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Sep 22, 2020
What Happens if I Die Without a Valid Will?
At this difficult time, with all of us isolated for so long and the constant threat of contracting COVID-19 ever present, the members of the Aird & Berlis Estates and Trusts Group are contacted daily by existing clients, as well as new ones.
Many people are soberly reflecting on their own circumstances. Fearful of being exposed to infection, illness and, from the statistics forced upon us daily, death, there is a great deal of internalizing about what would happen to their family if they were stricken.
We are sure that many of our readers will want to ensure their planning is up-to-date. For our readers who are advisors, it is important to ensure that your clients’ planning is also up-to-date. To that end, we have produced a weekly series of Alerts which will provide basic information in response to questions we are frequently asked.
Last week we looked at what will happen if you become incapable of managing your financial affairs and you do not have a proper Power of Attorney for Property.
Now let's get to this week's question:
What happens if I die without a valid will?
An individual is said to die "intestate" if there is no properly executed Will. When a person dies intestate a number of questions present themselves. Among them will be, who will administer my estate? How will my assets be distributed?
Under these circumstances, in order to deal with your assets, someone has to apply to the Court, in order to become the legal representative of your estate and to receive what is known as a Certificate of Estate Trustee Without a Will (frequently referred to informally as “probate”). That person will be the closest relative who wants to assume the burden of looking after your assets, paying your taxes and other debts, selling your assets and distributing the balance of your estate to a person or persons, in accordance with a very specific list of relatives prescribed by law. If more than one such relative wishes to be appointed, in a Court application which must be made, a Judge will decide who will be appointed, after a hearing and substantial expense.
When making the original application for a Certificate, “probate fees” (formally, Ontario “Estate Administration Tax”) will be payable on the fair market value of your assets. It is calculated at 1.5% of the gross value of assets in excess of $50,000 ($15 per $1,000). In arriving at values, for purposes of that tax, the gross values of all assets are included. However, only the value of real estate situated in Ontario is included. The only debts deductible from gross values of assets are the amounts owing on any mortgages registered against Ontario real estate.
Where a person dies intestate, and regardless of any desires of the deceased to leave specific items to particular people, the total estate, after payment of debts, including Income Tax, will be divided strictly in accordance with existing laws.
In Ontario, the distribution of an estate where there is no valid will is as follows:
a) Where the deceased was married but had no children, the surviving spouse inherits the whole of the estate.
b) Where the deceased was married and had children, the first $200,000 goes to the surviving spouse and the remainder is divided as follows:
i) If the deceased had one child, the remainder of the estate will be divided equally between the spouse and the child. But, if the child had died before the deceased, leaving children then alive, that child’s share of the estate will be divided among those surviving children.
ii) If the deceased had more than one child, 1/3 of the remainder of the estate goes to the spouse and the remaining 2/3rds is divided equally among the children. But, if any child had died before the deceased, leaving children then alive, that child’s share of the estate will be divided among those surviving children.
iii) If there is no surviving spouse, but there is a surviving child or children, the estate will be divided equally among those children. But, as before, if a child had died before the deceased, leaving children then alive, that child’s share is divided among those surviving children.
iv) If there is no surviving spouse, child or deceased child’s children, the estate is divided between surviving parents, equally.
v) If no surviving parents, but there are brothers or sisters, then they share equally.
vi) If no brothers or sisters, then nieces and nephews (by blood, not marriage) share equally.
vii) If no nieces or nephews, the estate is distributed equally to the next closest next of kin.
viii) If no such next of kin survive, then the estate becomes the property of the Ontario government.
It should be noted that if anyone under the age of 18 is entitled to any share in the Estate, the amount has to be paid into Court and will only be received by the beneficiary on a special application to the Court, otherwise, only when reaching 18.
Those are likely most unhappy results!
Read our Alert next week which will consider when you should review/amend your planning documents.
In the meantime, if you have any questions that you would like us to address in future issues, please contact a member of our Estates & Trusts Group.