Last week the Ontario Court of Appeal released its decision in Lang-Newlands v. Newlands, 2026 ONCA 530 (“Newlands”). (Previously, Darren Lund blogged twice for All About Estates on the lower court decision and its potential impact on estate freezes. See here for Darren Lund’s blog posted on July 4, 2025). The decisions of the ONCA in Newlands and of the lower court are important for estate and tax planning, family law lawyers, and estate litigators, and very much turned on the facts, as follows.
A wife and husband who were separating needed to calculate each of their net family property (“NFP”) for equalization pursuant to the Family Law Act, RSO 1990, c. F. 3 (the “FLA”). Before the marriage, the wife’s father settled a trust in which his daughter was the sole beneficiary. The trust held shares in the father’s business and provided that the daughter would receive the shares at age 39. At the date of marriage the shares were worth $16 million. Six years after the marriage and before the wife turned 39, her father had a health scare which prompted the wife receiving her shares in the family business from the trust. Eight years later, her father settled a new trust (the “Family Trust”) for $100 and created an estate freeze. The beneficiaries of the Family Trust are the wife and her and the husband’s four children. As part of the estate freeze the father created a new holding company (“Hold Co.”). At the direction of her father, the wife sold her shares in the family business to Hold Co. in exchange for preferred shares with a fixed value of $24.5 million. The sold shares were ultimately transferred to the Family Trust. At the date of separation, the wife’s 20% interest in the Family Trust was valued at approximately $134 million.
The primary question in Newlands was whether the wife’s interest in the Family Trust was a gift before or after marriage. Pursuant to s. 4 of the FLA, if it is a gift before marriage then the gift is deducted from the wife’s calculation of NFP but the growth in value is included. In this case, that result would greatly benefit the husband. However, if the interest in the Family Trust is a gift after marriage then the gift and any growth is excluded from NFP entirely, greatly benefitting the wife. In finding for the wife, the lower court held that it was bound by the ONCA decision in Shinder v. Shinder, 2018 ONCA 717 (“Shinder”), which the wife argued held that estate freezes create a new gift.
The ONCA disagreed that the lower court was bound by Shinder, which it stated is distinguishable on its facts. Notably, in Shinder the trust at issue settled by the father for his son (who in that case was the separating spouse) was comprised of property beneficially owned by the son before marriage. The trust also included property owned by and contributed to by the father after the son’s marriage. This resulted in excluded property for the NFP calculation. In contrast, the Family Trust in Newlands is comprised solely of the shares gifted by the father to his daughter (the wife) before her marriage. The shares were beneficially owned solely by the wife and those shares became the only property that comprised the Family Trust, except for the $100 contributed to by the father to settle the Family Trust.
Although the lower court held that the wife’s interest was a gift after marriage because it was bound by Shinder, the lower court provided a detailed alternate analysis if Shinder is not binding. In that case, the lower court would have determined that the interest in the Family Trust was property beneficially owned by the wife before marriage. Her interest would be deducted, rather than excluded, from her NFP calculation (a difference of $25 million to the husband). As noted by the ONCA, the lower court concluded in its alternate analysis:
The FLA does not…permit a spouse who acquires a gift before marriage to exclude the growth in value of that gift during the marriage from [net family property] calculations, simply because the spouse placed the growth in value of that gift into a trust. (at para. 301 of the lower court decision)
On the facts in Newlands, the ONCA agreed with the lower court’s alternate analysis that the wife’s beneficial interest in the Family Trust was a gift before marriage. The alternate analysis by the lower court also included a reduction in the equalization value (from $26 million to $18 million), on the basis that $26 million would be “unconscionable” pursuant to s. 5(6) of the FLA. The ONCA did not interfere with the reduction nor the lower court’s conclusion that the $18 million be paid to the husband over 8 years. The ONCA also agreed with the lower court’s alternate analysis for spousal support to the husband, should he receive the $18 million in equalization, and the lower court’s costs award, both of which are not discussed in this blog.
