Losing your parents is heartbreaking and stressful enough, but what if they die without a will?
No will means no executor, so what happens to the assets? How long must you wait before you can sell their house?
Don’t worry, the government won’t automatically take all the assets unless there are no legal heirs.
The primary consequences when relatives die without a will include additional expense, time, and hassle.
Ontario’s Succession Law Reform Act
We call dying without a valid will intestate. There is no control over the distribution of assets. Wishes of the deceased do not matter because relevant law dictates how everything happens. In Ontario, they distribute estates according to the Succession Law Reform Act.
You should engage a lawyer for advice if your relatives die without a will. Yes, this will be expensive, but it saves time and helps to eliminate confusion and conflict. The lawyer will explain the law and clarify different scenarios.
How does it work?
Unless someone is financially dependent on the person who died intestate and makes a claim, succession law dictates the surviving spouse is entitled to receive the first $200,000. The remaining portion of your estate if you die, is shared between your spouse and children.
What if you don’t have a spouse or your spouse is deceased?
According to the law, if there is no surviving spouse, your children are entitled to your estate. If any of the children are deceased, their children receive their proportionate share.
If no surviving children exist the grandchildren of the person who dies intestate are entitled to share the estate.
What if you don’t have a spouse or children or grandchildren?
If you do not have descendants, surviving parents will inherit your estate. Without surviving parents, your brothers and sisters are next in line. If any of your siblings have passed away, their children (your nieces and nephews) will inherit their share.
If there is no spouse, children, grandchildren, parents, siblings, nieces or nephews, a lawyer will be able to explain the distribution of your estate.
Probate
This is the legal process supervised by the courts that monitors the disbursement of the estate which occurs if there is a will or not. The purpose of probate is to assign responsibilities to the proper people who must pay debts and distribute assets correctly.
Normally, a will identifies the executor who will settle the estate. They administer the estate based on the wishes outlined in the will and according to applicable laws.
The process is time-consuming, so should start as quickly as possible. Under regular circumstances, it can take a few months or a few years depending on complexity. The estate covers legal fees.
No Will Means No Executor
Without a will, someone must apply to the courts for the responsibility of administering the estate referred to as the appointment of estate trustee. This increases not only the time but means increased costs for the estate.
Before you apply to administer an estate, you must notify all the legal beneficiaries. You need to obtain signed consent from each of them, or their guardians, if under the age of 18 or mentally incapacitated.
You may be required to post a bond or request that requirement is waived. Then you need to get your application notarized with all the related evidence. Now you are ready to apply
Can you see the dollar signs stacking up while you wait for a certificate of appointment? These fees will further reduce the amount of money left in the estate to divide between heirs. And you can never know how long the process will take, which simply adds to the existing anxiety, stress, and grief of losing a loved one.
Steps to take when inheriting a home
Because administering an estate takes time, if you are an executor or have applied to administer the estate, these steps are your responsibility during probate. You have a duty to protect the assets of the estate.
Contact the insurance provider to confirm the home is protected.
They will advise if you need to provide a death certificate or take out a new policy in your name.
Change the locks.
Keys may be shared with various people or service providers you are unaware of. New locks are an important precaution.
Get a fair market value assessment of the property.
This will help you decide about keeping or selling the home as well as establishing the base value for any capital gains.
Continue maintaining the home.
Check on the interior regularly and keep up with exterior maintenance.
Cost of inheriting a home
There is no inheritance tax in Canada, but ownership transfer fees apply if the home is your secondary residence.
If there are multiple heirs, one may wish to buy the others out to keep the home. If you sell or rent it out, all the heirs of the property will share the proceeds and expenses.
Primary Residence
- Live in the home full time
- Only own one property
Secondary Residence
- Do not live in the home
- Own other properties
- A cottage, vacation home, or investment property
Will you live in the home, sell it, or rent it?
There are a few things to consider when deciding if you wish to keep or sell an inherited home.
Keep the home and live in it
When you inherit a home, you will pay property taxes, repairs, mortgage if applicable, and insurance, etc. You may wish to hire a home inspector if you are unsure of the condition of the home to confirm it is safe to live in.
Sell an inherited home
When you sell a home that is not your primary residence, you must pay capital gains tax. We calculate this by taking the selling price and subtracting the value of the home at the time of inheritance. Tax owing is 50% of that difference.
The longer you own the home, the more likely the value will increase, therefore increasing the tax owing. Selling This is one reason settling an estate in a timely manner is so important and why having a will is beneficial to those you leave behind.
Additional fees for selling the home above the capital gains tax traditionally include realtor fees, inspection fees, lawyer fees, the expense of cleaning, repairing and prepping the home for sale on the market.
Selling an inherited home quickly saves money. Selling privately saves even more. MJS Properties can help make the process fast and easy.
Rent the home
If you decide to keep the home and rent it out, you must still pay capital gains tax since the type of property is changing from a residence to an investment.
In conclusion,
When you die without a will, you are leaving loved ones with added stress, expense, and delay the process unnecessarily. If they wish to sell your home upon your death, they must apply to administer the estate, adding more time to the probate process, which can have expensive consequences.
If you want to sell an inherited home, contact MJS Properties. We can help with providing a fair market value for the home and make selling easier, saving you time, money, and hassle.
