Deadman
Ottawa, ON
Male, 60
I help craft client estate plans; advise estate administrators and substitute decision-makers on their legal authority and responsibilities; and act as a mediator in estate disputes. In responding to your questions, I am providing legal information only; I am not giving legal advice and my response should not be construed as legal advice. Every situation depends on its own facts and you should therefore retain your own lawyer to obtain proper legal advice on your situation.
That will depend on what your goals are in using a living trust. (Up in the frozen north, we call them inter vivos trusts.) If, as I infer, you are thinking of the living trust as a will "substitute", one of its main advantages is privacy. In contrast to a will, there is no requirement to submit a living trust to the court for validation. Neither the terms of the trust nor the assets it holds would become open to public scrutiny. Nor would your death create any delay in the ability of the trustees of the living trust to continue to deal with the trust property. Remember that making a will does not affect your current ownership of your property because the will does not take effect until your death. By contrast, putting property into a living trust means an actual transfer of legal ownership from yourself to the trust, so you would want to be sure that in doing so you are not putting any constraints on your ability to deal with the property as you see fit. (Of course, if you are looking at a living trust as a means of asset protection, you may indeed want to limit your access to the property so as to protect it from future claims of creditors.) The last point to consider is whether a transfer of your property into a living trust would create any unintended consequences. Up my way, such a transfer can give rise, among other problems, to immediate income tax consequences. You would have to talk to a lawyer and/or tax professional to see what a property transfer might mean for you.
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Well, first you have to be above the age of majority (with limited exceptions) in the jurisdiction where you live to even be permitted to make a will. Assuming that's the case, the most important issue is probably whether you own any assets and have any concern about how they would be distributed if you died without a will. Every jurisdiction will have rules that apply if you die without a will -- "intestate" as we say in the trade. If you were satisfied with the intestate distribution rules, you might decide not to bother with a will. For example, the rule might be that if you have no marital partner and have no children, everything would go to your parents. However, having no will means having no one with authority to dispose of your property without first making a court application to be appointed to carry out that responsibility. Do you really want to enrich a lawyer at the cost of your family?
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I can talk only about the "books" in my jurisdiction. No doubt lawyers in other jurisdictions could entertain you with their own examples. Here are just a couple of laws in the Province of Ontario that could use a revamp in order to avoid unjust outcomes: 1. Regarding the formalities for making a Will: it has to be either (i) all in the testator's own handwriting with his or her signature (although not all jurisdictions recognize these "holograph" Wills); or (ii) in any other case, signed by the testator and by two attesting witnessess. Given the advent of computers, as long as the authorship of the document can be satisfactorily validated, why shouldn't a document signed by the testator but without two witnesses be a valid Will? (In fact, in some forward-thinking jurisdictions it is possible to have a court validate a document as a Will even if the formalities have not been complied with.) 2. In many jurisdictions, marriage revokes a pre-existing Will. There are plenty of instances where an elderly person of diminished capacity (A) is preyed upon by a younger person (B) who induces A to marry B in order to revoke A's Will and inherit all or a good portion of A's estate. The problem is that the threshold capacity to marry is far lower than the threshold capacity to make a Will. Result: A will die intestate and B will get a good chunk -- even all -- of A's estate. There is no remedy available to the persons who have lost an inheritance under A's revoked Will. There should be.
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Because it is the client who comes to me, he or she is usually in a frame of mind to discuss putting arrangements in place to deal with the consequences of death. The tougher cases are those -- and, like most lawyers who practise in my field, I have had my share of them -- where the client is suffering from a terminal illness at the time of the meeting and you both know that death may be weeks, or even days, away. In those instances, you take your cue from the client and judge how to conduct the interview based largely on his or her outlook. While demonstrating empathy and understanding is important, you must bring a professional attitude to the exercise, knowing that the plan you are helping to put in place will almost certainly be the one that takes effect.
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Well, I suppose that is an estate plan of sorts. But financial planners are just as strident in warning against the dangers of outliving your money. How much of a disaster that represents will depend on what standard of living you want to enjoy for the balance of your lifetime and what type of social safety net your government offers. Even if you could plan to arrange your financial affairs so that your money runs out precisely when your time runs out, this is hardly a plan if you expect to be survived by other persons to whom you owe a moral, if not legal, obligation to provide support. (On the other hand, perhaps you have died broke because during your lifetime you initiated a plan of gifting to, and creating trusts for, those very people.) And if you don't have any such obligations, why not plan to have something left at the time of your death to give to a charity of your choice?
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Dear SOSO:
As I hope you will appreciate (and as I have repeated in response to a number of other questions), I can comment only about what the law of Ontario has to say on this issue.
Lawyers are taught early on in the law school course on wills and succession law the Latin maxim: "Nemo dat quod no habet." (This has nothing to do with clownfish, whales, turtles or evil dentists.) It means "No-one gives what he doesn't have." In the context of wills, the implication is that a direction in a testator's will to dispose of a particular asset that he or she doesn't own at the time of death will have no effect. The gift is said to "adeem" in that case.
However, there are three possible exceptions to the ademption: firstly, the will may indicate that the intended beneficiary should get a substitutionary gift; secondly, the courts may find a way to give the beneficiary something in place of the thing that the testator no longer owns; and thirdly, there are "anti-ademption" principles in the statutes of Ontario. To expand on the last two exceptions:
1. A court may determine that although the specific thing the testator (T) had when the will was made is no longer in his possession, it is traceable into something else that T does have at death. Suppose, for example, T owned a piece of farm property at the time the will was made and the will said it was to go to Jim, but between that time and the time of T's death, T transferred the farm property to his or her corporation in exchange for shares of that corporation. T no longer owns the farm property directly. A court might decide the "nemo dat" principle applies and declare that Jim is out of luck. Alternatively, it might declare that T's executor will have to find a way to cause the corporation to transfer the farm property to Jim. (This may well have serious income tax implications, but that is another story.) The court is more likely to reach the latter conclusion if T had already transferred the farm property to the corporation before the will was signed and simply neglected to mention that transfer to the lawyer drafting the will. As with so many things in law, everything will depend on the particular facts and on the particular judge's view. Courts will go through legal gymnastics and legerdemain in seeking to give effect to what they perceive the testator's intention to be. Sometimes, there are occasions when it is simply not possible to do that.
2. Ontario's Succession Law Reform Act has an anti-ademption rule that is applied in certain situations that pertain to bequests of personal property or devises of real property. I won't catalogue all of the situations, but here are a couple of noteworthy ones (which would be subject to a contrary intention set out in T's will):
(a) Suppose T's will gave farm property to Jim and the farm property was expropriated by a government authority, giving rise to T's entitlement to compensation for that expropriated property. If the compensation had not yet been paid to T by the time of T's death, Jim would be entitled to that compensation.
(b) Suppose T's new car was bequeathed to Jim but it was destroyed by a fire and T was entitled to insurance money to replace it. If the insurance money had not been paid to T before T's death, Jim would be entitled to that insurance money.
3. Ontario's Substitute Decisions Act has its own anti-ademption rule. It covers a situation where T has become mentally inapacitated and has a substitute decision-maker (S) who is managing T's property. Let's go back to the example where T's will gives his new car to Jim. Suppose that S decides that the car has to be sold to generate money to look after T's health care expenses. If that is the reason why T no longer owns the care at the time of T's death, Jim will be entitled to the sale proceeds of the car (without interest), unless T's will says otherwise.
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I am an Ontario lawyer. I can't speak knowledgeably about other countries' laws on wills, but I can point out one significant limitation this province's wills law has in relation to the wills laws of other provinces of Canada. When an error is made in complying with the formalities for signing a will -- most frequently, failing to ensure that the witnessing requirements are met -- there is nothing that an Ontario court can do to fix the problem. Courts in several other provinces have at their disposal a "substantial compliance" rule or a "judicial dispensation" authority that permits them to overlook a deficiency in the manner of execution if the court is satisfied that the document in question reflects the true testamentary intentions of the testator. The last substantial overhaul of Ontario's succession laws toook place 35 years ago. Our Succession Law Reform Act is due for another major upgrade and this would be one welcome addition.
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