Why You Need A Will

Do you have a will?

Talking about death is something that we all look forward to, no doubt…  But the reality is that contemplating our own mortality is less about the impact that it has on ourselves, but rather the effect that it has on those around us.  Estate planning is not just for the uber-rich, but rather a critical aspect of financial planning for all Canadians.

According to a recent study by the Angus Reid Institute, 49% of Canadians surveyed either don’t have a will in place, or their will is outdated.  This number skyrockets to 85% for those in the 18-34 age bracket.  With so many Canadians leaving themselves exposed, it is probably a good idea to go over what happens if you die without a will.

NOTE: This post should not be considered legal advice.  If you have any estate planning questions, please consult with a professional to assess your individual situation.

Why You Need A Will

In Ontario, the Succession Law Reform Act governs what happens when someone passes away without a will in place, known as dying “intestate”.  In this case, your affairs will be handled in a prescribed manner.

Personal Representative

A key reason why you need a will is that you can name the executor of your estate.  The executor is responsible for the administration and distribution of your estate along with the wishes that you have expressed in your will.  When you pass away intestate, you have no executor named.  As such, your closest relative will likely be appointed as your personal representative.  In many cases, this may not be an issue.  However, in some cases, you may not want the individual named to be acting on your estate’s behalf.

The added benefit of naming an executor is that they can be adequately prepared for the responsibility.  Before appointing someone as your executor, you should have a conversation with them to ensure that they are up to the task and related responsibilities.  The role of executor tends to be time-consuming, and you should be mindful of this when naming someone to the position.

Child Care Without a Will

If you have children, it is non-negotiable that you have a will.  If you die intestate, you will have lost the opportunity to dictate who should be responsible for your children.  In this scenario, the courts will determine who is the most suitable to become your children’s guardian.

An added piece of importance is in the situation where you have a dependent child.  Without leaving instructions for their care, or setting aside specific funds, your dependent child may not receive the long-term care that you had intended.

Division of Estate Property

Your property is distributed based on the following:

1) You have a spouse, but no children

Your entire estate goes to your spouse. However, this only applies to legally married spouses. Common-law spouses are not automatically entitled to receive anything if you die intestate.

2) You have a spouse and children

Your spouse is entitled to a preferential share of your estate, up-to-the first $200,000. What remains is now referred to as the residue. If anything is left over, the residue will be divided between your spouse and your children.

3) You have children, but no spouse

The children each inherit an equal portion of your estate. If any of your children have passed away, then their share would pass on to their children (i.e. your grandchildren).

4) You have no spouse and no children

Your parents inherit your estate.

5) You have no spouse, no children, and no parents

Your brothers and sisters (or their children if a sibling has passed away) receive an equal share of your estate.

6) You also have no brothers and sisters

Your nieces and nephews each inherit an equal portion of your estate.

7) You have no nieces and nephews

All other next of kin inherit an equal portion of your estate.  The determination of next of kin is performed using the table of Consanguinity (courtesy of Wikipedia).

8) You have no living next of kin:

Your estate goes to the Ontario government.  Not who you had in mind for a charitable donation to as part of your estate plan was it?

Here is a helpful infographic on the topic.

Pet Care Without a Will

Unlike your children, the courts will not make a separate determination of whom the best caregiver will be.  Pets under Ontario law are considered Property.  As such, they will be subject to the division of property rules above.

Tax Efficiency

When you pass away, your representatives must file a final income tax return on your behalf.  This return comes with very particular tax planning opportunities, which are lost when you don’t leave a will behind.

When it comes time to validate your will, it goes through a process called probate. Probate is also required for those that die without a will.  According to the Ministry of the Attorney General, the probate process exists to:

• give a person the authority to act as the estate trustee of an estate; or
• confirm the authority of a person named as the estate trustee in the deceased’s will
• formally approve that the deceased’s will is their valid last will.

Part of the process involves the Estate Administration Tax (EAT), or what is more commonly referred to as the ‘Probate Tax’.  EAT is charged on your residual estate (i.e. everything that is left over after filing your final tax return).  Between your final income tax return and the EAT, significant taxes could end up being paid that could have been avoided if you do not have a legal will in place.

Funeral and Burial Arrangements

Without a legal will in place, the arrangements will be left solely up to the discretion of your personal representative.  As mentioned above, this individual will be court appointed and may not know your wishes.

So, What’s Keeping Canadians From Getting A Will?

As per the Angus Reid study, there are a few key reasons that our estates are not adequately planned for.

“Of course, 18-34-year-olds without a will are significantly more likely than other Canadians to say they are too young to worry about having one written – nearly half (46%) indicate as much. As they get older, Canadians are more likely to cite a lack of assets as the reason they do not have a will in place.”

Surprisingly, only 8% of respondents listed “not wanting to think about death” as their primary reason for not having a legal will in place.  So, it appears the morbidity of the topic is not the deterrent that we may have thought it was.

The 3rd most frequent answer provided as their deterrent was cost.  18% of respondents indicated that ‘It’s too expensive to get a will written’.  As with many industries, estate planning has seen its share of ‘disruption’.  No longer do you have to travel to a stuffy lawyer’s office and be gouged for their expertise. Not requiring a lawyer is especially true for the average Canadian whose estates are not very complicated.  This is likely the case for the 48% of respondents who thought that they were either too young or didn’t have any assets to consider.

For those with simple estates, who live in Alberta or Ontario, Novel recommends Willful as a great option to obtain a legal will in as little as 30 minutes. Their premium package includes a will as well as a power of attorney for property and a living will for $150 plus tax.  Also, we have negotiated a 10% discount with them if you use the promotional code ‘Novel10’ at checkout (read more about our affiliate policy).

The best part of using Willful’s service is that your will can be updated as many times as you would like, for free, forever!
Yes, free.
Yes, forever!
That means that there won’t be any legal costs incurred to update your estate when you move to a new home, purchase a new car, or welcome a newborn for example.  Just remember, when you do make updates to your will, all previous copies should be destroyed.

Do I Need A Lawyer To Write My Will?

No!

Similar to Willful, there are a number of options out there that can provide you with templates or documents that you can work with.  That said, you should never draft your own documents and any templates that you use should have been reviewed by a lawyer.  And rest assured, Willful has had a many lawyers aid in the drafting of their documents.

Once you have a will drafted using one of the various methods out there, you need to have the documents witnessed/signed by two parties who are not named in the will.  For example, your executor cannot serve as the witness.

Once signed, the hard copy location needs to be shared with your executor.  This will ensure that your executor can quickly access it and begin the process.  Unfortunately, at present, digital wills are not acceptable.  Hard copies with signatures must be kept as the official document for your will and power of attorneys.

That’s it.  You now have a legal will!

The Brass Tacks On Why You Need A Will

In 2019, far too many Canadians still either don’t have a will or their will is out of date.  Don’t leave your loved ones in a precarious position, by not having a will.  Not having an up to date legal will can create many complications for your estate, and your wishes may not be addressed appropriately.  Many tools are available for you to create your will and keep it up to date.

If you would like to discuss your estate planning or discuss it as part of a Fee-Only Financial Plan, please contact us to set up a consultation.

Did you find this article helpful?  Did we miss anything?  Please let us know in the comments.