Why You Need a Will
There are many advantages to having a properly considered and prepared Will. Everyone’s family circumstances and considerations are different and, therefore, the reasons for having a Will differ from person to person and family to family. For some, the choice of an executor to administer the Will or a guardian to look after minor children is the main importance. For others, distribution of their assets between family members in the way that protects their interest and takes into account their particular circumstances and needs is most important. Some are concerned in ensuring that their children do not inherit too great of an estate at a too early age but yet want to make sure their children have sufficient access to the estate for education and other important needs. Many blended families comprising of spouses and children from different relationships struggle with conflicting interests and obligations. Likely your family situation has its own unique considerations.
The following are some of the main reasons and benefits for ensuring that you have a proper Will:
Self Determination of your Estate
One of the main reasons for making a Will is to ensure that so far as it is legally permissible your estate is distributed in accordance with your wishes. In the absence of a valid Will, the Succession Law Reform Act (Ontario) dictates how your estate will be distributed but having a valid Will allows you to plan on how, when and to whom your estate will be distributed.
Minor Children and your Will
If you have minor children, your Will is an effective tool for naming guardians of any minor children and their property in the event that both parents or the parent who has sole custody of minor children dies. Making an appointment allows you an opportunity to determine who will have immediate care of your children. Such appointment may prevent disputes over who should look after the minor children and prevent the need for involving child protection agencies. Ultimately, all guardianships are subject to the supervision of the courts and the provisions of the Children’s Law Reform Act (Ontario).
Wills, Trust Provisions and Delayed Estate Distributions
In the absence of a Will or any provisions to the contrary in a Will, a beneficiary is entitled to receive his or her share of the estate as soon as they turn 18 years old. In many circumstances that is not the most desirable way of distributing your estate and does not provide for any special needs which your children may have. Sometimes, delaying the distribution of your estate until your children are of some older age and still providing for how their share of the estate may be used in the meantime is a more appropriate way of distributing your estate. This may be even more important if you have a child with special needs or history of substance abuse or financial irresponsibility. This may also be an effective way of sheltering inheritance from creditors or the spouses of beneficiaries.
Family Law Exclusion
A provision can be inserted into a Will that provides that any inheritance paid pursuant to your Will and any income that can be traced to it is to be excluded from the beneficiaries’ family property and, therefore, not intended to be shared with the beneficiary’s spouse in the event of marriage breakdown. It is important to keep in mind that the effect of this provision will also depend on how the beneficiary deals with the inheritance that he or she receive.
Tax Planning and Wills
Death of a person has various tax and estate fee implications. For example, on death, under the Income Tax Act there is an immediate deemed disposition of all capital property (essentially for tax purposes, the estate is treated as if the deceased person sold all their capital property on the date of death and realized all the capital gains). A Will, together with a proper estates plan, gives you an opportunity to plan for those taxes and fees and in some circumstances implement strategies which will result in deferral or minimization of those taxes and fees.
It is important to keep in mind that preparing a Will is an important part of your overall estate plan but in most cases it is not a substitute for an overall estate plan that you would prepare with your legal and financial advisers. The time, effort and cost required to complete your estate plan will vary greatly depending on the value and type of your assets and your family circumstances. Care should be taken to ensure that your Will is in line and is complementary to your overall estates plan.
Gifts, Loans and Advances in a Will
If during your lifetime you had made certain payments to your children or on their behalf then how should these payments be treated after your death. Are they loans which are meant to be repaid to the estate? Are these gifts which are not intended to be repaid? Are they prepayments of the beneficiaries’ inheritance and therefore meant to be deducted from that person’s share of the estate. Only you know the answer to these questions and unless you express your intentions in your Will you could create conflict and confusion between the beneficiaries which may result in unfair or unintended distribution of your estate.
Choice of Executors for your Will
Same as you would not give control of your property while you are alive to a random person, you likely would like to decide ahead of time who will be in control of your estate after your death. This is an opportunity to plan who will manage your estate after your death and how to minimize the possibility of conflict between the executors or the executors and the beneficiaries. If you have two children who have an acrimonious relationship or who are not being treated equally in your Will, is it then reasonable to expect them to manage your estate together?
Costs and Stress of Estate Administration
One of the main reasons for having a proper Will is to minimize the conflict, stress and cost inherent in dealing with the death of a loved one and the myriad of tasks required to settle the deceased’s person’s affairs and to distribute their estate. As the above points indicate, Wills and estate planning give you an opportunity to address your individual family circumstances and put into a place a plan that will address your family’s specific needs, treat everyone fairly and appropriately and allow the executors to do their job with the minimum of conflict and cost to your estate.
Contact Adam Altmid
Don’t leave your family and property without a plan. Call our North York office at 416-663-6888 or email Adam Altmid at firstname.lastname@example.org to find out more about wills and estate planning in the Greater Toronto Area.