Most of us have heard of the “KISS” principle, which stands for “keep it simple, stupid.” The natural assumption is that simple equals short and sometimes this is true, but not always. When it comes to legal documents such as Wills and trusts, the devil is in the details, and litigation to sort out matters is a lengthy, painful, and expensive path to get there compared to proper drafting from the outset.
The value of a properly drafted Will that respects all legislation in jurisdictions where the testator has assets and that reduces risk by leaving nothing unclear or uncertain has huge value. Remember that you, the testator, are no longer around to ask: “Did you mean this? Or did you mean that?” Much of the time, ambiguity in a Will eventually leads to family conflict and additional professional fees.
Short Wills, and Will templates (DIY kits), do not provide sufficient documentation to record your wishes, comply with legislation, and plan for contingencies.
In a Will, ambiguity raises questions and opens the door to interpretation. This is why a properly drafted Will is so long.
A mock simple Will
Consider a mock simple Will along the following lines (for discussion purposes only; please don’t try this at home):
I appoint A to be my executor and, if A does not survive me, I appoint B to be my executor.
My executor shall pay the following cash gifts:
- $10,000 to each of my nieces and nephews
- $10,000 to ABC charity
- $100,000 to my parents
My executor shall distribute the following articles and effects:
- My stamp collection to KLM
- My record collection to PQR
- My SUV to EFG
I direct my executor to distribute the balance of my estate as follows:
- All to my Spouse if he/she survives me. If not, all to my children in equal shares per capita, with such shares to be administered according to paragraph 27 of my Will; provided that if a child of mine is not then living but leaves issue then surviving, the issue of my deceased child shall take the share to which my deceased child would have been entitled in equal shares per stirpes with such shares to be administered according to the provisions of paragraph 27 of my Will.
- If none of the persons or entities specified in my Will survive me, or exist, at the relevant time to receive a vested share in my estate, or any portion of the trusts to be administered according to the provisions of paragraph 27 of my Will fail to vest, the balance remaining shall be distributed to Large Charity #1 and Large Charity #2 in equal shares.
What could possibly go wrong with a simple Will?
Indeed, that is the question: What are some of the things that could go wrong with this simple Will? As with all lawyerly answers, it depends. Answers to the following questions, and others, may impact the interpretation of the Will and administration of the testator’s estate:
- What is the citizenship, domicile of birth and current residency of the testator?
- What is the citizenship and residency of the intended executors?
- What is the citizenship and residency of the intended beneficiaries who are natural persons?
- Where is the Will being made?
- What is the intended jurisdiction of the trusts created under the Will?
- What is the relationship between PQR, KLM and EFG and the testator?
- How are the charities intended to use the gifts they receive: general purposes or something else?
- Can the executors borrow money to facilitate the administration of the estate without a court order?
- Can the executors lend money, including to beneficiaries?
- Are the executors required to keep an even hand between beneficiaries?
- Should the prudent investor rule in Ontario’s Trustee Act apply?
- What is intended to happen if a beneficiary disclaims their interest in the estate or trust?
- Can the executors purchase assets from the estate and, what compensation if any are they permitted to claim as well as the frequency of payment?
- Do children or grandchildren born outside of marriage inherit?
- Is income earned on inherited property and received during marriage to be excluded from marital property?
The list of questions goes on and on and, if the issues are not clarified in the Will, then there are default rules that will apply under legislation or case law. In some instances, this is fine but often there are better options that have become standard practice over the years. This is a key reason for the maligned boilerplate and drafting conventions private client lawyers hold dear.
Lack of clarity in Trusts is not good, either
Similar to the situation with the simple Will, interpretation and administration of a trust can suffer from a lack of clarity and appropriate boilerplate much of which is often nearly identical to that found in corresponding Wills. Key trustee powers lawyers like to see in most Canadian common law trusts include:
- Investment powers exempting from the prudent investor rule and permitting sub-delegation
- Incorporating companies to hold assets of the trust as well as reorganizing corporations held in the trust
- Borrowing and loaning monies
- Making elections under the Income Tax Act
- Winding up trusts early
- Pre-taking compensation
- Ability to amend the trust
- Ability to change the jurisdiction of the trust and hold assets in other jurisdictions
- Ability of the trustees to resign, be removed and replacements appointed
- The basis on which trustees may be relieved from liability and the extent to which they can be indemnified
Plan well. Live well. Leave an organized estate.
Wills, estates, and trusts in Ontario are subject to a combined total of approximately 50 pieces of provincial and federal legislation. On top, there are decades and even centuries of case law. To distill a client’s intentions down to the simplest form possible, without risking misinterpretation, would be a time-consuming and immensely expensive exercise, out of reach for most people.
If the goal of Will and trust planning is effective interpretation and administration that reduces the risk of conflict, delay and unnecessary expenses, as well as allowing for the best decisions to be made by ensuring flexibility, then comprehensive provisions that have been tried and tested among professionals and the courts is the smart way to go, even if not the shortest.
Save the KISS for your sweetie and buy them something nice with your savings!
— Blair L. Botsford