Don't Leave a Mess: 5 Reasons Your Heirs Need You to Make a Will
When someone dies without having made a will, they are referred to as having died “intestate”. When someone dies intestate, administering their estate is more complicated compared to someone who dies having made a will. To begin with, it is highly likely that in order to properly administer an intestate estate a Certificate of Appointment of Estate Trustee will need to be obtained from the Court. Whereas when someone dies with a will, it is more likely that a Certificate of Appointment of Estate Trustee may not be required. This determination often depends on the nature of the estate assets, but if an application for a Certificate of Appointment can be avoided, then so can a lot of procedure and costs.
Below are five other reason why administering an intestate estate is more complicated:
1. Beneficiaries are determined by Provincial law – Each province has its own laws dealing with intestacy. In Ontario, the beneficiaries of an intestate estate are determined by the Succession Law Reform Act (SLRA). The SLRA prioritizes a married spouse and children, followed in order by parents, siblings and nieces/nephews. This may seem like a logical order to some, but people with estranged family members may have their estate inherited in part or wholly by someone they did not have a relationship with before they died. Specifically relating to siblings, it is important to note that the SLRA treats full-blood siblings and half-blood siblings the same. Therefore, if no married spouse, children or parents exist, a deceased person’s siblings would be equally entitled to share in the estate of their deceased brother or sister along with any children that their parents had from another relationship.
2. Consents are required for appointment of Estate Trustee - In an intestate estate, the priority of who can apply to the Court to be appointed Estate Trustee follows the same priority as beneficiaries described above. Unless there is only one person ranking in priority as the sole beneficiary (for example, a deceased’s married spouse with no children), the person applying to become Estate Trustee is required to obtain the written consents of at least 50% of the estate beneficiaries as part of their court application for a Certificate of Appointment. Obtaining these consents will be difficult if the beneficiaries cannot agree on who should be responsible for the administration of the estate. Even if agreement exists, obtaining these consents is an additional court requirement often not needed when applying for a Certificate of Appointment of Estate Trustee with a will. Other additional court requirements may include preparing extra affidavits, obtaining a bond, or obtaining the renunciation of a person ranking higher in priority than the applicant. All these extra requirements and procedures take time and effort, and often result in more legal costs.
3. Uncommon division between a spouse and the children – In my experience, the most common scheme of distribution chosen in a will by a person who has a spouse and children is to leave their surviving spouse their entire estate with further terms stating that if their spouse does not survive them then the children will share in the estate. So, commonly, the children do not stand to receive any inheritance until both parents have died. According to the SLRA, in an intestate estate, if the deceased is survived by a married spouse and children then the spouse is entitled to a preferential share in the estate of up to $200,000 with the remaining estate value being split between the spouse and the children in percentages determined by how many children there are. This uncommon division in the SLRA may not be what most people want. It may complicate the administration of an estate because assets of the deceased may need to be liquidated and divided in order for a child or children to receive their inheritance, instead of these same assets simply transferring directly to a surviving spouse. This is not an ideal situation for a surviving spouse who could be fully or partially dependent on their deceased spouses’ income and assets to maintain their way of life. Further, this same surviving spouse could be the sole provider for the couple’s minor or dependent children, and the money being transferred to the children as inheritance could have been better allocated by the surviving spouse for the benefit of the family as a whole.
4. No legal authority to hold inheritance of a minor in trust – In Ontario, there is currently no legal authority given to an Estate Trustee of an intestate estate to hold funds in trust for a minor beneficiary. As a result, an Estate Trustee must pay the minor’s share into the Court to be held by the Accountant of the Superior Court of Justice. Once the minor turns 18 years old, they will have to apply to the Court to have their share paid to them directly. On the other hand, an Estate Trustee with a will derives their authority to hold funds in trust for minor beneficiaries from the will itself, and can decide from a range of options to best protect, grow and possibly use the funds for the minor’s benefit until it is time to transfer them directly to the beneficiary.
5. Different treatment of common law spouses - The SLRA does not provide the same rights and entitlements to a common law spouse as it does for a married spouse in an intestate estate. A common law spouse does not rank in priority as a beneficiary or as someone who could apply to become an Estate Trustee. This could come as a surprise to many common law spouses, who now have their loss of a loved one compounded by their detachment from their estate. Under the SLRA, a common law spouse could make a dependents support claim against the estate if the deceased has not made adequate provision for their support and is obligated to do so. This kind of claim will more than likely pit the family of the deceased against the deceased’s common law spouse in a time consuming, complicated and contentious Court matter.
Creating a will that reflects your wishes for the distribution of your estate is relatively easy and inexpensive. Dying without a will is not. An intestate estate is expensive and time consuming to administer and can cause significant disruption and conflict amongst the beneficiaries.
If you would like to discuss how to have a will prepared, please contact me. I’d be pleased to assist.