The Importance of Having a Will

Douglas J. Green

No matter the value of your assets, you have the right to decide who will manage your estate after your death, and how your assets will be distributed. Without a Last Will and Testament (“Will”), these very important decisions will be made by the government. In Ontario, the Estates Administration Act regulates the manner in which people will be selected in order to manage the assets of your estate. Part II of the Succession Law Reform Act (SLRA) sets out who is entitled to share in those assets, and in what proportion. The results that arise under these statutes may not be a desirable outcome for your family’s particular needs and likely not the results you intend.

Why Make a Will

A Will allows you to design how your assets can be distributed in a manner which is ideal for you. In particular, you can provide for the welfare of your family and ensure the efficient management of your property by a trusted person, designated by you. In addition, a well prepared Will provides you with the opportunity to save income taxes utilizing available tax planning or deferral measures. (A discussion on tax savings and deferrals is beyond the scope of this article)

Where No Will Exists

If you die without a Will, the law deems that you have died "intestate", which means that you have left no instructions as to how you want your property to be distributed and by whom. If you have a will, but have failed to completely or adequately deal with a portion of your estate, this is referred to as a “partial intestacy”. The SLRA sets out a scheme for distributing your property to your surviving relatives in the case of intestacy or partial intestacy. Your Estate will be divided in the following manner:

Surviving Spouse and No Issue

• If there is a surviving spouse, whether or not the spouses are separated, and no children surviving, the spouse may be entitled to the entire estate. A spouse, for distribution purposes, is limited only to a legally married spouse. Thus, a common law spouse would not be entitled to the distribution of the deceased person’s estate. A common law spouse would have to apply to the court as a dependent, or seek a constructive trust, in order to receive a portion of the deceased person’s estate.

Surviving Spouse and Children Surviving

• When there are both a spouse (whether or not the spouses are separated) and children surviving, the spouse may be entitled to a “preferential share”. The preferential share is currently $200,000.00, fixed by regulation under the SLRA.

The spouse is entitled to the preferential share in the following manner:

• if the net value of the estate is less than $200,000.00, then the entire estate passes to the spouse regardless of whether or not there are surviving issue; and
• if the net value of the estate is greater than the preferential share, $200,000.00 passes to the spouse, and the remainder will be divided between the spouse and children in the following way:

• if there is only one child, then the spouse is entitled to one half of the residue over and above $200,000.00 and the remaining one half is for the child; or
• if there is more than one child, then the spouse is entitled to one third of the residue over and above $200,000.00, and the balance is split equally between the remaining children.

Alternatively, a surviving spouse is given the option to elect to receive a portion of the deceased spouse’s estate under Part II of the SLRA, as has been outlined above, or under section 5 of the Family Law Act ( FLA).

Electing Under Section 5 of the FLA

• Subsection 5(2) of the FLA provides that, when a spouse dies, if the Net Family Property (NFP) of the deceased spouse exceeds the NFP of the surviving spouse, the latter is entitled to one half the difference between them. If the surviving spouse elects to receive under the FLA, he or she forfeits their entitlement under the SLRA. This option is not available to common-law spouses.

No Spouse and No Issue

• If there is no surviving spouse and no surviving children and one of the parents of the deceased is surviving, then that parent will receive the entire estate. If both parents are surviving, the estate will pass to them equally.

No Spouse, No Issue and No Parents

• If there is no spouse, children, or parent(s) surviving, the estate will pass equally among the siblings of the deceased person.

No Immediate Family

• Where there is no spouse, issue, or parent(s), or no siblings surviving, the estate passes to all of the nephews and nieces, who will share the estate equally.

Next-of-Kin

• If none of the above is surviving, the next-of-kin of equal degree will share equally.

No Next-of-Kin

• When there is no next-of-kin, the estate becomes the property of the Crown.

Personal Representative

If you have not made a Will to designate the person who will deal with your estate, the court will have to appoint an administrator, which will cause significant time delays and extra expenses that will be paid for out of your estate. Those who wish to be appointed must apply to the court for a Certificate of Appointment of Estate Trustee Without a Will. The priority list followed by the court when deciding who will be appointed as the administrator of the estate begins with the deceased person’s spouse followed by the children, grandchildren, parents, siblings and finally, distant relatives. Under paragraph 29(1)(a) of the Estates Administration Act common law spouses share the same priority as lawful spouses in becoming administrators of an estate.

Who Will be Granted Custody of Your Children, and Who Will be the Guardian of Their Property?

One of the most significant reasons for parents with small children to make a Will is to appoint a desirable person who will care for their children in the event that they should die while their children are still minors (i.e., children who have not reached the age of majority). In addition to choosing a capable custodian, parents should also be concerned with considering the manner in which the custodian(s) will raise their children in their absence, and who will be the guardians of their property until the children reach the age of majority. All of this can be specified in a Will.

Pursuant to section 61(7) of the Children’s Law Reform Act, the Will appointed custodian will have to apply to the court ninety (90) days after his or her appointment for a permanent order of custody, if he or she is interested in continuing as the minor’s custodian. Although the designation of a custodial parent in a Will is not binding on the court, it is significant evidence as to what the deceased believed was in the best interests of his or her children. Where desired, the deceased can name one person as custodian of the child, and a different person as the guardian of the child's property.

In the event that a parent dies without a Will, leaving behind a child who has not attained the age of majority, anyone who would like custody of the child will have to apply to the court for a custody order. Any time the court makes a determination with respect to children, their best interests are considered.

Making a Living Will and Appointing a Power of Attorney

Powers of attorney and living wills are useful ways to maintain some element of control over your property, and personal choices, should you become physically or mentally incapacitated. A Power of Attorney is a legal document that gives another individual the right to act on your behalf. A living will, or Power of Attorney for Personal Care, allows you to set out what you want to happen if you become ill and cannot communicate your wishes about medical treatment. This can help relieve your family of the stress and anxiety associated with making serious decisions about your health. Many are concerned today about “life support” issues and these can all be addressed in the Power of Attorney for Personal Care.

• A Power of Attorney for Personal Care allows you to appoint a person to carry out your personal decisions, such as housing and health care, if you are unable to do so. This kind of Power of Attorney is only effective upon your being assessed as mentally incapacitated.
• A Continuing Power of Attorney for Property allows you to appoint a person to make all decisions relating to your financial affairs if you are unable to do so yourself. This Power of Attorney can be made to be effective immediately or upon your mental incapacitation.
• A Non-Continuing Power of Attorney for Property allows you to appoint someone to make your decisions relating to your financial affairs, generally or in specific cases, such as the sale of your house, but terminates if you become mentally incapable. You can use this type of Power of Attorney while you are away from your home for an extended period of time, and are in need of someone to look after your financial transactions. You can specify the effective period of this kind of Power of Attorney so that it will be terminated upon your return.