Don’t Forget Your Furry Family Members

Many of us consider our pets to be members of our family. Some have taken this idea even further, actually left their entire fortune to their pets on their death. An example of this is Karlotta Leibenstein. Ms. Leibenstein was a German countess and multi-millionaire who left $80 million to her dog, Gunther III. This fortune was inherited by Gunther III’s son, Gunther IV, who is now worth over $400 million. You can read more about Gunther IV and his luxurious lifestyle here (he owns a property in Miami that once belonged to Madonna). While you might not be able to leave your pet millions of dollars, you can set up a pet trust for them in your will.

Under Ontario law, pets are considered as property. As such, your executor will have the right to decide what happens to your pets. Your executor would have the power to choose where your pets go and can even decide to take them to a shelter or put them to sleep.

If you do not have a will, you will not be able to decide who will care for your pets after your death. The courts will appoint an executor for you. This person will be chosen from the members of your family who step forward to act as executor. The person that the court chooses might not be the person you would have chosen to act as your executor.

One way to protect your pets is to put a pet trust into your will. A pet trust will arrange for any pets to be cared for after their owner’s death. By planning ahead, you can ensure that your furry family members are cared for after your death.

Do you know how to pass on your digital assets?

Many of us don’t see a whole lot of (if any) monetary value in our digital assets – there’s not much to gain in a Facebook or email account. However, there is always a possibility that there could be significant value to a digital asset, and either you don’t know, or your executor doesn’t know.

Do you have a gaming account? What about money stored in an eBay or PayPal account? A blog that creates defined value for your business? An e-commerce site? Music or video files purchased through an online store such as iTunes? Most difficult of all, digital currency, such as Bitcoin?

There is currently no law in Canada that allows your executor to access any of your digital assets. If you have anything at all that you would want your executor or beneficiaries to have access to, you must have a will.

Without proper advice, mistakes are all too easy to make

I see it all the time – people look on Google, find something that seems to make sense, and follow it through without getting advice from a professional. And then, when the action they took turns out to not have the same result in the place where they live as it did in the place where the blogger or journalist lived, they end up paying way more than they would have to just leave things be. Here are some common ones:

  1. Not naming a backup beneficiary for life insurance or registered investments. It’s great if you’ve named your spouse, but what if you die at the same time? Naming an alternate (or contingent) beneficiary means that this money will pass outside of your estate, and not be taxed.
  2. Gifting property (including adding a child to your deed). Always, always, always get advice from a lawyer and accountant before doing this. There are more dangerous than can be stated in a blog post.
  3. Designating registered investments through your will. This can be set up properly, but there is a specific way to do it – if you’re not using a lawyer, you can run into a lot danger, and end up with taxes owing on them because they accidentally pass through your estate.
  4. Putting severe restrictions on inheritances in a will. More often than not, they’ll be found to be invalid.
  5. Leaving assets to minor or disabled beneficiaries without setting up trusts. They could squander the money, or they could lose valuable benefits. It’s always best to have a professional do your will; it’s vital if your beneficiaries need any assistance at all.

This is a complicated area of law. Be careful.

Can I get a witness?

When preparing your own will, it is easy to overlook some legal formalities that could cost you (or others) much more than you think. One of these is having proper witnesses for your will.

It is a requirement to have two witnesses to witness your signature on a will. If this requirement is not met, it would require a court application to determine if the will is valid. If the will is not valid, then a previous will or intestacy laws would determine who inherits.

There are also restrictions as to who can be a witness on a will. If you are a beneficiary under the will and you are also a witness on the will, the gift that was left to you as beneficiary is no longer valid. This offers protection for will drafter in case the beneficiary is forcing you to sign the will. While it might not be your intention, you could prevent someone from inheriting their gift, or they could have to take legal action to inherit under the will (costing them money).

Under a holograph (handwritten) will having witnesses is not a requirement. This type of will can come with its own set of problems though in relation to witnesses. A handwritten will must be entirely written in your own cursive handwriting (not typed, printed or handwritten by another person). Your handwriting must then be properly identified by someone, which could require previous writing samples or could even involve hiring a handwriting expert to identify your handwriting. All of this would be submitted under a court application to validate the will, costing more money.

All this said, using a lawyer to draft your will provides you with an expert who can avoid these legal pitfalls and help save you money in the end.

Ontario is not Alberta (or California, or Oregon, or New York…)

If you’re planning your estate, be sure that you’re looking at the right laws. Each province, state, and country is a little (or a lot) different. If you’re looking at rules from somewhere else, you could be completely harming your heirs. Don’t assume. Ask someone who knows.

Passing on your RESP

I have two young children, and my husband and I started a family RESP when our first child was only a few months old. Education is much more expensive these days than when we went to university, and will likely be even more so by the time my kids go, so saving and taking advantage of government grants is very important.

RESPs are a different kind of vehicle from a registered investment like a TFSA or RSP. While those can have beneficiaries, the RESP cannot. What you need to do is have a specific clause in your will that states that the RESP is to pass to the child’s guardian, provided they set up a new RESP for the child’s benefit. If you do not have this, the RESP is collapsed and all of the grants are returned to the government.

If you have been saving in an RESP, you should make sure you have a will set up. You’ve worked hard to get those grants; don’t lose them.

Silence is not golden

If you have a power of attorney for personal care, you have the option of listing specific instructions in it. These can be things like whether to donate your organs, your preference for care in a facility vs. in your home, or even end of life care. The general rule that your attorney has to follow is first to look at any written instructions, then to follow your known wishes, and last to do what they think you would want done.

You don’t have to write everything down, but you should at least be discussing your wishes with the people you have named. If they don’t know, they can’t do what you would have wanted.

Don’t want your estate to be sued? It helps to use a lawyer

Over the coming years, there is going to be a massive transfer in wealth between generations. While the majority of people don’t have wills and their estates will therefore be transferred in accordance with the default rules, a large minority do have wills and expect those wills to be honoured. The problem? DIY wills are vastly more likely to lead to will challenges.

If there is anything unusual about your will, you run the risk of having someone sue over it. Left an unequal amount to each child? Left out a spouse? Left nothing to your kids in favour of your new partner? Are there concerns about your capacity? Did you change your will to cut out someone who was in it before in favour of someone else? Anything the slightest bit out of the ordinary leaves wiggle room for someone who would be interested in challenging the will; having done a DIY will (a kit, or an online preparation service, or even a handwritten will) makes it far easier. A lawyer who does wills on a regular basis will have taken careful notes about your reasons, and if someone sues, this can help defend against them. Even if no one sues, losing out on valuable advice can cost your estate far more than you would have saved by not going to a lawyer.

I’ve said it before, and I’ll keep saying it: Get a will, and get it from a professional.

Anthony Bourdain: No reservations, and no updated planning

Anthony Bourdain tragically died by suicide recently. Also tragic: he did not update his estate plan after his separation, which means that his estranged wife will be managing his estate. Perhaps this is what he wanted, trusting that she would manage things appropriately; more likely, he got busy and forgot, or didn’t realize that he had left her in charge.

In Ontario, as in many places, neither divorce nor separation revokes a will. Unless you make an effort to do a new will, for the most part, everything will stay the same.

If you are going through a change in relationship – entering or exiting – you need to change your will, too.

As far as your estate goes, stepchildren are not, legally speaking, children

I have had many clients over the years who have spoken about their children, and only after digging down do I discover that they are the client’s stepchildren, never formally adopted though often raised by the stepparent from a young age. The problem? Legally speaking, without a will, stepchildren cannot inherit from their stepparent.

Ontario has very strict rules about who can inherit if you don’t have a will. Children count, whether born in or outside marriage or legally adopted. Stepchildren do not. Further, if you simply say in your will “my children” without naming them, the presumption is that you only mean your legal or biological children.

If you’re raising children you aren’t legally related to, and you want them to inherit, you NEED a will, and it needs to be done properly.