A will is a legally binding document that lays out how you want your assets divided when you die. If you die without a will, you are said to be intestate, and a provincial formula is used to dictate who will inherit your assets, and the share of the estate that each person is entitled to. Most people assume that their spouse will inherit everything, but this is rarely the case. Estate law falls under the province you are resident in and/or have property in and varies from province to province.
1. Don’t assume that your common-law spouse will get anything.
In Ontario, Quebec, New Brunswick, Nova Scotia, PEI, and Newfoundland and Labrador, a common law spouse is not recognized under intestacy law in the same way as a married spouse. For example, in Ontario, a married spouse will inherit from the estate and the common law spouse will receive nothing. These rules are further complicated if there is a relationship breakdown before death.
Alternatively, in Alberta, a common law spouse (who qualifies) will receive a spousal distribution from the estate, while a married but separated spouse will often receive nothing. The married spouse is not entitled to anything if separated and living with another partner.
2. Don’t assume that your spouse will inherit the entire estate
In most provinces, the estate will be divided between the spouse and the surviving children or grandchildren. The spouse is entitled to a preferential share, and any amount left over will be divided between everyone.
The preferential share is defined differently in each province. For example, in Ontario, the preferential share is $200,000, while in Alberta, it is $40,000 and in New Brunswick it is the “marital property”. The portion of the estate that is in excess of the preferential share, which is called the distributive share is then split among the spouse and surviving children, but the amount varies based on the province of residence of the deceased and the number of survivors.
3. Don’t assume your current spouse will inherit the matrimonial home.
Some provinces, like British Columbia, Nova Scotia, Quebec, and Manitoba, provide special rights to the matrimonial home. However, these rights vary widely, and may be impacted by a previous divorce or relationship breakdown. For example, in Manitoba, a second spouse would not acquire rights in the matrimonial home if the deceased had lived there with the first spouse, subject to certain conditions. In many provinces, a married spouse is disentitled to a distribution on intestacy if:
– separated for a certain period of time;
– there is an application for divorce;
– there has been a division or property; or
– they are living separate and apart and/or separated and living in a conjugal relationship with another person.
Under British Columbia laws, a spouse can be disentitled if there is a separation over a year. In Ontario, the legislation is silent in this regard meaning that a s. a surviving spouse can be entitled to a distribution even if separated and in a new relationship.
4. Multiple deaths can cause multiple problems
In the case of death by common accident, it is possible that probate fees are payable twice. The laws vary by province. In Alberta, British Columbia, Newfoundland/Labrador, Nova Scotia and Prince Edward Island, the older person is deemed to have died first. In Ontario, Manitoba, New Brunswick, Quebec and Saskatchewan, each descendent is deemed to have survived the other.
Variations in the way that each province address distributions of estates if the deceased died intestate can have a big impact on the distribution of the estate. An example is the case of Leach vs. Egar (1990), where the spouses had previously divorced and the property was split. The former wife and children were lost at sea and presumed dead. All died intestate. The presumption of death in order of seniority applied, so the mother was deemed to have died first. Her estate went to the children. Because they died intestate too, their estates passed to their father. The mother’s ex-spouse inherited her entire estate, and her other family members (such as her parents or siblings) were not entitled to anything.
A well written will allows you to clarify your final wishes as to the distribution of assets. . Estate law is complicated and the need to seek professional advice cannot be underestimated. It is important to have a will and to review and update it regularly.
By Terry Zavitz with information taken from the Wills, Trust and Estate Administration course through STEP.