| PURPOSE OF A
WILL |
 |
The
purpose of a will is:
a) to provide for an orderly
transfer of assets upon death in accordance with a
testator's wishes; and
b) ) to avoid confusion and
conflict in the distribution of a deceased's assets.
| |
|
| FORMALITIES |
|
The
legislative formalities for preparation of a valid will
are set out in part one of the Succession Law Reform Act
(s. 26 Ontario
E-Laws). Essentially, to be valid a will must be
in writing, dated and signed in the presence of two
witnesses. There are number of specific provisions
relating to witnesses. | |
|
| THE ROLE OF
THE LAWYER |
|
Generally speaking, the lawyer should meet with
the client twice. In the first meeting, the lawyer
should review with the client his/her family and
financial circumstances, consider the client's wishes
and take instructions for the preparation of the will.
In the second meeting, the lawyer should review the will
with the client to ensure that the client fully
understands and appreciates what is being signed.
| |
|
| CAPACITY |
|
The
lawyer must determine that the testator has the
necessary capacity to make a will. The test is simple -
is the testator able to name the members of his/her
family and describe their basic circumstances and is
he/she able to describe his/her financial circumstances,
including income, obligations, assets and liabilities.
The lawyer should prepare notes from his conversation
with the testator, which should be retained as a record
as to the testator's capacity at the time that the will
was made. This record can be used as evidence of
capacity in the event of an application for a
declaration that the will is invalid due to lack of
capacity. | |
|
| FAMILY
CIRCUMSTANCES |
|
Each family is different and the differences may
be important in terms of the drafting of a will. In
order to recommend provisions for a will, the lawyer
needs to know such things as the age and health of the
testator and his/her spouse and children, which of these
persons are dependents of the testator, whether or not
any of the testator's dependents have special needs and
whether there are any ongoing conflicts or potential
conflicts within the family which could require special
attention. | |
|
| FINANCIAL
CIRCUMSTANCES |
|
The
lawyer needs to know and consider the particular
financial circumstances of the testator and his/her
immediate family. What are the testator's sources of
income and are they secure. What are the testator's
obligations, or potential obligations to dependents and
third parties. Are any of the assets of a category that
they will not form part of the estate upon the
testator's death; eg., jointly-owned assets, life
insurance or registered plans with designated
beneficiaries, etc. | |
|
| TESTATOR'S
WISHES |
|
The
lawyer must determine what are the wishes of the
testator for his/her estate upon death. These wishes
must be considered in relation to the lawyer's
understanding of the testator's family and financial
circumstances.
What is often described as a standard will may not
have the desired effect depending upon the testator's
particular circumstances.
| |
|
| AVOIDING
PITFALLS |
|
Examples of aspects which require special
attention include:
a) testator's obligations under the Succession Law
Reform Act (s. 26 Ontario
E-Laws) to provide for dependents, which might
include a former spouse, children from a previous union,
a common law spouse, a dependent sibling or parent,
etc.;
b) testator's wish to exclude a spouse or child from
the will;
c) testator about to change his/her marital status;
d) are sufficient assets in estate to meet estate's
obligations as a result of assets being held jointly or
where there are designated beneficiaries other than the
estate (life insurance and registered plans);
e) assets located outside of the province of Ontario.
| |
|
| CHOICE OF
ESTATE TRUSTEE (EXECUTOR) |
|
The
lawyer should consider with the testator what person or
persons should be named in the will as estate trustee.
The testator should choose someone who is likely to
be alive when the testator dies and able and willing to
undertake the work of estate trustee.
The estate trustee is responsible for the
administration of the estate, including funeral
arrangements, securing the assets of the estate, dealing
with the obligations of the estate and carrying out the
testator's wishes according to the will.
| |
|
| SIGNING THE
WILL |
|
The
lawyer has a duty to ensure that the will is properly
executed.
In addition to the technical requirements relating to
witnesses and signing, the lawyer needs to be satisfied
that the testator understands what he/she is signing and
is signing voluntarily without undo influence or
coercion.
After signing the will, the testator will be given
the choice of leaving the original will with the lawyer
for safekeeping, which is a service provided without
charge. | |
|
| ESTATE
PLANNING - TRUSTS |
|
Even in the case of a simple family structure and
a modest estate, a testator may benefit from estate
planning. For example, if there is no reason for the
estate to be left with assets, simple mechanisms such as
joint ownership or designation of individual
beneficiaries can be used to avoid tax arising from
death.
Most wills will include a provision for requests to
minors to be held in trusts until the age of majority
has been reached with discretion to the trustee to take
money from the trust to assist with education or health
care. Testators often wish to consider a clause whereby
bequests left for children are retained in trust until
the children have reached some age beyond the age of
majority. This will normally reflect the particular
experience in the case of each family.
There are many other circumstances in which other
types of trusts should be considered.
In situations where the estate will be substantial,
tax avoidance will be important. The lawyer will work
with the testator's tax accountant and financial planner
to produce a will that suits the particular
circumstances. Examples of trust arrangements which may
considered are a) a spousal trust - whereby a surviving
spouse receives income during his/her lifetime, with the
remainder going to children (often used in situations
where there has been a second marriage); b) children's
trusts - to provide income from an estate to children
with discretion to the trustee to determine the best
time for transfer of assets to the children or their
designates; c) grandchildren's trusts - used to bypass a
generation and thereby avoid tax in situations where
this is financially appropriate.
| |
|
| TRUSTS FOR
DISABLED PERSONS |
|
The
parents or siblings of persons who are disabled and in
receipt of a disability income will wish to consider a
special trust provision either during lifetime or upon
death to provide financial assistance for a disabled
child, while not interfering with the child's
entitlement to the continuation of the disability
benefit. In such situations, what is known as an
"absolute discretionary trust" can be established.
In the will the testator directs his/her estate
trustee to pay a sum of money from the estate into the
absolute discretionary trust. The trust clause names a
trustee (or trustees) who is directed to invest and keep
invested the money left to this trust. The trustee is
given an absolute discretion to take from the invested
funds whatever amount he/she feels is appropriate to
give to or spend for the disabled person. The disabled
person has no decision making authority and cannot
demand payment of any amount from the trust for any
purpose. The trust clause must designate a residual
beneficiary; ie., someone to receive what is left in the
trust when the disabled person dies. Generally, this
should not be the same person who is named as trustee
(and whose discretion might thereby be compromised).
The Ontario Court of Appeal in the Henson case
determined that income received by a disabled person
from a trust with these provisions does not disqualify
the disabled person from continuing to receive
disability benefits.
| |
|
| POWER OF
ATTORNEY FOR PERSONAL CARE |
|
Decisions relating to one's own personal care
include such things as:
a) directions to a physician for medical treatment;
b) where to live;
c) choice of diet, etc.
As long as a person continues to have the capacity to
make such decisions, he/she is the only one who can do
so. For example, if a doctor needs direction as to
whether or not continue medical treatment for a person,
the doctor will look to that person for this direction
as long as the doctor feels that the person still has
the capacity to make the decision. If the doctor feels
that the person has lost the capacity to make the
decision, he/she will be required to take the direction
from the person named in a Power of Attorney for
Personal Care. Otherwise he/she must take the direction
from the person's next of kin.
In a Power of Attorney for Personal Care, a person
who still has capacity to do so, can appoint another
person (who must be at least age 16) to act as his/her
attorney for personal care (Substitute Decisions Act
1992, see c. 30 Ontario
E-Laws). The Power of Attorney for Personal Care
has replaced what used to be known as a Living Will.
The Power of Attorney for Personal Care is useful in
situations where a person feels that there may be some
doubt as to how his/her next of kin will act, or where
there is potential for a conflict among next of kin as
to what decisions should be made.
| |
|
| CONTINUING
POWER OF ATTORNEY FOR PROPERTY |
|
By
a document known as a Continuing Power of Attorney for
Property, a person with the capacity to do so may
appoint another person (over age 18) to act as his/her
attorney for property. The person so named is given the
authority to act in place of the person giving the power
in financial matters.
The person giving the power can determine whether the
attorney should have limited or unlimited authority to
act in financial matters.
A limited Continuing Power of Attorney for Property
would be useful in a situation where the person expects
to be away on holiday when documents need to be signed
in order to complete a business or real estate
transaction. The attorney is given the authority to sign
documents for this limited purpose.
Similarly, a person with physical disabilities might
wish to give another person the limited authority to do
his/her banking, but otherwise retain financial decision
making authority.
The more usual unlimited Continuing Power of Attorney
is a means by which a person can provide for the
continuation for the management of his/her financial
affairs by a trusted family member or friend in the
event of future incapacity.
In the absence of such document and in the event of
incapacity, the person's assets and financial affairs
fall into the hands of the Public Guardian and Trustee
for the Province of Ontario. In most cases, this will be
an unwanted result.
The choice of attorney is important for obvious
reasons, not the least of which is that once the
document is signed, it can be used by the attorney even
though the person may still have capacity. A Continuing
Power of Attorney can be revoked at any time by its
grantor by a Revocation signed in the same way as a
Continuing Power of Attorney.
| |
|
