Planning for the future is important for everyone, but it’s especially important if you or someone you care about has dementia. That’s why we’ve partnered with RBC Wealth Management Estate & Trust Services to bring you a series of informative blogs about estate planning. In this blog, Elaine Blades, Senior Manager, Professional Practice Group, RBC Estate & Trust Services, explains why it's so important for everyone to have a will, and what you risk by not having one.
More than 50% of Canadians don’t have a will. Chances are, you or someone you care about is one of them. Nobody wants to think about death. But I challenge you to take a moment to consider what you might be risking without a will.
Here are 7 reasons why you need a will:
1) Ensure your wishes are known—and respected
There is a misconception that if you don’t have a will, everything will magically go to your spouse or your children because the law says so. That’s not necessarily the case.
When you die without a will, you are said to have died intestate in the eyes of the law. That means that your estate will be distributed in a standardized way according to the law in your province. These rules—which dictate who gets what, and how much—are non-negotiable.
Everyone’s situation is unique, and it’s likely that your wishes won’t match up with the arbitrary formula used by your provincial government. What do I mean? Suppose you have two children and one of them has special needs. Or, say you lent one of your children money over the course of their lifetime. In each case, an unequal distribution is something you likely would have wanted in your will.
Without a will, you risk that your assets could go to someone you hadn’t intended—or worse, someone you wanted to receive something may get nothing at all. Blended families, for example, are increasingly common and can present complexities for estate planning. Preparing a will gives you the peace of mind that your wishes will be legally recognized and properly executed.
2) Take care of your partner
Another common misconception is that your partner is automatically entitled to a portion of your estate. In some provinces, this depends on whether or not you are legally married.
When you die without a will, your surviving married spouse is entitled to a portion (if not all) of the estate. But in certain provinces, such as Ontario, a common-law spouse has no rights when their partner dies without a will. They may qualify as a dependent and be able to make a claim for support, but they have no automatic entitlement the way a legally married spouse would. They can make a claim as a dependent, but the process is no walk in the park—it can be long, expensive, and create friction with the other beneficiaries of the estate.
Regardless of your relationship’s legal status, it’s important to have a will to ensure that your partner receives the assets of your choosing. Otherwise, it is left up to the arbitrary rules of your provincial government.
3) Decide who will care for your children (or other dependents)
Did you know that the only place you can appoint guardians for your children or dependents is in your will? Should you die without a will and leave behind minor children or dependents, it’s up to the government to appoint someone to care for them—and it may not be the person you would have chosen.
In the absence of a will, provincial laws also determine how much money goes to your children. Until they reach the age of majority, though, your children can’t access those funds, and your spouse doesn’t have an automatic right to access them, either. Your spouse would need to apply to court to access the money on the children’s behalf, and would be accountable to the courts for how that money is spent.
With a will in place, all of this can be avoided. As well as appointing guardians, preparing a will allows you to establish Trusts for your children and dependents (and even for pets!) You can also appoint a Trustee to manage the Trust until your children turn 18. By documenting all of these decisions in your will, you can have the peace of mind that your children or dependents will be taken care of the way you want.
4) Avoid unnecessary headaches for those you leave behind
Administering an estate is no easy task—and without a will, it’s even harder.
When you die without a will, you miss the opportunity to appoint an Executor to administer your estate. Without an Executor, no one has an automatic right to make decisions for your estate. This may create a difficult situation for your family, who will face a number of administrative and legal hurdles as they attempt to manage your estate. Until someone is appointed by the courts to administer your estate, your assets (including bank accounts, stocks, and investments) can’t be accessed. Things like automatic monthly payments couldn’t be cancelled, and if the markets were to turn, investments couldn’t be liquidated to mitigate loss.
The process for a family member to get the authority to administer your estate can be time-consuming and expensive. The person appointed by the courts may not be the best person for the job, or who you would have wanted. Each province has a priority list for who has the right to apply to be the Executor. Generally speaking, a spouse would have the first right to apply to be the Executor, followed by adult children.
Another stressor comes from the fact that without a will, many decisions will have to be determined by the courts. This sometimes has the unfortunate effect of pitting family members against each other, as they each try to advocate for what they think is best and what they believe you would have wanted. By preparing a will and making your wishes clear, you can make an already difficult time less difficult for those you leave behind.
5) Minimize taxes on your estate
Without a will, you miss opportunities to plan in ways that can be advantageous for your estate. Although the basic rules for tax on your estate are the same whether you die with or without a valid will, estate planning, including making a will, offers you the chance to minimize income taxes and probate fees for your estate. Leaving a gift to charity in your will, for example, could be claimed against your tax bill. A good financial professional can help you understand the rules and talk through your options.
6) Save time and money in the long-run
While the up-front cost of a will might put some people off, preparing a will saves you and your estate in the long-run. Without a will, what may take you five hours with a professional will take your loved ones days, even weeks of legal work. As mentioned, when no Executor is appointed through a will, the process of distributing your estate is immediately longer and costlier. The time you spend with a professional upfront allows you to save time for those you leave behind and save money for your estate, by avoiding legal proceedings and taking advantage of tax planning opportunities.
7) Remember your favourite charities
Leaving a planned gift to a charitable organization is something many of us do to recognize causes we believe in. Without a will, there is no way to ensure that your philanthropic wishes are carried out precisely as you would like them to be. If your charity of choice changes its name or its focus, for example, you may not have the necessary details in place to ensure that your gift remains with them or goes to another organization. Talking through your options and wishes with an estate professional and incorporating this into your will ensures that you can leave the kind of legacy you wish to.
You can learn more about leaving a gift to the Alzheimer Society in your will at alzheimer.ca/giftinyourwill.
Making a will is one of the most important things you’ll ever do. Why delay? Take the first step towards preparing your will by downloading the Alzheimer Society’s Will Planning Checklist and check out these other great estate planning resources.
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