PLANNING THE WILL

In Canada notary public or lawyers who draft wills are not always tax experts. Client should ensure that financial advisors advice has been taken into consideration in planning their will.

A Will is a tool by which the testator expresses his or her final wishes as to the distribution of his or her property on death. The Will is structured in a manner that ensures those wishes are carried out.

The Will performs several functions. It designates the person or institution that will administer the estate. It sets out the scheme of distribution of assets to particular individuals and controls when and how those assets are to be distributed. It will determine the age at which any minor or adult beneficiary is to receive a bequest. It can make appropriate provisions for a disabled minor. It can specify whether debts owed to the testator are to be repaid or forgiven. In addition, having a well drafted will can minimize the cost of administering the estate, and help to reduce or postpone tax liabilities arising at death.

Since a trust is generally not entitled to claim a capital gains exemption in respect of gains retained in the trust, it is important that a testator’s will specifically empower the trustees to encroach on the capital of the trust. This will permit the trustees to allocate any gains realized by the trust to the beneficiaries, who in turn may use their capital gains exemption limit to offset these gains.

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