This Blog was written by: Emily Racine
It is a hard truth that after a client confirms they have a will done, the first comment to follow is often “but it was done years ago”. The reality is that even when clients have a will, often it has not been reviewed in many years. With the ever-changing landscape of estate law, this neglect can have significant consequences. When the plan that was created 20 years ago does not make sense in the new regime, clients may be opening their estate up to consequences that could have been prevented if their will had been reviewed periodically with an estate professional.
For example, many wills were drafted to take advantage of the tax planning strategies available when testamentary trusts had access to graduated rates of tax. Since this strategy is no longer applicable, there are hundreds if not thousands of wills which create trusts where they may not be necessary or advisable. While there are many reasons to use trusts in wills, if they were created purely for tax purposes, there may be no advantage and a lot of administrative burden to the trusts created.
To cite another example, multiple wills are used as a strategy in Ontario to try to minimize probate taxes payable after an individual dies. The basics of this strategy are this: separate a testator’s assets between those assets which will trigger the requirement for probate, such as real property, and those assets which will not trigger a requirement for probate, such as private company shares, and create a separate will to deal with each set of assets. A recent decision has called the use of this strategy into question and has underlined the importance of specific drafting techniques. Wills that had been drafted prior to this decision may think they are using the tax saving strategy of multiple wills only to find that, after death, the strategy has failed and all assets are subject to probate tax.
There are many obvious reasons to review an estate plan such as marriage, children, divorce, death of beneficiaries, to name a few. However, testators must always account for changes to the law. These triggers to review a will may be less obvious but they are no less important. If you have a plan in place based on an out-dated strategy, when the time comes, your beneficiaries may find that they are out of luck!