Will Planning: What You Need to Know
What is a will planning? Protecting Your Property, Your Passions, and Your Legacy
Protecting your estate when you die: Sad but true, life doesn’t always go according to plan
The main pillar of your estate plan is your will planning. A will is a legal document that defines how you want your property distributed and defines care for dependents. Many of the items on your estate planning checklist are formalized within the will. That includes your choice of executor, your beneficiaries and what each receives any special allocations of personal items to specific recipients, and more.
A will is particularly important when there are multiple beneficiaries so that allocations can be clearly defined. Beneficiaries can be defined as primary or secondary. For example, you might name your spouse and children as primary beneficiaries. If they also pass away before the will is executed, secondary beneficiaries would be the recipients.
A will can also include funeral and burial wishes – while they’re not legally binding aspects of the will, they are a blueprint your family can follow.
A Will. Why Do I Need One Now?
The Will document spells out who should get your assets after your death.
A will is a legal document that sets forth your wishes regarding the distribution of your property and the care of any minor children. If you die without a will, those wishes may not be carried out and in Ontario, the government will dictate who gets what Assets. Further, your heirs may be forced to spend additional time, money on accountants and lawyers plus emotional energy to settle your affairs after you’re gone.
Wills can vary in their effectiveness, depending on the type, though no document will likely resolve every issue that arises after your death. Here’s what you need to know about these vital documents.
A will is a legal document that spells out your wishes regarding the care of your children, as well as the distribution of your assets after your death.
Failure to prepare a will typically leaves decisions about your estate in the hands of judges or state officials and may also cause family strife.
You can prepare a valid will yourself, but you should have the document witnessed to decrease the likelihood of successful challenges later.
To be completely sure everything is in order let’s start with a chat today. I help with the planning and understanding of how to minimize the taxes so most of your estate goes to who you wish with the least haze land cost.
Choosing the right resources for will planning
A key part of creating your will is selecting your executor. Because there are a lot of tasks associated with closing an estate, this needs to be a reliable resource. Executors often must deal with selling real estate, filing court and tax documents, paying outstanding taxes, and distributing assets. Don’t have a suitable friend or family member? A professional such as an accountant or lawyer can be named as your executor. This is typically a role that requires hundreds of hours of work. Even the simplest of estates can take 12-18 months to wrap up. So, ensure you choose someone who has the capacity to take this on.
For parents with dependent children, choosing the right guardians is critical. It can be a lengthy commitment for guardians and trustees depending on the children’s ages and the timespan of the trust created.
Ideally, people appointed should be younger than you are and live in the same province, given that laws vary provincially. And it’s important to ensure that people are aware you have selected them for these roles since there are responsibilities that go along with each of being a trustee, guardian, power of attorney, or executor.
What happens if you die without a will?
A 2020 survey commissioned by Angus Reid, found that 57% of Canadian adults did not have a will. And a whopping 89% of Canadian adults under 34 years of age do not have wills. The numbers for all of Canada are 52% of Canadians do not have a Will.
A person who dies without a will is called an intestate, which means your assets will be distributed according to provincial legislation. Without a will, what you might have envisioned happening to your assets and what happens when you die may be completely different. Note the government decides by law what happens to your estate, not you.
Even if you have shared your intentions with family members, without a will your wishes may not be carried out. There is much more room for family controversy in situations where there is no will.
Without a will, you cannot choose your beneficiaries or who will administer your estate. You can’t choose your children’s guardian, and you can’t ensure that your estate is managed in a manner that minimizes taxes.
Failing to have a will in place can also mean delays in resolving an estate, with higher administration costs and higher taxes. That leaves less for your beneficiaries and more in the pockets of the government and lawyers. Without a will, the courts will appoint an administrator to wrap up your estate, and it may not be the person you would have chosen – it also takes longer, which delays any payments to beneficiaries.
It’s human nature not to act with urgency unless there is a compelling reason. But with so many negatives associated with not having a will, it’s clear why a will is considered the key building block of estate planning.
Is it better to have a will or a trust?
Wills and trusts are not mutually exclusive. Often trusts are created within a will as a ‘testamentary trust’ which appoints a trustee to manage assets on behalf of a beneficiary. Trusts are commonly used when the beneficiary or beneficiaries are minor children or disabled individuals or to save taxes.
The trust can stipulate that funds can be accessed by a child only for educational purposes until a defined age. At that time, for example, 21 or 25 years of age, the child would receive the balance of the trust.
A trust can also be used to reduce tax implications and ensure proper professional management of assets after a person’s death. For example, a testamentary trust could be useful in managing a legacy gift from a deceased person to a charity.
Along with testamentary trusts, another common trust in Canada is inter vivos (living) trusts which come into effect during a person’s lifetime. It could be valuable to think about whether a portion of your wealth should be dealt with while you are living. For example, a family business succession plan could tie into your estate plan.
Do I need an estate planning?
Glenn can help you with Estate Planning and Will Planning because he is a Certified Executor Advisor. He helps you plan the growth of your wealth and plan your Will to be the most tax-effective way to give you the best net result. Once you have a final plan he takes it to a lawyer to finalize the Will. Then he will review it with you annually to be sure it still meets your wishes and goals. However, there are important elements that should be included in your will. So, to ensure that you cover all the bases, it’s best to either use an online will service or consult a lawyer to prepare your will.
Regardless of how you create your will, it must be signed and dated by you and two competent adult witnesses who are both present at the same time and an affidavit of execution form be complete to prove the Will was duly witnessed. The original hard copy of that signed document needs to be stored in a safe place where your executor or a family member can access it. Due to COVID-19 social distancing guidelines, several provinces including Ontario and British Columbia are allowing virtual witnessing of wills under provincial emergency orders.
In the case of more complex scenarios, or if you want personalized advice, it may still be wise to consult Glenn to create your estate plan for you. Along with the creation of a Will and naming of Power of Attorney and selecting your executor I can help with complex family business implications or challenging tax scenarios. In most cases, a business owner will need two Wills to save taxes and expenses.
Family-owned businesses are another contentious holding for large or complex estates, we do recommend creating a Second Will as part of a good Estate Plan.
Call Glenn Stewart a Certified Executor
Advisor at 1-888-256-8685
To put together your Wishes the most efficient with the least amount of tax to be paid.
Contact Glenn Stewart, CIP, CRM, CHS, CEA
1-888-256-8685 or glenn@glennstewartinsurance.com