Islamic Wills in Ontario

“It is the duty of a Muslim who has anything to bequeath not to let two nights pass without writing a Will about it.” (Sahih al-Bukhari)

A Will is a document which says what you want done with your wealth (property, possessions, belongings) after you die.

In Ontario, anyone over 18 years old can prepare a Will provided the person does not suffer from any mental impairment.  Although is it not compulsory in Ontario to have a Will, it is highly recommended as the consequences of not having a Will may affect the distribution of your wealth.

An Islamic Will is similar to a traditional Will but the instructions regarding the distribution of your wealth are based on the principles of Islam.  In other words, a Muslim who wishes to fulfill his religious obligations will be guided by the law of inheritance provided for in the Holy Qur’an.  Surat An-Nisaa’ establishes fixed distribution requirements.  Further clarifications can also be found in several ahadith (traditions of the Prophet pbuh).

Islamic Wills are valid and enforceable provided that the requirements set out in the Ontario Succession Law Reform Act have been satisfied, subject only to laws which can be used to challenge any Will, Islamic or otherwise.  If the Will was properly executed (signed and witnessed), was not prepared under pressure or the testator (the person who has made the will) was not intimidated nor influenced, the instructions given in the Will should be enforceable.

However, there are instances where Courts may not enforce the Will, for example, if the distribution does not properly look after the needs of a person who was a dependent of the deceased or if the surviving spouse elects to receive his or her entitlements provided for under Section 5 of the Family Law Act.

In Ontario, if a person dies without a Will, Islamic or otherwise, his or her property will be divided according to the rules set out in the Succession Law Reform Act.  From an Islamic perspective, your surviving relatives may not receive the shares specified for them in Islam.

As a result of the serious financial and religious consequences involved upon the death of a person, every Muslim should prepare a Will. Knowing that your wealth will be distributed as you intended will give you peace of mind.

Should you require more information or assistance regarding Wills and/or estate planning or you want to make sure that your estate is distributed according to your wishes, please call 613-722-1500 and ask for Ted Mann or Karine Devost and they will be happy to assist.

 

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Why piece meal planning is dangerous!

I have recently been asked to prepare wills for an older couple who have several properties, various investments and two adult children. The real properties include both the matrimonial home, cottages and investment properties. I always ask the client how title is held and then I ask them to provide me with a copy of the deed so I can cross reference what the client believes to be the case with what the provincial records show.

How title is held is important because of the manner in which ownership interests pass on death.  There are several different ways in which people can own title to real property.

First, as joint tenants – two or more people may own property as joint tenants – when one joint tenant dies the other joint tenant is entitled to register a survivorship application and remove the deceased joint tenant’s name from title.  This process happens outside of the terms of any will and without the need of filing for a certificate of appointment of estate trustee and paying probate fees.  The refernce to joint tenants must be reflected on the deed.

Second, two or more people may own real property as  tenants in common – when one tenant in common dies their interest does not pass to the other tenant in common. The deceased tenant in common’s will dictates to whom the interest in the property will pass. In all but the rarest of cases title held by one person alone, or as a tenant in common, will require the estate trustee of the estate of the deceased to  file a court application to obtain a certificate of appointment of estate trustee in order to deal with the deceased’s interest in the real property.  This means the estate will need to pay the application fees and legal fees to obtain the certificate.  The certificate will be required before the estate trustee may sell or transfer the property, even to a beneficiary in the deceased’s will.

Each of my clients believed they respectively held title to an investment property with each of their children as joint tenants so that the ownership would pass to the adult child when the parent died.   When I researched the title records I discovered that the property that Dad owned with his daughter was held as joint tenants but the deed the Mother held with her son was as tenants in common.  As a result on Mom’s death there would be needless delay and extra expense that she would not have anticipated.

Finding out how title was held at the drafting state allowed us to suggest a solution to the problem.  It is a relatively simple fix while both parties are still living and competent. We prepared and registered a deed from Mom and Son to Mom and Son, as JOINT TENANTS.  This is done for estate planning purposes and is exempt from land transfer tax. If this situation had not been corrected and if Mom died believing the property was held as joint tenants then the Court application and filing and legal fees would have needed to be paid and there would have been unnecessary delay in transferring title.

Lesson learned – when you decide to make your will, check ownership of assets.

When is a Will not a Will?

There is a massive transfer of wealth currently happening in the province, and across the country, from the baby boomer generation to their children and grandchildren.  And everyone has a hand out wanting a piece of that pie.  As a result, there have been a significant number of law suits generated challenging the validity or enforceability of a will left by a deceased.  There are, however, only a limited number of circumstances under which a will can be challenged. The most commonly used challenges are:

  1. Improper Execution:  A will that has not been properly signed and witnessed as provided in the laws of Ontario is invalid, and can be set aside in a court of law.
  2. Undue Influence: A will can be set aside if a person or group of persons have pressured, intimidated or otherwise influenced the deceased in the preparation of his/her will.
  3. Against Public Policy: A provision in a will that is found by a court to be against public policy will be found to be invalid.  A recent example of the application of this principle can be found in the case of Spence v. BMO.  That case involved a father and two daughters.  The father had had no relationship with one of the daughters, and was very close to and had provided money to the other daughter.  That daughter told her father at one point that she was living with a man of a race different from theirs, and was going to have a baby with him.  The father, upon being advised of this, stopped his communication with that daughter, and changed his will, cutting out that daughter entirely and leaving his estate to the first daughter from whom he had been estranged.  The court set aside Mr. Spence’s will as being void as against public policy.  Although this case is under appeal, there is judicial authority in earlier cases for this principle, and estate planning lawyers are now delving more closely into motivations behind wills to reduce the likelihood of a challenge on this basis.
  4. Family Law Act: A spouse, instead of taking his/her inheritance arising from a will within six months of the date of death, may elect instead for an equalization of net family property under the Family Law Act, a complex calculation that evens out the value of the assets of each spouse accumulated during the marriage.
  5. Dependant’s Relief: A person who is the dependent of a deceased can challenge a will, to the extent that the will doesn’t adequately provide for that dependent.

It is our responsibility to advise our clients with regard to their estate planning needs to do our best to create an estate plan that can survive a challenge on any of the above grounds.

Ted Mann is the managing partner with Mann Lawyers LLP, a full service law firm in Ottawa’s Hintonburg area. Should you require more information or assistance regarding wills and/or estate planning, please call 613.722.1500 and ask for Ted Mann, Heather Austin-Skaret, Ashley Maksimovic or Mitchell Besner and they would be happy to assist.

DISCLAIMER: This article provides general information and should not be construed as legal advice or establish a solicitor-client relationship by way of the information contained herein. You should seek qualified legal advice before acting on any of the information provided herein.

Expert Panel Struck Regarding Carter v. Canada

The Federal Government has struck a three-person expert panel to address the Supreme Court of Canada decision (Carter v. Canada) (released earlier this year – see February 19 blog post below) which lifted the prohibition against physician assisted suicide. The ruling was suspended for one year to allow the government time to develop new legislation.

Chairing the panel is Dr. Harvey Max Chochinov, a psychiatrist and Canada Research Chair in Palliative Care at the University of Manitoba along with disability rights advocate Catherine Frazee, professor emeritus of Ryerson University, former co-director of Ryerson’s Institute for Disability Studies Research and Education and one-time chair of the Ontario Human Rights Commission; and Benoît Pelletier, a constitutional law professor at University of Ottawa and former Quebec Liberal cabinet minister.

The panel is to conduct on line consultations and report back to the government by late fall.

Changes to the Estate Administration Tax Regime

Though the rate of Ontario Estate Administration Tax (“EAT”) has not changed, the Government of Ontario recently amended this tax regime and the changes could mean a higher tax bill for Ontario estates.

Challenge # 1: Inclusion of some forms of jointly-held property in value of estate

When a joint tenant dies, all property (real estate, bank or investment accounts and personal effects) held in joint tenancy passes to the surviving joint tenant by right of survivorship. Prior to January 1, 2015, the value of the jointly-held property that passed by right of survivorship was excluded from the valuation of the deceased’s estate for EAT purposes – this exclusion is now no longer absolute. An executor (known in Ontario commonly as an estate trustee) must now carefully examine the circumstances behind the formation of the joint tenancy. If the estate trustee believes that the joint tenancy has “strings attached” in that the surviving joint tenant mustdistribute the jointly-held property amongst the beneficiaries named in the deceased’s will, the Estate Trustee must include the value of the jointly-held property as part of the taxable value of the estate.

The Solution: Multiple wills

A solution to the inclusion of jointly-held property in the value of the estate for EAT purposes is the use of multiple wills. The testator would select assets, such as real estate or investment accounts held in only that testator’s name, to pass under the testator’s primary will. This primary will would be submitted to court as part of the Application for a Certificate of Appointment of Estate Trustee with a Will (formerly known as “probate”) and the EAT would be paid based on the value of the assets covered by this primary will. The testator would also sign a secondary will in which the testator would refer to assets, including assets held jointly that were in the nature of a trust (the jointly held assets with strings attached) and other assets such as personal effects and shares of private corporations. The assets passing under this secondary will which is not submitted to court for Certificate of Appointment purposes, would not be subject to the EAT.

Challenge # 2: Inclusion of insurance proceeds in value of estate

Increases to the amount of the EAT payable by an estate could also arise from the inclusion of life insurance proceeds that are governed by insurance trusts. One of the major goals of an insurance trust is to control the age at which life insurance proceeds are distributed; this is of particular value if the beneficiaries of the insurance policies are minors or young adults. Prior to the changes to the Estate Administration Tax Act, insurance trusts were commonly included in wills as a matter of convenience by incorporating the terms of the trust in the will designed for the non-insurance assets to the insurance assets as well. Though the insurance was controlled by the terms of the will, the insurance proceeds were not deemed to form part of the estate value for EAT purposes.

The Solution: Insurance Trust Declarations

The recommended practice is now to create an insurance trust in a separate document called an Insurance Trust Declaration so that there is no mention of insurance in the testator’s will. Through this document the creator of the insurance trust, known as the settlor, would grant a trustee the power to control the distribution of the insurance proceeds. It is open for the settlor to choose terms, such as the choice of trustee, the designation of beneficiaries and the ages of distribution, that are the same as or different from the terms of the settlor’s will.

Though the changes to the Ontario Estate Administration Tax Act may appear subtle, their effect could significantly increase the EAT burden on Ontario estates. The risk to estate trustees has also been amplified by the changes as the Ministry of Finance has the power to audit an estate until a period of 4 years has elapsed after the date the EAT became payable.

Individuals should carefully review their estate plans and consider the options available to structure their estates to both minimize the EAT while at the same time protecting their estate trustees.

How will the “right to die” impact the Power of Attorney?

The recent Supreme Court of Canada decision on the ‘right to die’ issue, known as “Carter v. Canada”, found the provisions of the Criminal code dealing with assisted suicide to be invalid, as being contrary to the Canadian Charter of Rights. Although the Court struck out that Criminal code section, the Court did not impose any framework for how the ‘right to die’ should be dealt with, legislative or otherwise. Therefore, it remains unclear how to deal with this major shift in the law in our day-to-day lives. Of importance will be, not only the ability of a person to give permission to have medication administered which ends his/her life, but also how that permission is given. One important question, unanswered as of yet, is as to whether a donor of a power of attorney for personal care will be able to provide, in advance by living will (see earlier blog), instructions for assisted suicide. Currently, such instructions would be invalid. We must wait to see whether any legislation or other medical guidelines will shed light on the ability to instruct assisted suicide by living will.

Preparing a Power of Attorney for personal care

In preparing a power of attorney for personal care, we will discuss with our clients the preparation of specific instructions to be attached to the power of attorney, detailing the nature of the care the donor wishes under certain circumstances. This document is often loosely referred to as a “living will.” There is standard wording, often used, which provides for medication to be administered to provide comfort even if it hastens death, and for the refusal of ‘heroic’ measures being used to preserve life, in both cases where the donor is unlikely to improve from severe impairment through illness or other cause to his/her quality of life.  However, this document can go into considerable detail about other health care decisions, including a prohibition against certain kinds of treatment, or specifics as to the nature of care that a donor wishes to have (nursing care at home, retirement home, or nursing home).