Family Law Act Elections

What is a Family Law Act Election (“FLA”)?

An FLA election under the Family Law Act R.S.O. 1990, c.F3, provides a surviving spouse with a right to elect in favour of equalization of net family property (“NFP”), where the surviving spouse is not happy with the provisions of a deceased spouse’s Will, or the surviving spouse’s entitlement on an intestacy pursuant to the rules of intestate succession under the Succession Law Reform Act, R.S.O. 1990, c. S.26 (the “SLRA”).

What is an Equalization?

An FLA election is governed by Part I of the FLA, which deals with the division of property following the breakdown of a marriage by: death; or by separation

Section 5(2) of Part I of the FLA provides as follows: When a spouse dies, if the NFP of the deceased spouse exceeds the NFP of the surviving spouse, the surviving spouse is entitled to one-half the difference as between them.

There are three (3) key concepts that need to be considered when making an FLA Election:

1. NFP: The starting point is section 4(1) of the FLA which defines NFP: Essentially, the NFP of each spouse is their individual net worth, less premarital deductions, and after taking into account any exclusions pursuant to section 4(2); NFP is calculated as at the “valuation date”

2. “Valuation date” is defined in section 4(1) as the earliest of five (5) possible dates, relevant to an equalization at death:

1. 4(1)(5): “the date before the date on which one of the spouses dies leaving the other spouse surviving”; and

2. While, in most cases, the NFP of the spouses is calculated on the day before one of the spouses dies, this is not always the case:

If, for example, the spouses have separated prior to the spouse’s death, the valuation date will be the date of separation.

If both spouses die simultaneously, neither spouse’s estate will have a claim against the estate of the other, as there will be no surviving spouse.

If both spouses die in circumstances rendering it uncertain which survived the other, neither of the spouse’s respective executors/trustees will be able to discharge the burden of establishing entitlement to an equalization claim

the FLA says that a court may determine on an application for equalization, any matter concerning a spouses’ entitlement under section 5, but there are restrictions:

(a) the application per S. 5(1) or (3) commenced before death may be continued by/against the deceased’s estate;

(b) an application per S. 5(2) may be made against the deceased’s estate, but may not be brought per S. 7(3) a. 2 years after the date of the marriage is terminated by a divorce judgment; and

3. Equalization: Subsection 5(1) is the equalization provision.

The spouse with the larger NFP pays the other one-half of the difference

The entitlement under section 5(2) is “one-way” only; meaning: while the surviving spouse has a right to elect an equalization; even if the surviving spouse has the larger NFP, the estate of the deceased has no claim against the surviving spouse.

Once an election is made, the gifts made in the will to the spouse are treated as revoked, unless the will provides otherwise, and the will is to be interpreted as though the surviving spouse died first.(S. 6(8)).

The election and application must be made within 6 months of the date of death (S. 6(10)). During that time, no distribution can be made in the administration of the estate unless authorized by the court, or consented to by the spouse (S. 6(14)).

Once an election is made no distribution can be made without court authority or consent (S. 6(15))

The court can extend the time for a spouses application (S. 6 (16)), and can suspend the administration of the deceased’s spouse’s estate for the time being and to the extent that the court decides (S. 6 (20)

An FLA equalization application can delay the administration of an estate, particularly where there are valuation issues

In the case of Sagl v. Sagl, 31 R.F.L. (4th) 405, (OSCJ) 1997 CarswellOnt 12248, [1997] O.J. No. 2837 (Ont. Gen. Div.), it is suggested that notwithstanding the difficulties in determining valuation for the sake of the NFP calculation, the application of trust and corporate law concepts can add complexity to calculations

Sagl v. Sagl - The facts

The Sagl Family Trust was created in 1982.

The Trust was created two years before the marriage.

The capital beneficiaries of the Trust were Mr. Sagl, Mr. Sagl’s three sons from his first marriage and their issue

The income beneficiaries were Mr. Sagl, and his three older sons and their children

For the purposes of calculation, Mr. Sagls NFP, the value of his ‘contingent’ capital interest in the assets of the trust were to be valued. The valuation of a ‘contingent’ interest in a discretionary trust under the FLA is regarded as a difficult subject because of very nature of the contingency, since it leads to uncertainty “The evidence does not suggest that in February 1992, there would have been any reason for the trustees to collapse the trust and distribute capital to Mr. Sagl - To do so would have defeated the whole purpose of the trust- The Judge decided to approach this difficult issue on a fair and equitable basis having regard to trust law, the definition of property and the evidence as to what the intention was at the time of the creation of the trust.

The Court determined that Mr. Wolfson’s compromise submission produced the fairest and most equitable result: it is that I should treat the trust assets as if they were a deemed realization amongst all capital beneficiaries as at February 21, 1992. The court provided a compromise in its solution and determined that the interest should be valued as nominal or zero”

LeVan v. LeVan, [2008] O.J. No. 1905 (Ont. C.A.)

The case of LeVan v. LeVan serves as a cautionary tale on the dangers of the changing values of shares and the underlining value of the assets held by a trust during the course of litigation:

"The husband argued that under (section 5(6) (g) and 9(h) of the FLA there should be an unequal payment. He stated that in the circumstances it would be unconscionable to equalize the NFP. He relied on the decrease in value of the web cast shares and the terms of the marriage contract. He submitted that given the restriction on the transfer of the web cast shares, it would be unconscionable to place any value on the shares other than their current value. The husband further submitted that any equal division would result in his entire net worth being given to the wife, which would be unconscionable.

The wife’s position was that it is the value of the net family properties on the valuation date, in this case, the date of separation that is determinative. As it is to be expected that market values or conditions would have changed from the date of separation to the date of trial, this cannot be set aside as unconscionable.

However in the context of this case, for the reasons that follow, I am of the view that it is not appropriate in this case to consider the decrease in the value of the husband’s assets subsequent to the valuation date.”

“The marriage contract was set aside and upheld on appeal. The determinative point was the lack of financial disclosure, and the bullying such that the court set aside the contract.”

It seems to be clear that the court had little empathy for the husband due to the findings of his conduct during the course of the litigation.

The FLA Election – Who can make the election?

A surviving spouse.

The Public Guardian and Trustee who acts as statutory guardian of property of a surviving spouse pursuant to a certificate issued under s. 63 of the Mental Health Act would appear to have the necessary authority to make an election.

A mentally incompetent surviving spouse’s guardian of property appointed under s. 15(k) of the old Mental Incompetency Act would also be able to make such an election.

Under the Substitute Decisions Act, 1992: a “statutory guardian of property” and a “courtappointed guardian of property” have the authority to elect on behalf of a surviving spouse, subject to any restrictions imposed by the surviving spouse in the relevant empowering document or by court order.

If the surviving spouse is incapable of managing her property, the personal representative may exercise the election under the FLA on her behalf.

I say “may” because if there are other beneficiaries, the personal representative has a fiduciary duty to act with an even hand.

Note that this is a claim the personal representative may have to otherwise defend the Estate against.

There is also case law holding that a validly executed and subsisting continuing power of attorney will entitle the named attorney to file the election on behalf of the surviving spouse as grantor of the power (Anderson v. Anderson Estate (1990), 74 O.R. (2d) 58 (H.C.J.).

The FLA Election – Factors to Consider in Making the Right Choice

In order to realize an equalization entitlement, the surviving spouse must elect to take an equalization payment over any provision made for her under the deceased’s will (section 6(1)).

The surviving spouse is faced with a choice: either take under the will or elect an equalization payment under the FLA; the surviving spouse cannot have both unless the will expressly states so (section 6(5)).

Where there is a partial intestacy, the choice must be made between entitlement under the will and the provincial intestacy rules (SLRA Part II) on the one hand, and the equalization claim on the other hand.

Of course, where the surviving spouse would receive the whole of the deceased’s estate, whether according to the will or the intestacy rules, there is no point in electing in favour of an equalization claim.

In some instances, notwithstanding the right to elect, there may be no necessity and this too must be considered by those acting as Attorneys or Guardians for Property

Electing under the Will or on Intestacy

If the surviving spouse elects under the FLA or is deemed to have elected to take under the will or on intestacy, as the case may be, her entitlement arising on the death of the deceased spouse will be otherwise be unaffected.

In addition to benefits under the will or on intestacy, a surviving spouse will receive all insurance proceeds from policies on the deceased’s life, naming her as beneficiary as well as any death or survivorship benefits under pension plans or similar plans in which he or she is so named.

The right of survivorship associated with any property jointly owned by the spouses will be operative in the normal manner.

Electing to Make an Equalization Claim

Things change dramatically if the surviving spouse elects to take under the FLA.

Unless the deceased spouse has otherwise expressly indicated in his or her will that the benefits under the will are in addition to those available under s. 5(2) of the FLA, an election to take under the FLA will result in:

1. the forfeiture by the surviving spouse of all entitlement under the will; and

2. the interpretation of the will as if the surviving spouse had predeceased the testator.

Effect on Executorship

Where the deceased’s will appoints the surviving spouse as an executor, whether alone or together with another or others, and the surviving spouse elects in favour of an equalization, he/she cannot then act as executor (Reid Martin v. Reid (1999), 35 E.T.R. (2d) 267 (Ont. Div. Ct.)

The election constitutes a claim against the Estate, and therefore the electing spouse named as executor would be in a conflict in acting as executor since the personal interest sought would be at odds with the professional duty to act with an even hand and in the interests of the beneficiaries.

Effect on Intestacy

Where there is intestacy, either partial or total, the election in favour of an equalization claim will result in the surviving spouse’s forfeiture of his or her entitlement under Part II of the SLRA (FLA s. 6(9)).

On a partial intestacy, even if the will of the deceased spouse provides that the benefits under the will are to be in addition to the surviving spouse’s equalization claim, that statement would not appear to avoid the latter’s forfeiture of entitlement under Part II of the SLRA.

Effect on Dependants’ Relief Claims under the SLRA

Part V of the SLRA concerns “dependants relief/support applications.”

The surviving spouse who elects to make an equalization claim does not forfeit any entitlement under Part V of the SLRA.

However, any claim for relief is to be heard after the equalization claim is settled.

Section 58 of the SLRA requires, as a pre-condition of a dependants’ entitlement to support, that the deceased spouse, whether dying testate or intestate, has not made adequate or proper provision for the dependant.

Subsection 58(1) states: “Where a deceased, whether testate or intestate, has not made adequate provision for the proper support of his dependants or any of them, the court, on application, may order that such provision as it considers adequate be made out of the estate of the deceased for the proper support of the dependants or any of them.”

Section 62 sets out a number of considerations (too many to set out here) that the court is to consider in determining the amount and duration, if any, of support.

Current Considerations

A deceased spouse who has bequeathed a life interest in the whole of his estate to the surviving spouse. The surviving spouse has opted for an equalization payment, with the result that she receives nothing under the will.

In such a case, where the surviving spouse has, by his or her own hand, forfeited the life interest, can it fairly be said that the deceased did not make adequate or proper provision for the surviving spouse?

Of course, this issue may not be significant where the surviving spouse’s equalization claim is substantially in excess of her entitlement under the will. In such instance, once the equalization payment is determined, it may be that the value of such a claim is diminished depending on the facts of the case.

Any party bringing a Dependants Relief Claim, ought to be aware of the case of Cummings v. Cummings (2004), 235 D.L.R. (4 th) 474 (affirmed at the Court of Appeal)

1. Cummings concerned a case where the testator was survived by his wife, his ex-wife, a son and a daughter. Although both children were adults, both were legal dependants—the daughter due to enrolment in higher education, and the son due to a degenerative illness. To provide support for the children, the testator left in his Will a testamentary trust. The net estate included the matrimonial home (held jointly with his wife), and RRSPs of which his wife was a direct beneficiary—both were available by Part V (s. 72 of SLRA) as available for the purposes of supporting a dependants’ relief claim.

2. Cullity J. noted that the son’s illness left him in need of resources that greatly exceeded the value of the estate and could well justify ordering the entire estate to be applied for his benefit. However, the court found that “moral considerations continue to have a part to play in the analysis” and that the moral obligations were those owing to the wife of the deceased arising from contributions she had made to the relationship with the deceased.

3. The Court of Appeal upheld the judgment and that the language of sections 58 and 62 of Part V of the SLRA was broad enough to encompass moral claims against an estate and gives the court discretion to vary a will on consideration of all circumstances of the application.

Section 54(4) of the SLRA states:

1. The adequacy of provision of support … shall be determined as of the date of hearing of the application.

This would suggest that the forfeiture of any will entitlement that flows from the election in favour of equalization is to be ignored.

Prior to Cummings, SLRA claims were limited to “adequate” support.

However, the factors enunciated under the SLRA have always raised the issue of a moral obligations

The class of potential applicants is much broader and should be taken in to consideration since a support claim brought on the behalf of one defendant is deemed to be a support claim brought on behalf of all dependants, including spouses as defined in the SLRA, parents, children, siblings and even grandchildren where a grandparent demonstrates a settle intention to treat a grandchild as a child (SLRA section 57).

Taking into account the valuation difficulties raised at court we will want to be satisfied that a deceased has made “adequate provision for the proper support for his or her dependants”. The SLRA provides jurisdiction for a court to interfere with the administration of the estate in the same manner as does the FLA.

The provision of the SLRA regarding the deemed application by all dependants is section 60 (2).

Unlike in the FLA where the equalization claim is to be determined as of the date of separation, under the SLRA adequate support is to be determined as of the date of the hearing (SLRA section 58 (4)). The SLRA provides a list of factors to be considered in determining adequate support, which gives the court wide discretion (SLRA section 62), in addition to arguably even wider discretion in implementing support pursuant to the Cummings decision which implements the Tataryn Estate decision (Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807 (1994)). The court held in the Tataryn Estate decision that the deceased had a moral duty toward his or hers dependants and this to be a relevant consideration on a dependant relief application, and judges are not limited to conducting a “needs-based” economic analysis in determining what disposition to make. In doing so, it rejected the argument that the “judicious father and husband” should be replaced with a needs-based analysis.

The Tataryn Estate approach fits well in the Ontario legislation.

Effect on Insurance, Pension, or Similar Plan Benefits

The election to make an equalization claim may result in adverse consequences to the surviving spouse.

Unless the deceased spouse has otherwise designated in writing, such an election will require the surviving spouse to set off against an equalization claim any benefits to which he or she is entitled as a named beneficiary of:

The proceeds of any policy of insurance owned by the deceased spouse on his or her life, as well as the proceeds of any group policy under which the deceased spouse is a member; and

A lump sum payment provided under a pension or similar plan on the death of the deceased spouse.

If such benefits have already been received by the surviving spouse and are, in the aggregate, in excess of the equalization claim as finally determined, the estate of the deceased spouse may sue for the repayment of the excess.

Priority of Equalization Claim

The equalization claim has priority over:

Gifts made under the will, unless made for valuable consideration;

A person’s right to a share of the estate under Part II of the SLRA; and

Orders made against the estate under Part V of the SLRA, except orders in favour of a child of the deceased spouse.

Gifts under a will which have been made in accordance with a contract entered into by the deceased spouse in good faith and for valuable consideration will take priority over the equalization claim, except to the extent that the value of the gift, in the court’s opinion, exceeds consideration.

While the value of the gift would appear to be determined at the time of the deceased spouse’s death, it would seem more appropriate for a court to value the consideration as of the time the bargain was made.

Although the computation of the surviving spouse’s claim requires the deduction of debts and liabilities of the deceased spouse at the valuation date (one day before death), the equalization claim does not necessarily stand behind all of those debts and liabilities.

Restrictions on Distribution of Estate

When a spouse dies, no distributions can be made out of the estate during the six-month period immediately following the deceased spouse’s death without:

The surviving spouse’s written consent; or

Court authorization.

Where the estate trustee receives notice that an application has been made under Part I of the FLA, no distributions can be made out of the estate without:

The applicant’s written consent; or

Court authorization

Reasonable advances to dependants of the deceased spouse for their support are permitted, notwithstanding the prohibitions referred to.

Where the court extends the time for a spouse’s application based on s. 5(2), any property distributed by the estate trustee before the date of the order and without notice of the application is not brought into the calculation of the deceased spouse’s NFP.

The surviving spouse’s filed election to make an equalization claim does not constitute constructive notice to the estate trustee, who is under no obligation to inform himself or herself of the election.

Accordingly, a surviving spouse must block distributions by the estate trustee and bring an application under s. 7 on or before the expiry of the statutory six-month period or apply for a court order to suspend the administration of the estate.

An extension in the time for filing an FLA election will be appropriate where the surviving spouse requires more time to decide whether to make an equalization claim, or to obtain financial disclosure.

Liability of the Estate Trustee

An estate trustee who makes distributions out of the estate in contravention of the FLA provisions referred to will be liable, up to the amount distributed in breach, for the amount of any shortfall in the estate assets available to satisfy the equalization claim.

The estate trustee may be tempted to ignore the six-month moratorium on distributions out of the estate in two situations:

Where the surviving spouse has entered into a domestic contract with the deceased spouse, waiving her right to make an equalization claim; or

Where the will leaves the deceased spouse’s entire estate to the surviving spouse or the benefits to the surviving spouse under the will are stated to be in addition to his or her rights under section 5 of the FLA.

The estate trustee must be aware of the fact that:

A domestic contract may be set aside under one or more criteria set out in the FLA (sections 55(1) and 56(4)) and in light of case law; and

1. 55 (1) A domestic contract and an agreement to amend or rescind a domestic contract are unenforceable unless made in writing, signed by the parties and witnessed.

2. 56(4) A court may, on application, set aside a domestic contract or a provision in it,

(a) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;

(b) if a party did not understand the nature or consequences of the domestic contract; or

c) otherwise in accordance with the law of contract.

The Will may be found to be invalid (i.e., on the legal ground of lack of testamentary capacity; undue influence; failure to observe the formalities of execution; fraud; forgery or a combination of grounds and factors including suspicious circumstances and lack of knowledge and approval of the testamentary dispositions made).

Disclosure/Exchange of Financial Information

Pursuant to section 8 of the FLA, on an application under section 7, each party is required to serve on the other and file with the court a statement, verified by oath or statutory declaration, disclosing particulars of debts and liabilities as of

The date of marriage or separation date;

The valuation date; and

The date of the statement

Also, any exclusions or deductions claimed in calculating NFP must be particularized pursuant to the FLA

Disclosure on dispositions of property during the two years preceding the making of the statement or during marriage, whichever period is shorter, is required (FLA s. 8) and no claw back provisions exist.

Once the property has been disposed of prior to the valuation date, there is nothing in the FLA that permits tracing of the property into the hands of third parties.

This does not preclude the court’s finding that the apparent disposition is a mere sham and the third party is simply holding the property as a bare trustee for the disposing spouse.

However, where the transactions are legally effective to transfer beneficial ownership to the third party, the only remedy a court would appear to have is an order for unequal division of NFPs.

Duty owed by the Estate Trustee to the Surviving Spouse

There is some doubt as to the precise nature of the estate trustee’s duty to advise the surviving spouse. If the estate trustee owes a duty only to the estate and its beneficiaries, the estate trustee should make no mention to the surviving spouse of the potential rights she may have made under the FLA. If, on the other hand, a duty is owed to the surviving spouse, the question becomes: how far does that duty extend?

In the Superior Court of Justice decision in Webster v. Webster Estate, (2006), 25 E.T.R. (3d) 141 (Ont. S.C.J.), the surviving spouse missed the six-month period within which to file an election in favour of an equalization of NFPs. In an application to extend the time to elect, it was argued that the personal representatives of the deceased husband’s estate had a duty to advise the surviving spouse of her entitlement to make an equalization claim.

Robertson J. rejected this argument.

The facts are as follows: the surviving spouse and her son were two of the four estate trustees, and the court had made a representation order that the son act on his mother’s behalf for the purpose of bringing the application (she having become mentally incapable due to advancing Alzheimer’s). Even though the son became aware of the equalization within two months of the death, inexplicably he took no steps to pursue the claim for a further seven months.

Some argument exists to suggest that the estate trustee should not simply treat the surviving spouse as a creditor of the estate. Rather, the estate trustee should advise the surviving spouse that she may have rights under the FLA and suggest that independent counsel be retained to explain those rights.

The Time Deadline to Elect

A surviving spouse has six (6) months from the date of death of the deceased spouse to file an election. If the spouse does not elect within that six-month period, she is deemed to take under the will, if there is one, or pursuant to the intestacy provisions of the Succession Law Reform Act, if there isn’t one, unless the court, on application, orders otherwise. As such, when faced with a client who is unsure which choice to make, it is necessary for practitioners and clerks to note the date of death of the deceased, adding six months, and to set up a tickler to make sure the deadline does not pass in the period that the client contemplates their decision.

Where a surviving spouse is not in a position to make an election within the 6-month period—and this does happen, i.e., because she may lack the information necessary to make an informed decision—it is possible in such cases to secure an order extending the time for making the election. Section 2(8) of the FLA provides that the court may, on motion, extend a time prescribed by the Act if it is satisfied that:

a) there are apparent grounds for relief [relief = an equalization claim];

b) relief is unavailable because of delay that has been incurred in good faith; and

c) no person will suffer substantial prejudice by reason of the delay.

With respect to subsection 2(8)(b) and the “good faith” requirement, the courts have considered this factor.

In Hart v. Hart (1990), 27 R.F.L. (3d) 419, Mendes da Costa U.F.C.J. dealt with a wife who failed to assert her property rights claim within the limitation period because she failed to inform herself of her rights. Mendes da Costa J., wrote: “I believe, to establish "good faith", it must be shown that the moving party acted honestly and with no ulterior motive. It does not seem to me that the legislature, anticipating the general newsworthy nature of the family property provisions of the Act, intended that a mere failure to make enquiries should necessarily negate "good faith", provided that the absence of enquiry does not constitute wilful blindness or does not otherwise, in all the circumstances, fall below community expectations. As I have stated, my assessment of the evidence is that the wife was ignorant of her rights under the Act, and I believe that her state of mind was one of blamelessignorance. I am satisfied that the delay in issue was delay incurred in good faith within the meaning of s. 2(8)(b).”

In Busch v. Amos, (1994), 9 R.F.L. (4th) 36, Salhany J. agreed that the term “good faith” means acting honestly and with no ulterior motive and that to act in ignorance of one’s rights may, in some circumstances, amount to “good faith.” Salhany J. stated, however, that it is insufficient for a party to assert ignorance of his rights; he must also show that he had no reason to make inquiries about his rights.

In Scherer v. Scherer (2002), 26 R.F.L. (5th) 183, the Court of Appeal approved Hart v. Hartand Busch v. Amos as to the meaning of “good faith”. In essence, the Court of Appeal concurred with the finding of the motions judge that the applicant had been wilfully blind and did not disturb the finding that good faith had therefore not been shown in the circumstances.

Subsection 2(8)(c) would make it incumbent upon the estate to demonstrate that it suffered prejudice by reason of the delay. And, Courts have held that, if the mere passage of the limitation period amounts to “substantial prejudice,” a person who had missed a limitation period would never be in a position to satisfy all three conditions in s. 2(8), and the provision would be meaningless. [Curtner v McNally, 2002 CarswellOnt 4125, at par. 12, per Low J.]

Note that it is prudent to seek such an order prior to the expiry of the limitation period rather than after.

In addition, should an extension of time be sought with respect to an election, a motion to extend the time period for a potential Dependant Support claim should also be contemplated under section 61(2) of the SLRA, though the limitation period under the SLRA is six (6) months from the date of the grant of probate unless otherwise extended at the discretion of the Court pursuant to section 61(2).

A Caution re: Elections & Extensions of Time

A caution should be given to the surviving spouse who makes her election on the basis of a will in respect of which no certificate of appointment of estate trustee with a will has been issued. If, ultimately, the will being propounded is found to be invalid, the surviving spouse may well find that the election should have been made or not depending on the facts.

The prudent course of action would be to defer filing of the election until after the certificate of appointment of estate trustee with a will has been issued. Where there is difficulty locating a will or there is litigation over the validity of a will, it would be appropriate to apply for an extension of time for filing the election beyond the six month period following the deceased spouse’s death but within the six (6) month limitation period. In cases where a certificate of appointment of estate trustee with a will is issued and a later will surfaces after the election is filed or a will is found after a certificate of appointment of estate trustee without a will is issued, there will be problems in determining the rights of the surviving spouse who has already filed an election and who wishes to change her mind on the basis of the subsequently discovered will.

The Prescribed Form and Filing

Pursuant to subsection 6(10) of the FLA, the election must be in the form prescribed by the regulations made under the FLA 1. A template for the form can be found online, on e-laws or Canlii, under: Family Law Act, R.R.O. 1990, Reg. 368, Election of Surviving Spouse.

If the application is made in Toronto, Part XV of the Practice Direction Concerning the Estates List of the Superior Court of Justice in Toronto, which governs Family Law Act Elections, requires that “an application for the extension of time to make an election under s. 6(1) of the Family Law Act regarding the interest of a spouse under section 5(2) of that Act should be brought on the Estates List.”

This Estates Office is to be distinguished from that of the Superior Court of Justice for the geographical area in which the deceased spouse was domiciled at the date of death. If the application is being brought outside of Toronto, then it may be made on the civil list of court of justice of that jurisdiction. Often it is brought on the Family List but as it is a claim against the Estate, this may need to be regularized on notice to the beneficiaries. The application must be made on notice to the beneficiaries of the estate.

Revocation of an Election

Section 6 of the FLA empowers the surviving spouse to elect in favour of equalization of NFP. However, the statute does not expressly provide a right to revoke an election once made.

The case law is conflicted with respect to this statutory omission, Iasenza v. Iasenza Estate (2007), 34 E.T.R. (3d) 123 is a case on point. Mr. Iasenza died in November 2003 of brain cancer. He died with a Will that divided his estate equally among his wife, and each of his two adult sons, Michael and Paul. Michael was Mr. Iasenza’a executor. Mr. And Mrs. Iasenza’s marriage was a happy one and Mrs. Iasenza, although not the mother of the two sons, got along with them. Mrs. Iasenza was an immigrant to Canada. The Court found that her English was poor, and that she had little knowledge of financial matters.

Mr. Iasenza owned approximately $600,000 in assets shortly before his death. This included $202,000 in a money market account. When he died, it was unclear whether the Money Market Account would form part of his estate. In July 2003, Mr. Iasenza’s investment advisor recommended making Michael a joint owner of the Money Market Account, and giving Michael the right of survivorship. On the death of Mr. Iasenza, Michael could distribute the funds in the Money Market Account in accordance with the Will, but avoid probate fees. Mr. Iasenza did not follow the investment advisor’s advice. Instead, in August 2003, after he could no longer manage his affairs, Michael (who also was Mr. Iasenza’s Attorney for Property) made himself a joint owner of the Money Market Account. When Mr. Iasenza died, Mrs. Iasenza’s lawyer “…was properly concerned to obtain a commitment that [the Money Market Account] would be divided in the manner contemplated by the Will so that … Mrs. Iasenza would receive her onethird interest. Inexplicably, Michael did not say what he was going to do with the Money Market Account, despite Mrs. Iasenza’s repeated requests for information.

On the eve of the 6-month deadline to elect an equalization of the NFP, Mrs. Iasenza’s lawyer still did not have the ‘commitment’ about the Money Market Account. He was worried that Mrs. Iasenza would not get her fair share of the Estate if she took under the Will. The lawyer did not know that he could obtain an extension of the 6-month deadline, and so filed the Election, gambling that Mrs. Iasenza would get more from an equalization of NFP than she would under the Will.

The gamble failed. It turned out that (i) Mrs. Iasenza would get nothing from an equalization of NFP and (ii) Michael eventually acknowledged that the Money Market Account would be distributed in accordance with the Will. The lawyer soon realized this error. Mrs. Iasenza hired a new lawyer, and commenced an application for support and to set aside the Election. The Court held that that although a party does not have a general right to revoke his or her election, the courts retain a residual discretion, to be exercised in “restrictive circumstances,” to set aside an election made under section 6. Mr. Justice Hackland listed five criteria the Court should consider when deciding whether to exercise its jurisdiction in favour of setting aside an Election:

. Was the election filed as a result of a material mistake of fact or law made in good faith? [In this case it was – Mrs. Iasenza’s first lawyer erred in thinking that the 6-month deadline could not be extended]

2. Was there any responsibility or culpability on the part of the effected parties in relation to the election? [In this case, yes – the court held that Michael must bear some responsibility for that problem … Mrs. Iasenza’s lawyer asked for and was consistently refused any commitment by the estate to include the Money Market Account in the estate for distribution purposes]

3. Was the notice of intent to seek revocation of the election given in a timely way? [Yes – though the court didn’t give any particulars]

4. Had the estate been distributed or would interested parties otherwise be adversely affected by a revocation of the election? [No – there had been no distribution of the Estate’s assets]

5. Does the election result in an injustice to the surviving spouse in all of the circumstances? [Yes – if the election stood, then Mrs. Iasenza got nothing, even though it was clear that Mr. Iasenza wanted to support her after his death.

However, until the issue is clarified by an appellate court, prudence would dictate that if one is acting for a surviving spouse, the election, once filed, should be treated as irrevocable.

Court Orders

The court’s powers to enforce the equalization order are extensive. Pursuant to section 9, the court may order:

Money to be paid;

Security to be given;

Payment to be deferred for, or made in instalments over, a period of up to 10 years; 20

Transfer of property in specie; or

Partition and sale of property.

The court may restrain a spouse from depleting her property and may make orders for the possession, delivering up or safekeeping and preservation of the property.

This overview is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This information is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive. Whaley Estate Litigation.

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