Will Clauses - Hull on Estates #180
Listen to: Will Clauses - Hull on Estates #180
This week Bianca La Neve and Sarah Fitzpatrick discuss lesser known Will clauses to consider when preparing a Will.
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Will Clauses - Hull on Estates- Episode #180
Sarah Fitzpatrick: Hello and welcome to Hull on Estates. You’re listening to episode 180 on Tuesday, September 22, 2009.
Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada. Hosted by the lawyers of
Sarah Fitzpatrick: Hi and welcome to another episode of Hull on Estates. I’m Sarah Fitzpatrick.
Bianca La Neve: And I’m Bianca La Neve. Sarah, a few months ago you did an interesting podcast with Paul Trudelle about lesser known Will clauses that you might consider including in a client’s Will. And I thought today we could continue that discussion and talk about a few more of those clauses.
Sarah Fitzpatrick: Right, that’s right, Bianca. Paul and I had discussed, you know, those clauses that don’t really garner as much attention as your routine run-of-the-mill Will clauses. Ones you may not come across as frequently but still obviously worth consideration and we thought we’d discuss some of those today. We’ve got a long list of those and we’d see how many we could get through today and see how the discussion goes.
Bianca La Neve: So the first one you mentioned was including a provision that the Will is made in contemplation of marriage. So my understanding is that if you have a Will and you subsequently get married, your Will is automatically revoked by the marriage unless you specifically accounted for that situation in your Will.
Sarah Fitzpatrick: That’s right. Marriage does revoke a Will so unless there is a declaration in the Will stating that it is your intention that the Will survive your marriage then yes, it will be revoked. So certainly something to consider, canvass with your client if that’s a possibility. If they are looking at getting married and they are a single person doing their Will, it’s important that that would be included. Without that, obviously the Will is not going to hold up. Now the purpose of this is that you can envision the situation where you have a testator that is single, they make a Will, there’s no contemplation whatsoever of the spouse and perhaps future children in that Will. Then they get married and if the Will was not revoked then obviously the spouse and any potential children wouldn’t benefit at all and there would be a Will so there would be no intestacy. So by revoking the Will, it at least ensures to protect the spouse and any possible children on an intestacy, if there’s no declaration in the Will.
Bianca La Neve: Great point. So again, these sort of clauses we’re looking at are fact specific so you always want to canvass your client’s particular needs and background. So for example, I guess with this clause you would look at it if, you know, your client is single but in a serious relationship. If they were single and young and you know possibly still in school and not in a serious relationship, this is not something you would necessarily turn your mind to.
Sarah Fitzpatrick: No but certainly, you know, if there is an impending marriage, absolutely. This is something that you’d want to consider and include in your drafting.
Bianca La Neve: For sure. So the next one you mentioned was loyalty points and you had a particular scenario dealing with Air Miles.
Sarah Fitzpatrick: That’s right. Air Miles certainly are the ones that most people would think of. But we’ve got all kinds of loyalty programs now.
Bianca La Neve: Do my tanning points at the gym qualify?
Sarah Fitzpatrick: I think we’d need to probably look at the wording of the contract there but certainly, you know, for frequent business travellers, anyone that may have amassed a very significant quantum of points, it’s got value. It’s something that they may want to bequeath in their Will so it’s certainly not something that should be overlooked. I think you would certainly discuss with your client if they did have such points, how many they had and if they had any specific intention about passing that on to anybody. Now most of the plans…certainly I know Air Miles…they do allow for the disposition of points to immediate family members. You’d want to make sure there was no conflict, I suppose, with the wishes of the testator. But certainly that would be another less commonly used Will clause that you would want to consider in the particular circumstances.
Bianca La Neve: And what sort of, sort of what threshold quantity of Air Miles would you look at when considering whether or not to put this in?
Sarah Fitzpatrick: Well I certainly think it would be an amount of Air Miles, for example, whatever would be required for a person or two to have a round trip. I don’t know what that would be these days, maybe 200,000, something like that. But I think what would be more important than the actual amount would be the wishes of the testator. And even if they had a smaller amount but it was important for them to pass those on and it was something that they didn’t want overlooked, it would be again a useful clause to consider putting in your Will and something that really wasn’t done 5, 10 years ago. But, you know, things have changed and certainly a lot of individuals have built up a lot of points. So that would certainly be something, you know, a clause that you’d want to consider.
Bianca La Neve: For sure. And what other clauses have you encountered recently?
Sarah Fitzpatrick: Well, you know, another one that again may not arise frequently is when you’re getting into your appointment of your executors and trustees. I would say the majority of Wills may have one, possibly two, or you may have one executor and trustee and a successor executor and trustee. If you’re getting into a situation possibly when you have more than one, the facts may be such that you would want to consider a majority rule clause. For example, ensuring that when decisions had to be made that a majority of your executors and trustees had to agree on any decision before a resolution could be made.
Bianca La Neve: And you had mentioned that this is useful when you think there may be some points of dissension among estate trustees. But it could also be useful when you have one or more lifetime trusts set up in your Will where there’s discretion to pay out income, the amount of income paid out and/or discretion to encroach on capital. You might want to implement more than, or have more than one trustee so you have a couple of people or three people thinking about the issue and deciding on the best course of action for the trust.
Sarah Fitzpatrick: That’s right. And you raised a point just at the outset there about possible disagreement between your trustees. We really have, I suppose, a couple of different issues there. If it is a possibility that there could be some disagreement amongst your trustees, certainly I think the first step would be considering whether or not those would be appropriate appointments in the first place. I think these would be infrequently used clauses, this majority rule, because I think of course first you need to examine whether or not the appointment of the particular estate trustee or trustees is the right one and a part of that means that they’re going to be able to get along together and so forth. But certainly if you’ve chosen them and you think that they’re the appropriate ones, there would be circumstances where some kind of a majority rule clause might be appropriate. We had also mentioned, Bianca, the situation where you might appoint two individuals along with a trust company and you may want your majority rule clause to state something along the lines of the trust company had to be one of the majority, so that could happen as well. And certainly when you’re getting into a clause of this sort you need to contemplate in the drafting as well whether or not what happens if there is only one and you can’t have a majority, what happens if it’s a deadlock. All those types of issues need to be addressed as well.
Bianca La Neve: For sure and keeping with the executor clauses, you had mentioned something about when you’re appointed trustee of various estates.
Sarah Fitzpatrick: Right. Yeah. There’s a…certainly if you are acting as a trustee for other estates, for example, this is not uncommon in the context of lawyers or other professional advisors – accountants and so forth – to act as the trustee of certain clients’ estates. And in that situation, if the person who has been appointed, the lawyer for example, who is acting as a trustee of many other persons’ estates, if that person passes away, they need to give consideration in their own Will to who is going to assume the trusteeship of those. For example, you most likely have your spouse or an immediate family member in your own Will as the trustee. But it would not be appropriate in those situations for them to assume the title of trustee of those other estates in the professional context. So in that situation, you would most likely have a successor colleague, for example. You know, you and I discussed obviously you’d want to canvass that with your colleague, make sure that that was an agreement between your law firm or whomever that that was agreeable to you. And you may not only have a colleague as the successor estate trustee but someone else as well to stand in their shoes if they weren’t able to. So we did have…I don’t know if there was anything else you wanted to add on that point?
Bianca La Neve: No, I think you’ve covered it.
Sarah Fitzpatrick: Okay. And then there was just as well on the…we have a few actually here on the appointment of the estate trustees. We had discussed the equalization.
Bianca La Neve: Yes, that’s a good point. So that ties into having appointing your spouse as your estate trustee. So in these types of situations, a spouse can either choose to take their entitlement under the Will or, if its more beneficial, choose to elect under the Family Law Act. So in those types of situations, you run into the spouse wearing two hats. They’re wearing the hat of estate trustee but they’re also wearing the hat of a somewhat disappointed beneficiary that thinks they’re entitled to more or believes they are entitled to more and so chooses to elect under the Family Law Act to get more from the estate.
Sarah Fitzpatrick: Right. And obviously a spouse can’t act for and against the estate so you can certainly put in a clause that states that in the situation where a spouse elects to equalize as opposed to taking under the Will, then they would be removed as the estate trustee. So that’s something to consider as well with your client, if you think that say if your spouse is appointed as the sole estate trustee and you think that that may be equalization as opposed to taking under the Will, maybe a possibility. That’s something that you’d want to consider as well.
Bianca La Neve: So to wrap up, Sarah, perhaps we can talk about an interesting one you raised about charitable bequests.
Sarah Fitzpatrick: That’s right. Often in a standard Will you’re going to see a clause if there is any kind of a charitable bequest stating how much of a bequest, for example, and the name of the charity. But really we should be looking beyond that a bit. Firstly, we’ve got to make sure that the charity is properly described. This is extremely important that this certainty. Making sure the charity is still in existence.
Bianca La Neve: And this is important but it can only take you so far in some cases. Cause let’s say I do a Will today and I name a certain charity and let’s say it’s a local charity that’s active in my community that I want to benefit and I plan to live a very long time. And it could be that in 30, 40, 50 years, that charity doesn’t exist anymore. So I would still want to preserve the bequest to a charity.
Sarah Fitzpatrick: That’s right. So with the proper drafting, and I would call it a cy-pres clause, you could add that in, that you could make sure that not only would your bequest succeed to the charitable organization which you refer to in your Will but that if you include a more general charitable intent, that the trustee will then be given the discretion to give the bequest to a similar organization which has a similar charitable intent. So there’s some drafting that can be done there to ensure that the gift would not fail if the charity, as Bianca said, ceased to exist or if it amalgamated and no longer went by the same name. So we do have to consider those charitable bequest clauses as well and making sure that they are as inclusive as possible on that issue.
Bianca La Neve: Thanks Sarah. I think that brings us to the end of this week’s discussion. Thanks for listening and joining me today.
Sarah Fitzpatrick: It was a pleasure, Bianca. And I don’t think we’ve podcasted before together. It was a pleasure and I look forward to podcasting with you again soon.
Bianca La Neve: For sure. And we look forward to hearing from our listeners. You can send us an e-mail at hull.lawyers@gmail.com. Be sure to visit our blog as well at estatelaw.hullandhull.com where you’ll find even more information and discussion on today’s practice of estate law. We hope that you enjoyed the show. I’m Bianca La Neve.
Sarah Fitzpatrick: And I’m Sarah Fitzpatrick. Until next week, so long.
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