The legal framework
Property division on marriage breakdown is provincial: Ontario equalises net family property, British Columbia divides family property, Quebec applies the family patrimony and matrimonial regime. Canada has no estate or inheritance tax, but the deceased is deemed to have disposed of capital property at fair market value, which can create a large tax bill.
Key points
| Ontario | Equalisation of net family property; the matrimonial home is treated specially |
|---|---|
| British Columbia | Family property divided equally, including for two-year common-law spouses; excluded property concept for pre-relationship assets |
| Quebec | Family patrimony is mandatory; no forced heirship, so testamentary freedom is near-absolute |
| Wills variation | British Columbia allows spouses and children to vary a will that fails to make adequate provision |
| Tax at death | Deemed disposition of capital property; spousal rollover defers it |
| Registered plans | Beneficiary designations pass outside the estate in common law provinces |
| Probate fees | Provincial, ranging from negligible to significant |
| Provincial property law | Equalisation in Ontario, division of family property in British Columbia, partnership of acquests in Quebec |
| Matrimonial home | Given special protection in most provinces regardless of title |
In practice
- Get advice on the deemed disposition before transferring a cottage or rental property.
- Use spousal rollovers to defer tax where appropriate.
- Update beneficiary designations on RRSPs, TFSAs and insurance.
- In British Columbia, expect that a will excluding a child may be challenged.
- Name a spouse as the beneficiary of registered plans to defer tax on death.
- Check your province's treatment of the matrimonial home before agreeing to any settlement.
Cost and coverage
Legal and accounting fees for estate planning; probate fees vary sharply by province.
Recent changes
British Columbia's wills variation regime makes it one of the few common law jurisdictions where adult children can successfully challenge a will as inadequate.
Where to go
- Provincial law societies for referrals.
- Canada Revenue Agency guidance on final returns.
- Public legal education organisations in each province.
Worth knowing
The biggest surprise for Canadian families is the tax bill at death on a cottage or investment property that has appreciated for decades. Plan for it, or the property may have to be sold to pay it. Canada has no inheritance tax, but a deemed disposition at death can create a substantial income tax bill. Plan for liquidity, not for estate tax.
Official sources and links
- Canada.ca — official government portal
- Justice Laws Website — federal statutes and regulations