Wills

Estate Planning, wills documents

Wills

A Last Will and Testament, is a legal document that outlines and sets forth your wishes regarding the distribution of assets, property and the care of minor children (if you have any). To finalize and officiate these wishes, you should have a lawyer prepare your will.
When you create a will, you have sole discretion over any and all assets that you choose to distribute in the event of your death. This includes your personal belongings, family heirlooms, vehicles, and properties. Also, if you are a business owner, a will can allow for a smooth transition of your business to a new owner whether inside or outside the family. Family businesses are a huge source of litigation and these fights can be reduced if not eliminated by having a detailed will.

Are Wills Really That Important?

Your family and loved ones are the most important part of your life. In order to make sure that they are protected, and that your estate is properly divided among them, wills are crucial. There are so many factors that you may not realize that can change the outcome of an estate in a flash.
Ultimately, it is one of – if not – the most important documents you can have. So yes, it is very important. There are a seemingly endless list of issues that can arise within your estate, and among your loved ones if you do not have a will when you pass.
For example, without a will, your death will be intestate. In Ontario, this means that your estate will be subject to statutory provisions to dictate who will be inheriting your estate. This puts any distribution that you may have had in mind to a complete halt. Through this formula, it can often result in undesirable results.
If you are a business owner, a corporate will can allow you to keep your business assets separate from your personal ones and will not force it to go through probate. Meaning that the corporate will holding your business ownership will not go through probate and not be subject to the administrative tax (probate fee).

Areas of issues when dying without a will

If you simply want to leave everything to your married partner, and you have no children, then without a will your legally married partner has the right to your estate. However, if you and your partner are unmarried or in a common law relationship then your partner does not have the same right.
Of course, this can cause many issues for your significant other. Without a legal marriage, they are not allotted any automatic benefits if you are to pass without a will. In Ontario, a common law, or unmarried partner is not considered to be a next of kin under the province’s Succession Law Reform Act.
If you die without being married, the act outlines a list in which your estate will be distributed. Under the act, if you’re not married, your estate will:
Go to your children
If you have no children, then your next of kin would be your surviving parents
If none, then your siblings
Or, if they are no longer alive, then it will be divided among nieces and nephews
Nowhere in this list does it consider a partner or common-law spouse to receive any part of your estate.

What about your children?

This is another factor that is overlooked, and one that creates many issues in your surviving family. While the children will still receive significant portions of your estate without a will, it will not necessarily be divided how you, or they, expected it to be.
This can cause arguments or differences between your children regarding certain assets in your estate. A large reason behind this is the sentimental attachments to property or heirlooms. While there may be an “equal” division of your assets, your children may not see it that way if there was a sentimental connection to a property, or one child wanted an heirloom to pass on to further generations.
If these differences cannot be solved, and the children cannot come to a conclusive division of assets then the articles of the estate are forced into sale and division of the estate will just become one of finances.

Things to keep in mind

Having a will is crucial if you want to ensure that your loved ones are protected, your possessions are distributed how you want them to be and even that the shares and assets of your business are protected and transitioned properly. While Ontario may have some statutes and provisions set in place to divide your estate after your death, it surely won’t be divided the way you would have wanted.

What Is A Corporate Will?

A corporate will (also known as secondary will) is a special tool for estate planning with respect to your business interest in a privately held company. A large driving factor for having a second will is to avoid the probate requirement and therefore the estate administration tax.
As an example, if you are a business owner, you can have two separate wills. One will would deal with personal assets and the other would deal with your corporate shares. Your personal will may need to be probated, while the corporate secondary will is designed specifically to avoid probate. This will allow you to transfer the shares legally to a new owner or to the beneficiary without being subject to the administrative tax (probate tax) which is calculated based on the fair market value of those shares at the time of death.
Typically, one person would have one Last Will and Testament that handles all aspects of their estate. But the Ontario Supreme Court changed this idea with the ruling in Granovsky Estate v. Ontario. In this case, the court accepted the concept that a person could have two Wills; one Will that pays the administration tax and goes through probate and a second Will that does not go through probate and avoids the administration tax. This created the Primary and Secondary Will concept. Imagine two buckets: One bucket holds all your personal items such as your bank accounts, real estate and personal belongings, and the second bucket only holds your corporation ownership. By separating these assets, only the assets in your primary Will would go through probate and be subject to the administration tax (probate fee). The secondary will that only holds your business ownership will not go through probate and will avoid the administration tax.