LEGAL UPDATE
DO YOU NEED A WILL?
The legal consequences of dying without one.
October 2007
Introduction
To
the question "Do you need a will?", most lawyers and laypeople would
answer "Of course! Despite that, I
ask again, "Do you really need one?” The answer lies in a
determination of what would happen if you should die without one. Contrary to
the belief of many, the government does not take it all. That can happen, but
only in rare circumstances. It is
always true, however, that if you do not make a Will, the law will make one for
you. That "Will" is enshrined in the Succession Law Reform Act. The Will that is written for you varies with
different situations.
The
other question to look at is what does a Will do for you. The benefit of having a Will is that it
speaks for you from the moment of your death.
It allows you to decide who will look after your affairs, who is to
inherit what they are to inherit. It
allows you to benefit family members and other organizations or charities which
may not be possible if you died without a Will. The decision as to whether you would need a Will often will be
made after reviewing what happens to your estate if you don't have one. The process to administer your estate if you
were to die without a Will often takes longer and is costlier. Many people want to know what would happen
to their estate if they didn't have a Will.
This Update is a review of some of the situations and how they are dealt
with under the Succession Law Reform Act.
INTESTATE SUCCESSION
A. Person Dies Survived By Spouse And
Has No Children Or Grandchildren
The
Succession Law Reform Act provides that in this situation, the surviving
spouse is entitled to the deceased's property absolutely. Should you wish others to benefit including
charities you will need to set this out in your own Will.
B. Common Law Spouses
Contrary
to popular believe, the rights of a common law spouse are not the same as those
of spouses who are married. A common
law spouse has no property interest in the estate of the other common law
spouse. Accordingly, if one of them
should die without having made a will, the other would not be entitled to the
deceased's property. The surviving
common law spouse might have a claim for support from the estate as a
dependant, but would not be entitled to assets by virtue of their
relationship. If the common law couple
had children, the children would share in the whole estate. If there were no
children, the estate would go to the legal next of kin of the deceased partner,
being the parents, brothers and sisters or nephews and nieces for example
Accordingly,
if you are living in a common law relationship with another, you will have no
protection on the death of the other unless the other has a will naming you as
the beneficiary.
C. Person Dies Survived By Spouse
And Children
In
this situation, the Act states that the surviving spouse gets a preferential
share. The balance is divided between
the surviving spouse on the one hand and the children on the other.
The
preferential share of an estate is $200,000.00. If it is your intention that your spouse should receive the whole
of your estate, and your estate has a value of less than $200,000.00, you may
not need a will if the only purpose would be to transfer your property to your
spouse.
If
your estate is greater than $200,000.00, the Succession Law Reform Act
provides that if you are survived by a spouse and one child, the balance is
divided equally between your spouse and that child.
If
your estate is greater than $200,000.00, and you are survived by a spouse and
more than one child, then your spouse will get one third of the balance, and
your children will divide the remaining two thirds equally among themselves.
D. Person Dying Having No Spouse But
Survived By Children
In
this circumstance, the estate is divided equally among the children. If any child has predeceased his or her
parent, and such child in turn has children (that is, grandchildren of the
person who has died) such child's share is divided equally among his or her
children. It does not go to the spouse
of such child. If such child had no children, his or her share is divided
equally among his or her brothers and sisters.
E. Children Who Are Minors
A
child is a minor in the eyes of the law until such time as he or she becomes
eighteen years of age. If you should die without a will, and one or more of
your children is under eighteen, the estate trustee who is administering your
estate is under an obligation to determine the value of the share of such
child, liquidate sufficient assets to raise the money to satisfy such share,
and pay the share into Court to the credit of the child. There is no doubt that
this could create difficulties for a surviving spouse.
While
the money is in Court it bears interest at the same rate as the Consolidated
Revenue Account of the Province of Ontario, which may be a better rate than
your estate trustee can obtain. If the
money is needed for the support or other benefit of the child before he or she
becomes eighteen years old, an application can be made to the Court for payment
out on behalf of the child in either instalments for support or for a lump sum
for a specific purpose. When the child
becomes eighteen years old, the child can apply to have the money paid out of
Court to him or her.
The
obligation that the estate trustee has in liquidating sufficient assets to
raise the money to pay the child's share into Court, the legal expense of
"passing the accounts", the expense of paying the money into Court,
the expense of making an application or applications for paying money out of
Court before the child becomes eighteen, the expense of making an application
to obtain the money after he or she becomes eighteen, and the fact that the child
will have perhaps a substantial amount of money when he or she becomes eighteen
years old to do with as he or she pleases, may be a sufficient reason all by
itself to make a will.
F. Person Dying Without Spouse or
Children
In
these circumstances, if the person is survived by a parent or parents, such
parent or parents inherit the whole estate.
If
the person who has died has no surviving parent or parents, his or her share is
divided equally among his or her brothers and sisters. If any of them have predeceased the person
who has died, the share of such brother or sister is divided equally among his
or her children. It does not go to the
spouse of such brother or sister.
G. Guardianship and Custody of
Minors
If
the person who has died has no will, then no expression of their wish with
respect to the guardianship and custody of any of their children if there is no
surviving spouse would have been made.
The family, if any, will need to decide this question together and often
will require assistance of the Court.
The Court has the jurisdiction to place any minor children where they
think they should be in the child's best interests. They will have to make that decision in the absence of your
expressed wishes with respect to custody and guardianship.
H. Children Who Are Incompetent
If
you should die without a will and have a child who is not mentally competent,
that child's share of your estate must be paid into Court whether or not he or
she is a minor.
After
the money is paid into Court, an application can be made to the Court to have
it paid out on an instalment basis until it is all used up.
There
is no doubt, however, that administration of an estate where one of the
beneficiaries is mentally incompetent is substantially more expensive in an estate
where there is no will than is the case of an estate where there is a will.
If
you have a child who is not mentally competent and you wish to provide for that
child, a will is a necessity. A person
can be appointed in it to invest the money on behalf of the child and use it
for the child's benefit.
I. Second Marriages
The
Act makes no distinctions between first and second marriages. Accordingly, if a
person dies without a will and is survived by a second spouse, the second
spouse will take the preferential share and divide any balance with all of the
children of the first marriage.
If
both parties to the second marriage have children from an earlier marriage that
they wish to protect, it is essential that they both have a will. If they do
not, on the death of one of them, the surviving spouse would inherit from the
estate of the other assets having a value equal to the preferential share of
$200,000.00 plus a share of any balance. In most cases, that will be the whole
estate. The children of the party first to die will receive a share of the
surviving spouse's estate only if the surviving spouse makes a will leaving a
share of his or her estate to them.
J. No Surviving Spouse, Heirs, or
Next of Kin
In
legal terminology, the surviving spouse of a person who has died is neither an
heir, nor one of the next of kin. That is an accident of legal history which is
not relevant to this Update, but is the reason for including the spouse in a
separate category.
A
persons heirs are his or her children and their lineal descendants
(grandchildren, great-grandchildren and so on down the line).
A
persons next of kin include his or her parents, grandparents, great
grandparents and their children and all of their lineal descendants. Next of
kin also include brothers and sisters and all of their lineal descendants, and
uncles and aunts and all of their lineal descendants.
Strictly
speaking, it is impossible to die without leaving next of kin somewhere in the
world. It can happen, however, that it
is not possible to identify them. How
many generations in your family can you go back identifying all grandparents,
great grandparents, etc., and all of their children and lineal
descendants. Assuming you can do that,
can you locate them? In some cases, no
trace can be found of any of them.
In
these cases, if a person dies without a will, his or her estate will "escheat to the Crown". That means that the government will get it
all. That could have been prevented if that person had made a proper will
leaving his or her estate to the people or institutions such person wished to
benefit.
K. Bequests/Legacies to Friends and
Charities
If
it is your wish to give an item of your personal property (a bequest) or money
(a legacy) to a friend or charity, to grandchildren, or to anyone or any
institution other than your immediate heirs and next of kin, you must have a
will to do so. If you do not, they will
not share.
Do You Need A Will?
The
answer seems to be that if you don't care about what happens to your estate
after you die, you don't. But, if you,
like most of the rest of us, are among those who are not satisfied to have the
administration of your estate governed by the Succession Law Reform Act, who
does worry about the custody and guardianship of children, who does care about
whether or not the persons administering your estate will be able to minimize
taxes and other government fees, and who does care whether or not it will be
easy to administer your estate when you die, you do need one.
Other
reasons to have a Will include minimizing taxes and government fees. If a person dies without leaving a will, it
is usually impossible to take any steps to minimize taxes and fees that are
otherwise payable. This is not always
the case, but it is usually the case.
Further,
if a person dies with a will, it is sometimes possible to deal with his or her
estate without incurring large legal expenses.
If, however, a person should die without a will, there are few people or
institutions who will deal with his surviving spouse or children before such
surviving spouse or children have been appointed by the Court to administer the
business affairs of the deceased person.
What Will It Cost?
The
following are the fees charged by this firm for making a will.
Simple
will made by husband & wife $195.00
per will
Single
person making a simple will
$250.00
G.S.T.
and out of pocket expenses incurred in making investigations before the will is
completed are charged in addition.
