October 19, 2017

Wills

We have provided some useful explanations below related to the importance of having a Will, key elements to consider in preparing one and the process of Probate. We trust this will make the process of creating a Will more understandable to you. The following topics are covered on this page:

WHY YOU NEED A WILL
GOOD REASONS FOR PREPARING A WILL
HOW TO ENSURE A WILL IS VALID
ESTATE TRUSTEE (EXECUTOR)
SPECIFIC BEQUESTS
INVESTMENTS
FUNERAL DIRECTIONS
PROVISION FOR YOUNG CHILDREN
FAMILY LAW ACT CONSIDERATIONS
GUARDIAN FOR YOUNG CHILDREN
RRSP
LIFE INSURANCE
ASSET INVENTORY
PROBATE
WILL AND POWER OF ATTORNEY QUESTIONNAIRE
CONTACT US

 

WHY YOU NEED A WILL

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):

  • Must be in writing;
  • Must be signed by the person making the will (testator);
  • Be witnessed by two witnesses who are both present at the same time and are not beneficiaries of the 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.

 

ESTATE TRUSTEE (EXECUTOR)

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, you may specify in the Will if they must act together or whether they may act individually. Estate Trustees have specific duties and responsiblities that they must fulfill. 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.

Click here for more detailed information on Executor Duties

 

SPECIFIC BEQUESTS

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.

 

INVESTMENTS

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, they can only invest in those investments which a prudent investor would make.

 

FUNERAL DIRECTIONS

If it is possible for you to put in your Will funeral directions which may include some of the following:

  • Whether you do or do not wish to be cremated;
  • Where you wish your remains to be buried;
  • The location and type of funeral you are to receive;
  • Whether you wish to donate your organs for transplant or your body for research in medicine (Because it is critical that organs be received immediately following the death, even if you would like to include a provision in this regard in your Will, you should complete the appropriate section of your drivers license and make sure that your family and friends are aware of your wishes in this regard).

 

PROVISION FOR YOUNG CHILDREN

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, they will have matured and understand the importance of wealth management.

 

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 might be from time to time.

 

GUARDIAN FOR YOUNG CHILDREN

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 than person you have named as Guardian in your Will. This is a matter that you may want to discuss with us more fully.

 

RRSP

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 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.

 

LIFE INSURANCE

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.

 

PROBATE

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.

 

WILL QUESTIONNAIRE

If you would like us to prepare a Will and / or Power of Attorney for you, please click on the following link to our confidential Will and Power of Attorney Questionnaire. Once you have accessed the document, simply print, complete and return it to our office at the address listed on the form.

Gilmore and Gilmore Will Questionnaire

 

More about our ESTATE PLANNING PACKAGE

 

CONTACT US

Feel free to contact us at any point for assistance or advice with respect to Estate Planning, Estate Administration, Estate Litigation or Estate Law. We may be reached at 705.435.4339 or contact us via email.