Estates and Succession Practice Group

From the corporate client to the individual, our Ottawa area Estates and Succession Practice Group offers a diverse range of services in estate planning, business succession planning, estate administration, estate litigation and estate mediation to suit your needs. Estate and Succession Planning is critical to ensuring financial security and members of our practice group advise our clients of the most advantageous method of organizing their affairs.

Our team of Ottawa lawyers in the Estate and Succession Planning Practice Group will provide you with creative and up-to-date solutions in the following areas:

  • Estate Planning through the drafting of Wills and Powers of Attorney for Personal Care and Property;
  • Personal Tax and Estate Tax Planning including the drafting of family trusts, adult trusts, estate freezes, life insurance trusts, spousal trusts, inter vivos trusts, Henson trusts for special needs beneficiaries, variation of trusts, multiple Wills, post mortem tax planning, and administration of trusts;
  • Succession Planning for businesses including corporate reorganizations, shareholder agreements, use of life insurance, variable share structures, and tax advantageous dispositions;
  • Mental Incapacity Matters including guardianship and capacity issues;
  • Charitable Donation Planning including public and private foundations;
  • Estate/Power of Attorney Administration including the passing of accounts for trusts, estates and attorneys under powers of attorney, asset inventory, distribution of estate assets, filing of estate documents, interpretations of wills and trusts, and executorship duties;
  • Protection of Minors including appointing guardians and establishing trusts for minor children;
  • Property Issues including ownership options to ensure estate planning goals are achieved; and
  • Litigation/Alternative Dispute Mechanisms including capacity issues, estate disputes, and Will interpretation issues.

Lawyers Practicing in Estates and Succession Law

Harry A. Gregoropoulos
Andrew Higdon
James Jeffcott
Laura Kerr
Jean-François Laberge
John N. McFarlane
Kenneth Radnoff
Douglas Smyth
Alaina Spec
Michael Wong

Questions?

How do I find out if I’m a beneficiary of my uncle’s estate?

This may not be as simple as it sounds. Having the whole family meet at the lawyer’s office for a solemn “reading of the Will” may happen in movies, but not generally in real life. Instead, you’ll be faced with one of the following scenarios:

If your uncle made a Will naming an executor (usually a family member, friend, lawyer or other professional, or even a trust company) who is willing to administer the estate, and if the estate includes assets for which a probate application is required (such as real estate in your uncle’s name alone, or a large investment account without a joint owner or a designated beneficiary), then the executor will be required to provide written notice to all beneficiaries named in the Will of their interest in the estate at the time of filing the probate application with the court. Often the executor will give you informal notice even before the probate application is made, or you can ask for information.

If standard enquiries to your uncle’s family members and lawyer don’t produce a Will, someone can do a Wills search at the court and publish a Notice in a newspaper or legal publication asking whether anyone knows of a Will. If your uncle lived in several different places during his lifetime, you may have to repeat this search in each city.

If, after diligent searches have been conducted, it appears that your uncle didn’t have a Will, but someone volunteers to administer his estate, then again you should be notified as part of a court application if you are entitled to inherit. If there is no Will, a nephew or niece will only inherit if the deceased had no living parents, children or spouse, and if the deceased’s sibling who is your parent had died. If you are a potential beneficiary under this test, then in fact you can make the application to administer the estate. Generally, you would have a lawyer help you prepare the court documents, including written consent to your appointment, in the particular form required by the court, by any other living siblings and by the children of any other deceased siblings of your uncle.

If you think you may be a beneficiary but no-one is giving you information, then there are several standard court processes that might help you, including a probate search (to see if someone has already made an application to administer the estate), a request for notice of any probate application that might be brought in the future, a motion to have the Will or any similar document produced by a person who might have possession of it, or a motion for an order requiring either the named executor or, if there was no Will, your uncle’s closest family member, to accept or refuse an appointment as estate trustee. A lawyer will be able to help you determine whether you are entitled to ask for any of the above, and how to go about doing it.

I heard that if I leave my estate to my disabled son, the government will claw it all back. Is that true?

Not exactly. The government won’t take your estate. However, if your son is in receipt of Ontario Disability Support Program Benefits (“ODSP”), then his benefits could be clawed back if he inherits assets that are not on the approved list of exempt assets. Exempt assets include a principal residence, a second property if approved for the health and well-being of your son, a motor vehicle, a second motor vehicle valued up to $15,000 if needed by a dependent of your son for work, a prepaid funeral, tools of the trade that are essential to your son’s employment, $20,000 in business assets and $5,000 of other assets. An inheritance that initially comes in any other form may be converted into an exempt asset (e.g. cash can be used to purchase a house for your son to live in), in which case your son’s entitlement to benefits should only be suspended until the conversion.

In addition to the exempt assets mentioned above, there are three ways to hold cash and investments in the form of an exempt asset. First, all or part of an inheritance that initially comes in a non-exempt form can be put into a trust for your son (meaning that someone else will hold the assets on behalf of your son and make payments to him or for his benefit). The only assets that can be put into a trust like this are inherited assets or life insurance proceeds, and the cumulative lifetime limit of contributions to such a trust (from all deceased persons, not just you) is $100,000. So long as all payments made out of the trust are either used for disability-related items or services, or fall within the standard annual income limit of $6,000 in each 12 month period, then neither your son’s interest in the trust nor the payments will impact his eligibility for ODSP benefits. Second, if your son is under 59 and qualifies for the disability tax credit, all or part of his inheritance can be put into a registered disability savings plan, instead of or as well as the inheritance trust. Any assets can be contributed to an RDSP and the cumulative lifetime limit of contributions is $200,000. Neither your son’s interest in the RDSP and any payments made to him from the RDSP will impact his eligibility for ODSP benefits. To create either a trust or an RDSP, either your son must be mentally capable of creating a trust or opening the RDSP, or he must have an attorney or guardian for property (or a parent, if he is still under the age of 18) who can create the trust or open the RDSP on his behalf.

The third way to hold cash and investments as an exempt asset for ODSP purposes is the most flexible but must be planned in advance. Instead of leaving your son’s inheritance to him as an absolute gift with no strings attached, consider giving it to him by way of a “Henson trust”. In essence, this is a trust where your son’s entitlement to income and capital is entirely within the discretion of the trustee, meaning that your son has no enforceable right to receive any part of his inheritance either upon your death or subsequently. There is no limit to the value of the assets that can be contributed to a Henson trust, and there is no requirement that your son be mentally capable or have an attorney or guardian for property, but it is critical to choose one or more trustees who are sensible, detail-oriented, trustworthy, and have your son’s best interests at heart. Again, while your son is on ODSP benefits, payments out of the trust should be made with consideration of the income limits imposed by ODSP in order to ensure that he does not lose either the income support or other valuable benefits such as prescription drug coverage.

Can I challenge what I got under Mom’s will?

Of course you can. The real question is whether it is worth it.

The starting point is to remember that in Ontario a testator has absolute reign to leave his or her estate to whoever he or she wishes, with a very limited exception related to certain public policy constraints. Very limited. If your mother decided to leave everything to her neighbours, she is completely free to do so.

However, this all assumes two things: first, that Mom had testamentary capacity, and second, that she was acting completely of her own free will. Because the law presumes the validity of a will, it is up to you, the challenger, to prove that the will is not valid, and that is no easy task.

Proving that Mom did not have testamentary capacity when she wrote her will is particularly difficult because she is no longer around to examine. By definition you are into secondary sources of evidence. No matter how firmly held are your suspicions, such evidence is difficult to find and is rarely of the “slam dunk” variety. Nevertheless, wills are set aside in Ontario on the basis that a court is satisfied that the testator lacked testamentary capacity.

Wills are also attacked on the basis that Mom was not acting freely of her own initiative but that someone else was controlling or influencing her decisions. This is frequently seen where older people have become physically or emotionally dependent on someone, often a “new” person who has come into the senior’s life. While there may be nothing wrong with Mom leaving a caregiver a gift, even a handsome one, it becomes highly suspicious when Mom leaves the entire estate to the caregiver and cuts out her own family.

As can be imagined, many will challenges proceed on the dual bases of lack of testamentary capacity and undue influence because they often revolve around the circumstances of a fragile older person.

There is also another area of examination, and that is clerical error. In some rare cases the court will accept evidence that an error or omission arose because of oversight or mistake on the part of the lawyer or other person who drew up the will. This might succeed, for instance, where there is a glaring discrepancy between the lawyer’s intake notes and the final product, with no explanation for this.

Will challenges are not for the faint of heart. They can be costly not only in terms of money, but also in terms of emotional energy and potential wreckage of relationships. We regularly prosecute and defend such cases, but the client must always remember that the fight is likely to be bitter and difficult. Before you launch into such an action you need to have a very serious discussion with your lawyer, and with family and friends, about the implications of beginning a will challenge.

Can I put my home and investments jointly with my children to avoid probate fees?

Of course you can, but it may not be such a good idea. Let’s consider a few things.

First of all, “probate fees”, properly known as Estate Administration Tax, amount to roughly 1.5% of the value of the probated estate. In estate matters, there are far more significant tax matters to consider first. So, the discussion is worth having, but keep things in perspective.

Second, putting property into the kids’ names can actually set you and them up for a tax disaster. Consider your home: while you are living in it you will be exempt from Capital Gains Tax. Unless your kids are living with you, they cannot claim the Principle Residence Exemption. Let’s say your home is valued at $500,000 today and you put it into joint tenancy with your two children. Ten years from now, upon your death, the house is worth $800,000. The value increase of $300,000 is a capital gain. Your 1/3 is exempt, because it was your residence. No such luck for the kids– they had their own homes. Consequently each of them will have a $100,000 capital gain. Under current rules they would bring half of that into income, so they would pay income tax on an extra $50,000 in the year of your death. The Estate Administration Tax saving of $12,000 pales in comparison.

Another risk you face is that when you put your property in the kids’ names, you are exposing your property to all the matrimonial and creditor risks they personally face.

You also miss the opportunity to use trusts such as Henson Trusts, spendthrift trusts or residence trusts which you can do under a will.

Although we normally recommend against it, to be sure, there are rare situations where we will sometimes advise that it be considered. Typically this is the case where an individual has a terminal condition and it is clear that they have a very short time to live. In such a case, most of the above risks are minimal, and the “probate fee” saving is worth the time and cost of the legal work necessary. Every case needs to be discussed and evaluated.

We should also point out that in most planning situations where this question is asked there is usually a better option, namely setting up an Alter Ego or Joint Partner Trust under the Income Tax Act. Such a device can provide the Estate Administration Fee savings, but without exposure to most of the risks mentioned. Again, every case needs to be discussed and evaluated.

A friend told me he has a “primary” and a “secondary” will. What is that all about?

This has to do with “probate” and “probate fees”, more accurately called Appointment as Estate Trustee and Estate Administration Tax.

In simple terms, when you make an application to be appointed Estate Trustee, you will be required to submit the related Estate Administration Tax of roughly 1.5% of the value of the estate. But, once you have been appointed Estate Trustee, all arm’s length parties such as banks, investment houses and purchasers of real estate will need to deal with you because you have the authority of the Superior Court behind you. See our article “What is Probate and Why Do I Need It?”

But there are many instances where you would not need the authority of the court in order to transact business. Let’s take an example: the deceased owned 50% of the shares of a private corporation which was in the plumbing business. There was key-man insurance in place, and a shareholders’ agreement which obligates the surviving shareholders to buy the shares of the deceased. These are people who used to work side by side with the deceased, who know his family well and are likely on a first name basis with the executor. They have no reason to doubt the will of the deceased or be sceptical about dealing with the executor– everything lines up exactly with what they expected. So, who needs to have the will proved or the associated taxes?

As the law of Ontario now stands, the workaround for this situation is for the testator to have two separate but simultaneous wills, one of which is often called a Primary Will and the other of which is often called a Secondary Will. The Secondary Will deals with all manner of assets where “probate” would not be required, such as private company shares, collectables, certain kinds of real estate, etc.

This is not something you should try at home– unless it is done with great care there is a significant risk that rather than ending up with two wills, you will end up with none, or with one which only does half a job. But given the significant tax saving available, the multiple will scenario often yields a great return on the investment in professional fees.

What happens if I die without a will? Does the government get everything?

The government might get everything, but it’s pretty unlikely. Here’s how it works:

If you die without a will, the law provides a scheme of distribution for your net assets after debts and taxes. There is a preferential share for a spouse, then a division amongst spouse and children. If you are unmarried and have no children, the division works its way out the family tree beginning with the closest degree of relationship.

Only if no living relatives can be found, will your worldly goods go to the government. In technical terms, if nobody else can prove ownership, property is said to “escheat to the Crown”. This situation is very, very rare.

The more important question is, “If I die without a will, does my net property go to the people I want to benefit?”

What happens if I lose mental capacity and haven’t named an attorney for personal care?

Substitute Decision Maker

A substitute decision maker is the person who can provide or refuse consent to medical treatment if you are incapable of providing that consent.

Ranking

In Ontario, the Health Care and Consent Act provides that the person who ranks highest on the following list becomes your substitute decision maker provided such person meets the criteria described below:

  1. Your Court appointed guardian of the person;
  2. Your Attorney for personal care;
  3. The Representative appointed by the Consent and Capacity Board;
  4. A spouse or partner;
  5. A child or parent (this does not include a parent who has only a right of access);
  6. A parent who has only a right of access;
  7. A brother or sister;
  8. Any other relative including a person related to another person by marriage or adoption; and
  9. The Office of the Public Guardian and Trustee.

Two persons are not spouses for the above purposes if they are living separate and apart as a result of a breakdown of their relationship. Further, if two or more persons described in the same paragraph above disagree about whether to give or refuse consent, then the Public Guardian and Trustee shall make the decision.

Requirement

The substitute decision maker must meet certain requirements, including:

  • is capable of giving or refusing consent
  • is at least 16 years old
  • is not prohibited by court order or separation agreement
  • is available; and
  • is willing to assume the responsibility of giving or refusing consent.
What is a Power of Attorney for Personal Care?

The statutory ranking for substitute decision maker may not reflect your preference. While you have capacity to do so, you can appoint an Attorney for Personal Care of your choice by way of a written Power of Attorney for Personal Care. The term “attorney” does not mean a lawyer; it means the person or persons who you appoint in your Power of Attorney for Personal Care. The Attorney for Personal Care must be at least 16 years old.

You also have the opportunity to document your wishes with respect to treatment, admission to a care facility and personal assistance services. Personal assistance services include assistance with or supervision of hygiene, washing, dressing, grooming, eating, drinking, elimination, ambulation, positioning or any other routine activity of living, and includes a group of personal assistance services or a plan setting out personal assistance services to be provided to a person.

The Substitute Decisions Act prescribes certain mandatory requirements for a valid Power of Attorney for Personal Care. Please contact us if you need assistance in preparing your Power of Attorney for Personal Care.

What is Probate and Why Do I Need It?

Probate is proof– a Court Order that the document you, as Executor, wish to follow or enforce really is the Last Will and Testament of the deceased.

Probate is necessary because banks and other public institutions cannot just take the word of anyone who walks in, presents a piece of paper and says “This is my father’s Will– now give me his money!” Because such situations present great opportunity for fraud, the bank or other office is going to want to be satisfied that the Court has authenticated the Will and the Executor.

Under Ontario’s current laws, we no longer use the term “probate”. Rather, we speak of a “Certificate of Appointment of Estate Trustee”. In part, this not only gives you authority, but it also speaks to your accountability to the Court, as well as to the beneficiaries.

It is worthwhile remembering that you don’t always need probate, or a Certificate of Appointment. When you are dealing with individuals or entities who are non-arm’s length (relatives, business partners, etc.) they are not likely to ask for proof when accepting a gift or when dealing with the small business shares of the deceased. Consequently, many estate plans make use of a separate, Secondary Will to deal with such situations. Please see our related article.

Why Can’t I Write My Own Will?

Well, actually you can. Generally it’s not a good idea, but nothing is stopping you.

In the same fashion, you can build your own airplane, fix your own high-voltage wiring or make your own dynamite. You might save some money, but you might not like the results. And the biggest problem with a home-made will is that, by definition, if there are any problems, you won’t be around to fix them!

Will kits and online services give the impression that estate planning is simply a matter of “filling in the blanks”. This might work if there were no choices to be made, or if you knew the choices and their implications. But that’s not real life.

If you want the comfort and satisfaction of knowing that after you’re gone, your estate will be administered in a tax-efficient, cost-efficient and dignified manner for the tailored benefit of your loved ones, there is no substitute for professional guidance.

Do I have recourse if my married spouse dies and has cut me out of his or her Will?

Yes you do.

Assuming the parties have not separated prior to the death, the spouse of deceased person is entitled to an election which must be made within six months of the death of the spouse. The election permits the survivor spouse to elect to receive what has been left to the spouse pursuant to the Will or to treat the relationship as if the parties had separated. As a separated spouse, the survivor is entitled to equalize the property acquired during the marriage. The Will of the deceased spouse is treated as if the survivor had died before the other.

The surviving spouse may also be entitled to make a claim for support against the Estate of the deceased spouse.

There are other assets that are not necessarily dealt with in a Will, including;

  • Beneficiary designations under insurance plans, pension plans RRSPs, RRIFs and TFSAs
  • Joint property

If a spouse has cut his or her spouse out of his or her Will, one will also want to confirm if any beneficiary designations were changed prior to death, which if done might further justify the surviving spouse electing to treat the relationship as having been separated.

Joint real estate cannot be disposed of without the consent of the joint owners. Joint personal property could have been disposed of without the knowledge of a joint owner, so there might be a claim for an accounting and for compensation as part of any property division claim made as a result of the separation.

The surviving spouse would automatically become the custodial parent of any mutual children of the spouses. Any guardianship clause in the Will of the deceased spouse would not be applicable.

Do Marriage and Divorce affect my existing will?

Yes, they do.

Marriage:

In Ontario, if you have a Will prior to marriage, it is automatically revoked upon marriage (the entire Will is cancelled). [Some insurance or RRSP beneficiary designations made in the Will may still be valid]. To avoid that outcome one can make a Will in contemplation of the marriage. A Will made with the marriage in mind, must contain a statement which makes reference to the upcoming marriage and the name of the spouse. One can also provide that the will is conditional on the marriage actually taking place To avoid being treated as if one does not have a Will or having a previous Will treated as one’s Will when one dies, one would need to do a Will in contemplation of marriage or make a new Will after the marriage.

We also recommend that people review their registered plan designations and insurance designations when one marries. They are not revoked by marriage.

Ontario law applies to people when they die in Ontario. The laws are different in other provinces, territories and countries. So, deciding which laws apply if the person married in one province or territory and died in another, can be unclear. It is more unclear if a person marries or dies outside of Canada. So, we recommend that one enter into a Will and revoke any existing Wills upon marriage, or when entering into a common-law relationship.

Divorce:

If one gets a divorce, one’s Will is not cancelled. Instead, only the provisions in the Will that refer to the spouse are revoked. Which means that a former spouse, referred to in the Will will no longer be the executor, trustee or guardian, and any gifts left to the former spouse will go to someone else. Who the gifts will go to will depend on the structure of the Will.   Separation from a spouse where the couple was legally married, generally has no impact on the Will if there has not been a divorce. Separation of unmarried spouses also has no impact on the Will but the situation regarding property claims is even more convoluted. We recommend that clients should consider making a new Will when one gets divorced, or become separated from a common-law partner.

It is important to note that in most cases, beneficiary designations relating to assets, such as RRSPs, RRIFs, TFSAs, life insurance policies, and pensions are not affected by divorce, or separation from a common-law partner. This means that the individual will have to take steps to remove a former spouse or common-law partner as the beneficiary to prevent them receiving the asset.