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Your will is the document that details your final instructions. Most wills are straightforward in nature — everything goes to your spouse and your children. But depending on your situation, your will may involve tax strategies, or the use of sophisticated trust structures.
The other important function of your will is to name an executor, who is responsible for carrying out the instructions in the document.
And what would happen were you to die without a properly executed will? Click through the links below to find out:
What happens if you die without a will?
An individual who dies without a valid will is said to have died intestate. In such situations, provincial laws determine how your estate will be distributed. These laws vary from province to province, and it is by no means certain that your spouse and family will receive all of your assets on your passing.
Settlement delays. If you die intestate, the distribution of your assets will be delayed until the provincial courts appoint an administrator. In what is usually a difficult and trying emotional time, these delays can put added pressure on your family and loved ones. Even for those with smaller estates, obtaining court approval for the distribution of assets can be costly and time-consuming.
Loss of planning opportunities. If you haven't taken the time to prepare a will, chances are that you've also neglected to do some other estate planning. As a result, you may miss out on some tax-savings opportunities and end up leaving less for your family.
Preparing a will
It's never easy to broach the subject of wills. Because of the difficulties involved, it may be helpful to take a business-like approach to the matter, laying out the details as clearly and distinctly as possible — for example, funeral arrangements and appointing guardians for minors. This way, your intentions won't be subject to debate when you are gone.
Be sure to include your spouse in the discussion, along with your executor and possibly any older children. Bringing professional assistance to the table — such as your lawyer, accountant, or financial planner — can ease some of the difficulties associated with the topic and ensure that all important details are covered in the will.
As a start, you should determine where you stand today by compiling a list of all your assets and liabilities. Next, set out a list of your objectives: providing an income for your family, reducing final taxes payable, leaving something to your heirs, business succession plans, and so forth.
Although there are a number of will kits on the market, it's generally worth paying the money to get it prepared by a professional. The cost is reasonable, and because of the importance of the document, it's best not to leave anything to chance.
Professional assistance may be able to point out things you have missed or overlooked, such as establishing a trust for your minor children so that they receive an income when they reach a certain age.
When to review your will
It's a good idea to review your will every few years, together with your professional advisor, to ensure that it continues to reflect any changes to your estate or your objectives. Changes in tax or succession laws should also prompt a review of your existing will, as should significant life events such as:
- Marriage or remarriage (which usually revoke existing wills)
- Separation or divorce
- The birth of children
- Starting up or winding down a business
- Death of a beneficiary
Choosing an executor
One of the most important decisions you have to make in your will is choosing an executor. Your executor is responsible for managing and distributing your assets, based on the instructions in the document. The duties of an executor are many, and include:
- Carrying out instructions regarding funeral and burial
- Locating the will
- Locating the beneficiaries
- Locating and paying any creditors of the deceased
- Determining the value of the estate on death
- Settling the estate's bills
- Contacting insurance companies regarding claims
- Filing final tax returns
As you can see from this partial list, the duties of an executor can be far ranging, and may require some financial expertise. In addition, it may take several months — or even years — for your estate's affairs to be taken care of. Be sure that your executor has the time needed to complete the tasks.
Because the executor plays such an important role, many of us prefer to choose someone we know and trust, such as a close friend or family member. However, you should consider not just the willingness of the person, but their appropriateness to the task.
It's best to discuss the matter thoroughly with your chosen executor. Make sure he or she is clear on every aspect of your estate and how you want it to be settled.
Tip: Consider naming a professional, such as a lawyer, accountant, or trust company, to act as co-executor. This way, your executor can focus on dealing with family members and beneficiaries, while professionals take care of the technicalities.
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