Dying without a will can expose families to financial hardships, say experts

TORONTO — Dying without a will is a selfish decision that can add financial hardship to families suffering with grief, legal experts say.

“When you don’t do anything and there is a problem you’re leaving it to somebody else to solve the problem and that’s no kindness to the people that are grieving a person’s death,” says David Freedman, associate law professor at Queen’s University.

More than half of Canadians don’t have wills. Some people don’t like considering their death while others carry misconceptions about how their estate will be distributed.

Among the big errors is assuming that all assets will go to the surviving spouse if there are children.

There’s no guarantee that will be the case anywhere in Canada. Provincial rules vary, with some allocating the first $200,000 or $300,000 to spouses, while others pass along one-third of the estate when there are children.

Common-law spouses can wind up with nothing in Ontario, Quebec, New Brunswick, Newfoundland and Labrador, and Nova Scotia, although they can be named beneficiaries outside the will for RRSPs, TFSAs or life insurance.

Quebec couples have the same rights as married couples by entering into civil unions.

The law says those without a will have died “intestate” with no instructions as to how your property should be divided and distributed.

That can put beneficiaries through a wild and costly maze involving the courts that can cause family friction and ill will.

“If you care about any people while you’re alive to leave them without a will you’re leaving people with such a mess,” says Tim Hewson, president of Legalwills.ca, an online service available in Canada outside Quebec.

Failing to have someone in charge of the estate can tear families apart, he said in an interview.

“Families who have previously got along just fine, if there’s no process, there’s nobody in charge, then that can cause a lot of animosity and acrimony in families.”

Having a will makes it simpler and less expensive to settle the estate and avoid the family arguments that sometimes end up in court, says Quebec notary Benoit Rivet.

“A lot of times, family problems will resurface with grief, and not having a will only escalates the problem. Because of this, they may end up in court simply because they can’t get along and are arguing about something that happened 30 years ago.”

He added that a notary can also ensure that the proper steps are taken to protect the heirs, who would be responsible if the estate has a lot of debts.

The forced distribution of assets wouldn’t likely reflect what most spouses would wish and could see siblings or distant relatives inherit the estate even if the common-law couple had been in a 20-year relationship.

While Canada Revenue Agency recognizes common-law relationships after 12 months of cohabitation for taxation purposes, some provinces, including Ontario and Quebec, don’t for the purpose of inheritances.

Western provinces of Alberta, Manitoba and Saskatchewan give common-law spouses some rights to property if they have been living together for two or three years or have a child together, said Sandra Foster, author of You Can’t Take It With You: Common-Sense Estate Planning for Canadians.

“There are many ways to define family and only in a few provinces have the definitions of family under intestate even moved a little bit forward and become more modern,” she said in an interview.

“It could mean that the common-law spouse could end up with much less than they assumed that they would get.”

The living spouse would be forced to sue the estate for “unjust enrichment” to try to replicate how much of the family property would be available to her or him, said Freedman.

“Things can be done but you’re playing a game of chess where every move is very expensive.”

Meanwhile, an estranged spouse of the deceased would still have a claim to the estate in some provinces since they aren’t divorced.

The lack of a will can be especially difficult when there are minor children. The court could be called upon to oversee the process and make financial decisions.

In Quebec, the surviving spouse may be entitled to half the value of family patrimony including residences, furniture, vehicles and pension plans. The spouse would also receive one-third of the estate while two-thirds would be held for the children and be distributed automatically when they reach the age of majority, often not an ideal age to receive a large sum of money.

If the deceased does not have any children, the surviving spouse would receive two-thirds of the estate while one-third would go to the deceased’s parents and siblings.

A family living in Ontario with a surviving spouse and two children would see the spouse receive the first $200,000 and a third of the remaining estate, with the rest split equally between the children.

The guardianship of the children of single parents can be especially traumatic since a judge could have to decide the most appropriate person to care for the children without personally knowing any of the parties.

“So the children may be going to the wrong person,” said Hewson.

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