At the end of August, we addressed how the probate process differs for Indigenous clients who are governed by the Indian Act: see Probating Indigenous Estates: Who Has Jurisdiction?* In addition to a separate probate process, the Indian Act also has distinct provisions that govern the creation of wills and the distribution of estates on intestacy. Familiarity with these provisions is essential for counsel who assist Indigenous clients, as the Succession Law Reform Act may not apply if a client satisfies the definition of “Indian” under subsection 2(1) of the Indian Act. 

Testate Succession Under the Indian Act

Wills that comply with minimal formalities may be valid under the Indian Act – subsection 45(2) provides that any written instrument signed by an Indigenous person which expresses their wishes or intentions with respect to the disposition of their property may be accepted. Section 15 of the Indian Estates Regulations also expressly confirms that a will subject to the Indian Act is not required to comply with the SLRA, as the Minister may accept a will that does not conform with the legal requirements in force in any province. Even a will written in the native language of an Indigenous testator may be valid, as noted by Diana Leopardi in her recent article Protecting Indigenous Rights by Way of Last Will and Testament and Incorporating Indigenous Culture in Resolving Conflict in Estate Settlement. 

To be recognized as valid under the Indian Act, however, a will must be approved by the Minister. In fact, subsection 45(3) provides thata will which is not approved by the Minister will have no “legal force or effect as a disposition of property”. While there is no right to appeal the Minister’s decision under section 45, if the Minister does not approve a will, it ought to be possible to apply for judicial review under section 18.1 of the Federal Courts Act. After all, the power conferred on the Minister to reject or approve a will under the Indian Act is subject to the rules of ‘natural justice’: see Justice Marceau’s decision in Pronovost v. Minister of Indian Affairs, 1984 CanLII 5325 (FCA).

When assisting Indigenous clients who do not ordinarily reside on a reserve with estate planning, it is advisable to ensure that their wills comply with the SLRA. While the Minister may assume jurisdiction over such estates pursuant to subsection 4(3) of the Indian Act, the Minister is not required to do so. As such, if the Minister does not assume jurisdiction and the deceased’s will does not comply with the formalities of execution required under the SLRA, the Superior Court of Justice may not permit the will to be probated unless it is validated under section 21.1 of the SLRA. 

Intestate Succession Under the Indian Act

If an Indigenous person subject to the Indian Act passes away intestate, their estate will be distributed in accordance with section 48 of the Act. Even if the Superior Court of Justice were to exercise jurisdiction over the intestate estate, as per section 44 of the Act, the estate would still have to be administered in accordance with the “authority conferred on the Minister … in relation to testamentary matters.”

Like the SLRA, the Indian Act provides a preferential share for the deceased’s “survivor”, being either a surviving spouse or common-law partner. However, there is a significant disparity in the value of each respective preferential share. Under the Indian Act, a preferential share may only be $75,000 at most,whereas a preferential share payable under the SLRA is $350,000, as per O Reg 54/95. 

If the value of the deceased’s estate exceeds $75,000 and the deceased had no children, then the entire estate will go to the survivor on intestacy. If the deceased had a child, however, then that child will receive half of the remainder, with the other half going to the survivor. If the deceased had more than one child, two-thirds of the remainder will be distributed to the children, and the survivor will receive the remaining third. That said, the Minister has discretion under subsection 48(3) to “direct that all or any part of the estate that would otherwise go to the survivor shall go to the children”, if it appears that provision for the children is inadequate. In that case, the Minister may also grant the survivor the right to occupy reserve lands previously occupied by the deceased.

It also merits noting that if the deceased was predeceased by a child, but that child left “issue”, then that “issue” shall inherit the child’s share of the deceased’s estate on intestacy. 

If the deceased has no survivor or children, then the deceased’s parents will inherit the estate in equal shares, as long as they are still alive. The next relative in line for intestate succession is the deceased’s siblings, and potentially the siblings’ children. Finally, as a last resort, the deceased’s next of kin will inherit the estate.  

In keeping with the SLRA, if an heir on intestacy is conceived prior to the death of the intestate, but born alive after they have passed, that heir “shall inherit as if they had been born in the lifetime of the intestate and had survived him”: see subsection 48(10).

Property Included in the Estate of an Indigenous Person 

Online, the Government of Canada provides a comprehensive list of what property may be included in the estate of an Indigenous person governed by the Indian Act, including land and buildings owned by the deceased located both on and off-reserve. However, an estate may not include lands or buildings owned by a First Nation. As noted in Diana Leopardi’s article, “land on a reserve is technically owned by the federal government for the benefit of a Nation which resides on that given land and members of a Nation hold ownership of that land by way of certificate of possession”.

The fact that lands and buildings owned by a First Nation do not form part of a deceased Indigenous person’s estate does not necessarily mean that they cannot direct the transfer of that property. For example, section 24 of the Indian Act permits the transfer of land to the band or to another band member, subject to the Minister’s approval. To learn more about such transfers, see the firm’s 2021 blog post, Succession of Land on Reserves, and Diana Leopardi’s article.

Estate Administration Tax

If an estate is probated or administered under the Indian Act and the deceased ordinarily resided on a reserve, estate administration tax should not be payable. However, the law is more complicated for Indigenous persons who do not ordinarily reside on a reserve. For these types of estates, it appears that estate administration tax will not be payable if the Minister chooses to assume jurisdiction, but that it may be required if the applicant applies for a certificate of appointment of estate trustee. The Estates Court Staff Procedures Manual states that where “the deceased is a status Indian who resided off reserve and had property off reserve: Estate Administration Tax is payable on the value of that property”. However, if that person also had property on the reserve, tax will not be payable on the reserve property if it is transferred to another status Indigenous person. Similarly, the government of Ontario’s webpage for Estate Administration Tax states that “[c]ertain property situated on a Reserve may be exempt from taxation”, and suggests contacting the Ministry of Finance with questions about whether Indigenous persons are exempt from estate administration tax.

For non-status Indigenous persons who reside off reserve and do not have property on reserve, estate administration tax will be payable with respect to that person’s estate: see the Estates Court Staff Procedures Manual at section 3.2 b. 

Thank you for reading, and have a great day! 

Suzana.

* The term “Indian” is used in this blog post even though it is outdated and offensive, because it has legal meaning under the Indian Act. As noted by Justice Ahmed in Jack v. Wildcat, 2024 FC 1, the term Indigenous Peoples “more respectfully denotes those who lived on this land before settlers arrived”.Where possible, the term Indigenous is used.