Monthly Archives: April 2016

What is a will?

A will is a very flexible legal document that allows you to appoint a person or financial institution to manage your estate after your death, specify who you want to leave your assets to (your beneficiaries), and identify guardians for your minor children.

A will also helps to ensure that your estate is distributed in accordance with your wishes, that your children will have the care and resources they need, and that your death doesn’t impose a legal or administrative burden on your family.

There are several excellent reasons for having a valid will:

  • Your will clearly tells your surviving family members, friends, and others how and when your wealth and personal property should be distributed.  Without a valid will, these decisions would be made by the provincial government.
  • In your will, you can name the person who you want to serve as your minor children’s guardian, should something happen to both you and your spouse.  This person would be responsible for your children’s physical care, health care, education and general well-being until they reach 18 years of age (19 in some provinces).  If you don’t name a guardian, there could potentially be a dispute among family members as to who is best suited to act as a guardian; this could even end up involving the court or provincial government.  (Note, however, that guardianship requests are subject to the best interests of the children.  In most cases, guardianship requests are respected, but the courts have the power to overrule a guardianship request if it is in the best interests of the children to do so.)
  • You can make specific bequests legally binding by including them in your will.
  • Through your will, you can provide for elderly parents who depend on you for care.
  • A will allows you to recognize the people, organizations, causes, and even pets, that mean the most to you, by naming them as beneficiaries of your estate.

Despite all of the benefits listed above, many people never get around to making their will.  This can result in costly litigation and unnecessary emotional pain for loved ones – which is unfortunate, since making a will is a simple and inexpensive solution.

Help prevent disputes over personal property and family heirlooms

If there is one area that can lead to problems and disputes among family members, it is deciding how to divide up the personal property and family heirlooms.  For example:

  • Which daughter gets that beautiful diamond ring?
  • Which child gets that painting hanging over the mantelpiece?
  • Who gets the grandfather clock that’s been in the family for generations?

And on and on.  Think about it.  Are there things you own that you would like to pass along to someone specific when you die? Or items that you know your children would like to inherit? By making clear and specific bequests – provisions in your will for passing things along – you can ensure that these wishes are fulfilled.

Of course, you can make your wishes known in various ways: verbal instructions, written notes, audio recordings, or even instructions that are labeled right on the objects themselves.

However, all these methods invite challenge and dispute.  The safest way to ensure that your wishes are legally binding is to include them either directly in your will or in a memorandum incorporated into your will.  (As you age or downsize your home, you may also consider giving away some of your porssessions while you are alive.  Just remember to revise your will if you do so.)

It’s also a good idea to discuss your bequests with the people involved.  Sometimes an item that you think is very important to someone may actually mean very little to him or her.  Or, one of your children might treasure something you value very little.  The important thing is to at least think about these things when you are preparing your will.  If you want to avoid disputes, hard feelings, or disappointments among your family members, it’s a wise thing to do.

What happens when you die intestate (without a will)?

Many people assume that if they were to die without a will, their estate would simply pass to their spouse.  Unfortunately, this would only happen if the assets were held jointly with their spouse, with a right of survivorship (in all provinces other than Quebec).

If you die without a will in Canada, you are considered to have died “intestate.”  Simply put, this means that your provincial government – rather than you – decides how your assets will be divided.

Each province has its own intestacy rules that define who your estate’s beneficiaries are, and how much each is to receive.  Usually, this means that your legal spouse and biological or adopted children will end up with your estate’s assets.  Intestacy rules do not, however, take into account any intentions you may have for distributing your assets.  Even worse – intestacy can result in additional legal costs for your beneficiaries.

How your intestate assets may be distributed

Depending on your province, your spouse will receive a preferential share – ranging from the first $40,000 to $200,000 – of your estate.  The balance of the estate will then be divided among your spouse and children. (Children inherit at the age of majority, which is 18 in most provinces.)

The question then arises: who is a “spouse”? The definition varies from province to province, and this can present a challenge for non-traditional families.  For example, the absence of a will could be particularly problematic for someone who has both a legal spouse and a second, common-law partner, leaving a legacy of litigation to their heirs.  As well, most provincial intestacy rules do not recognize the status of a common-law spouse, so he or she may be left out of the will completely.  In most provinces, however, a common-law spouse may petition the courts for support as a dependant, leading the estate into litigation and further costs.

No matter what your family situation, intestacy is not desirable, since it fails to take into consideration any intentions you may have regarding the distribution of your estate, and invites unnecessary hardship and even litigation.  For your peace of mind today – and that of your family tomorrow – you can avoid the pitfalls of intestacy simply by ensuring that you have a valid will.

What Type of Will Should You Choose?

Formal Will

This is a typed document signed by you in the presence of at least two witnesses (who cannot be beneficiaries or spouses of beneficiaries). It is wise to have a formal will prepared by a lawyer – the cost is well worth it when you consider the potential problems you could create if improper wording is used or the document is not signed properly.

Holographic Will

This is a will prepared entirely in your own handwriting and signed by you. Holographic wills do not require any witnesses. Experts advise against the use of these types of wills, since they are frequently subject to misinterpretation and challenge. Additionally, some provinces do not even recognize holographic wills as legal documents.

Pre-Printed Forms/ Computer Programs

Another alternative—also not recommended—is preparing your will with one of the many pre-printed forms or computer programs currently available. They are inexpensive, but your savings are small compared to the legal costs your beneficiaries might have to pay to settle disputes over your affairs. Additionally, if your will is not worded properly, some of its provisions may be legally invalid. Simply stated, when you consider the consequences of not having a proper formal will, it’s just not worth using any shortcuts.

Additional Protection

A will is not the only legal document you need. There are several additional options – such as a living will and a power of attorney – that are also recommended.

Living Wills

Depending on where you live in Canada, a living will may also be referred to as a Power of Attorney for Personal Care. A living will allows you to maintain control over your own health-care decisions, even when you can no longer make them yourself (due to illness, or if you become incapacitated). Through a living will, you may specify which types of treatment you do or do not want to receive. You may also appoint someone to make health care decisions on your behalf if you are unable to make them yourself.

Most families are grateful for a living will, particularly when they are faced with difficult end-of-life choices. A living will can be a blessing to your family, because you will have chosen – in advance – the people whose judgment you trust to make your health care decisions. You will also have given them some guidance for making those decisions.

You should create your living will with the assistance of a lawyer. You should also discuss it with your family members and physician.

Power of Attorney

A Power of Attorney gives the individual(s) you name the authority to manage your financial affairs and other matters.

Overall, there are many options available for your consideration. RKLaw can help you select the ones that are right for you.

Choosing an Estate Executor, Trustee or Liquidator

How to choose an executor for settling your estate

Administering an estate can be an enormous amount of work.  For this reason, it is essential that you think carefully before you choose an executor (known as a “liquidator” in Quebec, and an “estate trustee” in Ontario).

Your executor – or executors – will be responsible for dealing with all your legal and financial affairs, and for ensuring that the provisions of your will are carried out.  Because of the time commitment this entails – not to mention the financial and administrative duties involved –
your executor(s) should ideally be someone:

  • you trust completely – such as a spouse, adult child, or close friend
  • who gets along with your other executors (if applicable), and who will deal fairly with all members of your family
  • who is of an appropriate age, such that he or she will be capable of serving as your executor when needed
  • who lives in the same province as you, preferably nearby (if possible)
  • who has the know-how, willingness, and time to be your executor
  • who will give you permission to name him or her as an executor in your will.

Because of all these considerations, many people – especially those with complex estates or blended family situations – choose to appoint a professional executor (such as a trust company) rather than a friend or relative.  This is usually a prudent decision.  It is also possible to have a relative or close friend serve as a second executor.

Of course, executors – whether individual or professional – are entitled to compensation for the significant amount of time and work involved in administering an estate.  Your will can therefore include directions as to how your executor(s) should be compensated.  (Your legal advisor should be able to provide guidance on any provincial standards or maximums).