Preparing a will is not something most Canadians look forward to. Yet there are a number of good reasons why you shouldn’t procrastinate in getting your will prepared – especially when you consider how little it costs and the benefits that come with it.
Having a will helps facilitate the administration of your estate and can help you save taxes. A will communicates your intentions and can allow you – and not someone else – to determine how your assets will be distributed upon your death. You put a lot of effort into acquiring wealth, so doesn’t it make sense to ensure your interests are preserved after you pass away?
What if I don’t have a will?
If you don’t have a will or your will is determined to be invalid, you will be deemed to have died intestate. Ultimately, the court will appoint someone to administer and distribute your estate according to the intestacy laws of the province in which you reside, regardless of what your wishes are. This means that your assets may not be distributed to your beneficiaries as you intended.
Under the provincial intestacy laws your spouse will usually receive a certain amount of your estate, commonly known as the “preferential share,” and the remainder will be divided between your spouse and your children. This may not seem problematic, but in some situations it can lead to undesirable results. Take a case in which spouses are separated and estranged. Spouses that are not yet divorced, are still technically spouses, which means the intestacy rules may apply and all or part of the estate may be distributed to the surviving ex-spouse. However, spouses that have a separation agreement in place, a court order or divorce judgment will not be determined to be a spouse for intestacy purposes.
Also, consider situations in which there are minor children. Portions of an estate payable to a minor child are usually paid into court (administered by the surviving parent or a court-appointed guardian) until the child reaches the age of majority. This means that at the age of 18 (this varies from province to province), a child could take charge of his or her full entitlement. For many people, leaving significant sums
of money to young adults is a concern since many teenagers are not mature enough to ensure that a sudden windfall will be put to prudent use.
An intestacy may also result in more tax being paid. This will impact the amount of money left to distribute to your family members or the beneficiaries of your estate. The distribution of your estate may be delayed and costly to administer. This can make the whole process frustrating for your loved ones at a time when they are already grieving.