No one should ever have to encounter a loved one dying intestate, or in other words, without a last will and testament. Dealing with and accepting a person’s death is beyond difficult. To have no final instructions, which a will offers, is unimaginable. To have no person in charge, which is the role of an executor, adds confusion. If you haven’t written your will, or equally as risky you haven’t reviewed your dated will, gaining an understanding of the intestacy rules may push you to do so.
The Need to be Aware
Before diving into the legislative acts, the story of the “infamous holograph will” may add a measure of urgency to your quest to write your will. Global News aired Cecil Geo Harris’ story of his “tractor fender will.”
On June 8th, 1948,
this Saskatchewan farmer encountered an unfortunate accident. He was pinned under his tractor. Realizing his predicament and the possibility
that he may not survive, he etched a sixteen-word hand-written will on the
fender of his tractor. It read, “In case I die in this mess I leave all to the
wife. Cecil Geo Harris.”
Regretfully, he didn’t survive
but his will was found by the courts to be a valid holographic or handwritten
will. His final wishes were made known on
a fender of a tractor.
Envision Mr. Harris’ dilemma in
those crucial hours as he lay pinned under the tractor. Regret may have weighed heavily on his mind
for not doing what he should have done sooner. He understood the seriousness of
not having a will and intentionally scribbled his final words. Today, his ordeal is still talked about and
studied in law textbooks on wills and estates. His case continues to be
publicized so that others may avoid the problems that may arise if they don’t
have a will.
The Need for
Education
You may naturally assume in Mr. Harris’ case that he didn’t need
a will based on the premise that his wife should have inherited
everything.
Here’s a question to test your understanding and offer that
back-to-school nostalgia. This appeared in the course, Living Wills, Forms of Property
Interests, Intestacy, and Probate, offered by The Canadian Institute of
Financial Planning.
Mr. Smith, a client, does not see the need for preparing a
will. He is married, has two adult children and an estate valued at $1.4
million. If he does not prepare a will,
which of the following would be FALSE?
A. His estate would
be distributed according to the provincial intestacy legislation.
B. The estate would
be subject to probate fees.
C. The distribution
of the estate would be held up until the completion of the probate process.
D. His spouse would
receive all of his assets.
How did you respond? ... Well, the correct answer is D.
Sadly, Mr. Smith’s spouse would
not receive all of her husband’s assets because of their two adult
children. We might think this shouldn’t
apply because they’re not financially dependent on their father… but according
to most provincial intestacy legislation, a spouse is entitled to receive a
preferential share, a set amount of the estate. The reminder above this
preferential share is then divided between the spouse and the surviving
children or grandchildren. The children share in the wealth regardless whether they’re
entitled to the property. Some may believe the intestacy formula is acceptable. However, depending on the size of a person’s
estate and personal circumstances, the spouse may not have adequate financial
support. The situation becomes problematic given the time of passing and the
spouse’s age and ability to earn an income.
Only a valid will would clearly define the appropriate distribution
between a surviving parent and children.
The Need for Intestacy Legislation
When you decide not to write a
will, then you choose to leave the settlement of your estate in the hands of
the courts. You may be hard-wired into believing the courts will treat your
family fairly. However, your treacherous
tactic of relying on the government-made plan can unravel your family and
permanently sever relationships.
When you make the choice not to
write the most important document of your life, you should examine the one the
government has written for you. Every province has put in place legislation;
the Government of Saskatchewan dedicates a page on their website with pertinent
information related to When the Deceased does not have a Last Will and Testament.
The Government of Saskatchewan spells out the
guidelines for distributing assets according to a formula in their The Intestate Succession Act, 1996.
Definitely the one-size-fits-all rules are not appropriate for everyone but
it’s the gamble a person takes when they don’t design their own will. Certainly, some assets may pass outside your
will if you have designated beneficiaries on your life insurance policies,
pension plans, RRSPs and RRIFs or if you own property jointly with rights of
survivorship. You may even have a partnership
or shareholder agreement in place for your business interests. However, other
assets may be owned solely in your name and, therefore, will become part of your
estate.
Aside from the assets, let’s not
overlook the most significant piece. The courts must appoint a person to act as
your administrator. Family can apply
for the job. The list of eligible persons is lengthy. (Surprise, it also includes creditors). One can expect controversy to arise in any family if more than one individual
steps forward and applies for the role. However,
everyone who chooses not to apply must renounce their right and give consent to
the appointment. The paper work is onerous.
Delays are inevitable. The choice of administrator may not meet your approval
but the fact is you’re not alive to protest.
Only when you are alive do you have the opportunity to define your own
rules related to the appointment of your administrator and distribution of
assets.
The Need for Other Government Legislation
The daunting consequence of dying
intestate is the “fight” your loved ones may need to undertake for their
rightful entitlement. No one should have
to go through a costly legal battle to do this.
Various legislation provides for and protects your loved ones but they may
need to plead their case to the courts.
Not all provinces and not all
legislation within the same province recognize a common-law spouse in the same
matter. With so many different acts in
Saskatchewan, The Intestate Succession Act (1996) and The Wills Act (1996) offer a
definition while The Administration of Estate Act, for one,
does not. Common law spouses may need to obtain a court order to declare they
are a spouse and provide supporting evidence based on a number of factors.
Same-sex and opposite-sex
common-law partners may also need to rely on other legislation, such as The Dependents’ Relief Act (1996), to
obtain their rightful entitlement. This same regulation also applies to any
dependents who require financial support from an estate.
When you die without a spouse and
without a will, the Guardian and Public Trustee will step
forward on behalf of minor children under the age of majority and name a
guardian for them. Any inheritance rightfully entitled to a child will be held
in trust until they reach the age of majority.
You can visualize all the twists and turns. Immediate concerns arise
from relying on the Public Trustee to choose the ideal guardian and trustee. From emotional standpoint a child’s welfare
depends on a suitable match with a loving substitute parental figure. From a
financial standpoint, a young adult potentially could squander their
inheritance too quickly. I don’t want to
belabor the point but formal instructions outlined in a will could avoid the
confusion and drama.
The Need to Understand
The intestacy rules appear
relatively simplistic and straightforward when divvying your estate. The responses appear to require a simple
“Yes” or “No”. But is it that easy? Most intestate situations are not.
Do you have a spouse? As discussed previously, your province’s rules
determine whether your common-law spouse is included in the distribution.
Do you have children? The wording in the intestacy legislation refers
to the term “issue”. By definition, issue means “all lawful lineal descendants
of the deceased” which broadly encompasses all children, grandchildren,
great grandchildren, even those born within or outside of marriage and those who
are legally adopted. In some provinces, children who are conceived, but not yet
born at the time of their parent’s death, may also be included.
Below depicts the order of
distribution from Saskatchewan’s Intestate Succession Act and the questions progress until you have a
definitive answer.
- Do you leave a spouse and no issue?
- Do you leave neither a spouse nor issue?
- Do you leave no spouse, issue, or parent?
- Do you leave no spouse, issue, parent, or sibling?
- Do you leave no spouse, issue, parent, sibling, nephew, or niece?
- Do you leave no lawful heirs?
From others’ experiences, we know
distant and unknown relatives tend to
come out of the woodwork if they can lay claim to an estate. However, if
there is no one who will inherit your estate, then your wealth will be acquired
by the Government of Canada through the Escheat Act.
The Need to Care
Advisors are looking for ways to crack
the code to convince more people to write their Last Will and
Testament. Stories, like that of Cecil
Geo Harris, need to reach those who procrastinate in drafting this important
document. No doubt, Harris didn’t wake
up that morning with thoughts of a pending accident or his death. Fortunately,
he had sufficient time to fully understand his mess. With some time, a pocket knife, and the
ability, he cared enough to etch a short-worded will on a tractor fender.
For no other reason, the
intestate formula written by the provincial government should make people care
about their families to ensure their loved ones are not left to deal with the
aftermath of an intestate. These points
extend their reasons for caring even further:
- Higher administration costs with intervention from the courts
- Additional income taxes without the proper estate and tax planning strategies
- Lengthy delays in the settlement of an estate
- Reassurance of financial support to dependents
If you know any family or friends
who have not written their Last Will and Testament, encourage them to:
Acquire
legal advice from professional advisors as soon as possible.
Avoid
relying on advice from family, friends, and neighbors about legal matters.
Absorb
all the information about the consequences of dying without a will.
I rest my case but maybe you have
something to add to this conversation.
Your comment is welcomed below.
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