Plan Your Will - One That Does What You Want
- List your assets and liabilities;
- Choose your beneficiaries - those who will receive what you leave;
- Choose your executors - those who will manage and distribute your estate;
- Make it clear and precise, so that you and your executors understand it; and
- Review it from time to time and when your circumstances change.
LIST YOUR ASSETS AND LIABILITIES
Make a list of your assets - your house, your cottage or farm, your investments, your pensions and savings plans and life insurance. Is the title to the real estate in your name or in your spouse’s name, or in both? What are the approximate values?
Who are the beneficiaries named in your life insurance policies and in your savings plans - your spouse, your estate? Do you have personal things - jewellery, art - of special value?
Have you loaned money to people in your family? Have you made substantial gifts to your children? Have you set up any trusts for your family? Do you expect to receive something when a relative dies?
Do you have an interest in a private business? What are the arrangements for selling your interest when you retire or die?
Make a list of what you owe - the mortgage on your home, bank loans, private loans. Calculate the tax that you would have to pay if you sold everything now.
As a rough figure, in most estates, it costs between 2% and 6% of the gross value to administer an estate. Include this as a debt of your estate.
By summarizing your assets and liabilities, and by deducting the administration costs, you can see what is left for your beneficiaries.
CHOOSE YOUR BENEFICIARIES
With few exceptions, you can leave your property to any person, organization or charity. You can treat your beneficiaries unequally and you are under no obligation to explain why. You can leave particular items outright (such as a house, cars, paintings, or bank accounts). You can require your property to be sold and then leave the proceeds. You can delay a gift by setting up a trust—the trustee then holds the property until an event of your choosing.
However, there may be claims on your estate. Your husband or wife may elect to receive a share under the Ontario Family Law Act. A dependant (for example, a child or parent) may also be entitled to support from your estate. There may be other claims; for example, if someone has made substantial contributions to your property and was never compensated, they may have a claim to part of that property. You should speak to your lawyer and plan for these possibilities.
If you are married and have children, you and your spouse may choose Wills leaving everything to the survivor, and when the survivor dies, everything to the children. If you are widowed, you may choose to divide your estate among your children. If so, should it be divided equally? If a child dies prematurely leaving one or more grandchildren, should the grandchildren receive the share that the deceased child would have received?
If you are not married, you may choose beneficiaries from among your family, friends, and charities.
CHOOSE YOUR EXECUTORS
In your Will, you name your executor or executors and you tell them how to manage your assets and how and when to distribute to your beneficiaries. In most estates, the executors have much to do. They plan how to pay the debts and the taxes, how to have money for your dependants while the estate is being administered, how to set up the trusts that you have in your Will, and how to distribute the estate. They file tax returns, keep accounts, look after the assets, make investments, and report to the beneficiaries.
They should be sensitive to the needs of your family; they should be able to do the job and to know when to get help and from whom. You should not expect them to do the clerical work; they should be permitted - indeed encouraged - to have someone else do administrative things such as keeping the accounts, doing the tax returns, and the like.
When there are trusts in the Will, they decide how to invest the funds and when and how to pay amounts that go to the beneficiaries of the trusts.
Often, a married person who leaves everything to his or her spouse (or to the children if the spouse doesn’t survive the one making the Will) names the spouse as the sole executor, and also names someone else if the spouse doesn’t survive - perhaps the children, or some of them. Some people choose a professional trustee - a trust company - or authorize the executors to hire a trust company to do the administrative work. Some people choose one or more persons and a trust company as co-executors.
Be aware of naming an executor who may have a conflict between his responsibility as executor and his personal interest - as a beneficiary, or as a possible purchaser of an estate asset, or for some other reason. If there is a possible conflict, you might not name that person, or you might name a co-executor so that the person with the conflict won’t have to act alone.
When you have a trust fund in the Will, there will be two stages in the administration of your estate. First, the “executors” pay the debts and taxes, distribute the amounts to go outright to beneficiaries, and allocate assets to the trust funds; then, second, the “trustees” administer the trust funds. Often, the executors and the trustees are the same persons, but they need not be. You can have different executors and trustees, and different trustees of different funds. For example, if you are going to have trust funds for your grandchildren, you could have the parents of the different grandchildren as the trustees of their children’s trusts.
MAKE IT CLEAR AND PRECISE
Both you and your executor(s) need to understand your Will. Make it precise—what happens if your beneficiary dies before you? How long should a trust fund last? What things should a trustee consider in managing the fund? Who should look after your children?
Speak to a lawyer. In addition to helping you express your intentions on paper, your lawyer can advise about taxes, court fees, problems with the Will, and difficulties with any trusts.
WHEN TO REVIEW YOUR WILL
Review it when your circumstances change - marriage (normally, marriage revokes a prior Will), separation, divorce, children, children growing up, when someone you name as an executor can no longer do the job, when you dispose of assets that in your Will you give to someone, and when your assets or debts or tax position change substantially.