March 2004

Presented at the University of Western Ontario's Summer Conference for Student Legal Clinics.

Disclaimer: This article was written in order to provide information only and should not be relied upon as legal advice. Detailed legal advice should be obtained which will be appropriate for the specific circumstances of your matter. (Copyright and Disclosure).

Should you need to discuss this Article or any other related matter, please contact Brian Phillips by e-mail or by telephone at (519) 672-9330.  If corresponding by e-mail, be sure to include your name, your telephone number and a brief message.

I occasionally have clients enquire as to what I think of using book store Will kits for basic estate planning. I usually indicate that if the client’s needs are quite basic that the kit may work well and that it would certainly be preferable to have a kit Will than no Will at all. Although I haven’t had an opportunity to review every Will kit out there, I have always been left with the impression that a client would have to devote a fair bit of time and energy to carefully reviewing and executing the instructions to be certain that they have produced a form of Will that carries out their full wishes. If you are on your own with no dependants, your Will needs are fairly basic and arguably, it might not matter much what happens with your estate although ideally, you at least have enough assets to take care of your internment costs.

Once you are married or at least in a committed relationship, your affairs become somewhat more complicated. Most married couples pool their resources in such a way as to build a financial future together and as such, most married folks plan to leave their separate estate to their spouse on death. If you don’t have a Will but also have no children, your spouse does in any event receive all of your separate estate on your death. Arguably, your affairs are only somewhat removed from being basic when you first tie the knot. However, once youngsters appear on the scene, estate complications do set in. If you have one child, after your spouse receives his or her “preferential share” ($200,000 currently), the balance of the estate in excess of the preferential share, if any, is split half to spouse and half to child. If you have more than one child, the split, after the preferential share, is one third to your spouse and two thirds to your children. Although the preferential share may seem like a high threshold, you can imagine the havoc that your spouse would experience with you gone if the farm had to be liquidated in order to make arrangements to pay to the children (or their trustee) that portion of the share exceeding your spouse’s preferential share. Once children are on the scene, your estate affairs have become complicated.

Where it is at all possible, we recommend that your Will structure generally deal with percentage shares rather than specific assets. Dealing in shares reduces the likelihood of having to revise your Will when you either dispose of old assets or acquire new assets.

Our farm and other business clients do encounter some challenges in this approach in that they often want to provide for a disposition of the farm business to possibly only one of their perhaps several children. Where there is a desire to be “fair” financially to all of the children, there are a number of avenues to follow. If you have been fortunate in your years of farming, you may have a number of non farming assets to divide amongst the other children. In the real world however, most farmers have most of their personal “wealth” tied up in the farm and plans must be devised to have the other children eventually benefit from the farm assets. If you have sufficient excess cash flow from operations, it might be a good strategic plan to look at having life insurance as part of the estate plan to provide cash on death to fund bequests to the children who will not be receiving a direct interest in the farm. Absent such arrangements, many farmers will bequeath the farm to the family member who is trusted to carry on the business subject to an obligation to pay out some portion of the value over some reasonable period of time to the recipient’s siblings. There are many different ways to structure these arrangements, depending upon which outcome you may wish to assure. The one thing to keep clearly in mind is that absent a properly drafted Will, your wishes will not necessarily be carried out, even if known.

If you have a younger family, where there is no one ready to take over control of the farm upon your death, then you will also need to direct your attention in your Will planning to issues of what sort of trust needs to be set up for your children and who will be their guardian. Ideally, you live long enough that your children are of age but your Will should provide for the unexpected. Most people will appoint their spouse as executor or estate trustee. Your spouse does not need to be a chartered accountant to administer your estate. It is sufficient that your spouse be aware of the availability of various professionals to assist with administering the estate’s assets. Your Will however, should also anticipate that your spouse has not survived your death. If your spouse is not around, who will take on this important role? There are two basic concerns which might aid you in making this alternate selection. First, where your children are concerned, it would be ideal to have one adult looking after the day to day care (the “guardian”) and another adult or two looking after the financial affairs of the estate. Heaven forbid our children should end up orphaned but in that unlikely event, ideally, there are a number of adults keeping an eye on what is best for them. The guardian would approach the executors every few months with a budget of needs for the children. The executors would review the budget and, if fully satisfied, make the necessary arrangements. The choice of alternate executors might also be impacted by the question of what is to happen to your estate if your branch of the family tree is totally wiped out. Many couples will come up with a distribution plan that involved both sides of the family (which I will touch on in more detail below). If you are your spouse head in that direction, choosing an alternate executor from each side of the family would make sense (and again, it helps ensure that your children following your death have both sides of the family involved in their upbringing). Remember that your choice of guardian for your children is not binding on the court. The court will do what is found to be in the best interests of the children at the time of your death. All things being equal, your wishes should be respected and accordingly they are worth setting forth in a will document.

The above outline suffices for most family’s estate plans. The only thing to be considered beyond the foregoing, for the average family, is the question of what happens to their estate in the event of a large scale disaster where, as is mentioned above, the entire branch of the family tree is wiped out. That is, no spouse, no children, no grandchildren, etc. In that hopefully highly unlikely scenario, we recommend to most couples that their Wills read the same. I suggest that they look at the pot to be divided in that circumstance and first agree on who should get to say about what portion. Many couples will just go half and half but in some circumstances, a different split might seem appropriate. The beauty of coming up with agreement on the split first is that each spouse should then get to say what they want to have happen with “their share” without concern for the reaction of their partner. Many people get a bit stuck at this point in the process but we certainly encourage them to not get totally stuck. The general concept of taking this approach is to avoid a circumstance where one side of the family or the other is totally cut out in a joint disaster just over the issue of who either died first or was deemed to have died first in cases where it is not clear who outlived whom (as is often the case with transportation accidents).

If you are taking on the task of doing your own Will please remember to follow the rules which apply to the execution of a formal Will (two witnesses in whose presence you sign your Will and who witness the Will in your presence and in the presence of each other). The purpose of the witnesses is to validate that it was you who signed the Will, that you did so voluntarily and perhaps most importantly that you were of sound mind at the time that you executed the Will (so don’t delay … do your will now). If you are a bit uncertain that your friends will attest to your good mental health, you can make a holograph will which will be recognized as valid and binding even without witnesses. The holograph will must be totally in your own handwriting, dated and signed by you. It is an emergency option and I wouldn’t generally recommend that it be used except where there is no other alternative.

Having struggled through the above process, you are probably ready to tackle having your Will done, whether with the assistance of a lawyer or as a consequence of having decided to invest in a self help will kit. Good luck and again don’t delay.