Estates & Wills & Trusts

A cautionary tale about separation and dying without a will

By Matthias Duensing for

After 10 years of marriage and two small children, Theresa falls in love with a co-worker, and asks her husband, Max, to leave their family home in Woodstock, which they owned together as joint tenants.

Max, in complete shock, moves into his mother’s basement. But within a few months, Max finds love again with Veronica, a beautiful and single architect. He moves into Veronica’s home in Markham, and Veronica also lovingly welcomes Max’s children, Alia and Ethan, into her home.

Theresa’s paramour leaves her after just six months. In despair and loneliness, Theresa leaves her job as a phlebotomist. She refuses to grant Max a divorce unless he gives up custody of the children, agrees to very limited access and visitation, and pays her generous monthly alimony and child support.

Max, emboldened by Veronica and his love for his children, chooses to fight for joint custody and equal access.

Veronica decides to sell her home in Markham and purchase a new one in Woodstock so Max can be closer to the children. To give him a better chance at joint custody and equal visitation, Veronica agrees to name Max as a co-owner — even though he did not contribute any capital to the purchase of the home — and purchases the home with Max as tenants-in-common.

Four years pass, with no end in sight to the high-conflict custody and divorce proceeding.

Then, tragedy strikes and Max dies of a heart attack.

And he has no will. What happens next?

When a person separates, they can legally have two spouses. They can still be legally married to an individual (Theresa), and have a common-law spouse (Veronica) — provided the rules defining what a common-law spouse is in their province have been satisfied.

In Ontario, an individual becomes your common-law spouse if you’ve been living in a conjugal relationship for three years or longer (for the purposes of family and estates law), or a minimum of one year (for taxation and pension purposes).

Without a will, Max died “intestate,” meaning without instructions on how to divide his estate. The rules of the Succession Law Reform Act are triggered to determine how Max’s estate should be divided amongst his spouse(s) and children. As a married spouse, Theresa could also make an election under the Family Law Act for an equalization payment.

The court is required to appoint an estate trustee to act as Max’s representative in dividing and distributing his estate. Generally speaking, Max’s closest living relative has the right to be appointed — and that would be his married spouse Theresa.

Unfortunately for Veronica, the Succession Law Reform Act only considers the legally married spouse, and not the common-law spouse, when determining the division of assets in an intestacy. A common-law spouse is not entitled to automatically receive any inheritance when their spouse dies without a will.

Under the Succession Law Reform Act, Theresa would receive a “preferential share” of up to $200,000 worth of Max’s assets, and she would receive one-third of the remainder, with the children each receiving an equal share of what is left. This would include a right to Max’s share of Veronica’s home. Veronica’s home is now also owned by Theresa and the children.

Further, if Max had not changed any of his beneficiary designations (such as on his life insurance policy, pensions, survivor benefits, CPP, RRSPs), then the named beneficiary (likely his married spouse, Theresa) would be entitled to these benefits too.

Any assets that Max jointly owned with Theresa — such as joint bank accounts or the family home in Woodstock, that were not formally divided upon separation — would also automatically be owned by Theresa upon Max’s death.

Veronica receives nothing.

If Veronica was dependent on Max for financial support, she could apply to the court and make a claim for dependant support payments from his estate. She could also make an unjust enrichment claim — meaning that Max/Theresa are receiving a financial gain at Veronica’s expense — by making a constructive trust award argument, which, if successful, would grant Veronica back half her home, since Max did not contribute to it.

However, these court proceedings would be costly, stressful, and time-consuming for Veronica.

This hypothetical case illustrates the stark truth: If you separate, immediately change your beneficiary designations, split any jointly held assets (such as bank accounts), and change any jointly held properties into tenancies-in-common. To protect your loved ones, write a will, or immediately change your existing will so that your wishes and intentions can be followed in the event of your untimely death.

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