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No Will - Higher Accountant Fees
There can be some very serious, and unwanted, consequences that arise from dying without a valid will, which demands your immediate attention.
To schedule an appointment, contact our law firm at 403-400-4092 or Chris@NeufeldLegal.com
When a person passes away without a valid will, their estate is governed by the Wills and Succession Act (Alberta), which dictates a rigid formula for asset distribution known as intestacy. Because the deceased hasn't provided specific instructions, accountants are thrust into a reactive role, forced to reconstruct financial histories and titles to determine what actually constitutes the estate. This untangling process is significantly more labour-intensive than following a streamlined will, as every asset must be cross-referenced against provincial probate requirements and various tax designations. Accountants often find themselves spending dozens of billable hours just identifying which assets bypass the estate through survivorship and which are trapped within it. Without a Will to clarify intent, the professional fee for this forensic-style accounting is frequently undertaken at serious cost to the very inheritance that is to be distributed to one's family.
The tax implications of an unplanned distribution in Alberta are particularly complex when dealing with deemed disposition rules at the time of death. Under the Income Tax Act (Canada), which the accountant must reconcile with Alberta’s provincial filings, a person is generally treated as having sold all their assets at fair market value immediately prior to death. In a planned estate, an accountant can utilize a will to trigger spousal rollovers or specific capital gains exemptions that defer these taxes. However, in an intestacy situation, the accountant must spend extensive time calculating the tax hit on assets that might be distributed to children or other relatives instead of a spouse, potentially triggering a massive, immediate tax bill. This requires meticulous, hour-by-hour analysis to ensure the estate remains compliant while trying to mitigate the financial damage of a non-optimized distribution.
Furthermore, Alberta’s specific legal landscape regarding Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs) adds a layer of billable friction for accountants. In a will, a testator can clearly designate beneficiaries or provide instructions on how to handle the tax burden associated with these accounts, which are fully taxable as income upon death. Without a will, these accounts may default to the estate, and the accountant must navigate the complexities of how that income is taxed across the final return and any subsequent rights or things returns. This often involves back-and-forth communication with financial institutions and the Canada Revenue Agency to rectify naming errors or lack of documentation. Every hour the accountant spends justifying these distributions to tax authorities is an hour billed to the estate, often surpassing the cost that a simple estate planning session would have incurred.
Finally, the absence of a designated Executor (Personal Representative) means the accountant often lacks a clear, singular point of contact to provide necessary financial records. This leads to a fragmented flow of information where the accountant must coordinate with various family members or a court-appointed administrator, often receiving incomplete or conflicting data. Correcting errors from mismanaged interim distributions or clarifying the cost basis for Alberta real estate and private corporate shares becomes a grueling, expensive task. Accountants must perform catch-up bookkeeping for the deceased's final years to ensure the Tax Clearance Certificate can be obtained from the CRA. In turn, the lack of a valid will forces the accountant to perform extensive administrative and investigative work that significantly increases the total professional fees charged to the estate.
As such, leaving behind your inheritance without a valid will has the potential for numerous consequences, many of which could either be avoided in their entirety or significantly limited by having a valid will, which was supported by appropriate estate planning in advance of one’s death. Avoid putting your loved ones in the difficult situation of attempting to settle and administer your estate without a valid will, by putting in place the necessary estate planning documents when you are alive and capable. Contact our law firm today at 403-400-4092 or via email at Chris@NeufeldLegal.com to schedule a confidential initial consultation.
IMPORTANT NOTE: This website is designed for general informational purposes. The site is not designed to answer specific questions about your individual situation or entitlement. Do not rely upon the information provided on this website as legal advice in respect of your individual situation nor use it as substitute for individual legal advice. If you want specific legal advice, you need to engage a lawyer under established legal engagement procedures that have been specifically agreed to by that lawyer.
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