FP Answers: You can do what you want if you have the mental and legal capacity to create a valid will. But there are a few caveats.
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Q. I live in Ontario, am 64 years old, and just sold my home. I have a small registered retirement savings plan (RRSP) and will have a small company pension plan when I retire from my job. The company pension plan continues to pay the beneficiary for 15 years after I die. I currently have no will. I have four estranged children. The last I heard from friends is that three of them live in the same city as I do and the fourth lives elsewhere in the province. As they have chosen to have nothing to do with me, when I pass away I do not want to leave them anything. I want to ensure that my will cannot be challenged and that they do not benefit from my estate in any way at all. Right now, I’m considering making a local animal charity the sole beneficiary of my estate and company pension plan. Any suggestions on how I can write my will to ensure this happens would be appreciated. —Donna
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FP Answers: Donna, you did not mention if you had any health concerns or a spouse at age 64. The will you make at age 64 may not be the same as one when you are 84 years or older.
Make your lawyer-prepared will today. This should give you more peace of mind.
You have testamentary freedom to do what you wish in your will, provided you comply with statutory requirements, have the mental and legal ability to create a valid will, including a stipulation that you have no delusions affecting decisions about your will.
Remember that wills are legal documents subject to rules of interpretation and legislative requirements. Judges review wills and if your will language is not clear, they can interpret your will in ways you did not intend.
Failing to make a will means the government gives you an intestate will and then decides for you who inherits your stuff. Their rules likely will divide your stuff among your next of kin and you can’t save on taxes.
Confirm, in writing, with your pension office that you can designate a beneficiary to receive your pension survivor benefits.
Your RRSP, unless you have a qualifying spouse, must be included as income in your final personal tax return. You can reduce any income tax on the RRSP by designating charities as beneficiaries.
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Usually, trustworthy family members that do not have a conflict of interest would be your first choice to serve as your estate administrator or estate trustee. If they are not a beneficiary, they may decline. Family can also serve as your attorneys under powers of attorney for property or for personal care.
Your lawyer’s job is to document your valid reasons. This may be due to serious family misconduct. Many lawyers can encourage you to avoid will disputes and include family or suggest a no-contest will clause, which threatens to disinherit beneficiaries who challenge the will, but there are some caveats I will explain.
No-contest clauses may not be enforced by courts if they contain vague language or are contrary to public policy. No-contest clauses cannot prevent legitimate scrutiny of your will’s validity. Your will should not be prepared or signed in suspicious circumstances.
What are public policy reasons that allow courts to ignore no-contest clauses? There are many. You cannot prevent a court from considering dependant support claims. Do not disinherit anyone because they married against your wishes.
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A no-contest clause is not a guarantee. It must impose penalties if relatives challenge your will. A penalty must be attached to their gift. For example, if any family member joins or starts legal proceedings to contest your will, they forfeit their $50,000 gift. This may be an inadequate penalty if they stand to inherit much more by questioning your will, capacity or suspicious circumstances. If your last will is prepared under suspicious circumstances, courts can investigate.
A $50,000 penalty, for example, may not prevent the court from scrutinizing how your will was prepared. If family members join forces, they may share the cost of lawyers, regardless of what penalty clauses you may have to pay.
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What about any grandchildren? This assumes you are not supporting any family members financially, directly or indirectly. Also, this assumes you have not made any promises to them that courts may enforce.
Your lawyer should record your reasons for excluding family members to prove this was not an omission. Normally, your reasons are not put into a professionally prepared will. There is no need to name estranged family in your will to exclude them in Ontario.
Edward Olkovich is an Ontario lawyer at MrWills.com. He is certified by the Law Society of Ontario as a specialist in estates and trusts law. This information does not substitute for legal or tax advice.
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