EstateWISE – Intestacy

Where a person does not have a Will, or where the Will does not address all contingencies, an intestacy can arise.  What are the implications of an intestacy?

What does the word “intestacy” mean?

  • A Will is also known as a last testament, the last opportunity a person has to make a statement about what will happen with their assets or estate
  • Essentially, if you don’t make that statement then the government has set a structure for distributing that property among your family and possibly extended relations

Does that mean that the same rules apply across the country?

  • Under the constitution, matters of the person and property matters are provincial
  • As a result, you have to look at the rules of the province where the deceased resided to determine who will be entitled to the estate and in what proportions

Is there any consistency of how these rules may operate?

  • Yes, if there are no parents, siblings or children then everything goes to the spouse
  • As well, if there is a child or children and no spouse, the children share equally
  • Beyond that, you have to look to the particular province to know what will happen

What about the concern that the government will take the property?

  • Only if there are no blood relatives will property escheat to the provincial Crown
  • Understand that the government is not trying to do something sinister with these rules, it is trying to emulate what a person likely would have wanted to happen

Are there any other problems with an intestacy? 

  • Without a Will, the entitlements of minor children and mentally incapable beneficiaries will likely have to be paid into court
  • A government department will monitor how these funds are managed and distributed
  • For the disabled, their government support may be jeopardized
  • For minors, it will be difficult to make adequate use of the funds while they remain minors and as soon as they reach age of majority 
  • Finally, the trustees of these funds will not have the liability protection the testator could have otherwise provided using a Will

EstateWISE – Do you need a Will?

The cornerstone of any estate plan is a person’s Will.  It is also the touchstone for all other wealth planning activities.  Unfortunately, many people do not exercise their right to execute a Will.  So, why should a person execute a Will?

For starters, how does a Will relate to an estate?

  • An estate comprises all the property owned solely by the deceased at the date of death
  • In turn, that deceased person has the option to exercise control over the management of that estate by having executed a Will while living
  • That said, the field of “estate planning” broadly addresses all your financial and legal planning both during your life and obviously after you die

At it’s core then, what does a Will do?

  • Two main purposes: 
    • Who will receive the property of the deceased person — the beneficiary/ies
    • Who will collect, manage and distribute that property — the executor
  • Lays out the ‘rules’ of how and when this is to occur

Is there anything beyond this ‘administrative’ function?

  • These core purposes may be seen as a shield that protects the desired distribution
  • It can also be a sword that exploits legal rules and accesses tax planning opportunities to provide advantages to the beneficiaries that would otherwise not arise

Is it all then simply about ‘dollars and cents’?

  • On the face of it, it truly is primarily a property distribution document
  • Beyond that though, it is an important means of providing closure to those left behind, even if there are  no surprises in its content

What if there is no Will?

  • Where there are few assets and uncomplicated relationships, it may be that the lack of a Will has little or no bearing on the management of the estate
  • On the other hand, it could result in unintended beneficiaries, undesired proportions, and ultimately unnecessary family anguish that could have been easily avoided   

EstateWISE – What is probate?

In the field of estate planning, there seems to be no word or phrase that strikes greater fear in a person’s heart than the spectre of “probate”.  While it is certainly a known word, its true nature and implications remain a mystery for most people.  Let’s remove some of that mystery:

What is probate?

  • The process of proving to a court office that a Will is entitled to be relied upon
  • The document issued from the court confirming the court’s finding
  • The tax the government/court charges for the service

When is it needed?

  • Third party demand – Likely a bank or other financial institution
  • Real estate under a land titles system (under which title must be certified by the Master of Titles)
  • Where public guardian is protecting the interests of minor beneficiaries
  • Pending or actual litigation involving the estate
  • Executor’s peace of mind

What does it cost?

  • The top rates range from about 0.5% to about 1.5% depending on the province
  • Alberta as a probate ‘haven’ — Maxing out at $400
  • Quebec notarial Wills do not require probate 

Who takes care of it?

  • It is the executor’s responsibility
  • Law office role is to assist with legal matters obviously
  • Often the executor will engage (and compensate) lawyer to carry out the application, but the executor remains legally responsible to oversee the lawyer’s activities

How long does it take?

  • Bringing the application to the court 
  • Time it takes the executor to gather assets and identify beneficiaries
  • Processing time for the court to respond
  • Depends on the backlog in the court office 
  • Few weeks to a few months