CANADA Law and Practice Contributed by: Ian Hull, Suzana Popovic-Montag and Nick Esterbauer, Hull & Hull LLP
An example of a legal obligation that may restrict tes - tamentary freedom is the requirement for testators to provide for their surviving married spouses upon death. Provincial legislation gives a surviving spouse the right to claim a share of family property, even if a will purports to do otherwise. Legislation in British Columbia also recognises the rights of adult children to inherit their parents’ estates, in the absence of a valid and rational reason for dis - inheritance, requiring the courts to consider evidence regarding the reasons for not benefitting family mem - bers. Courts are also authorised to vary the distribu - tion of an estate on this basis. In Ontario and other provinces, adult children have no right to benefit from their parents’ estates, although disinherited children may seek relief from an estate if they qualify as dependants of the deceased. An adult child may also inherit by successfully challenging their parent’s will. 2.4 Marital Property Prenuptial and Postnuptial Agreements Contracts can be used by married spouses and common-law partners in Canada to manage spousal disputes that may arise in the future. However, such contracts may not prevent claims against the estate of a surviving spouse. If each party does not receive independent legal advice when the agreement is executed, it may be unenforceable. Marital Property In all Canadian jurisdictions, married spouses have enforceable rights to family property, including assets accumulated during the spousal relationship, subject to certain exemptions. On separation, married spous - es have the right to equalisation of net family property equal to one half of the marital property. The matrimo - nial home typically constitutes marital property, even if it was owned by one spouse before the marriage. In most provinces, surviving spouses have the option of inheriting under the deceased’s will, or electing to receive an equalisation payment. An equalisation
payment may be preferable if the deceased left the spouse inadequate financial support. In Ontario, British Columbia and the Yukon, bequests left to the deceased’s spouse may be void if the par - ties were separated at the time of death. A bequest is also revoked in Ontario, British Columbia, Alber - ta, Saskatchewan, Manitoba and the Yukon if the deceased and their spouse were divorced. As noted in 1.2 Exemptions , the transfer of capital property from the deceased to a married spouse does Property may be transferred outright to an individual or a trust, or by adding another person as a joint ten - ant or tenant in common. Joint ownership is a com - mon mechanism for transferring property to the next generation on a tax-deferred basis. Unless the benefi - ciary of the property by right of survivorship makes the joint property their primary residence, the capital gain on the property will eventually be taxable at the time of its sale or deemed disposition at fair market value, which may occur at the time of death of the other joint tenant. Depending on the Canadian jurisdiction, land transfer taxes may also apply to a transfer of title. 2.6 Transfer of Assets: Vehicle and Planning Mechanisms In addition to gifts, assets may be transferred through joint tenancy, testamentary documents, trusts and corporations. Trusts are being used with increasing frequency throughout Canada, as they offer advantag - es for estate planning, including deferring taxes and sheltering assets from creditors. However, if a trust is not properly constituted, it may be deemed void and the intended advantages may be lost. 2.7 Transfer of Assets: Digital Assets For the purposes of succession, digital assets are treated as personal property throughout Canada. Digital assets include records created, transmitted or stored in digital or other intangible forms by electronic means, such as emails, contact information and writ - ten documents. Certain digital assets also carry sig - nificant monetary value (eg, cryptocurrencies). not trigger capital gains tax. 2.5 Transfer of Property
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