Preparing the Will
(i) Standard clauses
Precedent clauses for wills are very helpful to enhance the efficiency of your practice. You do not have to re-invent the wheel every time you draft a will. However, as with all precedents, you must exercise caution and be alive to changes in the law and better ways to express what the will-maker’s wishes are. Every will is unique, so you must bring to bear your own skill and knowledge to accomplish your task. One example of a will precedent is found at Appendix B of these materials.
It is essential to understand the purpose of the basic clauses that every will should have. These are the standard wills clauses:
- appointment of the executor and alternate executor
- a “survival” clause
- “holding” and trust provisions for minor beneficiaries
- guardianship for minors
- gifts and other considerations for disabled beneficiaries (if applicable)
- “total failure”, “catch-all” and “fail-safe” clauses
- discretionary power to keep and convert
- discretionary power to allocate assets in specie
- power to carry on business
- power to deal with real estate
- executor’s remuneration
- gender/plural clause
(ii) Appointment of executor and alternate executor
Although the appointment of the executor is fundamental, many wills neglect to appoint an alternate in case the primary executor is deceased, unable to act, or unwilling to act. Without an alternate, the estate must be managed by an administrator under the terms of the will. An administrator is the person who applies to and is appointed by the court to take charge of an estate. This can occur when there is no valid will, or if there is a will and no executor is named or the named executor is not able to take charge of the estate. When seeking probate, the ‘administrator with will annexed’ must have the consent of all parties who otherwise would qualify to be appointed administrator. This step slows the process and adds further expense.
(iii) A “survival” clause
A survival clause is one in which the beneficiary only becomes entitled to an interest in the will if he or she survives the will-maker. Usually, the period of survival is specified. Note that section 10 of WESA creates a 5 day survival rule, although a longer time frame may be specified by instrument. A sample clause is:
I direct my Trustee to pay the residue of my estate to my husband, Robert Smith, for his own use absolutely, if he shall survive me for thirty (30) days.
If the beneficiary dies more than 5 days after the will-maker and there is no longer qualification period before entitlement set out in the will, the residue will vest in the husband’s estate and his executor must distribute that residue as stated in the husband’s will. This requires that probate be granted for both estates with the attendant applications and double probate fees. It may also have the unintended consequence of having assets from the wife’s estate end up in the hands of beneficiaries she did not intend. These details can be very important to will-makers when there are second marriages with different families to accommodate. Such consequences should be explained to the client and the file should be documented to this effect; alternatively, the client should receive a confirming letter.
The length of time should reflect a reasonable balance between anticipated survival of a beneficiary and delay in administering the estate caused by waiting for the qualification period to terminate.
The survival clause is found most often in clauses affecting gifts to spouses and children because they are most likely to be involved in a common accident, particularly if the children are minors.
The following clause could be used where the will-maker would like a gift to go to her own child, or to her child’s children (her grandchildren) if the child does not survive the will-maker for the survival period.
I direct my Trustee as follows:
- To give the residue of my estate to my husband, Robert Smith, if he survives me for 30 days;
- If Robert Smith does not survive me for 30 days, to divide the residue of my estate into as many equal shares as there are of my children who are alive at my death, except if any child of mine has died before me and one or more of his or her children are alive at my death, then that deceased child will be considered alive for the purposes of this division and I direct my Trustee to divide that share equally among those children of that deceased child.
(iv) “Holding” and trust provisions for minor beneficiaries
Parents are often concerned about providing for their minor children should they die before the children come of age. The age of majority (19 years) is the earliest that beneficiaries may take their share.
Parents sometimes feel that the age of majority is still too young for their children to manage an inheritance. The solution is to postpone the transfer of the beneficiary’s share of the estate assets to a later date or to transfer a smaller portion of the beneficiary’s share at one age and the remainder at a later date. Clauses may be drafted to specify an age when the testator feels the beneficiary will be more settled in life, more mature, or able to manage the inheritance.
Inclusion of a holding or trust clause creates an ongoing trust. If the will-maker does not name a separate trustee to manage the share of the underage beneficiary, the responsibility falls to the executor as trustee of the estate.
Since a trust is created, take care to avoid the rule in Saunders v. Vautier (1841), 4 Beav. 115. This rule allows beneficiaries to terminate the period of postponement so that they can get their trust funds earlier where:
- all of the beneficiaries including contingent beneficiaries are over the age of majority;
- none of the beneficiaries are under any legal disability; and
- all beneficiaries consent to the termination.
In other words, if all three conditions are present, the trust created in the will by the holding clause may be terminated and all of the trust property distributed to the beneficiaries contrary to the intentions of the will-maker.
Creating a contingent class of beneficiaries is commonly done to avoid application of the rule. It requires that the contingent class be made up of minors who will not meet the first criteria in the rule, or any group of persons who are not likely to become ascertainable before the intended postponement date.
For example, the clause may state that in the event a beneficiary dies before the specified age, his interest is to be divided equally among his issue, per stirpes. Because the intended beneficiary is young and unlikely to have children of his own for some time, the term “issue” creates a class of contingent beneficiaries that may not be ascertainable when the will becomes effective on the death of the will-maker. Since the unascertained beneficiaries cannot fulfill the criteria to trigger the rule in Saunders v. Vautier, the primary beneficiaries cannot wind up the trust created in the will and receive their assets earlier than the will-maker intended.
Note that WESA defines "descendant" as all lineal descendants through all generations.
Do not use terms such as ‘issue’ or ‘per stirpes’ unless you understand what they mean. Per stirpes (which is Latin for “per branch”) specifies that each branch of the deceased person's family receive an equal share of the estate, regardless of how many people are in that branch. It is always better to use plain language wherever possible to explain these concepts in the will. Briefly, ‘issue’ means descendants; it is not confined to children or grandchildren.
‘Per stirpes’ affects the way an estate is distributed – the estate is divided among classes or groups of distributees who take the share that their deceased ancestor would have taken if he or she had survived. ‘Per capita’ denotes distribution equally to all persons standing in equal degree to the decedent.
If the will creates a trust by making a gift to a minor or postponing a date for distribution, it is advisable to expressly confer power on the trustee to apply the income and encroach upon the capital of the trust for the benefit of the beneficiary. Without such a clause the trustee has limited powers.
The trustee’s powers are set out in ss. 24 and 25 of the Trustee Act. For example, s. 24 allows the use of “income” for a minor beneficiary’s maintenance and education, but there is no allowance for encroachment on capital. Section 25 allows the trustee to apply to court for an order permitting the sale of capital assets to provide for the beneficiary’s maintenance and education where the income is insufficient. It is therefore preferable when drafting a will to confer wider powers on the trustee. Moreover, conferring wide discretion on the trustee provides maximum flexibility to cope with the needs of the beneficiary without having to go to court.
You should familiarize yourself with the range of available clauses to accommodate the needs of your clients (see Bogardus, Peter W. and Mary B. Hamilton, Wills and Personal Planning Precedents: An Annotated Guide, looseleaf, The Continuing Legal Education Society of BC).
The following is an example of a holding and discretionary power clause:
If any person should become entitled to any share in my estate before attaining the age of nineteen (19) years, the share of such person shall be held and kept invested by my Trustee and the income and capital or so much thereof as my Trustee in their absolute discretion considers necessary or advisable shall be used for the benefit of such person until he or she attains the age of nineteen (19) years.
(v) Guardianship for minors
The will-maker must consider what to do when a minor child or incompetent dependant survives the will-maker’s death.
Where one parent is left alive following the death of the will-maker, guardianship reverts to the remaining parent. If both parents die, an appointment of guardianship may be necessary. See Division 3 of Part 4 of BC's Family Law Act, S.B.C. 2011, c. 25. A sample clause follows:
If my spouse, (name of spouse), predeceases me, or if (gender) survives me but dies without making any provision for guardianship of our infant children, then I appoint, (name of guardian/address), to be the guardian of my children (names of children), during their minority.
Try to avoid naming a “couple” to act as guardians. Clients often mention both people only out of a sense of politeness to their friends. Ask your client what would happen if that relationship ended. Which person would actually be your client’s first choice of guardian?
In the case of a client who is separated from their spouse, you must determine whether they continue to share guardianship, as a result of a court order or separation agreement. In such case, the guardianship appointment made by the client may not take effect if the surviving parent continues to be a guardian.
A further issue involving gifts to minor children or other legally disabled beneficiaries is that postponement of fulfilling the gift impairs the executor’s ability to wind up the estate because the outstanding gift, held in trust, must wait for the minor child or incompetent person to qualify. See Part 8 of BC's Family Law Act which sets out rules for delivery of children's property to guardians or trustees.
One way to deal with this is to confer discretion on the trustee to pay or transfer the interest of the minor child or incompetent beneficiary to a lawful parent or guardian of the beneficiary. An example of this type of clause follows:
I authorize my Trustee to make any payments for any person under the age of nineteen (19) years to a lawful parent or guardian of such person whose receipt shall be sufficient discharge to my said Trustee.
(vi) Gifts and other considerations for disabled beneficiaries
Occasionally, you may be asked to draft a clause to accommodate a beneficiary with special needs, such as a child with a mental or severe physical disability. This can be a complex task and may necessitate further research. You must take care about the type of gift to create, whether a guardian should be appointed, and consider whether a Power of Attorney or representation agreement should also be discussed. Although you are not acting for the beneficiary, you may want your client to know the options available to the beneficiary.
It is very important to consider government benefits that the beneficiary is currently receiving or will be receiving in the future. Generally, in order not to disqualify the beneficiary from these benefits, dispositions of property or money should not be granted outright. Rather, they should be the subject of a trust crafted in such a way that the beneficiary does not have the ability to call for anything under the trust or to collapse it.
It is beyond the scope of this module to explore this topic in depth, but the references in the Further Readings will provide a start for your research. You may also want to review the Planned Lifetime Advocacy Network resources section, and the government website for Disability Assistance and Trusts.
It is important to confer specific power on an appointed trustee to retain or purchase real estate. Real estate may not be an appropriate investment on an objective test, so it is critical that you specifically confer the power to the trustee to retain or purchase real estate for the trust. This allows the trustee to retain or replace a residence for the use of the mentally or physically disabled beneficiary. Also consider drafting a clause that allows a beneficiary to remain in and use a home during his or her lifetime without disentitling the beneficiary to government benefits. (See Bogardus, Peter W. and Mary B. Hamilton, Wills andPersonal Planning Precedents: An Annotated Guide (looseleaf, The Continuing Legal Education Society of BC) and Scott-Harston, J.S. and P.A. Johnson, Tax Planned Will Precedents, Carswell, 2005.)
Recommended further reading to complete this module:
Wills Precedents: An Annotated Guide, by Peter Bogardus and Mary B. Hamilton, (looseleaf, The Continuing Legal Education Society of BC). This handbook provides sample clauses and commentary creating a discretionary trust for a disabled beneficiary.
(vii) “Total failure”, “catch-all” and “fail-safe” clauses
It is critical when drafting the will that you ensure that the whole estate has been dealt with, that is, that there is no plausible scenario that would result in a failure creating an undistributed portion of the estate. If that happens, the undistributed portion falls under the rules of intestacy which are set out in Part 3 of the WESA. Intestacy can result in a distribution that is contrary to the will-maker’s wishes.
As legal advisor, you must put your mind to possible scenarios that may come into play on the death of your client that might affect their distribution scheme. You must plan for those contingencies, even if remote.
Clauses called “total failure, catch-all or fail-safe clauses” deal with any part of the residue of the estate that does not vest in a beneficiary.
An example of such a clause follows:
If (spouse’s name) fails to survive me for thirty (30) days (“Failure Date”) and any trust herein fails to vest in anyone, then any part of my estate as then remains shall be divided in equal shares among such of my grandchildren as are alive on the Failure Date, except that if any of my aforesaid grandchildren are not alive on the failure date leaving a child or children alive on the Failure Date, then that deceased grandchild shall be considered alive for the purposes of the division and the share created for that deceased grand child shall be divided equally among his or her child or children alive on the Failure Date.
This is just one example. Each client will have their own wishes based on their own circumstances. For example, this sample clause uses 30 days. It may be that the gift to the spouse is longer or shorter based on what is previously stated in the will. Be sure to be consistent in your drafting. As well, if the grandchildren were already included as a gift-over in an earlier gift to children, you might ask your client to consider siblings or other relatives or charities. The will-maker may have residual beneficiaries in mind other than grandchildren.
(viii) Discretionary power to keep and convert
Unless expressly conferred in the will, the executor has a duty to sell speculative, wasting, or hazardous assets as soon as practicable and to re-invest the proceeds of sale in approved investments as set out in ss. 15.1-17.1 of the Trustee Act.
In some cases it may be desirable for the executor to retain items “in specie” from the estate. To retain items ‘in specie’ means the assets are retained in their individual or specific form and not converted, for example, into cash.
Executors have the greatest flexibility when they are granted the express power to keep or retain assets in their original form, to convert any assets at their discretion, and be relieved of liability for making such decisions. It allows them the freedom to take advantage of market conditions or even the wishes of the beneficiaries. An example of this type of clause follows:
When my Trustee administers my estate:
- my Trustee may convert my estate, or any part of it, into money or any other form of property or security, and decide how, when and on what terms;
- my Trustee may keep my estate, or any part of it, in the form it is in at my death and for so long as my Trustee decides, even for the duration of the trusts in this will. This power applies even if:
- the property is not an investment authorized under this will;
- a debt is owing on the property;
- the property does not produce income; and,
- my Trustee may invest my estate, or any part of it, in any form or property or security in which a prudent investor might invest.
(ix) Discretionary power to allocate assets in specie
Consider the trustee’s express power to “allocate assets”. This gives the executor the power to say which assets each beneficiary is to receive and to fix asset value in order to calculate the division scheme as set out in the will. It gives the executor freedom to choose, without exposure to liability for unpopular choices. While the executor may never be entirely free of criticism, he or she may at least be exempt from liability for making hard choices. This power may encourage an executor to fulfill his or her duties, particularly when there is animosity amongst the beneficiaries.
Here is an example of a clause granting the power to allocate and fix values:
My Trustee may allocate the assets of my estate in such form and such share or interest created in my will in such manner and at such valuation as my Trustee considers appropriate in her absolute discretion. Any value my Trustee may fix shall be binding on all persons concerned.
(x) Power to carry on business
If your client owns or operates a business (or may own one in the future), consider a clause conferring power on the executor to carry on the business. There is no statutory authority in either WESA or the Trustee Act for such power; therefore, without express authority, the executor may only preserve the business as long as reasonably necessary to sell it as a going concern. Here is an example of such a clause:
Without limiting the general powers and directions given to my Trustee I AUTHORIZE MY Trustee (who shall not be personally liable for any loss occasioned thereby)
(a) to carry on any business or businesses which I may own or be interested in at my death and either alone or in partnership with any persons who may be a partner or partners therein for the time being for such length of time as my Trustee in his or her discretion may consider to be in the best interests of my estate, and my Trustee shall be indemnified out of my estate for any loss, liability, costs or expenses suffered or incurred by reason of carrying on such business and shall have authority to do all things necessary or advisable for the carrying on of any such business or businesses;
(b) to join in or take any action in connection with any investment or interest or business or businesses which I own at my death, and to exercise any rights, powers and privileges which at any time may exist or arise in connection with any such investment or interest or business to the same extent and as fully as I could if I were alive and sole owner and holder of such investment or interest or business.
The scope of this power must be adjusted to suit your client’s requirements.
(xi) Power to deal with real estate
Consider that your client may own real estate in the future, if not at the time of preparing the will. The real estate in question is often the family home, which may be owned jointly with a spouse. If the title is registered in joint tenancy, the testator’s interest will pass outside the estate by operation of the right of survivorship. The surviving spouse need only attend at the appropriate land registry with a death certificate and the proper transfer form.
If the will-maker's interest in real property is registered as tenancy in common or solely in the name of the will-maker, the interest in the property passes to the estate. In such cases, the executors should have the power and flexibility to deal with the property as they deem appropriate. For example, it may be preferable to delay the sale of the property to make improvements or take advantage of tax or market conditions. The following clause is an example of conferring such powers:
If any real or leasehold property forms part of my estate, my Trustee may lease such property on such terms and may expend funds out of the income or capital of my estate for repairs or improvements as my Trustee considers appropriate in his absolute discretion. My Trustee may grant any options and may renew any mortgage or borrow money on any real estate or any mortgage and may pay off any mortgage that exists on the date of my death as he considers appropriate in his absolute discretion.
The will-maker must be made aware of the far-reaching scope of powers being conferred on the executor. Absent express power, the executor is limited to either seeking court authority under s. 11 of the Trustee Act to utilize estate funds for real estate or obtaining consent of all the beneficiaries which may not be possible due to the legal disability of a minor or a disabled beneficiary.
(xii) Executor’s remuneration
Unless expressly provided in the will, ss. 88 and 89 of the Trustee Act govern the fees a personal representative can charge.
The general rule is that, absent an express clause, there is a presumption that the legacy to an executor is in lieu of compensation for acting as executor. This presumption arises only with a legacy (i.e., a specified gift) and not with an interest in the residue. The will-maker must decide whether they want their executor to have both a fee and a gift under the will. If so, this should be made clear so there is no conflict later between the beneficiaries and the executor.
An example of this type of clause is set out below:
My Trustee may claim remuneration for acting as Trustee in addition to any gift or benefit I give to my trustee in this will or any codicil to it.
If the executor is a professional person, such as a lawyer or accountant, who will bring their professional skill and knowledge to bear in exercising their duties as executor, the will-maker should consider whether additional professional fees may be charged to the estate for those services. This is called a “charging clause”. An example of this type of clause is:
If any Trustee is a lawyer, accountant, stockbroker or other professional person, my Trustee or his or her firm may charge all usual professional fees and other charges for services rendered by my Trustee or his or her firm in the course of the administration of my estate.
Note that s. 43 of the WESA preserves the presumption in s. 11 of the Wills Act, which voids gifts to beneficiaries or spouses who are witnesses to the will. However, this rule may be subject to a successful court application made pursuant to s. 43(4) where the court is satisfied the will-maker intended to make the gift to the witness.
You should take special note that if the trustee is also a witness to the will, entitlement to remuneration is nullified by s. 43 of WESA.
(xiii) Gender/plural clause
It is advisable to include a general clause to catch any drafting errors involving gender pronouns and singular/plural slips. An example of such a clause is:
WHEREVER the singular or masculine is used throughout this my will the same shall be construed as meaning the plural or the feminine where the context so requires and vice versa.
B. Approval of Draft by Client
Many lawyers favour sending a copy of the will in draft form to the client for approval before meeting and execution. If you do so, make sure the will is clearly marked as a ‘draft’ and not for signature. Follow-up with the client to ensure they received it and understand and approve the draft. You must also make arrangements to meet with the client for execution of the will.
Be cautious of s. 58 of WESA, which allows the court to declare records, documents, or markings or writings on a will or document to represent the testamentary intentions of a person, even where they do not comply with WESA.