I just finished watching Mrs. America, the recent TV series that chronicles the fight by women in the 1970s to enshrine the Equal Rights Amendment (ERA) in the US Constitution. First proposed in 1921, the ERA sought to mandate equality between men and woman. In 1972, Congress passed the ERA, but they could not obtain the support of the 38 states needed to ratify the amendment. Without sufficient state support, the ERA was considered dead. However, in the last few years, the Nevada and Illinois legislatures passed the ERA. If the US Congress decides to resurrect the matter, the constitutional amendment may have a second act.
Social conservatives, of whom Phyllis Schlafly was the most well-known, argued that the ERA would destroy the traditional family, where men were the head of the household and breadwinner. Moreover, they argued that the ERA, which sought to treat men and women equally, would take away a woman’s right to financial support on the dissolution of a marriage. With the benefit of hindsight, this argument proved to be fallacious. Just take a look at Canada.
Equal protection is guaranteed to men and woman in the Canadian constitution. Section 28 of the Canadian Charter of Rights and Freedoms (schedule B to The Constitution Act, 1982) states: “Notwithstanding anything in this Charter, the rights and freedoms referred to in it are guaranteed equally to male and female persons.”
Since that time, Canadian law has evolved to afford greater, not less, protection to divorced or separated spouses. However, consistent with the Charter, these protections are available equally to men and women and are based primarily on financial circumstances and need, not gender.
In Ontario, the Family Law Act (“FLA”) regulates the division of property and the availability of spousal support on separation or death. Originally enacted in 1986, the FLA now applies equally to same sex couples. The FLA also extends protections to common law spouses, although their rights are different than married spouses.
Following the death of a married spouse, section 6 of the FLA allows the surviving spouse to elect to receive either: (1) her entitlement under the deceased spouse’s will or intestacy (if the spouse died without a will); or (2) an “equalization payment” equal to half the increased value of the spouse’s property during the length of their marriage (this is the same division of family property that would have been available to the spouse had the marriage ended in separation or divorce). In other words, the surviving spouse is allowed to elect to take whichever is greater: her inheritance or the equalization payment.
Notably, if the surviving spouse elects to take an equalization payment, her entitlement under the will is forfeited (she cannot receive both her inheritance and an equalization payment). In addition, the surviving spouse must make an election within six months after the death of the deceased spouse. However, extensions (which must be granted by the court) are common.
In order to reach a decision, the surviving spouse will seek as much financial information as possible in order to calculate the equalization payment. The calculation is as follows:
- Value of property owned by the deceased spouse immediately before death;
- Minus any liabilities immediately before death;
- Minus the value of property owned on the date of the marriage (i.e. what the spouse brought into the marriage, including any debts);
- Minus any inheritance or gift received during the marriage;
- Equals: Net Family Property.
The surviving spouse would perform the same calculation with her assets to determine her net family property. If her net family property is larger than the deceased’s, then she is not owed any equalization payment and would elect to take her inheritance. However, if her net family property is less than the deceased’s, then she is owed an equalization payment.
The amount of the equalization payment is half the difference between the two net family property amounts. For example, if the deceased’s net family property is $1,000,000 and the surviving spouse’s net family property is $500,000, then the deceased spouse (i.e. his estate) owes an equalization payment of $250,000 to the surviving spouse.
There is one additional factor that comes into play when calculating net family property when one of the spouses died, as opposed to separated: any life insurance proceeds or RRSPs/RRIFs paid to the surviving spouse by way of beneficiary designation will be deducted from the amount of the equalization payment owing.
A surviving spouse needs to carefully consider whether an FLA election is in her best interest – not only does the surviving spouse need to ensure that she is owed an equalization payment (the last thing the surviving spouse wants to do is to forfeit her inheritance rights only to find out she is not owed an equalization payment), the surviving spouse also wants to compare whether the equalization payment is more than her inheritance. Obtaining a full financial picture can be complicated. The best advice is to seek legal counsel and take your time in deciding whether an FLA election is the best choice.
Having made the availability of equalization payments and spousal support based on need, not gender, the law is well suited to adapt to changing societal norms. As long as men remain the main breadwinners during marriage and women sacrifice career advancement for childcare, then women will be the primary beneficiaries of spousal protection laws. However, the FLA was not designed to be based on gender and therefore does not pose a disincentive to the evolution of gender roles: it offers equal protection to all.