What Happens if You Die Without a Will

//What Happens if You Die Without a Will

What Happens if You Die Without a Will

By |2016-01-05T23:12:40+00:00February 24th, 2014|Uncategorized|Comments Off on What Happens if You Die Without a Will

Every responsible adult should have a Will.

While I suspect most would agree with this statement, this same majority is likely to not take the simple steps required to ensure their testamentary wishes are solidified in a legally binding document. Surveys estimate that between 55% and 70% of Canadians do not have a Will. And in spite of the relatively low cost of ensuring one’s estate is divided according to her or his wishes (generally costing only a few hundred dollars) and the short amount of time required (usually under a month from start to finish), most individuals will die leaving their estate to be dealt with by surviving relatives or friends.

There are many possible explanations for this disconnect between what individuals know they should do, and what they actually do. Perhaps the thought of one’s own death and the decisions to be made thereafter are too depressing or morbid to consider. Perhaps individuals avoid this planning process because they don’t think they own anything of significant value. Perhaps parents or grandparents are concerned that their decisions dividing their estate will be perceived as showing favoritism to certain family members. Perhaps people simply don’t care – after all they won’t be here to see how their possessions are dealt with after they’re gone. Or perhaps it comes down to pure procrastination, which I suspect is the most viable explanation for many things we should do but don’t.

Regardless of the reason why the majority of Canadians don’t have Wills, the question remains of what actually happens to a person’s possessions if they die without having made proper estate plans? This situation is called intestacy, with the deceased person having died intestate. Intestacy is governed by the Alberta Wills and Succession Act. Let’s explore how intestacy works by way of a simple example involving our fictional character, Harold, who passed away as an 85 year old widower.

Harold was predeceased by his wife and one of their five children, who left behind two children of his own. The other four children of Harold and his wife are still living. Harold was not a wealthy man, but left behind his home, fully paid for, and his life savings worth $200,000.00.

The above scenario creates a fairly straightforward distribution with the estate being divided five ways and distributed to Harold’s five children. With one of Harold’s children having predeceased him, the share of this predeceased child would be further split in half and distributed to his two living children (Harold’s grandchildren), according to the Wills and Succession Act.

For the sake of illustration, let’s alter the facts slightly. In addition to the above facts, consider the situation where five years prior to his death, Harold struck up a romance with a widowed neighbor Margaret. Four years ago Margaret moved in with Harold. What will happen to Harold’s estate now?

As Harold and Margaret have cohabited for more than 3 years, Margaret is considered to be Harold’s Adult Interdependent Partner (AIP), more commonly referred to as his common-law partner. In this situation, Margaret would get half of the estate, with the other half being distributed according to the first scenario above. This would happen regardless of any intention Harold had to the contrary. The fact that Harold worked most of his life to accumulate his possessions, and only connected with Margaret in the years just preceding his death, does not matter. The decision has been taken out of Harold’s hands.

Now let’s consider a third scenario, changing the facts so Harold the widower did not have any children. His parents have passed, along with his only sister who had one child who has also predeceased him. This niece of Harold’s left behind two adult children. Harold has only met this great-niece and great-nephew once and really has nothing to do with them, mostly because of their petty criminal involvement and lack of direction in life.

Unfortunately for Harold, the legislation stipulates that all Harold has goes to his surviving great-niece and great-nephew, to do with as they see fit. In spite of the fact that Harold would likely have preferred that his estate go to the local military museum, or the Humane Society, or to provide scholarships for aspiring law students, his wishes will go unfulfilled as he failed to plan for this unfortunate scenario.

Although the above scenario is exaggerated in its impact, more subtle difficulties arise every day when survivors deal with their deceased family members’ or friends’ estates. Situations where the surviving children cannot agree on who should be the beneficiaries of specific items their parents possessed are commonplace. Scenarios where the surviving children cannot agree on whether to sell the house, cash in investments, or liquidate dad’s classic car collection are routine. Determining whether grandchildren should also share in the estate regularly divides family members. These situations can get particularly hostile when the surviving family members are deciding how to deal with more sentimental assets such as a family cabin, particularly if the family has many great memories of the vacation property.

Whatever the reason individuals don’t have a Will in place, the effort it takes to complete this estate planning step is miniscule in comparison to the heartache it will save if the burden was left on those behind, grieving one’s passing. Creating a Will is an opportunity to create a legacy, and make a final, lasting connection with friends or family, even if an individual doesn’t believe she or he has assets of value. The act of leaving behind a gift to a loved one, regardless of its monetary value, is one which says far more than the value of the gift. And the most definite way to ensure this happens is to formalize your wishes through the creation of a Will.