One intent behind the preparation of a will should be to ease the administration of your estate. Your solicitor should have a clear understanding of your obligations because in addition to creditors for debts of the deceased and the estate, family members may have an enforceable right to make a claim against an estate. Where such obligations are not considered when drafting your will with your solicitor, you may leave behind more chaos than intended.
As accountants and tax experts, Shajani is well positioned to articulate and advise on the financial aspects of your estate, which is an important precursor to discussions with your solicitor in determining the potential claims by family members against your estate. Shajani is also able to strategize and devise plans to pass your assets outside of the estate where such a strategy may be warranted.
A spouse has rights to division of property and rights to the matrimonial home during their lifetime in addition to the potential claim against the estate of the deceased spouse. Any property used as a residence, including recreational property may be subject to special rights that attach to matrimonial home or homestead. However, in Alberta, the surviving spouse may only make a claim if the spouse was entitled to make the claim before the date of death. Generally, this requires that the spouses be separated or divorced. Property included are all assets acquired during the marriage. Property excluded are gifts or inheritance, and property acquired before the marriage – these assets should be maintained separate from other property or this protection could be lost.
A marriage contract or pre-nuptial agreement can minimize the impact of this claim.
An inter vivos trust may also be effective to shelter assets from a claim.
Dependent relief legislation
A spouse and dependent child (and certain other family members) have rights to support that are enforceable during lifetime or on death. There is a three-step test to qualify for this support.
1) Does the person making a claim qualify as a dependent?
A spouse, common-law/adult interdependent partner (with 3 years or more of cohabitation), minor child, adult child 18-22 that is also a full-time student, or an adult child with physical or mental disability would be considered dependents.
2) Was adequate provision made in the will of the deceased or was an adequate intestate distribution made?
This could be a long contestable list of considerations. Some of these include the needs and standard of living of the dependent, obligations of the deceased to others, relationship and its duration, reasons the dependent was not provided for in the will, needs of other persons, size and nature of the estate, conduce of the applicant, any agreements such as a prenuptial, other support received by the dependent, financial contributions made by the dependent to the estate and the intent of the testator.
3) What form of relief and what amount of relief is appropriate?
The consideration of legal and moral obligations will also be considered. The case of Tataryn v. Tataryn Estate necessitated what is adequate, just, and equitable must be viewed in the light of current societal norms. As such, moral obligations permit the courts to require a redistribution of the testator’s estate even where need is not established. As such, need is no longer a dominating criterion.
Legal and moral obligations should be considered in your estate plan. Shajani is well positioned to assist in discussions with your solicitor so that your will and estate plan appropriately reflect your obligations and your wishes.
This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. © 2021 Shajani LLP.
Shajani LLP is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning services.