Does the government get your estate if you have no will?
The short answer is “no,” says Vernon lawyer Rob Culos. If a person dies without a will, their assets are distributed to family members according to the Wills Estates and Succession Act of BC. However, Rob points out, this can create an unwanted result for many reasons:
- Where there is no will, nobody is named as an executor. The person who becomes responsible for the estate is called the “Administrator.” Family members might disagree as to who should be the Administrator and the result could be unnecessary stress, drama and expense;
- Where a couple have children together, and one parent dies, most people would prefer that their assets go to the spouse and then to the children only after the second parent dies. When the estate is distributed pursuant to the Wills Estates and Succession Act, there is no flexibility as to how the estate is divided between the surviving spouse and the children;
- Where a couple have children from a previous relationship, there is no opportunity to balance the interests of the surviving spouse and one’s own children. By signing a will (and often by providing a life estate in the house to the surviving spouse) this can be easily achieved;
- If a person has a child with a disability (this could be a physical disability, an intellectual challenge or a legal disability owing to being under the age of 19), it is not possible to appoint a family member to be the trustee of that child’s portion. The Public Guardian and Trustee of BC will take over. The money will be safe, but the PGT charges significant fees for their services; and
- If you would be inclined to give gifts to your favourite charity, you must either do so while you are alive or write that into your will. If you don’t have a will, there will be no charitable gifts.
Remember, a proper Estate Plan goes beyond the last Will and Testament – it is advisable to consider both a Power of Attorney and a Representation Agreement. It is also very important to consider how assets can be transferred to a beneficiary named in the investment documents – for example, people should double check who they have named as beneficiaries of their RRSPs, their TFSAs and their Segregated Funds.
Although the government won’t get your estate if you don’t have a will, they will probably get more than their fair share, Rob says. All assets that fall into the estate are subject to probate taxes. Not all assets need to fall into the estate – they can go directly to the named beneficiary.
“As a lawyer, I enjoy helping people through the very important (and sometimes very difficult) process of estate administration,” Rob says. “However, I don’t want to be paid as much as (or more than) the beneficiaries. Having a proper Estate Plan is an excellent investment, both in financial terms and for peace of mind.”