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This guest blog generously provided by Irit Gertzbein, LL.B., TEP, Barrister & Solicitor, Gertzbein Law.
Gertzbein Law offers comprehensive wealth and estate planning for all sizes of estates, for all levels of complexity of ownership, with a focus on tax reduction and the enhancement of family harmony.
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Special Status Beneficiaries of a Testate Estate
Albert Oosterhoff’s article on anti-lapse legislation in Canada, and particularly in Ontario (Anti-lapse Legislation and Unsatisfied Conditions, WEL Blog, July 29, 2019), is an excellent outline of the law’s treatment of gifts made in a Will to next-of-kin who had predeceased the testator (also known as the “anti-lapse rule”). The anti-lapse rule is meant to reroute gifts made in favour of “special status” beneficiaries, namely, children, grandchildren, and siblings of the testator who had predeceased the testator (the predeceased person is hereinafter referred to as the “PP”), to substituted recipients, namely, the PP’s spouse and/or issue, if surviving the testator. The intended effect of the anti-lapse rule is to cause the PP’s would-be gift to pass directly to his or her immediate family members who survive the testator.
Section 31 of the Ontario Succession Law Reform Act (the “Act”) states:
Substitutional gifts
31 Except when a contrary intention appears by the will, where a devise or bequest is made to a child, grandchild, brother or sister of the testator who dies before the testator, either before or after the testator makes his or her will, and leaves a spouse or issue surviving the testator, the devise or bequest does not lapse but takes effect as if it had been made directly to the persons among whom and in the shares in which the estate of that person would have been divisible,
(a) if that person had died immediately after the death of the testator;
(b) if that person had died intestate;
(c) if that person had died without debts; and
(d) if section 45 had not been passed. R.S.O. 1990, c. S.26, s. 31.
The remote issue of the testator, if surviving the testator, are captured by section 31 to inherit the would-be gift, in the right circumstances, where their own direct ancestor/s had predeceased the testator.
What if the PP was not a child or grandchild of the testator but rather, a sibling? Are the remote issue of the predeceased sibling likewise captured by section 31 and entitled (in the right survivorship circumstances) to inherit, notwithstanding that their own ancestor in their family line had predeceased the testator? According to section 31 of the Act the answer is, yes, subject to a contrary intention expressed in the Will.
That is, if there is no contrary intention expressed in the Will such as “if s/he survives me…”, then, the gift to the sibling who predeceased the testator shall pass to the spouse, and/or children and/or grandchildren and/or great-grandchildren of the predeceased sibling, conditional upon their surviving the testator. Thus, depending on the particular circumstances of survivorship, in addition to inheritance entitlement by a spouse of the predeceased sibling who survives the testator, the testator’s nieces and nephews (“NN” or “NNs”), great-nieces and great-nephews (“GNN” or “GNNs”), great-great-nieces and great-great-nephews (“GGNN” or “GGNNs” and more remote NNs) who survive the testator, are entitled to inherit the would-be gift intended in the Will for the PP sibling of the testator.
Heirs-at-Law of an Intestate Estate
What if the deceased individual died without a Will (hereinafter referred to as the “Intestate Deceased”)? Are remote issue of the Intestate Deceased entitled to receive the share of a PP who was a child or a grandchild, of the Intestate Deceased? Application of subparagraph 47(2) of the Act says yes. The effect of this subsection is that where, for example, the child and grandchild of an Intestate Deceased have predeceased the Intestate Deceased, the would-be share shall be inherited by the great-grandchild of the Intestate Deceased, if surviving the Intestate Deceased.
Does the Act bestow the same favourable inheritance entitlement upon the remote issue of a PP who was a sibling of an Intestate Deceased? Can the grandchildren or great-grandchildren of a PP who was a sibling of the Intestate Deceased inherit from the intestate estate? Stated differently, can the GNNs and/or GGNNs of the Intestate Deceased who survive the Intestate Deceased inherit? The Act says no.
The relevant provisions of the Act which address this question are subsections 47(4) and 47(5).
Subsection 47(4) states:
Brothers and sisters
(4) Where a person dies intestate in respect of property and there is no surviving spouse, issue or parent, the property shall be distributed among the surviving brothers and sisters of the intestate equally, and if any brother or sister predeceases the intestate, the share of the deceased brother or sister shall be distributed among his or her children equally. R.S.O. 1990, c. S.26, s. 47 (4); 2021, c. 4, Sched. 11, s. 36 (3).
Subsection 47(5) states:
Nephews and nieces
(5) Where a person dies intestate in respect of property and there is no surviving spouse, issue, parent, brother or sister, the property shall be distributed among the nephews and nieces of the intestate equally without representation. R.S.O. 1990, c. S.26, s. 47 (5); 2021, c. 4, Sched. 11, s. 36 (3).
Each of the above two subsections, independently, leads to the same conclusion: NNs (children of the predeceased sibling) who survive the Intestate Deceased can inherit directly from the intestate estate, but GNNs (grandchildren of the predeceased sibling) who survive the Intestate Deceased cannot inherit from the intestate estate of the Intestate Deceased.
Let’s look at a real-life intestacy example: Steven’s great uncle, John, died in 2019 without a Will. John’s sister, Mary, died in 2015. Mary was survived by her two daughters, Katie and Jennifer, and by her three grandchildren, Jennifer’s son, Steven, and Katie’s sons, Sam and Alex. Unfortunately, Jennifer died in 2018. She was survived by her only son, Steven. Therefore, at his death in 2019, John, the Intestate Deceased, was survived by his niece Katie and three great-nephews, Sam, Alex, and Steven.
According to subsection 47(4), the children of a predeceased sibling who are alive at the time of death of the Intestate Deceased, inherit, equally, the would-be share. This means that in our real-life example, Katie, the only child of Mary who survived John, inherits. The result of the application of subsection 47(5) is that since niece Jennifer did not survive John (had Jennifer survived John as Katie did, the two NNs would have inherited, equally), and her family line is not represented for purposes of entitlement to inherit, then, great-nephew Steven is not entitled to inherit a part of Mary’s would-be share. Sam and Alex also do not inherit.
The important takeaway is that according to subsections 47(4) and 47(5), inheritance entitlement under intestacy does not extend to generations beyond the children of a predeceased sibling. Phrased differently, inheritance entitlement under intestacy does not extend to generations beyond the nieces and nephews of the Intestate Deceased. In our real-life example, Katie is the only one with entitlement to inherit.
Remote NN Beneficiaries vs. Remote NN Heirs
The comparative analysis of the Act’s section 31 and subsections 47(4) and 47(5), reminds that the status of remote nieces and nephews is more favourable under testacy than under intestacy. GNNs and GGNNs are “more equal” as beneficiaries of a testate estate than they would be as heirs of an intestate estate.
To summarize: Section 31 of the Act provides that where a testator gifts by Will to his or her sibling, and, absent contrary intention expressed, where the sibling and the sibling’s child (the testator’s NN) predecease the testator, the testator’s GNNs who survive the testator inherit the would-be gift. But in the context of an intestacy, according to subsections 47(4) and 47(5), the would-be share can only pass as far as the children of the PP sibling who survive the Intestate Deceased, and further, as NNs have no representation for purposes of inheritance by further generations, the issue of a predeceased NN cannot inherit the would-be share. Accordingly, a grandchild or great-grandchild of the PP sibling, namely, the GNN or GGNN of the Intestate Deceased, cannot inherit.
The cases of Farmer Estate v Karabin Estate, 1997 CanLII 4461 (ON CA) and Kiehn v Murdoch, 9 ETR (2d) 76, have held that GNNs and/or GGNNs of an Intestate Deceased are not entitled to inherit any share of that intestate estate.
One more good reason to always have a valid Will in place.
