000.00 and it is determined that the surviving wife contributed $10,000.00 to this net worth. In this fictional scenario the difference is $190,000.00. Under the FLA, the wife would be entitled to inherit one half of the net value or $95,000.00 and the child from a previous marriage would receive the same amount.

This ensures that a spouse is recognized for their contribution to the families worth. Again , it wasn’t that long ago that a spouse was not recognized for putting their partner through school. This contribution was not recognized when the marriage broke down. So, it is a good thing!

In the case if intestate succession, the surviving spouse can also elect to inherit under the Succession Law Reform Act. It will be interesting to see if all provinces allow the choice between two acts.