Estate Law

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Estate Law & Litigation: What happens to a lawsuit if the plaintiff or another party dies? 

what happens to lawsuit if plaintiff dies before settling

Disclaimer: This article discusses Estate Law.  It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

Civil litigation on its own can be complex. What happens if a party passes away while the litigation is ongoing?

This creates a whole host of issues to consider. In this article, we’ll talk about the estate trustee’s next steps. However, each situation is unique, and it is always wise to talk to an estate attorney about your pending lawsuit. 

What happens in a civil lawsuit if the defendant dies?

In Ontario, if a party involved in legal proceedings passes away, those proceedings related to the deceased’s interests or liabilities in the lawsuit are promptly halted, known as a “stay.” This means that the court will not permit the action to proceed unless specific conditions are met. Rule 11 of the Rules of Civil Procedure outlines the procedure for parties to resume the action following the death of a party. 

What happens when a plaintiff dies? 

This can happen fairly often in a personal injury lawsuit, as it can take years to settle or go to trial. The same rules would apply as noted above. 

However, in some instances, a claim may not continue after the plaintiff’s death. For example, Ontario courts have barred an estate from continuing a Charter claim that the deceased had commenced against the federal Attorney General. 

Who can obtain an order for continuance?

According to Rule 11.02 of the Rules, if a person’s interests or responsibilities in a case transfer while the case is ongoing, anyone interested can ask the court to continue the case by filing the appropriate documents.

However, although the rule mentions “any interested person,” court decisions suggest it’s usually the executor of the deceased’s estate who must do this for a deceased plaintiff. This makes sense because whatever the deceased’s role was in the lawsuit becomes part of their estate.

What if someone dies without a will? The courts may be cautious about giving someone authority over litigation without the proper estate administration in place (such as a court appointment for an estate trustee). 

What if the estate has not obtained an order for continuance?

Suppose a plaintiff has passed away and his or her estate has not obtained an order for continuance.

If the estate does not obtain an order for continuance, defendants have two options:

Option A: Defendants can take the initiative to obtain the order themselves under Rule 11.02(1). This involves naming the trustee in substitution for the deceased litigant. 

Option B: Defendants could alternatively move under Rule 11.03. This rule allows for a motion to dismiss the action for delay if no order to continue is obtained within a reasonable time after the transfer or transmission of the plaintiff’s interest.

To make a motion under Rule 11.03 (Option B above), you must prove that the delay was unreasonable. 

Ontario courts consider various factors in determining reasonableness, but there are no specific guidelines on the length of delay. Factors that the courts would consider include the time required to obtain a certificate of appointment for the estate trustee, especially in cases of intestacy, and any legitimate reasons for the delay.

In many cases, it may be preferable for the defendant to simply obtain the order for continuance for themselves. 

Beeksma Law: Your partners for comprehensive estate advice 

Navigating estate law and litigation demands a nuanced understanding of legal procedures and implications, especially in cases involving the death of a party. At Beeksma Law, we recognize the complexities inherent in these matters and are committed to providing comprehensive estate advice and representation.

Whether you’re facing challenges related to the death of a party in ongoing litigation or seeking proactive legal guidance for estate planning, our experienced team is here to support you every step of the way. Trust Beeksma Law to be your partners in safeguarding your interests and securing your legacy.

Inheriting real estate in Canada: Do capital gains tax changes apply when you inherit property? 

Photo of a home representing if capital gains tax inherited property

Disclaimer: This article discusses estate planning.  It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

When it comes to estate planning, there are many decisions to make. 

What are the proposed capital gains tax changes?

One of the federal government’s changes relates to real estate. The proposed change applies to individuals and would raise the inclusion rate to 67% on capital gains above $250,000. 

What does that mean? 

The first $250,000 in capital gains would be taxed at 50% of the asset’s gain. For every dollar above $250,000, you would pay tax on 2/3 of the assets gain. 

Let’s use an example. Suppose you buy an investment property for $350,000.  Years later, you would like to sell it for $700,000. That leaves a profit of $350,000. 

Under the current regulations, the entire $350,000 is taxed at 50%, resulting in a $175,000 capital gain. 

However, under the proposed change, the first $250,000 would be taxed at 50%, while the remaining $100,000 would be taxed at the increased rate of 67%.

What does that mean if you inherit property?

It depends on whether the property was the deceased’s primary residence or not. 

If it was their primary home, then the estate does not pay capital gains tax when the property transfers. If it was a secondary residence, say a cottage, then it would be subject to capital gains tax when it transfers to the beneficiary. However, the estate would be responsible for paying that tax.

Either way, there are tax consequences when you, as the beneficiary, sell the property. It is likely subject to capital gains tax at that point.

What happens if the property value has increased in value? 

When an inherited property appreciates in value, the calculation of taxable capital gains hinges on the property’s fair market value at the time of inheritance. Put simply, the beneficiary becomes liable for capital gains tax on the difference between this fair market value and the property’s original purchase price.

For instance, let’s say Greg inherited his parents’ primary residence, which was valued at $600,000 at the time of their passing. However, his parents initially purchased the property for $150,000. Now let’s say that Greg decides to sell the home at a sale price of $700,000. 

Does Greg pay capital gains tax on the difference between what his parents paid for the home? Or does he pay based on the increase in value from when he inherited it? 

It would be the latter. Greg would be subject to capital gains tax on the $100,000 increase in value since he inherited the property.  

Is it time to look at your estate plan? Talk to Beeksma Law today!

Given the proposed changes to capital gains tax and their potential impact on property inheritance, now may be an opportune time to review and reassess your estate plan.

Consulting with tax experts and legal professionals can help you understand how these changes may affect your assets and develop strategies to minimize tax liabilities for your beneficiaries. Whether it’s updating beneficiary designations or exploring estate planning options, taking proactive steps can help ensure your assets are managed effectively. 

At Beeksma Law, we primarily practice estate law and are strategic advocates when it comes to protecting your legacy. Our team is dedicated to helping clients navigate complex legal matters related to estate planning, probate, and asset protection. With our expertise and personalized approach, we can assist you in creating a comprehensive estate plan that aligns with your goals and minimizes tax implications.

As trusted advisors in estate law, we understand the importance of proactive planning and attention to detail. With Beeksma Law by your side, you can have peace of mind knowing that your estate is in capable hands. Don’t wait until it’s too late – schedule a consultation with our team today to discuss your estate planning needs and start protecting your legacy for the future.

How does the death of a spouse impact your separation? What rights do the estate and the separated spouse have in Ontario?

man with lawyer illustrating separated but not divorced and spouse dies in ontario

Disclaimer: This article discusses estate law.  It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

In a perfect world, life would happen at the pace we need it to, and the timing of big life events would be in a certain order.  Unfortunately, that is not always the case. 

In some rare instances, you may be separating from your spouse when they pass away. What happens in that instance? And how can you make sure your estate plan is ready for anything?

In this article, we will talk about what happens if your spouse dies while you are in the middle of a separation. We will answer these questions: 

  • What is property equalization in family law?
  • Can a surviving spouse make a claim against the estate for equalization? 
  • Can the estate make a claim against the surviving spouse for equalization? 

If you want to learn more about how separated spouses are treated under the Succession Law Reform Act, please note that there have been changes that came into effect January 1, 2022 that impact what you may inherit. For example, marriage no longer legally revokes a previous will. We have an article on the subject here.  

A note for common-law spouses: property equalization only applies to married spouses  

This article only applies to married spouses. The property equalization portions of The Family Law Act do not apply to common law spouses. 

What is property equalization during a divorce? 

Property equalization is a fundamental principle in family law that aims to ensure fairness in the division of marital assets between spouses. It is based on the idea that each spouse is entitled to a fair portion of the property and assets that were acquired during the marriage. 

How is property equalization calculated under Ontario’s family law? 

Calculating an equalization payment involves two main steps. First, each spouse determines their individual net family property (NFP). This means assessing the value of their assets minus any debts as of the separation date and subtracting the value of assets minus debts as of the marriage date. If any property is jointly owned, such as the family home, each spouse includes half of its value in their NFP calculation.

Let’s use Spouse A and Spouse B as examples. First, each spouse calculates their individual net family property.

Spouse ASpouse B
Assets minus debts at date of marriage$20,000Assets minus debts at date of marriage$25,000
Assets minus debts at date of separation$100,000Assets minus debts at date of separation$45,000
Individual net family property$80,000Individual net family property$20,000

Next, the spouse with the higher NFP compensates the spouse with the lower NFP with half the difference. This is the equalization payment. 

In our example, the difference is $60,000. So Spouse A would pay Spouse B half of the difference (or $30,000). The courts may order an amount different from this calculation in certain circumstances, but this is the general principle. 

Now, imagine one of the spouses dies before this process begins. If you are the surviving spouse, what rights do you have to a share of your spouse’s property? 

Can claims be made against estates to protect the property rights of separated spouses?  

Short answer: yes.

Let’s consider our example above. Say Spouse A passed away before Spouse B filed a claim for their equalization payment. Spouse B can still file a claim, even though their former spouse has passed away. 

Even if the equalization process had not begun before the spouse’s passing, the surviving spouse retains the right to claim against the estate for their fair share of marital assets.

Can the estate make a claim against the surviving spouse for equalization?

Short answer: no.

In our example above, let’s say that Spouse B passed away. Can that spouse’s estate file a claim for equalization? It cannot. 

The estate cannot make a claim for equalization against the surviving spouse. It can continue an application that has already been filed, but it cannot bring a new application. The estate is at a disadvantage if an application for equalization has not begun. 

How does this impact Ontario families? 

If you are separating and in poor health, you should commence a court action to have your property divided sooner rather than later. That way, your estate can continue the action, and you can protect your property rights for your children or other beneficiaries. 

Comprehensive Legal Advice with Beeksma Law: Contact us today!

Navigating the intersection of family law and estate law requires expertise and insight into the nuances of Ontario’s legal framework.

At Beeksma Law, we understand the complexities and sensitivities involved in matters of separation, divorce, and estate planning. We understand how The Succession Law Reform Act affects other areas of law. Our experienced team is dedicated to providing comprehensive legal guidance tailored to your unique circumstances.

Whatever your situation, having a strategic advocate in your corner to create a strong estate plan can make a world of difference. Our compassionate and thoughtful approach ensures that your interests are safeguarded every step of the way.

Reach out to our team today for assistance with all things estate law. This includes succession law, intestacy (or if you spouse dies without a will), property outside Canada, and more! 

What is a Dependant Support Claim? What support obligations should you consider in your estate planning?

hand holding providing comfort to someone illustrating a dependant support claim ontario

Disclaimer: This article discusses estate planning.  It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

It is well-established in common law that you have the right to leave your estate to whomever you would like. This is referred to as “testamentary freedom.” 

However, this concept has a few exceptions – one of which is found in Section V of the Succession Law Reform Act. There, the law obligates you to ensure that you have adequately supported your dependants. 

Of course, this raises questions. Who are your dependants? If your relative has not provided adequately for you, do you have any recourse? What do you need to keep in mind? 

These are questions that this article will answer. Of course, each situation is unique, and this article aims to provide a broad overview. If you would like to discuss your estate or that of your loved one, we encourage you to book a call with our team. We would be more than happy to discuss this further during your complimentary consultation. 

What is a dependant support claim? 

A dependant support claim is an application brought against a deceased person’s estate to ensure continued support is provided.

In Ontario, the law ensures that specific people dependent on someone who has passed away have the right to seek support from that person’s estate, regardless of any inheritance they might receive through a will or intestacy laws. This means that dependants, such as spouses or children, can bring a claim for support separate from whatever they may inherit. If successful, the estate must prioritize fulfilling this support payment before distributing any remaining assets to other beneficiaries.

Who would qualify as a dependant? 

Section 57 of the Succession Law Reform Act sets out a two-part test to determine who qualifies as a dependant. 

Are you a dependant under section 57 of the Succession Law Reform Act? 

For the purpose of a dependant support claim, a dependant must be a spouse, parent, child or sibling. While that sounds simple enough, the law has some nuances that you should know. 

Additionally, in this scenario, spouses are not limited to married people. They also include common-law spouses, meaning two individuals who have cohabited for at least three years or are a child’s natural or adoptive parents. The court may consider a grandparent or grandchild equal to a child or a parent if the deceased demonstrated that they intended to treat that person as a child or parent of their family.  

Was the deceased providing (or legally obligated to provide) support immediately before their death? 

Secondly, the deceased must have been providing support (or should have been providing that support) immediately before their death. It may be that the deceased had a legal obligation to provide support, whether by an order for support or a domestic agreement. There may also be a moral obligation – meaning that a reasonable person would provide adequate provision and support in similar circumstances. 

For example, in the case of a minor child, a parent would have either been supporting their child or legally obligated to provide some level of support. Another example may be an ex-spouse who was receiving spousal support when the deceased passed away. The estate is responsible for providing that support as it would if the deceased were still alive.  The case law shows that the courts consider “support” to include financial, physical and moral support. 

How long do I have to bring a claim for support?

While we noted that the statute of limitations in other litigation matters is generally two years, Section 61 notes that an application must be brought within six months from the grant of letters probate of the will or letters of administration. 

Plainly speaking, this means you have six months from when the Certificate of Appointment of Estate Trustee is issued to bring an application forward. 

How does this impact your estate planning? 

Understanding the potential for dependant support claims is crucial when crafting a solid will.

Let’s use a hypothetical scenario: Joel is a divorced father of two children, Grayson and Rhys, who live in Ontario. Following his divorce, Joel and his ex-wife established a court-ordered child support agreement to ensure financial support for their children.

In preparing his will, we aim to draft it to minimize the likelihood of a dependant support claim being filed. It would be an understatement to say that no one wants Joel’s estate mired in litigation. Therefore, we would work to prevent such outcomes as much as possible while drafting his will.

That may include thoroughly reviewing Joel’s existing legal agreements, particularly the court-ordered child support arrangements, to fully grasp his current financial commitments towards his children. 

By gaining clarity on these obligations, we can tailor Joel’s will to align with his familial responsibilities and minimize the potential for disputes or dependant support claims in the future.

Beeksma Law: Strategic advice for all of your estate litigation needs  

At Beeksma Law, we specialize in handling various estate litigation matters, including dependant support claims. With our extensive experience and expertise in estate law, we can assist you in navigating complex legal processes and ensuring your estate plan reflects your wishes while minimizing the potential for disputes. For strategic legal advice, book a complimentary consultation with our team today! 

Understanding Certificates of Pending Litigation & Ontario Estate Law

A hand holding keys in front of a house showing the importance of a certificate of pending litigation

Disclaimer: This article discusses estate law.  It is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

One of the largest assets in many people’s estates is their real property – whether that’s their primary residence, a vacation home or something else. 

What happens if there is a dispute about the property? Perhaps you believe you’re entitled to the entire property, while another beneficiary argues that it should be sold and the proceeds divided among the heirs.

How can you protect your rights to the property? A certificate of pending litigation can help. 

This article will review what it is (we talked about it in more detail here), as well as some of the risks of seeking this remedy. 

What is a Certificate of Pending Litigation? 

A certificate of pending litigation is an official document issued by a court and recorded on title. It signals that there’s a claim tied to the property in question. We would apply for a certificate of pending litigation if we wanted to stop any transactions involving the land, like selling or mortgaging it. 

Why seek a CPL?

There are a few reasons why someone may want to register a CPL against a piece of property.

However, in estate law, they are most commonly used to protect estate assets from being sold when there is a disagreement over the estate. For example, let’s say there’s a dispute among the heirs of an estate over who should inherit a valuable piece of property, like a family home. One heir believes they’re entitled to the entire property, while another heir argues they should sell the property and split the proceeds.

To prevent the property from being sold off before the dispute is settled, the heir who wants to keep the property intact can apply for a CPL. Once granted, the CPL would be registered against the property’s title, effectively preventing it from being sold or transferred until the dispute is resolved in court.

In this way, the CPL serves to safeguard the estate’s assets, ensuring they remain intact until a fair resolution is reached among the disputing parties or by the court.

Can I apply for a CPL? 

In order to obtain a CPL, you do need to successfully answer these questions. 

Do you have a triable interest in the land? 

If you are the party seeking the CPL, you must prove that you have a triable interest in the property. What does “an interest in the property” mean? It is a low threshold. Basically, it’s just showing that you have some connection to the property or a claim to it and that you have a triable issue. The court has no interest in determining whether your claim is likely to succeed, just that a triable issue exists. 

Could you be adequately protected by another form of recourse or remedy? 

When deciding whether to grant a CPL, the courts will then consider if an equitable form of security would be more appropriate. For example, if putting a lien on the property or using some other type of legal protection could work just as effectively, they might prefer that option. 

There are a number of factors that the court will look at, such as whether the land is unique, whether damages could be calculated, or if there are any alternative remedies.  

The potential risks of registering a CPL

The courts have consistently viewed Certificates of Pending litigation as a tool for estate litigation. However, if you make a motion to have one registered on title, it is not guaranteed that the courts will grant it. 

The Courts of Justice Act notes that if someone registers a CPL without a reasonable claim to the property, they can be held responsible for any resulting damages.

For example, registering a CPL could hinder the sale of a property because potential buyers are unlikely to want a property tied up in legal disputes. In such a case, the owner of the property may seek compensation for the lost sale proceeds. 

It’s crucial to use the CPL as a tool to safeguard your legitimate rights rather than as a tactic to unfairly disrupt transactions.

Obtaining a CPL without giving notice

Justice Kurz’s recent ruling in McNeil v. Kaloustian highlights the risks of obtaining a Certificate of Pending Litigation (CPL) without informing the other party. Some CPL applications are urgent or involve fraud, so they’re pursued without notifying the other party.

Rule 39.01(6) requires the party seeking a CPL without notice to fully and fairly disclose all relevant facts. Failing to meet this requirement can lead to the order being overturned, regardless of the CPL request’s merits. In McNeil, Justice Kurz stressed the importance of transparency and adherence to legal duties. 

Despite the plaintiff’s right to seek the CPL without notice, their failure to fulfill their duty of candor resulted in the CPL’s cancellation. This ruling emphasizes that parties seeking CPLs without notice must meet high standards, as preserving fairness in legal proceedings is crucial.

The point? Just because you can do something does not mean you should. 

Contact Us to Protect Your Rights

If you need legal assistance with CPLs or any estate-related matters, Beeksma Law is here to help. 

Our experienced team of lawyers can guide you through the complexities of CPL applications, ensuring your rights are protected and the legal process is fair. Contact us today for expert advice and representation.