Do You Really Need a Will? Protecting Your Legacy
Death waits for no one or cares how young or old you are. So, when it comes to planning your retirement, it's a good idea to consider writing a will. Besides, who are you going to give your stylin' state-of-the-art toaster to?
To write a will or not to write a will
Do you really need to have a will? No. If you don't have a will at the time of your death, your estate will be subject to intestate. Under intestacy the surviving spouse is entitled to the entire estate, unless there are one or more children. In this case, the spouse is entitled to a share of the estate (across Canada this amount ranges from $40,000 to $200,000). If there is only one child, then 1/2 of the balance of the estate will be given to the child. However, if there are multiple children the estate will be divided further: 1/3 to the spouse and 2/3 to the children. If the deceased has died without a spouse the estate will be transferred over to their next-of-kin, either equally or entirely. If you die without a will and do not have any living family members, the fate of your legacy will lie in the hands of the Provincial Government.
Consequences of not planning ahead
If there isn't a relative or friend willing to be responsible for the management of your estate, then The Public Guardian and Trustee will manage/administer your estate. The court will also appoint a guardian for your children who are under the age of 19. Without a will, once a child turns 19, they can demand all the their money, regardless of their maturity or level of financial responsibility. Picture this: your son or daughter squandering all their money in less than a year. Gasp.
Also, if you have debts when you die, your administer will be responsible for contacting all of your creditors, filing all the necessary income tax returnson your behalf and they must obtain an Income Tax Clearance certificate to prove that you don't have an outstanding tax balance. And all your assets will have to be sold. This includes all the real estate you have in your name, stocks, bonds and other securities. Sometimes, instead of being sold, assets will be given a certain value and will be transferred to an heir as part of their share of the estate. Your administrator will have to use the value of your estate to pay the estate's debts, legal and accounting fees, and in some cases administrative fees. Whatever is left over will go to your heirs.
Taking control of your legacy
Taking the time to draft a living will is actually a good thing. The process will force you to think carefully about settling your estate. You can name who will be the executor(s) of your will, determine who your beneficiaries will be and how they will receive their benefit. This is especially important if you are the parent of a child with special needs and will require a Henson Trust. With a will you can choose guardians for your underage children and determine when to release their inheritance. Lastly, you can leave a gift to your favourite charities.
Timing, timing, timing
When should you get one? You can have a will written at anytime. However, ideally, you should have a will drafted whenever you have a major life event: birth of a baby, purchase of a property, start of a new business, retirement planning and/or if you suddenly fall ill.
Remember to update your will when ...
If your will is more than five-years-old or your marital status has changed, you need to revisit your will. Just because you are separated or divorced does not make a will invalid. Review your will whenever there are significant changes to the value of your assets or if you have lost confidence in the people you have named as guardian, trustee or executor of your estate.
As hard as it is to entertain the thought of your mortality, writing a will can protect your legacy for those you love.