UNIVERSITY OF VICTORIA Faculty of Law

UNIVERSITY OF UNIVERSITY OF VICTORIAVICTORIA

Faculty of LawFaculty of Law

Law 320Law 320

Succession & Estate PlanningSuccession & Estate Planning

Professor MarchessaultProfessor Marchessault Law 320: Succession & Estate PlanningLaw 320: Succession & Estate Planning 22

Class No 2. - January 8, 2009Class No 2. - January 8, 2009

Title: “Where there’s a will, there’s a way!”

1. What is a will anyway?

2. Legal Drafting – Some tips

3. Will Instructions – Getting the full story

4. Components of a Will

5. Will Planning & Checklists

6. Extend Your Knowledge

7. Readings for Future Classes


1. What is a will anyway?1. What is a will anyway?

1.1 Will defined

1.2 Will redefined

1.3 Meaning of “Power of Appointment”

1.4 The “Players”

1.5 Lapses that Lead to Issues


1.11.1 Will Defined Will Defined

Black’s Law Dictionary 5th edition

“Will” – an instrument by which a person makes a disposition of his property, to take effect after his death, and which by its own nature is ambulatory* and revocable during his lifetime.

“Will” – The legal declaration of a man’s intentions which he wills to be performed after his death.

* Subject to change or capable of alteration


1.2 Will Redefined1.2 Will Redefined

“Will” – a written document prepared by a person during his/her lifetime, to take effect upon death, directing how his/her assets are to be distributed following death.


1.31.3 Meaning of “PowerMeaning of “Power of Appointment” of Appointment”

Bequest of General Estate typically reads: - “I GIVE, DEVISE AND BEQUEATH unto my Trustees all my estate, both real and personal of whatsoever nature and kind and wheresoever situate, and also estate over which I may have any power of appointment or disposal at my death…”

Black’s Law Dictionary 5th edition - “Power of Appointment” – a power or authority conferred by one person by deed or will upon another (called the “donee”) to appoint, that is, to select and nominate, the person or persons who are to receive and enjoy an estate or an income therefrom or from a fund, after the testator’s death, or the donee’s death or after the termination of an existing right or interest. A power to appoint my be exercisable by deed or by will depending upon the terms established by the donor of the power, and is defined, generally, as power or authority given to a person to dispose of property, or interest therein, which is vested in the person other than the donee of the power.


1.41.4 The “Players” The “Players”

Testator/Testatrix - man/woman making the will. (“Testator” will be used for purposes of brevity.)

Executor/Executrix – the “office” of a man/woman appointed to carry out the intentions of the Testator and administer his “estate”. There can be more than one appointed under a will. (“Executor” will be used for purposes of brevity.)

Trustee – the individual or corporation that is appointed by the will to hold the estate assets in trust during the executor’s administration period and, perhaps, during the duration of any testamentary trusts settled by the will. Typically the executor and trustee are the same individual or corporation but they can be separate entities. Separate trustees can be appointed for the estate and testamentary trusts.


1.51.5 Lapses that Lead to Lapses that Lead to Succession/Administration IssuesSuccession/Administration Issues

• Failure to name an executor in the will

• Executor named in the will predeceases the testator, or ‘renounces’ the office of executor, and no alternate executor is named in the will

• Named beneficiaries have predeceased the testator with no alternate beneficiaries named

• Will fails to distribute all of the testator’s assets

• Testamentary trusts settled by the will fail to fully provide for the distribution of the remaining assets once the trust ends


2. Legal Drafting – Some tips2. Legal Drafting – Some tips

2.1 Find a good legal drafting text

2.2 The will speaks from death

2.3 The ‘KISS’ drafting strategy

2.4 If not ‘KISS’ then ‘KICCS’

2.5 Wills Precedents


2.12.1 Find a good legal drafting textFind a good legal drafting text

e.g. Legal Drafting by Robert C. Dick, Q.C. 2nd Edition, 1985 Carswell

Topics include:

• Drafting in General

• The Drafting Framework

• Stages in Drafting

• The Design of Legal Documents

• Rules of Drafting (33 Rules in all)


2.2 2.2 The will speaks from deathThe will speaks from death

Will only operates from date of death of testator

• We accept the testator as he is at death ( e.g., assets, liabilities, spouse, (grand)children, siblings, parents, aunts, uncles, are what they are on death)

• Specific gifts promised in a will that no longer exist (e.g., a house) are treated as though they were never promised at all

• Testator is free to deal with assets mentioned in will – without restriction on disposition, pledging, mortgaging, etc…

• However, we need to plan for eventualities, possibilities, etc…(e.g., heirs may predecease testator or be born after death of testator, relationships change, assets change, life changes)


2.3 The ‘KISS’ drafting strategy2.3 The ‘KISS’ drafting strategy

Keep it simple, stupid!

Easier said than done, due to:

• Complexity of many wills• Dealing with all ‘types’ of property• Attempting to deal with eventualities/possibilities• Creation of testamentary trusts• Taxation considerations• Desire of testator to remember everyone


2.4 If not ‘KISS’ then ‘KICCS’2.4 If not ‘KISS’ then ‘KICCS’

Keep it clear and concise, stupid!

Simple wills – allow for KISS drafting

Complex wills – demand KICCS drafting

• ‘Clear’ – unambiguous, understandable • ‘Concise’ – brief, precise, succinct


2.52.5 Wills PrecedentsWills Precedents

Practise makes better - strive for perfection but accept a bit less

Will precedents on Reserve in Priestly Law LibraryBogardus & HamiltonWills Precedents Practice Manual (CLE)

• Starting point only• Not to be viewed as “be all – end all”• Review carefully and understand context • Require adjustment and additional original drafting• Reread and pay very careful attention to details


3. Will Instructions – Getting the full story3. Will Instructions – Getting the full story

3.1 Practise the art of careful listening

3.2 Each life is a mystery - listen and search for clues

3.3 Ask questions and unearth the truth

3.4 Take concise notes and use checklists

3.5 Review facts from notes - confirm with client


3.1 Practise the art of careful listening3.1 Practise the art of careful listening

LISTEN CAREFULLY(Listen carefully to what your client is saying.)

B.C. Professional Conduct Handbook (Ch. 3, Subpara. 3(h)) - “3. A lawyer shall serve each client in a conscientious, diligent and efficient manner so as to provide a quality of service at least equal to that which would be expected of a competent lawyer in a similar situation. Without limiting the generality of the foregoing, the quality of service provided by a lawyer may be measured by the extent to which the lawyer: …

(h) prepares documents and performs other legal tasks accurately” (emphasis added.)

• Accuracy will improve with careful listening.


3.2 Each life is a mystery - listen and search for clues3.2 Each life is a mystery - listen and search for clues

Search for clues in your client’s story!

Clues for what?

• Types and locations of assets• Types of debts and obligations• Jointly owned assets• Existence of trusts or other estate planning• Family heirlooms and other cherished assets• Family history and status of relationships• Heirs and forgotten relatives (illegitimate children)


3.33.3 Ask questions and unearth the truthAsk questions and unearth the truth

Pretend to be ‘examining’ your client in court.

If client speaks of “stepchildren”….

Ask:

• Were you previously married• Was your current/former spouse previously married• Any children from previous relationships• Any separation agreements or divorce orders to review• Any support obligations – legal or moral• Any possible variation of will issues


3.4 Take concise notes and use checklists3.4 Take concise notes and use checklists

• Concise Notes – succinct, precise and accurate - which summarize key points

• You cannot remember everything - use checklists to act as reminders of key items

• Your notes are part of your client file and may be relevant in future litigation – avoid humiliating yourself with inferior notes


3.5 3.5 Review facts from notes - confirm with clientReview facts from notes - confirm with client

If time permits…(and this step could save time & money)

• Review notes and prepare a summary of all relevant facts needed for drafting the will

• Confirm facts with client orally or in writing

• Confirm spelling of names, dates, locations, etc…

• Confirm key points: e.g., executor, alternate executors, gifts, trusts, residual distribution, catastrophe provision


4.4. Components of a WillComponents of a Will

4.1 Commencement - Identification of Testator4.2 Revocation Clause4.3 Testator’s Declarations4.4 Appointment of Executor and Trustee4.5 Bequest of General Estate4.6 Payment of Debts and Taxes4.7 Distribution of Personal Effects4.8 Gifts and Legacies4.9 Trust for Children or Others4.10 Residue Clause4.11 Catastrophe Clause4.12 Powers of Trustees4.13 Guardians for Minor Children4.14 Attestation Clause


4.1 Commencement – 4.1 Commencement – Identification of TestatorIdentification of Testator

Will normally first identifies the testator and describes his place of residence and, possibly, his occupation.

e.g. This is the last will and testament of me, John Smith, of the City of Victoria, Province of British Columbia, undertaker.


4.24.2 Revocation Clause Revocation Clause

To avoid competing instruments, the Testator next revokes all prior wills, codicils and testamentary dispositions of any nature made prior to this will.

Careful not to revoke wills for property in other jurisdictions (if any) and beneficiary designations for registered retirement vehicles (e.g., RRSP) or life insurance policies.


4.34.3 Testator’s DeclarationsTestator’s Declarations

Testator may make declarations addressing:

• Statement of domicile or residence, if in doubt

• Will made in contemplation of marriage

• Will disposing of assets in specific jurisdiction

• Declaration that there is another will disposing of assets in another jurisdiction


4.4 Appointment of Executors4.4 Appointment of Executors and Trustees and Trustees

The testator’s will next appoints and identifies the executor and trustee (there can be more than one at a time) and, preferably, an alternate executor and trustee if one or more predecease the testator or ‘renounce’ their office.

e.g. I Nominate, Constitute and Appoint my brother, Bill Smith, of the City of Victoria, Province of British Columbia, to be the executor and trustee of this my will, provide that….


4.54.5 Bequest of General Estate Bequest of General Estate

The will then provides for the transfer of all of the testator’s property “wheresoever situate” to the trustee to be held ‘in trust’ in order to:

• Satisfy debts and taxes of the testator

• Pay gifts, bequests and legacies, etc …

• Satisfy the capital requirements of testamentary trusts created by the will

• Pay out residual amounts to beneficiaries


4.64.6 Payment of Debts and TaxesPayment of Debts and Taxes

• Executor is required by law to pay debts and taxes prior to distributing assets

• Absence of this provision does not allow executor to forego payment of debts and taxes

• Payment of debts and taxes is a common provision in most wills


4.74.7 Distribution of Personal EffectsDistribution of Personal Effects

Dealt with in a number of specific ways or in combination:

• Specific gift in will (e.g. my gold watch to my brother, Robert Smith)

• By memo prepared prior to the execution of the will and incorporated in the will by reference (binding on executor) – cannot be amended

• By post-execution memo mentioned in the will which sets out distribution scheme for personal effects (non-binding on executor) – can be amended

• By authorizing executor to distribute personal effects as he sees fit


4.84.8 Gifts and LegaciesGifts and Legacies

Specific bequests of fixed sums of money or specific personal property are listed with sufficient clarity as to who, how much or what

• Cash: e.g. I give to my mother, Jane Smith, of Victoria, B.C., the sum of one thousand dollars ($1,000) if she survives me

• Personal property: e.g. I give to my father, John Smith, of Victoria, B.C., my John Bateman print entitled “Wolf in Snow” if he survives me


4.94.9 Trust for Children or OthersTrust for Children or Others

• Will may create testamentary trusts(i.e., take effect on death of the testator)

• For the ‘benefit’ of minor children (who cannot receive gifts under a will)

• For the ‘benefit’ of persons with disabilities

• With or without an entitlement to capital in future


4.10 4.10 Residue Clause Residue Clause

• Assets remaining after “debts and taxes”, “personal effects”, “specific gifts and legacies” and “settlement of trusts” will be residue

• Residue is often distributed to a spouse or divided among surviving children or siblings

• Gifts that fail and unused capital and income from testamentary trusts may fall into ‘residue’ and be distributed according to this clause


4.114.11 Catastrophe ClauseCatastrophe Clause

• Good practice to add a ‘catastrophe clause’ to all wills in the event that a family is wiped-out with no survivors to inherit

• Not uncommon to see residue going to a charity of choice in the event spouse has predeceased and there are no surviving children or grandchildren


4.12 4.12 Powers of TrusteesPowers of Trustees

• Common to expand trustee’s powers beyond what is permitted by common law or applicable statute by specifying broad powers in will for such things as investments, carrying on a business, renting property, selling property, etc.

e.g. Investments by trustee are limited to those authorized by Trustee Act unless the will authorizes broader investment options


4.13 Guardians for Minor Children4.13 Guardians for Minor Children

Will can provide for the appointment of Guardians for minor children in the event both parents have died.

Avoid appointing married couples in case of future marriage breakdown – select one person with, perhaps, an alternate


4.144.14 Attestation ClauseAttestation Clause

• Clause at the end of the will

• Witnesses certify that the will has been executed by the testator in their presence

• Describes the manner in which the will has been executed (e.g., all witnesses and testator were present at same time and signed in presence of each other)

• Ensure the clause reflects any special circumstances (e.g., blind testator, signing with mark).


5. Will Planning & Checklists 5. Will Planning & Checklists

• Will preparation requires significant time, effort, knowledge and planning

• Organization and checklists are essential to fulfilling professional obligations to clients, delivering a quality product and being cost effective

• Development of good precedents and thorough checklists relating to interviews, drafting and will procedure is essential to a successful wills practice


6. Extend Your Knowledge Holograph Wills

Holograph Will - A will written entirely by the testator or grantor with his own hand – signed but not witnessed.

• Many Canadian jurisdictions recognize and allow holograph wills to be entered for probate.

• What about B.C. law – acceptable or not? Authority?

• How can this type of will be used in estate planning?

• When might someone recommend a holograph will to a client?

• What policy concerns might lead to the rejection of holograph wills?


7. Readings for Future Classes7. Readings for Future Classes

1. For next two classes – January 13 & 15, 2009

• Review notes on trusts and fiduciary duties, if any, or have a look at a basic text book on trusts in the library.

• Part 1 - Succession• All of S. 1 “Survivorship” (i.e., ss. 1.1 to 1.3)• SS. 1.1 Presumption of Death – Current Law• SS. 1.2 Proposed Law Reform• SS. 1.3 The Dead Human Body