What Happens to Your Business If You Die Without a Will in British Columbia: Legal and Financial Implications
Dying without a will, known as intestacy, can create significant legal and financial challenges for business owners in British Columbia. Without clear instructions, decisions about the management, ownership, and future of your business are left to provincial law and the courts. This can result in delays, increased costs, and outcomes that may not align with your intentions.
This article outlines what happens to your business if you die without a will in BC and highlights the importance of proactive estate planning for business owners.
Intestate Succession in British Columbia
If you die without a valid will in British Columbia, the law decides who receives your estate. This process follows strict legal rules that apply to both personal and business assets.
Governing Laws and Statutes
In British Columbia, intestate estates fall under the Wills, Estates and Succession Act (WESA). This law sets out who inherits when you die without a will and how your estate is managed.
When you die without a will, your estate does not pass based on your personal wishes. Instead, it follows a legal formula set out in Part 3 of WESA.
The court will appoint an administrator to manage your estate. This person takes on duties similar to an executor. The administrator gathers assets, pays debts, and distributes what remains according to the statute.
If you own a business, your shares or ownership interest form part of your estate. WESA governs how those interests transfer unless another legal agreement controls them.
Definition of Intestacy
You die intestate when you pass away without a valid will. This can happen if you never made one, or if the will does not meet legal requirements.
An intestate estate includes all property in your name alone. This may include:
Real estate
Bank accounts
Investments
Business shares or sole proprietorship assets
If you operate a business as a sole proprietor, the business assets become part of your estate. If you own shares in a corporation, those shares pass under intestacy rules.
Under intestate succession in British Columbia, the law prioritizes spouses and children. The court may also need to determine spousal status, especially in cases involving common-law partners or more than one potential spouse.
Jointly owned property with a right of survivorship does not form part of your intestate estate. It passes directly to the surviving joint owner.
Order of Entitlement
WESA sets a fixed order for who inherits. You cannot change this order after death.
The general order of entitlement is:
Spouse
Children
Parents
Siblings
More distant relatives
If you leave a spouse and children, your spouse receives a preferential share of the estate. The remaining balance is divided between your spouse and children according to the formula in WESA.
If you have no spouse or children, your estate passes to the next eligible relatives in the order listed above. If no eligible family members exist, your estate may pass to the Province of British Columbia.
Distribution of Estate Without a Will
If you die without a will in British Columbia, the Wills, Estates and Succession Act (WESA) decides who receives your estate. This legal formula applies to your business interest unless a shareholders’ agreement or partnership agreement states otherwise.
Spouse's Share
When you die intestate, your spouse has the first right to a large portion of your estate. Under the rules, your spouse receives a spousal preferential share.
If you leave no children, your spouse usually receives your entire estate. This includes your shares in a corporation, your partnership interest, or your sole proprietorship assets.
If you leave children and all of them are also your spouse’s children, your spouse receives a fixed preferential amount from the estate. The rest is divided between your spouse and children.
If you have children from another relationship, your spouse’s preferential share is lower. The remainder is split between your spouse and those children.
Your spouse may also receive household furnishings on top of the preferential share. If your business assets mix with personal property, disputes can arise.
Children's Share
If you have children, they may inherit part of your estate after your spouse receives the preferential share. The government sets these rules, not you.
WESA uses a fixed formula. After your spouse’s share is paid, the remainder is divided between your spouse and children.
If no spouse survives you, your children inherit your estate in equal shares. This includes your business interest.
If a child dies before you but leaves children of their own, those grandchildren may take their parent’s share. If your business requires active management, minor children cannot run it. A court-appointed guardian or trustee will manage their share until they reach age 19.
This can affect daily operations, voting rights, and control of the company.
Distribution to Other Relatives
If you die with no surviving spouse or children, WESA sets out a clear order of inheritance. The province does not decide based on fairness or need. It follows a strict ranking of relatives.
In this case, your estate passes first to your parents in equal shares.
If your parents are not alive, your estate goes to your siblings. If a sibling has died but left children, those nieces or nephews may inherit that share.
More distant relatives, such as grandparents, aunts, uncles, and cousins, may inherit if closer relatives do not exist.
If no eligible relatives can be found, your estate passes to the Province of British Columbia. This includes your business assets, unless another legal agreement directs otherwise.
Role of the Public Guardian and Trustee
If you die without a will, the Public Guardian and Trustee (PGT) may step in to protect your estate and any vulnerable beneficiaries. This office has clear legal duties under British Columbia law.
Responsibilities in Intestate Estates
The Public Guardian and Trustee of British Columbia operates under provincial law to protect people who cannot protect their own interests. You can review its mandate on the Public Guardian and Trustee of BC website.
In an intestate estate, the PGT does not automatically take control of your business. Instead, it may:
Monitor the estate administration when minor children are entitled to inherit.
Protect funds held for minors or incapable adults.
Require reporting from the estate administrator.
If your business assets form part of the estate, the administrator must manage them properly. The PGT can demand financial records and may review how business income or sale proceeds are handled when minors have an interest.
If no suitable person applies to administer your estate, the PGT may apply to act as administrator. In that role, it can collect assets, deal with creditors, and arrange the sale or transfer of your business.
When the Deceased Has No Heirs
If you die without a will and without eligible heirs, your estate may pass to the Province of British Columbia. The PGT plays a key role in this process.
Under BC law, the office may administer estates where there is no one else able or willing to do so, including estates of deceased or missing persons.
In this situation, the PGT can:
Take control of your business assets.
Sell business property or shares.
Pay outstanding debts and taxes.
After settling liabilities, the remaining estate may pass to the provincial government if no lawful heirs exist. This can result in the permanent loss of family ownership of your business.
Business Ownership and Intestacy
If you die without a will in British Columbia, the Wills, Estates and Succession Act decides who receives your business interest, how your ownership share transfers, and who has authority to manage it.
Transfer of Business Assets
When you die intestate, your business interest becomes part of your estate. The court appoints an administrator to collect and manage your assets.
Your spouse and children usually inherit first. If you have no spouse or children, other relatives may inherit.
The administrator does not automatically run the business long term. They must protect its value, pay debts, and then transfer ownership to the legal heirs.
Key points to understand:
Ownership transfers by law, not by your wishes.
Family members may inherit shares even if they lack business experience.
Delays can occur while the court appoints an administrator.
These steps can affect cash flow, contracts, and daily operations.
Impact on Sole Proprietorships
A sole proprietorship has no legal separation between you and the business. When you die, the business does not continue as a separate entity.
Provincial law controls how your assets are distributed and, in a sole proprietorship, that includes inventory, equipment, accounts receivable, and goodwill.
Your administrator may:
Sell the business assets.
Continue operations temporarily to preserve value.
Close the business if it cannot operate without you.
Employees may lose their jobs if the business shuts down. Clients may also end contracts if your personal services formed the core of the work.
Because the business depends fully on you, the risk of disruption is high.
Implications for Partnerships
If you are a partner, your death does not automatically transfer your role to your heirs. The partnership agreement controls what happens next.
In many cases, your estate receives the value of your partnership interest, not your management rights. Without a clear agreement, disputes may arise over control and valuation.
The legal structure of your business strongly affects succession. Some partnerships require the remaining partners to buy out your share. Others may dissolve the partnership entirely.
Your heirs may inherit:
A right to payment for your share.
Ongoing income tied to profits.
A disputed interest if terms are unclear.
If no agreement exists, your death can trigger conflict, financial strain, and possible litigation.
Appointment of an Estate Administrator
If you die without a will in British Columbia, no executor has legal authority to manage your estate or your business. The court must appoint an estate administrator before anyone can act on behalf of your company.
Process for Seeking Administration
When you die intestate, an interested person must apply to the Supreme Court of British Columbia for a grant of administration. The court decides who has the legal right to manage your estate under provincial law.
The applicant is usually your spouse, adult child, or another close family member. If no one is willing or able to act, the Public Guardian and Trustee of British Columbia may administer the estate.
To gain authority, the applicant must file court documents and may need to post a bond. Once the court issues the grant of administration, the administrator can access business accounts, deal with contracts, and manage company assets.
Administrator's Duties to the Business
As administrator, you have a legal duty to protect the value of the business. You must act in the best interests of the estate and its beneficiaries.
Your duties may include:
Securing business property and records
Notifying employees, clients, and suppliers
Managing cash flow and outstanding debts
Reviewing shareholder or partnership agreements
Filing required tax returns
You must keep clear financial records and separate estate funds from personal funds. If the business operates as a corporation, you may need to appoint or confirm directors to ensure daily operations continue.
You cannot distribute business assets to beneficiaries until you settle debts and confirm entitlement under the law. If you fail to meet your duties, you may face personal liability for financial losses to the estate.
Challenges Facing Surviving Business Partners
When you lose a business partner who dies without a will, legal and operational problems can arise quickly. You may face delays, frozen accounts, and disputes with the estate that affect daily operations and long-term stability.
Business Continuity Risks
If your partnership agreement does not clearly address death, the partnership may dissolve by law. In that case, you may need to wind up the business unless you and the estate agree to continue.
Without a will, your partner’s interest passes under British Columbia’s intestacy rules. The personal representative of the estate gains authority over that interest, not you. This can delay decisions about ownership, voting rights, and profit sharing.
You may also face disputes over whether partnership property passes by survivorship. Courts in B.C. have rejected automatic survivorship in some cases.
If no buy-sell agreement exists, you may need to negotiate with the estate to purchase the deceased partner’s share. This can create cash flow strain and uncertainty about control.
Access to Business Accounts
Banks often freeze accounts held in the deceased partner’s sole name once they receive notice of death. Even joint accounts may be restricted until the bank reviews ownership and signing authority.
If your partner was the only signing officer, you may lose immediate access to:
Operating accounts
Credit facilities
Merchant services
Payroll systems
This can stop payroll, rent payments, and supplier invoices. You must act quickly to update signing authority and provide required estate documents.
You should also review how assets are registered. Executors often require formal valuation and documentation before releasing funds or approving transfers.
Delays in probate can extend for months. During that time, you may need short-term financing to keep the business operating.
Tax Consequences for Your Business
When you die without a will in British Columbia, tax law treats you as if you sold many of your assets at fair market value on the date of death. This can create immediate tax bills for your estate and reduce the value of your business for your family.
Income Tax Implications
At death, the Canada Revenue Agency requires a final personal income tax return. If you operated as a sole proprietor, your estate must report all business income earned up to the date of death.
You are also deemed to have disposed of certain assets at fair market value. This rule applies even if no actual sale takes place. The deemed sale can trigger income tax on:
Business inventory
Accounts receivable
Depreciable property
Shares of a private corporation
Your legal representative must file the required returns and pay any balance owing from the estate. If funds are tied up in the business, your estate may need to sell assets or borrow money to cover the tax.
Potential Capital Gains Liabilities
Canadian tax law applies a deemed disposition of most capital property at death. This means you are treated as if you sold your business assets at fair market value, even if your family continues the business.
If your shares in a private corporation increased in value, your estate may face capital gains tax.
The gain equals:
Only a portion of the gain is taxable, but the amount can still be significant.
In some cases, your estate could also face a second layer of tax if the corporation later distributes funds to beneficiaries. Without proper planning, this reduces the net value your family receives and may affect whether the business can continue.
Potential Delays and Legal Costs
When you die without a will in British Columbia, your estate must pass through a court process before anyone can control your business. This process can slow operations and increase expenses at a time when stability matters most.
Probate Delays
Until the court grants authority, no one has full legal power to transfer shares, sign major contracts, or sell business property. This delay can interrupt payroll, supplier payments, and client agreements.
The probate process often takes several months. During that time, your business may face:
Frozen bank accounts held in your name
Delays in renewing leases or licences
Uncertainty among employees and customers
Probate also involves filing fees and legal costs. These expenses reduce the value of your estate and may limit funds available to keep the business operating.
Litigation Risks
When you leave no will, disputes are more likely. Family members, common-law partners, and business partners may disagree about who should control or inherit your business.
Conflict often arises when:
Multiple relatives believe they are entitled to ownership
A surviving spouse depends on business income
A partner questions the administrator’s decisions
The legal structure of your company also affects how disputes unfold. Corporations, partnerships, and sole proprietorships each face different legal steps after an owner’s death.
If someone challenges the estate, the matter may proceed to court. Litigation increases legal fees and can delay decisions for months or longer. During this time, your business may lose contracts, staff, or market share due to uncertainty and lack of clear leadership.
Minimizing Negative Outcomes
You can reduce disruption and legal risk by putting clear control measures in place before death occurs. Formal planning tools protect your family, employees, and business partners from uncertainty and delay.
Advance Succession Planning Alternatives
You should create a written succession plan that sets out who will control and own the business if you die. This plan can work alongside your will or exist within a trust or corporate structure.
Common tools include:
Family trusts to hold shares and manage tax exposure
Buy‑sell agreements funded by life insurance
Estate freezes to limit future tax growth
Powers of attorney for temporary incapacity
You should also review tax consequences. Capital gains tax may apply at death, even if no sale occurs. Advance planning allows you to control timing and funding.
Role of Shareholder Agreements
If you operate through a corporation, your shareholder agreement becomes critical. This document should clearly state what happens to your shares on death.
A well‑drafted agreement can:
Require surviving shareholders to buy your shares
Set a fixed valuation method
Provide payment terms
Restrict unwanted heirs from becoming shareholders
If you die without clear terms, your shares may pass to family members who have no role in the business. This often creates disputes or operational delays.
You should review the agreement regularly. Business value changes over time, and outdated terms can create funding gaps or unfair results.
Impacts on Employees and Clients
When you die without a will in British Columbia, your business can face immediate disruption. Employees may not know who has authority, and clients may not know who will continue the work.
Staff Employment Status
If you are a sole proprietor, your business does not continue as a separate legal entity. Your authority ends on death.
Your executor cannot act until the court grants probate and appoints a personal representative. During that gap, no one may have clear legal authority to sign payroll, renew contracts, or manage daily operations.
This delay can affect:
Wages and payroll processing
Benefits and insurance coverage
Ongoing projects and deadlines
Under British Columbia law, employees remain entitled to wages earned before your death. However, future employment may become uncertain if the estate decides to close or sell the business.
If you operate through a corporation, the impact may differ. Corporate bylaws or shareholder agreements may address death. Without a clear plan, the estate may inherit your shares, but management control can still stall.
Uncertainty often leads to staff resignations, especially in small businesses that rely on your direct oversight.
Client Service Disruptions
Your clients may experience immediate service gaps.
If you handled key relationships yourself, clients may not know who to contact or whether existing agreements remain valid.
Contracts signed in your personal name may not transfer automatically. The estate must review each agreement to determine whether it continues, terminates, or requires consent from the other party.
Common risks include:
Missed deadlines
Unanswered client communications
Suspended services
Loss of confidential data control
Professional advisors note that without planning, a business can fall into legal and operational limbo, leaving clients uncertain about next steps.
Clients may seek alternative providers to protect their own interests. In service-based industries, this shift can happen quickly.
If your estate later attempts to sell the business, lost clients can reduce its value. Clear succession planning helps maintain trust, continuity, and contractual stability.
The Final Verdict
Dying without a will in British Columbia can place your business at risk, leading to uncertainty, operational disruption, and unintended financial consequences for your family and partners. Proper estate planning is essential to ensure your business is managed and transferred according to your wishes.
To protect your business and avoid these risks, contact the attorneys at Parr Business Law. Our experienced team can help you create a comprehensive estate plan that safeguards your business interests and provides clarity for the future.
