Despite the clear disadvantages, approximately 58% of Canadians do not have a will*, and an additional 10% have an outdated one. This article explores the consequences of dying without a will in Canada.
Dying Intestate: The Implications
Dying without leaving a will is referred to as dying intestate. In such cases, intestate succession legislation comes into play, and the court appoints a personal representative for your estate. However, the distribution of assets follows local regulations, not your specific instructions. This means:
- You don’t get to name an executor.
- You don’t get to choose who receives your assets.
- Your spouse or next of kin may not receive as much as you would want.
- You don’t get to leave any money to charities.
- You don’t get to have a say in your funeral arrangements.
- You don’t have a chance to minimize taxes.
- You don’t have a say in who looks after your children.
Impact on Your Spouse and Children
If a spouse dies intestate, it can significantly impact the surviving spouse’s finances. The deceased’s assets may not automatically go to them. In some provinces and territories, common-law partners are not considered a legal spouse and will not benefit under intestate succession rules. If you have children, the money could be held in a trust until they reach the age of majority, potentially locking up funds your spouse could otherwise have used.
Impact on Other Beneficiaries
Intestate succession rules are inflexible and only recognize close relatives. If you’d intended to leave some money to a close friend, a distant relative, or a charity, this won’t happen if you die intestate. Also, if you die intestate, you won’t be able to provide for your pets or name someone to look after them.
Legal and Financial Implications
Dying intestate can lead to unnecessary legal costs for your estate and potentially unpleasant legal fights between your children and/or your spouse. It also means that you can’t minimize taxes. The process is often more costly and takes much longer than when you leave a will.
An Example: Ontario’s Inheritance Laws
To illustrate how the government will distribute your money and assets, here is an example of inheritance laws in Ontario. If you have no children, your (married) spouse will receive your entire estate. Common-law partners will not inherit. If you have a spouse and children, your spouse receives the first $350,000 of your estate, and the rest is split between your spouse and children.
Your Financial Advisor can help you put together an estate plan and recommend solutions that help maximize your estate’s value, minimize tax obligations, and ensure that your beneficiaries receive everything you have planned for them. They can also suggest options for how you can draw up a will so that you can prevent your family from having to deal with intestate rules.