Do You Have an Up-To-Date Will?

It’s estimated that 70% of Canadians who should have a valid or current Will. Don’t be one of them! This is a pretty astounding percentage given what’s at stake. A person who dies without a Will (intestate) will have their affairs settled by the Public Guardian and Trustee in Ontario. As you can imagine, that’s not ideal. Family members can wait years for the estate of the deceased to be settled. The eventual beneficiaries will have little or no control over the process.

When you pass away, your family will be dealing with a lot of stress and emotion. You don’t want to add to the stress by leaving your family unprepared to manage your estate.

Some people may feel that they will either leave a small estate or no estate at all, and therefore may not be motivated to complete a Will. However, if you own a home, you could end up with a sizeable estate. The average weighted home equity of Canadians 65 and over is $284,000 (net of debt, including the 30% who don’t own homes) (Source: Statistics Canada). Don’t take chances. Make sure you have a valid up-to-date Will. If you sit down and figure it out, you may find your net worth is much larger than you initially thought.

Preparing a Will is as much about estate planning as it is about documenting your intentions. People’s financial affairs are becoming more complex. Where our parents mainly invested in term deposits, we are investing in stocks, rental properties, real estate investment trusts, mortgages, bonds, options, futures. The list goes on. At death, these assets could trigger a significant income tax liability and probate fees. Probate is a process whereby the courts certify the validity of the decedent’s Will and the authority of his or her personal representative to administer the decedent’s estate. In Ontario, the court fee charged to probate the will is .5% on the first $50,000 of net value of the estate and 1.5% of the net value of the estate that exceeds $50,000. There are strategies available to minimize income taxes and probate fees. Also, if you’re planning to make a significant donation through your estate, strategies are available using life insurance that could make these donations more cost effective. Estate planning is important. Preparing a Will is part of that process.

It is important to ensure that your Will is kept up to date. Family dynamics change (e.g. a marital breakdown), your personal financial position is always changing, and the rules covering the taxation of trusts (created on death) are also changing. I recommend that your Will be reviewed every five years or when there is a significant family event. Did you know that a marriage automatically revokes prior Wills? Although you’ve remarried, it may be your intent to leave your estate to the children of your first marriage. However, if you don’t write a new Will after remarrying, your second spouse will have rights to your estate after your death. Don’t write your Will, place it in your safety deposit box and forget about it. It could be financially unhealthy and/or it could derail your plan for how your estate should be distributed.

Talk to your family about what is in your Will and what you would like to see happen when you pass away. This will help minimize or eliminate possible conflict when you pass that could arise from expectations of your beneficiaries not being aligned with your intentions. Provide your family with details of where you keep your Will, which bank you bank with, where your investments are held, where property deeds are kept, details of life insurance policies that you own, details of your debts (e.g. mortgage and line of credit), etc. Also, provide the firm name, your contact’s name, address, email address, and telephone number for all your key advisors (lawyer, accountant, financial advisor, life insurance agent). Who is the best person to talk with to assist with winding up the affairs of your estate? Who will prepare the final tax filings? Who will handle the probate process? When you pass away, your family will be dealing with a lot of stress and emotion. You don’t want to add to the stress by leaving your family unprepared to manage your estate.

The above information is invaluable in minimizing the stress and ensuring that your estate can be wound up quickly in accordance with your wishes. Don’t be part of the 70%. Make a Will and keep it up-to-date!

Peter Hobb, CPA, CA, CFP, is a partner at Collins Barrow Durham LLP. Focused on service excellence, he specializes in Succession Planning and Execution.

Originally published in the Clarington Promoter.