When was the last time you updated your Will?  Many people feel that once a Will has been drawn up, there is no need to update it. This is a misconception.  Although your Will does not become invalid simply by the passing of time, the circumstances of your lifestyle may make some of the existing provisions of your Will no longer appropriate or even possible.

Your Will should be reviewed every couple of years to ensure that the provisions contained in the Will still meet your objectives.  Below is a list of circumstances, which would likely merit a review and possible changes to your Will:

- your assets change significantly;
- the person or persons you have appointed as your Executor(s) move out of Canada, die, or become unable to act because of poor health or age;
- a beneficiary dies;
- you no longer own an item you have bequeathed to a specific person;
- there are new births or adoptions in your family;
- your marital status changes;
- the marital status of a beneficiary changes; or
- you move out of the province or you no longer are a citizen of Canada

With respect to changes in marital status, in general, marriage or remarriage automatically revokes a Will.  Divorce on the other hand, does not revoke an existing Will, but does revoke a bequest to the spouse from whom you are divorced and removes that spouse as the Executor if so named.

Multiple Wills

There is no legal requirement for an Executor to submit a Will for a grant of “probate” (now called a Certificate of Appointment of Estate Trustee with a Will).  The authority for an Executor to act is derived from the Will, not from the grant by the court.  However, practically speaking, it is difficult for an Executor to administer an estate and deal with third parties, such as banks, without providing proof of their authority to act.   

When submitting a Will to the court for probate, estate administration tax is payable on the value of the deceased’s estate.  The Province of Ontario boasts one of the highest estate administration tax rates in the country.  The current rate is $250 on the first $50,000 and $15 for every $1000 on the balance of the value of the estate.  For example, on an estate valued at 1 million dollars the estate administration tax would be $14,500.

To help minimize the amount of tax payable, it may be possible for you to execute both a Primary and Secondary Will.  The Secondary Will is prepared to govern assets which should not require that the Secondary Will be probated.  The premise is that upon your death, only the Primary Will will be probated and the estate administration tax will be calculated only on the value of the assets governed by the Primary Will.

Although the assets that can be included in the Secondary Will are broad, from a business perspective they can include shares in, or debt owing from, any privately held corporation (as opposed to shares traded on a stock exchange which do not qualify), an interest in a partnership or joint venture or assets held in trust by any privately held corporation or partnership.  If however, in the case of shares held or debt owing from a corporation, the board of directors will not allow transmission of these assets without a formal grant from a court, then the use of a Secondary Will may not be beneficial.  This is less of an issue in family-run incorporated businesses where the board of directors is often made up of those who will benefit under the Secondary Will.  Requiring a formal grant from a court would compel the Executors to probate the Secondary Will. Estate administration tax would be payable, reducing the amount of the assets to be distributed to the residual beneficiaries.  Requiring a formal grant would therefore not be in their best interests.

The use of a multiple Wills can be an important estate planning tool, particularly for business owners. It is therefore important that Executors be advised why multiple Wills have been prepared, as they ultimately decide whether the Secondary Will should be submitted to probate.  While they may have good reasons for taking such action (apart from being required by third parties to do so) you want to ensure that they do not submit the Secondary Will for probate, simply because they are unaware of the purpose in having made multiple Wills.

Choosing your Executor(s)

The role of the Executor (also known as Estate Trustee) is an extremely important one and the selection of a person or persons to fill this role should not be taken lightly.
 
Your Executor(s) have several obligations and duties in their role as administrator of your estate.  Generally, their duties include:

- locating your Will after your death and ensuring it is your last will and testament;
- making funeral/burial arrangements if not already provided for;
- obtaining proof of death;
- locating, collecting and preserving all the assets of your estate;
- determining all beneficiaries and notifying them of their interest in your estate;
- providing for the immediate needs of any dependants;
- opening an Estate bank Account;
- determining the value of your estate, which may include obtaining valuations where necessary;
- determining of your debts and satisfy them (this may involve the advertising for creditors if the Executor(s) believe there to be outstanding debts of which they have no knowledge);
- notifying any governmental and non-governmental organizations of your death (i.e. passport, SIN, Heath card, credit cards, Canada Pension, insurance, Revenue Canada, etc.);
- arranging for the preparation of income tax returns and determining liability for income tax;
- investing portions of your estate until it is distributed (if required);
- distributing the estate, which may include the sale of real estate;
- preparing an accounting of the estate to the beneficiaries (this necessitates good record keeping); and
- obtaining releases from the beneficiaries.

Given the responsibilities of the position here are some tips for choosing your Executor(s):

- Choose a person(s) you trust and is/are fair minded.  
- Choose someone who lives either in the province or at the very least lives in Canada as appointing a foreign executor can not only cause a hardship on the appointee from a geographic perspective, but in the process of probating your Will the foreign executor may be required by the court to post a bond.

- Age can also be a factor in selecting your Executor, especially if you have minor children or have set up a trust for your spouse.  In these cases there is no outright distribution of your estate and the Executor(s) will be required to hold/invest your estate until the children become adults or your spouse dies or remarries.  This obligation could last a number of years and appointing someone who is older can place a burden on them that they may not be able or willing to take on.

It is important that you speak to the person or persons whom you want to appoint to see if they are willing to take on the role of Executor.  If they are unclear as to their role and responsibilities, your Estates lawyer can speak with them to explain what those responsibilities entail.
Do you have a Will?

Many people believe a Will is unnecessary, sometimes because they don’t think they need one until they are much older, because the size of their estate is not significant or because they have discussed with loved ones or their business partners what they want done with their estate when they die and who they want to be the Executor.  Nothing could be further from the truth.

Having a Will prepared not only assists in implementing a succession plan for your business, but also assists you to plan for your loved ones, protects you, in the event of a marriage or divorce, can help minimize both income and estate administration taxes, can help prevent costly court actions and is a good exercise in compiling an accurate inventory of your assets.

If you die without having made a Will, you are said to have died intestate.  At this point provincial law dictates who is entitled to your estate and in what proportions and not what you told your spouse, relatives or business partner you wanted done with your estate.

It is important to note that the current definition of spouse does not include common law or same sex couples.  Therefore your common law or same sex partner will not be entitled to share in your estate if you do not leave a Will.

Also, if one of your children predeceases you and they are married, your son-in-law or daughter in-law does not share in the distribution either.  In addition, since March of 1978, both children born inside and outside marriage are entitled to share equally under an intestacy.

Other considerations
Still think you do not need a Will?
 
Consider this:
- Without a Will, both income and estate administration tax payable will likely be higher.
- Without a Will, assets that you may have wanted to go to particular individuals (i.e. your company, real estate or even sentimental objects such as jewellery or antiques) may need to be sold in order to distribute your estate to the beneficiaries.
- Without a Will, the court chooses who the Executor of your estate will be.
- Without a Will, the court will choose who the guardian(s) of your minor children will be.
- Without a Will, any minor beneficiaries entitled to share in the distribution of your estate will receive the money at age 18 regardless if they are responsible enough to handle it.

DISCLAIMER

The comments in this article are made in respect of Ontario Wills. While there may be similarities to other Canadian jurisdictions, there are also differences and the advice of local counsel in the appropriate province should be sought. The content of this article is intended to provide general information for the reader and is not intended as advice or an opinion to be relied upon in relation to any particular circumstance.  For specific applications of the law to a particular set of circumstances, the reader should seek professional advice.

Jennifer Searle practices in the areas of estate planning and administration as well as corporate and commercial law with McLean & Kerr LLP.  In her estates practice, she assists clients in the areas of estate planning for individuals and succession planning for family and private businesses, administration of estates including applications for a certificate of appointment of estate trustee with/without a will, passing of accounts, sale of estate assets and providing assistance to estate trustees in their duties, administration of trusts and substitute decision-making and mental capacity planning including continuing powers of attorney for property and powers of attorney for personal care.