What happens if you die without a will?
Topics covered:
- Explaining what happens if you die without a will
- Giving a links to legislation prescribing default beneficiaries and default administrator (executor) if there is no will
- Explaining consequences for if there is no will with guardian or trustee provisions for minor children
What happens if you die without a will?
It’s not as horrible as you might think.
In fact, there are circumstances when having a will, or not, wouldn’t make much difference at all.
I suspect that most people are concerned about what would happen to their stuff: “If I don’t have a will naming beneficiaries, do my assets go to the government?”
The law provides for default beneficiaries if you haven’t designated beneficiaries in a will.
You can access a link to “Division 1 – Distribution of Estate When There is No Will” of British Columbia’s Wills, Estates and Succession Act (the “Act”) here:
(https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/09013_01#division_d2e2469).
The legislation starts by saying that if you die with a spouse and no living descendant, the default beneficiary is your spouse.
That default works for most people in that circumstance.
Not having a will also means no appointed executor. You might ask: “How can an estate be dealt with if there’s no executor?”
Easy-peasy!
There’s another provision of the Act that gives a priority list of people who the court can appoint to administer the estate if there’s no will. It’s section 130 which can be accessed here:
(https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/09013_01#section130).
The top of the list is your spouse.
But, you might ask: “Does it cost a bunch more money to administer an estate using the defaults of the Act than if there was a will?”
The answer is no.
The process of obtaining an estate grant (commonly known as probate) is needed regardless of whether or not there is a will. There are just slightly different forms if there’s no will.
The same probate fees will have to be paid.
And the estate grant process shouldn’t cost any more in legal fees.
That might beg the question: “Why go to the expense of having a will!?”
There are many reasons.
One key reason is that the default beneficiary provisions don’t work out well a lot of the time.
Consider, for example, a scenario where you have a spouse and a child.
Most people would want their spouse to be their sole beneficiary, with their estate going to their child only if their spouse predeceased them.
The default provisions are a little complicated. A lump sum goes to the spouse ($150,000.00 or $300,000.00, depending on whether the child is also the spouse’s), with the balance divided between the spouse and the child.
The other default provisions are kind of fun to read through. I invite you to read through section 23 of the Act, which sets out a dizzying set of defaults if you die without a will and have no spouse. It goes through an expanding family tree trying to find someone the deceased is related to and goes so far as great-grandparents and their descendants!
And yes, the very end of that paragraph says that if none of those defaults apply, “the whole estate passes to the government…”!
Another important reason for a will is to deal with minor children.
If you don’t have a will that appoints a guardian and a trustee of minor children, there is a very expensive government body called the Public Guardian and Trustee of British Columbia (“PG&T”) that must handle their financial affairs.
And unless there is a trust set up in the will that requires a child’s inheritance to be held for them until they are more mature, they will have that lump sum on their 19th birthday.
Some parents want provisions that hold back a child’s inheritance until they reach age 25, 30, or even older, with a trustee able to use their discretion to dole out amounts that might be helpful for the child’s education and other reasonable needs until they reach that age.
There are many other reasons why a properly drafted will can be of significant value, but those will have to wait for future columns.
Effective estate planning can be very simple. It can also be very complex. I encourage you to consult with an estate planning lawyer so that you can be properly advised and make an informed decision about what mechanisms to put in place to ensure your wishes are followed.
