June 15, 2020

A will allows an individual to decide in advance who will administer her estate and who will receive her assets when she dies. Testamentary freedom is guaranteed to all Canadians, meaning we are free to choose who will benefit from our estates: family members, friends, pets, charities, or our favourite sports team. (Note that most provinces impose some limits on testamentary freedom, namely a requirement to provide support to dependants. A testator is also prohibited from asking their executor to do something illegal.) Despite the many advantages of having a will, around half of all Canadians never get around to it and die “intestate” (meaning they have no will). What happens then?

Contrary to popular belief, the government does not seize all your assets if you die without a will. However, each province’s government does set out the rules for who will administer your estate and who will inherit your estate on intestacy. In Ontario, the rules of intestacy are set out in Part II of the Succession Law Reform Act (the “SLRA”) and the Estates Act.

Who Administers the Estate?

Section 29 of the Estates Act sets out who is given priority to administer the estate:

– The deceased’s married or common law spouse; then

– The deceased’s next of kin, being:

– The deceased’s children or grandchildren;

– The deceased’s parents; then

– The deceased’s siblings.

If the deceased does not have a spouse or next of kin, or none are willing to act as executor, then the Ontario Public Guardian and Trustee will step into that role as a last resort.

Who Benefits from the Estate?

As with all estates, the executor must first pay all the debts and liabilities of the deceased (including taxes and funeral expenses). Whatever is left over after the payment of all debts is called the “residue.” Part II of the SLRA sets out who is in line to inherit the residue of the estate.

The Deceased Was Married

If the deceased was legally married at the time of her death, then her spouse is guaranteed a “preferential share” of the estate (the current value of the “preferential share” is $200,000.00).

If the deceased had no children, then her spouse receives the rest of the residue. However, if the deceased had children (or grandchildren, if the deceased’s children died first), then the remainder of the residue after the payment of the preferential share to the spouse is divided as follows:

Spouse and One Child

– Spouse and child divide the remainder of the residue equally between them

Spouse and Two+ Children

– Spouse receives 1/3 of remainder of the residue

– Children divide the remaining 2/3 of residue equally between them.

It should be noted that only married spouses are entitled to inherit on intestacy. Common law spouses do not receive anything from their partner’s estate on intestacy.

The Deceased Was Not Married

When the deceased was not legally married when she died, then her estate is distributed equally to her closest “next of kin.” Listed in order of priority, next of kin includes:

– The deceased’s children (or, if the deceased’s children died before her, then her grandchildren or great grandchildren).

– If no children/grandchildren, then to the deceased’s surviving parents or parent.

– If no parents, then to the deceased’s siblings.

– If no siblings, then to the deceased’s nieces and nephews.

– If no nieces and nephews, then equally among “next of kin of equal degree of consanguinity.” To help determine who is the “closest” next of kin, the SLRA states: “degrees of kindred shall be computed by counting upward from the deceased to the nearest common ancestor and then downward to the relative, and the kindred of the half-blood shall inherit equally with those of the whole-blood in the same degree.” Practically speaking, this means aunts and uncles, cousins, then second cousins and so on – whatever blood relations may be found.

– If no blood relations, then to the Crown (i.e. the government will only inherit the residue of the estate if no blood relations can be located).

Any Other Considerations?

The law of intestacy in Ontario follows the presumption that most people want to benefit their immediate family members on their death. However, the Ontario rules of intestacy benefit only married spouses and blood relations. It leaves out common law spouses, step children, and other people with whom the deceased may have had a close and loving relationship during her life. If the deceased was providing those people with financial support before her death, then the estate may be faced with a dependant support claim, tying up the administration of the estate in litigation.

In addition, one of the benefits of a will is that it conveys authority immediately on the named estate trustee. While the estate trustee may not be able to complete the estate administration without first obtaining probate, she will at least be able to take preliminary steps, such as making funeral arrangements and gathering information about the estate assets.

Where there is no will, interactions with institutions (banks, funeral homes, landlords, for example) can be much more difficult – it can be harder for family members to gather information about the deceased’s assets and debts without first proving their right to access that information. This often means that the deceased’s assets are entirely frozen until probate is obtained.

Finally, the probate application itself is more complicated where there is no will; there tends to be an increased number of forms to fill out and family members that must be consulted before the application is complete.

So while you can rest assured that your assets will make it to your family members if you die intestate, you are often doing them a favour by setting out your wishes clearly and simply in a will.