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Estates - Intestacy


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What is an Intestacy

O.k. It's a funny word. Now let's get on with it.

Where a person dies without a Will, it is called an 'intestacy'. The property will still become a legal entity called an estate, but the Court must appoint an Administrator, not an Executor, to look after it, and the property is distributed according to the Intestate Succession Act, not the Will. The Public Trustee will have to be the trustee for anything which must be held in trust. There is, of course, no opportunity for tax planning, such as managing Capital Gains.

Who gets what

The Intestate Succession Act will govern who is entitled to what share of the property. Those people are the "beneficiaries". There are different rules according to when the death occurs, but, as of the time of writing, 1995, it provides that the spouse gets the first $100,000.00 and shares the rest with the children. If there are neither, the Act sets out priorities, based on degrees of kinship. There is an exception of a separated spouse was living in adultery at the time of death.

Although so-called "common law marriages" became more and more like traditional marriages under the law, they were not a spouse within the meaning of that Act, until 2001, when Saskatchewan make cohabitants who had lived together for more than two years as spouses, equivalent to spouses for all purposes. However, illegitimate children were 'children' within the meaning of the Act.

The court can change the scheme in the Intestate Succession Act, if a person proves they were a dependant and weren't adequately provided for, under the Dependant's Relief Act. Under that act, a 'common law spouse' is included in the definition of spouse, and a spouse is automatically considered a dependent, so a common law spouse may apply for a share.

Where a beneficiary is Incompetent

If a person is not legally entitled to hold property, they are incompetent. A child is always incompetent. A mentally challenged person can be ruled incompetent by the courts. Property which would have gone to an incompetent person must be held by the Public Trustee until the person becomes competent. The Public Trustee will invest the property, but will also charge for administration.

The public trustee has the power to use the property for the benefit of the beneficiary, but normally prefers the protection of being ordered to do so by the courts.

What property is passed

Before any beneficiaries get anything, the estate must pay funeral expense and debts of the deceased. And even before that, a spouse or other person can apply to say that some of the property didn't really belong to the deceased at all, so it isn't really in the estate. For instance, as spouse could make a claim under the Family Property Act.

Who can deal with the property in the meantime

Since there is no will, nobody can legally act with respect to the deceased's property until the court appoints an Administrator. The Queen's Bench Act (formerly the Surrogate Court) governs this area. There is a traditional order of precedence based on degrees of kinship. In other words, the most closely related person has first chance at being the Administrator. The person applying must prove that people more closely related are non-existent, non-available or unsuitable.

The degrees of kinship are found in the rules of court. First is legal spouse, then grown-up children, then grown-up grand-children, then parents, then siblings, so on through all the types of relatives, and finally, creditors of the deceased. Although there is no provision for a common-law spouse to be appointed, in my opinion, the court has the power to appoint such a person, as least under the heading of creditor.

The Administrator can then act over the property, transferring it to the proper trustee, who will then eventually transfer it to the proper beneficiaries.

There are a few exceptions to the requirement for an administrator, which include:

Legal Risks and Liabilities

In some cases, property can be effectively transferred without an administrator. For instance, a couch can be effectively, although not legally, transferred just by a change in possession, so long as nobody objects.

Of course if a person took property which would not have wound up with them, had the legalities been followed, they would be liable to a claim by the proper beneficiary, or the proper Administrator.

If anybody takes any property which belonged to the deceased, and if there are any creditors left unpaid, then that beneficiary is liable to the creditors.

If the Administrator does not follow his/her duties as set out in the Letters of Administration (the court order appointing them) or any further court orders, or if s/he is dishonest or careless, then s/he will be liable to whoever should have received the property which was lost as a result.

The Administrator may be personally liable if s/he passes property to a beneficiary without pursuing the proper steps to ensure that creditors and Revenue Canada are paid.

These are only the main dangers.

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Office Kevin Jaques, B.A., LL.B.
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