What will you do? Part Two
Marissa Mah, B.Comm., LL.B., LL.M. - Feb 20, 2023
Today we present the second part of a candid conversation about preparing a will, which focuses on online will providers, advice for business owners, blended families, and the hardship created by dying without a will.
Earlier this month, we presented Part One of a candid conversation between our very own legal eagle, Marissa Mah, and Andreea Muth, a lawyer who supports our clients in the areas of succession and estate planning. There are so many questions – and as you will see, so many great answers.
Today we present the second and final part of that conversation, which focuses on online will providers, advice for business owners, blended families, and the hardship created by dying without a will.
Here we are in Part Two of our conversation about wills. There are many services online that allow you to make you own. Do you find benefit to them, and at what point should someone say, “Online is not right for me, I need a lawyer?”
Those companies are very clear that what they are good at is creating the most basic minimum will. They are clear about what their wills can and cannot do. If you are comfortable with that, and you find that your situation fits what they can provide, online wills are a good and valid service.
The problem is that many people don’t really understand if they are a fit with the online model. Let’s say you have two children and a simple estate. You want to have both children as executors – something we sometimes have concerns with (see Part One of this conversation) – but if you want both kids as executors, not all online services can provide that. So, you may end up with a will that has just one child as executor and that can create conflict between your children.
Also, you have to consider important nuances. For example, if you have more children in the future, some online wills only allow you to divide your estate amongst the children you have at the time of making the will. Therefore, in this scenario, you might inadvertently exclude any future children from inheriting their share of your estate.
As a final note, the online programs do not always allow you to divide your estate exactly as you want. Couples might want to split their assets between their broader families, for example, and that might not be permitted by all online models.
Many of our clients are business owners, something that introduces another level of complexity into the management of their affairs. What do you recommend in terms of these clients’ wills?
Things can get complicated quickly. The business does not have to be a huge enterprise. It can be someone running an Etsy account. There are intricacies in terms of shutting things down, paying taxes and managing assets so they can be sold, for example.
A sole proprietorship may not need a complex will, but it still needs guidance. With a corporation of any size, typically we recommend having a separate will for the shares of that corporation. When there is more than one person in the corporation, it is important to have a shareholders’ agreement, and to ensure that the will corresponds with it. For example, if in your will you bequeath your share of the business to your children, but the shareholders’ agreement restricts that, then litigation could be needed to sort things out.
It is so important not just to get your wishes expressed in a will, but to talk about them. Have those conversations with your family and business partners. If you find out that your partners don’t want your children to be involved in the business, that will necessitate a different approach. You will also need to have discussions around having appropriate life insurance in place, what are the buyout mechanisms in place, and how your children are being protected to ensure the true value of the company is being passed on to them.
You have to ensure that all parties understand what your intentions are.
Exactly. You have to let your partners in on the big picture, and the small details, of what is going on. You have to be willing to have those conversations.
Another situation we see is with blended families – families in which divorced people are remarrying, bringing children with them into the marriage, and perhaps having new children. What are some of the considerations there?
Many people will leave everything to their spouse. Then, when the surviving spouse dies, everything goes to the kids. But in a blended family situation, that can get tricky. Not because there is a reason to distrust the surviving spouse, but because it creates a fundamental issue in identifying which kids inherit the estate.
Everyone might be getting along and be on the same page, but if everything goes to the surviving spouse, and then that spouse dies without a will, or the will is deemed invalid for some reason or can’t hold up in court – all of a sudden everything may go to the kids of the surviving spouse only. The children of the passed spouse may be inadvertently cut out.
It is also true that sometimes, when the surviving spouse updates the will after the death of the first, they make a mistake, and that leads to painful litigation just to understand who is supposed to get what.
What is the solution?
One answer is to leave certain things in trust for the surviving spouse, or when the first spouse dies, make an outright distribution to the children of that spouse. Another approach is to have an agreement in place so that after one spouse dies, no changes to the will of the surviving spouse will be permitted (or will only be permitted in certain limited scenarios).
I want to ask you about dying without a will. Some people say they don’t need a will, especially single people who say they don’t have enough in the way of assets or don’t have children to whom they wish to leave their legacy. What is your response to that?
I do hear people say they don’t have anything, but even personal belongings can have value to the people left behind. It is not just a matter of saying, “I don’t have a big car, or house, or valuables.” There can be value in digital assets. What happens to all that stuff?
In Ontario, we have default rules. If you don’t have a spouse or kids, by law, your assets go to family – parents and siblings, in that order, and then out to further degrees within your family. Not wanting that default system to take over may be reason enough to have a will! Because perhaps you want certain friends to have certain things and maybe you want some things to go to a charity you believe in.
When you die without a will, it introduces elements of confusion and uncertainty. Someone in the family or friend group will have to step up and manage a search for a will and instructions that don’t exist. When they finally come to the conclusion that a will doesn’t exist, they will have to consult a lawyer.
During the time your will is being searched for, which can last months and even years, your assets may fall apart. So, by the time everything is resolved, some of your assets might not make it into the hands of the people you wanted them to.
Having a properly structured and executed will is the equivalent of saving your loved ones extra confusion, uncertainty and pain. Many people, when they die without a will, truly place a burden on the people they love the most. If people stopped to think about it, they would realize they would rather spare them that burden, and having a will is the way to do that.
Andreea, thank you so much for having this conversation with me. Your expertise has proven so valuable to our clients.
Anytime! I am here.
If you would like to discuss creating or updating your will, or if you have any questions at all on the subject, please contact Marissa Mah at email@example.com or 1 416-945-7051.