How Does Inheritance Work in Canada?

When a person passes away, their possessions – known as their estate – get passed to their beneficiaries. When distributed among beneficiaries, this collection of assets, which may include cash, property, residences, vehicles or investments, is referred to as an inheritance.

The distribution of an inheritance is not always simple. If you plan to leave your loved ones an inheritance, it’s wise to hire a Wills and Estates lawyer to guide you through the process. Here’s an overview of how inheritance distribution works.

How Inheritance Works

Inheritances are passed to beneficiaries after one passes. The distribution process varies depending on if the estate owner made a Will. A Will is the quickest and most straightforward way to distribute an inheritance. Some estates may still require to pass through the probate process, formally authorizing the distribution of assets. Contact a lawyer at GS Brar Law for your specific needs.

The Probate Process

Probate is the legal process of validating a Will and appointing its executor for the formal distribution of assets as outlined in a Will. In the absence of a Will, the probate process appoints an administrator to distribute the estate according to the Succession Law Reform Act.

Beneficiaries occasionally dispute a Will’s validity during probate. Such disputes are litigated in the Superior Court of Justice.

Inheritance Law

In Canada, inheritances are regulated at the provincial level. In Ontario, for instance, the Succession Law Reform Act informs how inheritances are treated if someone dies intestate (without a Will) or if a Will’s provisions are unclear. The Act specifies the following points, among others:

what happens to a person’s property when they die intestate,
how a Will is probated,
how property is distributed in circumstances where a decedent dies intestate and without any next of kin,
what share of an estate the decedent’s immediate family members are entitled to

A Wills and Estates lawyer can advise you on planning your estate to benefit your loved ones as much as possible after your death.

Inheritance without a Will

The Succession Law Reform Act outlines how an estate is to be distributed in the absence of a will. Below is the typical order of distribution:

If there is a spouse and no children, the spouse inherits the decedent’s entire estate. Common law spouses are not entitled to inherit under the Act.
If there is a spouse and children, the spouse inherits a preferential share equivalent to $350,000, with the balance of the estate shared equally among the spouse and children. Only the spouse stands to inherit in estates valued below the preferential share amount.
If there is no spouse, but there are children, the estate is divided equally among the children. In the event a child dies, the children of that child inherit.
In the absence of any spouse, children or grandchildren, the deceased’s parents inherit the estate equally. If one parent has died, the living parent inherits the estate.
In the absence of any parents, the deceased’s siblings inherit.

In every case, the Law applies to the deceased’s nearest relative until a beneficiary is identified. If there are no living relatives to inherit, the estate passes to the province.

Inheritance Tax

There is no inheritance tax in Canada. However, there is an estate tax of sorts. When winding up an estate, an executor must prepare a final tax return on any outstanding income earned from the last filing date up to the time of the estate owner’s death. This includes any capital gains from the appreciation of capital assets – a residence, real property, stocks or bonds. Tax amounts owing are paid from the estate’s funds before distribution to beneficiaries.

Plan with the Inheritance Process in Mind

There is no time like the present to create a plan to provide for your loved ones. At GS Brar Law, our experienced wills and estates lawyers can help you craft a solid estate plan that effectively caters to both your needs and the needs of your loved ones.

Call us at 1-905-291-3297 or complete our contact form for more information.