Wills and Estates.
A will is a document detailing the free expression of wishes of the testator (person making the will) as to how he or she wishes for their estate to be distributed upon their death. For a will to be valid it must be signed by the testator in the presence of two witnesses who do not benefit from the will.
Holograph wills are those written out and signed by the testator alone and are commonly used in emergency situations where the testator is near death. Under the Succession Law Reform Act[i] the holograph will must be in the testator’s own handwriting and signed by the testator. If a will is typed out and then signed by the testator, it will be invalid. The courts are very strict when it comes to applying this rule as they want to ensure that the testamentary document authentically represents the wishes of the testator.
Absent a will, the Succession Law Reform Act will govern the distribution of assets for the deceased. If prior to death, if you wish to bequeath specific assets to beneficiaries then a will is required to be drafted. Under this will, you can specify what assets go to whom. For example, if you want to donate the gold chain watch that has been passed generations, then you can do so under the will.
Another reason for having a will is to take into consideration of minor children, disabled people or other people that you wish to ensure receive assets but are preserved. Trusts are important for this reason and testamentary trusts, trusts created upon death, govern the distribution of assets over a period of time. A simple example of how testamentary trusts can be important:
You have three children ages, 12, 15 and 20. You want to ensure, in the event of death while your kids are young, that the assets are not dissipated. You can set up a trust for each of the children specifying the conditions of distribution – distribution can occur over period of years, for example, every 5 years, a quarter of the assets from the trust is distributed to each beneficiary, provided the child is of age of majority. You can also distribute upon a child reaching a certain age. However, assets cannot be held indefinitely inside a trust. Assets must be distributed prior to the expiration of 21 years from the date of death of the deceased.
You can also specify other wishes under the will such as funeral arrangements, gifting of assets to people other than family members such as charities, organ donation wishes, appointment of guardianship for minor children as well as taking into consideration of tax consequences.
Wills should be reviewed every two to four years in the event of financial changes, divorces, new marriages or certain beneficiaries have passed while you are still alive.
Wills are one component of properly crafted estate plan. Business owners have other complexities that need to be addressed. You should consult with your accountant, lawyer and financial adviser to ensure that your loved ones have been taken into consideration.