Hi everyone, I’m Sabrina, a probate lawyer at Varity Law. When we pass, most of our assets will be immediately frozen, regardless of whether we have a Will or not. The Will or the Estate must be submitted to the Court for probate. Once approved, our executor can access the estate funds to pay off debts and taxes and distribute the rest to the beneficiaries.
Unfortunately, many Wills are not written in a way that considers the future probate and estate distribution. Most Wills, whether or not they are drafted by lawyers, focus on naming who is the executor (manager of the estate) and the beneficiaries (receivers of the estate). Learn more about will drafting. Most people think that once you have a will, you’re covered, but that’s not always true. Even if your will is legally valid, it might still create major headaches during probate or estate distribution. At Varity Law, we’ve seen families struggle because the will was missing key legal documents, promised assets the deceased didn’t actually own, or left behind properties that were too costly or hard to manage.
In this post, I will share three real-life case studies showing how common drafting mistakes (without practical estate planning) can lead to delays, disputes, and unnecessary expenses. If you’re planning ahead for your loved ones, this is a must-read.
Case Study 1: There is NO affidavit of execution
The Will must be signed by the testator (person giving away their inheritance upon their passing) and two witnesses who are not executors or beneficiaries to the Will (nor their spouse). One of the witnesses needs to sign an affidavit of execution with a lawyer before probate can be submitted.
However, since this affidavit is needed during probate and not during Will drafting, it is often not included with your Will. But without the affidavit, the Will cannot be probated. This creates a big problem.
A family came to us to probate their Will, but it lacked an affidavit of execution. The witnesses were the lawyer who drafted the Will and his law clerk. As the lawyer has been retired for years now, we had a hard time locating him. Then we had to consider the harder solution: finding someone who can authenticate the testator’s signature, such as a bank employee who witnessed it before. This is very difficult because very few people are willing to take on that type of responsibility and liability (more info found probate with no affidavit of execution of will.)
Fortunately, after much effort, we finally located the lawyer and had him sign an affidavit in our presence. However, we have known others to not be so lucky, as the original witnesses predeceased the testator.
Case Study 2: You cannot give away what you do NOT own
A daughter came to us to probate her dad’s Will. In the Will, the dad stated that everything would go to the daughter, including an office he owns worth millions. However, after we did a title search, we found out that the office is owned by the dad’s company, and not by him personally. This company is co-owned by Dad and Mom.
As the mom did not want to sell the company or the office, it created a stalemate with the daughter. Under the Will, she can inherit the dad’s ownership of the company, being 50% of the shares. However, this does not give her unilateral decision-making power, so she could not override the mom’s wishes to keep the company and office without litigation. In the end, the daughter gave up and just continued to operate the company with the mom.
The lesson is always to check that you personally own the assets to be given, and that they are not co-owned with someone else. When the asset is held by a company, you must ensure there are no restrictions that would prevent the corporate assets from being transferred, such as a requirement that all shareholders agree.
Case Study 3: Is it easy to liquidate the estate? Is it expensive to maintain the assets?
A daughter and a son came to us to probate their parents’ estate. After receiving probate approval, they must decide whether to keep or sell the investment property they received. While I suggested they start proceedings to evict the tenants and sell the property, they were unsure. The daughter wanted to keep the property while the son wanted to sell it.
Despite my warnings about the bank starting Power of Sale, they persisted in their disagreement. Unfortunately, months passed by, and the bank began the power of sale. This means that because there is an outstanding mortgage on the estate property, the bank can sell it upon the deceased’s death. All costs incurred during the sale, such as legal fees, broker fees, and interest penalties, are to be deducted from the estate, resulting in the son and daughter receiving less of the inheritance.
The children frantically tried to sell the property themselves before the bank could finish its sale. Then they learned it could take a year to evict tenants (while waiting for the landlord and tenant tribunal). And no one wants to buy a property with tenants not paying rent. Seeing no other choice, they decided on cash for keys – the children paid the tenants a sum of money in order for them to move out immediately.
Finally, they sold the property at a loss, before the bank could finish its power of sale. They also had to pay for the property taxes and renovations out of pocket to ensure a successful closing. Moreover, the estate would need to pay capital gains tax on the sale, so the children would get even less money than expected.
Based on those 3 case studies, it’s obvious that just writing a Will naming executors and beneficiaries would fail to resolve many key problems in probate and estate administration. We invite you to click HERE to book a 1st free consultation regarding your estate planning, probate, and estate administration.
