Estate planning myths and tips: Why you need a will now

Along with the tremendous emotional strain associated with the passing of a loved one, family members and other beneficiaries are usually faced with numerous expenses and administrative issues to deal with. A well thought out estate plan will ensure a tax-efficient and effective transfer of your estate to your intended beneficiaries as smoothly as possible, reducing the potential for a legal battle amongst family members.

This article provides some estate planning tips on what you can do now to protect your beneficiaries from the mental, administrative, and financial matters of an estate, and how a will plays an important part ensuring your estate gets distributed as per your wishes.

Why you need a will

A will is the most important document in your estate plan. At death, your will, if properly drafted, deals with several important matters, such as to appoint the person you want to act as your executor and how you want to distribute your estate.

But what happens if you pass away without a will? Without a will, there will be additional complications and delays in dividing your estate among your heirs, not to mention the additional fees involved. Without a will there is no appointed executor, so the courts will appoint a person to take care of your estate. This process may take months to finalize, during which no one can manage or deal with your estate until the court appoints an executor. This will create problems for your estate and your loved ones as bills may go unpaid, and more importantly, those that need support from your estate may not receive it in a timely manner.

If you die without naming heirs to all or a portion of your property, you die intestate, and must follow rules set out by the provincial government. Your immediate family has the best right to claim your estate, but if you have no family, your estate will go directly to the government - and you thought paying taxes was bad enough!

An often overlooked but key component of a will for someone with a child is guardianship - planning for your child’s care. Difficult as it is, you need to choose a guardian for your children to ensure someone guides and supports your children, otherwise that decision could be left for the courts to decide which may not be in their best interest.

On the flipside, having a will in place and efficiently setup will maximize the overall value of the estate, minimize the tax and probate burden, and control who the assets are going to. And in today’s world where you can create a legal will online for close to nothing, why wouldn’t you have one in place!

As we have seen in the past 2 years the unexpected can certainly happen, which reiterates the importance of an effective estate plan that properly reflects your wishes. So, even if you already have a will, it could be out of date and there is no better time than the present to take action and ensure it is updated and properly reflecting your wishes.

Estate myths

Here are a couple misguided myths about this topic, and I hope to provide you with a couple different perspectives to take away:

Myth #1: I am too young to benefit from estate planning

Shockingly, over 50% of Canadians do not have a will in place - are you one of them?

Young people without substantial holdings still benefit from estate planning. Without a will, Canada's default laws will dictate executors and beneficiaries for you which may go against your wishes. Additionally, the estate may be subject to higher taxes and probate fees without a will, even if you are young and not married.

Given how easy it is to get a will, it is better to be prepared - do it for your family and loved ones!

Here is an article explaining in more detail how young people can benefit from a will:

Myth #2: A safety deposit box is more secure than a safe at home

It’s a misconception that the most secure place is a safety deposit box at a bank, which is a common place to store valuables and estate-related documents. However, a fireproof safe in your home will protect from fire and water damage and is likely covered under insurance. Most safety deposit boxes are not insured or waterproof and can be drilled open if payments are not made as per the contract.

Also, keep in mind there is not much you can do to get an item from a safety deposit box during an emergency, as you are at the mercy of banking hours.

Hence, when it comes to protecting your most valuable items, a safe in your home is worth the consideration.

Read here for a deeper dive on the benefits of a safe:

Things to consider when creating or re-creating your estate plan and will:

Once properly implemented, the result is a plan which reflects your personal situation, and at its heart is a documented expression of your wishes, providing peace of mind in knowing that your loved ones will be looked after.

To assist you in creating your personal estate plan, here are some questions to consider:

  • Do I have a will in place? If not getting a will is the place to start!
  • Have appropriate beneficiary designations been made for registered accounts (RRSPs, TFSAs, etc.)?
  • Should a new will be drawn up to reflect your current wishes, or to take into consideration any special circumstances?
  • Are there gifts of specific items (like jewelry, coins, art, etc.) that you would want to include in your will?
  • Are you interested in making charitable donations, establishing charitable remainder trusts or making charitable gifts of securities in your estate plan?
  • Should your will utilize trusts to provide greater control over your assets?
  • If you are at the wealth accumulation stage, will there be sufficient assets to pay off existing debts and provide an income for dependents.
  • Does your executor and guardian reside in your jurisdiction, and do they plan to stay there?

While a difficult topic to discuss, it is extremely important to have your will and estate planning in order, ensuring you are looking after and protecting your loved ones. Everyone can benefit from either a new plan or at the very least a review of their existing plan, especially after all the uncertainty we have faced in recent memory.

As always, I am here to help and be a resource to you, so please reach out for any further information or resources.

If there is one thing to take away from this article it is this: If you don't have a will, make it now. Holographic, online or see a lawyer. Just do it!

Thanks for reading!

If you enjoyed the newsletter and found it helpful, don’t forget to subscribe for future updates, and feel free to share with a friend who would benefit from this information. If you want additional information or resources on this topic, please reach out to me directly.

All the best until next time!

Nathan Biren, Associate Investment Advisor