A Will is a legal document that states how you want your property to be distributed after your death, and who will gain custody or guardianship of any minor children.
In this article, you’ll find out:
- What is a Will, and why you need it
- Types of wills that are legally accepted in Canada
- What a Will can (and can’t) do
- Tips for creating a Will, so you know that it clear and covers all the important points
Importance of having a will
According to a consumer poll, more than half of Canadians don’t prepare a last will and testament. Many of them believe that only very old or very wealthy people need one. Some are uncomfortable about creating one—or put it off, in favor of more “practical” financial concerns like paying the bills or saving for retirement.
However, a will is an important part of any financial planning. No matter how small you perceive your assets to be, it makes sure that the properties are transferred quickly and without dispute.
You have full control over how your assets are divided
If you do intestate or without a will, Canada law does have guidelines for distributing the property to your legally married spouse and children. However, you may not agree with the way the assets are allocated.
Here are some situations where a will is critical to execute your wishes, prevent disputes, or ensure that heirlooms are kept in the family:
- You are married with children, but want to provide for elderly parents, siblings or people who are not directly related by blood
- You want to name a common-law spouse as a main beneficiary (Ontario law favors married spouses, so your partner will need to hire an estate lawyer to make claims if you do not make a clear stipulation in your will)
- You have specific instructions about who receives an asset, or how that asset can be used (i.e, a property can’t be sold)
You ensure that your children receive the best possible care
Your will clearly names who gets custody over your children, sparing them the trauma of being caught in a family tug-of-war, or having their fates determined by the court.
You avoid delays, fees and other complications
Without a will, transferring properties will incur more fees and delays. The court will need to appoint an estate trustee and issue a certificate before s/he can manage and distribute your assets.
Your relatives may also not be aware of all of your assets, and waste time trying to trace and verify bank accounts, deeds of property, and other investments.
Types of Wills that are recognized in Canada
- Testamentary will. It is a formal document which you can prepare yourself, or ask an estates attorney to prepare for you. It is then signed in the presence of witnesses. This is considered the ideal form of will, and is least likely to be contested.
- Holographic or handwritten wills. This is a handwritten document usually written in emergency situations without any witnesses. In a famous case, a Saskatchewan farmer was crushed by a tractor and wrote a one-sentence will on the side of the vehicle. Holographic wills are recognized by Ontario, but not in some Canadian provinces like British Columbia.
- Oral wills. An oral will is not widely recognized by the court, even if there is an audio or video recording and done in the presence of witnesses. So, to prevent any legal issues, it’s important to put your will in writing.
- Pour-over will. If you have transferred some of your assets into a Living Trust, this kind of will ensures that any remaining assets will be added to it after your death. It prevents legal issues in case the Trust becomes invalid or difficult to fund after you die.
- Mutual wills. This is usually done by a couple that is married or have a mutual commitment. Both parties are bound by the will, even after one of them dies. This is usually done to make sure that assets are passed on to their children, and not to a new spouse. The will i
For any type of will, the testator (or the person leaving it) must be deemed of sound mind and body at the time it was written. The witnesses should not be a minor or a beneficiary named in the will.
What a will can (and can’t) do
A will shows how your assets and belongings (including money in the bank, property, investments, or businesses) will be distributed.
You can indicate the beneficiaries (whether they are people or charity organizations) and can specify the amount. Can you leave out a spouse or your child completely? That’s complicated, and requires legal consultation with a seasoned estate attorney so the will is not overturned in court.
A will does not include any payouts from your life insurance policy and some investment accoints, but that will not be a problem since these policies usually have specified beneficiaries or clauses about who to transfer it to after death.
Lastly, a will determines who gains custody or guardianship over any minor children, and how their inheritance will be managed until they are old enough to access it.
Checklist: How to plan your Will
- List of assets. This includes houses, vehicles, stocks and other investments, family businesses, and valuable heirlooms or personal possessions. You should be the sole owner of the property. For example, if you and your spouse have a joint title on your home, you can’t include that in your will.
- List of debts. While this isn’t actually part of your will, some debts will be settled by part of your estate. Thus, accounting for these – and other expenses such as medical treatments, funeral expenses or taxes – can give you a complete picture of what you will leave behind. To protect your inheritance, consider getting life insurance policies that can cover some of these costs.
- Name an executor. This person will manage your estate and the provisions you listed in your will. You may want to name two people, in the event that the first person will be unable to perform this task.
- Name a guardian. Consider two scenarios: if the child has a surviving parent, and if both parents die at the same time. Aside from childcare and custody, you also have to think of who will manage their property or inheritance—and assign somebody else, such as a law or financial firm, to do this until they reach the age of majority.
Get expert and trustworthy financial advice
A last will and testament needs to be clear and complete to prevent any confusion and conflict after your death. Sim Gikhar can help you with your estate planning, to ensure a smooth transfer of your assets—and protect the legacy you worked so hard to build in this lifetime.
Useful references and resources