Election Between Equalization and Will Inheritance in Ontario

After a spouse dies, you may learn that the will leaves you less than you expected, or nothing. The law gives a married surviving spouse a choice, and that choice has a short deadline.

This article explains the options, what you give up by choosing equalization, and how the election works. Which option is better depends on the numbers, so a lawyer or accountant can help you compare.

The two options

When a spouse dies leaving a will, the surviving spouse must elect either to take under the will or to receive the equalization entitlement under section 5 of the Family Law Act. If the spouse died without a will, the choice is between the intestate share under Part II of the Succession Law Reform Act and equalization.

On death, if the deceased spouse's net family property is larger than the survivor's, the survivor is entitled to one-half the difference. The valuation date is the day before the death.

Equalization is a payment of money. It is not a split of each asset. The idea behind it is that child care, household management and financial provision are joint responsibilities, and that each spouse contributes equally to them, whether financially or otherwise.

What choosing equalization means

Electing equalization generally costs you the gifts to you in the will. Those gifts are revoked unless the will expressly provides otherwise, and you keep them in addition to equalization only if the will expressly says so.

Some things you receive because of the death are credited against your equalization entitlement:

• life insurance proceeds
• lump-sum pension payments
• property passing by right of survivorship

Your equalization entitlement has priority over gifts in the will, intestate shares, and dependant-support orders, except an order in favour of a child of the deceased.

The six-month deadline and the form

The election must be in the prescribed form and filed in the office of the Estate Registrar for Ontario within six months after the first spouse's death. The prescribed form is Form 1, Election of Surviving Spouse, available on the Ontario court forms website. Check that site for the current version before you file.

If you do not file in time, you are deemed to have elected to take under the will or the Succession Law Reform Act, or both, unless the court orders otherwise on application. A late claim is not guaranteed; a court may extend a time limit only if there are apparent grounds for relief, the delay was incurred in good faith, and no one suffers substantial prejudice.

The estate also cannot be distributed within six months of the death. A separate time limit applies to an equalization application after a death: six months after the first spouse's death.

How to compare the options

Working out net family property means valuing assets and debts, subtracting excluded property such as certain gifts and inheritances, and subtracting date-of-marriage property. Valuation can be complex, particularly for pensions, businesses and investments.

A few points about the calculation help you see what a comparison involves:

• Debts and other liabilities on the valuation date, such as lines of credit, loans and mortgages, are deducted.
• If a spouse's net family property is less than zero, it is deemed to be zero.
• Values are calculated as of close of business on the valuation date or the date of marriage.
• Property is defined broadly, and for pension rights it includes the imputed value of the spouse's interest in the plan from the date of marriage to the valuation date.
• Property received by gift or inheritance from a third person after the date of marriage is excluded, other than a matrimonial home.
• Life insurance proceeds payable on death and damages for personal injuries are also excluded.
• The deduction for date-of-marriage property is not allowed for a matrimonial home, so its full value is included even if one spouse owned it before the marriage.
• A family home that was inherited or received as a gift is counted in full.
• The person claiming a deduction or an exclusion has to prove it.

What to do next

• Note the date of death and mark the six-month deadline right away.
• Get a copy of the will, if there is one.
• List the deceased spouse's assets and debts, and your own, as of the day before death.
• Collect details of life insurance, pension and jointly held property you will receive.
• Gather proof of anything you think should be deducted or excluded, such as date-of-marriage property or an inheritance.
• See a lawyer early so the comparison is done well before the deadline.

How this applies depends on your situation, so it is worth confirming the figures with a lawyer or accountant before you decide.

Frequently asked questions