Courtesy of David Mills from Mills and Mills LLP.
If a person dies without a valid Will, lawyers say that the person died “intestate” or that they left an “intestacy” (whereas a person with a Will dies “testate”). Many people have no idea – or, more frequently, the wrong idea – of what will happen to their money if they die intestate.
In Ontario, Part II of the Succession Law Reform Act governs how a person’s estate will be distributed should they die without a Will. These default rules are almost never exactly what an individual would choose for him- or herself. Take, for example, the case of a person who is married with children. The surviving spouse receives, first, a “preferential share” (currently fixed by regulation under the Act at $200,000). If there are assets remaining after the spouse receives the preferential share, the remainder of the estate (called the estate’s “residue”) is divided among the spouse and children. If there is only one child, the spouse and child each receive half of the residue of the estate. If there is more than one child, the spouse receives one-third and the children equally share the remainder.
If the children are under 18, the funds are required to be held paid into Court (or managed by a court-appointed Guardian for Property) and held until they turn 18, when they will receive the money outright. Many parents are understandably uncomfortable with the idea of an 18 year old receiving a significant sum of money as they are unlikely to have the experience or maturity at that age to manage it properly.
For more information on related topics, please contact DFS Private Wealth, the author of Managing Alone and founder of widowed.ca. We are here to help and answer any questions you have. Should you need a connection to a professional in your area we would be happy to make the introduction for you to someone you can trust. Contact Us today.