Estate planning is an essential part of securing your family’s financial future. In Quebec, this process can be particularly complex due to the province’s unique civil law system, which differs significantly from the rest of Canada’s common law jurisdictions. When it comes to real estate and who inherits your property upon death, understanding the rules under both Quebec succession law and federal tax law is critical, especially when considering spouses, children, parents, and siblings.

This article walks you through what happens to your property upon death, who is entitled to inherit, and what taxes might apply. Concrete examples are included to help clarify these important points.

Quebec Succession Law: Who Inherits?

In Quebec, when someone dies without a will (intestate), the Civil Code of Québec sets the rules for how their property is distributed. The outcome depends on the family situation of the deceased.

Key Rule: Spouses do not automatically inherit.

Only legally married spouses have certain rights, and even then, they do not automatically inherit the estate unless they are named in a will. Instead, they may receive compensation through family patrimony and matrimonial regime rights. Common-law spouses (also known as de facto spouses) have no inheritance rights unless named in a will.

Intestate Succession Scenarios

Family Patrimony: What the Surviving Married Spouse Can Claim

Although a surviving legal spouse does not automatically inherit, they have the right to claim half the value of the family patrimony before the estate is distributed to heirs.

What Is Included in the Family Patrimony?

• The family residence
• Household furnishings
• Family-use vehicles

How Is It Valued?

The patrimony is valued at the time of death, and the surviving spouse is entitled to 50 percent of the net value, regardless of who legally owns the assets.

Example:

• Family home value: $600,000
• Mortgage balance: $200,000
• Net value: $400,000
• Spouse’s patrimony claim: $200,000

This amount may be paid in cash or through other estate assets. If necessary, the property may be sold to satisfy this claim.

Federal Tax Considerations (Canada Revenue Agency)

Under federal law, when a person dies, they are deemed to have disposed of all capital property at fair market value immediately prior to death. This can trigger capital gains tax on appreciated assets like real estate.

Key Tax Rules:

• Principal Residence Exemption: If the property was the deceased’s primary home, capital gains may be fully or partially exempt.
• Spousal Rollover: If a property is transferred to a legal spouse, capital gains tax can be deferred until the spouse sells or dies.
• Transfers to Children, Parents, or Siblings: No tax deferral is available. The estate must pay capital gains tax on the property’s appreciation before distributing the asset.

Example:

• Family home value: $600,000
• Mortgage balance: $200,000
• Net value: $400,000
• Spouse’s patrimony claim: $200,000

These taxes must be settled by the estate before heirs receive their share.

When Do Parents and Siblings Inherit?

Parents and siblings inherit only when there are no surviving children or spouse (or if the will provides for them). Below is how inheritance is typically distributed in such cases:

Distribution Rules

Planning for the transfer of real estate and other assets is essential to ensuring your wishes are respected and your loved ones are financially protected. Quebec’s succession laws are strict and can lead to unexpected outcomes without a proper estate plan.

Recommendations:

Prepare a Notarial Will: This type of will avoids probate and ensures faster, simpler estate administration in Quebec.

Clearly Designate Beneficiaries: Especially important for real estate, investments, and insurance policies.

Understand Family Patrimony Rules: Married spouses are entitled to a share of certain assets regardless of the will.

Plan for Taxes: Consider how capital gains taxes will affect your estate, and prepare accordingly.

Use Trusts Strategically: Trusts can protect assets, provide flexibility, and defer or reduce tax burdens in some cases.

 In Quebec, transferring property and managing inheritance involves navigating both provincial succession law and federal tax rules. Without proper planning, even close family members like spouses or children may face delays, legal costs, or unintended exclusions.

*The Overview is for consultation purposes only. Consult your estate financial advisor for your specific situation.