Provincial family legislation allows a surviving spouse to elect to either receive the gift(s) left them under their deceased spouse’s will (or according to succession legislation, if there was no will) or receive an equalization of marital property under said family legislation. Usually, the surviving spouse determines his or her entitlement under both options and makes their decision on the basis of which option provides the greater benefit. The election to take the entitlement under the family legislation must be made within six months of death or the spouse is deemed to have elected to take their entitlement under the will (or, again, under succession law if there is no will). Thus, in order to make a prudent decision in this regard, the surviving spouse must perform due diligence and calculations in a thorough and timely fashion.
In Lasenza v. Lasenza Estate (2007), 34 E.T.R. (3d) 123 (Ont. S.C.J), Mrs. Lasenza applied to the court to set aside her election in favour of taking her entitlement under family law legislation rather than under her deceased husband’s will. Mr. and Mrs. Lasenza married in May, 2000. Mr. Lasenza, who had two sons from a previous marriage, was diagnosed with brain cancer in November, 2002 and died about a year later. Although they seldom spoke of finances, Mr. Lasenza had told Mrs. Lasenza that his investments totalled $500,000. He had also assured her that he made adequate provision for her in his will and that she could remain in the family home. Furthermore, Mr. Lasenza had taken Mrs. Lasenza to his lawyer to transfer title to the home into her name or into joint title with him. However, the lawyer refused to take instructions and act on them as by that time, Mr. Lasenza’s ability to communicate was seriously impaired.
After Mr. Lasenza died, Mrs. Lasenza’s lawyer, Mr. Ross, obtained a copy of the will which instructed that the estate was to be divided into three (3) equal shares between Mrs. Lasenza, and Mr. Lasenza’s two sons. However, there was uncertainty regarding two sizeable assets, namely a RBC securities account worth $202,000 and a $67,000 Scotiabank RRSP, both of which had been transferred to one of Mr. Lasenza’s sons a few weeks before he died by exercise of a power of attorney. Despite his attempts, Mr. Ross could not get assurances from the Estate Trustee, who was one of Mr. Lasenza’s sons, that they would be included in the estate. As the six-month deadline for a family law election was fast approaching, Mrs. Lasenza followed Mr. Ross’s advice to make the election, although she didn’t have full understanding of the implications. It was later determined that all of the assets would pass under the will totalling $612,000. However, Mrs. Lasenza’s election made it such that instead of receiving a third of the estate, she actually owed the estate money.
In deciding in Mrs. Lasenza’s favour that the election should be set aside, the court concluded the following:
- It would be a clear injustice to allow the election to stand.
- There was a mistake of fact in that Mrs. Lasenza lacked information about what assets would form part of the estate at the time she made the election.
- The estate trustee was responsible to provide assurances as to the amount of assets under the will. Furthermore, timely and complete disclosure of the circumstances surrounding the estate is required if the 6 month limitation period is going to be enforced.
- Mrs. Lasenza did not inappropriately delay in notifying the parties of her desire to revoke the election.
- The estate was not yet distributed.
- There was no prejudice to the effected parties.
This case obviously demonstrates that a decision to make a family law election for estate administration purposes hinges on the extent of the elector’s knowledge about the assets of the estate. Furthermore, if the assets are not known or fully disclosed, one cannot be assured that such an election or failure to make the election will be honoured and upheld by a court. It also highlights the importance of having a current estate inventory and an up-to-date will, in the absence of which there can be confusion and unnecessary delay in the administration of an estate.
If you would like assistance in determining whether you should elect to take your inheritance entitlement under family law legislation or would like to prepare an estate inventory and a will, please contact Andrea Kelly.
Andrea Kelly, Lawyer, has extensive experience in wills, trusts, powers of attorney and estate administration matters. She provides clients with a high standard of timely professionalism and expertise, incorporating a very thorough fact finding process. This is quite often enlightening for her clients and facilitates individually tailored services. If you would like to know more, feel free to use the easy contact form or read Andrea’s bio.