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WILLS

  1. Who can/should have a will?
  2. Why should a client have a will?
  3. What should or could a will include?
  4. How often should a client have their will reviewed?
  5. What is an executor or executrix?
  6. Who can act as an executor or executrix?
  7. Can Investors Group Trust Co. Ltd. act as a corporate executor?
  8. Can an Investors Representative act as an individual executor or executrix?
  9. Is it possible to name more than one executor?
  10. What characteristics should an executor possess?
  11. Should a client name the surviving spouse as executor?
  12. Can a client's lawyer or accountant be named an executor?
  13. When should a client select a Corporate Executor?
  14. What does an executor get paid?
  15. When do you decide what the executor will get paid?
  16. What are the potential duties of an executor?
  17. How will I know if the client's will can meet the client's estate planning objectives?
  18. Does an individual have total discretion on how the estate will be disposed of?
  19. How does the matrimonial regime affect estate planning in Quebec?
  20. Does separation or divorce affect an existing will?
  21. Where should I keep my will?
  22. What is a Codicil?
  23. What is a Living Will?
  24. What is a Holograph Will?
  25. What are the forms of wills used by Quebec residents?
  26. Who can be a witness to a will?
  27. Should spouses have separate wills?
  28. If all assets are jointly owned by a couple, is a will necessary?
  29. What percentage of Canadian adults have a will?

Appendices:

  1. Provincial Intestate Succession Laws - What happens if you die without a will?
  2. Responsibilities of Executor/Executrix
  3. Will Checklist

1. Who can/should have a will?

Most people think about a will when they get married and start to have children or become ill and start to think about their mortality. Any individual who has attained the age of majority in their province of residence with assets that they want to have distributed according to their wishes should have a will. The age of majority is 18 in all provinces except British Columbia, New Brunswick, Nova Scotia and Newfoundland where it is 19 years. Any adult with mental capacity has the ability to direct the distribution of his/her assets upon death. A person under the age of majority may make a valid will if married, formerly married, or a member of the Canadian Armed Forces.

2. Why should a client have a will?

A will can minimize the time and expense associated with orderly disposition of assets upon death. Without a will, the deceased's assets are distributed according to provincial intestate succession law. In the absence of a properly drawn will, a court may appoint a person to handle your estate who you would not normally appoint. If there is no relative or friend who applies or is accepted to handle your estate, the Public Trustee's office will be appointed to carry out this task. See Appendix A to this section, showing how the provincial intestate succession laws would apply in the various provinces. Also, if a minor child is receiving part of the estate and there is no will, the monies are frozen in trust until access is granted by the courts, normally until the child reaches the age of majority. You also lose the opportunity to name a guardian for your children if you die intestate. You lose the chance to establish any trusts. A will can avoid court costs and time lags, as well as avoid disputes among heirs, and ensure direct administration and transfer of assets as per your wishes.

3. What should or could a will include?

a) Assets and Liabilities

Full disclosure of your assets and liabilities should be provided to the lawyer drawing up the will so that the appropriate detail can be indicated in the will.

b) Legal Guardian for Children under the Age of Majority

Provincial courts make the ultimate decision on who will be the guardian of minor children, but the client can state his/her preference in the will. The fact that the client has named someone in the will should be very persuasive to the court.

c) Executor or Executrix Appointment

The executor/executrix will be responsible for distributing the property according to the terms of the will. Naming an appropriate Executor (Male) or Executrix (Female) is critical. See Questions 5 - 16 for more information on Executors. Also provide for the appointment of a contingent executor if the first choice is unable or unwilling to act or predeceases the client.

d) Cash Flow for Family Members

While waiting for the estate to be settled, life goes on for the survivors and there will be the usual living costs. Ensure the Will provides for immediate living expenses.

e) Specific Bequests/Legacies

If a client wants to leave a specific piece of property or a gift of money to any person or organization, the will should provide for this. Gifts of specific amounts of money should be reviewed on a regular basis to ensure appropriateness.

f) Tax Planning

Wills can minimize taxation at death, especially where spousal trusts are involved or the executor has the power to make elections for spousal rollovers, or other elections.

g) Disinheritance of adult, non-dependent children

While provincial laws do not allow a client to disinherit completely one's spouse, it may be possible to disinherit adult, non-dependent children. A lawyer will have to advise you on this.

h) Payment of Taxes and Debts

The will can authorize the executor/executrix to pay the funeral costs, outstanding taxes and debts and can indicate from what part of the estate the taxes and debts are to be paid.

i) Distribution of Residue

When all other estate dispositions have been accounted for, the residual estate may go to one or a number of beneficiaries, to a testamentary trust or to an "existing" inter vivos trust.

j) Beneficiaries and the ages they will inherit

For example, the will can state that beneficiaries shall inherit monies in stages, at specific ages, thereby creating a testamentary trust.

k) Protection of Beneficiaries from Divorce Claims

Due to family law legislation, which varies from province to province, you may want a clause stating that any part of your estate that your children inherit is not part of "net family property". Without this clause a child could have a divorce immediately following your death and end up losing one half of the inheritance to the ex-spouse. Your lawyer can give you further advice on this point.

l) Illegitimate Children's Clause

In some provinces a child born outside marriage has the same status as a legitimate child unless a contrary intention is expressed in the will. This clause indicates a contrary intention and specifies the definition of children.

m) Beneficiary Designation

The will can confirm or vary any direct beneficiary designation, such as RRSP or Registered Pension Plan designation on record at a financial institution.

n) Trusts

The will may establish the terms of any trusts to be created upon death, such as a Spousal Testamentary Trust or a trust for minors, as minors who inherit directly may have their assets frozen and held by the courts until age of majority.

o) Powers

This is extremely important. Unless the will provides the executor or the trustees of the trusts with wide and discretionary powers to invest, manage and sell property, to borrow, to lend, to make income tax elections, to forgive any forgivable loans at his/her discretion, the estate representatives will be subject to the provincial restrictive trust laws in making investments and may be unable to file tax elections. Where the provincial laws must be followed, Investors mutual funds may not be allowed for investment purposes.

p) Independent Umpires in Special cases:

It is possible to give your executor the power to seek independent business or legal opinions. There are different situations that may warrant the naming of someone other than the executor. In certain cases it may be wise to appoint an umpire to resolve disputes while ensuring there are few formalities for the umpire to make decisions, in order to avoid review by the courts if there is a disappointed beneficiary. Here are 3 examples:

q) Contingencies - Alternate Beneficiaries

In the event of death of a beneficiary under the will, provision should be made in the will to provide for alternate beneficiaries.

r) Adequate Support to Dependents

The estate should be disposed of according to the terms of the will and the will should comply with the relevant provincial laws with respect to providing adequate support to spouses and other dependents. If not, the will could be contested. See Question 18 on this topic.

s) General Statement

4. How often should a client have their will reviewed?

As often as circumstances dictate. For example, a major tax law change, a change in marital status of the individual or the spouse or other beneficiaries, a birth, adoption, death of beneficiary or estate representative, a move to a different province or country of residence, or a change in financial position are reasons to have a will revised. In general, a will should be reviewed at least every three to five years.

5. What is an executor or executrix?

The person named in your will who acts as your estate representative to dispose of your estate according to your wishes.

6. Who can act as an executor or executrix?

An individual or a corporate executor. An individual includes the surviving spouse, or a child who has attained the age of majority or any mentally competent adult person. A corporate executor is normally a trust company that carries on business in the province of residence of the deceased.

7. Can Investors Group Trust Co. Ltd. act as a corporate executor?

No.

8. Can an Investors Representative act as an individual executor or executrix?

Only for a close relative. An executor's responsibilities are considerable. See Appendix B for a list of the responsibilities. An executor can be held liable for mistakes made in settling the will. Also, an Investors representative does not want to be put in a conflict of interest position and will not be entitled to commission earnings on estate assets he or she invests as executor or executrix in Investors' products. See "Conflict of Interest Policy for Sales Representatives of Investors Group" from the December 8, 1995 Sales Bulletin at the end of Section 11 on Trusts, for more information.

9. Is it possible to name more than one executor?

Yes. Co-executors may be appropriate where the client does not wish to choose between family members or friends, where the client wishes to satisfy both the need for estate administration knowledge and sensitivity by having a lawyer and the spouse, or a business partner and the spouse, act as co-executors. It is also possible to have an individual and a corporate executor as co-executors.

10. What characteristics should an executor possess?

An executor should be trustworthy, willing, available, and should have the business and administrative talent to fulfill an executor's responsibilities. The individual should not be in a conflict of interest position.

11. Should a client name the surviving spouse as executor?

It depends. Many people prefer to name their spouse. But some clients may feel that the spouse may not have the knowledge or ability to act as an executor or may not be able to act appropriately during the grieving period, in which case, they may choose to name a different executor or executrix or co-executors.

12. Can a client's lawyer or accountant be named an executor?

Yes. If the client's lawyer or accountant are familiar with the client's estate and sensitive to the client's estate objectives, the lawyer or accountant could be named.

13. When should a client select a Corporate Executor?

A corporate executor might be selected where there is no appropriate individual to name as executor and/or where specialized knowledge is required to deal with a complex and extensive estate and where impartiality and efficiency are important, despite corporate executors' fees being greater than most individual executor's fees.

14. What does an executor get paid?

Provincial law will determine the level of an executor's fees if the compensation is not stipulated in the will (or even, in some cases, if it is) or when the beneficiaries of the estate cannot come to an agreement about the executor's remuneration. Executors are entitled to compensation based upon a fair and reasonable allowance for the executor's care, pains and trouble, and their time expended in and about the estate. Family members/executors often waive compensation. Canada Trust indicates that an average corporate executor fee can vary between 3 - 5% as follows:

On the first $250,000 of the value of probatable assets: 5%
On the next $750,000 or portion thereof of probatable assets: 4%
On the excess of $1 Million of probatable assets: To be determined based on time spent, complexity of matter, results achieved, value of the estate

15. When do you decide what the executor will get paid?

The client and executor may decide before death, although it is more common that executors receive compensation based on a percentage of the amounts received, the amounts paid out by the executor and the amounts held by the executor in trusts established by the will. That amount is only known upon death. So the percentage could be established in the will, but the actual amount would not be known until a later date.

16. What are the potential duties of an executor?

See Appendix B for a comprehensive list of an executor's responsibilities.

17. How will I know if the client's will can meet the client's estate planning objectives?

See Appendix C. Use the checklist in Appendix C to determine whether all relevant items have been considered by the client in giving the client's lawyer instructions in drafting the will. Have the client consult with the lawyer responsible in drafting the will if there appear to be deficiencies.

18. Does an individual have total discretion on how the estate will be disposed of?

No. Each province has a family property or family law statute that limits the extent to which the client can dispose of the estate assets. Generally, this legislation ensures that there will be adequate provision for those people that have been or should be supported, despite the terms of the will. As well, agreements such as a divorce court order, a separation agreement, a shareholders' agreement, or a domestic/marriage contract, may preclude the individual from disposing of the estate in a manner that contradicts such an agreement.

As an example, legislation of this nature might require that the net worth* of each spouse be determined upon death. Where the net worth of the deceased spouse exceeds the net worth of the surviving spouse, the surviving spouse has the right to elect to receive (if the will does not provide for this and there is no agreement that prohibits this) 1/2 of the difference in the net worths. In other words, there would be an equalization. If the will does not adequately provide for the surviving spouse and this election occurs, the surviving spouse may lose other entitlements (for example, entitlement to the insurance proceeds on an insurance policy owned by the deceased on his/her own life). The net worth* of the spouses generally includes all the assets acquired during marriage. Depending on the legislation and the facts of the situation, it may or may not exclude inheritances.

Also, if you fail to provide support or adequate support to a dependent, the dependent can apply to the courts in many provinces under dependant's relief legislation, claiming they should receive a portion of the estate if the will did not provide for them. The following people may be dependents if they were in fact being supported by the deceased or if the deceased was under a legal obligation to provide support to them: the spouse (legal or common law), divorced spouse, parent, grandparent, child, grandchild, brother or sister.

A lawyer in the province of residence of the client will have to determine the situation that applies to the particular client.

19. How does the matrimonial regime affect estate planning in Quebec?

The matrimonial regime may impact on an individual's ability to freely dispose of his or her property on death (as can be the case with marital property legislation in the common law provinces, as noted in question 18). Claims may arise resulting from the matrimonial regime, the family patrimony and the compensatory allowance, all of which could be claims that are enforceable against the estate of the deceased. Quebec clients should consult a lawyer if they want advice as to how the matrimonial regime may impact on their particular circumstances.

20. Does marriage, separation or divorce affect an existing will?

Marriage automatically revokes a will unless it is made in contemplation of marriage. If you make a will (not in contemplation of marriage) and then marry, it is important to have a new will prepared. Otherwise, when you die, you will be deemed to have died without a will, unless your surviving spouse elects to have it stand. Legislation will govern the distribution of your estate where the surviving spouse does not elect to have the will stand.

If you divorce after making a will, having named your ex-spouse as your executor and beneficiary of some or all of your estate, these provisions are automatically revoked, unless otherwise specified in the will. If you are separated, however, that is not the case. It would be particularly important to review the will upon separation if you wish to ensure that the estranged spouse cannot inherit the estate.

21. Where should I keep my will?

Many people keep their will in their safety deposit box. Some solicitors offer a gratuitous safekeeping facility for the single original document signed by the client. The client should also have a copy which indicates where the original is kept. The copy can be kept in a safety deposit box.

22. What is a Codicil?

When you want your will changed, supplemented or revised, a codicil is added to the original will to provide for the changes or additions desired.

23. What is a Living will?

A living will is a document that may express an individual's desire not to receive life-support treatment which may artificially sustain or prolong life. Several provinces (Nova Scotia, Quebec, Manitoba, Ontario, Saskatchewan and British Columbia - B.C.'s legislation is not yet in force, but may come into effect in late 1997.). It is expected to become effective in September 1996.) have taken legislative initiatives to codify the right of an individual to determine his future health care. As an example, the Manitoba Legislature has passed The Health Care Directives Act giving formal recognition to health care directives that are prepared in accordance with the legislation. A health care directive allows an individual to express his/her own wishes regarding care and treatment decisions in situations where this person is unable to communicate on his/her own behalf. In addition, the legislation allows for the appointment of a proxy who will act on behalf of the individual writing the directive. This is especially important given that individual directives may not address all care/treatment situations.

This legislation essentially legitimizes a practice that has existed for some time. It will allow an individual to reflect on his/her own care given certain circumstances, and more importantly, it will allow for the identification of a person who can be trusted to act on his/her own behalf.

Such directives should be completed with the assistance of the client's solicitor and family physician.

24. What is a Holograph will?

A holograph will is one which is hand drawn by the testator and is signed by the testator without any witnesses. A holograph will must be totally in the testator's handwriting and signed at the end by the testator. A holograph will is valid in Alberta, Manitoba, New Brunswick, Newfoundland, Saskatchewan, Ontario and Quebec.

Note: Clients who purchase will forms from a stationary outlet should realize that a holograph will must be "totally" in their handwriting, so use of the form in combination with one's own handwriting may not be viewed as a valid holograph will.

The holograph will may be of particular use where an individual feels the need to make a will immediately and cannot obtain witnesses to the will (perhaps in a deathbed situation). Some individuals may also find the holograph will to be attractive because it will likely not involve a lawyer, but caution should be exercised because hand drafted legal documents are open to misinterpretation, with the potential for resulting disputes amongst beneficiaries and litigation that may result in legal fees far exceeding the cost of a properly drawn will!

25. What are the forms of wills used by Quebec residents?

There are three types of wills that are recognized in Quebec:

  1. Notarial will - This is a will made before a Notary, in the presence of witnesses. The notarial will is kept on deposit with the Notary and it does not require probate.
  2. Will made in the presence of witnesses - This is sometimes called an "English form of will". It is a will which must be executed by two witnesses, in accordance with formalities that are similar to wills executed in common law provinces. This type of will does require probate (although in Quebec probate is still a relatively speedy and inexpensive procedure).
  3. Holograph will - This is a will which is hand drawn by the testator and signed by the testator without requiring any witnesses. It does require probate (again, a relatively inexpensive and expeditious procedure in Quebec).

26. Who can be a witness to a will?

Not a beneficiary, nor a spouse of a beneficiary. Anyone else who is at least the age of majority and of sound mind can witness the client's signature to the will.

27. Must spouses have separate wills?

Yes.

28. If all assets are jointly owned by a couple, is a will necessary?

A will is still desirable to deal with the situation where both spouses die together.

29. What percentage of Canadian adults have a will?

According to the Trust Companies Association of Canada, 50%.