The importance of a Will
This is an exclusive series brought to you by Tax and Estate Planning advocate, Doug Carroll BBA JD LLM(tax) CFP TEP
It is devastating to deal with the death of someone close, and it is even more devastating when that someone dies without a Will. There is no control over how an estate is distributed to family members and loved ones if there is no Will in place. The added uncertainty, paperwork and stress of not having your affairs in order isn’t something you want to inflict on the people you love.
Having a properly prepared Will is a fundamental piece of your estate plan. It is a powerful tool that will not only establish how your estate will be managed, but also how and when your assets will be distributed.
Purpose of a Will
A Will serves two basic purposes:
- To name the person who will be responsible for carrying out your wishes and the distribution of your assets.
- To ensure that your property will be distributed to your named beneficiaries according to your wishes.
Without a Will, the provincial rules of intestacy (meaning the absence of a valid Will) will dictate the distribution within your family and bloodlines. Unfortunately, that would operate without the benefit of your legally binding wishes, let alone any final thoughts or moral guidance from you. Depending on the province, that may include or exclude a common law spouse, or require a prior registered notice for that person to share in the estate.
Even when one is legally married, intestacy can distribute things in unintended ways. Depending on the value of your property and how title is registered, your children may have immediate and significant claims in an intestacy alongside your married partner. That could be complicated and inconvenient if the children are minors, and potentially disastrous to the survivors if there are standing family tensions.
You may feel you don’t own enough to be bothered, but eventually you will (often without you noticing), and sometimes rights and claims arise as a result of an untimely or accidental death. It’s not so much about the things you own, but rather it’s about properly caring for the people you love, particularly those who are financially dependent on you.
Supporting your children in vulnerable circumstances
Beyond the matter of transferring property between you as spouses, as parents you have to consider the unthinkable of what happens if you both die, whether at once or in short succession.
Transferring property to children can be complicated. It requires careful thought about when and how that will happen, how structured or discretionary it may be, and who is best suited to oversee it.
Even more important is that children need a stable family structure, especially during traumatic times. You want them to have an emotionally supportive home, surrounded by extended family and a social setting that allows them to build fulfilling lives. Your Will is the last word you can offer on guardianship, so its contents and the conversations leading up to its execution are fundamental to your role as a parent.
Even the simplest estates should have a Will
When a child dies first, it can be crushing to parents, whether that child is under their roof or has already set out into the world. Such a ‘death out of order’ can be emotionally, socially and even physically paralyzing for parents. A minor child can’t do much to prepare for such a tragedy, but an adult child can make a Will to ensure that their estate can be managed as efficiently as possible, allowing their parents to begin dealing with their grief.
Main types of Wills in Canada
A legal document usually prepared by a lawyer and signed by at least two witnesses. The Formal Will specifies who will be your estate executor, how and when your estate is to be distributed, your powers of attorney, and guardianships for minor children and dependent family members.
Allowing a legal professional to prepare the Will ensures it follows the rules of law governing how your final wishes are undertaken. This includes rules around executor selection, asset distribution, charitable donations, and how any minor children or dependent family members will be taken care of. When a law firm prepares your will, it usually keeps a copy on file, so that it can be located by your family members and/or executor(s) in the future.
Used in Quebec, Notarial Wills are similar to Formal Wills. It is prepared and signed by a notary public, usually with at least one witness.
A document prepared in handwriting, signed by you without witnesses. Legal experts advise against using a Holographic Will as some provinces do not recognize them. You may inadvertently misrepresent your wishes in the Will, leaving it open to possible legal challenges.
Do-It-Yourself Will Kit
Purchasing a Will Kit may save you money but if it is inadequately prepared, it could lead to a legal challenge, or it simply may not meet your intended wishes.
Seeking Professional Guidance
When planning your estate, it is important that you engage in the services of legal and tax professionals to properly prepare your Will. This ensures that your estate is effectively managed after your death and your assets are distributed according to your last wishes. In addition, proper estate planning helps reduce probate and income taxes payable at death, thus optimizing the transition of your assets to your loved ones and/or to charitable causes.
The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters.