Top 5 Myths about Wills
Four Pillars has organized a cross blogsphere theme today about wills and estate planning (read his post on his last will and testament). Thus, this is an opportune time to dis-spell some common myths about wills. A will, no matter how straight-forward your life, is not a simple document. The Law Society of Upper Canada (which governs lawyers in Ontario) estimates that a wills and estates lawyer needs to understand over 10 pieces of legislation when drafting a will from tax to family to estates law. In a world of such complexity and regulation, a simple piece of paper which says “give it all to my spouse” just doesn’t cut it.
What makes planning and drafting a will all the more difficult is the number of urban myths surrounding wills. We have all seen television shows and movies where the family is summoned into a lawyer’s office after the death of a family elder and, with pregnant pause, the lawyer announces Daddy screwed Mommy and the kids of their inheritance and gave it all to the maid or kids have to bury Mommy standing up in New Zealand facing east on the 3rd Tuesday of November. Many of these dramatic scenarios are just that- scenarios that make for good television.
The following are some common myths are wills. A few more caveats and disclaimers than usual apply. First, laws on estates and wills differ widely from jurisdiction to jurisdiction. I only comment on Ontario but also add some general comment applicable to all. Second, terminology in wills vary greatly from jurisdiction to jurisdiction. Wills speak Law not English and Law has a lot of local dialects. American law has a different language than Canadian law which has a different language than Scottish law. So, copying a will of an American when you live in Canada is not going to do you much good. Third, as usually, wills have a wide variety of legal and tax implications to them so please seek qualified legal advice in the jurisdiction you live in on how to best plan your will.
Now that I have lawyered you to death, without further ado, let’s tackle some common myths about wills.
- “I want my ashes shot to the moon.” Contrary to popular opinion, an executor or trustee or estate executor of an estate (which is the legal term used to describe the sum of a person’s property upon death) does NOT have to follow funeral instructions or directions. An executor/trustee/estate executor’s primary duty is to the orderly administration of the deceased’s estate by winding up the affairs of the deceased and distributing the estate to beneficiaries. If the funeral instructions are so expensive or impractical as to deprive the beneficiaries of their distribution, the executor or trustee can ignore the instructions in the will. In fact, funeral instructions are not legally binding on an executor or trustee. Not to mention the practical issue that wills are read after funerals. Thus, unless funeral instructions were made explicit before one’s death and there is money to pay for it in the estate, funeral instructions are really funeral preferences.
- “What’s in the house is mine as well right?” Not necessarily. Here is a crash course in the distribution of an estate. First, pay off all debts of the estate (including taxes) and the remainder is what you have left to distribute. Then, the deceased gets to gift specific property to people at their discretion and subject to relevant laws. In legal terms, any gifts which are not real estate is known as a “legacy” and a gift of real estate is known as a “devise.” For historical reasons, real estate (known as real property legally) and personal property (all property that is not real estate- i.e. everything else) are treated differently (if you really want to know why, all lands is ultimately owned by the state as a foundation of its sovereignty whereas you can own absolutely non-property). Thus, the gifting of land, which is treated as one class of property legally, does not necessarily entail the gifting of the contents inside, which is treated as another class of property. You cannot assume what’s in the house goes with the house. In the absence of clear intention, the contents of the home, if it has not been gifted, is considered part of the residue of the estate (everything left over after debt, legacy and devise) and distributed to whomever the beneficiaries of the residue are.
- “I see my kids every third week and should have custody if my ex passes away…” Better check the law where you live. In Ontario, only those who have custody of a child can appoint a guardian (someone who takes care of your kids) which does not necessarily have to be an ex-spouse or birth parent. A person with access rights to their kids have NO rights to appoint a guardian. Where there is joint custody, there must be agreement on who the guardian is and there may not always be agreement (in which case the Court will have to decide based on the best interest of the child). In other words, do not assume just because you are the other parent with access or joint custody, you will be the guardian of your child upon the death of the primary giver. That power goes with the primary care-giver or parent with custody. As indicated above, this point of law varies jurisdiction to jurisdiction depending on how pro-access parent the jurisdiction is so please seek advice from a lawyer on this point and make sure, if you are going through a separation, this point is clearly negotiated into a settlement.
- “My wife was a terrible spouse and she gets nada!” In most jurisdictions, there is now legislation which bars no or little distribution of an estate to a spouse, child or persons who were dependents on the deceased. There must be some level of support to dependents after death or those dependents can apply to the Court for support payments out of the proceeds of the estate. In some jurisdictions, your will must allow for a distribution that is at least equal to the amount of support a spouse received as if you got divorced. Children who were supported by the deceased, whether under or over 18, may also have an entitlement to a support claim if the will does not allow for it. In other words, yes it is true. You supported them in life and you shall support them in death. Please seek qualified legal advice to see if this applies where you live.
- “Janice gets the chalet in Whistler and the winter-home in Palm Springs…” Not so fast. If you have assets in various jurisdictions, you need to have separate wills for the asset in each jurisdiction. Why? Some jurisdictions do not honor the validity of other jurisdictions and deceased in those other jurisdictions can be considered to have died without a will and the distribution of the estate is subject to the law and Courts and not the deceased’s wishes. If you have assets in various jurisdictions, make sure you get a will for each jurisdiction. It may not be a chalet in Whistler but a bank account with a few thousand dollars in India is a lot of money.
As the above shows, a will is not a very simple document. Given my obvious bias as an ex-lawyer, do spend some the time and money to have a proper will drafted by a lawyer no matter how simple you think your affairs are.
Other posts on wills today include:
Enjoy the series.