Explore essential considerations for drafting a will in Canada, including blended family dynamics, trusts for dependants, guardianship designations, multiple wills, and the management of digital assets.
When clients think about making a will, their initial focus is often on fundamental elements such as identifying assets and naming key beneficiaries. Although these steps are crucial, there are additional factors that can significantly affect the distribution of an estate and the well-being of surviving family members or dependants. This section delves into these considerations, highlighting the interplay between Canadian legal frameworks, family dynamics, and emerging concerns such as digital asset inheritance.
In Canada, increasing numbers of families are blended—meaning there are stepchildren, half-siblings, or dependants from previous relationships in the family unit. In such scenarios, a will must carefully reflect the financial needs and emotional sensitivities of all parties involved. Failure to draft a balanced estate distribution plan may lead to disputes, legal challenges, or unintended disinheritance.
• Consider designating specific bequests to stepchildren, if desired, to avoid possible legal disputes.
• Clarify any pre-existing obligations from prior relationships (e.g., child support or spousal support) and how those obligations are satisfied in the estate plan.
• Consult relevant provincial statutes (e.g., Ontario’s Succession Law Reform Act, or British Columbia’s Wills, Estates, and Succession Act) to understand the rights of common-law partners or dependent children.
Estate planning for children or adult dependants with special needs can be highly intricate. Setting up trusts—such as a testamentary trust or a Henson Trust—may help preserve government benefits or provide long-term care:
• A testamentary trust established within the will can ensure that funds are managed responsibly for the lifetime of the dependant.
• Complement the trust with a Registered Disability Savings Plan (RDSP) for the beneficiary, where applicable.
• Consider naming a professional trustee, such as an organization specializing in trust management (e.g., RBC Royal Trust or TD Private Trust), when additional expertise is required.
Trusts are legal arrangements that manage and distribute assets for beneficiaries, according to the directions specified by the settlor (the individual establishing the trust). In the context of wills, testamentary trusts are created upon the testator’s death. Below are several trust structures that may be used in conjunction with a will:
A testamentary trust comes into effect after the testator’s death. It can be designed for a variety of purposes, including:
• Providing ongoing financial support to a surviving spouse or partner (spousal trust).
• Safeguarding assets for minor or dependent children, releasing funds according to milestones (e.g., at certain ages or upon attainment of specific life events).
• Managing complex business interests, such as shares in a family corporation.
A spousal trust ensures that a surviving spouse has ongoing income or financial resources, while preserving the capital for other beneficiaries (often children) after the spouse’s passing. Careful drafting can also offer tax advantages that align with Canadian taxation rules on rollovers for spousal beneficiaries. Consulting with a legal professional and a tax accountant is essential to optimize these trusts and ensure compliance with the Income Tax Act (Canada).
Beyond general testamentary trusts, specialized trusts can be created for a broad range of child-related expenses:
• Education trusts to fund tuition, books, and living expenses for higher education.
• Trusts that provide for medical or rehabilitation costs for children with disabilities.
• Lifecycle trusts that release funds at specific milestones or achievements to encourage fiscal responsibility.
If minor children are left without a surviving parent, guardianship designations in a will are crucial. Courts typically respect the parents’ preferences for a guardian, as stated in the will, unless there are compelling reasons to deviate from those wishes. Failure to name a guardian can lead to legal uncertainty, protracted family court battles, or the appointment of a guardian who may not reflect the parents’ original intentions.
• Appoint both a primary guardian and an alternate guardian to ensure continuity of care.
• Include a brief rationale for your choice, if appropriate, to help avoid disputes.
• Consider discussing these decisions openly with the prospective guardian and other family members to gain their support and keep expectations aligned.
In some provinces (e.g., Ontario), individuals may set up multiple wills—commonly referred to as a primary will and a secondary (or ancillary) will. The fundamental aim is to reduce probate fees on certain assets that do not require probate or where the transfer mechanisms can be simplified:
• The primary will covers assets that typically go through probate (e.g., real estate, financial accounts with no named beneficiaries).
• The secondary will may cover assets like shares in a privately held family corporation, shareholder loans, or personal property of notable value that can be transferred without probate.
• Work with an experienced legal professional who is familiar with local provincial laws to ensure that multiple wills are valid, integrated, and do not inadvertently conflict.
Below is a simplified illustration of how two wills might be structured:
flowchart TB
A((Testator)) --> B(Primary Will)
A((Testator)) --> C(Secondary Will)
B --> D[Probate Assets e.g., Real Estate, Bank Accounts]
C --> E[Non-Probate Assets e.g., Private Corp Shares, Some Personal Assets]
In this diagram, the testator creates two wills. The primary will covers assets normally sent through probate. The secondary will handles qualifying assets that may be transferred outside of the probate process, potentially lowering probate fees.
A will is a legal document that undergoes a formal process. By contrast, a letter of instruction or personal memorandum is an informal supplement to a will that can provide clarity on specific personal belongings or instructions. Some Canadian provinces allow these memoranda to be legally binding if they are explicitly referenced in the will and properly executed according to local law. However, even when they’re non-binding, these documents can be extremely helpful:
• Outline details for distributing sentimental items, such as jewelry, art, or collectibles.
• Provide login credentials and guidance on accessing digital assets and online subscriptions.
• Offer personal messages or explanations that may help reduce disputes among family members.
Note that digital assets—ranging from cryptocurrency wallets to social media accounts—pose unique challenges. Each platform has its own access and transfer policies. Canadians should maintain a clear record or instructions so that executors can address these assets efficiently and legally.
Digital assets include online banking passwords, cryptocurrency wallets, email accounts, social media profiles, online-only subscription services, and more. Overlooking these assets can delay or complicate the estate settlement process.
• Keep secure login details documented and stored in a safe way, such as in a password manager or with encrypted backup.
• Review service agreements of major online platforms (e.g., Facebook, Google) to determine if and how accounts can be transferred or memorialized.
• Provide clear guidance in a will or letter of instruction regarding the desired handling of personal, business, or financial digital assets.
The Canadian Investment Regulatory Organization (CIRO) periodically issues guidelines on estate-related issues for client accounts. This includes naming beneficiaries, issuing instructions for powers of attorney, and effectively handling estate accounts. Advisors should remain current with CIRO notices published at ciro.ca to ensure compliance when assisting clients with estate planning.
Estate laws are largely governed by provincial legislation. Key statutes include:
• Ontario’s Succession Law Reform Act (SLRA)
• British Columbia’s Wills, Estates, and Succession Act (WESA)
• Alberta’s Wills and Succession Act
• Quebec’s Civil Code
These regulations outline the minimum requirements for a valid will, rules around spousal entitlement, and guidelines for family maintenance claims.
Each province’s Public Guardian and Trustee office provides resources, brochures, and sometimes direct oversight for estates or trusts that involve vulnerable parties (e.g., minors, or individuals who lack capacity). Advisors and executors can consult these offices for guidance on specific matters, especially if disputes or complexities arise around guardianships or dependent adult beneficiaries.
Consider an Ontario-based client, Karen, who has two children from her previous marriage and a stepson from her new marriage. She also has a child with special needs. Karen’s estate includes a family home, an RRSP, a privately held corporation, and a significant art collection.
• Karen decides to set up two wills:
– A primary will to handle the bulk of her assets that require probate (e.g., the family home, personal bank accounts).
– A secondary will for the privately held corporation’s shares to avoid unnecessary probate fees.
• To provide long-term support for her child with special needs, Karen directs that a testamentary trust be established within her primary will. The trust’s funds will be administered by a professional trustee.
• She also prepares a personal memorandum to designate specific gifts of art to each child and provides instructions for her jewelry.
• Finally, aware of her blended family context, Karen communicates her decisions to her spouse, her children, and her stepson to minimize misunderstandings.
Drafting a will that genuinely reflects one’s wishes, protects dependants, and coordinates with broader wealth management objectives involves more than just naming beneficiaries. Advisors and clients must address guardianship, trusts, multiple will strategies, digital assets, and provincial legal nuances. By exploring these areas in depth—and staying current with Canadian regulations—clients can ensure that their legacies are effectively preserved and that their loved ones are well looked after.
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