Most of the reasons to have a Will have to do with what happens if you don’t have one and that often will depend on what province you reside in.  Each provincial government has its own Wills and Estate legislation which also provides for the rules regarding intestacy.  The following are some of the reasons to have a Will and what could result without one.

1. Informs your family how and when your property is to be distributed

Your Will affords you the opportunity to give clear instructions as to whom will receive your wealth.  It also allows you to make bequests of certain items such as family heirlooms which you may wish to leave to a specific individual. For those who wish to leave funds to a charity, the Will allows you to do this.  Without a Will, this opportunity may be lost. The bottom line is that you make the call.  Dying without a Will means that the provincial government will make the determinationon how your estate is to be distributed depending on the intestacy laws.

For example, if there is a spouse and children, the spouse will usually receive a specified amount.  That amount can vary between $200,000 and $300,000 depending on the province.  Any amounts over that are, for most provinces, split between the children and the spouse.  The amounts due to the children, however, are not received by them until they reach the age of majority.  Up until then, those funds are administered by the provincial government. If you reside in Alberta or Manitoba the children receive nothing, and all goes to the spouse.

If you die without a spouse and without children, then the assets will be left to parents, siblings, nieces and nephews, in that order.  The government will receive all if there are no relatives.  And remember those family heirlooms that you could dictate to whom they went in your Will?  Without a will those and other similar assets will most likely have to be sold so the estate can properly be distributed. 

2. Allows the testator to name an Executor

The task of the Executor is to administer the estate and ensure that the testator’s wishes are carried out.  Without a Will, there is no Executor, and an administrator must be appointed by the government.  Usually, this will be the spouse, but if the spouse is not willing or capable then someone else will have to be found to carry out this function.  Regardless, the result usually will be unnecessary delays and increased expenses.

In administering estate assets, the role of an Executor also helps to ensure that there is no loss of estate assets due to lack of oversight prior to the assets being distributed.

3. Protects a common law spouse

British Columbia, Saskatchewan, Manitoba, North West Territories and Nunavut recognize common law marriages where the parties have lived together for more than two years.  In these jurisdictions common law spouses have the same rights as a married spouse.  In all other provinces, however, they are not recognized and as a result are entitled to nothing.  There may be exceptions where a dependency claim can be made to the courts, but that could prove to be expensive and result in significant delays.  It also could result in other family members making objections to the court.  With a properly drafted Will, the rights of a common law spouse are protected.

4. Naming a guardian for your children

Having the choice as to who will look after your children should you die is an extremely important reason to have a Will.  This is especially true in the case of a common disaster involving both parents.  Consider the unimaginable scenario in which the decision as to who should be the guardian of your children was left to the courts.

5. Leaving instructions for your funeral, burial or cremation

A Will affords you the opportunity to leave concise instructions regarding your funeral arrangements.  Dying without a Will or with no clear directive could cause stress and family discord.

6. Proper estate planning can result in income tax savings

Estate planning, including a properly drafted Last Will and Testament, may result in tax savings.  On the other hand, dying intestate will see this opportunity lost and administrative costs increased.

It is unfortunate that many Canadians do not have a Will.  While there may be some circumstances where a Will is not necessary, for those Canadians who are married and have children, a Will is vital and should not be overlooked.  Ideally, a Will should be drafted by a lawyer who is acquainted with all the technical requirements and contingencies that come into play.

If you are without a Will, talk to a lawyer who can assist you as soon as you can.

This article is intended to provide general information and should not be considered legal, tax or financial advice. 

My Dearest Kate

Although I expect to make it through this surgery it has got me thinking that anything could happen to any of us at anytime and we are rarely prepared. 

So, if anything should happen……………. 

1. Before you tell anyone that I didn’t make it– Clean out our safety deposit box and joint bank accounts. Everything is going to you anyhow and when the bank finds out I’m dead, they’re liable to close off all access to them until my will is probated.
2. Call the funeral director– But go there with somebody who won’t be suckered into buying the fanciest coffin.  Just remember, the money you spend on my funeral won’t be available for the big wake I want you to throw for me!
3. Gather up all my important papers– My will, life insurance, disability insurance, and general insurance policies, business agreements, banking information, notes receivable or payable, stock or bond certificates, real estate deeds, recent tax returns, marriage, birth and death certificates, military records, automobile registration forms and all recent contracts. Don’t throw away anything that looks official, even if it appears to be terminated.
4. My passwords are in the bottom left hand drawer of my desk in a note book which should be a big help to you in managing those accounts.
5. Call our life insurance agent– He’ll not only help you in collecting the money from my life insurance, but also in collecting the death benefits of my group insurance, company pension, social security, as well as the death benefits from my variable annuities.
6. Call our accountant– He’ll be needed for the various tax returns that must be filed.
7. Call our attorney– She’ll tell you what other stuff is needed and what must be done to settle my estate.  She’ll also tell you whether my will has to be probated (a process to prove my will is valid).  Our attorney will also advise you on whether there are any federal or state estate taxes. As far as state probate costs, I’ve tried to minimize them through joint ownership of most of our assets and naming beneficiaries where I could.
8. Call the other executors– You know you are my primary executrix, and you know who the other two are, so call them.  Even though our lawyer will probably call them, it would be nice if they heard from you first.
9. Call my business associates– My partner will want to know that our buy-sell agreement has just been triggered so he can collect the insurance money to buy my share of the business from you.  And call my assistant Marie in Admin to spread the word.  Ask her if there’s anything else coming to you such as unpaid expense accounts, ongoing group benefits, etc.
10. DON’T PANIC! I picked my executors and the above-mentioned professionals to assist and advise you in this situation.  So let them do their jobs and help you.  And don’t rush into anything, like selling the house, or anything major, for at least a year.  With my life insurance and all the other benefits coming to you, you can take your time and make better decisions when the time is right.

Fortunately, Don survived his surgery and is on the road to recovery. Don decided that he would attach this list to his will for Kate to refer to in the future, because, well, you never know….

Q: I am married. I have RRIF and LIRA and my spouse has RRSPs. We have joint cashable accounts too. We have appointed each other as beneficiaries for every account. I am told this arrangement takes longer to settle on death if there is no will. Why do I still need a will?

—Krish

Click to read the answer to this question on the MoneySense website.

If you have a will in place, great. A will, however, is only a fundamental first step, not a comprehensive plan, point out authors of the 2017 Wealth Transfer Report from RBC Wealth Management.

“One generation’s success at building wealth does not ensure the next generation’s ability to manage wealth responsibly, or provide effective stewardship for the future,” they write. “Knowing the value (alone) does little to prepare inheritors for managing the considerable responsibilities of wealth.” Overall, the report’s authors say the number of inheritors who’ve been prepared hovers at just one in three.

Worse, they say despite best intentions, individuals are repeating history in a negative way.

“Overall, our respondents reveal a marked level of discomfort when confronting the theme of wealth transfer directly: Only 40% say they are comfortable sharing details with their beneficiaries. As such, they risk subjecting their own heirs to the same lack of clarity and understanding they experienced during their own inheritance.”

Two thirds say their own wealth transfer plans aren’t fully developed – a critical barrier to having this discussion in the first place.

While the report focuses on wealthier beneficiaries in society, the lessons remain true for most: There is planning, communication, and a fair bit of education your heirs need in order to make the best decisions about your wealth when the time comes.

1. Recognize that action today can help you create a better future forever.

First, it’s important to acknowledge that creating an estate plan means contemplating your own mortality – an inescapable element of the process. It can also involve some awkward conversations, particularly if you’re not in the habit of talking about money with family and loved ones.

Without planning, however, the outcome you leave may not be the one you would choose.

2. Get help to build your plan, then share it with those who matter.

Estate planning typically isn’t a “do-it-yourself” project. Instead, you’ll probably need to rely on a network of professional advisors who can bring their expertise to different parts of your plan. Your network might include a lawyer and a financial advisor or other representative from your financial institution.

Once you have your plan in place, it’s time to ensure that the people who are impacted by it are aware of your wishes. In the survey, only 35 per cent of those who had inherited money in the past said their benefactors had prepared them in advance.

Members of your professional network can also help you explain your plan to beneficiaries and help those who inherit your assets to understand your preferences and the decisions you’ve made.

3. Encourage education early.

Most of the people surveyed are not confident that the wealth they pass on will be preserved by the people who inherit it. Nearly 60 per cent of Canadian parents said they aren’t sure that their children will preserve or grow their inheritance, though almost 70 per cent said their children were first in line to inherit.

Here’s where a little financial education can go a long way: If you’re concerned about the money management skills of those to whom you’ll leave assets, now is the time to start putting structures in place to build financial literacy. Having a plan is itself an important first step. The survey showed that 58 per cent of those with a plan are confident the next generation will sustain their wealth, compared to just 33 per cent of those who haven’t taken time to prepare.

Finally, although creating an estate plan sounds as though it will only have an impact after you’re gone, the confidence (your own confidence, and the confidence you instill in others with a little bit of preparation) is one of the benefits you can enjoy in life. In sum, these three steps – developing a plan, communicating it to those who matter, and taking action to ensure your wishes will be sustained over generations – can lead to confidence now about the future you’re creating.

Let’s get together to discuss how you can create your wealth transfer plans, and get help in communicating those plans to the people who matter the most.

As always, please feel free to share this article with anyone you think would find it of value.

Arranging the funeral 

In addition to arranging the burial or cremation and funeral services according to the deceased’s wishes the executor would be responsible in ensuring that family, friends and interested parties (especially employer) have been notified about the death.  Family members will most likely assist in this including the posting of the obituary. If there are sufficient funds in the bank account of the deceased the bank will usually release  funds to cover the cost of the funeral.

Preparing for the task 

An executor may wish to consider hiring a lawyer to advise and assist.  The lawyer will assist with the paper work and ensure that all the executor’s obligations are discharged properly.  Accounting and legal fees related to the settling of an estate are paid by the estate.    The first group of tasks that a trustee must complete are:

• Locating the will and all relevant documents. It is important to verify that the will in question is in fact the last will of the deceased;
• Locating and itemizing all accounts held in the name of the deceased as well as the balances of each;
• Open a bank account in the name of the estate to pay the estate’s debts;
• Locate and list the names, addresses and dates of birth of all the beneficiaries’ names in the will or other estate documents;
• Notify all beneficiaries of their interests. This includes charities named in the will;
• Locate and verify all life insurance policies on the life of the deceased. Any named beneficiaries of those policies will need to officially notify the insurance companies of the death of the insured.  This also applies to any living benefit policies such as disability income and critical illness policies.  Often these policies have an additional benefit that is paid at death otherwise you want to ensure that further premiums cease to be paid.

Consider the financial needs of the beneficiaries 

• Often immediate family members (i.e. spouse and dependent children) will require immediate funds for living expenses etc. Institutions that held deposit accounts for the deceased should be contacted to determine if any funds can be made immediately available for this purpose;

• Life insurance policies or accounts with a named beneficiary (including RSP’s TFSA’s RRIF’s etc) are sources of funds that can be distributed soon after death. For this reason make sure that death certificates are received from the attending physician or the funeral director. Copies of birth certificates showing date and place of birth may be required as well;

• Any employer should be contacted to determine if the deceased had group insurance or union benefits payable to the estate or designated beneficiaries;

• Application should be made for any government benefits that may be available such as Canada Pension Plan for death and survivor benefits;

• Cancel all credit cards and subscriptions (including online subscriptions).

Protect the estate assets and pay the debts 

• Prepare a listing of all assets and debts. If there is a safety deposit box, open it and make a list of all the contents;
• Some assets may require valuation and these assets often include stocks and bonds, non-registered mutual funds, registered plans, business or farm assets and personal belongings;
• Diligently try to locate all creditors and identify and verify any debts to family members as well as loans made to family members;
• Take possession, in your role as executor, of all cash, jewelry and other valuables. Make sure sufficient insurance on these assets is in place to protect against loss.  This also applies to all motor vehicles, buildings, recreational property and any other assets of value that should be insured.   The common-sense approach would be for the executor to exhibit the same degree of care and attention that the deceased would have during his or her lifetime;
• Set aside funds to cover the valid debts of the deceased including all taxes that may be owing. Also include a sum to cover your compensation, if applicable, as executor;
• File the deceased’s final income tax return including any returns that may be required from the estate. Often, the deceased’s or another accountant can perform this task and the fees for this are paid for by the estate;
• Once the returns have been filed and taxes owing paid, it is necessary to obtain an authorization form from the Canada Revenue Agency confirming all taxes have been paid before assets can be distributed to the heirs;
• REMEMBER – the executor can be personally liable if any distribution of the estate is made before the deceased’s debts, including income taxes, have been paid.

Prepare and submit probate documents 

• Probate documents must be submitted to court in order to obtain probate. Probating the will allows the executor to handle the estate of the deceased.  Fees will be assessed by the court based on a provincial schedule.
• Some assets don’t require probate. These include property held in joint tenancy.

Although it may seem like it, this is not an exhaustive list of the duties of an executor.  Depending on the circumstances there may be more or less but the list above covers off the main duties and responsibilities of those who serve in the role as an executor.  Like most serious endeavors, it is recommended that you always obtain professional advice to ensure that your obligations are discharged properly.

What are the challenges?

The truth is that many members of the Sandwich Generation find the circumstances are both emotionally and financially draining.  In the past, women have been looked upon to provide the primary care giving in the home while men take care of the income needs.  Today, roles have changed with the majority of working age women employed outside of the home.  As a result, financially, both parents are looked upon to provide for the family.  For The Sandwich Generation helping their parents and their children at the same time, creates a stress that can affect both their mental and physical health.

Risk Management in the Sandwich Generation

Having an effective financial plan becomes key in dealing with the challenges.  As the main breadwinner in this situation it is possible that three generations are dependent upon you.  One of the first issues to be addressed then is how you protect your revenue stream.  

5 Steps to Minimize risk for the Sandwich Generation

1. Have an open and clear discussion about family resources and needs – The older generation needs to have a discussion with their children so that everyone knows what steps have or have not been taken to provide for the senior’s care when they are no longer able to care for themselves. This would also be a good time to initiate or continue any talk about what liquidity needs exist for taxes, long term care, funeral costs and last expenses etc.

2. Complete a life insurance needs analysis – Where there is not sufficient capital to continue family and dependent’s income at the death of a breadwinner, life insurance can provide the necessary funds required to maintain lifestyle, pay debt, reduce mortgages, fund children’s education and provide money for aging parent’s care. Life insurance is an affordable way to guarantee future security.

3. Review your disability and critical illness coverage – If there is not sufficient income that will continue to be paid should you become unable to work due to sickness or accident, consider long term disability coverage. Critical illness insurance will provide needed capital in the event of diagnosis of a life threatening illness or condition.  Not only will this provide financial support but will also improve your chances of recovery without the financial stress that often accompanies such a condition. 

4. Investigate Long Term Care Insurance – Having the appropriate amount of LTC insurance will help to reduce the stress of having to care for a parent when they are no longer able to fully care for themselves. Consider having all the siblings share the cost.

5. Draft a Living Will or similar Representation Agreement – Making your wishes known to your loved ones in the event you are no longer capable of making medical decisions will go a long way to providing comfort to all concerned when difficult choices need to be made.

As you can see, being part of the Sandwich Generation can be very stressful – emotionally and financially.  Having someone to talk to or being part of a support group dealing with this issue, will certainly help manage the emotional challenges.  Sitting down with a financial advisor or estate planner will help you determine what strategies you may need to implement to provide the financial security your family needs.