Everyone should have an estate plan in place, complete with a will. This ensures that financial affairs are resolved quickly at your death and that your loved ones benefit from your estate and lose as little as possible to taxation.
What is a will?
A Will is a document you can execute which transfers property to your beneficiaries when you die. A Will may be revoked or revised at any time up until the moment you die. It does not grant any beneficiary a right to your property until you die. The downside is that your beneficiaries are usually required to wait a period of time after your death before they can apply for ownership of your property.
Why you need a will
The most important part of your estate plan is a valid, up-to-date will. If you die without a will, the government simply distributes your estate according to provincial law. Not according to your wishes. Only with a will can you ensure that your wishes are fulfilled.
The best way to create a will is to work with an expert. Many do-it-yourself will packages leave details open to legal interpretation. So it pays to get good advice.
It also pays to have your will updated regularly by your professional advisor. Your acquisition of assets and a new child, for example, are good reasons to keep your will current. You should also know that getting married invalidates your existing will.
How to distribute your estate
Distributing your estate is more complicated than simply dividing things among your heirs. You need to determine the value of your assets from pensions, investments, real estate and personal property. You also need to know which assets you own jointly with your spouse and who are the beneficiaries of your RRSPs and insurance policies.
Then you must appoint an executor, the person who will see that your wishes are met. Lastly, you must decide on your goals. Most people want to maximize the value of their assets and protect them from excess taxation. It also makes sense to leave behind enough liquid assets (cash, stocks or bonds) so that your executor doesn’t have to sell physical or family assets to pay taxes.
When you are unable to help yourself
We recommend that in addition to your will you prepare an enduring power of attorney and a representation agreement. These legal documents are designed to protect you and your family should ill health prevent you from making decisions about your affairs on your own.
An enduring power of attorney lets you appoint somebody you trust to look after your financial and legal affairs if you are unable to. It allows your attorney, for example, to act for you if you become mentally or physically infirm.
A representation agreement is your appointment of a trusted person to represent your wishes regarding your health care in the event infirmity of any kind makes it impossible for you to made decisions on your own. This is particularly important if you have express wishes concerning specific medical treatments or medications.