Most likely, everyone has been told that it is important to have a Will. While this is the best advice, people do not always have one. So, what happens when a person dies without a Will?
Dying without a Will is referred to as an “intestacy”. In some limited circumstances, this is not a big problem. If all assets (e.g. house and bank accounts) were held jointly with someone who survived the deceased, they simply take the property as surviving joint owner. Another example is where a person dies and owns no real property and no accounts in their sole name of any significant value, financial institutions are generally agreeable to transferring funds to the next of kin upon proof of death. Yet another example is where investments or life insurance policies have designated beneficiaries, so the funds go to those people directly.
However, if the person died owning real property and/or accounts in their sole name, someone will need to step up and apply to be appointed the administrator of the estate by the Court of King’s Bench for Saskatchewan. Priority to apply is governed by The Administration of Estates Act, SS 1998, c A-4.1. Generally speaking, the closest relative has first priority but if that person cannot or does not want to act, they can renounce their priority position in favour of someone further down the list. If there is no one to do this, the public guardian and trustee can also step in.
One of the biggest differences in applying to be appointed an administrator as opposed to applying as an executor appointed under a Will is the requirement to file a bond, which can be obtained from most insurance providers. The premium depends on the amount of the estate assets to be administered.
Once Letters of Administration are granted (i.e. the document that identifies the administrator and confirms their authority over the estate assets), the administrator can proceed. Since no Will exists, an administrator must determine who is entitled to receive the residue of the estate, after all just debts and liabilities are satisfied. This is not always an easy question to answer. Family makeup at the time of death can be a complicated web of relationships.
The Intestate Succession Act, 2019, SS 2019, c I-13.2 (the “Act”) and applicable case law provide most of the answers. For example, if a person died leaving a net value estate of $600,000.00 and had a spouse but also two children from a previous relationship, the spouse would receive what is called a “preferential share” of the estate, plus 1/3 of the remainder. The two children would share equally in the 2/3 of the remainder. Right now, the preferential share is defined under the Regulations as the greater of $200,000.00 or ½ the net value of the estate. So, in this example, the spouse would take $300,000.00 plus $100,000.00. Each child would inherit $100,000.00.
The result would be different if there was only one child. In that case, the spouse would take their preferential share plus ½ of the remainder (or $300,000.00 plus $150,000.00) and the one child would inherit $150,000.00. If the children were common to the deceased and the spouse, the spouse would take it all, but only if all children are common. Separations, divorce proceedings, and new spousal relationships can extinguish a spouse’s preferential share entirely. Pregnancy at the time of death can change things too: an unborn child will inherit as if they were born. If one of the children had died previously but had surviving children, grandchildren would inherit in their place. Step-children have no entitlement, while adopted children are treated the same as biological children.
Where there is no spouse and no children, a different set of rules apply. In that scenario, the net value of the estate would go to the surviving parents or parents’ descendants, if any, and so on until surviving beneficiaries are identified. These distributions occur per stirpes, which is a Latin term for “by branch”. As an example, if both parents had predeceased, the estate would go to their surviving children equally (i.e. the intestate’s siblings).
Sound complicated? It sure can be. Fortunately, most situations can be sorted out by applying the legislation and case law or by agreement of all potential beneficiaries. The administrator can also apply to the Court for direction.
Of course, if you do not want your estate to be distributed among your next of kin or if you want to benefit someone who is not related to you, you definitely need a Will. Whether you need an estate plan or you need to deal with an intestacy or you think you may be a beneficiary, our team at Stevenson Hood Thornton Hood LLP can assist.
Faith Baron
STEVENSON HOOD THORNTON BEAUBIER LLP
500-123 2nd Avenue S, Saskatoon, SK S7K 7E6
Telephone: 306-244-0132
Email: fbaron@shtb-law.com
This article is provided for general informational purposes only and does not constitute legal or other professional advice.
This article was originally published in The Western Producer on March 28, 2024.