Usually wills state that certain beneficiaries will receive a percentage of the residue of the estate. Sometimes however clients will suggest leaving specific assets to their beneficiaries. For example they may want to leave an investment account, RRSP or a piece of real property to someone.
There are significant issues which need to be addressed if specific assets are to go to beneficiaries. They include the following:
1. What if the asset no longer exists at the date of death? Is it the will-maker’s intention that the beneficiary receive nothing?
2. Who will pay any debt associated with the asset? There may be a mortgage registered against the title of the property or there may be taxes owing on the death of the will-maker. Who does the will-maker want to pay the debt, the beneficiary or the estate?
3. Who should bear the transactional costs? There may be a commission or fee payable as a result of the disposition of the asset.
All of these things need to be considered and addressed before specific bequests are made and it is often preferable to simply leave beneficiaries a certain percentage of the residue of the estate to avoid uncertainty about the will-maker’s intentions.
Deborah A. Todd