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BAKER & BAKER
Family Lawyers
During your thirty minute complimentary consultation you will receive a free copy of the Ontario Divorce Handbook by Donald S. Baker, LL.B.
We ensure that all your questions are answered.
Will & Estate Planning
Baker & Baker understand the necessity to help you develop a plan that fully addresses your long-term financial needs. We have the legal know-how and financial expertise required to make certain all your desires are met.
Your Will and Marital Status
Will and estate planning is essential when your marital status changes. If you marry after signing a will, the will is automatically void, unless it is made in contemplation of the marriage. However, a divorce does not entirely revoke the will of a divorced couple, but it does void any designated asset to a spouse and the estate trustee appointment of a spouse. A marriage contract will take precedence over the statutory rules respecting a couple's wills and estate if those matters have been addressed by the contract.
What is a Will?
A will is a legal document that allows you to distribute your assets according to your wishes. If you die without a Will (intestate), the Courts will appoint an administrator to dispose of your assets according to a rigid legal formula regardless of your wishes or the needs of your family. That is why a will is so important.
When you need a Will
· You have children.
· Wish to give money to a friend or charity.
· Own a home or business.
· Wish to pass along family possessions or heirlooms.
· You are married, single, separated, divorced or living
common law.
Your cottage, keepsakes and collectibles stay in the family
Without a will, the person charged with winding up your finances may be required to sell all of your assets and turn them into cash. A will helps you protect items of family or sentimental value from being sold.
Why do so many of us put it off?
For many people, the stumbling block is a number of simple, understandable, but faulty and potentially costly assumptions. You can ensure your wishes are carried out, and your family is left in the best financial and emotional circumstances possible by drawing up a proper will.
Intestacy (What can happen if you don't have a Will?)
It’s very simple. When you have a will, you decide how your wealth will be distributed. Without a will, the provincial government decides. A will can ensure your wealth is handed down in the most tax efficient way. When you die without a will, your intentions are replaced by the rules of intestate succession.
Mistaken belief
When you die, everything you own automatically passes to your spouse.
Fact
Without a will, provincial rules dictate how much and which of your assets your spouse is entitled to.
Mistaken belief
If you are living in common-law, your partner has a claim to your estate.
Fact
Despite having the same rights as a legal spouse in the tax department's eyes, a common-law spouse has limited rights under some provincial estate laws.
Mistaken belief
Your family can step in and decide who should take care of your children.
Fact
In the absence of a will, the courts determine who will raise your family. The court can be influenced based on the wishes of the family.
Keeping your will current
Once you’ve created a valid will, make sure you keep it up-to-date. Review and rewrite your Will whenever there is a major change in your circumstances. A divorce, getting remarried, having children, or launching a new business is just some of the major life events that necessitate a reworking of your Will.
To be safe, look over your will at least once a year. A regular review will ensure it continues to reflect your intentions.
Estate Planning
If you become incapacitated and unable to make decisions, legal authority is required. A Power of Attorney for Property authorizes a person to manage your personal possessions and finances if you become incapable of managing these arrangements. A will only covers your affairs once you pass away.
Estate Trustee – Key to Estate Settlement
The estate trustee will be responsible for dealing with all your legal and financial matters and finally, for seeing that the provisions of your will are carried out. It should be someone you trust. Much of what they do requires both financial and administrative skills, you have to be sure they have the expertise to take on the job. Before you name someone in your Will to be your estate trustee, you should always get their permission.
These considerations require the appointment of a professional estate trustee, such as a lawyer, trust officer or accountant. You may also wish to have a relative involved along with a professional.
Power of Attorney for Property
A Power of Attorney document grants decision making authority over your assets or personal care to another person in the event that you are unable to manage your financial affairs should you become mentally incapacitated while you are still alive unless otherwise specified.
A power of attorney for property is a simple, inexpensive, and reliable way to arrange for someone to manage your finances if you become unable to do so yourself.
Your power of attorney automatically ends at your death. If your spouse is your power of attorney their authority is automatically terminated if you divorce. An estate trustee will be responsible for managing your personal affairs.
Power of Attorney for Personal Care ("Living Will")
A Power of Attorney for Personal care (also referred to as a "living Will") grants authority to another individual over decisions regarding health care, nutrition, shelter, clothing, hygiene and shelter if you are unable to make those decisions or care for yourself, usually due to illness or accidents.
Eight Key Considerations in planning your Will
Asset Distribution
You determine how you want your property to be distributed after your death.
Estate Trustee
Your will should specify an estate trustee who will take control over your assets when you die. Choosing an executor is one of your most important decisions.
Guardian
If you have minor children, your will can name the person you want to be the guardian should something happen to you and your spouse. Although this clause is not legally binding, the courts generally carry out the request.
Legacies
If you would like to leave something to certain people or organizations, the legal term for your gift is a legacy. It’s possible that a legacy to a charity could result in a tax benefit for your estate.
Trusts
A trust lets you transfer ownership of assets but still retain control of how the assets are distributed. For example, if you have a minor heir, you could create a trust that gives them their inheritance over time rather than in one lump sum.
Power Clause
Many actions of the executor and trustee require court approval. A power clause gives them the authority to do certain things in managing the estate without court approval, for example, to make investments on behalf of the estate.
Life Interest
The income or enjoyment of an asset without giving the asset itself such as a cottage or a trust fund that generates income. A life interest clause protects the asset to ensure it will be there for future generations.
Death Benefits
To determine the death benefits that you may be entitled to receive upon the death of your loved one go to Canada Benefits page on dealing with death in Ontario, or the Service Canada page on Canada Pension Plan Death Benefits or contact Human Resources Development Canada (HRDC) at 1-800-277-9914.
Trusts
Trusts help you protect your assets by providing a trustee who will manage them on behalf of your beneficiaries. A trust may be established to carry out financial arrangements during your lifetime or upon your death.
Three reasons you should establish a Trust
Ensure your wishes are carried out The terms of a will can be challenged. Any child of the deceased can ask the court to rewrite the will if the child is not satisfied with its provisions. The courts then decide if the deceased has fulfilled his or her moral obligation to the child.
More powerful legal instrument than an ordinary Will It will allow you to better control who will inherit your assets and how they will inherit them.
Optimize your estate’s tax situation Creating a trust often makes it possible to defer or reduce taxes to ensure that wealth is transferred to one’s heirs and beneficiaries in the most tax-efficient manner.
Charitable Giving
For charitably minded individuals, a little planning will mean your charitable gifts can both help your favourite cause and provide tax relief for you and your estate.
Make a charitable bequest Leave a set amount or some of your assets to a charity in your will. Your estate gets a tax credit that reduces your estate's taxes for the year of your death and the year before.
Buy life insurance in your own name and name the charity as the beneficiary The life insurance proceeds will generate a tax credit that can then be used to offset taxes due on your death.
Life Insurance
Even the most thoroughly planned estate will have to pay some taxes, naming your spouse as beneficiary can delay paying some of the taxes. However, taxes will reduce a good portion of the money that would otherwise go to your family and other chosen beneficiaries.
If you don't name your spouse as your beneficiary, and you are predeceased by your spouse, or aren't married, the tax liabilities and other costs when you die can be significant. Here's why:
Taxes on Your Asset Gains You're deemed to have sold any capital assets, such as a cottage or stock portfolio, at the time of your death. If they have increased in value since they were bought, your estate has to pay tax on those gains even if these properties are passed on to your heirs.
Taxes on your RRSPs and RRIFs Any assets held in registered plans must be included in your final year's income which means up to half of your tax-sheltered savings will go to Canada Customs and Revenue Agency. Registered assets can be rolled into your spouse's registered plan.
The Cost of Paying your Estate's Debts Any debts you have when you die have to be settled by your estate. While your executor can always sell assets to cover any amounts owing, this can be a costly choice.
Baker & Baker Will Planner
Our will planner addresses the necessary components, including a power of attorney for property and personal care, required to ensure your estate wishes are carried out.
Click here to download our will planner.
Four critical steps for proper preparation of your will entail the following:
Once you have completed your will planner and returned a copy to us we will ensure that the laws that govern property and dependent relief are applied. We provide the necessary assurance that your will is valid and all legal requirements have been met.
Signing and Witnessing your Will
Signing and witnessing is essential to the legitimacy of your will. You are required to sign your will with two witnesses in each other's presence. Beneficiaries or their spouses cannot be witnesses.
Safekeeping of Personal Records
Important personal records relating to your estate should be kept in a safe, organized place where they can be easily located for estate administration. They include:
Advise your lawyer, executor or bank as to the whereabouts of your will.