DYING WITHOUT A WILL

So, do you really need a Will? If you die without a Will, provincial legislation provides a scheme for administration and distribution of your estate, and a court will appoint an administrator. If there is a Will, then the executor under the Will may act almost immediately upon death; probate simply confirms the appointment of the executor under the Will.

Problems with a Court-Appointed Administrator

Without a Will, and before the appointment of an administrator by a court, no one is empowered to deal with the affairs of the deceased's estate. Because it can take weeks or months to appoint an administrator, the delay can be a serious problem if, for example, a business needs to be run on a continuous basis. Also, a spouse or close relative will usually apply to become the administrator of the estate, but it is possible that there could be a contest between multiple applicants, which could not only further delay matters, but also result in your estate in the hands of an administrator that you would never have appointed yourself.

If you live in British Columbia, an additional problem with the appointment of an administrator upon your death is that unless all beneficiaries and creditors are within BC and consent to the appointment, the court may require a bond. When there are minor beneficiaries a bond will be required. A bond is insurance that the administrator will properly administer the estate and not defraud the beneficiaries. Potential administrators must be bondable and there is a cost involved. If no one will act as administrator of an estate, there is a public official called an Official Administrator, who administers estates for a fee.

Once appointed by a court, the administrator acts in a capacity similar to an executor under a Will. He or she will pay debts, funeral expenses, and taxes, as well as liquidate and distribute assets.

Distribution of Estate If Deceased Has No Will

When it comes time for an administrator to distribute the estate, it is distributed under a legislative scheme. For example, if you have a spouse and no children or other issue (blood descendants), then the entire estate goes to your spouse. The term "spouse" includes common-law spouses who meet the definition of "spouse," which is cohabitation with another person in a marriage-like relationship (including the same gender) for a period of at least two years immediately before the person's death. If spouses have been separated for greater than one year, they are not deemed to be spouses for the purposes of the Estate Administration Act.

You should be aware that there still could be significant legal issues as to whether someone is a "common-law spouse", whether someone is a separated spouse, or whether a former spouse has acquired property rights through other legal mechanisms. Legislation even contemplates there being more than one spouse. In these cases, hopefully rare, a judge decides who gets what.

If you have a spouse and children, the spouse gets the first $65,000.00, "household furnishings", a life estate in the spousal home, and a portion of the residue depending upon the number of children. Children receive the balance of the estate. This is not usually a desirable result, because the surviving spouse will probably be unable to remortgage the family home, especially if there are minor children. To avoid this, a spouse with property solely in his or her name should always have a Will.

If you have children but no spouse, the estate is divided equally among the children.

If you have no children or other issue, and no father or mother, the estate is divided equally among brothers and sisters.

If there are only distant relatives, next-of-kin of equal degree of consanguinity (bloodline) receives the estate's assets. This is based upon a historical chart that has been in existence for hundreds of years. When the closest next-of-kin are siblings, a child of a deceased sibling takes their parents' share. If there are only nieces and nephews, a child of a deceased nephew or niece does not take their parents' share.

Couples who have property in joint tenancy and no Wills need to consider that if they die in a common accident, the youngest is deemed to have died second if the order of death cannot be determined. The second to die receives the property and it is then passed to their next of kin. If there is a second marriage with both spouses having their own children, then one set of children will get nothing, because step-children are not considered to be children under the legislation.

Another significant issue for those of you with minor children is that if you die without a Will, you have not appointed a guardian. There could be a contest between potential guardians. As with the administrator, you could end up with someone being the guardian of your children that you would never have appointed.

Taxes and Probate Fees Without a Will

Dying without a Will is not likely to affect income taxes or probate fees. The only time the provincial government actually takes the assets of a person who dies without a Will is when no next of kin can be found. Even in these situations, people with a legal or moral claim may make an application to have the money paid to them.

So, you might not need a Will if your requirements are the same as the government scheme. This will be a rare situation, however, and legal advice is suggested. Reliance on the Estate Administration Act could well be preferable to having a poorly drawn do-it-yourself Will. Just remember that proper estate planning always results in a smoother and more cost-effective transition for your heirs.

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