A Will is a document in which you explain what you want done with the assets that you own solely in your own name when you die. These assets typically consist of real estate, money, investments, and personal or household belongings that you own.
A Will generally doesn’t cover assets that you jointly own with another person, for example, a joint bank account or a house owned in joint tenancy. Also, a Will may not apply to assets like life insurance or RRSPs, where you have already designated a beneficiary. A Will is only one part of an overall estate plan
There are opportunities to transfer assets to beneficiaries outside of a Will, without tax and other cost consequences. This is called “estate planning”.
In a Will, you name a person or company to be the “executor”. The executor gathers up the estate, pays your debts and divides what remains of your estate among the “beneficiaries,” the people named in your Will to receive a share of your estate. Choose an executor you trust and who will likely still be alive when you die. He or she may be a trusted family member or friend; it helps if he or she is also a good book keeper and communicator. If you like, you can appoint more than one executor who can act together as co-executors. You should also appoint an alternate executor if the first executor isn’t able to act. If you have a complex estate or investments or need someone to take over the operation of a company, you should name a professional executor like a trust company. If you have minor children, appoint a guardian in your Will
There are two types of guardianship. The first type is a guardian to look after your children if they’re younger than 19 when you die. This will avoid confusion in your extended family as to who should care for your children if both you and the other parent die before they become adults. Make sure your appointed guardian agrees to be the guardian. It’s especially important to name a guardian if you’re a single parent – otherwise the court might appoint someone you would not want.
The second type of guardianship is guardianship of the estate. This means that the guardian can receive funds from your executor for the benefit of your child. If you’re a separated parent and the surviving parent will be looking after your child, but you want a different trusted person to be the one who decides what funds your child needs for educational or other necessary expenses, then be sure to name a guardian of the estate.
What happens if you don’t make a Will? Then your estate will be divided in a certain way according to the Estate Administration Act, and this division may not be what you would want.
Although a Will may seem simple, it’s really a complex legal document. To make an effective Will requires a good understanding of property ownership rules and the law about Wills. There are rules that must be followed, no matter how simple the Will, otherwise the Will may not be valid. And the words used must be chosen carefully so the Will is clear and unambiguous.
Your estate may have to pay “probate” filing fees. The term “probate” refers to a “proving” of the existence of a valid Will, or determining and “proving” who one’s legal heirs are if there is no Will. Since the deceased can’t take it with them, probate is the process used to determine who gets their property
Probate filing fees are the fees that must be paid to the province to do this.
Taxes may also have to be paid. When a person dies, the law assumes that they sold their assets on the date prior to their death date, and there may be substantial capital gains on those assets. If so, the estate will have to pay tax on those gains to the Canada Revenue Agency. But if you leave your assets to a named beneficiary, tax consequences may be reduced. If you own assets that will attract capital gains tax on your death, you should speak to a lawyer or an accountant to see how you can minimize this tax.
With estate planning, you may be able to reduce the amount of probate fees and taxes that your estate would otherwise pay.
An experienced lawyer will know about the rules that apply to Wills and can help with estate planning so as to save money for your beneficiaries. And you’ll have the peace of mind of knowing that your Will is properly drafted and valid, and that your estate will be paid out according to your wishes.
You can minimize the legal fees by being well prepared. It helps if you have the following information ready before you meet with your lawyer:
- A list of everyone in your immediate family with their full names and contact information, their relationship to you and the ages of all your children, including stepchildren.
- The names and addresses of any other people or organizations to whom you want to give gifts.
- A list of all your assets, such as your home, car, investments and any personal items of significant value. It’s important to describe how you own any property (for example, whether you own it alone or together with someone else).
- A document that shows whose name is on the title of any real estate or house you own.
- Details of any insurance policies you own, and, specifically, who the beneficiary is.
- Details of any pensions, RRSPs or other investments, and the beneficiary of these.
- Information about the structure of any business you operate (for example, a company or partnership).
- Any separation agreements or court orders requiring you to make support payments or dealing with custody or guardianship of any minor children.
- The person or company who you want to be the executor and guardian.
A well-drafted Will anticipates different scenarios and plans for these (for example, what happens if an adult child or grandchild dies before you). But you should still think about changing your Will whenever your financial or personal circumstances change or if there’s a change in the beneficiaries. For example, if you made a Will when your children were young and named your parents as guardian and executor, when your children become adults, you’ll no longer need the guardian clause and you might want your children or a sibling to be executor instead. It’s a good practice to review your Will every three to five years to ensure that it still reflects your current wishes.
Also make sure to review your Will after any change in your marital status. If you marry, your Will is automatically revoked unless the Will says that it was made in contemplation of your new marriage. If you divorce, the portions of your Will that involve your ex-spouse may no longer be valid.
What is LEAVE A LEGACY™? LEAVE A LEGACY™ is a public awareness program of the Canadian Association of Gift Planners. See (www.cagp-acpdp.org). Its objective is to promote, through the media and educational sessions for the public, the importance of preparing a Will and it raises awareness about leaving a gift for charity in the Will.