“We make a living by what we get, but we make a life by what we give.”
— Winston Churchill
If you die without a formalized will, the government will determine how to distribute the wealth you've built throughout your life. Each province and territory handles this process differently, but they all have one thing in common: they expose your loved ones to unnecessary stress during a difficult time and revoke your control over your money and assets. Neither are ideal circumstances, and both actively undermine the value of a well-thought-out estate plan.
Despite the downsides—and frankly, how easily they can be avoided—the statistics are staggering:
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58% of Canadians don't have a will.
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10% have an out-of-date will.
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88% of 25-34-year-olds lack a will.
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45% of people above 65 don't have a will.
So, what are the fine details of dying intestate? Who inherits? How are beneficiaries chosen? Who serves as executor if you haven't appointed one? Is your entire estate at risk? What if you have a spouse and child?
Consequences of dying intestate in Canada
Otherwise known as passing without a will, dying intestate nullifies your decision-making capability. Instead of choosing how your estate is divided and your assets are distributed, intestate succession legal processes do. Aside from individual policies and accounts that already have designated beneficiaries, your assets and debts are held by your estate.
From there, a court-appointed representative will handle the financial affairs. How everything is doled out depends largely on local laws and regulations and not your specific wishes. The outcomes vary widely depending on the province or territory in question—Ontario, for example, abides by the Succession Law Reform Act, whereas British Columbia adheres to the Wills, Estates, and Succession Act.
Regardless of the location, there are some common traits when it comes to intestacy:
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You cannot appoint an executor.
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You cannot choose who receives what.
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You cannot dictate funeral arrangements.
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You cannot name a guardian for children.
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You cannot strategize for tax efficiency.
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You cannot make a difference and donate to charity.
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Your spouse or next of kin may not be taken care of.
It's clear that dying without a will imposes significant limitations for planning. Unfortunately, although the notion that it's never too late to start is usually true, it is not accurate when it comes to death. Without the necessary legal documents to elect an executor (or administrator, or in Quebec, a liquidator), a close family member or friend would need to go before the court to request the role. This isn't a swift process and prolongs the entire process before your assets can be distributed and your loved ones can find closure.
What dying intestate means for your spouse
If you've built a life together, your income and expenses are likely intertwined under the assumption of a two-person budget. If you pass away without a will, your assets, including your home, savings, pensions, vehicles, and more, might not automatically go to your spouse, potentially upending the entire financial arrangement.
Further complicating matters, if you die in Canada without a will, there's a chance that certain provinces and territories—such as Ontario or Quebec—may not recognize your common-law partner as a legal spouse, and they won't benefit from intestate succession legislation. Without property division rights, they'll be completely omitted from the estate.
Children when parents die without a will
In some areas, legal mandates will divide your assets evenly between your surviving immediate family members. It wouldn't work if one of your children was successful and you wanted to help their struggling sibling buy a home.
If you have minor children and haven't written a will, a trust will hold their inherited money until they reach a certain age, usually 18 or 19. Money that could have otherwise been handled under the guidance of your surviving spouse. Instead, they'll be greeted with a lump sum of cash that they're likely ill-prepared to manage themselves, which isn't an ideal outcome.
Perhaps the most unnerving concept is that if you're the only surviving parent and suddenly pass away, the court will dictate guardianship. It could be a brother who holds very different values from how you raised your children, or it could be a close relative who has no parenting experience at all. Nobody, especially not courts, knows better than you who is best suited to protect and nurture your children. More importantly—no child should be shuffled through the legal system like that in such a stressful, traumatic time.
In an era of blended families
James Craig, Vice President of Financial Planning, notes that in a world where blended families are becoming more prevalent, the ramifications of dying without a will are further complicated, and “testamentary spousal trusts are a common strategy in these scenarios.”
When provisioned for in your will and structured correctly, these trusts offer a number of benefits, such as tax deferral, wealth protection, professional management, 21-year deemed disposition avoidance, and reduced probate fees. Essentially, once you’ve passed away, your surviving spouse (or common-law partner) will be entitled to all income generated in the trust throughout their lifetime. Once deceased, the trust’s assets can be distributed to the named beneficiaries—presumably children from your first marriage—or paid out into successive testamentary trusts.
Craig articulates that these vehicles "can allow you to satisfy two of your estate planning priorities: supporting your partner until their death and ensuring the future care of your children from your first marriage."
There’s also a case to be made for utilizing these strategies even if you don’t have a blended family. Should your widowed spouse remarry, a testamentary trust can specify that your wealth will ultimately go to your children and not to their new stepparent.
Beyond beneficiaries, executors, and trustees
Drafting a will doesn't have to be expensive, but dying without one usually is. Whether through simple legal fees or more costly courtroom battles between family members arguing over what they think they deserve, these expenses can quickly accumulate and drain the estate's value.
Tax considerations are crucial for any form of financial planning, and your estate is no different. Without a will, you won't be able to maximize tax efficiency—for example, if your surviving spouse inherits your estate, there's minimal tax repercussion. If intestate successions laws divvy up your assets equally amongst children, your estate may be liable for taxes before beneficiaries can claim their inheritance. These are simple scenarios, but rest assured, more complex and tax-smart strategies like trust structures are equally off limits if you die without a will.
The breakdown of dying without a will in Ontario
To contextualize how legal courts would divide and distribute your estate, here's a hypothetical scenario of how it would materialize in Ontario:
You may notice a pattern here—the further down the list you go, the less likely your wealth is to support those closest to you, those who are struggling the most with your passing. In a moment when their lives have turned upside down, leaving a legal will behind can add much-needed structure.
In some cases, it's not truly about the money but about leaving your family with one less struggle to overcome.
Futureproofing your estate plan
With convenient digital will drafting services (such as a program we've rolled out ourselves) at your fingertips, there's no reason not to have a legal will in place to safeguard your family's future and ensure your wishes are followed.
Whether it's a simple or complex estate plan, Bellwether Family Wealth advisors are prepared to minimize taxes, maximize value, and help you find peace of mind—when tomorrow is taken care of, we can remember to enjoy today.
