An Alberta court case explains the application of the Dower Acton property where the deceased did not have a valid will at the time of their death.
The deceased passed away without a will in 2013. His wife was granted a life estate in his property, which was registered in the sole name of the deceased. This property was a “homestead” under the Alberta Dower Act. The Dower Act defines a “homestead” as: “a parcel of land […] on which the dwelling house occupied by the owner of the parcel as the owner’s residence is situated”. Section 18 of the Dower Actgives the surviving spouse with a life estate in the homestead on the death of the married owner:
“Life estate to surviving spouse
18 A disposition by a will of a married person and a devolution on the death of a married person dying intestate is, as regards the homestead of the married person, subject and postponed to an estate for the life of the spouse of the married person, which is hereby declared to be vested in the surviving spouse.”
However, the deceased’s two children from a previous marriage made an application for advice and direction to the court.
At issue was section 61 of the Wills and Succession Act,under which the surviving spouse or an adult interdependent partner is entitled to the greater of the prescribed amount or 50% of the net value of the estate. If the value of the estate exceeds the prescribed amount, the residue of the estate is distributed among the intestate’s descendants where they are not the descendants of the surviving spouse. The prescribed amount under the Preferential Share (Intestate Estates) Regulation is $150,000.
The wife claimed the entire value of the estate based on capitalizing and deducting the value of the life estate from the estate for distribution. The value of the property was estimated at $270,000, and the wife capitalized the value of the life estate under the Dower Actat $190,265. The amount of property for distribution was $79,735. As a result, the wife claimed that less than $150,000 remained in the estate, meaning that she could claim an entitlement to the entirety of the estate.
The children disputed the wife’s valuations and asked the court to recognize the interest of the surviving spouse to half of the estate and to both of them as children of the deceased in a one-quarter interest of the estate, subject to the life estate of the surviving spouse.
The issues were:
1) Was the wife entitled to deduct the capitalized value of the life estate from the net value of the property, so that the value is below the prescribed amount of $150,000?
2) What was the true net value of the property and the estate?
On the first issue, the court explained that the life estate is not an estate of inheritance, but grants for the life of the tenant an interest in the property. On the death of the life tenant, the interest in the land will revert to the estate. Both the life tenant and the holders of the interest in remainder therefore have a present interest in the same land.
The court then explained that the Dower Act and the Wills and Succession Actoperate separately to secure different interests of the surviving spouse. In fact, section 2 of the Wills and Succession Actstates that, in the event of a conflict between the legislation respecting a spouse’s rights in respect of property after the death of the other spouse, the Dower Actwill prevail. The Dower Act provides a life estate in the homestead following the death of the owning spouse, while the Wills and Succession Act providesfor a scheme of the distribution of the estate in the event of intestacy. The court concluded:
“I am of the view that the life interest in the Dower Actdoes not confer the right to capitalize that interest in the manner that is proposed by the [wife] in this case. This coupled with an entitlement to remain in the house would mean, in effect, she would benefit twice from the life estate. For legal and evidentiary reasons, this is not an appropriate circumstance for the Court to read into the legislation a means by which the surviving spouse may value her life estate to defeat the scheme of distribution of the intestacy to the other holders of the interest in remainder.”
The court then turned the issue of the true net value of the property and the estate. After reviewing the parties’ submissions, the court stated that since the interest in remainder would not devolve to the children until the termination of the life estate, the issue was premature. Accordingly, the court stated that it was unnecessary to decide this point.
For the purposes of administering the estate, the court directed that the property be notionally valued at the tax assessed value as of the date of death, which was $359,000, and that the inventory of property be amended to include any personal property of the deceased that may have been omitted.
Finally, the court ordered that a transfer of the land be made, granting the wife a life estate in the homestead pursuant to the Dower Act, with a remainder interest of one-half granted to the wife, and one-quarter granted to each child.
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