Significant Increase to Ontario’s Preferential Share for Surviving Spouses

Ontario’s estates law landscape has recently undergone a pivotal transformation, bringing about a substantial increase in the value of what is known as a surviving spouse’s “preferential share” of their deceased partner’s estate. This change holds profound implications for estate planning, particularly for individuals who pass away without a valid will.

This development is especially critical for married individuals who are separated but have not yet formally finalized their divorce. In such circumstances, the surviving estranged spouse could be entitled to a considerably larger portion of the deceased’s estate if death occurs after separation but before the divorce proceedings are complete. Understanding these updated provisions is essential for anyone navigating personal relationships and estate matters in Ontario.

Understanding the Background: The Succession Law Reform Act (SLRA)

The recent adjustments to the preferential share stem from amendments to the existing Succession Law Reform Act (SLRA). This foundational Ontario legislation dictates the distribution of an individual’s estate in the unfortunate event of dying intestate – meaning without a valid will. The SLRA outlines a default scheme for asset distribution, ensuring that even in the absence of explicit instructions, an estate is not left in legal limbo.

A core component of the SLRA for intestate estates is the “preferential share” for a surviving spouse. Until very recently, this figure was set at $200,000, a value that had remained unchanged since the last amendment in 1995. This long-standing amount reflected the legislature’s intent to provide a basic level of financial security for a surviving spouse before the remaining assets of the estate are distributed among other eligible beneficiaries, such as children.

When an individual dies without a will, the value of this preferential share becomes a cornerstone of how the estate is divided among the surviving spouse and children. The provisions of the SLRA establish clear, albeit rigid, rules for this distribution:

No Children: If the deceased and their surviving spouse had no children together, the surviving spouse receives the entirety of the estate, up to the value of the preferential share. If the estate’s total value is less than the preferential share, the spouse inherits the entire estate.
One Child: In cases where the deceased and their spouse had one child, the surviving spouse is entitled to the preferential share. The remaining balance of the estate, known as the “residue,” is then divided equally, with one-half going to the surviving spouse and the other half going to the surviving child.
Two or More Children: For estates where the deceased and their spouse had two or more children, the surviving spouse still receives the preferential share. However, the distribution of the residue differs: the spouse receives one-third of the remainder of the estate, while the other two-thirds are divided equally among all surviving children.

It is evident from these rules that the higher the value of the preferential share, the larger the portion of the deceased’s estate the surviving spouse is legally entitled to claim. This fundamental principle underscores the significant impact of the recent amendment.

The Recent Legal Update: A Substantial Increase

Effective for deaths occurring on or after March 1, 2021, the preferential share has seen a substantial increase, rising from the former $200,000 to an updated figure of $350,000. This 75% increase represents a considerable shift in Ontario’s intestate succession laws and reflects a long-overdue adjustment to account for inflation and the escalating cost of living since the last update in 1995.

What this means in practical terms is that if you are married (or legally separated but not divorced) and die without a will on or after March 1, 2021, your surviving spouse is now entitled to receive up to $350,000 from your estate. This amount is paid out before any remaining assets are divided according to the rules outlined above, which determine additional shares for the spouse and children.

This hefty jump can undoubtedly come as an unwelcome surprise, particularly for individuals who have recently separated from their spouse and have not yet formalized their divorce. The thought of a soon-to-be-ex-spouse inheriting such a significant portion of one’s estate, especially when the intention might be otherwise, highlights a critical area of concern for many Ontarians.

Illustrative Impact of the New Preferential Share

To further illustrate the practical effect of this change, consider these hypothetical scenarios:

Small Estate (e.g., $300,000 total): Under the old rule, a surviving spouse would receive $200,000 and the remaining $100,000 would be divided according to the number of children. Now, the surviving spouse would inherit the entire $300,000, as it falls below the new $350,000 preferential share threshold.
Medium Estate (e.g., $500,000 with one child): Previously, the spouse would get $200,000, leaving $300,000 to be split, with the spouse receiving an additional $150,000 and the child $150,000 (total spouse: $350,000; child: $150,000). Now, the spouse takes $350,000, leaving $150,000 to be split. The spouse gets an additional $75,000 and the child $75,000 (total spouse: $425,000; child: $75,000). The spouse’s share has increased significantly.
Larger Estate (e.g., $1,000,000 with two children): Under the old law, the spouse received $200,000. The remaining $800,000 was divided, with the spouse receiving one-third ($266,666.67) and the children sharing two-thirds ($533,333.33). The spouse’s total was approximately $466,666.67. With the new preferential share, the spouse first receives $350,000. The remaining $650,000 is then divided, with the spouse getting one-third ($216,666.67) and the children sharing two-thirds ($433,333.33). The spouse’s new total is approximately $566,666.67.

These examples clearly demonstrate that the increase in the preferential share funnels a greater proportion of the estate towards the surviving spouse, often at the expense of other potential beneficiaries, especially children, if there is no will.

Important Considerations and Who is Affected

It is crucial to understand the specific parameters and individuals affected by this significant change to the SLRA:

Effective Date of the Change

This amendment to the SLRA exclusively applies to intestate deaths that occur on or after March 1, 2021. Any deaths that took place prior to this date remain subject to the former value of the preferential share, which was $200,000. The effective date is absolute and critical in determining the applicable share amount for any given estate.

Definition of “Spouse” Under the SLRA

The change specifically applies to “married spouses” as recognized under Ontario law. This broad category includes:

Couples in Same-Sex Marriages: Ontario recognizes same-sex marriages, and these spouses are fully included in the provisions of the SLRA.
Legally Separated Spouses: Perhaps one of the most surprising and impactful aspects is that this includes individuals who are married but legally separated at the time of one spouse’s death. Unless a formal divorce is finalized, or a valid separation agreement explicitly waives inheritance rights, a separated spouse retains their entitlement to the preferential share, along with any other statutory entitlements under the SLRA. This often creates unintended outcomes, particularly when spouses have been living separate lives for years but have not yet dissolved their marriage legally.

Common-Law Partners are Excluded (with nuances)

A frequent misconception is that common-law partners are treated the same as married spouses under estate law. However, under the current Ontario law, common-law partners, as defined under the province’s legislation, are generally not legally entitled to any part of their partner’s estate if there is no will. This means they do not automatically receive the preferential share or any other statutory share that a married spouse would.

Despite this general exclusion, there is an important caveat: common-law partners may still have legal avenues to seek support from an estate. They may apply to a court under the provisions of the SLRA that pertain to the support of “dependants.” To qualify as a dependant, a person must have been financially reliant on the deceased. In the right circumstances, if a court determines that the common-law partner was a dependant, they may receive a share of the estate if ordered by the court to ensure their ongoing support. This process, however, is not automatic and requires a legal application, which can be time-consuming, expensive, and stressful during a period of grief.

The Ultimate Takeaway: The Indispensable Role of a Valid Will

While the increase in the preferential share for surviving spouses is certainly a noteworthy update in Ontario’s estates law, the most crucial message to internalize goes beyond these specific figures. Regardless of your marital status – whether you are married, living common-law, or single – having a valid and up-to-date will is the single most important step you can take to ensure your assets are distributed exactly as you intend after your death.

Without a properly executed will, you inadvertently relinquish control over your legacy to the government. The provisions of the Succession Law Reform Act will then dictate the division of your estate, applying a standardized formula that may not align with your wishes, family dynamics, or financial arrangements. This can lead to unforeseen consequences, including:

Unintended Beneficiaries: Your assets might go to individuals you did not wish to benefit, or in proportions that do not reflect your relationships. For example, a separated spouse might inherit a significant portion, or a cherished common-law partner might receive nothing.
Exclusion of Loved Ones: Individuals you cared for deeply, such as common-law partners, step-children, or close friends, may be entirely excluded from your estate under intestate rules.
Family Disputes and Litigation: The rigid application of intestate rules can often fuel disagreements among surviving family members, leading to costly and emotionally draining legal battles that could have been avoided with clear instructions.
Delays and Increased Costs: The probate process for intestate estates can be more complex and lengthy, potentially incurring higher legal fees and administrative costs, further eroding the value of the estate.
No Guardianship for Minor Children: A will allows you to name guardians for your minor children, ensuring they are cared for by individuals you trust. Without a will, this critical decision falls to the courts.

A well-drafted will provides clarity, prevents potential disputes, and offers you peace of mind that your loved ones are provided for according to your wishes. It empowers you to specify who receives what, to appoint an executor you trust to manage your estate, and to make provisions for guardianship of minors. It is a fundamental component of responsible financial planning and a profound act of care for those you leave behind.

Therefore, the increase in the preferential share serves as a powerful reminder of the dynamic nature of estate law and the absolute necessity of proactive estate planning. Consulting with an experienced estates lawyer is the best way to ensure your will accurately reflects your current intentions and fully complies with Ontario’s legal requirements, safeguarding your legacy for the future.