My Spouse Died After We Separated. What Happens to All Our Assets & Debts?

If you’re separated but not divorced, and your spouse suddenly dies, it can add an unexpected layer of complexity to the process of divorce, which is already an emotional and challenging situation. You may wonder how your spouse’s death will affect the division of your marital assets and liabilities, particularly if things weren’t fully settled before they passed away. 

Understanding how Ontario family law works in situations of death after separation will help ensure your rights are protected.  Here are the key points.

Separated vs. Already Divorced in Canada: Where Are You in the Process?

As the old saying goes, “Timing is everything”.  Your assets and debts will be handled differently, depending on where you were in your separation/divorce journey when your spouse died. 

To be clear, there’s an important distinction between “separation” and “divorce”. In Ontario, separation occurs when spouses live “separate and apart,” with the intention of ending the marriage. This can happen even while you are still living in the same home, provided you no longer function as a couple. Divorce, however, is the formal legal end of your marriage, which requires a court order under Canadian law.  Until that point you are still considered married.

With this in mind, there are two scenarios:

• If Separated:  If your spouse died when you were merely separated, the division of your marital property and liabilities is not automatically halted. Many of the same rights and obligations that existed during your marriage will still apply, especially when it comes to property and debts. Your spouse’s Estate will take over handling their financial responsibilities, and this includes the division of property which will typically be governed by Ontario’s Family Law Act. The Estate, essentially, becomes the other party in your divorce case.

• If Divorced: On the other hand, if your spouse died when you were already divorced, your spouse’s financial obligations arising from the end of your marriage will usually cease – although there are some narrow exceptions as discussed below.
  

Dividing Marital Assets After Death – The Role of Ontario Estates Law

When your spouse passes away after your separation date, their Estate will handle any unresolved division of assets and payment of debts, through the Estate Trustee (formerly called the Executor). 

In Ontario, the Succession Law Reform Act governs how the estates of deceased persons are distributed.  Once again there are two scenarios: 

• If Your Spouse Had a Valid Will: In this case your spouse’s estate will simply be divided according to their wishes as expressed in that document.  However, if you and your spouse were still legally married when they died, and you had not yet settled the division of your assets, you may have rights to make a claim under the Family Law Act. This could include a claim for the equalization of your Net Family Property.
• If Your Spouse Died Without a Will (Intestacy): Ontario’s intestacy rules determine how their estate will be divided in this scenario. If you are still married, even if separated, you may have rights to a portion of the estate under a separation agreement or court order.  Note that as of January 1, 2022, changes to the Succession Law Reform Act have eliminated a separated spouse’s entitlement to a certain “off-the-top” share of the other deceased spouse’s Estate, which is called the “preferential share”. 

Under either scenario, your spouse’s Estate becomes responsible for paying any amounts that you may be owed now that your spouse has died. Common assets that are subject to division may include:

• Family home: The matrimonial home holds a unique status in Ontario family law. Both you and your spouse have equal rights to it (including the right to possession) until a court rules otherwise. The Estate may continue to hold responsibility for this asset even once your spouse has passed away, and it will be dealt with through the Estates process.
• Joint bank accounts: The balance of any joint bank accounts will usually pass directly to you as the surviving account holder.
• Investments, pensions, and RRSPs: Assets like pensions, registered retirement savings plans (RRSPs) and certain investments are often subject to specific beneficiary designations. If you were named as the beneficiary on these accounts, you may still receive those funds, unless your spouse had changed the beneficiary designation before their death.
• Debts and liabilities: Just as assets are distributed, debts that were jointly held or related to your marriage can still be your financial responsibility, even after your spouse passes away. This can include credit cards or a mortgage.  However, any liabilities that were clearly in your spouse’s name alone may now fall to their Estate to settle.

Related: Property Division 

 

What Happens to Child Support or Spousal Support?

Your spouse’s passing will often raise questions about ongoing child support or spousal support.

Let’s assume that prior to his or her death, the court had already ordered your spouse to pay support.  If your spouse passed away before fulfilling these obligations, then they may persist even after-the-fact. Specifically: 

• Child support: If your spouse was ordered to pay child support, you may be able to claim this from his or her Estate. Courts can also make orders for child support to be paid out of your deceased spouse’s Estate if your children are minors, or are still legally considered dependent.
• Spousal support: If you have been receiving spousal support since your separation or divorce, it will usually end upon your spouse’s death, unless there is a court order or separation agreement to the contrary.  In that case, the Estate will continue to be bound by the exact order or agreement in place at the time of your spouse’s death.  Alternatively, the payments may continue if specific arrangements such as life insurance have been made beforehand, to cover them. 

Either way, you may need to file a formal claim with the Estate, to enforce your right to spousal support payments.

Are you navigating this complicated scenario and need expert legal guidance? Contact Fine & Associates to discuss your case and understand your rights. We are here to guide you through these difficult and unexpected circumstances with compassion and clarity.