Whether you have a child with a disability or not, the simple answer in almost all situations is yes.
Retaining a lawyer to draft a proper will does cost. Many of my clients have paid in the neighbourhood of $1,500 to $2,500 for powers of attorney and a will that includes a Henson Trust. The cost isn’t insignificant, but dying without a will can cost far more and there are other fairly unpleasant consequences.
In the absence of a will, the assets of an estate are disbursed in accordance with your province’s laws of intestacy, which have strict guidelines. Even a surviving spouse does not have the legal right to determine how the assets should be disbursed and they certainly can’t assume they are entitled to 100% of the estate.
In Ontario, if you die intestate (without a will), leaving a spouse and a child or multiple children behind, your spouse is entitled to the first $200,000 of your estate. The remainder of your assets are split between your spouse and your children, regardless of how old they may be. If you have one child, the amount above and beyond the initial $200,000 is split equally between your spouse and your child. If you have more than one child, the spouse receives the initial $200,000 and then one-third of the remaining assets. The other two-thirds is split equally between the children.
If one of the children has a disability, the situation becomes more complex, raising additional issues. Unfortunately, many of the resulting issues are not easily remedied. Most issues come with a cost, take time and energy to implement and the solutions are often less than satisfactory.
An example might be helpful. A man dies, leaving a wife and three sons behind and a 1.1 million dollar estate (after fees, taxes and other disbursements). The children are ages 12, 15 and 22. The oldest child has a significant developmental disability and is heavily dependent on his mother. The first $200,000 of the deceased’s estate goes to his wife. The wife would also receive an additional $300,000 (one-third of the remaining $900,000) and the remaining $600,000 would be divided equally between the three children.
Aside from the fact the money is not divided as the mother would like or in the best interests of the family, there are other complications. The money for the 12-year-old and 15-year-old may not be easily accessible. The mother is not given control of the assets simply because she is the mother. If she wants control of the assets, she has to apply to the courts. Think of the cost and the time, not to mention the emotional stress.
Even if the mother’s application to the courts is successful, she must spend the money allocated for her two younger sons in their best interest. The mother use the money from either of the younger sons’ inheritance to cover costs that are not in their benefit. Once they turn 18 they are adults and receive the remaining amounts in their names. Once the money is in their hands, it is their money. Not only would they be able to spend the money at their discretion, they may also demand a full accounting of all transactions while the money was managed by the mother. If they do request an accounting of how the money is spent and are not satisfied the money was spent in their best interests, they could pursue legal action against their mother.
The 22-year-old child receives his share of the estate in his name. Because the inheritance is given to him in his name, his Ontario Disability Support Program benefits maybe jeopardized, if not revoked entirely. Because he is single and has no dependents, he is not allowed more than $5,000 in assets in order to maintain his eligibility for ODSP. His ODSP can be reinstated by putting the money he has received into ODSP exempt assets, such as the RDSP, but there are other complicating issues that can get in the way.
Due to the severity of his developmental disability, the eldest son does not have the contractual capacity to manage his own money or even the ability to give his mother power of attorney over his assets. As a result, the mother would have to make another application to the courts to secure guardianship for her son. Until his mother secures guardianship, they money for the son will likely be managed by the Public Guardian and Trustee. More costs, delays and stress.
Even if the mother finally secures guardianship for her son, his portion of the estate may not be enough to respond to his needs because the children’s portion is divided equally and not in accordance with their needs. If the father died with a will, all of his assets could have been left to his wife for her determine how the money should be used. Without a will in place, the mother’s ability to decide how the money should be used, for whom it should be used and when it she be used is severely restricted.
At 1.1 million dollars, the father has left behind a significant estate that should be able to ease the financial challenges of his surviving spouse and his three children, but the size of the estate is not the only determining factor. Without proper planning, assets do not end up in the right hands, raising many issues where a satisfactory resolution may not exist. Any issues that can be addressed, at least to a certain extent, will come with a price tag, ultimately eroding the value of the estate, not to mention the inevitable delays and the ensuing emotional stress.
Effective estate planning helps to ensure assets go where they are intended, government benefits (i.e. ODSP) are safeguarded, delays and costs are minimized, taxes are reduced and stress is managed. The cost of a properly drafted will may not be insignificant, but the cost of not having a will is often far greater, profoundly affecting a family’s quality of life.