Wills and Estates – Common Law Basics of Wills, Estates, and Trusts
It may seem intimidating and morbid to think about how you want to distribute your assets after you die. However, we like to think of it as making the necessary preparations to ensure that your loved ones do not need to go court to resolve disputes over assets.
We understand that there is a lot of consideration before you can even begin to draft a Will to dispose of your Estate property or set up a Trust. For this reason, we have simplified the terms and concepts for you below as an introduction.
A Will provides information on how you would like to distribute your assets after you die. In Ontario, Wills are governed by the Succession Law Reform Act.
An individual who dies with a valid Will is considered to have died testate. This individual is called the testator for males or the testatrix for females.
An individual who dies without a Will is considered to be intestate.
In some cases, an individual can be partially intestate if the deceased validly disposed of some but not all assets in accordance with the terms of the Will. The recipient of an asset(s) is called the beneficiary.
Types of Wills
1) Attested Wills: This is your typical witnessed Will.
2) Holographic Wills: A testator may make a valid Will wholly by his or her own handwriting and signature, without formality, and without the presence, attestation or digital signature of a witness.
3) Privileged Wills (military service): A written Will be signed by the testator, or by some other person in his or her presence and by his or her direction, without any other formalities
4) International Wills: A Will drafted in accordance with the Uniform International Wills Act which prescribes a set of minimum standards to make Wills legally acceptable in each country that signed the convention.
A Will is valid when it is prepared and meets the formalities required in the Succession Law Reform Act. An attested will must be:
- In writing;
- Signed at the end by the testator, or another person in the testator’s presence under his or her direction;
- The signature must be signed or acknowledged in the presence of two or more witnesses, present at the same time;
- Two or more attesting witnesses must sign the Will in the presence of the testator
- If a Will does not comply with the formalities of execution prescribed in the Succession Law Reform Act, a court Will consider it invalid and proceed to dispose of assets as if the Will did not exist.
- A valid Will only becomes effective after the testator’s death.
- Ambulatory recognizes that a Will can expand and contract over time to consider assets that a person acquires over their lifetime. You do not need to change your will every time you acquire a new asset (e.g. buy a car) because your will should be drafted to include future additions or subtractions of assets.
- A Codicil is an amending document that supplements, explains, or modifies the Will in some manner. If the change is minor, drafting a codicil is the least expensive option.
- Anyone can contest a Will if they do not like how the assets within it are disposed of. However, the probabilities of success vary depending on the contester’s relationship to the deceased.
- You must be at least 18 years old to write a Will, unless:
a. You are serving the military on active duty, where you may draft a Will if you are younger than 18 years old; or
b. You are younger than 18 and have recently married, then you can draft a Will because you have taken on the responsibility to provide for your spouse and must make accommodations.
- To be valid, the language used in the Will must express the testamentary intentions to dispose of the testator’s property instead of reflecting mere wishes.
- In order for a Will to be valid, you must have the capacity to execute the Will, meaning:
1) You must have actual knowledge of the contents in the Will and approve of its contents
2) You must sign the Will voluntarily, free of any undue influence or other forms of fraud
3) You must not operate under certain mistaken beliefs
The “Estate” includes all of the property, financial assets, and debts at the time of an individual’s death, including:
a. Realty: All real property owned by the individual; and
b. Personalty: All other property owned by individuals other than real property, including monies, investments, stock certificates, automobiles, personal effects, and furnishings.
In Ontario, estates are governed by the Estates Act.
An Estate Trustee sometimes referred to as the executor, is the person who is responsible to distribute the gifts set out in a will after paying any outstanding debts of the deceased, and filing taxes on the estate.
The Estate Trustee derives authority from the Will itself, which is validated by a Certificate of Appointment.
Probate is a procedure asking the court to:
- Give an individual the authority to act as the estate trustee of an estate, or
- Confirm the authority of an individual named as the estate trustee in the deceased’s will
- Formally approve that the deceased’s will is their valid last will.
The Estate Trustee may hold gifts in trust for some time if the beneficiaries are minors. Trusts impose conditions which must be met before the beneficiary can receive the gift, the most common is that they reach the age of majority of 18 years old.
In other words, Trust is a three-way relationship:
Settlor –> gives property to –> the Trustee, to hold on behalf of –> the Beneficiary
- Testamentary Trust is a Trust that is created on the testator’s death. The Terms of the Trust are established either by the Will or by a court order.
- If the assets are not disposed of in a will, (i.e. the deceased died without a will), or court order, the assets will be deemed an Inter Vivos Trust.
- Inter Vivos trusts may be an obligation or debt to pay a certain amount to a beneficiary, any other person, or partnership with whom any beneficiary of the Trust does not deal at arm’s length.
- In Canada, Trusts are taxable.
Consider preparing ahead of time to save yourself and your loved ones many headaches later. Our specialist Wills and Estates Lawyers will work with you to plan for the future and ensure that your loved ones are cared for.
Nothing in this article should be considered or relied on as legal advice or opinion. This article only provides general information and should you require assistance, please contact us to book a free initial consultation 905-366-0202 or through our website here.