This is a letter I send to clients about how to make a Will in Ontario. Please contact me before acting on any of the information included here — law is nuanced and good advice depends on your unique situation.
How to Make a Will & Power of Attorney
This letter is an outline of the key decision points in making a Will & Power of Attorney. It is meant to provide you with a basic understanding of the process, so that we can be well prepared to meet and discuss your decisions in detail.
A few definitions:
Your Will is the “master document” for directions on what happens after your death. We will include a base set of legal clauses, but otherwise this is a blank state for directions on: distribution of your Estate, guardianship of your children, funeral arrangements, etc.
Your Estate includes your existing assets, as well as those that accumulate before and after your death. Examples includes real estate, vehicles, investments, life insurance, inheritance, and heirlooms.
A Power of Attorney allows you to empower someone to make decisions as if they were you. This is for the scenario where you are still alive, but incapable of making the decisions on your own (incapacitated, physically or mentally unfit). Your appointed person (“attorney”) will be called on to make decisions for you, including financial dealings, arranging health care and decisions about life support — this is a very powerful document.
For your consideration:
When someone dies without a Will, a default system directs what happens to their Estate. Your Will overrides that system with your specific directions. Your Will and Power of Attorney are individual — we create and sign a set for each person. Generally couples have “mirror” documents, but it is possible for the directions to be different.
Your Will is explained and signed one-on-one with your lawyer, with an additional witness present, i.e., nobody will know the contents of your Will other than yourself, your lawyer and an assistant.
These are particulars to consider:
When to Make a Will
If you don’t have a Will or if you haven’t updated it in awhile, the default actions may not reflect your wishes. The best time to make a Will is when you have a major life change:
- birth or adoption of a child
- marriage & divorce
- living together as “common law”
- your parents re-marry or divorce
- purchase of a house, investment or asset greater than $5,000
- moving to a new country
- before extended travel
Distribution of Estate
The default is for your spouse to receive the first $200,000 of your Estate and the remainder to be divided among your spouse and children. Generally your spouse takes full ownership of your primary residence. If you do not have a spouse, your Estate is inherited in order by: children, grandchildren, parents, siblings, nieces and nephews, other relatives or the government.
To replace the defaults we will get really granular about who will receive what amounts — we can work both in absolute values ($10,000 to X) and percentages (50% to Y and the remainder to be divided equally among A, B and C).
You should also consider distribution in the scenario where there is no surviving spouse or children. We can specifically include or exclude a child’s spouse. Other beneficiaries to your Estate may include family members, friends or charitable organizations.
Minimizing Taxes and Fees
Fees and taxes related to death are expensive. Your Will allows you to pass on your Estate while protecting its value. These are some of the associated costs:
- the courts take around 1.5% of your Estate to validate the Will;
- your Estate Trustee is entitled to 2.5%+ of the Estate;
- taxes are due as if you had sold your property;
- your relatives can dispute the Will, delaying distribution and incurring costs.
To protect the value of your Estate we can create Trusts, exchange sources of debt (e.g., your mortgage may be excluded from court fees while a line of credit is not), list a specific fee for the Estate Trustee and minimize risk of dispute.
Since the implications of any decision are nuanced, I recommend we meet and discuss your wishes early on. For now an overarching question is: what in your Estate do you want access to during your lifetime, and what would you be willing to transfer now? Transferring wealth while you are alive provides more flexibility in protecting the value of your Estate.
We will appoint an Estate Trustee — the person who follows through on the directions in your Will. This person needs to be available, reliable and organized. A surviving spouse may not be the best option, because this can be a significant work load that happens when they are otherwise grieving. Common alternatives are parents, children, siblings or other close relatives. If you believe part of your directions will be controversial (e.g., guardianship of children or distribution of significant assets), then you should consider a neutral person — your lawyer is a good option or there are professionals that do this full time. Any Trustee, whether relative or professional may be paid a fee from your Estate.
Guardianship of children
Again, this is planning for the scenario where there is no surviving spouse. Generally you should name just one person to be guardian of your children, but we will do this in list format. e.g., Guardian shall be Person A, and in the alternative Person B, and in the alternative Person C.
Consider the guardian’s ability to care for your children, as well as their willingness and financial resources. It is common for the guardian to also receive financial support from your Will — to ensure they can provide care for your children. I advise reaching out to your prospective-guardian and telling them about your plans.
We can include any specific directions about your funeral arrangements. Common directions decide between burial and cremation, as well as location. Sometimes people provide directions as specific as what music will be played and what food will be served at their Wake.
We can include any directions regarding organ donation, however this can be ineffective because of the time required to produce and validate your Will. A better alternative is to discuss your wishes with your family.
We can name a person you want to care for your pets.
Your Will really is a blank slate. We can include disclosure of internet passwords, enclose private letters to be sent after death, etc.
Power of Attorney
There are two key decision points for your Power of Attorney: who will be your attorney, and when will they be given this power. Generally, people name their spouse as attorney, but again we should have at least one additional name for greater protection. You will have both an attorney for property (they can make financial decisions in your name — bank loans, credit cards, selling property, etc.) and attorney for personal care (they can make decisions about healthcare and life support). The attorney for property and attorney for personal care don’t have to be the same person.
By default, the Power of Attorney activates instantly on signing of the document. This timing provides the most flexibility, however the risk is the attorney can make decisions starting immediately. A common alternative is for the Power of Attorney to activate when you are incapable of making decisions (on confirmation of your lawyer or doctor). The risk is you are adding a roadblock (waiting for confirmation) when a critical decision needs to be made instantly. If there is someone you trust 100% then the first option, instant activation, is usually better.
It is important to have a Will and Power of Attorney in place — and it is just as important that you are confident in the directions you provide. I’m available at 519.835.0007 or [email protected] to answer any questions you have about the process. Please take your time considering the above, and when you are ready we can schedule a meeting.