Get Started Will Planning Revised February 2014 How to use this booklet The purpose of this booklet is to allow you to summarize key information about your Will plans to assist you in working with a lawyer to have your Will properly prepared. Wills are an important part of the overall estate planning process. Therefore, this booklet should be used in conjunction with the Get Started Estate Planning booklet which allows you to record all necessary personal and financial information needed for the process. It can then serve as an ongoing record as your plans change. This booklet can also be used along with the Get Started Power of Attorney booklet and other Get Started materials such as those for managing digital data or medical data. Wills are only one way to dispose of property at death. Beneficiary designations are another. In some cases, it may be prudent to transfer property while alive either directly or through a trust. Therefore, the starting point before focusing on any one form of document is to have a comprehensive estate plan. Business owners should also consider developing a business succession plan along with their estate plan to ensure both work effectively together. You may not be able to complete all sections of the booklet on your own before consulting a lawyer. That is okay. Do what you can. The process works best when there is a dialogue between the client and lawyer. Now, it s time for you to Get Started. Your Information Name (full legal): Other names: Full Address (h): Full Address (w): Occupation: Tel (h): Tel (w): Cell (h): Fax (h): Fax (w): Cell (w): Email (h): Email (w):
Get Started Will Planning Why Make a Will? There are several purposes to making a Will. One is to allow people (called the testator ) to appoint a person or persons to be their estate trustee. It is the role of the estate trustee to administer the financial affairs of the testator when he/ she has died. Without a Will, there is no one with legal authority to administer the testator s affairs which greatly increases the likelihood that a grant of probate will be required. Probate generally refers to the process of formally proving a Will. However, it also refers to the process to appointing an estate trustee where no Will exists or there is a Will but there is no one named in it who is willing and able to act. Grants of probate protect third parties from liability for potentially dealing with someone who does not really have authority to administer the testator s affairs. Sometimes probate can be avoided, even if there is no Will, but it is not guaranteed and some types of assets such as real property can require probate in order to be transferred even if there is a Will. Also, in order for a third party to agree to waive probate, where that option is available, the estate trustee or beneficiaries may be required to give a personal guarantee. This is not ideal. Also, any share that is required to be allocated to minors will have to be paid into court to be administered, or the office of the public guardian, and then distributed at the age of majority which is either 18 or 19 depending on the province. Most people do not want minor beneficiaries to receive their portion until they reach an age greater than 18/19. Payments for health, education etc. can be made by the government before that time but the parents need to apply each time they need money. It s a hassle and impersonal. Wills can allow a trustee to be appointed to manage the share to which a minor beneficiary may be entitled. Also. Wills can deal with a range of administrative issues from who comes within certain definitions like spouse and children, persons defined by relationships, to investment powers. They can even set out funeral instructions and provisions for the custody and maintenance of pets. Without a Will, there can be delays and extra expense in the administration of a testator s affairs. The situation may also result in a distribution of property that the testator would not have wanted. The law will fill in the gaps for people who do not make a Will but the result often does not correspond to what the testator would have done themselves. Therefore, to address the larger question about why anyone should make a Will, the simple answer is to retain control of one s affairs. The next purpose of a Will is to set out the distribution of the testator s property after all debts and taxes are paid. Provided the testator fulfills his/her legal (and moral obligations in some jurisdictions), he/she is free to dispose of their property as they determine appropriate. Without a Will, the distribution is fixed by provincial law with absolutely no flexibility and no room for post-mortem tax planning. Page 2
Preliminary Matters Requirements to Make a Will Capacity In order for a Will to be valid, the person making it (the testator ) must have legal capacity to make a Will. While Canadian law presumes capacity, it is the responsibility of the testator s lawyer to verify that capacity exists to prevent challenges to the Will. This responsibility cannot be delegated to others. Medical input may be needed in some instances but the final decision rests with the lawyer. There is no prescribed test for testator capacity and the level of investigation needed will vary according to specific circumstances. However, Canadian law recognizes certain standard hallmarks of capacity to make a Will. The testator understands the nature and effect of making a Will The testator understands the extent of his/her property The testator understands and appreciates his/her duties to others such as dependants and creditors The testator is not suffering from a disorder of the mind that affects his/her decisions in making dispositions under the Will No undue influence: No one can make a Will for another person nor can they direct the process. Any attempt to interfere in the taking of instructions by the lawyer can create a presumption of undue influence even if the participation by others is innocent. Undue influence can invalidate a portion of or even all of a Will. A lawyer advising a client about their Will and drafting the Will does not constitute making a Will for another person since the lawyer is not making the client s decisions for them. Knowledge and understanding: Testators must know and understand the contents for their Will. Again it is the responsibility of the testator s lawyer to confirm this test is met. Lack of knowledge and understanding can result in the Will being challenged and in a finding that a portion of the Will is invalid. Execution: Some jurisdictions permit holograph Wills. In those cases, the Will must be entirely in the handwriting of the testator and signed by him/her at the bottom of the Will. No witnesses are required. For type-written Wills, whether prepared by a lawyer or just using a form, the requirement in most jurisdictions is for the Will to be signed by the testator in front of 2 witnesses present at the same time. There are restrictions on who can be witnesses. Generally beneficiaries are prohibited. If a beneficiary is a witness, it will invalidate his/her gifts under the Will. Page 3
Get Started Will Planning Preliminary Matters Definitions Spouse: Child: Issue: Estate (if multiple Wills): Personalty: Your lawyer may wish to clarify certain terms to be used in the Will. Be prepared to discussion the following: Married, common law, same sex Natural, adopted, step All descendants or just grandchildren All property, or limited subset All non-real estate property or restricted subset Other (specify): Other (specify): Other (specify): Matters affecting Will Contemplation of marriage: Your lawyer may wish to confirm the application of the following items which could impact how you structure your Will and estate plans as well as the ultimate administration of your estate. Family law agreements: Shareholder or partnership agreement(s): Other agreements: Other Will(s): (e.g. foreign Wills) Page 4
Preliminary Matters Special provisions (Provide details as appropriate. Your lawyer can help you if anything is unclear.) Funeral instructions: Appointment of trustees (outside trusts): Domicile / governing law: Plan designations: Joint account intentions: (gift, administrative ease) Other: Notes Page 5
Get Started Will Planning Estate Trustee Appointment Estate Trustees (complete all applicable sections) First choice(s): Survivors to act alone: Majority rule clause: Alternates: How to replace 1st trustees: Minimum # of trustees: Special instructions Restrict non-residency: Compensation, gifts, selfbenefit: Professional fees in addition to compensation: Other: Other: Page 6
Guardians for Minors (custody) Guardians (complete all applicable sections) First choice(s): Survivors to act alone: Alternates: Financial assistance: Details of assistance, if Yes: Special instructions (provide details) Page 7
Get Started Will Planning Protectors Protectors Protector appointee(s): A protector is a person appointed to oversee the activities of a trustee. They do not have decision making authority but can have certain responsibilities including reporting to the beneficiaries. Your lawyer can discuss the appropriateness of appointing protectors for trusts under your Will. Use the space below you record your wishes and notes. Alternates: Rights, duties and powers: Notes Page 8
Care of Pets Custodians Don t forget the fur children! First choice(s): Survivors to act alone: Alternates: Financial assistance: Details of assistance, if Yes: Special instructions (provide details) Page 9
Get Started Will Planning Distribution Provisions General Digital accounts: Provide as much detail as you can and note any questions. Your lawyer can help you understand your choices. Setoff: Debt forgiveness: Memorandum clause: Articles and effects: RRSP contributions (final): Page 10
Distribution Provisions Specific Devises of real property: Provide as much detail as you can and note any questions. Your lawyer can help you understand your choices. Bequests of personal property: Bequests of shares: Cash legacies: Charitable gifts: (use Gift Planning guide for additional help): Rights and things: Page 11
Get Started Will Planning Distribution Provisions Residue Beneficiaries: Provide as much detail as you can and note any questions. Your lawyer can help you understand your choices. Alternates: Disaster clause: Hotchpot clause: Page 12
Distribution Provisions Gift Terms Spousal trusts: Provide as much detail as you can and note any questions. Your lawyer can help you understand your choices. Family trusts: Trusts for minors: Henson trust: Other trusts: Page 13
Get Started Will Planning Trustee Provisions Powers Investment rules: Your lawyer may discuss some or all of these items with you to determine your instructions. They may also have additional questions depending on your specific circumstances. (prudent investor, other): Investment in private corporations: Investment re special plans: (e.g. RESPs, RDSPs) Even-handedness rule: Investment in private corporations: Investment where corporate trustee acting: Investment management agreements: Employ investment advisor: Employ experts and agents: Corporate fiduciary: Borrowing: Guarantees: Loans: Page 14
Trustee Provisions Powers Powers with respect to corporations: Your lawyer may discuss some or all of these items with you to determine your instructions. They may also have additional questions depending on your specific circumstances. Carry on business: Participate in business: Act as director, etc.: Appoint directors: Allocation of payments made (income vs. capital): Division in kind: Rent or lease property: Purchase property from estate: Settle trusts: Transfer to other trusts: Distribution in trust: Page 15
Get Started Will Planning Trustee Provisions Powers Your lawyer may discuss some or all of these items with you to determine your instructions. They may also have additional questions depending on your specific circumstances. Consolidation of trusts: Early termination of trusts: Estate accounting reports: Trust accounting reports: Purchase executor Other: Page 16
General Administrative Provisions Admin Provisions Interpretation: Your lawyer may discuss some or all of these items with you to determine your instructions. They may also have additional questions depending on your specific circumstances. Partial invalidity: Definition of relationships: Family law exclusion: Effect of disclaimer: Suspension of rights of beneficiary: Trustee liability restrictions: Dispute resolution: Mutual Will exemption: Other: Page 17
Get Started Estate Planning Document Storage Instructions Complete as needed Original Primary Will With client With lawyer Instructions Other Original Secondary Will With client With lawyer Instructions Other Destroy old Primary Will Yes No Destroy old Secondary Will Yes No Notes Page 18
Completing the Booklet This booklet is part of the estate planning process and should be used with the Get Started Estate Planning booklet which is both an estate planning aid and an ongoing record of the status of your estate plans. Us it to get your plans started, then as a reference guide for future discussions. Plan, implement, review and revise. A separate booklet should be completed for each person participating in any share or joint planning process such as spouses or common law partners. A person who has legal capacity can make their own Will (a holograph Will or a Will form as permitted in the relevant jurisdiction) or they can instruct a lawyer regarding their wishes to have one prepared on their behalf. In Canada, the only professionals currently licenced to provide legal advice and services to the public regarding Wills are lawyers (as well as notaries in Quebec). The same is true with respect to powers of attorney and trusts. Other advisors can provide information regarding the process and concepts but the lawyer who will be preparing the Wills, etc., must conduct their own due diligence such as determining client capacity and obtaining instructions free from potential undue influence or conflicts of interest. This responsibility cannot be delegated. Clients considering discussing their Will, power of attorney and estate planning objectives with non-lawyers should remember that no solicitor-client privilege will apply to those discussions even if a lawyer is later retained. The lawyer must be retained first, and then he/she can engage financial planners, accountants, etc. as needed on behalf of the client. Page 19
.ca is a website dedicated to providing information about the Will and estate planning process, along with related areas, in order to assist people in their quest to develop a comprehensive plan for the effective management of their financial and health care issues while alive and upon death. Do it right - NOW! makeawillcanada.ca The site has sections covering: Will, power of attorney and trust planning Estate planning Incapacity planning Disability planning Probate planning Business succession planning Charitable gift planning Financial planning Insurance planning Estate administration Taxation Dispute resolution Visit the site today and find out how to start your planning process. Working with Professionals Advisors help bring it all together. Information is not knowledge and knowledge is not advice. The role of professional advisors is to use their knowledge and understanding of technical information within a discipline to help clients formulate goals and then make recommendations about how to achieve those goals. Advisors cannot tell clients what to do but they can use their experience and professional judgment to suggest which options are more or less appropriate given the client s goals, risk tolerance and other relevant factors. It is the role of clients to instruct their professional advisors. This means communicating their goals and relevant information to the advisors then selecting the most appropriate methods for achieving their goals from the available options presented. In turn, the advisors will then set about implementing the desired plans in accordance with required standards of practice in their profession. The client and advisor relationship, in order to be effective, is one based on trust and mutual respect. As a result, it is important to select professionals who not only have the appropriate technical skills and commitment to professional excellence but also instill confidence in their understanding of the needs of individual clients. For planning requirements that overlap such as estate planning, it is important not only to select individual advisors who are appropriate for each component of that process but also ones that can work effectively together as a group. In communications with the respective advisors, the rules regarding solicitorclient privilege must be observed to ensure it is not lost. Copyright 2014. All rights reserved. The materials presented here are for information purposes only and do not constitute legal or other professional advice.