Apart from the added stress this will put on your family members, dying without a will also means that your final wishes may not be met.
Yet, even with all of these clear disadvantages, roughly 58% of Canadians do not have a will, and a further 10% have an out-of-date will. Perhaps unsurprisingly, younger people are less likely to have a will (only 12% of 25-34-year-olds), but shockingly, 45% of people aged 65 and older don’t have a will.
Let’s take a look at what happens if you die without leaving a will, how it impacts your family and friends, and how your money and assets will be shared out.
Dying without a will in Canada — what to expect
Dying without leaving a will is called dying intestate. This means that, instead of you choosing how your estate is managed and distributed after your death, intestate succession legislation comes into play. All of your money and assets (and debts) are put into your estate (except for policies and accounts that have a designated beneficiary, or which were held in joint tenancy).1
The court will appoint a personal representative for your estate, who will close your financial affairs and make sure your assets are distributed correctly.2 However, the way those assets are distributed will follow local regulations, rather than your specific instructions. Dying without a will means that:
- You don’t get to name an executor (a trusted person who will administer your will).
- 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.
Without a will, and therefore without an executor, someone (either a family member or friend) would have to apply to the court to become the personal representative of your estate. This can take some time, making the whole process of passing on your assets a much longer and more stressful one than if you’d made a will.
How dying intestate will affect your spouse
If a spouse dies without leaving a will, it can have a big impact on the surviving spouse’s finances, as the deceased’s assets may not automatically go to them. Furthermore, in some provinces and territories, common-law partners are not considered a legal spouse and will not benefit under intestate succession rules.
Many people would prefer to leave all of their money and belongings to their spouse, especially if they have young children or a blended family. However, if you leave no will, your estate could be split between your spouse and children (regardless of their age).
When a parent dies without leaving a will
Some intestate laws automatically split your assets between your spouse and your children. This means that, if you’d planned on giving one of your children a larger share of your money than the others, that won’t happen.
And, if your kids are minors, the money could be held in a trust until they reach the age of majority (18 or 19, depending on where they live). This could be money that your spouse could otherwise have used, but instead it could get locked into a trust for many years.
Another issue is that, once they reach the age of majority, your children receive all the money left to them, all at once, and can do whatever they want with it. This could be too young an age for many people to know how to handle such potentially large sums of money.
If your children’s other parent is dead, the court decides who will look after them, and this might be someone other than who you had in mind.
How dying without a will in Canada affects your other beneficiaries
According to Canada’s inheritance laws, If you’d intended to leave some money to a close friend, a more distant relative or a charity, this won’t happen if you die without leaving a will.
Intestate succession rules are inflexible and only recognize close relatives (by blood or adoption). In fact, in most cases, your estate will pass on to your spouse and children, and no one else. Also, if you die intestate, you won’t be able to provide for your pets or name someone to look after them.
Intestate issues beyond beneficiaries
Intestate succession rules can lead to unnecessary legal costs for your estate and potentially unpleasant legal fights between your children and/or your spouse.
Dying without a will also means that you can’t minimize taxes. For example, if your whole estate passes to your spouse, there would be little to no tax impact. If some of the estate goes to your children, your estate may have to pay a portion of the amount in tax before it passes to your beneficiaries.
Dying intestate also takes much longer than when you leave a will and it’s often more costly. The court may appoint a public trustee, who doesn’t know anything about you or your final wishes. And your family members will have a more stressful time finalizing your affairs, at a time that is already upsetting for them.
An example: what happens if I die without a will in Ontario
To give you an idea of the order in which 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. If you have only one child, then it will be split equally between your spouse and child, but if you have more than one child, then one-third will go to your spouse and the other two-thirds will go to your children.
- If you have children but no spouse, your estate is split equally among all your children.
- If any of your children are dead, their share is split between their children.
- If you have no spouse or descendants, your estate goes equally to your parents. If only one of them is alive, they receive the whole amount of your estate.
- If you have no spouse, descendants, or surviving parents, your estate will be split equally among your siblings. A deceased sibling’s children will receive their share.
- If you have no siblings, your estate will be split among your siblings’ children.
- If you have no nieces or nephews, your estate will go to your next of kin.
- If you have no next of kin, your estate will pass to your provincial or territorial government.
As an example of how rules vary between provinces, in Quebec, if you have a spouse and children, your spouse will receive one-third of your estate, with the rest being split equally among your children.
Estate planning made easy
Your IG advisor can help you put together an estate plan and recommend solutions that help maximize your estate’s value, minimize tax obligations and help 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.
Contact your IG advisor today to arrange a meeting to discuss estate planning. If you don’t have an IG advisor, you can find one here.
1 Joint tenancy is not applicable in Quebec. Beneficiary designations cannot be made in Quebec except with respect to life insurance policies and annuities. In the rest of Canada, beneficiary designations can typically be made with respect to life insurance policies, RRSPs, RRIFs, TFSAs, pension plans, and locked-in accounts.
2 In most of Canada, a personal representative of an estate is called the executor or administrator. In Quebec, the legal term is liquidator. In Ontario, the term is estate trustee. While executor and administrator remain commonly used terms across the country (other than Quebec), for simplicity, personal representative is used in this report.
Written and published by IG Wealth Management as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Wealth Management Consultant.