Tiniest errors in your will can result in big costs and delays later

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Do you know where your heirs are? If people making their wills can’t answer that question off the top of their heads, think how difficult it will be for an executor when the time comes to settle an estate.

Tracking down missing or unnamed heirs is just one of the complications that can drain money from an estate and give executors and estate lawyers headaches.

Estate lawyer Aron Chitsaz at Westcoast Wills & Estates in Vancouver says he sees issues with locating beneficiaries in about 10 per cent of wills. Working through family channels, he can usually track down the beneficiary within a few weeks, but a small number require significant time and investment, he says.

Another snafu? An heir may be named but the executor has no current address. Or there may be a class of beneficiaries, such as nephews or cousins, who are not specified by name.

“It depends on the nature of the issue. If you know a person exists and can’t find them, you hire a skip tracer,” he says. “If you don’t know if someone exists at all, that’s where the genealogists and heir-finders come into play.”

Hiring investigators and genealogists can cost a few thousand dollars or more.

The person settling the estate also may have to prove to the court that reasonable efforts have been made to find all heirs. Chitsaz says courts may still accept the old fashioned newspaper ad seeking heirs as a show of effort, but practically speaking, lawyers today rely on the internet and Google searches.

Once the court has been satisfied that all reasonable steps have been taken to contact the heir, the executor can apply to waive the required notice, says Chitsaz. If that application is granted and probate is received, the executor has to return to court when ready to distribute the estate to ask for an order allowing the missing beneficiary’s share to be be paid into the court.

The missing beneficiary’s share is then held until the heir comes forward. In B.C., if that doesn’t happen, after five years the funds are paid to BC Unclaimed, a nonprofit that keeps a database of unclaimed property and donates a portion of the unclaimed funds to the Vancouver Foundation to be distributed to charity, Chitsaz says.

The obvious way to avoid all that work is for the person making the will to provide contact information for beneficiaries, including email addresses, to the executor.

Meghan O’Neil, partner with Mills & Mills LLP in Toronto, says that if a client thinks there might be a problem finding a beneficiary, he or she can specify a time limit for the search in the will. “That would provide the trustee with the go-ahead to make an alternate distribution for that gift in the event the beneficiary can’t be located,” she says.

A few other possible problems

Precise language is crucial when specifying family heirs, O’Neil says.

If nieces and nephews are named as beneficiaries, for instance, the testator needs to be clear. A niece or nephew through marriage may not be considered the testator’s niece or nephew by a court.

Testators in Ontario have a lot of freedom with bequeathing gifts, says O’Neil. With the exception of dependents, they can leave assets to whomever they please.

“If they want to leave their assets to their best friend the bartender at the Four Seasons, they could do so. In situations like that we would certainly recommend they leave some documentation of why they chose to do things the way they did.”

Anyone named in the will should be identified with their legal names and any other names they go by.

“I have seen situations where a beneficiary has had to provide a supplementary affidavit that they are one and the same person because they’re referred to in the will in one way but they go by another name,” says O’Neil.

Clarity is also crucial when dealing with children and the intended distribution of assets. A couple making a will may want to have assets split evenly among their children, including future children.

O’Neil recommends using the term “my issue in equal shares per stirpes,” a legal phrase that ensures the assets are distributed to the children in equal shares. If a child dies before the parent making the will, their share will pass to the deceased child’s children.

Clarity is also needed in the case of a child who is conceived and born after the death of the parent through assisted reproduction, O’Neil says.

Other complications could come from having beneficiaries outside Canada, who may face tax withholding because of laws in their country.

“One of the easier ways to simplify is to give them fixed cash amounts rather than a portion of the revenue,” says Chitsaz. That can cut down back-and-forthing with a foreign beneficiary when there is a language barrier and translation services are required.

Chitsaz says he has been dealing with an estate in which some beneficiaries are in Ethiopia, and they face questions about the reliability of wire money transfers. His firm is looking at the options, which could include the executor having to go in person to Ethiopia.

How to specify a charity properly

Proper identification and clarity should also be applied to charitable bequests.

The complete name of the charity, as well as its current address and Canadian Revenue Agency registration number, should be included in the will, says O’Neil. That can help with confusion over national charities that have individual branches, or charities with similar names. Hospitals may have both a registered charity and a foundation, for instance, says O’Neil.

If a charitable gift is meant for a particular purpose, some flexibility can be built into the will in case the purpose planned for the bequest is no longer practical or desirable when the testator dies. A direction could be made to the board or trustees of the charity to change the use of the gift, keeping it as close to the giver’s intent as possible, says O’Neil.

Chitsaz says large institutions may provide wording they want to see in wills if money is coming their way.

Complexity, poor drafting and lack of information can increase the time it takes to settle an estate. O’Neill says even for a simple estate, the process can take a couple of years, and items such as legal research or application for direction from the court causes delay and cost.

Chitsaz recommends a will be reread every five years to ensure it still reflects the wishes of the will maker.

It also helps for the will maker to talk to the executor.

That conversation will produce “a better sense of who’s getting what, as well as what the broader intention is,” Chitsaz says. “There can be some nuances lost in the letter of the will.”

More from Canadian Family Offices:

• New spouses invariably upset the inheritance apple cart
• Inheritance power move: leaving money to charity so you don’t spoil the kids
• Can you challenge an unfair will? Where you live makes a difference
• The beer-brewing family who lost it all
• If you want to leave Canada (and its taxes) behind, prepare for a very long goodbye

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