This article will explain the purposes, backgrounds and plain meanings of clauses found in my wills. A few of these clauses may be altered slightly to accommodate individual instructions.
I have attempted to make my wills more readable and understandable to the non-lawyer. I have a tried to remove unnecessary words, Latin and legal talk. However, some phrases must be used as they have been interpreted the same way for hundreds of years and cannot be easily changed. There are other clauses that perhaps seem unnecessary but being lawyers, we are taught to be overprotective. Some clauses are also necessary because of some archaic rules of law that still apply to wills. It must be noted that originally lawyers were paid by the word for legal documents so it is inherent that wills are long. In this article, the numbers refer to the number the clauses usually have in my wills, though this might change for wills that do not have all of the clauses.
1. Revocation Clause
This clause makes it clear that previous wills are no longer valid and this will is the legally binding will. To amend a will, a short separate document called a codicil can be made (see my article ” Changing Your Will” ). If a foreign will is also desired this clause should specifically state that the foreign will is still valid and not revoked by this will.
2. Executor and Estate Trustee Clause
The Executrix (Executor for a male) is the person who administers the estate. The Estate Trustee is the person who administers ongoing trusts such as ones set up for minor children. The Estate Trustee is also now, with changes to Ontario legislation, the name given to an Executor. It is common, but not necessary to have one person do both the jobs of administering an estate and looking after the trusts. For simplicity sake, throughout the will this person (or persons) is called the Estate Trustee. Alternates are chosen in case the executor and estate trustee are not alive or are unable to act. As the number and the sex of the executors may vary, for simplicity sake the person is simply referred to as my “Estate Trustee”.
3. Transfer to Estate Trustee
This clause gives all of the assets to the Estate Trustee and the power to carry out the directions stated in the will. The word ” property” is the legal term which means all assets of every kind and not just real estate.
3.1 Debts and Taxes Clause
This clause instructs the Estate Trustee to pay the debts of the estate, the administration costs and the taxes. If a beneficiary is to pay the taxes then it should be stated so here. The priority of debts is first the funeral expenses, then the administration costs and lastly, the general debts. An executor can be liable for the funeral costs personally if there is not enough money in the estate to pay the funeral costs. Beneficiaries can not be responsible to pay the debts of the estate if there is not enough money to accommodate all the debts. If one wants the beneficiary to pay the tax on an asset like a cottage or an RRSP, the will must specifically state so, otherwise the beneficiary gets the specific asset clear of any tax.
This clause sets out how the estate is to be divided once debts, administration costs and taxes are paid. If a specific gift is not in existence at the time of death because it has been sold, lost or given away prior to death, then no bequest occurs. There is no substitute made. This is legally called ademption. If the money bequests are greater than the value of the estate then those bequests are paid in proportion to the value of the estate. This legally is called abatement. If there are more money bequests then the value of the estate than there is no residue.
The residue of the estate is everything in the estate left after the administration expenses, the debts, taxes and special bequests have been paid. The requirement that a spouse survive by thirty days is used here and later in the will to insure that if a beneficiary dies at the same time as the person who made the will, the estate does not form part of the beneficiary’s estate. Instead it is dealt with in accordance with the maker of the will’s alternate wishes as he or she probably would want the alternate persons to receive the bequest rather than the estate of the dead beneficiary.
The only Latin phrase used in my wills is “per stirpes” . It is found usually in the Residue clause. It is used where the maker of the will wants to benefit his or her grandchildren if their parent is not alive, by having the grandchildren share equally the deceased parent’s share. Per stirpes means that if a child is not alive then the child’s children share equally the deceased child’s interest. As an example, if a person has three children all of whom have two children then if one of the children are not alive their children (the grandchildren) each get 1/2 of 1/3 which equals 1/6.
4. Estate Trustee Powers
The purpose of this clause is to give the Executor and Estate Trustee as much power as may be necessary to administer an estate and the trusts created by the will. Because statute law is lagging behind if this clause is not in a will, an Estate Trustee may not have the flexibility to deal properly with the estate. The Estate Trustee generally will not need many of the powers given, but it is safe to have them here. An Estate Trustee must be reasonable with investments and could not, for instance, cash Canada Savings Bonds to buy penny mining stocks. A recent case held that mutual funds were not an accepted investment unless specifically stated in the will. I have added mutual funds to the type of investments an Estate Trustee may invest in as mutual funds are an appropriate investment vehicle in today’s times.
All of the powers may not be needed and many do not apply in all cases, but it does not hurt to include them. One never knows what the future asset will be. The borrowing clause might be needed if a lot of the assets are tied up in long term investments and it would be financially detrimental if they were liquidated. Therefore short term borrowing might be needed. I believe that if one feels nervous about giving an estate trustee all these powers, then a problem lies with the choice of the estate trustee and not the powers.
5. Persons Born Outside Of Wedlock
The Succession Law Reform Act in 1979 changed the law so that the definition of the word ” child” or ” children” would now include people who were born to parents who were not married. This creates the possibility of a person being entitled to an estate who the maker of the will may not have intended. For instance, a male parent may have conceived a child with another woman before marriage and has nothing to do with that child. A female parent may have had a child at a young age and given the child up for adoption. To ensure that these children are not included in the estate distribution this clause is necessary. If it is known at the time of making the will that there are children born outside of marriage who should be included then they should be specifically named. The discretion allowed the Estate Trustee at the end of the clause should allow the appropriate children to be included. This would be the case where there is a common law relationship. If there is a common law relationship at the time the will is made, then the persons in the relationship or the children should specifically be named in the will.
6. Family Law Act
This clause is of some limited assistance to a beneficiary when that beneficiary separates from his or her spouse. Only if this clause is in the will does the Family Law Act provide that the interest earned from the inheritance is not to be an asset that is subject to division upon marriage breakdown. The Family Law Act also states that an inheritance if it is still in existence or if it can be traced into an asset, other than a matrimonial home, is not shared on marriage breakdown. A person receiving an inheritance should consult with a lawyer about protecting this inheritance, perhaps by way of a marriage contract or the segregation of the inherited asset.
7. Thirty Day Survivorship Period
The purpose of this clause is to ensure that if a beneficiary dies within thirty days of the maker of the will, then rather than the beneficiary’s estate getting the bequest and distributed according to the beneficiary’s wishes the maker of the will names alternates to receive the bequest.
Unfortunately a few years ago a Judge in British Columbia made a ruling that changed how lawyers have always interpreted the definition of ” per stirpes” . This clause corrects the Judge’s interpretation. The interpretation clause also states that though there may be more than one Estate Trustee, and the gender of the Estate Trustee may be male or female, changes of number and gender should be altered depending on the context of the will. It would be too wordy if, after every mention of the words “Estate Trustee”, the will said ” he, she or they”.
9. Payment For Minors
This clause allows the Estate Trustee to hold in trust monies that are payable to beneficiaries who are still under age, but where not previously named specifically. The age to hold the bequests in trust is usually the age of majority being 18 in Ontario. This clause also permits the Estate Trustee to pay to the minor’s parent, custodian or guardian the bequest. This is helpful in a case where the bequest is small and it would be more convenient to just give the money to a parent rather than holding on to it until the person is eighteen.
10. Perpetuity Clause
This is a very technical clause that is needed in a will. There is an old rule still in effect in Ontario that there can not be an indefinite holding of property in trust or otherwise a gift would be void. This clause solves that problem and is used where it is possible that a trust may be longer than 21 years from the date of the last to survive the maker of the will, the spouse or child alive at the maker of the will’s death. Do not lose sleep over this complicated clause.
11. Accumulation Period
Like the Perpetuity clause this is a technical clause which is required to insure that a rule against accumulating interest for a period provided by the law, which is now set at 21 years is not violated.
12. Custodian Clause
A person with custody of his or her children may appointment a custodian of his or her children in a will. It is only effective for ninety days, after which time an application to the Court must take place to confirm the appointment. The person chosen by the maker of the will is not automatically chosen by the Court but the named person will have a much stronger case because the court will accept that a parent would know best who to choose as custodian. A letter outlining the reasons for the choice would also be helpful and though again not binding. It is possible that as wills are written many years before one’s death and not updated as much as they should that the named custodian is no longer appropriate which is why the court will make the final decision. Naming a custodian is very important as it prevents a tug of war of the children upon the death of a parent or parents for at least the first ninety days.
13. Cremation And Burial Clauses
Burial instructions do not bind an estate trustee. The estate trustee makes the final decision though in almost all instances the instructions will be followed. As the instructions are not binding it is best to leave the instructions outside of the will so that they can easily be changed or expanded upon without having to change the will.
Affidavit Of Execution
At the same time that a will is signed, it is appropriate to have one of the witnesses sign an Affidavit stating that he or she saw the will signed in front of another witnesses. This Affidavit would be needed if the Will has to be accepted by the court (probated). The affidavit is attached to the front of the will at the time the will is signed.
Wills Made In Contemplation Of Marriage
As a will is automatically revoked on marriage a person getting married is allowed to make a will prior to marriage so that after the wedding prior to the honeymoon he or she does not have to run to a lawyer’s office. To do such a will the maker must know who they are marrying and that marriage will be taking place within a reasonable time. If this type of will is made a clause specifically stating it is a will in contemplation of marriage is inserted in the will.