There are many components to a strong financial plan: Living within your means, saving for medium-term purchases, investing towards long term goals, having the right insurance in place, minimizing taxes throughout your life, and having a valid will and estate plan.
You are not alone if you have ignored this last one. According to a recent survey, 56% of Canadians do not have a valid will. Perhaps at certain stages of our life we don’t think we are going to die. Perhaps we want to ignore the inevitable and will look after it ‘later’. Perhaps there was never a trigger to finally get it done or the decisions around naming guardians or executors are just too difficult. Or maybe it’s the cost.
For whatever reason, it is ignored by most and that means that millions of Canadians will die without a will in the coming years. Is that so bad, really?
Put simply, a will is a way for you to distribute your estate according to your wishes, rather than the government’s wishes.
If you die without a will it is called ‘dying intestate’, and the government will appoint a trustee to distribute your estate according to a pre-set formula. In Ontario, the first $200,000 of your estate will be distributed to your spouse. They will also receive one-third of the remaining balance. The rest will be equally divided among your children. If your children are under 18, the court will hold the funds in trust, and once they turn 18 all of it will be made available to them.
If you do not wish your estate to be distributed according to this formula, you need to have a will. If you and your spouse would rather decide who the guardians are for your children if you both pass away unexpectedly (rather than have the court decide), you need to have a will and designate them. If you wish to bequeath anything to anybody, you need to have a will.
Planning for your own demise is not something we choose to do willingly, but getting this done will actually help you live more carefree. Having your affairs in order, no matter if you are 25, 45 or 65 is just good planning, and a wonderful gift to your family. Times of loss are stressful enough without throwing in additional anguish due to a lack of planning. It can take several weeks up to several months to administer an estate without a will, which can leave loved ones unable to move on.
The cost of a will and two powers of attorney (additional documents recommended to manage your health and estate during a time of incapacity) can cost as little as a few hundred dollars. DO NOT purchase a will kit. Lawyers are the only ones who should create a will in your name, as they are trained to ask all the pertinent questions and to make sure the will reflects your wishes and contemplates all areas of interest for you.
Please do not ignore this aspect of your financial plan. Set a date, whether it is New Year’s Day, the first 20 degree day of the spring, the first snowfall in November, whatever. And get the will in place by then. You’ll sleep a little better knowing it’s done.