Dying without a will, also known as dying intestate, can have significant financial and personal consequences that many people do not fully understand. When working with your financial advisor, it is important to have an open and honest conversation about what this means for your estate and the people you care about. Asking the right questions can help you understand the potential risks and take steps to protect your family and your legacy.
One of the first things to discuss is what happens to your assets if you pass away without a will. In most cases, the distribution of your property will follow the intestacy laws of your province or territory. These laws determine who inherits your estate, and the results might not reflect your personal wishes. For example, if you are unmarried but have a partner, they may not receive anything under the default rules. Understanding these laws and how they apply to your situation is critical for planning.
It is also important to know how your debts will be handled if you die intestate. Creditors will generally be paid before any inheritance is distributed, but the process can become more complicated without a clear estate plan in place. Your financial advisor can help you understand how liabilities are settled and what impact this might have on the assets you leave behind.
A key question to ask is who will manage your estate in the absence of a will. Without an appointed executor, the court will choose someone to take on that responsibility. This person may not be the individual you would have trusted to handle your affairs. The process can also be time consuming and costly, which can add stress for your loved ones during an already difficult time.
Taxes are another area of concern. Ask your advisor about the potential tax implications for your estate if you die intestate. Even with a will, a lack of planning can result in unnecessary taxes that reduce the amount ultimately passed on to your heirs. Proper planning often provides opportunities to minimize these costs.
Family dynamics are often affected by intestacy rules as well. How will your spouse, children, or other beneficiaries be impacted if you have not left a will? If you’ve separated and/or remarried, a new will becomes even more essential. These default rules may create unequal or unintended outcomes that can lead to disputes among family members. Your advisor can help you review these scenarios and explore ways to avoid conflict.
Another important point is whether you can designate individuals to receive specific assets without a will. While certain accounts and policies allow for named beneficiaries, other assets do not, which means they will be subject to intestacy laws. Understanding the difference is essential for clarity and peace of mind.
The costs associated with probate are also worth discussing. Probate can be lengthy and expensive, and without a will to guide the process, those costs can increase significantly. Keep in mind, anytime something goes to court it’s not only dragging on the process but also adds to the overall expense of estate administration. If you own a corporation and live in Ontario or British Columbia, you also have the opportunity to create a second will that permits the shares in your private company to pass outside of probate. Your advisor can explain what to expect and how planning ahead can simplify the process for those you leave behind.
For those with minor children, there is also the issue of guardianship. If you do not have a will, the court will decide who takes care of your children. This decision may not align with your wishes, which is why planning is so important.
Finally, while a will is primarily about the distribution of your assets, you should also ask about other parts of your estate plan, such as healthcare directives and powers of attorney. These documents ensure that your preferences for medical care and financial decisions are respected if you cannot make them yourself.
Discussing these questions with your financial advisor can help you understand the consequences of dying intestate and provide a clear roadmap for protecting your assets and loved ones. Taking action now by creating a comprehensive estate plan can save your family stress, prevent disputes, and ensure that your wishes are carried out exactly as you intend.
Advisory
As your Chief Financial Officer, I’m here to help you understand the various tools available to you to secure your future. There are many factors to consider and understanding your goals is key to building a plan that serves you today and well into the future – as your life changes.
Have more questions than answers? Educating you is just one piece of being your personal CFO that I offer. Call (780-261-3098) or email (roxanne@c3wealthadvisors.ca) today to discuss insurance.
Roxanne Arnal is a former Optometrist, Professional Corporation President, and practice owner. Today she is on a mission to Empower You & Your Wealth with Clarity, Confidence, & Control.
These articles are for information purposes only and are not a replacement for personal financial planning. Everyone’s circumstances and needs are different. Errors and Omissions exempt.
