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Saturday, October 9, 2010

Intestacy for First Nations people

Recently a reader asked about whether the rules for distribution of an estate on intestacy (i.e. without a Will) are different for First Nations people under the Indian Act. The rules can be very different so I'm creating this post to discuss them.

The Indian Act, which is federal, applies to a person who is defined as an "Indian" under the Act, which generally means a person who is ordinarily resident on a reserve. If a First Nations person doesn't live on a reserve, the laws of the province where he or she lives will apply to his or her estate.

The rules for intestacy are set out in section 48 of the Indian Act. If the deceased's estate is worth $75,000 or less, the whole estate goes to the surviving spouse. This includes married and common law spouses.

If the estate is worth more than $75,000, the spouse gets the first $75,000. If there is a spouse and one child, the spouse also gets half the rest, with the other half going to the child. If there is more than one child, the spouse will get one third of the rest, with the other two-thirds being divided among the children. If a child has predeceased, that child's children will inherit the child's share. Other than the $75,000 dollar amount, this proportionate division is similar to provincial laws.

The definition of "child" is unique under the Indian Act. A child includes a legitimate child, an illegitimate child, and an adopted child, as it does under provincial law. The unique element is that the adoption can be either the usual legal adoption or an adoption according to First Nations custom.

The Minister of Legal and Northern Affairs has the discretion to change this distribution.

If a person under the Indian Act dies without spouse, children or grandchildren, his or her estate will go to parents next, and if the parents are not alive, then to siblings. Beyond that, an estate can be distributed to the further next of kin, as long as it isn't land on the reserve. If the deceased owned land on the reserve and there are no survivors of sibling level or closer, the land will vest in the Crown (i.e. the federal government) for the benefit of the deceased's band.

The rules about signing and witnessing a Will are more relaxed under the Indian Act than they are under most provincial/territorial statutes, which should result in fewer people ending up with an intestacy due to Will being declared invalid.

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