Valle: Quebec's inheritance rules are surprising to some — a will is your best protection |
I’m 70 and I want to write a will and testament. My husband and I come from a country where writing a will is not common. After 30 years in Canada, he refuses to discuss this with me. Can I still write a will even without him?
In personal finance, many things we consider routine in this country are unheard of elsewhere. The concept of filing income tax returns every year, for example, is something most people around the world never do. In many countries, customs or local laws sort out inheritance so predictably that writing a will seems unnecessary. But in North America, failing to plan can leave your family with complications you never intended.
A couple of infamous celebrity cases serve as cautionary tales as to what can happen with a lack of estate planning.
Musical icon Prince died unexpectedly in 2016 at age 57 without a will, sparking an eight-year legal battle among his six living heirs over his $150-million estate. Then there is the case of legendary soul singer Barry White, who had a will, but never updated it. When he died unexpectedly in 2003 at age 58, his estranged wife inherited most of his assets, estimated at about $20 million, while his long-time partner was left with nothing.
Both of the above examples could have been avoided by having a will and keeping it updated when circumstances changed in their lives.
A common misconception is that a surviving spouse automatically receives all assets from their deceased partner. In Quebec, this isn’t true. To understand why, you need to know how family patrimony works.
Family patrimony is the legal framework in the Civil Code of Quebec that defines which assets belong to each spouse and which are considered shared property. Assets like a house or an RRSP may be owned by one individual, but if they are jointly used by a couple, they fall under the umbrella of family patrimony.
When a marriage ends — either through divorce or death — the family patrimony is divided. The process takes inventory of a couple’s assets and liabilities and then the net value is split, with one spouse possibly owing money to the other to equalize the division.
Only after this step is taken does an estate get divided among heirs. Without a will, the Civil Code of Quebec directs the distribution in the following manner:
One-third to the surviving spouse
Two-thirds to their children
This means your children could end up being co-owners of your home and inherit a substantial portion of your retirement savings — potentially triggering a large tax bill for your estate. And because heirs are automatically designated as liquidators unless they vote otherwise, blended families can make the process even more complicated.
To make matters even more difficult, the Civil Code of Quebec excludes unmarried spouses from the protections of the family patrimony framework. This means there is no right to inheritance and no protections for surviving spouses who may reside in the home owned by their deceased partner. A 2022 study showed that half of unmarried couples in Quebec were unaware of this.
The best way to make sure your wishes are respected is to write a will. Only a will allows you to specifically designate beneficiaries for your share of the family patrimony. In this case, you could designate your spouse as beneficiary of your share of the home, retirement savings accounts and TFSAs. This would also avoid a large tax bill and ensure your spouse remains financially secure. You can also split up your assets in other ways as long as you respect patrimony rules.
Here are the steps to take in drafting a will
Ask yourself or your partner: “What will happen if I die?”
Consider who you want to inherit your assets, who should manage your estate (the liquidator) and whether you want your spouse to remain in the home or receive anything specific.
Make a list of your assets
Include things like your home, bank accounts, RRSPs/RRIFs, TFSAa, pensions, insurance policies to ensure nothing is overlooked.
While you could draft a will with a lawyer or do it yourself online, these options come with additional steps. The most secure and practical option is to use a notary.
A notarial will is stored and registered properly and does not require probate, which will save your family time and money. You do not need your husband’s participation or consent to make your own will.
Sign the will and keep a copy
Once signed before the notary, a will is valid immediately. The notary keeps the original so it can be easily found when needed.
I hope this information empowers you to do the best you can to ease the pain in your family and minimize conflict in your absence. The void we leave behind should be spiritual, not financial.
Do you have a personal finance question? Send it to Carlo Valle at advisor@delta-finance.ca.
Valle: How you can protect your savings if Quebec separates
Valle: How can we navigate the traps that lead us into debt?
Valle: Why pulling out of the stock market right now would be a really bad idea