Many people think that a will is only for people who want to set up trusts or save on taxes, which may indeed be important benefits. However, the primary reasons for making a will are: (1) to leave your assets to those whom you care in accordance with your wishes; (2) to choose the persons whom you trust to handle your assets and/or to care for your minor children; and (3) to alleviate hardship and distress for your survivors upon your death.
What if you die without a will?
If you die without a will, your assets will be distributed rigidly according to the applicable Ontario legislation. For example, if you are survived by:
- a spouse, no child: spouse takes all.
- a spouse, one child: your spouse takes the first $200,000 plus one half of the remainder, and your child takes the rest.
- a spouse, more than one children: your spouse takes the first $200,000 plus one third of the remainder, and all children share the rest equally.
- children, no spouse: all children share equally.
- parents, no spouse, no children: your parents take all; if no surviving parent, your siblings share equally; if no surviving sibling, nephews and nieces share equally.
- no spouse, no next of kin: the Ontario government takes all.
You may not know that an adopted child or a child born outside marriage is included in the distribution, but a step-child is not. Also, if a child dies before you, his/her share will be distributed among his/her children equally. The allocation as prescribed by the legislation may very well differ from the distribution you desire.
If you die without a will, no person is authorized to administer your assets at your death. An application must be made to the Court to appoint an “executor” in accordance with the priority order fixed by the legislation: your spouse, common law partner, or your next of kin. If you want to have a friend or professional who is more qualified to perform onerous duties imposed on an executor, your choice will not have a chance to be considered.
If you die without a will leaving children under 18 years of age, the executor cannot pay funds exceeding $10,000 to the child’s parent or legal guardian. The executor must pay the share into the Court until the child reaches age of majority. Also, if you and your spouse die at the same time in a disaster accident, the Court will not have a guidance on whom you desire to be a legal guardian of your minor child.
If you die without a will, collecting information about your assets and liabilities may be difficult if third parties refuse to assist. The distribution of your estate may be delayed by conducting a complete search of beneficiaries who are entitled to a share of your assets under the legislation. Also, surety bond may be required to be posted before an executor can be appointed. Further, your estate may have to immediately pay income taxes, which might result in insufficient funds being left to support your dependents. These difficulties may leave your survivors under further financial hardship and emotional distress.
All of these problems can be avoided if you have a properly drafted will.
What is the best way to make a will?
Perhaps you’re interested in completing a form obtained from a do-it-yourself package or generating your will using an online software. These options are all available and appear appealing for cost and convenience. However, you might create an inferior will that does not reduce or eliminate tax burden on your estate or beneficiaries. You might unknowingly omit potential liabilities and statutory obligations, which may entirely defeat the structure of your disposition plan. Moreover, you may end up with an invalid will that is not properly executed as required by the legislation.
Making a will is a process that will take knowledge and expertise. For example, do you know that some assets may not be distributed by will, such as a property held jointly with another, a life insurance, or a RRSP? Or that a spouse has a right to equalization of family property regardless your instructions in your will? Or that a claim may be made against your estate by a person who seeks “dependent relief”? Your freedom of disposing your assets may be limited by numerous applicable legislation. Your will is only part of your total disposition plan, and you need understand those statutory rules that may bring potential claims to your estate.
You probably think all you need is a simple and standardized will. Are you certain about that? Have you thoroughly examined your personal situations and assessed their impacts on your overall estate plan? Some of the situations are:
- you have a minor and/or disabled dependent.
- you are in a second marriage.
- you have obligations under a separation agreement, a marriage contract or a shareholder’s agreement, etc.
- any of you, you beneficiaries and executors is living outside Ontario or a foreigner.
- your spouse or child needs protection from creditors’ claims.
- your spouse or adult child are having issues on managing financial affairs.
- Your adult child’s marital relationship may not be stable.
It might be that you won’t recognize the effect of a particular fact on your estate plan until you are interviewed by an estate lawyer. Adequate disclosure of your life and property is essential to the making of a good will, which may not be achieved without a professional’s assistance.
Here is something else to consider: the process of making your will may be scrutinized at your death if challenged by a disappointed beneficiary on the grounds of lacking capacity or under undue influence. To make your will litigation-proof as much as is reasonably possible, it is desirable to have the will making process properly documented by an independent professional. An estate lawyer’s notes may be produced to protect your wishes when a dispute arises.
Why you should review your will regularly?
You should have your will reviewed every three to five years or when you have a major life change, such as your marriage, separation or divorce, birth of children; acquisition or disposition of real property; change of residency or citizenship, death, disability or incapacity of any persons in your will. Should any change be needed, be cautious not to make handwritten notes on the face of your will. Consult an estate lawyer to determine the effect of ,these events on your will and make a new will.
What is the cost of preparing a will?
The cost of preparing a will depends on the amount of time we spend on the matter, varying on the complexity of your assets and your dispositive wishes. It should be noted that any unusual problems may incur extra costs. In simple cases, the fees may be very modest.