Earlier this year, there has been a significant increase to the amount fixed as ‘preferential share’ under Succession Law Reform Act (SLRA). There seems to be a bit of confusion as a number of informational websites do not appear to have reflected this change yet. This post will try to address this confusion.
If a person dies with a valid will, any property of value owned by the deceased, called ‘estate’, is distributed according to the directions prescribed by the will albeit with some exceptions.
If a person dies without a valid will, or ‘died intestate‘, the estate is distributed as per Ontario’s SLRA. In the event where the deceased is survived by a spouse and a child or children, the spouse gets a fixed amount from the estate, called ‘preferential share’, and the remaining estate is distributed among the spouse and the child/children.
This ‘preferential share’ is set out in Ontario Regulation and has been fixed at $200,000 for the last 25 years. However, in February 2021, the amount was raised to $350,000. According to the amended regulation, a preferential share is now $200,000 for the estates of persons who died before March 1, 2021, and $350,000 for the estates of persons who died on or after March 1, 2021.
Let’s take John for example. John passed away on May 1, 2021, without a valid will and is survived by his spouse, Mary, and his only child, Max. After deducting all liabilities, such as debts, estate administration tax, and estate expenses, John’s estate is left with $300,000. Since $300,000 does not exceed the preferential share ($350,000), Mary will receive the $300,000 in its entirety.
If, however, John’s estate is left with, say, $500,000, Mary will have preference over $350,000, and the remaining $150,000 will be divided evenly between Mary and Max. If John had more than one surviving child, Mary will receive one-third of the remaining $150,000 ($150,000 x 1/3 = $50,000) and the balance ($150,000 - $50,000 = $10,000) will be distributed equally among the children.
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