Having a well drafted will can provide peace of mind and act as a final farewell to our close friends and family. However, what happens when an individual passes away without a valid will? In such instances, the individual who dies without a will is said to have died “intestate.” Intestacy can occur in two instances:
- when an individual dies without having a valid will, and leaves behind their estate without direction on how it is to be managed or disposed following their death, and
- when an individual with a valid will dies, but their will is poorly drafted and does not completely dispose of their estate, which is known as partial intestacy. This article will outline the consequences of intestacy on succession and the distribution of an estate.
Ontario’s Succession Law Reform Act, R.S.O. 1990 c. S.26 (the “SLRA”) governs how an intestate individual’s estate is organized and administered following their death. Specifically, Part II of the SLRA addresses intestate succession and determines how assets in your estate are to be disposed according to your marital and family status.
What Is the Order of Intestate Succession for Spouses and Children in Ontario?
The order of intestate succession is as follows:
| If at the time of death, the deceased has a… | ||
| Spouse but no children | The spouse inherits the deceased’s estate | s. 44 |
| Spouse and children | The spouse inherits a preferential share in the amount of the first $350,000.00[1] of the value of the estate and the remainder, if any, is divided between the spouse and the children. | s. 45 and s. 46 |
| Children but no spouse | The estate is divided equally between the children. | s. 47(1) |
| No children and no spouse | The deceased’s parents inherit the estate | s. 47(3) |
| No children, no spouse, no parents | The deceased’s siblings inherit the estate and divide it equally between the living siblings, with the nieces or nephews inheriting their parent’s share of a predeceased sibling | s. 47(4) |
| No children, no spouse, no parents, no siblings | The nieces and nephews of the deceased divide the estate equally | s. 47(5) |
| No children, no spouse, no parents, no siblings, no nieces or nephews | All other next of kin divide the estate equally | s. 47(6) |
| No next of kin at all | The estate passes to the Ontario government | s. 47(7) |
For intestacy, the SLRA definition of “spouse” does not include common law spouses. Additionally, spousal entitlements outlined in Part II of the SLRA do not apply if the spouses were separated at the time of the individual’s death (section 43.1 (1)). Spouses are deemed to be separated if before the individual’s death:
- The spouses lived separate and apart as a result of a marriage breakdown for a period of three (3) years;
- There was a valid separation agreement between the spouses;
- There was a court order regarding the rights and obligations of the spouses in their marriage breakdown;
- There is a family arbitration award regarding the rights and obligations of the spouses arising from a marriage breakdown.
Where intestacy occurs and the deceased has a few degrees of surviving family and a spouse, the surviving spouse is entitled to a $350,000 preferential share of the net value of the estate. The “net value of an estate” is the total value of the deceased’s assets after all their debts, encumbrances, expenses, and estate administration costs have been deducted. In essence, after debt payments, the surviving spouse is first in the order of succession and inheritance. Notably, if the net value of the estate is less than the surviving spouse’s preferential share of $350,000, then the surviving spouse is entitled to the entirety of the net value of the estate.
For instance, in an estate with a value of $350,000.00 that is subject to debts of $10,000.00 and there is a surviving spouse, the following breakdown applies:
| Surviving Spouse & Impartial Preferential Share | |
| Value of Estate: | $350,000.00 |
| Debts: | $10,000.00 |
| Net Value of Estate | $340,000.00 |
| Total of Surviving Spouse’s Entitlement | $340,000.00 |
In this example, if the estate was comprised of a house worth $300,000 and a car worth $50,000 subject to a $10,000 car loan, the loan would need to be paid out and the surviving spouse would be entitled to the absolute value of the house and car.
Any “issue” that the deceased had either with the surviving spouse, or with an ex-spouse, are next in the line of succession. Issue refers to any of the deceased’s descendants, children, and grandchildren but does not include stepchildren. If the deceased is survived by a spouse and their issue, and the estate is worth more than the surviving spouse’s preferential share of $350,000, the excess amount known as the “distributive share” will be split between the surviving spouse and the issue.
For instance, in an estate with a value of $500,000.00 that is subject to debts of $100,000.00, where there is a surviving spouse and the deceased’s one and only child, the following would occur:
| Surviving Spouse + 1 Child | |
| Value of Estate: | $500,000.00 |
| Debts: | $100,000.00 |
| Net Value of Estate | $400,000.00 |
| Spouse’s Preferential Share | $350,000.00 |
| Distributive Share of Estate | $50,000.00 |
| Child’s Entitlement | $25,000.00 |
| Spouse’s Entitlement of the Distributive Share | $25,000.00 |
| Total of Surviving Spouse Share | $375,000 |
| Total of Surviving Child’s Share | $25,000 |
If there are multiple children, the division of the distributive share changes. The surviving spouse receives the preferential share, and the distributive share is then divided into three equal parts: 1 part goes to the surviving spouse, and the remaining 2 parts are split equally among the surviving children. Using the same example as above but with three children, the following would occur:
| Surviving Spouse + 3 Children | |
| Value of Estate: | $500,000.00 |
| Debts: | $100,000.00 |
| Net Value of Estate | $400,000.00 |
| Spouse’s Preferential Share | $350,000.00 |
| Distributive Share of Estate | $50,000.00 |
| Spouse’s Entitlement of the Distributive Share | $16,666.67 |
| Child 1 Entitlement | $11,111.11 |
| Child 2 Entitlement | $11,111.11 |
| Child 3 Entitlement | $11,111.11 |
| Total of Surviving Spouse Share | $366,666.67 |
| Total of Each Surviving Child’s Share | $11,111.11 |
It is important to remember that not all assets of the deceased’s will become part of their estate. The deceased’s estate captures assets that are not held jointly and or do not have a designated beneficiary. Any personal or real property assets that are held in title as joint tenants will automatically pass to the surviving joint tenant through the right of survivorship, and thus, will not pass through and become part of the deceased’s estate. Similarly, any life insurance policies or retirement saving plans that have designated beneficiaries will automatically go to the designated beneficiary and omit passing through and becoming part of the deceased’s estate.
What Are the Implications of Intestacy on Estate Executor Selection?
Another consequence of intestacy is the lack of an executor of the estate. Without a will designating an executor of the deceased’s estate, the Superior Court of Justice will have some discretion on who to select as executor. Section 29(1) of the Estates Act, R.S.O. 1990, c. E. 21 provides some guidance on who may be selected by the Court to act as the executor of the deceased’s estate.
If the deceased had a spouse or was living in a conjugal relationship outside of marriage, or had some next of kin then these are both possible options who could act as executors of the deceased’s estate. The Court may also choose to appoint joint executors including the deceased’s spouse and next of kin together. Notably, the Court has an unqualified discretion to make such appointment of an executor and that it is in the best interests of the administration of the estate (Lagrandeur Estate (Re), 2021 ONSC 3447 at para 47).
Ultimately, intestacy is an unfortunate way to say good bye to loved ones and friends not only because the deceased’s survivors are left to sort out the deceased’s affairs while grieving but also because of the likelihood for conflict to arise in such instances. Generally, the surviving spouse and family will frequently face immense challenges sorting out the deceased’s estate and trying to guess their final wishes, particularly when different relatives have opposing interpretations of the deceased’s final wishes. When such interpretation conflicts arise, families turn to estate and estate litigation lawyers as one means of resolving the uncertainty that arises in intestacy. Usually, an estate lawyer will assist the deceased’s relative to become the executor of the estate and will provide guidance on the procedures required for estate distribution. However, when conflicts escalate into estate litigation, the road to resolving the conflict becomes a lengthy and oftentimes bitter process that can tear apart families.
A well drafted will is a much smoother and simpler process than estate litigation following intestacy. December is Draft a Will month, so please feel free to get in touch with our team of trusted lawyers for a free consultation.
[1] If the deceased died after March 1, 2021, then the preferential share is $350,000.00. However, if the deceased died on or before 1 March 2021, then the preferential share is $200,000.00
