In some ways, outliving your beneficiaries is a good problem to have.
It’s usually a sign that you’ve lived a long (and hopefully healthy) life, but it should also be a sign to update your will.
In a recent case, a judge had to intervene to interpret the will of an elderly Greater Toronto Area woman whose chosen executor and beneficiary had died before her.
The woman at the heart of the case made her will in 1997, soon after her retirement, leaving her entire estate to her only child – a daughter who was also named as executor. However, the will went untouched in the next two decades, before the testator died in 2016 at the age of 91.
In the meantime, the woman’s daughter had predeceased her. The will did have contingencies in place, but the back-up executor (the lawyer who drafted the will) and most of her alternate beneficiaries – her five sisters – had also died before her.
To clear up confusion about how the proceeds of the estate should be split among the next generation of the woman’s sisters, the new executor – a friend of the testator’s daughter – had to go to court for guidance on interpreting the will’s ambiguous residue clause.
After reviewing three separate scenarios for the distribution of the estate, the judge found that the deceased had intended to benefit all five of her sisters equally and that, in the event that any of them should not survive her, the family branches of each deceased sister. As a result, each of her 10 nieces and nephews ended up with varying shares of the estate, depending on their number of siblings.
The decision also illustrates how costly a court action can be in Ontario, even on a relatively straightforward issue like this one, where none of the proposed beneficiaries objected to the judge’s interpretation.
Costs of $33,000 were awarded in favour of the executor – money that will come out of the estate itself, eating into the amount due to all of the deceased woman’s heirs.
Outliving your beneficiaries is not the only reason you should return to your will after drafting it. I typically recommend clients revisit their estate plan every couple of years and check whether the people you named as your executor and heirs still make sense. Relationships evolve over time, and they may not always be as suitable in those positions as they were when you first picked them, even if they are still alive.
If you can’t commit yourself to that kind of frequency, then big life events or major relationship changes should prompt an update to your will – think the birth of a child, marriage, divorce, or a major change in net worth.
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