If you don’t have a will, it seems you’re not alone! 57% of Canadians admit they don’t have one either, so what happens to their assets when they die? This is an important question, and if you find yourself unsure of the answer, you may want to take the time to learn more about what assets you have, what happens if you pass away without a will and what the next steps are to ensure that you tie up any loose ends with legal documentation before it’s too late.
Assets Could Be Distributed Based On Provincial Laws
You may have heard the term “dying intestate,” which simply means dying without leaving behind instructions on how to distribute your property (having no will). When this happens, the government gets to use provincial laws to appoint an executor and then decide how your estate will be distributed. Your estate refers to any assets or liabilities that you own. Even if you’re OK with your assets being distributed according to provincial law, having a will can still eliminate a lot of delays and additional expenses your appointed executor will have to manage as they move through the process.
In Ontario, the Succession Law Reform Act governs how your assets will be divided should you die intestate. According to this act, your property will be distributed as follows depending on your personal situation:
1. If you have a spouse and no children, your spouse will inherit everything. Keep in mind that this will only apply to legally married couples, so common-law spouses will not receive anything if you die without a will.
2. If you have a spouse and children, the spouse will take preferential share, which translates to $350,000 worth of assets if the death took place on or after March 1, 2021. If anything remains once the spouse takes their share, this is referred to as residue and will be divided amongst your spouse and children as follows:
– If you have one child, they will split the residue with the spouse.
– If you have more than one child, the spouse receives 1/3 of the residue and the children share the remainder equally.
3. If you have children but no spouse, the estate will be divided equally amongst each child. If one of your children has died, their descendants will receive that child’s share (grandchildren).
4. If you have no spouse or children, your parents will inherit your entire estate.
5. If you have no spouse, children or parents, any siblings you have will divide your estate evenly.
6. If you have no siblings, your nieces and nephews will inherit your estate.
7. If you have no nieces and nephews, then all other next of kin will inherit an equal portion of your estate.
8. And finally, if you have no living next of kin, then the provincial government inherits your estate.
Take note that the government states that in order for a “relative” to inherit, they must have a relation by blood, including children born outside of a marriage or legally adopted children. Half-blood relatives will share equally with whole-blood relatives. It’s very important that you understand this law of succession so you know exactly where your assets will go in the event of your death, should you not have a will. Aside from not being able to divide your assets the way you wish, dying without a will means that those you leave behind to organize your estate will be met with unnecessary delays, additional expenses and likely a lot more stress than you intended to cause.
Assets Could Be Distributed To The Loved Ones Of Your Choice
When you pass away with a valid will, your estate is typically divided according to directions you leave within the will. This means that you’re free to leave your assets to anyone you wish, whether that’s a relative, friend or charitable organization. A will gives you the ability to leave everything to one person, divide things evenly between a few people or even parcel out different items within your estate to ensure that all of your loved ones get what is best suited or most appropriate for them.
Some Assets Could Be Used To Pay Off Your Debt
When you have a valid will, you can also outline if some funds should be set aside to pay off outstanding debts. This ensures that your debt gets cleared and isn’t dropped on your loved ones to manage at the worst possible time. Debts could include paying off a mortgage so remaining members of your household don’t have to stress about their living situation, it could mean paying the remainder of your monthly vehicle installments or even paying off credit card debt.
Some Assets Could Be Lost Forever
If you die without a valid will, some of your assets may slip through the cracks forever with no beneficiaries able to claim them. Without legal documentation, dividing up an estate can get messy for everyone involved, and there are a lot of factors to consider. If you own a small business, work in a partnership, have a charitable donation legacy, own multiple properties or even live common-law with a spouse, there are assets that may overlap with others or could cause drama for those you leave behind. Having a last will and testament ensures that there are no loopholes or ways for assets to slip through the cracks of the legal system due to lack of paperwork or use of proper terminology. Thinking about and planning for death isn’t exactly fun, but being prepared with the right documentation and an understanding of the legal processes surrounding your will can help ensure that you leave behind your legacy and not a giant mess your loved ones need to organize. While you don’t legally need a will, there are so many reasons why having one is a wise decision. If you have questions about your estate, how to manage assets or how to financially prepare for end-of-life necessities, our team can help.