A Power of Attorney for Personal Care, along with a Will and a Power of Attorney for Property, make up the basic estate document package in Ontario. For a discussion of the issues you need to consider in creating a Power of Attorney for Personal Care in Ontario, Click Here, and for a discussion of issues you need to consider to in creating a Power of Attorney for Property in Ontario, Click Here.
The featured image for this blog article is the Martyr’s Shrine, Midland, Ontario, Constructed In 1926.
The following are the topics we will address in this Article:
How to create a Will in Ontario
What happens if you die without a Will?
Issues to consider in choosing your Executor
Key Takeaway
How do you Create A Will in Ontario
At the risk of being trite, it is important to clearly understand that a Will is a legal document that you create while you are alive which provides what you want to be done with your property when you pass away, and who you want to step into your shoes to take care of your affairs when you are gone.
Ontario law provides two different ways that a valid Will can be created. The first and definitely the easiest way to create a valid Will is to write out in your own handwriting what your testamentary wishes are (what you want to have happen on your passing) and sign the document with your normal signature. This is called a “holograph Will” and is expressly allowed under Section 7 of the Succession Law Reform Act, Ontario (the “SLRA”) which is the primary legislation in Ontario that deals with Wills and estate matters. Although easy to create, the holograph Will has led to a lot of litigation over the years with the primary issues being whether the handwriting on the document is really that of the deceased person and whether the document represents the final testamentary intentions of the deceased.
It is not hard to think of situations where someone who is not entirely sober or otherwise of sound mind writes out a note which says “I leave everything to my best friend Bob Jones” and signs the note. The person then forgets about the note and dies without ever having created a new Will. The signed note is later found in his effects. On its face, this is a valid holograph Will. However, there are obvious issues with this document and it may be contested by other persons in his world. As lawyers are apt to say, holograph Wills are a recipe for litigation.
The second way to create a valid Will is to set out your testamentary wishes in a written document (does not have to be hand-written), and sign the document in the presence of two witnesses who must also sign the document attesting to the fact they both witnessed you sign the document. This is your standard “lawyer-prepared” document. The obvious benefits of doing your Will in this fashion are that its validity is much less susceptible to being attacked, and your lawyer can assist you in ensuring that the Will clearly expresses your testamentary wishes and addresses all the important issues that should be addressed in a Will.
The decision of whether you incur the expense of hiring a lawyer to prepare your Will is yours, but a Will is an important document. Spending the money to make sure it is done right is likely one of the better investments you will make in your life.
What happens if you die without a Will
Clients frequently ask us what happens if they die without a Will. With respect to your property, it will be distributed in accordance with the Ontario intestacy rules which are set out in Part II of the SLRA. These rules set out a listing of persons who are related to you starting with your spouse and children and ending with more distant “next of kin” relationships. The disposition provided by these rules may have no relation whatsoever with how, and to whom, you would like your property to be distributed. If you do not have living relatives as specified by these rules, your estate will pass to the Government of Ontario.
Perhaps a bigger risk for many people is that if you die without a Will you run the risk that no one comes forward to act as your estate trustee, or that no one comes forward to act as the guardian of your minor children. Even worse is the scenario where multiple persons seek to be appointed to one or both of these positions with a resulting court fight over who will ultimately be appointed at the expense of your estate.
Obviously, this later situation is not something that is in the best interests of anyone. The resulting stress and animosity that this type of court proceeding can cause in the family setting often lasts for decades. By carefully considering who would be the best person or persons to act on your behalf in these capacities, and ensuring that these persons are comfortable in acting on your behalf by discussing the appointments in advance, you can save your family a great deal of stress and expense, and allow a much smoother transition on your passing.
Issues to Consider when Choosing an Executor
There are many things that should be considered and discussed with your lawyer in the process of having your Will prepared. However perhaps the most important decision you need to make is who you will appoint as your executor. The following list is far from exhaustive. However, considering the following issues in choosing your executor is a good starting point.
Trust. The person you appoint as your executor is the person who will step into your shoes and attend to your affairs pending the realization and distribution of the assets of your estate to your beneficiaries. The name “executor” comes from the fact the person appointed is legally responsible for “executing” the terms of your Will. The person appointed to this position is also referred to as your “estate trustee”. If the person appointed fails to follow the terms of your Will, the beneficiaries of your estate will have recourse to the courts to force the appointed executor to comply with what has been provided in your Will.
Needless to say, given this authority, you want to appoint someone in this position who you are 100% confident will deal with your estate honestly, who will “execute” your instructions as set out in your Will in good faith, and who will deal with your estate with the best interests of the beneficiaries in mind.
Comfort Level with Legal and Financial Matters. An executor will be responsible for dealing with matters that are primarily of a legal and financial nature. You have may someone in mind to be the guardian of your minor children who is very caring and nurturing. However, this person may not be the right person to be appointed as your executor as the knowledge and skills necessary to competently execute the functions of a caregiver are not necessarily the skills necessary to competently execute the functions of an executor.
Number of Executors to Appoint: It is possible to appoint more than one executor. This is often done to create a “sounding board” effect such that no one person has full control over the estate assets. This may be more important for larger and more complicated estates, but the effect is the same no matter how large the estate. If you do appoint more than one executor and one person cannot act for any reason including predeceasing you or passing away before the administration of the estate is complete, the other jointly appointed executors retain legal authority to act. If you feel you only need to appoint one executor, you should at a bare minimum appoint an alternative in case the person you appoint can’t act as your executor for any reason. If this happens someone else may have to make an application to court to obtain the authority to deal with the estate which is never a good solution to an estate issue.
Availability. Ideally, the person you appoint as your executor should be someone who is local or at least someone who resides within a reasonable travel time to your residence. The functions of the executor include looking after your estate until these assets can be dealt with in accordance with the instructions in your Will. This will include managing any real estate you own as of the date of your death, and any vehicles you might own. It is quite difficult for a person to deal with these issues from a distance. In addition, Ontario estates law provides that if an appointed executor is a non-resident of Ontario, this person will have to post a bond to secure the value of the estate or obtain an order from the court waiving the requirement to post this bond. This adds an additional layer of complexity and cost to the process that is avoidable by appointing residents of Ontario as your executors.
Estate Assets requiring specialized Expertise. If you own your own business, you may want to consider appointing an executor who has the expertise to operate your business after your death to ensure its value is protected. If this is the case you may also want to consider a “multiple Will structure”. The details of how this structure are beyond the scope of this article but if you are self-employed, it should be discussed with your lawyer.
Executor Compensation: An executor is a special type of trustee that is appointed by a Will. The legislation governing trustees, which term includes executors, is called the Trustee Act. Section 6(1) of this statute states that a trustee is entitled to fair and reasonable compensation for the care, pains, trouble, and time expended in administering an estate.
Over the years a “rule of thumb” has evolved in Ontario whereby the executor of an estate will be entitled to compensation equal to five percent (5%) of the total value of the estate. However, this is only an approximation and is subject to adjustment (up or down) based on a number of factors by a Court which includes an adjustment downward for any fees paid by the executor to third parties for services that the executor is normally expected to perform. The fee payable is also not a fee for each executor but must be split between executors if there is more than one executor appointed by the Will.
You can also provide in your Will what fee will be payable to your executors for acting as such, and this is an especially good idea if you set up testamentary trusts in your Will that may be in existence for many years. However, it is highly recommended that you discuss the fee structure you wish to employ with your proposed executors as he or she can renounce the appointment if they believe the work and time commitment involved is not worth the fee you have provided in your Will.
Key Takeaway
Creating a valid Will that clearly sets out what you want to have happen on your passing is important. To do this properly a lawyer needs to consider your entire family and financial situation. It may be that a basic Will is appropriate for you and your family, but this can only be determined by having full disclosure of your circumstances to make a determination as whether a more complicated estate plan is warranted. At end of the day, there is no “one size fits all” estate plan and full and complete disclosure of your affairs is required to ensure all important issues are addressed.
This article has been prepared by Security Plus Law for informational purposes only. It is intended to provide general information with respect to the topic discussed. It is not intended to provide actionable legal advice with respect to any particular fact situation, and we expressly exclude any liability for unauthorized reliance on the contents of this article without first obtaining our written consent. If you need legal assistance with respect to any issue discussed in this article, or would like a consultation with us, complete the request for a consultation above, or email us at info@securitypluslaw.com including your name, phone number, and best time to call, and we will get back to you usually within 24 hours.
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