How Ontario Distributes Estates Without a Will

My last post gave you tips on handling Ontario estates if there is no will. These are intestate estates. Guess who shares when there is an intestacy? What you learn may encourage you to sign your will.

Here is a Simple Example of an Intestate Distribution:

1. When you die without a will, all your estate debts and taxes are paid. This cannot happen until courts appoint estate trustees without a will. [ See my post “How Do You Handle An Ontario Estate If There Is No Will?”]. If you do not have the cash to do this, your assets must be sold.
2. Married spouses in Ontario receive their spousal preferential share. This is the first $200,000 after all debts are paid. In intestate estates, only married spouses have these inheritance rights.
3. The balance of the estate is shared between married spouses and children. There are specific rules that apply depending on the number of children and if they are minors.

There is no Typical Intestate Estate

The division of all intestate estates is not always this typical and cannot save any income taxes.

There are now fewer typical and simple estates.

People have multiple partners, marriages, and legal obligations. Their obligations can vary from my simple intestate distribution above. Many intestate estates create legal messes. Competing claims and broken promises can create prolonged court battles.

More Intestate Distribution Options

What if a person dies without a will and has no married spouse and no claims from dependants?

Their estate may pass to their parents. If there are no surviving parents, then their brothers and sisters inherit the estate.

What if the deceased had a brother or sister who died, leaving children? The deceased’s nieces and nephews inherit their deceased parent’s share. Only blood relatives or legally adopted children can inherit. Half blood relatives share equally with whole blood relatives.

Who Can Serve as Estate Trustee Without a Will?

Only Ontario residents can apply to court for appointment as estate trustee without a will. Persons who live outside of Ontario cannot apply to be estate trustees without a will.

You will still see some financial institutions using outdated forms. These ask you to provide letters of administration. This old intestate term referred to you as an administrator. Ontario now uses the gender-neutral term “estate trustee without a will.” In some jurisdictions, estate trustees without a will are also referred to as estate administrators or personal representatives.

Who Should Apply for Estate Certificates?

Normally, persons who apply have financial interests in the estate and are without a conflict of interest. This can include common law spouses or next of kin as identified under Ontario law.

Usually, your closest living Ontario relative can seek appointment. If there is a conflict, or two people of equal entitlement seek to be appointed, then courts decide who is appointed.

The court application must notify all potential beneficiaries of the estate that someone is applying for appointment as estate trustee. This process can take time, especially if not all beneficiaries can be identified. Applicants will require the consent of most beneficiaries who have an interest in the Ontario estate.

If there are any minors or persons with disabilities, then applicants must serve the parent or guardian of minors and the Ontario Office of the Children’s Lawyer or the Office of the Public Guardian and Trustee.

The court has discretion to require that anyone applying for appointment post a bond. This usually delays matters and adds expense.

Spouses with Potential Claims Need Not Apply

Under Ontario’s Family Law Act, married spouses can make claims for division of property. They can elect to receive what they would be entitled to had they filed for divorce. Surviving married spouses have claims against their deceased spouse’s estate. They may also have rights under prenuptial or separation agreements.

Married spouse’s claims may prevent them from acting as estate trustee without a will.

Why?

Because if you have a claim against your spouse’s estate, you cannot act as estate trustee without a will. You cannot serve as estate trustee and sue yourself to enforce your rights against the estate in court.

Ontario Common Law Partners Don’t Inherit Without Wills

It is important to remember that only married spouses are entitled to a share in intestate estates. Ontario common law spouses do not have inheritance rights in intestate estates.

Common law partners do not receive the $200,000 spousal preference share. It does not matter if you have lived together for 21 years or not.

Common law spouses are entitled to make claims for defendant’s relief, joint family ventures and unjust enrichment.

Common law spouses do not automatically inherit even a portion of the estate. They must commence legal proceedings to claim dependant’s relief, joint ventures, unjust enrichment and constructive trusts. Again, they cannot sue the estate and also act as estate trustee without a will.

If you have a married or common law spousal claim, you require experienced estate advice.