When you think of preparing a will, what’s your first reaction: relief that you already have one, or embarrassment that you don’t?
Dying without a will (known as dying “intestate”) can have significant unintended consequences. Here are the four biggest reasons you don’t want to die without a will.
1. You want control over who gets what.
Without a will, you don’t have control over how your assets are transferred to your loved ones. Instead, your assets will pass according to a legislative formula specific to your province. They could be distributed in a way that is very different from what you would have hoped.
For example, if you are married and die without a will, you might imagine that your assets are left in your spouse’s hands. In fact, in Ontario, the first $200,000 go to your spouse; and of the remaining assets, one-third go to your spouse and two-thirds to your children. Furthermore, without a will, your spouse will not automatically have the right to manage a minor child’s property or determine at what age the child should receive his or her share.
(Keep in mind that in Ontario, if you’re in a common-law relationship you have no inheritance rights at all, so it’s even more critical to have a will.)
2. You want to have an executor in place.
The executor—named in your will—is the person or trust company who manages your estate when you die. Among many tasks, your executor is responsible for making funeral arrangements, locating your assets, distributing assets to your beneficiaries, and filing all income tax returns for your estate.
If you haven’t appointed an executor, no one can write cheques on your account, run your medical professional corporation or pay your bills. A family member will need to go through a court process to be appointed administrator of your estate, causing unnecessary delays and increasing costs.
If no relative (or other eligible person) steps forward to take on the task, the court can appoint the Public Trustee to be the administrator. Regardless, the delays could mean your dependants will not have access to immediate financial support, or your assets could suffer from a lack of necessary protection.
3. You want to leave specifics about how your children are looked after.
A will allows you to appoint a guardian to look after your children following your death, provided they are under the age of majority. If you don’t appoint anyone, others can apply to the court to take care of your minor children. Grandparents, step-parents, adult siblings, other family members, and people who aren’t family members are eligible, as long as they are mentally competent and have reached the age of majority in their province. It will be up to the court to choose a guardian from among the applicants. If no one steps forward, the children may become wards of the court.
What’s more, when parents die without a will, they have no say in how the money they leave to their children is managed. In a will, you can create trusts for the children; this way, funds are held for them by someone you trust until they are mature enough to handle the money. Without these trusts, your children can receive all the money as soon as they reach the age of majority—whether they’re ready to manage it or not.
4. There may be others you want to provide for.
If you have elderly parents you are caring for, or children with special needs, you will not be able to properly plan for them without specific instructions in your will. Also, if you have other family members, friends, or favourite charitable organizations that you want to leave money to, you need to do this in a will.
Taking the time to prepare a will can go a long way in ensuring that your assets are distributed in the way you wish—and it will certainly minimize the burden on your loved ones after you pass away.
Did You Know…?
If you’re unsure who should be the executor of your will, you can name MD Private Trust as your professional executor. If you choose this service, the people you care about will be spared the challenge of settling your estate during an already difficult time.
To learn more about creating an estate plan, contact your MD Advisor