Partial Intestacy – When a Will does not Cover Everything
Most people are fairly familiar with the concept of a person either dying testate or intestate. The idea that if a person dies with a will their estate is distributed according to their will, and if a person dies without a will their estate is distributed according to a set scheme devised by statute, is fairly well understood. What many people may be less familiar with however is what happens when a person dies falling somewhere in between these two extremes. What happens when a person dies leaving a will that only deals with part of their assets? What happens to the assets not dealt with under the will? When this happens a person is said to have died "partially intestate", and what happens with the property that is not dealt with by their will is governed by statute.
In Ontario partial intestacy is governed by Part II of the Succession Law Reform Act ("SLRA"). In determining what to do with the portion of the Deceased’s estate which was not covered by their will, the first step is to identify whether the Deceased was married at the time of their death (unfortunately for the purpose of this section common-law spouses are not entitled). When a married person dies intestate the first $200,000 of their estate goes to their spouse as a "preferential share". If there are any funds remaining in the estate after the payment of the preferential share, these funds are then distributed according to a set statutory scheme.
Presumably, when a married person leaves a will, they will leave part of their estate to their spouse. As the surviving spouse is likely already receiving a portion of the Deceased’s estate under the will, it seems unfair that the spouse would be entitled to an additional first $200,000 as a preferential share of the Deceased’s property which was not covered by the will. In order to get around this, section 45(3) of the SLRA provides that you need to take into account any property that the spouse receives under the will and subtract this from the preferential share. For example, if a person received $150,000 under the will, they would receive a preferential share of the first $50,000 of the Deceased’s property that was not covered by the will. If a spouse receives more than $200,000 under the will, then in the case of the property not covered by the will there would be no preferential share.
If there is any property remaining after the payment of the preferential share, this property is distributed according to a set statutory scheme. In the case of a person dying with a spouse and no issue all remaining property is distributed to the spouse. If a person died with a spouse and issue, if there is only one issue then 1/2 of the remaining property goes to the spouse and 1/2 to the issue. If there are 2 or more issue, then 1/3 of the remaining property goes to the spouse, with the remaining 2/3 distributed to the issue.
In the case of a person dying partially intestate who is not married, the property would be distributed to their issue. If there are no issue it would go to their parents, siblings, nephews and nieces, or next-of-kin with reference to section 47 subsections (3) to (6) of the SLRA. In the event that no next of kin can be found, then pursuant to section 47(7) the property would escheat to the Crown.
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