Do I Need a Will?

Do I Need a Will?

What every person needs to know about estate planning.

Wherever possible, every adult person with assets should have a current Will.  The existence of a Will makes it easier for your intended beneficiaries and executors to manage and distribute your estate, and eliminates the uncertainty of who will get what. In the absence of a Will, the laws of Ontario provide for a very specific distribution scheme that may not be in accordance with your intentions, and the application process for a “Certificate of Appointment of Estate Trustee” (formerly known as “probate”) is made more challenging and costly when you do not have a Will.

The following are some examples of who is entitled to your estate should you die without a Will:

  1. If you leave a surviving spouse and no children, the surviving spouse is entitled to apply for the Certificate of Appointment and is entitled to all of your estate.
  2. If you leave a surviving spouse and 1 child (whether adult or minor), the surviving spouse is entitled to a preferential share (presently set at $200,000.00) and the remainder of the estate (if any) is divided equally between the spouse and the child.
  3. If you leave a surviving spouse and 2 or more children, the surviving spouse is entitled to the preferential share and one-third of the remainder, with the surviving children (however many there are) being entitled to share equally in the remaining two-thirds of the estate.
  4. If you leave only a child or children surviving you, that child is entitled to the entire estate or the children are entitled to share equally in the estate.
  5. If you leave no spouse and no children, your parents (or the survivor of them) are entitled to your estate.
  6. If you leave no spouse, no children, and no parents, then your surviving siblings (brothers and sisters) are entitled to your estate.

While the above-noted distribution scheme may seem satisfactory to you and reflect your intentions, complications will certainly arise if you have minor children, as their share of your estate will, in the absence of a Will and properly constituted trust provisions, be placed into the hands of the Accountant for the Province of Ontario and held in trust for those minor children until they reach the age of 18.  Upon turning 18, the child would receive their entire share and be free to spend it in any manner.

In our view, the only likely situation where a Will is not necessary is if you are married with no children and intend that your spouse should receive your entire estate, as this is precisely what will happen should you die without a Will.

Once you have children, it is imperative to have a Will, not only to ensure that your surviving spouse takes your entire estate (as is virtually always the desired case), but to ensure that adequate trust provisions and guardianship/custody provisions are in place in the event that you and your spouse should perish at the same time. 

Most adults recognize that an 18 year old is not likely responsible enough to properly manage a significant inheritance, therefore it is recommended that your children not become absolutely entitled to their share of your estate until they reach the age of 25.  However, properly drafted trust provisions in your Will can ensure that your children’s needs are properly looked after, with minimum income distributions and discretionary capital encroachment provisions.

Trust provisions of this nature, however, are not usually found in any “do it yourself” Will package you can buy online or from any number of other sources.  While these “do it yourself” Wills are suitable for certain situations, in our view they are not sufficient to protect your interests in the same manner that a properly drafted and customized lawyer-prepared Will can.  In the end, you get what you pay for.   

What you won’t get from a “do it yourself” package is customized estate planning advice, and when it comes to the administration of your estate, do you really want to place your confidence in a $40.00 kit designed for the masses?  Can your beneficiaries bring an action against the publisher or vendor of the Will kit if your intentions weren’t properly carried out?

In addition to dealing with your estate assets through a Will, it is perhaps more important to identify those assets of yours that can be kept “out of the Will”, in an effort to minimize the filing fees payable to obtain a Certificate of Appointment of Estate Trustee.  Current estate filing fees in Ontario are .5% on the 1st $50,000 of declared value, and 1.5% of any amount over $50,000 of declared value.  In the case of an estate valued at $1,000,000, the filing fee is $14,500.00 – which must be paid at the time the Application is filed, prior to the granting of a Certificate of Appointment.

To minimize filing fees, we work with our clients to reduce the amount and value of assets that will or must be distributed through your Will. We can give you planning advice regarding real estate, ordinary stock trading accounts and bank accounts, insurance policies (whether including a cash value or not), RRSP or RRIF accounts, and, segregated fund accounts.

If you are a business owner and your business has any significant value, then the usage of a holding company, a family trust, and other estate freezing techniques should be implemented at the appropriate stage.  If you are unsure as to whether you should implement such procedures, you should consult your accountants and/or our firm.

Where you own shares of a private corporation that have any significant value, we suggest implementing a dual Will scheme to ensure that the shares you own in any private corporations are excluded from distribution under your regular Will and are stated to be distributed under a separate Will.  This scheme of dual Wills is, for the time being, still legal and a valid means to further reduce the filing fees payable upon your death.

There is a great deal more to know about estate planning, depending on your individual circumstances.  If you don’t already have an estate planning lawyer, we at The Brown Law Firm would be pleased to provide you with an estate planning consultation.

© July 2017

5100 South Service Road, Unit 10

Burlington, Ontario L7L 6A5

Phone: (905) 632-5333

Fax: (905) 632-1189

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