CH 36 WILL PLANNING, DRAFTING, AND EXECUTION
Lawyer’s liability Lawyer only be liable to the client but to intended beneficiaries or beneficiaries for any act or omission in carrying
out the instructions of the client that frustrates the intentions client’s testamentary intentions
Lawyer’s duty Make sure that:
a. Client has testamentary capacity
b. Client’s expressed wishes are not the result of undue influence or duress exerted by others
c. Client provides a full and accurate inventory of the client’s property, together with any information or
documentation that may have a bearing on the client’s authority or ability to dispose of any of the
property
d. The client is apprised of relevant income tax issues and other issues or limitations that may affect the
client’s scheme or distribution
e. The client approves and understand the will
f. The appropriate degree of diligence is applied to see if the will is signed in timely manner
g. There is a compliance with the statutory formalities for signing the will
● Lawyer should ensure that the will is drafted in language sufficiently clear and unambiguous
● Lawyer should ensure that there are no practical barriers in a way of the estate trustee’s administration
● That the client has capacity
● That no undue influence or duress are at play
● Client personal and financial circumstances relevant to the exercise of the will
● Insure the client’s testamentary intentions
● The client’s understanding and approval of the contents
● Ensure that the file notes and contain sufficient info to support the affirmative as to: a) testamentary
capacity AND b) absence of undue influence
● If the client is ailing or elderly, the lawyer must make a professional judgment about
whether to take initial instruction from another family member, and later confirm
capacity in a meeting with the testator to sign the will.
TESTAMENTARY The client is legally capable of disposing of assets by will
CAPACITY Lawyer must have an opportunity to observe, interview and assess the testator in person
For a will to be valid A person must have the capacity of understanding:
a. the nature and extent of the assets and
b. comprehending and appreciating the persons who should receive the assets
Undue influence or Instructions MUST reflect the wishes of the testator. The validity of a will may be compromised, either whole or in
duress part
Pressure to the degree where the testator has reached the point of thinking – “it is not my wish but I have to do
this”
caution for any invitation of family member to act as an interpreter
,STATUTORY a) Dependent support claims: ( 3 criterias to be met)
CONTRAINTS TO THE 1. Claimant must stand in the right relationship to the deceased ( married, common-law, grandparent,
TESTAMENTARY child, grandchild, or sibling of the deceased)
FREEDOM 2. Immediately before the death, the deceased was providing support to the claimant or legal obligation to
a) Part V of do so
SLRA ( 3. The deceased did not make any adequate provision for the claimant
dependant Adequate provision considerations – budgetary needs + the moral considerations
support)
b) Part I of the b) property rights of the married spouse ( FLA)
FLA Surviving spouse now has the right to chose between will or equalization of property
(property If choses equalization – will = forfeited and deemed to have died before the testatory.
rights of the
married WHAT IS EXCLUDED IN THE EQUALIZATION CALCULATION
spouse) ● Mortgage if the parent forgives mortgage on child’s matrimonial home
● Inheritance or gift during marriage ( except if that value can be used to satisfy an equalization claim and
other assets are NOT enough)
WHAT IS INCLUDED
● Matrimonial home
● If the child uses inherited cash to pay on the mortgage of the matrimonial home
Mutual wills ( can The “mutual wills doctrine” – where two parties have made a contract together, neither of them will change his or
not change the will her will after the death of the other.
after one party dies) Survivor takes any property acquired under the will of the deceased on trust, to deal with it in the same manner
as is set out in the will that the survivor made at the same time as the deceased made the deceased’s will.
Without written agreement, courts will be reluctant to establish an oral will to be mutual wills
ESTATE ADMINISTRATIVE TAX
First 50,00 = NO TAX
Higher than 50,000 ( value after) = 15$ for every 1,000
Ex. 190,00
190,000 - 50,000 = 140,000
140, = 140
140 x 15 = 9.3
Role of the estate ● Attending to the funeral and burial arrangements,
trustee ● proving the will ( if necessary),
● collecting and protecting the estate assets,
● paying creditors and satisfying liabilities ( including tax owing),
● distributing specific bequests and conveying devises of real property,
● and distributing the residue of the estate
Decision-making Who can appoint?
responsibility for Parent with the decision-making responsibility with respect to child to appoint a sucesor ot decision-maker
minor child with respect to that child parent’s will.
If two parents share the decision making respon, then the appointing will be on the later of the two parents
to die
, If both die at the same time: only what is common by both of them in both wills
Appointment is temporary = only effective for 90 days
Guardians of Guardian can also be effected by will. To appoint a guardian of property – must be a guardian of property of the
property of minor child. In Ontario, a parent is not automatically the minor child’s guardian of property. That requires a court order.
child
The family Duty of the estate trustee to turn assets that are non-incoming producing into ones that are.
home/family cottage
Unless the will expressingly gives the estate trustee directions. authority to retain a family home or family cottage
for the benefit of specific persons, the estate trustee will be obliged to sell the property or properties in due
course and invest the proceeds.
IF LEAVING HOME TO BE HELD IN TRUST – lawyer should mention whether principal residence exemption applies
IF LEAVING HOME TO ONE CHILD – lawyer should canvas with client: a) equality of distribution of estate or b)
accommodation of the needs of the stay-at-home child
IF LEAVING THE HOME TO 2 OR MORE CHILDREN – if equal: joint tenants, if not equal: tenants in common, if will
is silent: tenants in common,
joint tenancy = right to survivorship
Trustee purchasing w/o the express authority to purchase estate assets, the estate trustee will have to obtain approval from all the
assets for the estate beneficiaries or from the court if any of the beneficiaries is a minor.
trustee’s own benefit
GIFTS
What happens to the
gifts in the will
GIFT LAPSE IF: If the beneficiary dies before the testatory – the gift lapses and falls into the
residue of the estate
EXCEPTION = NO LAPSE IF
a) Class gifts Class gifts do NOT lapse:
If one or more members of the class should predecease the testator, the
bequest passes to those members of the class still alive on the death of the
testator
b) Gift to beneficiary
(child, grandchild, or Gift goes to the spouse/child as intestacy w/o will) unless contrary intention in
sibling of testator) will
and dies before no preferential share to the spouse
testator + leaves
behind issue or
spouse { anti-lapse
, provision s. 31 SLRA}
INTEREST PASSES TO Where interest fails because the beneficiary died before the testator, the
INTESTACY IF: interest passes on to an intestacy
LEAVING GIFT TO SON, If client is leaving a gift to married beneficiary’s spouse:
DAUGHTER-IN LAW If spouse chooses equalization: has to set off/include the gift will be
subtracted in the calculation unless expressly says does not need.
TRUST ISSUES
Investment authority To look at the scope of trustees investment authority – MUST look at the authority in the will
The lawyer should proceed as long as the lawyer is satisfied that the instructions are practicable and capable of
being expressed in clear and objective terms
Perpetuties Common law – the rule against perpetuities ( rule against remoteness of vesting)
Properties must be distributed within 21 years of death.
Before if the property was not distributed within this time, the gift was VOID
WAIT AND SEE PRINCIPLE:
Instead of gift benign VOID, the gift is ‘presumably valid’ even after 21 year until actual events establish that the
gift is incapable of vesting:
a) Within OR
b) Outside
The perpetuity period
Limits of reinvesting For will – Can not be re-invested more than 21 years after the testator’s death
income held in trusts
TAX CONSIDERATIONS
Taxed at the highest marginal rate
Exception: testamentary trust for the named beneficiary who qualifies for the disability tax credit. For those trusts
only, taxation of the undistributed income from the graduated rates is possible provided that elections can be
made.
** There are clawback rules if the beneficiary does NOT receive the benefit of the undistributed income
Rule in Saunders v. If all beneficiaries have interest in trust are at the age of majority, they can together demand the distribution of
Vautier the trust property.
Rule is based on the succession-law principle that one can not postpone enjoyment of an absolute gift.
To avoid the old Saunders rule, testators can add a condition precedent in the will.
Lawyer’s liability Lawyer only be liable to the client but to intended beneficiaries or beneficiaries for any act or omission in carrying
out the instructions of the client that frustrates the intentions client’s testamentary intentions
Lawyer’s duty Make sure that:
a. Client has testamentary capacity
b. Client’s expressed wishes are not the result of undue influence or duress exerted by others
c. Client provides a full and accurate inventory of the client’s property, together with any information or
documentation that may have a bearing on the client’s authority or ability to dispose of any of the
property
d. The client is apprised of relevant income tax issues and other issues or limitations that may affect the
client’s scheme or distribution
e. The client approves and understand the will
f. The appropriate degree of diligence is applied to see if the will is signed in timely manner
g. There is a compliance with the statutory formalities for signing the will
● Lawyer should ensure that the will is drafted in language sufficiently clear and unambiguous
● Lawyer should ensure that there are no practical barriers in a way of the estate trustee’s administration
● That the client has capacity
● That no undue influence or duress are at play
● Client personal and financial circumstances relevant to the exercise of the will
● Insure the client’s testamentary intentions
● The client’s understanding and approval of the contents
● Ensure that the file notes and contain sufficient info to support the affirmative as to: a) testamentary
capacity AND b) absence of undue influence
● If the client is ailing or elderly, the lawyer must make a professional judgment about
whether to take initial instruction from another family member, and later confirm
capacity in a meeting with the testator to sign the will.
TESTAMENTARY The client is legally capable of disposing of assets by will
CAPACITY Lawyer must have an opportunity to observe, interview and assess the testator in person
For a will to be valid A person must have the capacity of understanding:
a. the nature and extent of the assets and
b. comprehending and appreciating the persons who should receive the assets
Undue influence or Instructions MUST reflect the wishes of the testator. The validity of a will may be compromised, either whole or in
duress part
Pressure to the degree where the testator has reached the point of thinking – “it is not my wish but I have to do
this”
caution for any invitation of family member to act as an interpreter
,STATUTORY a) Dependent support claims: ( 3 criterias to be met)
CONTRAINTS TO THE 1. Claimant must stand in the right relationship to the deceased ( married, common-law, grandparent,
TESTAMENTARY child, grandchild, or sibling of the deceased)
FREEDOM 2. Immediately before the death, the deceased was providing support to the claimant or legal obligation to
a) Part V of do so
SLRA ( 3. The deceased did not make any adequate provision for the claimant
dependant Adequate provision considerations – budgetary needs + the moral considerations
support)
b) Part I of the b) property rights of the married spouse ( FLA)
FLA Surviving spouse now has the right to chose between will or equalization of property
(property If choses equalization – will = forfeited and deemed to have died before the testatory.
rights of the
married WHAT IS EXCLUDED IN THE EQUALIZATION CALCULATION
spouse) ● Mortgage if the parent forgives mortgage on child’s matrimonial home
● Inheritance or gift during marriage ( except if that value can be used to satisfy an equalization claim and
other assets are NOT enough)
WHAT IS INCLUDED
● Matrimonial home
● If the child uses inherited cash to pay on the mortgage of the matrimonial home
Mutual wills ( can The “mutual wills doctrine” – where two parties have made a contract together, neither of them will change his or
not change the will her will after the death of the other.
after one party dies) Survivor takes any property acquired under the will of the deceased on trust, to deal with it in the same manner
as is set out in the will that the survivor made at the same time as the deceased made the deceased’s will.
Without written agreement, courts will be reluctant to establish an oral will to be mutual wills
ESTATE ADMINISTRATIVE TAX
First 50,00 = NO TAX
Higher than 50,000 ( value after) = 15$ for every 1,000
Ex. 190,00
190,000 - 50,000 = 140,000
140, = 140
140 x 15 = 9.3
Role of the estate ● Attending to the funeral and burial arrangements,
trustee ● proving the will ( if necessary),
● collecting and protecting the estate assets,
● paying creditors and satisfying liabilities ( including tax owing),
● distributing specific bequests and conveying devises of real property,
● and distributing the residue of the estate
Decision-making Who can appoint?
responsibility for Parent with the decision-making responsibility with respect to child to appoint a sucesor ot decision-maker
minor child with respect to that child parent’s will.
If two parents share the decision making respon, then the appointing will be on the later of the two parents
to die
, If both die at the same time: only what is common by both of them in both wills
Appointment is temporary = only effective for 90 days
Guardians of Guardian can also be effected by will. To appoint a guardian of property – must be a guardian of property of the
property of minor child. In Ontario, a parent is not automatically the minor child’s guardian of property. That requires a court order.
child
The family Duty of the estate trustee to turn assets that are non-incoming producing into ones that are.
home/family cottage
Unless the will expressingly gives the estate trustee directions. authority to retain a family home or family cottage
for the benefit of specific persons, the estate trustee will be obliged to sell the property or properties in due
course and invest the proceeds.
IF LEAVING HOME TO BE HELD IN TRUST – lawyer should mention whether principal residence exemption applies
IF LEAVING HOME TO ONE CHILD – lawyer should canvas with client: a) equality of distribution of estate or b)
accommodation of the needs of the stay-at-home child
IF LEAVING THE HOME TO 2 OR MORE CHILDREN – if equal: joint tenants, if not equal: tenants in common, if will
is silent: tenants in common,
joint tenancy = right to survivorship
Trustee purchasing w/o the express authority to purchase estate assets, the estate trustee will have to obtain approval from all the
assets for the estate beneficiaries or from the court if any of the beneficiaries is a minor.
trustee’s own benefit
GIFTS
What happens to the
gifts in the will
GIFT LAPSE IF: If the beneficiary dies before the testatory – the gift lapses and falls into the
residue of the estate
EXCEPTION = NO LAPSE IF
a) Class gifts Class gifts do NOT lapse:
If one or more members of the class should predecease the testator, the
bequest passes to those members of the class still alive on the death of the
testator
b) Gift to beneficiary
(child, grandchild, or Gift goes to the spouse/child as intestacy w/o will) unless contrary intention in
sibling of testator) will
and dies before no preferential share to the spouse
testator + leaves
behind issue or
spouse { anti-lapse
, provision s. 31 SLRA}
INTEREST PASSES TO Where interest fails because the beneficiary died before the testator, the
INTESTACY IF: interest passes on to an intestacy
LEAVING GIFT TO SON, If client is leaving a gift to married beneficiary’s spouse:
DAUGHTER-IN LAW If spouse chooses equalization: has to set off/include the gift will be
subtracted in the calculation unless expressly says does not need.
TRUST ISSUES
Investment authority To look at the scope of trustees investment authority – MUST look at the authority in the will
The lawyer should proceed as long as the lawyer is satisfied that the instructions are practicable and capable of
being expressed in clear and objective terms
Perpetuties Common law – the rule against perpetuities ( rule against remoteness of vesting)
Properties must be distributed within 21 years of death.
Before if the property was not distributed within this time, the gift was VOID
WAIT AND SEE PRINCIPLE:
Instead of gift benign VOID, the gift is ‘presumably valid’ even after 21 year until actual events establish that the
gift is incapable of vesting:
a) Within OR
b) Outside
The perpetuity period
Limits of reinvesting For will – Can not be re-invested more than 21 years after the testator’s death
income held in trusts
TAX CONSIDERATIONS
Taxed at the highest marginal rate
Exception: testamentary trust for the named beneficiary who qualifies for the disability tax credit. For those trusts
only, taxation of the undistributed income from the graduated rates is possible provided that elections can be
made.
** There are clawback rules if the beneficiary does NOT receive the benefit of the undistributed income
Rule in Saunders v. If all beneficiaries have interest in trust are at the age of majority, they can together demand the distribution of
Vautier the trust property.
Rule is based on the succession-law principle that one can not postpone enjoyment of an absolute gift.
To avoid the old Saunders rule, testators can add a condition precedent in the will.
