The Rural Voice, 2004-03, Page 48Agrilaw
Making hour will: lawyer or will kit?
Brian
Philips. an
associate
lawyer with
the London
law firm of
Cohen
Highlev LLP.
By Brian Phillips
I occasionally have clients enquire
as to what I think of using book store
will kits for basic estate planning. 1
usually indicate that if the client's
needs are quite basic the kit may
work well and that it would certainly
be preferable to have a kit will than
no will at all.
Although I haven't had an
opportunity to review every will kit
out there, I have always been left
with the impression that a client
would have to devote a fair bit of
time and energy to carefully
reviewing and executing the
instructions to be certain that they
have produced a form of will that
carries out their full wishes. If you
are on your own with no dependants,
your will needs are fairly basic and
arguably, it might not matter much
what happens with your estate,
although ideally you at least have
enough assets to take care of your
interment costs.
Once you are married or at least in
a committed relationship, your affairs
become somewhat more complicated.
Most married couples pool their
resources in such a way as to build a
financial future together and as such,
most married folks plan to leave their
separate estate to their spouse on
death. If you don't have a will but
also have no children, your spouse
does in any event receive all of your
separate estate on your death.
Arguably, your affairs are only
somewhat removed from being basic
when you first tie the knot.
However, once youngsters appear
on the scene, estate complications do
set in. If you have one child, after
your spouse receives his or her
"preferential share" ($200,000
currently), the balance of the estate in
44 THE RURAL VOICE
excess of the preferential share, if
any, is split half to spouse and half to
child. If you have more that one
child, the split, after the preferential
share. is one third to your spouse and
two thirds to your children. Although
the preferential share may seem like a
high threshold, you can imagine the
havoc that your spouse would
experience with you gone if the farm
had to be liquidated in order to make
arrangements to pay to the children
(or their trustee) that portion of the
share exceeding your spouse's
preferential share. Once children are
on the scene. your estate affairs have
become complicated.
Where it is at all possible, we
recommend that your will structure
generally deal with percentage shares
rather than specific assets. Dealing in
shares reduces the likelihood of
having to revise your will when you
either dispose of old assets or acquire
new assets.
Our farm and other business
clients do encounter some challenges
in this approach in that they often
want to provide for a disposition of
the farm business to possibly only
one of their perhaps several children.
Where there is a desire to be "fair"
financially to all of the children, there
are a number of avenues to follow.
If you have been fortunate in your
years of farming, you may have a
number of non -farming assets to
divide amongst the other children. In
the real world however, most farmers
have most of their personal "wealth"
tied up in the farm and plans must be
devised to have the other children
eventually benefit from the farm
assets.
If you have sufficient excess cash
flow from operations, it might be a
good strategic plan to look at having
life insurance as part of the estate
plan to provide cash on death to fund
bequests to the children who will not
be receiving a direct interest in the
farm. Absent such arrangements,
many farmers will bequeath the farm
to the family member who is trusted
to carry on the business, subject to an
obligation to pay out some portion of
the value over some reasonable
period of time to the recipient's
siblings.
There are many different ways to
structure these arrangements,
depending upon which outcome you
may wish to assure. The one thing to
keep clearly in mind is that absent a
properly drafted will, your wishes
will not necessarily be carried out,
even if known.
If you have a younger family,
where there is no one ready to take
over control of the farm upon your
death, then you will also need to
direct your attention in your will
planning to issues of what sort of
trust needs to be set up for your
children and who will be their
guardian. Ideally, you live long
enough that your children are of age
but your will should provide for the
unexpected.
Most people will appoint their
spouse as executor or estate trustee.
Your spouse does not need to be a
chartered accountant to administer
your estate. It is sufficient that your
spouse be aware of the availability of
various professionals to assist with
administering the estate's assets.
Your will however, should also
anticinate that your spouse has not
survived your death. If your spouse is
not around, who will take on this
important role? There are two basic
concerns which might aid you in
making this alternate selection. First,
where your children are concerned, it
would be ideal to have one adult
looking after the day-to-day care (the
"guardian") and another adult or two
looking after the financial affairs of
the estate.
Heaven forbid our children should
end up orphaned but in that unlikely
event, ideally, there are a number of
adults keeping an eye on what is best
for them. The guardian would
approach the executors every few
months with a budget of needs for the
children. The executors would review
the budget and, if fully satisfied,
make the necessary arrangements.
The choice of alternate executors
might also be impacted by the
question of what is to happen to your
estate if your branch of the family