In every province in Canada there are laws that prevent a person from cutting a dependant out of the will. The law recognizes the obligation of a person to provide adequate support for a spouse or child after death. The spouse or child who gets cut out can go to court and ask a judge to rewrite the will to get some or all of your estate. The request has to be made within 4 months of the date of death.

The Judge will look at the value of your estate, and all of the circumstances and then use discretion to give a lump sum or an annual amount to the dependant for maintenance and support. If you give nothing  to your spouse or children who are financially depending on you for support, expect a lawsuit, guaranteed. Giving a dollar does not cut it either.

Now you may think you have good reason to cut off a spouse or child such as a gambling addiction or drug use. If you want a judge to accept your reasons you had better prepare a memo with your reasons in writing and sign that memo. If you use a lawyer to prepare a will, the lawyer will ask why you are disinheriting someone and will probably take notes and prepare a memo for you to sign. Even then, the judge may ignore your reasons. Where there has been a disinheritance or unequal treatment between children, the big question is whether there is a “logical connection” between the disinheritance or unequal treatment and the reasons for it. The reasons have to be valid and rational.

Tom Peters had three sons, ages Adam 57, Bob 55 and Charles 50 and an estate of 2 million dollars. His youngest son Charles was gay and Tom disapproved. When making his will, Tom instructed his lawyer that he did not want Charles to get anything from the estate because of his lifestyle. The lawyer said that would be unacceptable and probably challenged, and he would not prepare a will that way. An argument took place and finally Tom decided to give 1/3 to Adam and 1/3 to Bob but put Charles’ 1/3 share in trust so Charles would only get the annual income and not a lump sum. When Charles died, his lump sum was to go to Adam and Bob and not to Charles’ gay partner.

When Tom died, Charles challenged the will and the reasons. One of the brothers objected but the judge found that the father’s reasons did not hold water and gave Charles a lump sum equal to 1/3 of the estate. Homosexuality was not a good reason to treat a child unequally. Tom’s reasons were not valid or rational.

The term “Dependant” used to be thought of as  financial dependence but courts now look at a moral obligation with stunning results.

Silas Drew had 4 adult children. He left his estate of $100,000 to Alice and Bart and disinherited Caleb and Danny. They both got nothing. Silas and Danny had had a falling out when Danny was 18 and they never talked to each other or saw each other after that. Danny was 41 when his Dad died. Although he had nothing to do whatsoever with his Dad for 27 years, Danny claimed that his Dad had a moral obligation to leave him something in the will. Alice and Bart gave some of their money to Caleb but objected to Danny getting a penny since there was no relationship between Danny and his Dad. The court sided with Danny. Danny did not give up his moral claim to a share in his father’s estate. The judge felt that Silas should have done more to open communication with Danny. Since Silas gave Danny nothing in an emotional or material way, the will was his last opportunity to do right by his son. Danny got his share.

Spouses have added protection thanks to the law on marital property. If a spouse dies and gives away all or part of the marital property there will be a challenge. Marital property is the property owned by one or both spouses and ordinarily used by them and their children while they are living together. That challenge must happen within 60 days of death. Usually a spouse is entitled to half the marital property, but not always!

Ray Riddell QC

Ray Riddell QC

Your estate consists of everything you own at the time of your death. Some items that are owned jointly or have designated beneficiaries like life insurance, RRSP, homes and camps are not included in your estate. There is a great saving of probate fees and time because they pass automatically to the beneficiary. Some couples arrange for everything to be owned jointly so there is no need to go to Probate Court when one of them dies. Even if a car is owned in just one name, or a small bank account is in one name only, they may be transferred without going to Probate Court if there is a valid will.

A good rule to remember is the smaller your estate, the smaller the probate fees. A lawyer, banker or financial planner can be very helpful in making sure you pay less money to the taxman.

When you have a list of your property, you need to write down in plain English in your own handwriting your instructions as to who gets what (beneficiaries), who handles your estate (executor) and who will look after your infant children (guardian). Money given to children is held in trust by a person called the trustee. The trustee, executor and guardian may be the same person but many think that separating the roles is better since two heads are better than one. If you sign your instructions at the bottom of the sheet of paper you have made a will. You do not need any witnesses. You can also take these instructions to a lawyer and have a formal will prepared and signed by two witnesses. Your lawyer may have some helpful advice and if you give the lawyer your instructions before you meet it  will save time and money.

For most couples, the decision is simple. Most couples leave everything to each other and appoint the survivor to handle the estate (executor). The spouse is familiar with the financial details and will usually be supported by family and capable advisors when necessary. It is important to have a back up plan in case your spouse dies before you or at the same time. In that case it is common to appoint a backup executor to handle the estate and to lay out  a backup plan for dividing their estate.

Most commonly, but not always, the surviving parent will leave everything to the children. The children may be infants and in that case there are some additional considerations such as appointing a trustee to look after the money.

If all of the children are adults the best way to create a future battleground is to treat children unequally. More family disputes happen after the death of a parent and the majority of those disputes result from a perception of unfairness. Money from an inheritance can increase the quality of life and open up opportunities that could not have been possible before, but human traits such as greed and anger can be magnified and without Mum or Dad around to settle the squabbles, brothers and sisters may never talk to each other again.

Parents who treat adult children unequally claim to have good reasons. One child may be in need and another well off. Unfortunately, life changes and what you see now may change and roles could be reversed. Parents may also want to punish a child for something done in the past. A will is not the place or time to do that. I knew of one widow who actually cut off her son because he did not show up for Mothers Day. She did not imagine the permanent damage she caused to her family. Dividing the estate equally among the adult children and appointing them all as executors reduces the chances of an all out war.

Ray Riddell QC is a resident of Woodmans Point, NB. He practised law in Halifax, Nova Scotia for 30 years with particular focus in probate, property, labour law and civil litigation. He is presently on sabbatical.

You know that dying without a valid will is not only costly but you lose control over all of your belongings and they may not go to the people you had in mind. The hassle will cause your family added stress at a very difficult time in their lives and if you have a common law partner or step children they may be ignored completely. Most family arguments happen right after the death of a parent so to avoid all of this you have decided to face facts and write a will but where do you start?

First, set aside some private time to think about making your will. Then, make a list of everything you own (called “property”). You own two types of property. “Real property” is real estate like your house, farm or camp. Everything else you own is called “personal property” and includes your car, boat, RRSP, snowmobile, ATV, furniture, clothes and cash.  When you die, all of your property is called your “estate” and the person you choose to look after your estate (called the executor) will need this list. Also, by making a list now you will have some idea of your net worth (that may be a good thing…or maybe not). Collect all of your deeds, insurance policies, tax returns and other important documents and put them in one safe fireproof place.

Free pamphlets are available from the Public Legal Education and Information Service of New Brunswick and most banks have free checklists to help you make your own list.

Decide on who you want to have your property after your death (beneficiaries). There are laws that prevent you from cutting out dependents so your choices are limited. If you wish to give to charities, contact the charities and they will send advisors to assist you. Consider gifts of part of your property now rather than after you die. There is no gift tax and a gift now may provide a great benefit to a family member in need.

After your death, your executor will need approval from the Probate Court to handle your estate. That means paying fees based on the value of your estate. Look at your list to see if any items can be passed to a beneficiary directly to avoid extra tax. Your house, RRSP, bank accounts, and life insurance proceeds are examples. You can reduce or eliminate probate fees by basic planning. For example, your house or camp can pass automatically to your partner, with no probate fees, if you own the property jointly (and vice versa). Check your deed to see if you do own property jointly. If not, consider changing your deed to make this happen. Consult a lawyer if you are unsure

Another example is life insurance. If the beneficiary of your life insurance is your estate, the money goes to your estate when you die but probate fees have to be paid on the full amount and the money may get tied up for over a year. Designating a beneficiary means the money goes directly to the beneficiary with no probate fees and no hassle. Check with your insurance agent and make sure you have selected a beneficiary to get the insurance proceeds right away after your death.

An RRSP has special tax considerations. A little mistake can cost your estate a lot of money. Take the example of Jack Davis. Jack had an RRSP worth $100,000 and cash of $100,000. He wanted to treat his wife and daughter equally when he died, so Jack left the RRSP to his daughter and the rest of the estate ($100,000) to his wife. Jack did not know that if he left the RRSP to his wife it would be tax free. Sadly, because Jack got it the wrong way around his estate had to pay tax on the RRSP out of his cash, leaving his wife with only $50,000 after tax. If Jack had designated his wife to be the beneficiary of the RRSP and left the cash to his daughter, each of them would have received $100,000. A quick call to a financial planner would have saved $50,000. As it was, the taxman received the benefit. If you have an RRSP, RRIF or the new tax free savings account, better check with your financial planner or friendly banker to see if you have designated beneficiaries. If you haven’t, the taxman will be a very happy camper.

Joint bank accounts can be a real problem and I’ll deal with them in my next article.

Over the next ten years or so we will see the largest transfer of money between generations that the world has ever seen. Boomers, having built huge nest eggs, will be passing them on to their kids. Unfortunately, these good intentions may fail due to the lack of a valid will.

Even though everyone is telling us to make a will, many of us still have not taken the necessary step of putting our wishes in writing. By provincial law a will is valid only if it is in writing.

A will allows someone to say who gets what and to choose a person (called the executor) to look after the belongings and get them to the right people. While there is a proper legal way to sign a will in front of two witnesses, it is possible to make a valid will by putting down what you want in handwriting and signing it without these formalities. It can be done without a lawyer but the cost of a simple will, properly prepared by a lawyer, is very reasonable and will save considerable heartache down the road.

A few real life cases show some of the problems with not having a will. The names have been changed.

Jack and Mary Davis were retired and received financial advice to open separate bank accounts so they would each get interest income. Jack transferred $200,000 from the joint account to Mary and she put it in her new bank account. Sadly, Mary died right after the transfer without a will (intestate) and the bank would not allow Jack to get back the money from Mary’s account. Jack had to call a lawyer and apply to the court for permission to look after Mary’s estate. Even though Jack and Mary had been married for 48 years, the court required Jack to post a bond for $250,000 and have two friends put up their property as security before they would let him look after his wife’s property. Since Jack did not want to approach friends to put their property up, he was forced to call a bonding company who asked for a hefty fee before they would  give Jack the bond and asked for three years payment up front. Jack had no choice. The substantial cost of the bond and the lawyer (not to mention the emotional turmoil) could have been avoided if Mary had written on a piece of paper “I leave all my property to my spouse Jack and appoint him to be the executor of my estate” and signed it. Something seemingly so simple had been overlooked with terrible consequences.

Alice was 44 when her Dad died without a will. Her three brothers and two sisters were shocked when Mom told them that she and their Dad had never been married but had been living common law for about 50 years. They were doubly shocked to find out that their Dad had been married before, had a daughter from that marriage, and he never got  a divorce. When Alice called a lawyer she was devastated to hear that the law did not recognize Mom and Dad’s common law relationship, only the legally married wife from 50 years ago, and that all of Dad’s belongings would go to the first wife and child as there had never been a divorce. Her mother would receive nothing!

If only her Dad had written on a piece of paper “I leave all my property to my common law partner Jane Seymour and appoint her to be the executrix of my will” this disaster could have been avoided.

Procrastination, fear of dealing with lawyers, and uncertainty of the cost are some reasons people give for not having a will (or updating an old one). The bottom line is that everyone needs a will in order to control who gets what after death and that the job of making sure that is done is carried out by a carefully chosen person. The end result is less aggravation and less cost. So why are you waiting?