You spend your entire life working hard to accumulate and protect your assets. Whether those assets include money, property, antiques, or other things that may or may not have a high monetary value, one tends to collect a lifetime of prized possessions. So, what happens to your assets and possessions after you pass away? Unless you are pursuing a Pharaoh’s burial, the old saying goes “you can’t take it with you.” Accordingly, for many Canadians, steps are taken in advance of death to prepare a last will and testament. A will allows you to express your wishes for the distribution of your assets amongst current (and future) relatives and/or family and can express exactly where you want each item to go.
What if, though, you do not have a legal will? What happens to your property and possessions?
What rules apply without a will?
When you die in Ontario without a will, it is known in law as an ‘intestacy,’ or ‘dying intestate’ (without a testament). When you die intestate, a law known as the Succession Law Reform Act (the “Act”) spells out exactly what will happen with your estate (i.e., possessions and property). Here are some examples of the rules, in short:
- If you have a spouse, and no children (known as ‘issue’ in the Act): Your spouse inherits the entirety of your property. Note that this does not automatically apply to common-law spouses. Also, if you had any property in joint tenancy with another person (a legal form of co-ownership) then that property is not automatically included.
- If you have a spouse and children and the estate is worth less than $350,000: In this case your spouse would inherit the entirety of your estate.
- If you have a spouse and children and an estate worth more than $350,000: Your spouse would inherit the first $350,000 of your estate and then the remainder is divided amongst your spouse, and how many children are alive after you pass. Let’s take an example with an estate worth $650,000:
- If you have one child, your spouse inherits the first $350,000 and the remaining $300,000 are divided between your spouse and your child, so that your spouse ultimately inherits $500,000 and your child receives $150,000
- If you have two or more children, your spouse receives their first $350,000, and then a ⅓ share of whatever is remaining after that, with the number of children dividing a ⅔ share. For example, a spouse and four children would ultimately result in your spouse receiving $450,000, and your children each inheriting $50,000.
- If you have no spouse or children: Your parents inherit the value of the estate, or a single parent if they are the only surviving parent receives the entire value.
- If you have no spouse, children, or parents: Your siblings equally inherit your property under the Act, and if any sibling has already died then their children receive what would be their designated share.
- If you have no spouse, no children, no parents, and no surviving siblings: Your nieces and nephews would inherit your estate equally.
- If you have no spouse, children, parents, siblings, or nieces and nephews: Your ‘next of kin’ inherits your property – this person is found from going up your family tree to the nearest common ancestor, then counting down their line to find the closest surviving relative (i.e.: cousins once- or twice-removed).
The intestacy rules under the Act make logical sense – if you have no will then logically your family would inherit your property. Yet families are complicated, and people often put very specific instructions in their will either to change a person’s inheritance, or sometimes remove it entirely.
Without a will, though, can anyone challenge or make a claim to alter the application of the above rules from applying?
Claims under the Succession Law Reform Act
There are two main types of claims that a person can make against another person’s estate, whether that involves challenging the will or challenging the estate based on the intestacy rules.
The first is a claim for dependant’s support. If the deceased was supporting you before they died, and this support is now cut off by the will or the intestacy rules, you can make a claim for that support to continue. In cases of intestacy, this can be particularly helpful for common-law spouses, or stepchildren who were not legally adopted, as neither one is considered a descendant under the Act.
The other option is for a surviving spouse to make a claim for equalization. In an equalization payment, the surviving spouse receives a share of the property that has accumulated during the marriage, similar to how property is divided when a couple separates. In an equalization, the net family property is calculated for each spouse to assess their assets, and a surviving spouse can obtain 50% of the difference in these two amounts.
It may be favourable to elect to take the equalization, but other amounts such as life insurance payments may be deducted from this total, so there is much to consider. This is a technical procedure under the Family Law Act and should be a strategic decision made with the guidance of legal advice.
While the intestacy rules may not be much different from your own wishes, everyone should have a properly prepared legal will that accurately expresses how they want their assets divided. You’ve worked hard your whole life – a will lets you have your final say. We routinely assist clients in the Cambridge, Kitchener, and Waterloo regions to prepare their wills, and also help surviving relatives apply for probate, or even issue the challenges outlined above. Contact us today to set up a consultation.