Why Having a Will is Important
To understand why will and estate planning is important, let’s begin by sharing a reference we will likely recall seeing on the news several years ago.
The famous musician, Prince, was rumoured to have died without a will. Ironically, while he was alive he took great care of maintaining control over his intellectual property. But because he had no legal documents, he had no control over where his millions of dollars and intellectual property went upon his death. They will end up with someone who was determined by the government.
You don’t have to be Prince and have millions of dollars in assets to benefit from having a will. On the contrary, it will save your family money to have your will done. If you die without a will, your family may have to fight to gain access to your estate. Unfortunately, this costs significant time and money.
The Government of Canada defines a will as “a legal document that says how you want your estate to be divided once you die.” Statistics show that many Canadians could receive substantial inheritance. The average inheritance could be more than $250,000.
Prince is not the only person without a will. In fact, recent data from a 2017 report by the Angus Reid Institute found that a majority of Canadians have no will in place and of those who do, only 35% say they have updated their will recently (see above Figure). Those under the age of 35 are particularly notorious for not having wills, with almost 80% indicating they have no will. Overall, the cost and consequence of not having a will is very high. Frankly, it’s not worth putting it off for another day or month or year.
Will & Estate Planning
A will is a vital part of a broader planning process called estate planning. Key aspects of estate planning include:
- A will, which stipulates who will enact your wishes and who receives what assets when upon death
- The choice of an agent or representative, who will act on your behalf to make decisions for you if you die or become incapacitated
- Effective tax strategies to make sure your wealth grows and gets distributed in a way that maximizes the value of the estate
- A plan to leave a ‘legacy’ for those left behind, including leaving your affairs ‘in order’ so those left behind can make sense of things
Executors vs. Representatives
You will be able to choose an individual to be Executor of your will. This person is legally granted the ability to make important decisions for you only if you die. However, if you become incapacitated, the executor does not receive this ability. Instead, it is the person named in your Power of Attorney/Personal Directive that has the legal ability to make decisions for you.
(This is covered in-depth in the Guide to Entrusting Your Values and Preferences to a Representative)
The people named in your legal documents have a tremendous responsibility to act on your behalf. How well have you educated them on your plans and preferences?
What is included in a will?
The following are examples of what could be included within a will:
- A section that appoints an executor
- An explanation of the scope of the executor’s power
- Distribution of the estate – who gets what, how much, and when
- A part that includes specific gifts or items
- The appointment of a guardian for minor children as well as instructions respecting what financial assistance the guardian may receive
- Provisions to set up trusts for individuals for extra support in managing their inheritance (ex: underaged or disabled beneficiary)
- Signatures of the individual and their witnesses
5 Reasons a will will positively benefit your life:
1. A will protects your family.
Unfortunately, inheritance may cause a lot of family turmoil, especially if there is no will that indicates who gets what. When you die without a will, there is a chance that your family members may contest your estate. As a result, this can cause enormous legal ramifications as family members hire lawyers and go after different assets. It can be costly, time consuming, and frustrating for those involved. But, with a clearly laid out will, you can reduce the disagreements, saving time and money.
2. A properly orchestrated will helps reduce fees.
When you die, the person you choose to follow through on your wishes written in your will (your executor) may need the court’s approval to fulfill your wishes. Essentially, the courts require proof that your executor was selected by you. This process is called “probating”. Sometimes, this may be costly – especially if you have significant assets. Having a will may reduce confusion during the probating process therefore saving time and money. Furthermore, thoughtful estate planning with your legal and accounting advisors can also help reduce costs. These professionals can equip you to minimize tax and other financial consequences flowing from the disposition of assets.
3. A will allows you to decide who you will provide for.
If you have kids, you can indicate how and when they might receive parts of your estate. Under some jurisdictions, if you do not have a will, your estate is automatically divided up among certain members of your family. However, if you have opinions about who should get what, a will is necessary.
4. If you have children, a will stipulates who will look after them.
If you were to die tomorrow, who would look after your kids? You might have an idea of who you would want to look after your kids. But, in some jurisdictions, your children’s official guardian could become the public guardian and/or public trustee. In this case, they would have no existing relationship with your child or children and are agents of the government. That is why it is essential to have a will. It ensures that you choose who will ultimately take guardianship and responsibility for your children.
5. Your will is an expression of your wishes and values.
You may think of your will as your “final opinion”. That is, your will allows you to show the world who you are and what you stand for. For example, some people wish to donate a significant portion of their estate to causes important to them. Some people leave donations for health organizations, the arts, and/or education. Knowing that you will leave an imprint on society can be incredibly fulfilling.
What’s holding you back from doing will and estate planning?
At this point, you may see the need to start complete your will. But there may be ‘barriers’ to you moving forward. In unpublished research conducted by Plan Well Guide, we found that even when people understand what a will is and why it might be important, they still may have opposition toward completing a will. People’s reasons for not completing a will vary, but our research supports the following common “barriers”:
“I’m too young.” / “It’s not a priority right now.”
Regardless of whether you’re 20 or 100, having a will is important. Our research shows that Canadians often put off completing a will because it’s not a priority to them. Even when you’re 20, your family may still encounter conflict should you not have your affairs in order.
Imagine that you’ve died without a will. All your closest friends and family have gathered to discuss how to proceed with dividing up your things. Because you didn’t leave a will, your family members begin to argue about who gets what. As a result, this issue creates a large rift in their relationship. But if you had created a will, you could have significantly reduced confusion and potential conflict in this situation.
“I don’t have a lot of money and lawyers are too expensive!”
Our research suggests that people may hesitate to engage a lawyer due to financial issues. In fact, the number one most cited reason for not completing a will was cost or lack of resources. This is also supported by past surveys. As we talk about below, there are strategies you can use to reduce the costs of will planning. Additionally, there are many online legal services that are generally less expensive than office visits.
“I don’t want to think about dying.”
Most people don’t. When asked about why he or she might lack confidence in completing a will, one participant in our research said, “Just facing [completing it], when I don’t really want to think about it”. Dying is scary. However, in many different places around the globe, movements are working to normalize talking about death. Death is an important part of human experience. Avoiding discussions around death will damage our ability to plan for it. Consequently, those we leave behind will suffer.
“I don’t have the time to make this happen.”
Depending on the size of your estate, a will could take as little as 20 minutes using various online tools. Regardless of your estate size, the time it takes depends on how much you want included in your will. Furthermore, preparing in advance for the discussion will reduce the time needed to conduct the discussion with your lawyer.
“I don’t know how to find a good lawyer.” / “I don’t have a high degree of trust in the legal profession.”
Accessibility and trustworthiness were real issues identified by several of the participants in the study that we conducted. Therefore, having trusted advisor give a referral can help you find a lawyer you can trust. You may want to consult your accountant or financial planner, or even our favourite lawyer referral service.
There is no good reason to not have a will.
It can be a simple, quick, and cost-efficient process completely tailored to your needs. We encourage you to move forward and get a will.
Meeting with a Lawyer
We strongly advise you to get professional guidance from a lawyer to develop and finalize your will. Yes, ‘handwritten wills’ are legal in many jurisdictions. You can even download cheap forms off the internet that will help structure your ‘homemade’ will. But the risk of error and the cost consequences of those errors is too great. Remember, you are talking about your family, your children and your estate.
We strongly encourage you to arrive at the meeting with your lawyer prepared and as informed as possible. This will prevent you from potentially spending money unnecessarily and will enable you to be as efficient as possible.
Preparing for the Meeting
- List all the property/assets you own.
- Consider who you would want to give this property to.
- Consider whether any of that property could go directly to a beneficiary.
- List all your debts.
- If you have minor children, consider who you would want to be a guardian to them in your absence.
- List any legal obligations to any spouse or former spouse, dependents, or anyone else.
- Consider what kind of legacy gifts you might want to make (i.e. scholarship donations)
- Consider your family dynamics and how they may impact the choices you make regarding your estate.
- Make note of any major changes. For example, marital status changes, moving to a new province, sudden change in wealth (i.e. lottery win, inheritance, or sudden loss in wealth), sale of a business, or retirement severance
Pick the right Representative
A big part of completing a will is the selection of someone to carry out your instructions in the will. This is the person who will manage your estate after your death. An estate representative may also be called an executor, an estate trustee or a liquidator. It is possible to name more than one person as your estate representative. You can also choose anyone: a friend, family member, or a professional. We suggest you make a list of potential choices and consider the pros and cons of each person before making the final choice. Your lawyer may ask your for the names of a few people, in case your first selection is unavailable.
Whoever you choose, you should speak with them to ensure they are comfortable with their responsibilities. They will be responsible for following the instructions left in your will. If you have not named an estate representative, provincial or territorial courts will name someone to manage your estate. But this will come at a cost and cause significant delays in liquidating your estate.
Already have a will?
If you already have a will, remember to review it, to check if it requires any updating. Some suggest reviewing your will once a year, while others suggest reviewing it every three to five years. Regardless, reviewing your will after any major life event will help ensure that your will stays up to date. Furthermore, if your executor is no longer able to fulfill their commitment, it is imperative that you update your will.
Major life events can include:
- Change in marital status
- A significant move across the province or to another country
- New significant medical diagnosis.
- Significant change in your wealth, either increase or decrease
- Change in family member circumstances (Birth or death of a child)
- Sale of a business
- Change in circumstances of person named as your executor or representative
It’s as simple as this: you need a will. A will protects your family, your legacy, and ultimately, your wishes and values. Educate yourself, determine the gaps in your knowledge and work with a professional to complete your will. Wills are for everyone. Even if you currently don’t have a lot of assets, creating a will now will allow you to ease into creating a more complicated will as your estate grows. Will and estate planning is one of the most impactful things you can do for your loved ones.
In addition, we strongly recommend that you also read Power of Attorney for Finances. This will increase your understanding about that role and the responsibilities that come with it. As a result, you can make a wise decision about who might take on that role for you.
If you would like even more content, check out the Guide to Entrusting and the Guide to Enacting.
We hope we have provided the necessary knowledge, tools and resources to help you plan your will.
For a province-specific resources on estate law and wills, visit the following links below:
- British Columbia
- New Brunswick
- Newfoundland & Labrador
- Northwest Territories
- Nova Scotia
- Prince Edward Island