Ontario Executors: Beware New Claims to Estate Property

Once upon a time, Jack and Nicole lived together in Jack’s house. They both worked to pay off Jack’s mortgage. Then they decided to have children.

Nicole gave up her job to raise the twins. Jack made a bundle in a computer business, which he sold for $11 million. Jack later died without a will. He was not married to Nicole.

Does Nicole have any claim to Jack’s property?

Nicole is a common law spouse. In Ontario, Nicole has no automatic rights to share in Jack’s estate or property. She needs a good estate lawyer. Nicole must apply in court for relief. This means she will sue Jack’s estate.

If you are appointed estate trustee without a will for Jack’s estate, beware. You will need to hire a lawyer to defend the estate against Nicole.

Common Law Spouses’ Claim for Support

Jack should have provided for Nicole. He could have given her insurance or pension benefits. He could have made her a part owner of his home. Jack had no will or estate plan for Nicole. Possibly because they were not married, Jack thought he had no obligations to Nicole.

Well, you will see how dead wrong Jack was.

If Nicole is a dependent common law spouse, she has rights. She will have to apply in court for adequate support. A judge under Ontario’s Succession Law Reform Act can do what Jack should have done.

A judge will consider Jack’s legal and moral obligations to Nicole [and the twins, but let’s focus on Nicole for now].

A judge has a variety of possible options to award Nicole support.

A judge could, for example:

  • transfer the home to Nicole;
  • order Jack’s estate pay all house expenses while Nicole lives there; or
  • allow Nicole to stay in the house for the rest of her life.

In a recent case, a court awarded a common law spouse $100,000 a year. This was for support for the rest of the house husband’s life.

Apart from support, can Nicole make a claim to Jack’s property?

Common Law Spouses’ Claims against Estate Property

Nicole has a right to claim a share in Jack’s property. Her legal claim in based on the law of unjust enrichment. A court can find Jack was unjustly enriched by Nicole’s services.

If that happens, a court can order Jack’s estate to make restitution. This remedy is called a constructive trust. It can put all of Jack’s estate in jeopardy.

What if a constructive trust is raised over the estate? You, as estate trustee, must not distribute estate property. You may need to participate in the legal proceeding. You will need to be neutral. You cannot take sides.

As an executor, you need legal advice about the current law.

There are new remedies given to the common law spouse. Since the Supreme Court of Canada 2011 decision in Kerr v. Baranow, a common law couple’s accumulated wealth can be shared.

If a court finds a “joint family venture” (JFV) exists, it does not matter that:

  • Jack has all the money in his name;
  • Jack is the only registered owner of the property; or
  • Nicole did not work in or contribute directly to the business.

Nicole can ask for a share of Jack’s estate based on her contribution to a JFV.

About Ed

Edward Olkovich (BA, LLB, TEP, and C.S.) is a nationally recognized author and a Toronto estate lawyer and Certified Specialist in Estates and Trusts. Edward has practiced law since 1978 and is the author of seven estate books including Executor Kung Fu: Master Any Estate in Three Easy Steps. Visit his law firm’s website, mrwills.com, for more free valuable information.