It is imperative to make a will. Too often lawyers come across files where an individual dies without a will (i.e. “intestate”), leaving behind a messy estate to be wrapped up and distributed. People often wonder who inherits an intestate person’s estate.
When a person dies intestate in Ontario, the distribution of his or her estate is governed by the intestacy rules set out at Part II of the Succession Law Reform Act. The Succession Law Reform Act provides for a list of individuals, in hierarchical order, who the law presumes the deceased would have wanted to leave money to. For example:
- if you are married and have no children at the time of your death, your spouse inherits your entire estate;
- if you are married with children, your spouse will inherit the first $200,000 of your assets and the remainder (if any) is divided among your spouse and children (how the assets are split depends on the number of children you have);
- if you are not married and have no children, your estate is distributed to your closest living blood relatives (for example, parents would take priority. If your parents are not alive, your siblings. If your siblings are not alive, your nieces and nephews, etc.); and
- if you have no next of kin, the estate will escheat to the Crown (i.e. your property will become the Crown’s property). However, this is quite rare.
Common-law spouses have no entitlement to an estate under the intestacy rules. Even though the law provides a road-map as to who should receive an intestate person’s estate, an unhappy family member, common-law spouse, or a multitude of other persons can nevertheless come after the estate and fight for a piece of the pie. It is therefore best to make a will and avoid the chaos. High profile celebrities who have died intestate serve as cautionary tales for why you should make a will.
For example and as previously blogged about, Prince died intestate on April 21, 2016. He left behind an estate worth an estimated $200 million. It took one year to determine who the beneficiaries of Prince’s estate are (at one point, 29 people made a claim for a share of his estate). Ultimately, a Minnesota judge declared that Prince’s six siblings were the heirs of his estate. Even still, further disputes continued, including who should be appointed as the estate trustee of his estate. Prince’s six siblings have yet to receive their inheritance since Prince’s passing two years ago. Given the amount of legal fees spent to date, estate expenses (including taxes owed), a lawyer for three of Prince’s siblings recently commented that, “there is legitimate concern that at the end of the Estate’s administration there will be little, if anything left to pass on to the Heirs”. No doubt, proper tax and estate planning would have prevented the lengthy and costly litigation.
Billie Holiday is another example of a famous celebrity to have died intestate. Ms. Holiday died in 1959, at 44 years of age. At the time of her death, she had $0.70 in the bank and $750 strapped to her leg. Unfortunately, Ms. Holiday died without a will and her entire estate and royalties passed to her estranged husband, Louis McKay. While Ms. Holiday’s estate was not worth much at the time of her death, her estate continues to earn income after her death. After Mr. McKay’s death, his widow also received a share of Ms. Holiday’s royalties through Mr. McKay’s estate. Certainly, Ms. Holiday could not have intended to benefit her estranged husband or his widow.
Complex and unique family relations may not be protected by intestacy rules. The laws of intestacy may also not reflect your true testamentary wishes and your estate may pass to a person you never intended to inherit from your estate. Moreover, loved ones may spend significant time, money and emotional energy to decipher your wishes and administer your estate. Why leave it to the law – make a will.