With the recent addition of David Freedman, professor at Queen's University, Faculty of Law, as counsel to our firm, it seems appropriate to reconsider the basics of wills and trusts that are taught at law school.
When people think about a will, what most frequently comes to mind is a mechanism for passing property from one generation to the next. However, when drafted properly, a will can do so much more than typically thought possible. Wills can create and govern multiple trusts, award temporary guardianship of a minor child, and communicate wishes with respect to funeral and burial arrangements.
The law in Ontario does accommodate for non-traditional estate planning by the creation of an informal will. Pursuant to Section 6 of the Succession Law Reform Act, a holograph will is a document that is wholly in the handwriting of the testator. In Ontario, where there is no substantial compliance doctrine, the document must still comply with certain technicalities required of all wills: the will must clearly feature testamentary intention and it must be signed at the bottom, below the dispositions made within the document. A holograph will, unlike other wills, is not required to be witnessed.
Holograph wills provide an opportunity to individuals who may not otherwise be able to obtain a will to express testamentary intentions in a legally-binding manner. Individuals who wish to avoid the use of a lawyer and simply write out a holograph will should beware the potential consequences of relying upon a non-traditional method and non-traditional language for estate planning. What a non-lawyer intends to effect in a holograph will may not accurately represent what has been recorded, pursuant to the law and subsequent interpretation by the court.
Although a will only affects the disposition of assets at death, it is very important that this matter be addressed while the testator is still living. When one waits until death is imminent, it may be too late to create a valid will. A will that is executed at a time where the testator lacks the mental capacity to do so may be set aside by the court by reason of such testamentary incapacity.
Trusts are notorious for being poorly understood. A trust is an operation of law that allows a person to give property to someone else, but maintain or designate control to someone who can manage the trust property in the interests of its beneficiaries. While aspects of the law of trusts may be confusing, the ownership with respect to trust property is clean and delineated, with legal ownership and beneficial ownership being clearly defined and identifiable.
Using trusts as a planning device, the rights with respect to a single piece of property can be divided in numerous ways. A trust can be employed to allow certain individuals to enjoy certain parts or rights associated with the trust property or its ownership. For example, a property can be subject to a life interest of one individual, then pass to another beneficiary upon the life tenant's death. Trusts can be effective in delaying a transfer of trust property to its beneficiaries. This is especially useful with transfers to minor children, who cannot hold real property outright until reaching the age of majority. Trusts can be structured in many different ways to serve their intended purpose.
The drafting of a will that creates multiple trusts and provides for minor children can quickly become complicated and benefits greatly from an experienced drafting solicitor. Together, wills and trusts are capable of accomplishing the many complex goals associated with estate planning. However, these planning devices will be of little use if a knowledgeable professional is not consulted or if planning is left too late.
*Ian Hull and Suzana Popovic-Montag are partners at Hull & Hull LLP, an innovative law firm that practices exclusively in estate, trust and capacity litigation. To watch more Hull & Hull TV episodes, please visit our Hull & Hull TV page.