Saturday, April 25, 2020

Right of Spouse to Acquire Spousal Home in Intestate Estate

In British Columbia, when a person dies without a will (or in other words intestate), his or her spouse may take the deceased interest in the spousal home as part of the surviving spouse’s share. The survivor does not receive the house automatically, but the Wills, Estates and Succession Act provides a mechanism for the spouse to select the home.

When someone dies without a will leaving a spouse and children or other descendants, the spouse receives the first $300,000 if the descendants are descendants of both the deceased and the spouse, or $150,000 if the deceased left descendants who are not also descendants of the spouse. For example, if the deceased had a child from a previous relationship, the surviving spouse would receive the first $150,000 as her preferential share. The spouse is also entitled in either case, to one-half of the rest of the estate.

Sections 26 through 35 of the Wills, Estates and Succession Act sets out the process for a surviving spouse to receive the spousal home. When the personal representative applies to court for a representation grant, the representative must give notice to the spouse of her right to acquire the spousal home. She has 180 days from the date the court issues the representation grant to provide written notice to the personal representative of her decision to acquire the home. If the spouse is the personal representative, then she must give notice to those entitled to a share of the estate, and if any are minors or mentally incapable person, notice is also given to the Public Guardian and Trustee.

When the spouse gives notice, the notice must set out a value of the home. If the personal representative agrees with the value, then the agreed value is taken from the spouse’s share of the estate. If the spouse is the personal representative, then the other beneficiaries may agree on the value. If there is a disagreement about how much the home is worth, then the court may determine the value.

What if the value of the home exceeds the spouse’s share? For example, what if the home is worth $1,000,000 but the value of the estate after payment of debts and expenses is $1,200,000, and the spouse’s share is $750,000? The spouse may then purchase the home by paying the difference into the estate ($250,000 in our example).

If purchasing the home would “impose a significant financial hardship to the spouse,” then the court has a broad discretion to give the spouse the home and may impose conditions. For example, the court could require the spouse to pay the other beneficiaries and amount that is less than the difference between the value and the spouse’s interest in the estate. The court may also place a charge on the home in favour of the other beneficiaries, in which case they will eventually receive funds, but may have to wait until sometime in the future as the court may set out, perhaps when the spouse sells the home, ceases to live in the home or dies. In applying this provision, the court will need to balance the interests of the spouse and the other beneficiaries.

I am not aware of any reported court decisions that have applied these provisions. Fortunately, my experience has been that the value of the spouse’s share of the estate has been sufficient to acquire the house, and the value has been agreed upon.

These provisions also apply when there is a will does not dispose of all of the deceased’s assets (referred to as a partial intestacy), and does not dispose of the home. Partial intestacies are unusual in professionally drawn wills, but may occur, if for example, the will-maker makes a will leaving specific assets to beneficiaries, but does not have a clause disposing of the residue of the estate.

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