| Why do you need an estate plan before having your will drafted?|
YOUR SOURCE OF ESTATES AND REAL ESTATE LAW
Why do you need an estate plan before having your will drafted?
People's lives are unique and complex. Your relationships might result in legal obligations you may not be aware of, and that is why there is no substitute for a good plan. Clients often ask me… why do you do the “estate plan” portion of the work? Can’t you cut that out and skip to making my will?
If I were to offer an analogy as an answer to this question, here it is: having a will done without an estate plan is like going hiking in a large park without a map, compass, phone, GPS or any guiding device. Or for the meat lovers out there, it is like preparing the meal but not taking the meat out of the package before cooking it! I can go on and on. The idea is that having an estate plan before having your will drafted is so necessary that I would go as far as saying that it is professional negligence not to prepare one for a client before drafting their will.
The estate plan does not need to be a heavy meal layered by complexity, obscurity and confusion. It can be simple, but most importantly, it must be clear. It can take very little time to put together or it can take a longer time, depending on each person’s situation.
But what is an estate plan, after all? It is a compilation of your life:
- who are the members of your family?
- do you belong to a blended family or not?
- is there anybody who does not get along?
- do your children have children?
- does/will any beneficiary/executor of your live in the US?
- is anybody in your family dependent on you financially?
- what are your assets?
- what are your liabilities?
- did you ever sign a cohabitation/marriage/separation agreement?
- did you get married/divorced recently?
- do you have a previous will?
- are there any shareholders agreements in place?
- do you have life insurance?
- do you have registered savings plans?
- do you have any debt?
- and any other life circumstances…
But why do I ask all these questions about you? Because the answers to all these questions and beyond can have legal ramifications that you may not be remotely aware of. Without knowing the answer to these questions, I could draft a will that is completely inappropriate for your situation. I could make mistakes so large that it will cost your estate many headaches and a long time trying to undo them.
To give a few examples, here are some common mistakes:
- large sums of money left to minors outright – this will lead to the involvement of the Office of the Children’s Lawyer, which could include them taking control of the money until the child turns 18
- leaving money to a disabled beneficiary without placing it in a special trust called a “Henson Trust” – this could lead to disqualification of ODSP
- not inquiring about a separation agreement signed by the client – this could lead to an estate claim from an ex-spouse because the separation agreement had a clause which made it obligatory for the testator to name the ex-spouse on a life insurance policy
- not inquiring about RRSP beneficiaries – this could lead to an estate claim by the beneficiaries of the will because they are stuck with the tax bill on the RRSP, while the RRSP beneficiary receives it without tax consequences to them
- not inquiring about assets and how title is held could lead to a void gift because the asset passed outside the will to another beneficiary due to the manner of ownership
I consider it to be my utmost duty to you as my client to alert you with any red flags and risks. It can be dizzying to read all those questions and have to think about all the consequences on your own. But you are not alone. I will be there to figure all of this out with you and for you.
PLEASE NOTE THAT THE CONTENT OF THIS BLOG IS MERELY FOR INFORMATION PURPOSES AND DOES NOT CONSTITUTE LEGAL ADVICE.
Raluca M. Soica, BBA, CPA, CMA, JD
Barrister & Solicitor
Raluca M. Soica, Toronto 12/2/2020