Where There's a Will

by Craig Young

Every parent should have a will. Having a will is important not only for your own peace of mind, but also to make sure that you have adequately provided for your partner or children left behind.

Anyone who dies without a will (also referred to as “intestate”) has their assets dealt with and distributed under the provisions of the Estate Administration Act. This is a statute that provides a very specific formula for how your estate is distributed. While your wishes may have been known to those around you, there is no discretion under the Act as to how your estate is distributed. That discretion, or control, is why you need a will. A will takes control out of the formula and puts it back into your hands.

More troubling to most parents is the fact that if you die without a will, the Court appoints guardians for your children. The Court, not you, will decide who will raise your children. However, this can normally be avoided by appointing a guardian in your will.

A developing trend among parents of minor children is that they want their close friends, often with children of a similar age, to raise their kids if something happens. While always subject to final approval of the Court, expressly naming those friends in your will gives them standing to be appointed guardians and makes your wishes expressly known. Even if others were to come forward seeking guardianship, the Court will generally respect your judgment in who is best suited to raise your children.

Having a will allows you to control how and when your children will receive the proceeds of your estate. The executor of your estate acts as trustee and manages your estate. Some of the funds you leave your children may be withdrawn from your estate as required for their maintenance and education as they grow older. Those funds would otherwise remain in trust for your children until they reach the age specified in your will for them to receive the remaining proceeds of your estate. Think about who you want in this role as executor. Generally, that person is given a lot of discretion in managing and releasing funds, although he/she is not without accountability to the beneficiaries of your estate for payouts. Think about whom you can trust to raise your children and who you can trust to spend your money on them in a way that would meet your approval.

An interesting development has been the use of Registered Education Savings Plans (RESPs) as a way to save for your child’s education. While in some ways they seem similar to Registered Retirement Savings Plans (RRSPs), an RESP is treated completely differently under your estate. While both types of plans can have a designated beneficiary, many people are unaware that upon the death of the plan holder, only RRSPs go automatically to the designated beneficiary. The RESP is treated as a private contract between you and the plan provider. If you die without a will, the money in an RESP will be treated as an asset belonging to your estate and will not automatically transfer to your child even if that child is named as the designated beneficiary of the RESP. An RESP has to be specifically addressed in your will in order for your contributions to continue and the funds to be available for your child’s education when needed.

The difference between the treatment of an RRSP and an RESP demonstrates why it may not be wise to simply buy a will kit from a bookstore or attempt to draft your will on your own. Mistakes in homemade and kit wills are common and may result in thousands of dollars in legal fees to sort out the problems created by those mistakes.

Also, you may not know that under the Wills Variation Act, you have the responsibility to provide for certain people unless you provide a valid reason why you have chosen not to do so. If you are not aware of your obligations and how to meet or avoid them, you may inadvertently create grounds for your will to be challenged based on unequal distribution or failing to adequately provide for a certain person.

A properly drawn will requires much less effort and expense than you may think. While many parents, especially young or new parents, may not yet own a lot of assets, a properly drafted will takes this into account. As you acquire your first home, savings, and new investments, you won’t have to re-draft your will. While you should review your will every few years and update it as needed, there is flexibility to accommodate new or growing families.

Craig D. Young practices in estate planning, real estate and corporate law at Johns Southward Glazier Walton & Margetts. Craig is a member of both the Victoria and the Canadian Bar Associations and is Treasurer of the CBA Wills & Trusts Victoria Subsection.