Value of Creating a Will vs. Intestacy
June 7th, 2021
If you die without a will, you are said to have died intestate and your estate will be distributed according to The Intestate Succession Act. Under this Act, your assets are distributed to your family in accordance with a specific and inflexible scheme of distribution.
Distribution of Estate
Notably, if you don’t have children or your children are with your current spouse/common-law partner, your assets will be distributed to your spouse or common-law partner. Under The Intestate Succession Act, a common-law partner is defined as (a) a person who has registered a common-law relationship under The Vital Statistics Act; (b) a person who is not married to the deceased and has cohabited with them, either (i) for a period of at least 3 years, or (ii) for a period of at least one year and they are together the parents of a child.[1] It is important to note that the meaning of a common-law partner differs from one piece of legislation to another.
If at the time of your death, you do not have a spouse or common-law partner, your estate is distributed to your issue, meaning your children, grandchildren and great-grandchildren. However, under an intestacy, step-children do not receive anything from your estate; your assets are only distributed to formally adopted and biological children. From there, it would be distributed to your parents, your siblings and continues under a specific regime until your estate is distributed. While it is very unlikely that such a situation would arise, if there is no successor under The Intestate Succession Act, your estate would go to the Crown.[2]
Simply, without a will, you have no input as to who receives your assets. Further, the law is constantly evolving and the current scheme under The Intestate Succession Act may not be the one in place at your death.
Having a will allows you to decide who will inherit from your estate, which may include friends, charities, and other family members who would receive nothing from your estate if you died intestate; allows you to disinherit individuals who would otherwise receive your estate in accordance with The Intestate Succession Act; and allows you to determine in what proportion you want others to inherit your assets.
Distribution & Protection of Specific Assets
Under The Intestate Succession Act, all your assets are distributed per capita (essentially, in equal amounts per generation) to the successors of your estate. As an example, if your spouse has pre-deceased you and you have three children, your 3 children would receive an equal portion of your estate. For a multitude of reasons, this may not be in accordance with your wishes. A will allows you to choose what you want to gift to individuals. It also allows you to protect specific assets. If you own farmland that has been in your family for generations, you may want to leave it someone who will care for the land; otherwise, it may simply be sold and the proceeds distributed amongst your successors.
Administration of Your Estate
If you die intestate, a court application will have to be brought to grant an individual the authority to administer your estate. The Court will give an order called Letters of Administration which grants the administrator authority to distribute the deceased’s estate. The right to apply to be administrator belongs firstly to a spouse or common-law partner, secondly to adult children, then to parents, then to siblings and then nieces and nephews.[3] According to The Court of Queen’s Bench Surrogate Practice Act, the administrator must be a resident of Manitoba.[4] If at the time of your death, you have limited family members who live in Manitoba, this may pose a problem for distributing your estate.
When you create a will, you appoint an executor/executrix who administers your estate. There is no requirement that the executor/executrix be a Manitoba resident, however, there may be tax implications or other practical concessions which pose challenges if appointing a non-Canadian resident as your executor. Nevertheless, when you create a will, you have the freedom to appoint an individual to administer your estate that doesn’t exist if you die intestate.
Under sections 25(1) and 25(3) of The Court of Queen’s Bench Surrogate Practice Act, an administrator is required to post a bond for twice the value of the estate, unless an exception applies or a judge orders otherwise. Further, for estates over $50,000 but under $100,000, a surety is also required.[5] For estates over $100,000, two sureties are required.
A surety is a person or insurance company responsible for paying the amount of the bond if the Administrator does not administer the estate property. If all the beneficiaries are all adults and capable of consenting, a judge may direct that the grant of administration of the estate can be made without a bond or surety.[6] However, there is no guarantee that the judge will grant this and it can be a drawn-out process.
If you appoint an executor under your will, they are only required to post a security bond if they are “not habitually resident within Canada.”[7] In the majority of cases, appointing an executor eliminate the cumbersome and expensive process of posting a security bond.
Gifts to Minors
Where an individual dies intestate and a minor is to benefit, funds can only be accessed for the maintenance and education of the minor through a court order. Minors receive the full amount of the inheritance when they reach the age of majority (18). Receiving a large sum of money at age 18 may not be beneficial for the child or in accordance with an individual’s wishes.
Under a will, trusts can be created which give a trustee the authority to distribute funds for the minor’s benefit prior to them attaining the age of majority Further, provisions can be added to a will wherein funds are distributed in stages, such as a 1/3 to be received at age 18, 1/3 at age 21 and the remaining 1/3 to be received at 25.
Guardianship of Minor Children
Most wills contain a guardianship clause which allows you to designate an individual/individuals who would care for your minor children in the event that you and/or your spouse or common-law partner are deceased. While guardianship clauses are not binding on the court and the court has ultimate jurisdiction over children, these clauses are very persuasive and the court is likely to honour your wishes, provided that it is in the best interests of your children.
If you die intestate, your wishes may have little bearing if you have not properly communicated them. This may result in a situation where the guardian of your children is not the individual you would have chosen. Having a will with a guardianship clause may prevent this.
Tax Implications
Tax savings may also be available through tax planning provisions that include the ability to make certain elections under the Income Tax Act at the time of death. Tax savings are likely to result in more money being available for your beneficiaries.
Simplicity for Executors and Loved Ones
Thinking about death and planning for it can be challenging, however, it is the best way to provide for your loved ones upon your passing.
Dying without a will may create animosity amongst your family and loved one in dividing your possessions. This can be eliminated through gifting your personal property (jewellery, cars, paintings, etc.) to designated individuals.
Creating a will can eliminate the stress on your personal representative (executor/administrator) and help ensure that the administration of your estate runs smoothly. Having a will allows your executor to be confident that they are fulfilling your wishes.
Avoid the uncertainty and create a will to provide for your family and loved ones.
[1] The Intestate Succession Act, s 1(1)
[2] The Intestate Succession Act, s 7
[3] While not referred to in The Court of Queen’s Bench Surrogate Practice Act, The Intestate Succession Act sets out the degrees of consanguinity.
[4] The Court of Queen’s Bench Surrogate Practice Act, s 7(1)
[5] The Court of Queen’s Bench Surrogate Practice Act, s 25(6)
[6] [6] The Court of Queen’s Bench Surrogate Practice Act, s 25(4)
[7] The Court of Queen’s Bench Surrogate Practice Act, s 7(2)
Notice: The articles on our website are provided for general information purposes only and should not be relied upon as legal advice or opinion. They reflect the current state of the law as at the date of posting on the website, and are subject to change without notice. If you require legal advice or opinion, we would be pleased to provide you with our assistance on any of the issues raised in these articles.
