The estate to be distributed under the said Act, includes any property in which you are the sole owner or in which your estate is designated as a beneficiary (e.g. under a life insurance policy, registered retirement savings plan, tax free savings account, etc.). Property owned jointly will be transferred to the surviving owner(s) and designations other than the estate will be paid directly to the designee, both flowing outside of the estate.
Scenario #1 – Spouse and No Children
If you have a spouse and no children, your spouse is entitled to your entire estate. It is extremely important to note that common law spouses are not included in the definition of ‘spouse’ and therefore are not entitled to any of your estate under the Act. If you wish a common law spouse receive an inheritance from your estate you must do this by will. Also, note that the definition of ‘children’ includes biological and formally adopted children.
Scenario #2 – Spouse and Children
If you have a spouse and one child, your spouse gets the first $200,000 (referred to as the ‘preferential share’) and ½ of the balance of the estate and you child is entitled to the other ½. If you have a spouse and more than one child, your spouse will still get the preferential share, but only 1/3rd of the balance of the estate, which the remaining 2/3rd being divided equally amongst your children.
Scenario #3 – Children and No Spouse
If you aren’t married but have children, your children will share equally in your estate. If any of your children have predeceased you leaving surviving descendants (referred to as ‘issue’), those descendants would be entitled to the share in which you child would have been entitled if he had survived you.
Scenario #4 – No Spouse and No Children
If you aren’t married and have no issue, the next in line to inherit would be your parents equally or all to your surviving parent. If you parents have predeceased you, then your estate will be divided equally among your brothers and sisters. If a sibling has predeceased you, then the share that he or she would have been entitled to if he or she had survived you will be distributed among his or her children equally. If all your siblings have also predeceased you, then your nieces and nephews will share in your estate equally. If you also have no surviving nieces or nephews, then your estate will be divided equally among the individuals in the next closest level of blood relation to you (referred to as ‘next of kin’).
Scenario #5 – No Relatives
Your estate will only go to the government if you die without a will and have no surviving spouse, issue, parent, brother, sister, nephew, niece, or next of kin. This happens very rarely.
If a beneficiary of your estate is a minor (i.e. under 18), any inheritance must be paid into Court as they can’t legally hold property. The guardian(s) of the minor must then apply to the Office of the Children’s Lawyer each time they need money for the expenses related to the care and management of the minor. You can only choose the individual who will manage the funds for the minor by will. The Court would then pay the remaining balance of the inheritance to the minor beneficiary at the age of 18. If you want to delay the age at which the minor beneficiary will receive the balance, you can only do so through a will.
If you are the last surviving parent of your children, upon your death, the Court will choose a guardian for your minor children. However, through a will, you can choose who that guardian will be.
To complicate matters further, it’s possible that even if you have a valid will in place it may not properly address the distribution of all the property in your estate or may not provide for backup beneficiaries if all the beneficiaries named in the will die at the same time or predecease you. This creates what is referred to as a ‘partial intestacy’. With a partial intestacy, the part of your estate that is not distributed according to your will is to be distributed according to the Act as set out above. It is therefore important to have your will reviewed by a lawyer.
Finally, the individual that will be in charge of distributing your estate (referred to as the ‘trustee’, similar to an ‘executor’ as appointed in a will) must be appointed by the Court in the absence of a will. The priority of individuals who can apply to the Court to be appointed estate trustee is similar to the hierarchy of beneficiaries with respect to the distribution of the estate, with the major exception being that common law spouses rank first along with married spouse. One can imagine the complications that could occur in the scenario of a common law spouse being appointed the estate trustee and not be entitled to a share of the estate. Individuals at the same level of relation, such as children, are all equally entitled to apply. One is prohibited from applying if he/she is not resident in Ontario, an undischarged bankrupt, a minor, or incapable of managing property.
As you can surely gather by now, a will is quite possibly the most important document of your life. A will is an exercise of your freedom to decide how and to whom your life’s accumulation of assets will be distributed. Further, for those with minor children, a will gives you the control to decide who will care for them, who will manage their inheritance, and when they will receive their inheritance. Do yourself and your family a favour and get a will.