Today’s blog was written by Courtney Lanthier, Law Clerk at Fasken LLP.

With the colder months approaching, it’s the time of year when people start considering (or re-considering) their estate plan. But when it comes time to sit down and make a Will, people can often become overwhelmed by the complexity of the process. A lot goes into an estate plan that the average person may not consider at the outset, like meetings and discussions with lawyers, thinking about your legacy, how to provide for the loved ones in your life and who you will appoint to administer your estate. These questions can oftentimes lead to stress and inevitably, putting it off for weeks, months or even years.

However, estate practitioners are available to assist clients throughout this sometimes “scary” process from start to finish and can provide advice on the best approach to one’s estate plan. There are even some helpful planning techniques that can be considered, which oftentimes can be used while preparing an estate plan to complement a Will, or a quick fix to get something in place before a Will can be completed:

• Owning property as joint tenants –owning a home jointly with right of survivorship with a spouse will allow for it to pass to the surviving spouse on the first spouse’s death. This will avoid additional taxes and complications for the surviving spouse.
  • A word of caution – it’s not recommended that joint ownership with anyone other than a spouse be implemented without first obtaining legal advice with respect to one’s specific situation. A joint tenancy with an adult child, for example, could, among other risks, end up creating the presumption of a “resulting trust” which would in turn not protect the property from being exempt from paying probate tax.
• Beneficiary designations – providing for individuals, such as spouses, children or other dependents, under designated plans like RRSPs/RRIFs, TFSAs or insurance policies can ensure they pass to the intended beneficiary outside of one’s estate, therefore avoiding the probate tax that would otherwise be payable on these assets. These designations can be included in the Will, but can also be standalone documents made with financial institutions, insurance companies or investment companies.
• Inter vivos trusts – trusts like the “Alter Ego Trust” or the “Joint Spousal Trust” allow assets to flow through a trust rather than a Will. Both of these types of trusts typically require more extensive planning and therefore may end up costing more in the long run. However, the terms of the trust will often mimic the distribution that would otherwise be provided for under a Will, but the assets under the trust wouldn’t be subject to probate taxes right away, so they can be beneficial in an estate plan. For an alter ego trust, the settlor must be 65 and the only beneficiary of the trust during their lifetime. For a joint-spousal trust, if both parties are contributing, both need to be 65 and the funds held in trust are intended to benefit both spouses during their lifetime.
• Gifts made during one’s lifetime – probably one of the more “in a pinch” options, these gifts can ensure that funds are delivered to an intended beneficiary right away. Some may refer to these types of gifts as a gift made donatio mortis causa, meaning “a gift made in contemplation of death”. In this case, a few factors must be satisfied in order to ensure the gift is valid – (i) the gift must be made in contemplation of death, (2) it must be delivered to the beneficiary, and (3) the person must actually die from the cause contemplated. If the person providing the gift ends up recovering from the illness/cause of death contemplated, the gift would be revoked.
• Holograph Wills – a quick way to get one’s wishes across when they don’t necessarily have time to set up a “conventional” Will is to prepare a holograph will. Written in the handwriting of the testator, dated and signed, this document can effectively convey how assets should be distributed and who should administer one’s estate. A holograph Will is acknowledged by the courts in Ontario as a valid will, so can be a valuable option for some.
  • A word of caution – a holograph will should generally be viewed as a temporary solution only (like when an unexpected and urgent surgery is required and there is no will in place). Given the nature of handwritten wills, they do seem to have a greater risk of partial intestacies, ambiguity requiring advice from the court and will challenges (which is a truly scary thought).

In some cases, the above options could be beneficial and in others, they may just be a temporary “stand-in” to the beginning of a more structured and complex estate plan. In any event, encourage those in your life to start (or re-start) the process of creating their estate plan – and make sure they know that it’s not really as scary as they might think.