The Family Law Act - Hull on Estates #178
Listen to: The Family Law Act - Hull on Estates #178
This week on Hull on Estates Paul Trudelle and Sarah Fitzpatrick discuss the Family Law Act and the elections of equalizations under the Act.
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The Family Law Act - Hull on Estates- Episode #178
Sarah Fitzpatrick: Hello and welcome to Hull on Estates. You’re listening to episode 178 on Tuesday, September 1, 2009.
Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada. Hosted by the lawyers of
Paul Trudelle: Hi and welcome to another episode of Hull on Estates. I’m Paul Trudelle.
Sarah Fitzpatrick: Hi and I’m Sarah Fitzpatrick.
Paul Trudelle: How are you today, Sarah?
Sarah Fitzpatrick: I’m fine, thanks. How are you today?
Paul Trudelle: Good, back from holiday and we’re all ready to get back into work and podcasting.
Sarah Fitzpatrick: That’s right.
Paul Trudelle: Yes. Today we thought we’d talk a bit about the Family Law Act, the elections and equalizations under the Family Law Act, the time limits for doing that and as a result of those time limits, the need to extend those time limits and how you would go about extending those time limits.
Sarah Fitzpatrick: That’s right. So just by way of background, in Ontario it’s governed by the Family Law Act. And Section 6 of that Act allows for a surviving spouse to either take under a Will or perhaps under intestacy if there was no Will, or that they can elect to make an equalization of net family property under the Family Law Act clause. And typically what’s going to happen is the surviving spouse is going to look at both scenarios essentially and determine, I guess, what’s better for them.
Paul Trudelle: That’s right. And I think it’s an accounting exercise that the surviving spouse would have to go through to see what they get under the terms of the Will and what that means to them and what they might get if they were to make the equalization election.
Sarah Fitzpatrick: Right. I guess that investigation must take some time.
Paul Trudelle: It does normally and what you need is to (a) find out what the assets of the estate are, what the Will says and how the assets are distributed and (b) to compare that, you need to know what the net family property calculations are for both the deceased spouse and the surviving spouse, because under the Act, the surviving spouse would be entitled to the difference between the two net family property calculations.
Sarah Fitzpatrick: Right. And as I understand it, the deadline for filing an equalization claim is 6 months from the date of death, is that correct?
Paul Trudelle: That’s right. It’s the date of death that triggers the limitation period under the Family Law Act. You need to make your election within that time and commence your application. If you don’t, the Act has a deeming provision that deems the surviving spouse to take under the Will or under the intestacy provisions of a Succession Law Reform Act. So because of that, one needs to act quickly and make the determination as to whether there is going to be an election or not. And if you’re not able to make that determination in advance, then you would want to get an Order from the Court extending the times within which you make the election and commence the application.
Sarah Fitzpatrick: And is that a fairly typical scenario having to extend the deadline, and what would the Court require when you are asking for an extension for that deadline? Is that something that’s commonly requested?
Paul Trudelle: It is commonly requested and we see a lot of that. Usually it’s right at the end of the 5 month period, just before the 6 months are up. The Court can hear that application and there’s a specific provision in the Family Law Act for extending the time. The Court, under the Family Law Act, can extend any time on grounds. There has to be some grounds for the relief being sought. If there is delay in proceeding with the application for delay, then there has to have been some reason for the delay and it can’t have been made in bad faith. And thirdly, the Court will consider whether any person is prejudiced by reason of the delay or the extension of the time. But it’s a common application in Toronto. It can be made to the Estates Court. It’s an application that would be based on an Affidavit from the surviving spouse or someone else who may be able to put that information before the Court.
When making that application, we normally ask for an Order that would extend the time within which to make the election.
Sarah Fitzpatrick: Right.
Paul Trudelle: Also extend the deemed election provision, the 6 month deemed election that we’ve referred to and also a time for making the election.
Sarah Fitzpatrick: Right.
Paul Trudelle: So that’s what…that’s the relief that we seek under the Family Law Act. While there, it’s often common to also ask for an extension of the time within which to make a claim for dependant’s support under Part 5 of the Succession Law Reform Act.
Sarah Fitzpatrick: Okay, so that would be included in the application typically at the same time.
Paul Trudelle: That’s right. The limitation under the Succession Law Reform Act for making a dependant’s support claim is different than the Family Law Act limitation. It’s 6 months from the date of the issuance of the Certificate of Appointment; however, that’s something that often needs to be extended as well because at that point, one still doesn’t always have the necessary information in order to determine whether you’re going to be making that claim for dependant’s support.
Sarah Fitzpatrick: Right. And I guess there may be some other considerations as well in terms of preserving the surviving spouse’s interests in the event, perhaps, a surviving spouse is also elderly. And in the potential event of their death before the expiration of that 6 month period, there may be some - just putting on our estate planning hats here - there may be some estate planning considerations as well. Perhaps, for example, having the surviving spouse sign the FLA election while you’re in this decision-making process about whether or not to file it. Perhaps they could sign it together with a direction stating that obviously you have the right to file that if you’ve actually crunched your numbers and decided that it in fact is in the best interests of their surviving spouse. And also perhaps to ensure review their Will, the surviving spouse’s Will, and make sure that it does empower the estate trustee to file that election on behalf of the surviving spouse, if they have actually signed the direction.
Paul Trudelle: Right, no I think that’s a good practice to be and in order to ensure that if it becomes advisable to make that election, there is still the right to make it. Because that right is personal to the surviving spouse and therefore those steps that you’ve referred to are a good practice in order to ensure that the surviving spouse is the one making the election and it just gets filed at a later date if advisable.
Sarah Fitzpatrick: Exactly.
Paul Trudelle: So those are good practices to get into with respect to making sure that right to elect is maintained.
Sarah Fitzpatrick: That’s right. Perhaps we could touch just briefly on revoking an election in the event that perhaps somebody has hastily made a decision to elect and perhaps that was an error. They didn’t realize that certain assets might have comprised part of the estate and perhaps erroneously made an election. Are there some opportunities for revoking that?
Paul Trudelle: There are and that comes up from time to time. As you say, there could be assets that are discovered that change the calculation of net family property or on the other hand, change the distribution under a Will or on an intestacy. Those things often come up after its too late and the election has been filed. And there is the relatively recent case, I’m not sure when it was now…
Sarah Fitzpatrick: That’s right. I think 2007, Iasensa.
Paul Trudelle: We’ll say that’s right.
Sarah Fitzpatrick: Yup.
Paul Trudelle: Where the Court considered whether a party could revoke an election once it had been made.
Sarah Fitzpatrick: And I think the Court determined there that it was within the Court’s discretion; however that discretion should be utilized sparingly.
Paul Trudelle: Right.
Sarah Fitzpatrick: And the Court did outline several situations there when it would exercise its discretion. Would you like me to cover off those as well?
Paul Trudelle: That would be great.
Sarah Fitzpatrick: Okay. In considering whether or not to exercise its discretion, the Court in Iasensa held that the Court considers (1) was the election filed as a result of a material mistake of fact or law made in good faith; (2) was there any responsibility or culpability on the part of the affected parties in relation to the election; (3) was the notice of intent to seek revocation of the election given in a timely way, and in particular, how long after the 6 month filing period was notice given; (4) has the estate been distributed or would interested parties otherwise be adversely affected; and (5) does the election result in an injustice to the surviving spouse in all of the circumstances. So in that case in Iasensa the Court did determine to use its discretion and actually revoked the election on the facts of that particular case.
Paul Trudelle: Well it’s good to know that there is case law to support a revocation if you need to make a revocation at some point.
Sarah Fitzpatrick: Right, but obviously…
Paul Trudelle: And you’re not going to be stuck but…
Sarah Fitzpatrick: That’s a last resort.
Paul Trudelle: Yes, avoid that situation if you can, hopefully by getting the extension if you need the extension and considering whether to make that election seriously.
Sarah Fitzpatrick: Great.
Paul Trudelle: Okay well that, I think, covered briefly the rights that you have under the Family Law Act to make an election for equalization, when you might want to exercise those, the time limits for making the elections and how you would extend the time and a few other points as well. So thank you very much Sarah.
Sarah Fitzpatrick: Great, thanks. Thanks for listening and thanks for joining me today, Paul.
Paul Trudelle: Thank you. We look forward to hearing from you, our listeners. If you can send us an e-mail, send it to hull.lawyers@gmail.com and be sure to visit our blog at estatelaw.hullandhull.com where you’ll find even more information and discussion on today’s practice of estate law.
Sarah Fitzpatrick: We hope that you enjoyed the show. I’m Sarah Fitzpatrick.
Paul Trudelle: I’m Paul Trudelle. Thank you.
Sarah Fitzpatrick: Thank you.
This has been Hull on Estates with the lawyers of Hull & Hull. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.
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