Problems in blended families when death occurs

BY: VALERIE DYE 

Blended families may be faced with significant issues when a spouse dies especially where one or both spouses have children from previous marriages or relationships.  Quite often spouses prefer their children to inherit their property rather than allow the surviving spouse to inherit their property. The main consideration is that if the surviving spouse inherits the property that property may pass to the children of the surviving spouse when that spouse dies.

Of course, if the properties are owned jointly by both spouses the surviving spouse will automatically become the owner of the property when the other spouse dies. What happens when the property is owned only by the deceased spouse who has children from a previous relationship? If the deceased spouse has no will then the rules of intestacy will apply, and the surviving spouse will be entitled to a preferential share of the deceased estate which is equal to the sum of $200,000.00. If the entire estate is valued at $200,000.00 or less the surviving spouse is entitled to the entire estate. If the estate is valued more than $200,000.00 the surviving spouse will be entitled to the $200,000.00 plus half of the remaining value if the deceased has one child or one-third of the remaining value if the deceased has more than one child. 

This scenario of course changes if the deceased made a will. It is possible that the deceased may bequeath his or her entire estate to their children from a previous relationship. For instance, a home which is only in the name of the deceased may be left only to the deceased children and not to the spouse. When this happens, it may appear that the surviving spouse has been disinherited. Nonetheless, the law has made provision to protect a surviving spouse that has been disinherited. The principle of equalization which occurs when spouses separate or divorce also applies when one spouse dies. Section 5(2) of the Family Law Act provides as follows:

When a spouse dies, if the net family property of the deceased spouse exceeds the net family property of the surviving spouse, the surviving spouse is entitled to one-half the difference between them.

This provision is similar to the section dealing with divorce Section 5(1) which provides that :

When a divorce is granted, or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them.

As such, all is not lost if no provision is made for the surviving spouse in a will. Of course, whether or not the surviving spouse becomes entitled through equalization depends on the value of his own net family property. If, for instance, the total of the surviving spouse’s net family property is $600,000.00 and the total of the deceased net family property is $800,000.00, the surviving spouse is entitled to payment of $100,000.00 from the estate of the deceased. If the surviving spouse’s net family property is higher than that of the deceased that spouse is not entitled to an equalization payment.

It is important to note that the equalization process is not automatic. The surviving spouse has six months within which to move for equalization of net family assets.

The ability to apply for equalization of net family property upon the death of a spouse is very comforting for spouses who fear that the other spouse will leave all their property to their children after death.