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What is a will and how does it work?

SUMMARY

A will is a crucial tool for making sure one’s final wishes are carried out after they’ve passed, including leaving an inheritance for loved ones. Creating a will can be much easier than you think — it’s what happens after that can get complex. In this article, we’ll go over the ins and outs of wills, how they work in Canada, and what you can expect.

By Jiten Puri
CEO & Founder, Insurance Advisor, LLQP
22 min read
IN THIS ARTICLE

When many people think of wills, they think of wealth. They think of rich families seeking to distribute big inheritances. In reality, though, anyone can benefit from having a will. Here’s what you need to know about how wills work and how to create a last will and testament in Canada.

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What is a will?

A will, or a “last will and testament” is a legal document that provides instructions about what to do with a person’s estate when they die. A will lets you decide how your estate — comprising personal property, land, heirlooms, financial assets, and liabilities — will be distributed after your death. In other words, who will receive what. A will can also include other instructions, such as appointing guardianship for any dependents and what your burial wishes are. The person who creates a will is also known as a “testator”.

Types of wills

In Canada, there are two main types of wills:

  • Formal
    This type of will is written by the testator and signed in front of adult witnesses. This is the most common type of will. It is also known as a testamentary will or attested will. Formal wills come in many different forms, such as joint wills between two people, notarial wills that must be witnessed by a notary public, living wills for end-of-life care, and more.
  • Holographic
    These are both handwritten and signed by the testator themself. No witnesses are required. However, some provinces in Canada do not accept holographic wills, so it’s recommended that you create a formal will instead.

What is the purpose of a will?

Ultimately, the purpose of a will is to communicate your wishes after you die and ensure that your estate is distributed as you see fit.

Your will can make sure your dependents are cared for by people you trust. This is especially helpful for people in common-law relationships. Whereas common law spouses sometimes have difficulty being legally recognized as their partner’s next of kin, a will can help someone make sure their life partner is taken care of beyond their death.

A will can also outline how any financial affairs you leave behind are taken care of, like outstanding debt or loans, funeral expenses, and more. It essentially gives you some control over what happens when you’re gone. Making a will is an important part of estate planning.

Despite this, many people do not have wills: 51% of Canadians reportedly have no will and testament, while just 35% have one that is up to date (Angus Reid). We know the process can seem a bit daunting, but writing a will doesn’t have to be complicated — or expensive. In this article, we’ll cover everything you need to know about wills and how they work in Canada.

You don't need a lawyer to make a will - you can write one yourself!

How does a will work in Canada?

The process from creating a will through to its completion involves several steps. Let’s take a look at each part of the process.

1. A will is drafted 

Once someone decides to create a will, they typically appoint a person or institution, known as an executor, to make sure their will is carried out at the time of death. The executor is also sometimes called a “personal representative”.

The will is drafted, naming the executor, the beneficiaries who will receive assets/property, the distribution plan of who gets what, and any other final wishes of the person making the will. Additionally, the will must be dated and signed by the will-maker and two valid witnesses. Some provinces require the witnesses to be legal representatives. But, in general, for a witness to be valid, they must be above 18 and must not be:

  • The executor
  • The executor’s spouse
  • A beneficiary named in the will
  • A beneficiary’s spouse

In most provinces, witnesses have to physically sign the will. But British Columbia allows electronic witnessing of wills.

Your will should also include details about how you want your funeral to be carried out, how you want your personal property and/or assets to be shared and when, and similar information. Not being detailed enough in your will is a common mistake that can lead to issues down the line, so make sure to get it all down!

2. The will goes to probate 

After the testator dies, their will is typically filed with the probate court, which will review the document to ensure it is valid. The executor named in the will must provide the probate court with a detailed accounting of the deceased person’s assets and their distribution.

3. Estate assets are distributed 

Once the probate court finds the will to be valid, they will give the executor a “grant of probate” that confirms the will is valid. With a grant of probate in hand, the executor can then carry out the instructions outlined in the document. This may include selling property, distributing assets to beneficiaries, and paying any outstanding debts. This is typically done by transferring ownership of the assets to the beneficiaries, such as by transferring ownership of a bank account or property to the person named in the will.

4. Watch out for complications 

The whole will process sounds pretty straightforward, and it often is. But there are some complications to make note of. For instance, the distribution of estate assets can be subject to legal requirements and even court supervision. The executor may even have to get court approval first before selling certain assets, in some cases.

And, a will can only be used for managing assets that are solely in the deceased person’s name. So, if the individual owned assets jointly with someone else — such as their spouse — that property will not be distributed according to the will at the time of death. Instead, it will be passed directly to the joint owner.

Similarly, if an asset such as a life insurance policy already has a designated beneficiary, then that asset will also not be distributed according to your will. In this case, it will be passed to the designated beneficiary that was already previously named.

Read more about how life insurance, probate, and wills work in Canada. 

Do you need a lawyer to write a will?

Though a will is a legal document, you do not need a lawyer to write one.

It can be helpful to seek legal guidance in the process to ensure there are no errors and that everything is covered. And, there are estate lawyers who specialize in wills and administration of estates. These lawyers handle all legal affairs related to an estate, going even beyond handling estate planning documents and writing the will to actually seeing it through probate as well. Using professional estate services can be particularly helpful if you have a complex estate with a lot of different moving parts.

But, there are alternatives to lawyers — and their legal fees — or similar estate services when composing a last will and testament. For example, you can choose to handwrite your will or opt to use a will kit or online service, such as a Willful plan. These options are typically much more affordable.

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What is probate?

Before a will-maker’s estate is distributed based on the contents of a will, the will must be authenticated. This validation process is called probate. Probate is carried out by a provincial court and ensures that the last will and testament is the most up-to-date version and meets legal criteria. Probate also authorizes the executor and ensures that the assets listed in the will — from personal property to real estate property and everything in between — are eligible to be distributed.

The probate process typically happens after the testator has passed. It’s also during this time that your will can be challenged. After probate, all wills become public documents. So, anyone who requests access to a will upon the will-maker’s death will be able to view it.

In almost all cases, it is necessary to go through the probate procedure before the will-maker’s estate can be distributed. The process can be lengthy, but it is in place to protect financial institutions against misunderstandings or fraud. For example, the deceased could have written two wills in their lifetime, each with a different executor. Banks would therefore be at risk of handing over assets to two different executors for a single estate. Probate checks all relevant documents and validates the true will.

Probate can be free of charge, depending on the value of the estate. However, in other cases, it will incur a fee that must be paid by the executor. The exact cost and who the fees should be paid to depend on the province. But we’ll go further into that a bit later on.

Do all wills in Canada have to be probated?

Not all wills across Canada must undergo the probate process. The specifics vary by province, but small estates are not always required to undergo probate. Probate is also not usually required in circumstances where assets are jointly held, which is common for spouses. In these cases, the assets can simply be passed to the surviving account holder.

Additionally, if you live in Quebec, probate is not required for notarial wills. Handwritten or witnessed wills, however, must still undergo the probate process.

It is also worth pointing out that life insurance policies do not have to undergo probate; benefits are paid directly to your beneficiaries when you die. Life insurance death benefits are also not subject to probate fees.

Read more about why you need both life insurance and a will

How much does probate cost in Canada?

The cost of probate varies greatly and is generally dependent on the size of the will-maker’s estate and the province in question. In Ontario, for example, probate costs $5 per $1,000 for the first $50,000. For every $1,000 that exceeds $50,000, the rate goes up to $15.

In British Columbia, there are no probate fees for estates under $25,000. But for estates valued at between $25,000 and $50,000, probate fees equal 0.6% of the estate value. This proportion jumps to 1.4% for values above $50,000. Meanwhile, in Quebec, there is a flat $65 fee for probate.

If you’re thinking about setting up a will, you should research estimate probate costs in your province or speak with a professional who can help.

How long does it take to get money from a will in Canada?

In Canada, it usually takes up to a year for a will to undergo probate and for administration of estates to be completed. However, in some cases, the process can take longer. If the validity of a will is being challenged in the probate process, it can take years for beneficiaries to receive any inheritance.

What happens if someone dies without a will?

When someone dies without having written a will, their estate goes into what is known as “intestacy”. In this case, the government can provide estate services to distribute assets based on local regulations, which vary from province to province. Here are some different outcomes for the estates of people who do not have a will:

The estate can go to family  

In general, if you die without a will, your estate will be distributed to family members. If you have a spouse and no children, your spouse will be entitled to all of your personal property and remaining assets after tax, fees, etc. If you don’t have a spouse or children, your parent(s) will receive your estate. If you have no parents or spouse, your estate will be divided between your siblings.

But cases vary by province

The specific formulas for distribution of a deceased estate vary the most in cases where a person has a spouse and children. That is, it’s not typically a matter of dividing the estate equally between spouse and children — each province has its own distribution formula.

In Ontario, for example, the first $200,000 of the estate is distributed to the deceased’s spouse. If the estate is worth less than that, the spouse receives it all. If the deceased has one child, the remaining assets will be divided between the spouse and child. If there are multiple children, the spouse is entitled to one-third of the remainder, while the children split the remaining two-thirds of the estate.

But in Quebec, a third of the entire estate goes to the spouse, while the remainder is split between children. If you have a spouse and parents, two-thirds go to the former, while one-third goes to the latter. And in British Columbia, the spouse is entitled to a preferential share of $300,000, and half of the remaining share.

The estate can also be handled by the provincial Public Guardian office

The estates of people with no living relatives (including grandchildren, nieces, nephews, cousins, etc.) are managed by a government agency, such as the Office of the Public Guardian and Trustee in Ontario and Alberta, the Public Guardian and Trustee in British Columbia, the Office of the Public Guardian in the Northwest Territories, and similar public guardian offices in each respective province.

In this case, the Office of the Public Guardian and Trustee can act as an estate representative or to oversee a deceased estate. They determine whether the deceased left behind any personal property, assets, debts, or other financial or legal affairs. From there, the Office of the Public Guardian must manage the estate, including settling debt where possible. The probate process can be long and complicated in cases like this.

The Office of the Public Guardian and Trustee may also step in for cases where a will is being challenged. Check out the FAQ section below for more about what happens when a will is challenged.

It can be a combination

Aside from the outcomes mentioned above, there is another, more complex outcome. “Partial intestacy” is where you have a valid will but it only distributes part of your assets or estate. In this case, your executor will be responsible for distributing any assets included in your will and according to your wishes. But any assets not covered under you will be handled by the government or public guardian via the local intestacy regulations we mentioned above.

You should choose someone that you trust to be the executor of your will.

How much does it cost to have a will made in Canada?

The cost of creating a will varies significantly depending on the size and complexity of your estate and how you choose to write your will. For example, hiring a lawyer to oversee the drafting of a will costs significantly more than using a will template or writing it yourself.

The cheapest option is to write a will yourself. This type of will is called a holographic will and it must be written in your hand. While inexpensive, holographic wills come with a greater risk of error.

On the cheaper end of the spectrum, will kits can cost as little as $20. These provide a template to follow when drafting a will, but do not include any additional guidance.

There are also online will services that can help you put together a legal will for a modest price. These tend to provide additional support and take you through each step of will writing, not unlike online tax preparation services.

If you opt for a lawyer’s services in drafting a will, the costs vary, but you could easily spend upwards of $1,000. As a general rule, the more complex your estate, the more it will cost.

Does the executor of a will get paid?

It is common for an executor or joint executors to be compensated for their role. Executors have a wide range of responsibilities, including organizing the deceased’s assets and accounts, applying for probate, and ultimately distributing the will-maker’s estate to beneficiaries. Giving them compensation creates an incentive for the executor to take on the role appointed to them.

The value of an executor fee is calculated based on different factors, including the size of the estate, provincial laws, and whether the will explicitly states a compensation amount. As the owner of a will, you can decide how much compensation to set aside for the executor.

If you don’t specify an amount, the executor fee is determined by formulas set by your province of residence. If a financial institution or law firm is appointed executor (i.e. a professional executor), the executor fee is usually decided by them and can exceed provincial fee amounts.

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How to write a will

As we saw, there are a few different options at your disposal when it comes to writing a will: you can write it yourself, use a will kit, employ an online service, or hire a lawyer. Regardless of which route you choose, there are some key things that should be covered in your will.

  • Appoint an executor. This will be the person or people who oversee the terms of your will when you die and organize the distribution of your entire estate. It is important that you tell the person you appoint that they are your executor, and that they know how to access your will. You should also appoint a backup executor in case your primary executor is unable or unwilling to fulfill their duties.
  • Appoint a guardian. If you have any dependents at the time of writing your will, it is important to choose a guardian that will take on responsibility for them in the event of your death. It is also vital to update your will if you have any more dependents or your guardian preferences change.
  • Specify your burial preference. While not necessary, you can choose to include your burial wishes in your will. Funeral wishes and requests are not legally binding, but your preference for cremation or burial will be.
  • List your beneficiaries. Once you have an idea of your estate, you can designate your beneficiaries and specify who will inherit what, whether it’s a portion of your overall assets or specific items or heirlooms. You are not required to tell someone that you have named them as a beneficiary in your will, as your executor will be responsible for doing this when the time comes. However, if your beneficiaries are close relatives, such as your spouse or your children, you may feel comfortable giving them a heads up — that’s a personal choice up to you.
  • Ensure your will is legal. The criteria for a legal will is different in each province, so it is critical that your will meets specific guidelines. For instance, holographic wills must be entirely written in the person’s hand (any edits must be made by hand as well). Both typed and online wills require a witnessed signature — although, only British Columbia allows for electronic signatures and witnessing.
  • Have an alternate plan. Planning your wishes down to the tiniest detail is a great idea. But, as we’ve all learned at one point or another, plans can go sour. It’s recommended that you have a backup plan for your will just in case it can’t be carried out according to your original wishes. A “Plan B” can be a trust, a Power of Attorney, or several other legal actions that can be a failsafe in case your will, somehow, doesn’t work out.

Frequently Asked Questions

Who can make a will?

Anyone who is 18 or older and of sound mind and memory can make a will in Canada. This includes even people who are considered vulnerable, such as the elderly or people with cognitive impairment. And, importantly, it includes all walks of life — wills aren’t just for the super-rich.

As we mentioned above, the legality and validity of a will vary by province and the type of will you make. But, in general, this is the main requirement.

Who should get a copy of the will?

Typically, you should hold onto your own will and keep it stored somewhere protected, such as a safety deposit box or a safe. The executor of your will should know where your will is stored and be able to access it easily when the time comes.

In terms of sharing your will, it is up to you to decide whether to keep the contents of your will private or share them with beneficiaries. While you can make a copy of your will, only the original signed document is considered valid in Canada.

Can the executor of a will also be a beneficiary?

Yes, it is possible for a chosen executor of a will to be a beneficiary. In fact, it is quite a common occurrence, since people typically choose someone close to them, such as a family member, to be the executor of their will.

Can the executor refuse to carry out a will?

Once an executor has been appointed, that person is legally required to carry out the deceased person’s last will and testament.

But, there is a way they can still back out of it. The executor can resign their position by submitting a formal application to the court to be released from their duty. If there was a secondary executor, the duty to carry out your will would fall to that person. Or, if there is no secondary executor, the executor who resigns may be able to name an alternative executor.

If your executor resigns, the court may appoint a new executor or estate administrator. It may also ask a Public Guardian and Trustee to manage your estate if no other executor, personal representative, court appointee, beneficiary, or anyone else to do so. The Public Guardian and Trustee may also manage your estate if there is a dispute over distribution of your assets.

What happens if a will is challenged? 

During the probate process, someone can question whether a will is valid. This is called challenging the will. But not just anyone has the right to challenge a will. Typically, it can only be challenged by someone considered to have interest in the estate, such as a beneficiary, spouse, or child of the deceased person.

There are a few grounds on which a will can be challenged, including:

  • The testator did not have the mental capacity to make a will
  • The testator was unfairly pressured or influenced by someone else to put certain terms into the will (i.e. undue influence)
  • The will was obtained fraudulently
  • The will had errors, like it was not signed properly or not witnessed

When a will is challenged, a court hearing has to be held to determine if the will is actually valid or not. This can be a time-consuming, expensive undertaking. And, the deceased person’s assets or wishes will not be carried out until the matter is resolved.

If the court finds that the will was invalid, then the testator’s assets will be distributed under the local intestacy regulations mentioned above.

Do I need both a will and a trust?

Wills and trusts are closely related, but whether you need both depends on if you need your assets to be managed during your lifetime or not.

A trust is a way for someone to own something. It allows one person, known as the “ultimate owner”, to transfer something(s) they own to another person, known as the trustee. Like an executor, the trustee is not the final owner of a trust’s assets — that is the beneficiary. Instead, the trustee is responsible for managing and distributing the trust’s assets to the beneficiary.

But, unlike a will, a trust can be used during one’s lifetime. It can also have several uses, including to reduce taxes or take care of an incapacitated beneficiary. On the other hand, a will only comes into effect once the will’s owner passes away.

Why is it a good idea to make a will?

Making a will can seem intimidating, and of course no one likes to think about their death. But, like life insurance, a will is an important tool to make sure your financial affairs are sorted out and your loved ones looked after once you’ve passed on. Whether it’s your spouse, children, siblings, or even a beloved pet. And whether you want to pass on a large tract of land or just personal property like a family heirloom or your favourite sweater.

No matter your life situation, making a will is one of the best ways to tie things off smoothly and ensure there’s no confusion about who gets what of your estate property. You should consult an expert for advice if you’re thinking about making or changing a will.

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The information above is intended for informational purposes only and is based on PolicyAdvisor’s own views, which are subject to change without notice. This content is not intended and should not be construed to constitute financial or legal advice. PolicyAdvisor accepts no responsibility for the outcome of people choosing to act on the information contained on this website. PolicyAdvisor makes every effort to include updated, accurate information. The above content may not include all terms, conditions, limitations, exclusions, termination, and other provisions of the policies described, some of which may be material to the policy selection. Please refer to the actual policy documents for complete details. In case of any discrepancy, the language in the actual policy documents will prevail. All rights reserved.

If something in this article needs to be corrected, updated, or removed, let us know. Email editorial@policyadvisor.com.

KEY TAKEAWAYS

  • You create your will, but you appoint someone you trust as your executor to carry it out
  • Making a will does not have to involve a lawyer or an expensive process
  • If someone dies without a will, their assets are taken over by the government

By Jiten Puri
CEO & Founder, Insurance Advisor, LLQP
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