The morale of the story is that sometimes there is such a thing as too safe. The issue with renting a safety deposit box is that you are at the whim of the bank’s hours. While many banks now open past traditional banking hours, banks are not 24-7 services. For example, if the original power of attorney for health care is locked in a safety deposit box, how would anyone get access to it if one is rendered incapable in the middle of the night?

As for wills, some jurisdictions do allow executors to remove original wills from a safety deposit box. Other jurisdictions will adhere to the rule that the only people allowed access to the safety deposit box are the renters and executors who are duly appointed. But you can’t be duly appointed without the original will so you end up in a big circle.

As implied above, giving a copy of a key to your spouse or proposed executor does not solve the problem. Instead, the spouse or proposed executor has to sign the rental agreement to allow for unfettered access to the safety deposit box.

Given all these issues, it may be best to keep the original of the will  and power of attorney at the lawyer’s office or in a fire-proof safe at home with your family and executor knowing exactly where the original is kept.

But what happens if the beneficiary is a minor? This is all the more common with the rise of single-parent families, older parents and parents with children from different relationships.

In Ontario, the general rule is if a minor child is beneficiary of $10,000 or over of personal property or money without a trustee named, the insurer or financial institution pays the money into the Accountant of the Superior Court of Justice or the court-appointed guardian for property.

Not happy with the state being the trustee of a minor child’s money? The typical answer is that most life insurance and/or RRSP forms have a section to add a trustee. Herein lies the problem. The trustee section is typically tiny and often does not contain any provisions of what the trustee can and cannot do with the monies. Many forms also tends to assume that the beneficiary can take the entire proceeds of the insurance plan or RRSP at 18. Most readers with 18 year old children know that this is not the wisest idea.

Add to this that many wills will empower the executor to hold money in trust for minor children (usually without full payout well past 18) and you have a strange situation if a person is appointed as executor for a minor beneficiary under both the will and insurance policy and/or RRSP plans: the trust provisions under a will may be fully formed and developed while the trust provision in the insurance policy and/or RRSP plan are not (to be very clear, the executor is actually an executor under two trusts- one under the will and one under the policy and/or plan).

To make the situation worse, if the insurance/RRSP form has no provision for powers of the trustee but the trustee is named, the trustee is a “bare trustee” without the power to take out from the proceeds to pay for education, housing etc.

What to do?

If a large portion of one’s estate is in a RRSP, one had best to consult the financial institution to determine whether a fully fleshed out trust provisions can be added to mirror the will (if anyone in the financial industry can shed light on this, it would be appreciated). If a large portion of one’s estate is in insurance, speak to a lawyer about setting up a “testamentary insurance trust.” In plain English, a testamentary insurance trust directs insurance proceeds to be paid to a trustee in trust for beneficiaries (rather than the beneficiaries directly) and, if properly drafted, puts some rules and restrictions on the use of funds.

These types of trusts are pretty complicated and are typically not drafted by the lawyer who also closed your home. However, if the proceeds of insurance are quite substantial, it is worth it to hire the right expertise.

A will is essentially the wishes of the will-maker (known as a testator or a testatrix) and “speaks from the date of death.”  In other words, unless otherwise altered or there are exceptions to this rule (see below for several examples), the wishes contained in the will shall continue to stand (save and except illegality, undue influence, lack of capacity etc.) even if the will-maker passes away decades after the will has been drafted.

Thus, most lawyers will advise that their clients review their will upon some major life-change or the circumstances of their lives are altered significantly. In many jurisdictions, by law, a will is invalidated upon marriage (unless the will specifically states it is being drafted in contemplation of marriage). However, the law is silent in many other cases which may apply to many estates and professional advice should sought.

For example, a spouse or child begins to require some special accommodations after the will is drafted (a physical disability, mental illness etc.). The “standard” will provision of the residue of the estate (the residue is the portion of the estate left after settling all debts) to spouse and if spouse pre-deceases the will-maker to the children equally may not capture the monetary and non-monetary care a beneficiary may require (readers with disabled children may want to seek professional advice on this matter since there is a complicated interface between disabled beneficiaries and government support payments to the disabled).

A more common issue is if one of the children grows up to be a poor manager of money as an adult. Without setting a trust over the inheritance, the will-maker could simply be throwing their money away. The more immediate issue is if this spendthrift child is costing the will-maker a lot of money in life, which is disproportionate to what the other children are receiving, it may cause family tension which spills over during estate administration (I addressed the issue of the spendthrift child and estate planning previously).

For those who are separated and not divorced, many jurisdictions have passed laws which deem the divorced spouse as having pre-deceased the will-maker (and, thus, not entitled to the estate) BUT this same principle does not apply to separated but not divorced spouses (in Ontario, many couples petition for divorce upon the grounds of living separate and apart for more than 1 year- it is this gap period which becomes a problematic issue).

In other words, the will-maker could inadvertently be including a separated spouse in their inheritance. The standard advice is for a will-maker to amend the will immediately upon separation (please note that separated and divorced spouses can claim support against the estate if, at the time of death, the will-maker was providing support voluntarily or under Court order).

The standard analysis is always the same. If there is a major life event or a material change in your life circumstances or the circumstances of your beneficiaries, it may be time to revisit your will lest there be unintended consequences to the will-maker’s wishes.

Beneficiary designations in life insurance, registered retirement plans and Tax Free Savings Account (for Canadian readers) may also raise unintended consequences. While a will speaks from the date of death, the exception to the rule is designations in plans proceeds in a will. In this case, the designations in these plans only speak from the date of the will.

In plain English, the will only address the plans in existence on the death of the will and if: (i) new plans are opened subsequent to the will date; or (ii) more importantly, the designated beneficiaries are changed to NOT be consistent with the will after the will is signed, the beneficiary designations  in the plans trump the will.

In other words, a will is drafted in 2000 naming the spouse as beneficiary to a life insurance policy and the beneficiary in the life insurance policy is consistent with the will. In 2010, the will-maker changes the beneficiary to the children in the life insurance policy but the will is unchanged. The beneficiaries listed in the life insurance policy will trump the will.

On the flip side of this equation, a policy holder who forgets to change the designated beneficiary in a life insurance plan, retirement plan etc. after a separation or divorce will continue to have the separated and/or ex-spouse named as beneficiary.  In some jurisdictions, a divorce will not automatically deem the ex-spouse as having been removed as a designated beneficiary.

For this reason, the typical solution is: (i) keep all beneficiaries consistent; or (ii) change the will if the plans change administrators or the beneficiaries change. Money Smarts has an excellent article on estate planning and the TFSA.

As final food for thought, insurance proceeds payable to a named beneficiary (rather than the estate) passes outside of the estate and is not subject to the claims of the estate’s creditors (I am assuming the insurance was not bought for the sole purpose of avoiding creditors who are advancing claims). Thus, it is important for individuals who live highly leveraged lives (entrepreneurs, individuals who hold a lot of real estate as investment property, individuals generally with high level of debt) to consider life insurance as a defensive mechanism to protect their loved ones financially after death.

Since the laws governing wills and estate-planning vary from jurisdiction to jurisdiction, the standard disclaimer applies- the following is for information purposes only. Suffice to say, professional advice should always be sought in circumstances where the will-maker or his/her beneficiary have unusual circumstances. Good luck.

Even if the beneficiaries are not troublesome, every executor faces several practical issues- how to pay for the funeral costs and the costs of applying for probate (probate is the process of authenticating a will and required to deal with most financial institutions; the probate fee can be tens of thousands in a large estate)? After all, without a grant of probate, the executor cannot access the deceased’s funds unless it was held in a joint account or the executor already had signing authority over a bank account.

Since this process can sometimes take weeks and months (assuming the beneficiaries have not challenged the will or appointment of an executor), there is a cash flow gap between the expenses of administrating an estate and when the grant of probate can be presented to the bank to free up the estate’s funds. For executor’s with modest means, footing these costs or sharing it among the beneficiaries can bust a household budget.

The solution is to locate and find: (i) the will; (ii) the certificate of death;  and (iii) calculate assets and expenses to determine probate (ideally with the help of a wills and estates lawyer. With these in hand, attend to the bank and explain the situation and request that an advance of funds be made specifically to pay for the funeral expense and the probate fees. Most banks will make cheques directly to the appropriate persons (but not to the executor personally). The key is to find someone at the bank who has familiarity with dealing with these types of situations (which is yet another reason why the bank continue to need branches and we cannot work on a totally virtual world).

Good luck.

However, a will kit presumes the will-maker has a “traditional” nuclear family. But the married couple with children has recently become a minority of the population and, along with it, the shrinking notion that there is such a thing as a “simple” will.

In a world of multiple marriages, separated couples,  same sex marriages/unions, step-children, adopted children and dependent parents, will planning is no longer that simple.  Since the estate generally pays for legal fees in a dispute for both the executor and beneficiary challenging the will, it is best for the will-maker to get it right lest the assets of the estate are drained for the lawyers and no one else.  What top three will planning mistakes should you avoid?

It starts with the executor. Executors occupy a very difficult position. They must report to all the beneficiaries, your creditors and the tax man. The typical reflexive response is to name your spouse the executor. However, if your spouse is not good with finances (and knows it) or you have a lot of young kids, it may not be wise or fair to burden your spouse with such responsibilities (when the kids get older, you can amend the will to name your spouse as executor). In some jurisdictions (including Canada), the executor is personally liable if taxes are not fully paid during the winding up of an estate. Thus, saddling a person without the skill or experience to hand an executor’s responsibilities can also get them into personal trouble.

(some of you are probably wondering “just have the spouse/executor hire a lawyer/accountant to do their job…” The issue with this approach is fees incurred by professionals for executor duties are taken out of the compensation paid to the executor by the estate. In heavily leveraged/indebted estates, the executor compensation many constitute the bulk of distribution)

Where the spouse is the 2nd or 3rd spouse and you have financial obligations to ex-spouses or your kids from previous relationships, the spouse as executor may not act with an even hand; lack of communication from an executor is often the harbinger of estate litigation since beneficiaries think silence means something  bad is happening. You may end up with the litigious extended family.

There are several solutions. Partner the over-burdened or unqualified spouse with a steady hand- a relative or friend with financial acumen- to share the workload.  Appoint a relative or friend with financial acumen to act as executor while the family is younger. As the family ages and child care responsibilities lessen, change the will to name the spouse the executor. Finally, as your accountant or lawyer to act as executor personally, and their firm can be hired to undertake the legal and tax aspects of the estate (which is work typically not classified as executor work and these fees would be earned in addition to executor fees).

Do not write out dependents. Hate the wife and secretly plot to get your revenge from beyond the grave? Many jurisdictions now have laws prohibiting the spouse to be written out from a will. The spouse can simply elect to take at least half (in most cases) of the estate. More problematic, and costly, is writing out dependents. A dependent- think spouse, child, sibling or parent- has the right in many jurisdictions to claim continued support from the assets of the estate if they were being taken care of during your life. In other words, if you paid your deadbeat brother $500 a month for living expenses, he can seek to continue such arrangement after your death (the practical solution to this issue is to cut the deadbeat brother off).

If you are going to write an immediate family member, other than your spouse, out of your will (assume no ongoing dependent relationship at death), some lawyers recommended that the reason for the exclusion be specifically  provided. For example, if your daughter was given $20,000 extra to attend school over your son, you may want to state your daughter receives nothing since she got more during life. Perfectly reasonable reasons for exclusion make challenges to wills more difficult (note that exclusions based on human rights issues- son is written out for marrying a Catholic- can be over-ruled if challenged on the grounds of public policy).

Cottage= headache. No other asset tends to create a larger issue than the cottage. Mom and Dad’s residence at death may be too small, too old or too far away for any of the kids to want but the cottage tends to hold emotional attachment to the surviving family members. Short of selling it to a non-family member, the solutions tend to be impractical mainly, divide it evenly among the kids (unwieldy if there are lot of children), put it into a trust (there are costs incurred to pay the trustee and people tend to bicker over time allocations) or give it to one child (creates jealousy).

My lawyer will once said her general advice was to sell the cottage and divide the proceeds. It makes no one happy but at least it solves the issue quickly. The other alternatives are either the above or to compensate the non-cottage recipient with something of equal emotional worth (if it exists).

The final point is people change. It is prudent to check your will after large life changes or every 5 years or so to ensure it matches your current state of affairs and wishes. Good luck.

If you are an average employed Canadian, the most likely reasons to see a lawyer are: (i) draft a will; and (ii) sell or purchase a home; and (iii) documenting a divorce. For the middle transaction, a simple sale of a house costs on average $827  (the $827 average does not include the cost of title insurance, taxes and disbursements). A purchase and sale will, on average, run a typical Canadian almost $1,300 based on the survey results.

Lawyers charge on average $344 for a “simple” will (one presumes a simple will is all to spouse and then all to kids in the event spouse pre-deceases the testator) and $156 for a power of attorney. It is not clear whether this is for one power of attorney or $156 for each of power of attorney for personal care and power of attorney for property. Assuming it is $156 for each power of attorney, estate planning would cost approximately $650.00 before taxes.

However, in the age of multiple marriages, kids from different relationships, deceased with assets in other jurisdictions, testators which are deeply in debt, support obligations to elderly parents or grown children is there such a thing as a simple will anymore? I will post on this in a future post but wills and estate planning are become less than simple as the family unit evolves.

Under the heading of “only the lawyers get rich”, lawyers charge on average $1,200 for  an uncontested divorce and over $12,000 for a contested divorce including a high of over $50,000; the high fees for a contested divorce probably arises from child custody disputes/arrangements.  It is for this reason that the family bar has begun to move towards collaborative family law. It is definitely an option worth exploring if you are contemplating or are in the middle of a separation.

Obviously, you get what you pay for in life so use the survey results only as a broad guide. On a more practical level, do try to actually engage in a conversation with a lawyer rather than starting out with “how much does it cost?”

All law is contextual so even if you do not like the price quote, a conversation or consultation will at least flesh out some issues you may not have been aware of. A good analogy would be you would not hire a contractor to renovate the kitchen without having them actually look at it first.

If you do not know how to find a lawyer, call your local law society. Most have referral services. The Law Society of Upper Canada, which regulates lawyers in Ontario, has finally made their lawyer referral service free after charging a modest fee for years.

The answer of one traces back the problem of the lost or revoked will. Traditionally, if someone wants to renounce the terms of the will (short of marriage which automatically deems a will invalid unless made in contemplation of marriage), you destroy it but tearing it up, burning it, striking it through with pen or some other defiant act of destruction. The problem is that if more than one original of a will exists, especially if other originals are in the hands of beneficiaries, the will-maker (known legally as a testator) has to track down and destroy each and every copy of the will.

A beneficiary who may have their interest diminished or written out of the will replacing the will intended to be destroyed can simply keep the will and, upon the death of the will-maker, destroy the new will and assert that the old will is still valid. Given that this is the only original copy of any will left, old or new, the terms may actually apply. Dead man tell no tales after all.

This situation sounds like a typical law school question but law school questions are grounded in some fact situation, however absurd, that actually occurred.

The flip-side of the one will answer though is what if you lose the only copy of the will? The issue is that, in many jurisdictions, there is a presumption a lost will is a renounced will and the deceased died without a will (this can be over-turned by evidence the will-maker really wanted the lost will to be valid and binding on death).

The practical solution is to have one will signed. Give it to someone for safe-keeping (an advantage of hiring a lawyer to draft a will; they have a professional responsibility to ensure it is not lost or destroyed). Keep a copy yourself which is clearly marked copy since even custodians of wills do lost them. If the will needs to be changed, simply inform the lawyer or the custodian of the will to destroy it (written evidence of your intention to destroy a will may be enough in some jurisdictions to renounce the provisions of the previous will).

One of the more cleaver technological solutions I have also heard is scan the copy of the will onto a USB card and put the card into a safe and attach to it a note, which is dated, indicating that this is an electronic copy of your will and if the original is lost, you did not mean to renounce the will and a scanned copy is found on the USB card.

It is not the perfect solution but it minimizes the risk of having too many original wills and losing the one copy.

There are only really two options to handing down assets to beneficiaries (either in life or in death although I will focus on the latter). Either it is given unconditionally or, well, it is not. If it is not, the typical legal tool is a trust. We often think about trusts as something only the uber-rich use. However, regardless of the net worth or income, it is one of the more flexible legal fictions available to anyone who wants to engage in some practical wills and estates planning.

In particular, a “spendthrift” trust describes a trust whereby the settlor (the creator of the trust) appoints a trustee (the person who holds legal title to certain property placed into a trust) to hold property for a beneficiary (the person(s) entitled to benefit from the trust) who is unable to control their spending. The terms of the spendthrift trust generally dictate that the trustee is only allow to provide enough resources periodically for the beneficiary to live some type of reasonable life-style. For example, a beneficiary may only be given $1,500 a month in living allowances to prevent the beneficiary from living a rich and famous lifestyle even if the trust holds substantially more assets.

The other situation is if there are elderly parents with non-minor children who do not believe their heirs are old enough to be able to manage even a modest gift of money (unearned wealth being a curse rather than a blessing).  For example, parents may believe that their non-minor children should be at least 30 before inheriting $50,000. In this situation, the spendthrift trust can set up and wound down when the beneficiary turns 30. In the meantime, the trust is providing a small subsidy to the adult children.

Given the interplay between money and family, the key to a spendthrift trust is to appoint a trustee who is good with numbers, has some distance from the beneficiary and has the ability to say no without guilt. As a result, trustees of spendthrift trusts are often family accountants, family lawyers or professional trust companies (or family members who are estate trustees/executors are granted the authority to hire professionals help to manage the spendthrift trust). While there may be a cost involved to administrating the trust professionally, it certain less than the potential of the beneficiary spending all of his/her inheritance quickly.

Spendthrift trusts are useful tools in that, since title to the assets are held in trust, creditors of a beneficiary generally cannot attack the monies held in trust (monies paid out to the beneficiary are subject to creditor seizure). Thus, people with shopping addictions, gambling problems and substance abuse issues are often made beneficiaries of a spendthrift trust.

A spendthrift trust is definitely not something you can set up with a will kit you buy from the local stationary store. Careful attention must be paid to who the trustee would be, how much resources should be put into trust and the terms of payment to the beneficiary. As such, seeking qualified legal advice is a must. Furthermore, given this is a rather specialized wills and estates tool, don’t just go to the cheapest lawyer. Ask for a lawyer who has experience dealing with setting up trusts.  It may cost a little more for the will but, again, the costs must be weighed against the potential of the estate being spent by an heir who can’t manage their finances properly.

Keep your will and power of attorneys in one place.

If you have hired a lawyer to draft your wills and power of attorneys (a power of attorney for personal care is also known as a living will), the back page of the will typically has the contact details of the lawyer so that the executor can quickly contact them if you need a lawyer to help you settle an estate.

If you have alternate power of attorneys, one power of attorney should be  releasable to your first choice in the event the power of attorney is required. In the event the first choice has predeceased you or is no longer able to carry out their duties, a legal document known as a “direction” should be on file which directs the power of attorney to be releasable to the 2nd choice; if you have two power of attorneys issued, you have two people with power over your property or personal care.

This is an especially important point if your primary power of attorney is your spouse and you both pass away at the same time or the survivor passes away shortly thereafter. A direction is typically kept on file by your lawyer (safe-keeping of wills and power of attorneys is often an over-looked aspect of why you should hire a lawyer to draft a will; in some jurisdictions, a lost will can be interpreted as no will at all).

Here is the important point: let someone know where you have kept these documents and provide them access to it whether through a copy of the key to the safety deposit box, the combination to the safe or the contact details of the lawyer who drafted the will.

Provide a one page memo of your holdings.

As Canadian Capitalist suggested, a one page listing of all our bank accounts, insurance policies and portfolio statements would be helpful. To drill down one more level, it should not only list the account name and numbers but who to call for more information. In the case of insurance policies, it may be helpful to list the insurance broker’s name since many older policies are underwritten by a different company than who issued it given the consolidation in the industry. The account number on the insurance policy may be different so the broker should be able to provide some assistance.

One would be surprised how much unclaimed money there is in bank accounts or unclaimed insurance proceeds simply because the executor did not know an account existed or a policy was purchased.

Photocopy important underlying documents.

This tip is especially important if the deceased was born in a different jurisdiction. Photocopies of birth certificates, and citizenship cards are important if you have to claim property in other countries. The deceased may have copied account numbers wrong and the one page summary sheet becomes incorrect.

If you photocopy underlying documents and produce a one page memo of your holdings, it would help to put them in a folder which, in turn, is stored in a drawer or cabinet. In this manner, it is easy to find rather than having an executor rummage through drawers to find one item and then a set set of drawers to find the other.

Provide the password to computers

Certain accounting software now as emergency record features. However, if the executor cannot access a password protected computer, how can they use this feature? The alternative would be to save all of the above on a USB card and to provide it to your executor.

The case is rather famous/infamous in all introduction to wills and estates classes in law school since it addresses the topic of whether a hand-drafted will, or a holographic will, is an acceptable and binding legal instrument.

What makes holographic wills rather unique is the history and forms of wills itself. If you ever read a will, you will notice that the language is rather archaic. The reason is that the interpretation of wills language is based on centuries of common law (judge made law) and many of the archaic phrases have meanings attached to them- in other words, some judge centuries ago defined what “happy home life,” a phrase often found in describing the standard of care for a minor child, meant in specifics.

A traditional will also has a prescribed form (in writing, signed by the testator, witnessed by two people over 18 and of sound mind and who are not beneficiaries and, in some jurisdictions, an accompanying affidavit of execution by the witness). Many holographic wills have neither the language or form required of a traditionally recognized will which has made recognizing this type of will problematic.

Nonetheless, some jurisdictions do accept holographic wills BUT it must be hand-written and not typed and it does not even have to be signed in some cases; the form varies from jurisdiction to jurisdiction and you should seek advice on this matter. However, by and large, it is a completely home-made will in all forms, shapes and sizes.  The reasoning for this lack of form is that the underlying policy of accepting a holographic will is that it should be a will made in emergency situations only and accepted for this reason primarily.

For this reason, a holographic will in most jurisdictions that accept them can replace an existing will but, in some jurisdictions, CANNOT amend an existing will (an amendment to a will is known as a codicil and must have the same requirements as a traditional will to be valid).

Thus, for the raging DIYers, there are several issues. Depending on where you live, a holographic will may or may not be recognized. Even if it is recognized, it must be of a certain prescribed form (for example, California requires you to date the will; New York only recognizes a holographic will from a member of the armed forces; Alberta recognizes a holographic will but B.C. doesn’t; Ontario requires no witnesses; Quebec case law only recognizes the non typed parts etc. etc.). It is all a hodge-podge of differing laws and case law.

It is best not to take your chances and draft a holographic will unless you are truly in an emergency and do not wish to die without a will. The more prudent route is to make drafting wills part of your personal finance process either through a qualified professional or as part of a will kit.