How to bulletproof your will

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Adam Erlich often gets the call when a will is challenged. A partner at Fuller Landau LLP in Toronto, he is appointed by a court as a neutral third party who oversees how assets are distributed as litigation unfolds.

He often works with members of wealthier families in which one or more members contest a will. It’s a role that allows him to see the not-so-pretty side of failing to write a will that’s airtight.

“It’s a costly, extremely invasive process,” says Erlich, who is a partner in the law firm’s Corporate Restructuring and Insolvency Group and an Individual Licensed Insolvency Trustee. “And it’s happening more and more due to the transfer of wealth. No one wants someone they haven’t met to come in and manage their estate.”

While families often have the best of intentions in leaving their assets to loved ones, if a will is hastily written, is vague or its contents are not communicated early enough, it may be challenged – a process that can cost millions and take months to years. Family offices and other advisors need to ensure that their clients set out clear and well-communicated goals. They also need to review wills periodically and ensure they are fair in the distribution of wealth to prevent legal wrangling in the future.

Here are a few steps to consider.

Should you use the no-contest clause?

In theory, a no-contest clause can help prevent an attack on a will as it makes the beneficiary’s gift conditional on the acceptance of the will’s terms by the inheriting individual. While such a clause can rule out a person’s inheritance if they challenge the will, it can also send up red flags for those who stand to inherit, says Harold Feder, a partner with Brazeau Seller Law in Ottawa.

“You can’t create these types of barriers,” he says. “Setting up a no-contest clause means a lot of strategies were not followed. You’ve created the inference that this is not fair and I don’t want you to challenge it.”

Instead, he suggests spending more time at the front end, drafting a will that’s clear, fair and well-communicated.

Encourage families to talk about estate planning frequently

Regular meetings and open discussions about how assets will be divided are optimal, though not the easiest, says Feder.

“It’s an uncomfortable subject,” he says. “Generally, people who are successful at generating wealth are used to going it alone.” But it’s a good idea to fight these entrepreneurial tendencies and initiate dialogue about who will receive what.

Another topic for discussion: whether family members who are inactive in a family business should receive anything at all. All too often, business owners leave individuals who don’t play a big role in a family business with a false sense that they will be included in the will, Feder says, when the reverse is true. This can open the door to litigation.

Determine which family members want to take over the business

Business owners frequently have blinders on when it comes to succession, says Feder. “Often the entrepreneur chooses one or more children as successors without any sense of their interest in doing this,” he says.

This scenario can result in a legal mess, as the child named as the successor may receive the business in the will, with other assets distributed among the other children. The other beneficiaries may perceive this as unfair and contest the will.

In other cases, the children are afraid to say no, giving the impression they are eager to take the reins. Feder says advisors should be attuned to these feelings and watch for body language. If it’s clear that what the family business owner and the heir apparent want isn’t the same thing, then advisors need to set up discussions immediately about who will take over the business.

Order a capacity assessment

The issue of mental capacity – the mental fitness of the person who drafted the will – drives many will challenges, Erlich says. Often, a matriarch or patriarch has made dramatic changes to a will or drafted the will at a very advanced age.

Feder says the best way to keep a will from being contested over capacity is simple: Order a professional capacity assessment to be conducted at the time the will is drafted. This assessment will then be sealed in the file and highlights that the individual who made the will was of sound mind when he or she wrote down their wishes.

Avoid the trap of undue influence

Many wills can be challenged over undue influence, Feder says, meaning that one individual has essentially persuaded the testator to enrich them unfairly.

He says that in many cases, a family member, such as a child, will move in with an elderly family member and care for him or her, while other members maintain a more arm’s length role. The caregiver can then end up with a lion’s share of the person’s assets, whether the decision was made independently by the testator or the testator was asked to do so by the child.

Regardless, says Feder, “it’s an environment that’s ripe for dispute and litigation, especially the longer such a situation is allowed to go on.” In these cases, it’s often best the elderly family member be cared for by a third party, such as a home care service or support worker.

Take your time

While no one can guarantee that a will won’t be contested, people can take many measures to ensure it works as intended. The best way to improve a will’s chances, Feder says, is to ensure that families are making thoughtful decisions about who they leave their assets to, involve family members in these discussions and ensure that their will drafting is careful and systematic, rather than part of a hasty and inequitable process.

Feder says the key is “ensuring the estate planning process is robust and well-communicated over an extended period of time.”

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