A last will and testament is a formal, legal document that gives your final instructions regarding your assets and dependents. It is a vital part of any financial planning, and helps protect your family and/or business after your death.
Consumer studies found that more than 50% of Canadians have never written a will, and 35% do not regularly update it. If you are one of those who have not gotten around to written a will, this article will help you finally begin that important process. Find out:
Your will is one of the most important documents you will ever have—and the only guarantee that your wishes will be followed after your death.
Your assets include bank accounts, properties like real estate or vehicles, investments like stocks and bonds, and valuables like jewelry, art or collectibles.
In your will, you will name each beneficiary and what they receive. Beneficiaries can include immediately family, relatives or colleagues, friends, or charities and organizations you want to support.
If you have children who are minors at the time of your death, your Will expresses your wishes for who will take care of them and manages their inheritance. This includes the possible scenario that both you and their other parent are no longer around.
Without a will, the question of how assets will be divided or who takes care of the kids will be left for family discussion—or, more often than not, dispute and discord. If this occurs, assets are typically frozen. If you have any dependents, it may be months or years before they get the money you left behind to support them.
A will prevents that kind of conflict because it is clear-cut, recognized by the court, and legally binding. While someone can contest a will, they will have to file a case and provide enough evidence to support their claim.
For a will to be recognized and properly executed, some elements are required.
According to Ontario laws, a will has to be written and signed in front of two witnesses who are at least 18 years old and are not direct beneficiaries. Ideally, you should make it a time when you are in good health (or in legal terms, of sound mind and body).
Emergency wills that are written in life-threatening situations with no witnesses may be accepted, but will be examined by the court. Verbal wills are currently not accepted by the province of Ontario.
The will must name an executor of the estate. One of the responsibilities of the executor is to bring the will to probate court, which will verify the authenticity of the will and then supervise him/her in carrying out your wishes.
The executor will also be in charge of locating property deeds and other documents, getting estimates on valuables and other assets, and settling any debts of the estate. For this reason, it’s important to choose an executor who you both trust and has the skills to manage these tasks appropriately.
Your will is the biggest and most important part of estate planning, which is about providing for your family after death and preparing for what happens in critical care and after you die. Other components of estate planning are:
When you die intestate (or without a Will) your assets will be distributed according to Ontario’s Succession Law Reform Act. Beneficiaries usually include the spouse and children. If you do not have a spouse or children, assets will be distributed to the closest next-of-kin.
The Succession Law Reform Act does not cover common-law spouses, so a Will is necessary to ensure that he or she will be able to lay claim to any inheritance.
If you have minor children, the court will decide their custody and care.
Both Wills and Trusts guide the management and distribution of your assets after your death. However, while a Will is a Legal Document that specifically names who gets what and how much, a Trust is a Legal Entity that will hold any assets and then transfer them to your trustees.
Furthermore, a Trust is effective immediately, while a Will is only activated upon your death.
A Trust is often used to avoid estate taxes, and since assets do not pass through Probate Court your beneficiaries they are generally easier and faster to transfer to beneficiaries. They are not usually challenged in court.
However, Trusts are generally more complicated and expensive to set up. A Will, on the other hand, is a fairly straightforward document that anyone can make.
Even if you have established a Trust, it is still important to create a Will. A Trust can only manage the assets you have transferred to it, so it’s possible for some assets to be in limbo if you die intestate.
Yes. You can add a codicil, which is basically a separate document that references provisions inside it and makes changes. Only the person who originally created the Will can do this.
It is actually encouraged to update your Will periodically, either to add or substract beneficiaries or to account for new assets.
While this is not required, it is highly recommended. These experts can help you through the process to ensure that you don’t have any loopholes that can cause confusion or be contested. They can also serve as objective witnesses to your Will.
It is never too early to do it. You can still revise your Will, and you have peace of mind knowing that you have planned for everything.
Sim Gakhar is an experienced financial planner who can help you with Estate Planning, including writing your Last Will and Testament. Contact us to find out more.
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