Back in February, I wrote about changes to the Estates Act and the Rules of Civil Procedure which established a simplified probate process for “small estates”, being estates that do not exceed $150,000 in value. The simplified rules are intended to increase access to justice for Ontarians, by making it easier, faster and more affordable for individuals to administer small estates. Whether the changes will have their desired outcome remains to be seen.
Since I’ve last written, there have been further significant changes to Ontario’s estate laws as part of the government’s overall effort to modernize Ontario’s laws to better reflect the reality of life in 2021.
Here are some of the more important changes:
1. Revocation of a Will Upon Separation
When a marriage is terminated by divorce or declared a nullity, the provisions in a person’s Will affecting their former spouse (for example, the appointment of the testator’s spouse as the executor and any gifts made to the testator’s spouse) are revoked and the testator’s Will is construed as if the former spouse had predeceased the testator. In January, 2022, this rule of interpretation will be extended to cases where the testator and their spouse are still legally married at the time of the testator’s death, but are "separated". Similarly, separated spouses will no longer have any entitlement under Ontario’s intestacy laws. The circumstances in which spouses will be considered to be “separated” include where the spouses lived separate and apart for at least three years as a result of the breakdown of their marriage, and at the time of the spouse’s death, they continued to be living separate and apart as a result of the marriage breakdown (no reconciliation). I imagine the Court will look to case law in family law proceedings to determine whether a couple was living “separate and apart” at the time of the deceased’s death.
2. No Automatic Revocation of Wills By Marriage
Under the (soon to be) old rules, when a person married, their Will was automatically revoked, except in specific circumstances. The reasoning behind this longstanding rule was that individuals do not always get around to changing their Will immediately after getting married, because they either forget to do so, or they are under the false assumption that a legally married surviving spouse inherits everything on death, regardless of the terms of the deceased spouse’s Will. While the rule was intended to protect the surviving spouse (as a legally married spouse has certain rights on an intestacy), it sometimes led to unintended consequences, such as negating a carefully devised estate plan, especially in the case of blended families, and allowing for predatory marriages.
3. Increase of the Spouse’s Preferential Share on Intestacy
Under Ontario’s intestacy rules, a deceased’s legally married spouse (common law spouses have no entitlement on an intestacy) is entitled to the “preferential share” as well as a percentage of the remainder of the estate. The preferential share, which was previously set by regulation at $200,000, has been increased to $350,000 for the estates of individuals who die on or after March 1, 2021.
4. Increase of the Minor’s Property Threshold
Under the Children’s Law Reform Act, where a person, such as an estate trustee, is obligated to pay money or deliver personal property to a minor, they can discharge that duty by paying the funds to the parent with whom the minor resides or a person who has custody of the minor, IF the total amount paid or delivered doesn’t exceed $10,000. If the amount is greater, the estate trustee had to pay the funds into Court to be managed by the Accountant for the Superior Court of Justice until the minor beneficiary attains the age of majority. The threshold has been increased to $35,000.
5. Substantial Compliance Regime
The Superior Court of Justice will soon have the authority to make an order validating a document or writing that was not properly executed but which sets out the testamentary intentions of the testator. This is a significant departure from the old “strict compliance” regime which did not give the Courts any discretion to validate a Will which did not meet the formal requirements imposed by law. Several other provinces, such as British Columbia, have already enacted similar laws.
Aside from the above noted changes to estates laws, over the last few years there have been significant changes to various tax laws related to estates, trusts and taxes on death. In the ever evolving legal landscape, it is important to stay abreast of these changes to ensure that your overall estate plan will have the desired outcome.
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