A well drafted Will can save your estate significant money. A poorly drafted or poorly prepared Will often results in expensive legal fees, court costs, and delays when attempting to obtain Probate of a Will. If a Will is vague, confusing or open to interpretation, it may be necessary to bring the Will before the court to have a judge interpret the terms of the Will. Without proper legal advice, family conflict, uncertainty, and confusion may arise which may result in very costly estate litigation.
A Will is a document containing your instructions and wishes for the administration and distribution of your estate after your death. It is important to have a Will that records your wishes so that your assets such as your house, land, car, shares, bank accounts and insurance policies are distributed how you wish. You can also use a Will to appoint an Executor, name a guardian for your children, set up property management for young beneficiaries, or forgive debts. Any person who has reached the age of majority or older and of sound mind can make a Will. The person who makes the Will is called the “Testator” (sometimes called an Estate Trustee).
Without a Will, you have no control over who will look after your property, how your property will be distributed and who will be a guardian for your children. The individuals the court chooses to appoint to these roles may not be the same individuals you would have chosen if you had prepared a Will.
Without a Will, all of your property will be divided according to Provincial law. More often than not, the division under such law will result in an unexpected and unfair division of estate assets.
In addition, the distribution of the estate may be severely delayed with higher administration costs.
Any share of your estate allocated to any minor children will be held until they become of age (unless a court application is brought to release some of these funds). When the minor child reaches the age of majority the child is entitled to receive the entire inheritance without any restrictions. If the child does not handle the inheritance wisely, there is nothing anyone can do about it.
The following things should be considered when preparing your Will:
Who will be the Executors (see following)
Who will be the Beneficiaries (see following)
What are your current assets and liabilities and how would you like them distributed
Do you wish to have particular assets transferred to the Beneficiaries rather than sold
Who will take care of your children upon your death
Do you wish to be buried or cremated
Is their any special requests for your funeral or headstone
Would you like to set up a testamentary trust to provide for your children’s children at a certain age and minimise tax liability for them
As your Will is an important legal document it is important to make sure all the details of your Beneficiaries are correct; including the proper names and addresses of Executors and Beneficiaries.
Yes, for the most part you can give your property away however you wish, but there are a few exceptions. Your spouse may have a right to some of your property, and your children may be able to claim some of your property unless you expressly disinherit. Also, your estate will have to pay any debts that you die owing, and those debts will be paid before any property is passed to your named beneficiaries.
To change your Will, do not just mark up the hard copy your current Will. Markings added after the original Will can indicate foul play and it could cause problems. Instead, for small, simple changes – like changing the amount of a cash gift or changing the name of your Executor -- you can make a codicil, which is an add-on amendment to a Will. If you want to make more significant changes, make a new Will instead of amending your old one.
The Executor (Estate Trustee) are persons who you trust to dispose of your assets in accordance with the instructions in your Will. It is important to select someone who has an understanding of legal and financial matters so they can properly administer your estate. In most cases they will be entitled to a fee for the work required to administer the estate. The Executor, in effect, steps into the shoes of the deceased person and winds up the deceased person’s personal affairs.
Some tasks usually performed by an Executor include:
Locating the Will
Arranging the funeral
Applying for Probate
Obtaining a death certificate
Informing investment bodies of the death
Locating family and Beneficiaries
Locating and assessing the value of assets
Paying debts, income tax, funeral expenses
Transferring assets and paying the appropriate fees
Distributing any surplus to Beneficiaries.
This is a very important role of your Will and you must be certain of who you choose. This person can also be a beneficiary of your Will. You can pick choose among your family members (must be an adult) or a trustworthy friend. If this becomes a much more complicated matter, choose someone with estate expertise like a Wills & Estate lawyer. If you prefer, you may choose joint Executors, a combination of a person of your choosing and a lawyer.
In selecting your Executors, you should keep in mind the following:
If you intend to leave the majority of your assets to a single person, such as your Spouse, then usually that person should be nominated as one of your Executors.
You can nominate an independent person, such as a friend or advisor, who you trust to act as co-Executor if you wish. It will be the responsibility of both Executors to work together in this situation.
Consider the Executor’s age before nominating them, especially if you nominate an Executor who is likely to pass away before you. If you nominate someone who is older than you, then you should consider nominating a substitute Executor as well.
You should also consider having substitute Executor(s) in the event a nominated Executor cannot act for some reason. For example, the complexity of administering the estate might be too complicated or your primary Executor is no longer available.
Each province has its own rules. But generally speaking, your Executor must apply to your province’s Probate court for approval of your Will if you:
died in debt. If the estate is essentially bankrupt, then the Executor usually doesn’t apply for Probate because there’s no money to cover the cost.
had bank accounts, registered investments or life insurance policies without a named beneficiary. (And if the financial institution won’t pay out the funds without Probate), or
owned property that you’re not passing directly to your spouse or common-law partner through joint ownership.
A joint Will that is signed by the two spouses will leave their assets and property to each other, while a separate Will can cover each other separately.
A joint Will is “locked in” after one of the spouses die, and it can be a burden for the living spouse to update and make changes. Since you still have independent estates, consider getting a separate Will or even a mirror Will. A mirror Will be identical to a joint Will, but this can be updated at any time like a separate Will.
Each Estate Plan is specifically tailored to each individual's own unique circumstances. A well thought out Estate Plan may include any or all of the following:
· Income-splitting opportunities in Wills and Trusts.
· Multiple Wills to protect business assets, to reduce Probate fees, and to administer property in other jurisdictions.
· Trusts to protect assets and income from creditors.
· Discretionary trusts to ensure disabled loved ones will continue to receive the care and government benefits they need for their lifetimes.
· Powers of Attorney, and Trusts to help with planning for possible future incapacity.
Beneficiaries are persons who will receive your assets. They usually include your Spouse or partner and children. You may divide the assets in any way you wish. For example, you may wish to give children and step-children assets in percentage form with one Beneficiary entitled to a greater interest than the other. Alternatively, you may wish to divide your assets into equal shares. You may also provide specific gifts such as your jewellery, house or car to particular Beneficiaries. You may also set up trusts for any children or step-children so that assets will be passed to them when they reach a specific age.
To avoid a conflict of interest, choose separate witnesses from the Beneficiaries.
If you don’t have a Will when you pass away you are said to have passed away “intestate”. The Courts will apply a legal formula to decide who will receive your assets. Your assets will be distributed according to a rigid formula set down by the laws of intestacy.
These laws may:
Force the sale of the family home or other family assets so other Beneficiaries can claim their share of the assets accordingly
Not provide future financial protection for your children or grandchildren or any other dependent
Leave incapacitated members of your family without adequate support or financial security
May give your assets to the government if you have no relatives
Furthermore, you will have no say in who administers your estate or who may be appointed guardian of your children if they are under the age of majority. If you do not have a Will, any family member may apply to the court for letters of administration which, in effect, gives them the power as Executor of your estate and they may legally administer your estate at their discretion.
Simply put, Probate is a legal approval process that confirms:
the validity of a Will, and
appointment of an Executor.
Most estates will need probate if there are assets that need to be distributed. The more complicated the will, the more likely probate is required.
Without Probate, your Executor will likely have problems, such as if your Executor contacts one of these institutions with a non-probated will in hand:
your bank,
a mutual fund company,
your pension plan provider, or
the land title office.
Your Executor then asks them to hand over your money or register a transfer of property title. Those institutions will want proof that:
you’ve died,
the Will is valid and is the final version,
your Executor is the person named in your Will, and
no one will sue them if anyone contests the Will.
Why would a bank risk a lawsuit for handing out your money to the wrong person? They’re not likely to take a risk by assuming your non-probated Will is valid. Instead, the bank may refuse to release your money until it gets the legal protection. And, they can only get this legal protection from approval of your will by the provincial probate court. That’s the big upside to Probate.
Provincial Probate costs and fee structures vary across Canada. Depending on your province of residence, you can be charged Probate fees as a:
flat rate, or
percentage of your assets, not your income.
Generally speaking, Probate can cost approximately 5% of the value of the estate.
Many people believe that assets jointly held by two people don’t need to go through Probate if one were to die. For example, joint accounts usually transfer directly to the surviving account holder. But check the wording of your account agreement, to confirm. If the joint title on your home lists you and your partner as owners on the property’s deed, you may register this joint title in a way that includes right of survivorship. That means that if one partner dies:
the surviving partner gets full title to the home, and
it doesn’t have to go through Probate.
This scenario can make a lot of sense, both now and after one of you dies.
If you have lost your Will, this wouldn’t automatically revoke your Will. A true copy of the original can be used to obtain a grant of Probate. If this is not present the estate will be distributed according to a previous Will or intestacy. Dealing with a lost Will is very difficult, make sure you keep your original Will in safe and accessible place. You may want to keep a copy with the Executor or beneficiary.
As the Testator, you can destroy your Will which will then be revoked. You may destroy it by burning or tearing it. If you are planning on writing a new Will, the previous one maybe destroyed like this.
If you marry after you have made a Will, the Will is generally revoked or cancelled, unless it was made in anticipation of marriage. If you divorce after you make your Will, it only revokes or cancels any gift to a former spouse. It also cancels your spouse’s appointment as Executor, trustee or guardian in the Will. However, this won’t apply if the Court is satisfied that the Will-maker did not intend by divorce to revoke the gift or appointment. If you wish to alter your Will or your marital circumstances change, you should seek the guidance of your solicitor to advise you accordingly.
If you are separated from your spouse, it is integral for you to make a new Will as soon as possible. If you do not have a Will, the law in most Provinces stipulates your spouse will be entitled to inherit either all or a large portion of your estate (depending on the number children you may have, if any). If you have a valid Will, your existing Will remains in effect while you are separated unless you revoke it. It is common practice for married couples to normally leave everything to each other in their respective Wills. In the event, you die before your divorce is finalized, and you have not made a new Will since separating, your former spouse will get everything.
A Will is the best place to indicate who should be your child's guardian. Keep in mind however, that courts will not automatically appoint the person you name. A court will always consider your choice, but it will also assess the situation and then appoint the person it thinks will do the best job for your child. Also, if your child has another living parent, that parent will care for the child—the court will not name a guardian unless that other parent is found to be unfit.
In some provinces, you can have more than one Will.
For example, a common estate planning practice in Ontario involves using multiple Wills:
The primary Will covers assets that require Probate (known in Ontario as a “Certificate of Appointment of Estate Trustee”) in order to be administered.
The secondary Will deals with assets that do not require Probate. (e.g., shares in privately-held corporations or personal belongings).
This practice of separating assets under two or more different Wills generally has the effect of reducing Estate Administration Tax (“EAT”, formerly and still sometimes referred to as “Probate fees”). It allows for one’s estate to pay the EAT only on assets that require Probate.
