Sandy Abley, Money Coach and Consultant
The Wealth Doc
According to a recent survey by Lawyers’ Professional Indemity Co. (LawPro), the majority of Canadians (56%) do not have a signed Will. There are various reasons for this: people feel they are too young, they don’t have a lot of assets, they don’t want to think about dying, they can’t decide on a guardian for their children, they don’t want to pay for one, etc. If we add Canadians who have an outdated Will, that I estimate that’s another 15% to 20% of the adult population.
So, what really happens when you die without a Will or if you don’t have an estate plan in place?
- If you have minor children, then depending on where you live (your jurisdiction), a significant portion of your estate will go to a government entity, like the Public Guardian and Trustee. This government entity will hold a large portion of your estate for your child or children and will release the funds to your child when she reaches the age of majority (the age of a legal adult) in your province (either age 18 or 19) whether or not the child is ready to manage the money. Most parents I’ve consulted with do not want their children to inherit at such a young age and most parents want the surviving spouse to control the estate without government involvement.
- Your minor children may end up living with guardians who you may not approve of. If you do not have a Will naming your first and second choices, your family members and the Public Guardian and Trustee may not know who you would have wanted to care for your children. The guardian(s) you name do not have to be family members.
- If you are young, unmarried with no children but have some assets like savings, investments, a vehicle or a business and you die without a Will, your parents will inherit your estate. And if they are not alive, your siblings. You do not get to control who will receive your assets; like your friends, beloved nieces and nephews or favourite charities. I’ve seen further complications when someone young and in a long-term relationship dies without a Will. I know of more than one set of parents and long-term partners involved in estate litigation because there was no Will.
- If you do own significant assets such as real estate, companies, trusts, investments and assets in other countries, you should work with your tax advisors, accountants and lawyers to implement strategies to minimize probate fees and income taxes on death in all the relevant countries. You may need to coordinate sophisticated tax and estate plans in multiple jurisdictions.
I’ve seen many unfortunate circumstances where people have left it too late to make a Will or update an old one which resulted in heartbreak and unintended consequences.
- An ex-girlfriend receiving a large portion of an estate of a person who died without children or a spouse. As a result, nieces, nephews and siblings were left out of the estate. This person desperately wanted to update his Will on his deathbed but waited too late and no lawyer was available due to his remote location.
- A young wife and mother who died in an accident and who legally held most of the family’s real estate assets in her sole name. Now the Public Guardian and Trustee is involved in managing a significant portion of the family’s wealth and many of the probate fees and taxes could have been avoided with proper estate and tax planning. In addition, the surviving spouse had to pay significantly more in legal fees to deal with the additional legal requirements associated with working with the Public Guardian and Trustee.
- An elderly client’s Will being challenged by a very distant family member, who she didn’t communicate with at all, because she waited too long to update her Will which allowed for an incapacity argument. Even though the client was capable when she signed her Will, merely her advanced age and health alone were enough for the distant family member to pursue a challenge.
- As I mentioned above, parents fighting with a deceased’s live-in or long-term partner for a piece of the estate.
Often, these circumstances may be avoided or minimized with a proper estate plan. An estate plan may include your Will, Letters of Wishes, Business Succession Plan, Tax Plan, Gifting Plan, Life Insurance considerations, Advance Care Plan (Enduring Power of Attorney and the Appointment of a Substitute Decision Maker for health care decisions) and perhaps the use of Trusts. Often a Will alone is often not enough, but it’s a good start.
This article is intended as a general source of information only and should not be considered or relied upon as personal and/or specific financial, tax, pension, legal, or investment advice.
BC’s Make-a-Will Week is October 4 – 10, 2020. MAWW is a Ministry of Justice campaign that brings awareness to the importance of creating and maintaining an up-to-date will, which ensures that the people, charities and organizations you care about most receive the benefit of your estate.
In conjunction with the Leave a Legacy Vancouver program of the Canadian Association of Gift Planners, we are sharing tips and info throughout the week to help our readers learn more about wills and their pertinence in ensuring that final wishes are understood and executed. Visit our blog all week for key posts related to MAWW and will preparation.