WILLS AND ESTATES

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Preliminary Considerations

Important, preliminary decisions must be made in preparation for completion of your Will:

 

  • Who will act as your Estate’s Executor and Alternate Executor?

  • How do you wish the assets of your Estate to be distributed or divided?

  • Are there any important items or heirlooms you wish to make special provision for?

  • Do you have any assets that will require specific planning or management?

  • If you have children, who will be named as their guardian(s)?

  • If minors may become beneficiaries under your Will, at what age(s) do you wish that your bequests be granted to them?
     

It is important to give thought to these questions in order to provide comprehensive instruction to your lawyer, so that your Will can be completed.  Your lawyer will also be able to provide advice and guidance as to these concerns when you meet to discuss your Will.

Wills – Frequently Asked Questions (FAQ’s)

Do I really need to see a lawyer to complete my Will?  Can’t I just use a kit or buy a pre-prepared Will?

A Will is reasonably economical to prepare with proper legal assistance. There is no substitute for qualified and specific

professional advice. Unintended errors or omissions in a Will can delay or thwart administration of your Estate.  They an be very costly to your executors and intended beneficiaries, and in some extreme cases, entirely undermine the validity of a Will.Even if you have completed a Will, it may be extremely difficult to have it accepted for Administration (probate) by the Estate Office of  Ontario Superior Court, unless the witnesses to your Will have attended with a lawyer or notary to complete sworn affidavits confirming that they indeed did attend upon your execution of your Will. Your lawyer will generally act as a witness to your Will, and complete this documentation at the same time your Will is  executed. If your witnesses predecease you or cannot be located, and no such Affidavits of Execution are available, your Will may be  ejected. 

Do I really need a Will?  What is an intestacy? What happens if I never complete a Will?

In Ontario, if you die without a valid, complete Will, an intestacy is created, and the distribution of your Estate will be governed entirely by the Succession Law Reform Act.  

This law provides for a complicated mechanism of determining which of your family members will inherit specified portions of your Estate, depending on the amount you leave and the closeness of your relatives’ familial relationship to you. Where there is an intestacy, a surviving spouse is entitled to a preferential share of the Estate – the first $200,000.00  in value.  The residue thereafter is divided between the surviving spouse and surviving children. 

 

If there is only one child, the spouse and child divide on a 50-50 basis.  If there is more than one child, the spouse is entitled to one-third, and the remaining two-thirds is divided equally between the children. If there is no spouse and no children, the Estate will pass to a  parent or parents.  If no parents survive, the Estate will pass to brothers or sisters of the deceased.  Absent surviving siblings,  the property of the estate will be distributed among the nephews and nieces of the intestate equally.  If there are no surviving nephews and nieces, however, the ranking “next of kin” as defined in the Act are entitled to share in the Estate.

This scheme is further complicated by Ontario’s Family Law Act.  The FLA entitles a surviving spouse to elect either to take under the Will/intestacy, or alternatively, under the Act’s property division and equalization scheme (ordinarily applicable upon marital separation/divorce).

What is meant by “Estate Planning?” What difference does it make?

Proper Estate planning takes into account the best means of minimizing the liability of your Estate and its beneficiaries to pay income taxes and provincial Estate Administration fees when your Estate is administered. These fees are entirely based on the value of your Estate – the greater the value of your Estate, the higher probate fees will be. 
 

“Estate Planning” refers to the process whereby you and your professional  adviser work to lawfully structure your holdings and assets so as to minimize the taxes and fees that may be payable at the time of your death. This form of planning aims to maximize the after-tax value of your Estate in order that you can best provide for your beneficiaries.

What taxes will be payable by my Estate?

This question can best be addressed by your accountant and financial advisors, with reference to your specific circumstances.  In general terms, however, the following are examples of typical taxes which may apply:

  • Your Estate will be required to pay income tax in year of your death.

  • All monies held in your RRSP’s could be taxed as income in the year of your death, if your Will does not provide for a tax-exempt transfer.

  • Without careful planning, all your investment assets will be deemed to have been sold on the date of your death, and your Estate will be liable for capital gains taxes on all such assets.

Why do you recommend that I prepare a new Will if mine was made before 1986?

The Ontario Family Law Act came into force in 1986.  It allows a person making a Will to specifically declare and provide that a gift under the Will is not to be considered part of the ‘net family property’ of the beneficiary, if that beneficiary undergoes a matrimonial separation or divorce.Prior to 1986, family property was treated differently in martial separations, and such a provision in a Will was not required or generally, contemplated.Today, unless a Will contains an explicit provision excluding the inherited property from the beneficiary’s net family property, his or her spouse could be entitled to a divided share of the inheritance and income from the inheritance.

Wills completed before 1986 do not typically have such a provision, and should be updated accordingly. All current Wills should be reviewed to ensure that this provision is included, if it is your intention to shield the inheritance from the potential for a claim by a spouse under the Family Law of the Province.

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