Why You Need a Will
Complete our confidential Will Questionnaire if you would like us to prepare a Will (or Power of Attorney) for you It is available in either Word or Adobe format. Simply print your chosen format and return it to our office at the address listed on the form.
Recent
studies show that at least 50% of adult Canadians do not have a Will. A Will is an important part of your personal
planning.
There
is a common misconception that if you die without a Will, the government will
either end up with your property or end up with a substantial amount of your
property. The government only ends up
with your property if you do not have a spouse, parent, siblings, children, or
any other relative alive at the time you die.
There are many good reasons for preparing a Will.
First of all, a Will ensures that your estate passes to the people that you want it to pass to;
Secondly, it will ensure that you have people in charge of administering your estate who you trust;
Thirdly, you can structure a
Will in many ways both to benefit your estate and to benefit those who will
receive your estate or part of it.
In
order to be valid, a Will (other than a holograph will):
**A
Holograph Will is a Will that is entirely in the handwriting of the testator
(the person making the will) and signed by the testator. A Holograph
Will does not have to be witnessed. A 'fill
in the blank' Will in which the blanks are filled in by the testator does
not comply with the handwritten requirements of a Holograph Will. All of the Will has to be in the handwriting
of the testator for it to be valid. There
are many risks with Holograph Wills, and they only should be used as a last
resort.
The
Estate Trustee (this is the present term in Ontario for the person everyone
still generally calls an Executor) is responsible for the administration of your estate. The Estate Trustee may be an individual or
it may be a corporation. Most chartered
banks and trust companies offer their services to act as Estate Trustees. A will may specify one or more Estate
trustees, they may specify must act together or whether they may act
individually. Although executors who
are family members or close personal friends may elect not to charge an estate
to act as an estate trustee, an estate trustee is entitled to be paid executors compensation. You may specify an alternate trustee in
case your initial trustee(s) die(s) before you or dies before the
distribution of your estate is completed.
If your initial trustee survives you, but dies before the administration
of your estate is complete, the estate trustee specified in the will of your
executor will be responsible for the completion of the administration of your
estate.
You
can leave specific items to particular individuals. In order for a gift to be legally enforceable, it should be
included within your Will. The
disadvantage to including specific bequests in your Will is that if you change
your mind or the gift is no longer possible because you have lost or given the
item away, frequent changes to your Will may be necessary. Lengthy list of bequests may also increase
the cost of preparation of your Will, although this should not be an overriding
consideration, it is one that you must make. Many people just write up a
list of specific gifts and hope that their Executor will do the right thing.
You
should include a provision in your Will, which indicates what kind of
investments your Trustee can make.
You should generally select a Trustee whose judgment you trust
absolutely. You may allow your Trustee
to invest in any investments that they consider appropriate, or you may specify the
types of investments which they may make or you may indicate that they are
only to invest in Trustee Act authorized investments. The Trustee Act recently was amended and now contains a “prudent
investor model.” Essentially
this means
that under the Trustee Act, unless the Trustee is otherwise authorized so that
they can only invest in those investments which a prudent investor would
make.
If
it is possible for you to put in your Will funeral directions which may include
some of the following:
If
you have young children, you will want to make a provision for them in the
event that you and your spouse should die.
You can determine the age at which your children are to receive their
share. It is also possible for you to
distribute a portion of your estate to your children through several stages
payable at different ages.
The advantage of this is that children may be inclined to misspend the money they inherit at a young age. If an inheritance is split into a number of installments, paid at different ages, hopefully by the third or fourth installment (if not sooner), they will have matured hopefully will retain some of the money.
Family Law Act Considerations
If a married couple splits up, generally everything that they accumulated during their marriage is divided equally between them. Gifts (including Inheritance) from someone other than the spouse are exempt from this division. A child should ensure that their inheritance is not mixed with other assets in order to preserve their right to keep all of the inheritance in the unfortunate event of a separation.
It is an unfortunate reality is that many young marriages break up. This is yet another good reason to delay the complete distribution of your estate to your children. Most children use their inheritance to pay off their mortgage, buy a house, or otherwise use or invest the money in such a way as to give half of the money to their spouse (in the event of a separation). If you delay the distribution of the total amount of the estate to a later date, you may maximize the odds of your child retaining the benefit of what you leave your child in your Will.
It
is a good idea to counsel your children on how they should deal with their
inheritance considering the Family Law Act issues.
Although you specify an age or ages when your child is to
receive portions of your estate, you can authorize your Executor to make payments
out of that share for the benefit of the child. Although you can itemize exactly what the Trustee may or may not
advance money for, our recommendation is that you simply authorize your Trustee
to use money for the benefit of the child in the Trustee’s sole
discretion. This will enable the
Trustee to use money for school, medical, travel, business or any other purpose
that the Trustee considers appropriate. It is difficult to predict what
circumstances may exist at the time of your death and what your children's needs
night be from time to time.
If
you have young children, you can specify who the guardian of your children is
to be in the event of your death. The appointment of a guardian in a Will is
effective only for 90 days following the date of death. Within that time period, the guardian named
must apply to a court in order to obtain a custody order. The application for custody will proceed as
any normal application for custody, and anyone who wishes to support or oppose
the application, may do so.
If you are separated from your former spouse
(the other parent ), your estranged spouse may well be entitled to custody over
the person you have named as guardian in your will.
This is a
matter that you may want to discuss with us more fully.
It
is possible to designate the initial beneficiary for an RRSP. You can also specify an alternate
beneficiary in case the first beneficiary may predecease you.
If
your RRSP passes by virtue of a beneficiary designation, it is “creditor
proof.” This means that if you have any
claims against your estate when you die (as in the case of a death resulting in
an automobile accident where the deceased was at fault), the RRSP will not form
an asset that the creditor can claim.
If, on the other hand, the RRSP falls into your estate, creditors will
be entitled to make claims as against it.
If an RRSP is transferred in this way to a spouse, a financially dependant child, or financially dependant grandchild, this may pass without any immediate tax consequences (if the beneficiary transfers the money to their own RRSP).
If the beneficiary of
your RRSP is someone else( or the spouse etc elects not to transfer the money
into their own RRSP), there will be tax consequences to your Estate on the transfer. The effect of the designation will be that
the full amount of the RRSP will be paid to the beneficiary, but your estate
will have to pay the tax. This is a
result that most people do not wish.
For that reason, unless the RRSP is to pass to a spouse, child, or
grandchild, you may wish to have the RRSP payable to the estate and indicate
that the RRSP net of the tax payable go to the named individual.
You
should generally make sure that your life insurance has a beneficiary designated and that
there is an alternate designated in the event of the death of the initial
beneficiary. If you have a beneficiary
designated, insurance does not form part of your estate and no tax or probate
fees are payable on it.
It is possible to draft a
comprehensive beneficiary designation clause that will accomplish your wishes
with respect to the distribution of life insurance proceeds. If your life insurance sales representative
does not feel comfortable with drafting such a clause, we would be pleased to
draft it for you. Such a clause can
appear as a clause in a Will.
Asset Inventory
In
the event of your death, it is helpful for others to have a list of your assets
(investments, bank accounts, life insurance, etc.). We would be happy to provide you with a sheet that you can use to
list all of your assets for this purpose.
You
should review and update this list from time to time.
A
Certificate of Appointment of an Estate Trustee is what is popularly referred
to as “probate.” Probate is simply the
process by which the court appoints the representative(s) for an estate. If there is a will, and there are executors
named, those people are generally named the Estate Trustee(s). If there is no Will, someone (usually a
family member or a close friend) applies to be appointed as an
administrator. There is a general
misconception that there are estate taxes that are payable, which will consume
a large portion of the value of an estate.
This is not correct. When an
application for probate is submitted, fees have to be paid.
Depending
on the nature of the assets of an estate, it may or may not be necessary to
obtain probate.