What happens without a will?
If you die intestate (without a will), your assets are distributed according to provincial laws that define who gets what — usually in order of family ties. It's a formulaic process that may be very different from what you wanted.
These laws on distribution of assets differ from province to province. Here are a few examples based on Ontario laws:
Beatrice and Jon are a married couple with two children in university. If Beatrice dies without a will, Jon will receive the first $200,000 from her estate plus one-third of the rest. The children will divide the remaining two-thirds between them. Giving money outright to her children may not be what Beatrice had in mind.
Helen and Andrew might fare even worse. They are a common-law couple with no children. If Helen dies without a will, Andrew won't be recognized as a "spouse" and Helen's parents will inherit her estate — unless they die before she does, in which case her brothers and sisters will share her estate equally. Her nieces and nephews come next in line, and then her other closest next of kin — but Andrew will receive nothing.
If you die without a will, you may also miss out on opportunities to reduce taxes and probate fees.* Probate fees alone can add up quickly. They also vary depending on the province you live in. In Ontario, they are known as the estate administration tax and they amount to $5 for every $1,000 (or part of $1,000) on the first $50,000 of the value of an estate, and $15 for every $1,000 (or part of $1,000) of the rest. Naming beneficiaries on registered accounts and insurance policies is one of the easiest ways to reduce the assets that are subject to probate. Your CIBC Financial Advisor can help with the appropriate beneficiary paperwork on your registered plans.
That's not all. A will also gives you a chance to assign two very important roles, executor and guardian, which would otherwise be court-appointed.