WILLS AND ESTATE PLANNING
Wills and Estate Planning is a very broad topic. This article is meant to give a general overview, answer some questions often asked and provide resources to pursue more specific inquiries. Topics reviewed are:
It will review generally:
A Will is a properly written and executed (signed) document that meets all of the requirements and formalities of the Wills Act of Nova Scotia, that upon your death will activate and determine to whom your estate will devise. Through your Will you may gift your property upon death to whomever you wish, and continue your control of your assets, somewhat, after death. You can always change your Will, with the last one in time counting. It does not take effect until you die.
The Nova Scotia Wills Act is quite tedious in its formalities and requires careful attention when drafting and executing Wills.
Generally your Will should be typed, as holograph or video Wills can be too easily tampered with. Wills must be properly witnessed and initialled. Special and particular meanings may be given to words in a Will and legal advice/preparation by a lawyer is well worth the nominal fees charged - generally around $200.00. Most lawyers discount the second Will of spouses where they are "mirror" Wills. Generally the Will of a spouse is $100.00.
Will forms sold at stationary stores with fill-in-the-blank spaces may not be legally binding except for special circumstances for service-men during war.
Often people have personal articles, such as antiques, jewelry, and guns, that they wish to give to other individuals upon their deaths. They may change their minds about who these items go to, but at the same time want to make sure that everyone is covered. They may also gift these things while they are living. Rather than include all these personal items in the Will itself, a Codicil may be added to a Will any time prior to death. Codicils can be more easily changed without having to rewrite the entire Will, but must be properly executed or signed the same as the Will itself. Provisions for pets may also be included in a Codicil.
If you have a Will which is not valid your estate will be treated as if you died without a Will and your estate will devise and go to your heirs according to the Intestate Succession Act in accordance with a procedure called Administration, as opposed to Probate.
Administration requires that whomever steps forward to look after things upon your death, that person must be nominated/agreed to by all heirs of equal standing and also bonded - an added expense not necessary with a valid Will. Without a valid Will, your heirs are your spouse, for the first $50,000, and the balance divided among your spouse and children. If you have no spouse or children, your estate would go to your parents, or if they are not living to your brothers and sisters and then to the nieces and nephews, etc. If you do not have any legal heirs, the estate will be administered by the Provincial Public Trustee. Your "estate" is whatever you own at the time of your death, including real estate, investments, insurance, bank accounts, personal effects...
The Intestate Succession Act recognizes a "spouse" as a legally married spouse, not a common law spouse. Such persons must be specifically named. Canada Pension does recognize common-law spouses who may apply for any Canada Pension Plan death benefits and survivor's pensions available to spouses.
Children born out of legal wedlock and not later "legitimized" by marriage may only be the heirs of their mother's estate. Step-children and children raised by a non-biological parent and not legally adopted may likewise not be considered your heirs-at-law and should be specifically named in your Will.
Guardians for children under the age of majority (19) should be named in your Will.
It is important that both spouses have Wills. There is no such thing as a spousal Will that covers more than one person. Spouses can have "mirror wills", but they each must have their own. If the husband has a Will and his wife does not, it will only govern if he dies last.
In circumstances where there is a common accident, automobile/plane crash and there is uncertainty as to who died first, the youngest is presumed to have died last. If the wife is younger she is presumed to have died last, so if only her husband had a Will the estate will go according to the Intestate Succession Act to the wife's heirs-at-law; not in accordance with her husband's Will.
Make a Will so your estate will not be distributed arbitrarily as an intestacy and avoid those extra costs of a bond. This is especially important with young children, step-children and in common-law relationships.
With your Will you should compile a personal record file and update this file on a regular basis. The file should include a copy of your Will, the name and address of your financial advisor, banker, lawyer and accountant; where your original Will is kept, where your safety deposit key is kept; the location of any/all important documents such as share certificates, deeds, receipts, insurance policies, marriage certificate, birth certificates, SIN numbers, credit cards, bank accounts/numbers, business records and past tax information such as notices of assessment and/or tax returns. Your executor should know where this file is kept, preferably in a fire proof box.
Wherever possible, assets should be held jointly to provide for the right of survivorship, especially between spouses. If held jointly, whether your house property, your car or your bank account, the survivor automatically inherits your interest without any probate or any further action upon your death. Your spouse is entitled to half of all matrimonial assets, regardless of whose name they are in, so why not have all of those assets in both names to begin with. This will avoid the extra expense and time delays involved in probating your Will. Matrimonial assets are all property of any kind owned before your marriage or acquired during your cohabitation except some personal effects, business assets, gifts and inheritances not used by the family. Some insurance settlements may also be exempt.
Name your beneficiary directly on any insurance policies, investments and registered plans whenever possible. The proceeds will then be paid out directly to that named person or persons upon proof of death and those proceeds will not be considered part of your estate or used in the calculation of probate fees.
Get financial and tax advice to defer and minimize any income tax consequences that might follow your death. In Nova Scotia there are no inheritance taxes, but your estate may still be subject to income tax and capital gains tax. It is important to discuss your own circumstances with a financial planner and obtain accounting advice when planning your investment strategies and estate plan.
Have an emergency Power of Attorney. Under the Powers of Attorney Act you may name someone over 19 to act for you if you are not able to act on your own behalf and this may endure even if you become legally incompetent. A Power of Attorney allows your named attorney (not your lawyer) to do whatever you could do - sell, rent, collect in your name - so that person must be 100% trustworthy to carry out your wishes. As your Will only takes effect upon your death, your Power of Attorney allows your nominee to deal with your assets while you are still living; but that power dies with you and then your Will takes over. Without a Power of Attorney, if you become incompetent, a Guardian would have to be appointed and have leave of the Court to sell any of your property. This is an expensive and timely procedure. If you have a Power of Attorney, you should include that your nominee named therein would automatically be your Guardian under the Hospitals Act.
Special burial instructions such as cremation and donation of body organs should be discussed with your executor and family. These may be included in your Will, but are not legally binding, as you may be already buried by the time your Will is found and read. There is no formal "reading of the Will" although sometimes the Registrar of Probate may read a Will at the closing of an estate. You may also consider a pre-planned and paid for funeral arrangement, which would be discussed and arranged by you with a funeral director of your choice. Make sure your heirs and executor know of any prepaid plan.
The Medical Consent Act provides that you may also nominate a person to consent or refuse medical treatment on your behalf if you are unable to communicate your own consent or directions. The combination of three documents - a Medical Consent, a Power of Attorney to deal with your assets during your incapacity but life, and your Will to take effect upon your death - is as close to a "Living Will" that we have in Nova Scotia. Normally your next-of-kin would consent on your behalf to medical treatments if you were unable. Your next-of-kin would be your spouse, then your children or possibly your parents. They must be unanimous in their directions for the removal of life support. Doctors, I believe now more than ever, appreciate a signed medical consent in your file. Most commonly it provides them and you protection from "heroic measures" to keep you alive and allows the administration of pain relief, even though that medication may shorten your life.
Designate your residence under the Social Assistance Act. In 1988 the legislation was amended to provide that a municipal unit may not, as the result of providing social services or assistance to a person, recover or attempt to recover those expenses from that person's estate by encumbering in any way that person's home; nor can you be forced out of your home. If you go into a nursing home, the government cannot collect for your care there from the sale of your designated residence. Therefore, elderly people should not transfer their homes to their children outright if planning to go into nursing care. All they must do is designate their home as their residence under the Act and it will then be protected; however, only the designated residence is protected, not additional lands, bank accounts or investments.
A common question which often arises is, do I have to leave anything to my ungrateful child who doesn't visit and with whom I have little or no contact? The answer is no, subject to the Testators' Family Maintenance Act which provides that if you have a dependent for whom your Will has not provided, a Judge may, on application and taking into account all relevent circumstances, order maintenance or support for that dependent to be paid by the estate. A dependent is defined as a "child" (legitimate) or a widow/widower who cannot adequately provide for himself or herself. On the hearing of an application by a dependent, the Court will consider the character and conduct of that person, their relationship with you prior to your death, their financial needs and entitlement to any other assistance and the ability of your estate to pay. The Court will also consider your reasons for not providing for that person. If you wish to exclude a potential dependent, who is a child or spouse, reasons should be provided in your Will. If your intention to leave that person out is clear, your Will will likely be upheld. If you do not want to put in your Will the particular reason(s) for exclusion, you should still advise your lawyer and witnesses of the reason(s) as, if your Will is contested, the lawyer and witnesses could be called upon to attend any hearing and advise the Court of your reason(s) for exclusion. A gift of $1.00 or any nominal gift will not protect your estate from such an application.
This is the person or persons you want to administer and manage your estate and to distribute your assets for you after your death. This may be a trust company or individual person and the Executor/Trustee may also be one of your beneficiaries. It should be someone who is familiar with your assets, family and wishes. You should have an alternative person(s) named in your Will in the event your first choice predeceases you or is unable or unwilling to act. Your choice should be trusted, reliable, competent and likely to outlive you. It is good to choose someone in your local area and home province where you are domicile.
Your Executor may not need to probate your estate if your assets have gone by survivorship and to named beneficiaries, as there would be no assets to manage or distribute under your estate. Proper estate planning tries to avoid the use of your Will and those probate costs, but your Will is a precaution in case something was missed in your estate plan; for example, a forgotten life insurance policy. Your representative or Executor should, however, have your Will proven and filed, do your final tax return for the year of your death, obtain a compliance certificate from Revenue Canada and apply for any government death benefits available, such as Canada Pension.
Your Executor finds your Will and obtains legal advice as to the necessity of probating it. It is proven by oath before the Registrar of Probate by at least one of the witnesses to it.
If Probate is necessary a Petition for Probate with a guestimate of the value of your assets is filed with the Probate Court, together with your Executor's oath, to properly administer your estate according to your Will and the law, and your Will is also proven. Upon payment of a fee, based upon the guessed value of your estate, your Executor is given Letters of Administration to take to your bank, life insurance companies, stock transfer agents, Department of Transportation, etc., to prove his/her authority to deal with those assets. He/she collects your assets and confirms their values by at least two appraisers, confirms any debts owing and, with any cash available, pays those debts. An Inventory supported by two appraisers of all of the assets of your estate must be filed with the Court within three months of your death. Your estate is advertised for six months for any creditors to file their claims.
Your assets may not be distributed for the first six months and likely longer - until the estate is closed and even after it is closed - pending clearance from Revenue Canada. Once distributed, no further claims can be made against it. Any trusts for children or to carry on business interests would continue after the closing of your estate in accordance with your Will and the Trustee Act.
Your Executor/Trustee is entitled to a commission based upon the value of your estate. You may provide other compensation in your Will, if you wish, instead of the legislated commission amounts. You may also limit and/or enlarge your Trustee's powers in your Will.
People often ask if a Deed will be recorded and the answer is likely no. If the title was owned jointly, the survivor owns the property by right of survivorship and nothing further is recorded. If the property goes by your Will, your Will is recorded and acts as a Deed; however, if your Will places your property in a trust, then a Deed would be necessary from the Trustee to ensure continuity of title.
In conclusion, the information provided is general. Specific inquiries should be made when doing your individual estate planning from competent professionals, including your lawyer, accountant and financial planner.
NANCY M. PEERS
Disclaimer: The information in this article is believed to be accurate and reliable when posted, but is not guaranteed to be accurate, complete, or current at all times. This article is for informational purposes only and is not intended to provide official financial, legal, accounting, or tax advices and should not be relied upon in that regard. The rates and fees are not guaranteed to be current, though they are endeavoured to be kept current.
