If you die without a Will, you might be very unpleasantly surprised by what happens to your estate. Intestacy laws can cause some very tricky problems for your family.
If you have a Will, you can rest easy knowing that your assets will be given away the way you would have wanted it done.
But just exactly what does happen if you die without a Will?
If you die without a Will, the Wills, Estate and Succession Act (“WESA”) tells us what to do with your estate. These rules are called intestacy provisions.
WESA’s intestacy provisions might be acceptable to some people, but it’s entirely possible you could be really unpleasantly surprised about what these intestacy rules actually involve.
It’s important to know what these intestacy provisions actually are, since they don’t always follow a pattern you might expect (or want). Making a Will avoids these provisions. It means your family will know what you want, and can follow your instructions.
So we know there are rules – now what?
Determining the nature of your estate
The first step is to determine which of your assets will be governed by these intestacy rules.
These intestacy provisions apply to any asset you own by yourself at your death, which are not subject to a true joint tenancy and which do not have a designated beneficiary named for them.
Let’s call these assets your “individually owned assets“.
Any property you own as true joint tenant with someone else passes to the surviving owner on your death. Any assets that have a designated beneficiary (RRSPs, TFSAs, etc.) are paid to the named beneficiary.
Getting a Grant
So now we have identified that you have assets in your own name that don’t pass to a surviving joint tenant or designated beneficiary. You didn’t have a Will, so we know we need to look to WESA’s intestacy provisions to determine how to distribute the assets.
But before we do that, we need someone to be in charge.
Someone in your family needs to apply for a representation grant. This grant is actually a court order that authorizes someone to be your representative, and to manage your estate.
A representation grant is important because it means we know who to listen to – we won’t have several people fighting over what to do with your estate.
When you make a Will, you get to choose your representative. If you didn’t make a Will, you lose your choice – someone must volunteer to take on that role, and your family must follow the rules in WESA setting out who has priority for this duty.
Why is this a problem? Because the person who volunteers for this job might not be the best (or right) person for the job. It might be someone you wouldn’t have chosen. You have no control over who will handle your estate if you have no Will – that will be up to your family and the court.
The family member who gets a representation grant for your estate will then be able to manage your estate.
So what happens to your stuff?
Figuring out your family
So now someone has volunteered to be your representative, and they have a grant. What’s next?
Before we can decide how to give away your estate, we need to sort out who your family members are.
First: do you have a spouse? Sounds like an easy question, right? Not always. It’s actually possible to have multiple spouses at the same time under WESA.
When a person is a spouse under this Act
2 (1) Unless subsection (2) applies, 2 persons are spouses of each other for the purposes of this Act if they were both alive immediately before a relevant time and
(a) they were married to each other, or
(b) they had lived with each other in a marriage-like relationship for at least 2 years.
Next, we need to identify your children. Do you have any children? Are they from one spouse, or multiple spouses? Were you still living with your children’s other parent at your death? Have any of your children predeceased you? Did they leave any children surviving you?
Only once we have this information can we tell how your estate will get distributed.
Here are some examples:
Spouse and no descendants
If you die with a spouse and no descendants, then your spouse gets everything.
No spouse, but you do have descendants
Descendants? Don’t you mean children? Nope. Here’s one of the parts you might not like.
In WESA, the word descendant means:
“descendant” means all lineal descendants through all generations;
So let’s think about what this means.
Scenario A: If you have two children and none of them have any children, then you have two descendants.
Scenario B: If you have four children and each of those children has two children, you have 12 descendants.
Why does this matter? Because if you have no spouse, but you leave descendants, then your estate is distributed to your descendants, following a set of rules about who is alive or not.
Let’s imagine you are single, and you have two children who survive you. What happens if you haven’t made a Will?
Your two surviving children would share your estate after you die. In this scenario, your grandchildren receive nothing.
But what happens if one of your children died before you? Now we include any children they might have had (your grandchildren).
This can get pretty messy. For example:
If you have a spouse and descendants
If you have a spouse and descendants, it gets more complicated.
First, your spouse will receive:
- your household furnishings
- a preferential share in your estate
Next, what remains of your estate is divided in half. One half of your remaining estate will go to your spouse, and the other half will be divided among your descendants.
It’s important to understand that your spouse doesn’t receive everything when you die – they will share your estate with your children.
Before we can determine how much this “preferential share” is going to be, we need to determine who was the parent to your children. Are your children from your current spouse? From a previous spouse? Or a mix?
The preferential share will be:
- $150,000, if you had some or any children with another person, or
- $300,000, if you only had children with your current spouse.
Note that “child” means a descendant you have had by birth or legal adoption, and does not include step-children.
So, if you have a spouse and children from your current wife:
Is this really what you want to have happen?
Now let’s imagine that you and your first wife (let’s call her Mary) got divorced. You and Mary had two children. You then later married another lady (let’s call her Allison), and you had two children with Allison. You die without a Will. What happens now?
Mary gets nothing. Allison, as your current spouse, gets:
- the household goods and personal effects
- the first $150,000 from your estate
- 1/2 of the remaining residue.
Your four children share the other 1/2 of the remaining residue of your estate.
No spouse, no kids
Your parents share your estate between them if you have no spouse or descendants.
What if my parents have both passed?
Your parents’ descendants will then share your estate. This might mean your estate goes to your half-siblings, if you have any.
Your representative is allowed to look for next of kin family members up to 5 degrees of separation from you. After that, or if you have no next of kin, then you guessed it, the government will receive your estate.
My kids are minors – what does that mean?
Lastly, what happens if any of your beneficiaries are minors?
Their inheritance will be held in trust for them by the Public Guardian and Trustee until they reach 19.
It should come as no surprise to you that the Public Guardian and Trustee will charge money to your children for managing these trusts.
Solve everything – make a Will
In conclusion, you can see that this can get very complicated, very quickly. Making a Will solves all of these problems.November 10, 2019 1:27 pm