Why You Need a Will

Upon the breakdown of a marriage or a long-term relationship, there are a number of issues which normally need to be resolved depending upon the circumstances of the parties. These issues may include: the custody of children, child support, spousal support and the division of property.

If you presently have no valid Will, or if you have not reviewed your Will lately, you should consider meeting with a member of our Wills, Estates and Trust Practice Group to obtain advice on how best to protect your family or loved ones in the event of your death.

The following true-to-life scenarios may help to illustrate some of the dangers of failing to plan for your demise, or proceeding on faulty assumptions as to your present estate plan.

1. You are a 65 year old woman, recently married for the second time to a wealthy man.

You signed a will shortly after the death of your first husband which leaves your entire estate to your three children, and you see no reason to make any changes to that will, in view of the fact that your new husband has no need of your assets. Did you know that your recent marriage revoked your previous Will, and if you die without making a new will, your husband will inherit a significant portion of your estate?

2. You are a 50 year old man, divorced from your wife of 35 years.

You remain “best friends” and are very much in each other’s lives. You have no children and both of your parents and your only brother have died. You have two nieces which you barely know. You made a Will 20 years before your divorce which leaves your entire estate to your former wife. In view of your continuing relationship, you see no reason to change the disposition of your estate. Did you know that upon your death, any benefits accruing to your former wife are revoked, absent a contrary intention contained in your Will, and that your estate will devolve upon your nieces?

3. You are a 35 year old male, married with three children ages 1 month to 5 years.

Your wife is a stay-at-home Mom with no job skills and no assets of her own. You have no Will. Did you know that if you die without a Will, your wife will have to share a substantial part of your estate with your children, and may not have enough to live on without being forced into employment to make ends meet? Did you also know that any share to which your children are entitled must be paid into Court and supervised by an official of the Ontario Government until they attain the age of eighteen years?

4. You are married and all of your assets are owned jointly with your spouse.

You have no children, and you see no need to prepare a Will at this time, since on the death of either one of you, the survivor will inherit everything. The survivor would of course prepare a Will at that time. Did you know that if you and your wife die in a common disaster, one-half of your joint estate would be divided among members of your family, which could include parents, siblings, and nieces and nephews, while the other half of your joint estate would be divided in the same fashion among members of your spouse’s family? Is this what you would want?

5. Consider the same scenario as above.

Instead imagine that you die immediately in the same disaster, while your spouse survives, but dies from his or her injuries, one day later. Did you know that your entire joint estate would go to your spouse’s family?

Make an appointment with one of our skilled professionals today, to ensure that your wishes will be implemented on your death, and further to determine the most cost efficient and practical methods of accomplishing that objective. At the same time, consider planning for potential incapacity by putting Powers of Attorney in place.

If you have questions about your will or would like to draft a will, please contact one of our family law lawyers at (613) 728-8057. You can also contact Gail Nicholls directly at (613) 288-3234 or by e-mail at gailnicholls@tslawyers.ca.

Gail Nicholls,
Counsel Group,
Tierney Stauffer LLP

This article is provided  as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter  referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship.

What is a Henson Trust (Absolute Discretionary Trust)?

A Henson Trust is an excellent way to allow for financial care for disabled children after the death of the parent(s). The terms Henson Trust, Absolute Discretionary Trust and Discretionary Trust are used interchangeably and refer to a very specific type of trust when used in the context of planning for a person with a disability.

The purposes of a Henson Trust are to protect the assets (typically an inheritance) of a disabled person, as well as that person’s rights to collect government benefits and entitlements.

The key provision of a Henson Trust is that the trustee has “absolute discretion” in determining whether to use the trust assets to provide assistance to the beneficiary, and in what quantity. This provision means that the assets do not vest with the beneficiary and thus cannot be used to deny means-tested government benefits.

In addition, the trust may provide income tax relief by being taxed at a lower marginal rate than if the beneficiary’s total assets were considered. It can also be used to shield assets from matrimonial division in case of divorce of the beneficiary. In most cases, the trust assets are immune from claims by creditors of the beneficiary.

A Henson Trust can be established either as an Inter Vivos (Living) or a Testamentary Trust (Created by last Will and Testament). The most commonly used type of Henson Trust is the Testamentary Trust established in a parent’s or caregiver’s Will.

History of the Henson Trust

Leonard Henson had a daughter named Audrey. Audrey was a person with a developmental disability and she lived in a group home managed by the Guelph Association for Community Living. Leonard knew that if he left his estate directly to his daughter, it would exceed the allowable asset limits as set out by the Family Benefits Allowance (now called the Ontario Disability Support Program). He realized that having assets in the hands of his daughter directly would not be to her advantage and that her benefits would be terminated until the assets were “spent down” to a level below the threshold amount. In addition, Leonard’s wife had pre-deceased him and he had no other family.

Leonard discovered a technique that would allow Audrey to retain her government benefits while at the same time allowing her to receive quality of life enhancements from his estate. That technique was the use of the Absolute Discretionary Trust to be created in his Will as a Testamentary Trust. The Will required the creation of an Absolute Discretionary Trust which appointed the Guelph Association for Community Living as Trustee and his daughter Audrey as beneficiary of the trust. Once Audrey died, his Will instructed that the remaining funds in the Trust were to be passed on to the Guelph Association for Community Living.

The Ministry of Community, Family and Children’s Services (the ministry which controls the FBA (ODSP)), determined that Audrey had inherited the estate of her father and since it was in excess of the allowable amount of assets, they terminated her benefits. The Guelph Association for Community Living challenged this decision and the Ministry took the trust and the Trustee to court. The first court found that the funds contained in Audrey’s trust account did not meet the FBA (ODSP) definition of assets and therefore, it ruled in favour of the Trustees. The Ministry launched an appeal. The appeal reached the Supreme Court of Ontario and in September of 1989 was dismissed. The court allowed the trust to benefit Audrey without affecting her government benefits.

That decision has enabled families who have a son or daughter with a disability and are residents of Ontario with a vehicle in which they can place assets for their children without disqualifying them from receiving the ODSP payments to which they would otherwise be entitled.

For further information or assistance, please contact Douglas Laughton, Partner, Tierney Stauffer LLP at 613-288-3225 or dlaughton@tslawyers.ca. If you have questions about trusts in general, you can contact us at 613-728-8057 or by e-mail at info@tslaywers.ca.

Douglas J. Laughton
B.A. (Hons.), LL.B.
Partner, Tierney Stauffer LLP

This article is provided  as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter  referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. 

Common Law Spouses and Intestacy

Many common law spouses believe that because they have been living together, they are considered married in the eyes of the law and consequently, if one common law spouse dies intestate (without a Will), the surviving one common law spouse is entitled to receive part of or the entire Estate. This is not the case.

The Succession Law Reform Act (the “SLRA”) states that if one dies without a will, married spouses are entitled to a preferential share of the estate equal to $200,000 plus 1/2 of the balance to share with the deceased child or 1/3 of the balance to share with the deceased’s children.

However, common law relationships of heterosexual or same sex partners, lack the same recognition as married spouses under the SLRA leaving the surviving common law spouse with no statutory right to an inheritance from their spouse’s Estate.

That means if a common law spouse dies without a will, the surviving common law spouse has no entitlement to any part of the Estate.

For example consider Jack and Jill who have decided never to marry but have been living together for 15 years and have three children aged 12, 9 and 7. Unfortunately, Jack dies in a car accident leaving an estate valued at $300,000. Jack has no Will.

Because Jack and Jill were never married, Jill has no legal right to an inheritance or to property through an equalization payment and Jack’s estate will be divided equally among his three children where each would inherit $100,000 (held in trust until they have reached the age of majority).

As a common law spouse, Jill can only hope to succeed in an action where she would sue the Estate seeking support as a dependent.

The above example may seem unfair but the Supreme Court of Canada in Walsh v. Bona, held that such distinction does not offend the Canadian Charter of Rights and Freedoms because the differentiation was based on the individuals’ choice of whether or not to marry.

Common law spouses who want their spouse to have a right to an inheritance in their Estate must have a valid Will. If you or someone you know is in a common law relationship and does not have a Will, to avoid a situation such as this, it is time to consider getting one.

If you have questions regarding this issue or any other issue pertaining to Wills and Estates Planning, please contact:

Sébastien Desmarais
LL.B., LL.L., J.D.
Associate, Tierney Stauffer LLP

This article is provided  as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter  referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. 

The Effects of Marriage, Separation and Divorce on your Will

We generally recommended that if you have a Will, you review it periodically to ensure that it remains relevant and continues to reflect your wishes. We also recommend that you consult with a lawyer if there has been a material change in circumstances since your will was executed. It is extremely important to follow this advice if you marry or if you separate or obtain a divorce from your spouse. These “material changes in circumstances” can have a significant impact on your Will and need to be reviewed with a lawyer.

If you Marry, Your Existing Will will be Revoked

Upon your marriage, any Will that was executed prior to your marriage is automatically revoked pursuant to the Succession Law Reform Act. There are 3 exceptions to this rule, the most important being if there is a declaration in the Will that it was made in contemplation of the marriage. If your will does not fit into any of the 3 exceptions, you will have to have a new Will executed after your marriage otherwise upon your death, you will be deemed to die intestate and your estate will be distributed in accordance with the intestacy provisions of the Succession Law Reform Act.

If you Separate, Your Existing Will will not be Affected

If you separate from your spouse, your Will will not be affected. It will remain valid and your estate will be distributed in accordance with its terms even if your former spouse is the beneficiary of your estate.

It is our experience that upon separation, most clients do not want to benefit their former spouse. As such, it is important for an individual who has separated to meet with his/her lawyer to review their will and determine if a new Will needs to be executed.

If you are Divorced, the Interpretation of Your Will will be Affected

If you obtain a divorce from your spouse, your Will remains valid, however, its interpretation will be affected by the terms of the Succession Law Reform Act.

Pursuant to the legislation, any gift to your former spouse or an appointment of your former spouse as executor or trustee will be revoked and your will shall be construed as if your former spouse had pre-deceased you.
As such, it is also important for an individual who has obtained a divorce to meet with his/her lawyer to review their Will and determine if a new will needs to be executed.

If you have any questions regarding any of these issues, we would invite you to contact us in order that we can set up a time to meet and discuss your questions.

David Sinclair
B.Com., B.A., LL.B.
Senior Associate, Tierney Stauffer LLP

This article is provided  as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter  referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. 

Separation: Issues to Consider

Upon the breakdown of a marriage or a long-term relationship, there are a number of issues which normally need to be resolved depending upon the circumstances of the parties. These issues may include: the custody of children, child support, spousal support and the division of property.

The following is a summary of these very important issues and the factors that are often considered in resolving them.

Custody and the Residency of Children
One of the most important decisions that will need to be resolved on the breakdown of a marriage or relationship is who will have “custody” of the children.

The term “custody” refers to a parent’s right to make important decisions regarding a child’s care. A custodial parent is entitled to make decisions regarding a child’s education, health, religion and welfare.

Upon separation, one parent may be granted “sole custody” which means that that parent is entitled to make all of these important decisions alone. If one parent has sole custody, the other parent does not participate in these decisions but is still entitled to be informed of the decisions after they have been made and also receive information about other important issues in the child’s life. In other cases, the parents may be granted “joint custody” of the children. This means that the parents are joint decision makers and they must both agree before a major decision affecting the child is made. In order for joint custody to work, the parents must have an ability to effectively communicate with each other and they must have a common outlook towards parenting.

The residency of the children is an issue, which although technically separate from the issue of custody, is closely related to it. Upon the breakdown of a marriage or relationship, the parents may agree that the children will maintain their primary residence with one parent and the children will see the other parent according to a fixed access schedule. A typical access schedule normally involves the children seeing the other parent once during the week, every second weekend and during all major holidays.

In other families, the parents may agree that the children should not have a primary residence but rather the children should reside equally with both parents. This is referred to as “shared residency” or “shared custody.” Finally, the parents may also agree that one or more children should maintain their primary residence with one parent and one or more children should maintain their primary residence with the other parent. This is referred to as “split residency” or “split custody.”

The issues of custody and the residency of the children are always decided on the best interests of the children. In determining the “best interests of the children”, the following factors are considered: the love, affection, and emotional ties between the parent and the child, the views and preferences of the child, the length of time the child has lived in a stable home environment, any plans proposed for the upbringing of the child, the ability of each party to act as a parent, and the ability and willingness of each parent to provide the child with guidance and education, the necessaries of life and any special needs of the child.

Child Support
Both parents have a responsibility to financially support their children, regardless of the custody or access arrangement that is in place.

Generally, child support will be determined in accordance with the federal or provincial Child Support Guidelines. The guidelines provide a comprehensive but straight forward method of determining how much child support each parent will pay.

A child support order is usually comprised of two amounts: the “table” amount and a contribution towards a child’s “special and extraordinary” expenses.

The “table” amount represents a parent’s contribution to the day to day costs of raising a child, namely: shelter, clothing, food, basic extracurricular expenses, etc. Within the guidelines, there are different sections which detail how the table amount is to be calculated based upon the residency arrangements for the child(ren). Thus, if the children maintain their primary residence (defined as at least 60% of the time) with one parent, the table amount is calculated in a certain manner. If the children reside with both parents at least 40% of the time (referred to as “shared custody”), there is a different method of calculating child support. Finally, if there is more than one child, and at least one child maintains his or her primary residence with each parent, there is another method of calculating child support.

Regardless of which section of the guidelines will be used, the other variables which must be known prior to determining the table amount are: the number of children, the ages of the children and the incomes of both parties. Once these are known, the determination of the table amount is relatively straight forward.

Special and extraordinary expenses, as the term implies, are those expenses which fall outside the purview of a child’s daily needs. Examples of such expenses include: child care costs, medical and dental insurance premiums relating to the child, health related expenses such as orthodontic treatments or eyeglasses, the costs of post-secondary education, or expenses for extraordinary extracurricular activities.

A separate section of the guidelines details how each parent’s contribution towards these expenses will be determined. First, one must determine if the expense in question is both reasonable and necessary. If the answer to both of these questions is in the affirmative, then the parents will each contribute to the after-tax cost of the expense in proportion to each parent’s income. For example, if the after-tax cost of the expense is $1,000 and the mother earns $100,000 and the father earns $50,000, the mother will pay 67% of the expense and the father will pay 33%.

Spousal Support
Spousal support is designed to provide financial assistance from one spouse to the other upon the breakdown of a marriage or relationship. It is one of the most controversial areas of family law and one of the most difficult on which to advise.

There are three major issues that need to be resolved when spousal support is considered: entitlement, quantum and duration.

Entitlement involves, as the name implies, the determination of whether one spouse should receive support from the other. It is normally resolved after reviewing various factors including: the length of the marriage, the roles the parties assumed during the marriage, the financial circumstances of the parties at the breakdown of the marriage and the self-sufficiency of each party.

If there is an entitlement to spousal support, the next issues to be resolved are how much support should be paid and for how long. In determining these issues, the following factors will be relevant: the ages, health and incomes of the parties, the length of the marriage or relationship, the incomes of the parties, the needs of the recipient and the ability to pay of the payor, and, the future employment prospects for the parties.

To assist in the determination of the issues of quantum and duration, the federal government created the Spousal Support Advisory Guidelines (“SSAG”). These guidelines are advisory in nature, unlike the child support guidelines which are mandatory. The SSAGs use the incomes and ages of the parties, the length of the marriage whether child support is being paid to develop ranges of spousal support. The parties can then use the ranges generated as a means of resolving the issues of quantum and duration of spousal support.

Division of Property
The division of property will be directly affected by the nature of the relationship in question. Married spouses participate in a property division scheme which is detailed in Part I of the Family Law Act. It is referred to as the Equalization of Net Family Property. Unmarried spouses do not participate in this scheme. Property between unmarried spouses is generally divided according to ownership.

The Equalization of Net Family property scheme is premised on the fact that there is an equal contribution by both parties for the care of children, the management of the household and the financial provision for the family during a marriage. When a marriage ends, both parties should share equally in any assets and liabilities that were acquired or incurred over the course of the marriage.

The rules that need to be followed in complying with the scheme are complex and numerous exceptions and exemptions exist. The following is a very basic outline of the steps that need to be followed:

Step 1 – Each spouse determines his or her net worth on the date of separation. An individual’s net worth is determined by subtracting the value of all debts and liabilities one has from the value of all assets that one has. An adjustment may also have to be made to take into account whether a spouse has “excluded property” on the date of separation. Excluded property may include such things as: ifts or inheritances that were received during the marriage and which still exist on the date of separation, damages for personal injuries that were received during the marriage and which still exist on the date of separation, or life insurance proceeds that were received during the marriage and which still exist on the date of separation.

Step 2 – Each spouse determines his or her net worth on the date of marriage.

Step 3 – Each spouse determines his or her net family property. Net Family Property (“NFP”) can be defined as a spouse’s net worth on the date of separation (see step 1) less his or her net worth on the date of marriage (see step 2).

Step 4 – The parties compare their NFPs. If the two amounts are equal, nothing needs to be done. If one party has a higher NFP, the party with the higher NFP will pay the party with the lower NFP half of the difference between them to “equalize” their NFPs. This will result in each party receiving half of the assets and liabilities that were acquired over the course of the marriage.

Step 5 – Determine if the result in Step 4 needs to be adjusted to account for any unconscionable results. It should be noted that the result in Step 4 will generally stand and it is only in very rare circumstances that it will be adjusted by Step 5.

If one party owes the other an equalization payment, it is normally paid through a cash payment. However, the parties may agree that the payment is to be funded through the transfer of property, the assumption of debt or some other transaction.
Summary

This overview of the basic family law issues is a very brief summary. These issues are very complex and are often only resolved after a full analysis of numerous factors. As such, one should not rely upon the foregoing as being a definitive answer to your individual situation.

If you have questions about your separation or how a separation may affect you in the future, please contact one of our family law lawyers at (613) 728-8057. You can also contact Kerri Ross directly at (613) 288-3238 or by e-mail at kross@tslawyers.ca.

Kerri Ross, 
B.Sc. (Hons.), LL.B.
Associate, Tierney Stauffer LLP

 

This article is provided  as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter  referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. 

Different Methods of Resolving Family Law Issues

After the breakdown of a serious relationship or marriage, the individuals involved will often have a number of difficult issues to resolve in order that they may each move on with their lives. Those issues may include: custody of children, child support, spousal support, property division and the disposition of the matrimonial home.

One of the first decisions that the parties will have to make is how are they going to resolve these issues. Although there are numerous ways of resolving any dispute, this article will examine 4 methods that are often used in a family law context:

• Negotiation
• Mediation
• Collaborative Family Law
• Litigation

Negotiation
Negotiation is probably the most common form of dispute resolution in family law. It normally involves each party retaining a lawyer who, acting on the client’s instructions, will negotiate a resolution of the issues on behalf of the party.
Depending upon the issues involved, it may be necessary for the lawyers and parties to meet at a “4-way meeting” to help resolve any outstanding matters. If a settlement is reached, it will be documented in a Separation Agreement which will be signed by both parties.

Mediation
Mediation is a method of dispute resolution in which the parties retain a third party (i.e. the “mediator”) to assist them in resolving the outstanding issues between them.

The mediator does not take sides nor does he/she resolve the issues for the parties. The parties negotiate the settlement themselves. The mediator’s role is simply to facilitate a discussion between the parties that will hopefully lead to a settlement. If a settlement is reached, the mediator will normally draft a Separation Agreement that details the settlement.

Collaborative Family Law
Collaborative family law is a process where the parties agree to resolve the outstanding issues between them in a cooperative rather than adversarial manner. The parties, with the assistance of specially trained family law lawyers, will identify each party’s interests and will then attempt to craft a resolution that will respect and meet those interests. The process is designed to minimize posturing and tactical maneuvering and to focus as much as possible on settlement. If a ettlement is reached, it will be documented in a Separation Agreement that will be signed by both parties

Litigation
Litigation is a process whereby the parties go to court and ask the court to decide the outstanding issues for them. The parties will often have to attend in court on a number of occasions before the matter is either settled or a trial is held. If a trial is held, the judge hearing the matter will impose a decision which is binding on the parties. Notwithstanding that the parties are in court, they may still agree on a settlement. In fact, over 95% of the cases that go to court will settle before a trial is held.

The choice of the method of dispute resolution will be a critical aspect of resolving any family law dispute. Clients will have to consider the nature and scope of the outstanding issues, the reasonableness of the opposing party, the level of cooperation and communication with the opposing party, finances and any history of domestic violence in deciding which method is appropriate for them. It is highly recommended that a full and frank discussion

If you have any questions concerning the termination of an employee or employment law in general, please do not hesitate to contact David Sinclair directly 613.288.3226 or by email at dsinclair@tslawyers.ca.

David Sinclair
B.Com., B.A., LL.B.
Associate, Tierney Stauffer LLP

 

This article is provided  as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter  referenced in this document before making decisions. Any use of this document does not constitute a lawyer-client relationship. 

Options after Marriage Breakdown

After the breakdown of a marriage, one of the first decisions that the parties will have to make is how are they going to resolve the outstanding issues between them. Fortunately, there are a variety of techniques that can be used in resolving these disputes.

Negotiation involves each party retaining a lawyer who will negotiate a resolution of the issues on the party’s behalf. In mediation, the parties retain a mediator to assist them in resolving the outstanding issues between them. The mediator does not decide the issues but is there to assist the parties in negotiating a settlement.

In collaborative family law, the parties retain specially trained family law lawyers and third  party  professionals. The parties, lawyers and professionals attempt to resolve the issues in a cooperative rather than adversarial manner.

Litigation is an adversarial process whereby the parties go to court and ask the court to decide the outstanding issues for them.

The method of dispute resolution will be a critical aspect of resolving any family law dispute. Parties need to consider the nature of the issues in dispute, the reasonableness of the opposing party, the ability to communicate with the opposing party, finances and any history of domestic violence in deciding the appropriate method.

It is highly recommended that a party discusses these factors with an experienced family law lawyer before a method is selected.

David Sinclair, Lawyer
Tierney Stauffer LLP
dsinclair@tslawyers.ca

 

This article is provided as an information resource and is not intended to replace advice from a quaified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this document before making decisions.