Do I Need A Will?

Introduction

On 23 January 2018 CTV News published troubling results from a survey they conducted (https://www.ctvnews.ca/lifestyle/majority-of-canadians-don-t-have-a-will-poll-1.3772853) showing that the majority of Canadians (51%) do not have a will.  Reasons for not having a will include being too young to worry about it (25%), not having enough assets to make it worthwhile (23%), and not wanting to think about dying (8%).  But what happens if you pass away without a will?  Why are wills needed?  Is it really necessary?  These questions will be explored in the paragraphs below.

What happens if I die without a will?

So what happens if someone dies without a will?  Canadian estate law is largely inherited from British law.  As a result, it used to be the case that if someone passed away without a will their possessions would escheat (or “go to”) the King or Queen personally.  As the law evolved, this eventually morphed into possessions going to the Crown generally (or government general revenue).  However, around the time of the industrial revolution governments began to recognize that this created hardship in families, and they started to legislate how property would transfer in the case that someone died without a will.  Now if someone dies without a will the property will go to their living spouse.  If there is no living spouse, then the property goes to children, and if there is no children, then to grandchildren and so on.  In Alberta this is governed by the Wills and Succession Act SA, 2010 c W-12.2 (the “Act”).

However, if someone dies without a will and without and living family today, their property still escheats to the Crown.  The Crown in Alberta (the Alberta Government) has decided that when this happens, the money derived from the estate should go to post-secondary institutions in this province.  While this all sounds reasonable in theory the concern is this: if you die with $100 in assets to your name it is the government deciding what happens to that $100, and not you!  The current distribution method has been determined by an act of the Alberta Legislative Assembly – and it can just as easily be changed by the same legislature.  As a result, there is no certainty what will happen to your assets (whether they be worth $100 or $100 million) if you die without a will.

Probate Issues

Let us assume that someone just wants their property to go to their spouse (or split evenly among their children, if they do not have a spouse).  Some people may be willing to risk betting that the legislation would not change, and that their spouse or children would eventually obtain everything.  There is nothing wrong with this in theory.  However, there are still very serious practical implications to doing this.  When someone dies without a will, the spouse or children who have a right to inherit under the Act do not do so instantaneously, as if by magic.  A Court must first approve the distribution of the estate of the deceased person.  This approval used to be knowing as a “grant of probate” but now is known as a “grant of administration with (or without) a will annexed”.  For our purposes though, we can use the term interchangeably in this article.  

The issue here is that obtaining a grant of probate or a grant of administration is not a quick matter – one does not simply walk down to the courthouse and ask to speak to a justice.  First, an extensive amount of information must be gathered for paperwork that must be filled out.  Often multiple parties will need to get together to sign the paperwork.  If people are living in different cities, this means signing off on things, and then mailing them to the next person.  Once the paperwork has been filled out, it is then submitted to the Surrogate Court clerk, who will review it.  The turnaround time for this review is currently 6 – 8 weeks in Calgary.  If the paperwork has any issues, (which is often the case, even when lawyers are the ones filling out the papers) the clerk will return it to the lawyer to make corrections, resubmit it, and the 6 – 8 week wait begins again.  

Once the clerk is satisfied that the paperwork is properly filled out, it is then sent to a justice for his or her review.  And once again there is a significant delay here as the justices also have a significant amount of backlogged applications to process.  If the justice is content that the paperwork has been filled out properly, and everything looks to be in order, he or she may issue a grant or if he or she has questions, they may order an in-person appearance in Court.  If an in-person appearance is ordered, it must be scheduled for a future date, and again this can result in a significant delay.

The entire process is lengthy, and it is easy to see why phrases like “the executor’s year” or “the probate year” are used.  Eventually though, a justice will likely issue the grant and the spouse or children will then be entitled to access the deceased person’s estate.

Delay Issues

By now some people reading this will be thinking “okay, so there will be a delay, but my spouse or kids will still get my stuff, right?”  While this may technically be true, there are still some very serious practical issues that may arise during the year long wait for it to occur.  If you were living alone prior to passing away, your service providers may cut services to your home for non-payment of bills.  A lack of power in an empty home in the summer is not an issue per se, but a lack of heat in the winter when it is –40 outside is an issue: water pipes burst, countertops start to fall apart, and floors warp.  Even if someone can talk a utility company into permitting payment of the account by someone other than the account holder, the company insuring the home will likely cancel the house’s insurance policy – as it is now empty.  Insuring an empty home is much different than insuring a home with someone living in it.  And if the home burns or is vandalized while it sits empty, with no insurance covering it, there will be nothing to cover the loss.

If someone passes away while living with their spouse, this can still create a multitude of issues.  For example if the deceased person owned a vehicle only in his or her name, no one can sell it until the Court issues the grant.  If a spouse had a bank account only in his or her name, the surviving spouse cannot access the money, until the Court issues the grant.  If the deceased person had investments in his or her name, the surviving spouse or children could not sell off the investments prior to the Court issuing the grant – even if the market was collapsing and waiting for the Court would mean that the assets would be worthless!

Owning Nothing when Dying

Even if a person does not own a single thing when they die (for example, if they gave everything to their children prior to passing), it is still a good idea to have a will!  Even after a person passes away, there are things that need to be done: the CRA expects that a final tax return be filed after someone passes away if they made any income at all in the year before they died (including pension income).  No one has the authority to file a tax return for someone else, unless that person has given their permission (such as to an accountant or in their will) or unless the Court has issued a grant.  As a result, even though the deceased person may not have owned a single thing prior to dying, the estate may be entitled to receive money back from the CRA.  If the person did not leave a will, the children will have to wait a significant amount of time to file the final return, and to receive any money from the CRA.

Everyone Should Have a Will

Everyone should have a will, regardless of age, wealth, marital status, and parental status.  Even if someone owns very little, or is young, everyone should have a will.  Even if you have a spouse and want everything to go to him or her upon your passing, which the legislation will facilitate if you do not have a will, not having a will means that your spouse will have to wait a significant amount of time prior to inheriting your possessions.  If you are the only one with access to bank accounts, or the one person whose name is one the mortgage, it is possible that your spouse could be forced to move out of your family home while waiting for the Court to issue the grant.  It is simply not worth the risk.  Wills can be very quick and easy to create and will save your loved ones a significant amount of time and headache when you pass away.

If you think you are ready to get a will, contact us today to see how we can help you!