dying without a will

Dying Without a Will

DYING WITHOUT A WILL CREATES A LEGACY THAT NO ONE WANTS

It’s common knowledge that having a valid Will is a critical first step in estate planning. That said, many people would rather take a poke in the eye with a sharp stick than make an appointment with a lawyer to create or update their Will. 

Why? Making a Will requires facing one’s own mortality and making decisions about how earthly possessions are to be divided amongst family members without the benefit of a crystal ball. 

Creating a Will is not that difficult. Furthermore, a Will can be easily changed when needed.  

The legal term for dying without a valid Will is “intestacy.” Dying “intestate” creates all kinds of problems. 

Delays and Higher Costs  

If there is no Will or no valid Will, settlement of the estate takes a lot longer. Nothing can be done until a lawyer is hired to make a court application. Experienced estate lawyers bill out at $400+ per hour. 

The Court must appoint an “estate administrator” and issue “Letters of Estate Administration” which outline the estate administrator’s powers, and, more importantly, how the deceased’s net assets are to be divided amongst surviving family members. 

In the absence of planning and a well thought out Will, the estate may face a higher tax bill and higher accounting fees. 

All of this adds up to more complexity, more time and less money for the beneficiaries.

Duties of an Estate Administrator

The job of estate administrator normally falls to the surviving spouse, if they are willing and capable of acting. If the spouse cannot act, adult children, another relative, a trusted friend or advisor may offer to act. 

In the absence of any of these individuals, the Court may appoint a professional executor: usually a trust company whose fees are comparable to those of estate lawyers. 

The duties of an estate administrator are no different those of an executor: both are charged with settling the affairs of the deceased, under different orders. An estate administrator acts under the terms of a Court order while the executor acts under the terms of the Will. 

Whoever gets appointed has to start from scratch to determine who and what’s involved in the estate, adding a lot more time to the process.

How is an Estate Divided in an Intestacy? 

When someone dies without a Will, no one knows how that person wanted to have their estate divided. 

Each province and state have specific “Rules of Intestacy”, governing the division of net estate assets amongst surviving family members. With the help of the estate lawyer, the court appointed estate administrator must have a clear understanding of local rules. 

As a general rule:

  • If the deceased leaves a surviving spouse and no children, the surviving spouse receives the net estate assets. 
  • Where there is no surviving spouse, the net estate is divided equally amongst the surviving children; in some cases, grandchildren. 
  • Where there is a surviving spouse and surviving children, they divide up the net estate, according to local Rules of Intestacy.
  • If there is no surviving spouse and no surviving children, the net estate assets will pass to other family members, according to local Rules of Intestacy. 
  • Depending on the jurisdiction, common law partners may not be treated the same as married partners in an intestacy.
  • Shares of minor children will be held by the Office of the Public Trustee (or equivalent) until the children reach the age of majority, at which point they receive their inheritance all at once.  

Without a valid Will, there is no opportunity to create trusts for minor children, subsequent spouses, disabled dependents, or spendthrifts, which often creates other problems.

Under the Rules of Intestacy, family members whom the deceased wanted to benefit may get less than intended or get nothing at all. And family members whom the deceased definitely did not want to benefit may stand to inherit.

More often than not, dying without a Will creates family friction, often resulting in litigation: the last thing Mom or Dad wanted!

A Valid Will May be Your Most Important Legal Document

If your circumstances are simple, use a reputable Wills kit. 

If your circumstances are more complex, spend the money to get advice from an experienced estate lawyer, including your other trusted advisors in the planning process. 

Review your Will every few years and update it as circumstances change. 

If tragedy suddenly strikes, it may be the best money you’ll have spent for your family.