The importance of a last will & testament in Alberta
In the Angus Reid Institute study, a quarter of Canadian adults said they hadn’t written a will because they were too young to worry about it.
Almost a quarter said they didn’t have enough assets to make a will worthwhile.
The truth is that unexpected events can and do happen, so you’re never too young to plan ahead for the future security of your family; and people often underestimate what they will have to pass on if they do meet an untimely end.
A will can be written for the distant future, not just for if something happens to you tomorrow.
Do Canadians need a will?
Legally, Canadians don’t need to prepare a last will and testament. However, failure to do so may place your intended beneficiaries open to expensive estate litigation.
Many Canadians find more reasons not to make a will than to make one. In addition to being too young or not having enough assets, we commonly hear the following excuses:
- “Everything’s going to my spouse whether or not I make a will”
- “I made my will 25 years ago”
- “I’ve already informed everyone verbally of my wishes”
- “I can’t afford a lawyer”
- “I’ve prepared it from a kit”
- “Wills are only for the wealthy”
With no valid will, the distribution of your estate will be determined by “intestate law”, which varies from province to province. Your spouse doesn’t automatically inherit it.
If you are not married, a will is even more important for protecting your common-law spouse.
Depending on your family situation, this can become very complex. You may be leaving a huge and expensive mess to attend to in your absence, with mounting court costs and legal fees.
Even though a will is legally valid until it is destroyed or you get married, it needs to be updated from time to time to reflect changes in your life situation, asset collection, and relationships.
Unless your will was prepared in a way that makes it legally binding and your executor is informed of its whereabouts, your efforts may be for nil.
That’s why working with an estate planning lawyer who can create an actionable will and arrange any adjustments should be a priority.
The importance of estate planning in Alberta
Most Canadians have friends or colleagues whose families have faced quarrels over loved ones’ estates.
Not stating your wishes clearly in legally binding estate planning documents is risking this happening to your family.
There are several good reasons to begin estate planning with a qualified lawyer as soon as possible:
- To distribute assets to intended beneficiaries
You should be in a position to decide who gets what – not the courts.
This applies no matter the size and value of your home, how large your share portfolio is or whether you have a stack of valuable art of jewelry to pass on.
To make sure that all your assets end up with whoever you want them to go to, prepare a legally executable estate plan.
- To protect your own needs
Estate planning is often considered to be all about who you’re leaving your assets to. While that’s always an important component, it can also protect your own needs while you’re living.
If you are incapacitated and unable to look after your own affairs, it’s important to nominate a trusted individual to manage them for you (medical and financial).
You will need to ensure that your own cashflow and insurance needs are looked after for the remainder of your life.
- To protect young families
If you pass away before your time and leave a young family behind, with small children, you may leave them in financial difficulty without preparing the right documentation.
If you and your spouse both pass away, you can also protect your children by naming legal guardians for their upbringing in your absence. Otherwise, the court may have to decide.
- To save taxes for your beneficiaries
Inheritance taxes can be severe unless you plan for them.
Keeping the tax laws in mind and taking advice from a professional estate planning lawyer prevents you from leaving your heirs open to a hefty tax bill.
A good lawyer can help you arrange your affairs in a way that minimizes unnecessary inheritance and income taxes, and advise on cash gifting and setting up trusts.
- To avoid estate litigation and family feuds
Families can and do feud over estates. Emotions run high and cause painful rifts and this can lead to expensive estate litigation that is really in nobody’s interests.
With comprehensive estate planning, you can avoid this unpleasant scenario by detailing exactly who is entitled to what and who controls your finances if you lose mental capacity.
You can also avoid estate litigation from other quarters, like from frivolous challenges to the assets you have built during your lifetime. The use of trusts can remove your name from assets and place them into legally protected “vehicles”.
The estate litigation procedure
Challenges to the will are the most common form of estate litigation.
These often revolve around whether or not the maker of the will had the mental capacity to understand the nature and effect of the will.
There may be allegations of undue influence being exerted by another person (often a beneficiary of the new will) on the maker of the will.
Estate litigation can be complex and involve medical opinion and professional witnesses, as well as other evidence presented in court. You will need an experienced estate litigation lawyer to assist if you are involved in such a case.
Reduce estate probate & taxes
Probate is the process by which the courts validate the contents of a will. This can take a while and slow down the process of transferring assets to your intended beneficiaries.
There is a charge for this process depending on your province – up to 1.5 percent of the estate or a fixed fee.
The way that you hold property (individually or jointly s a married couple) can affect the amount of the probate fee, so check this with your estate planning lawyer.
As mentioned before, smart estate planning can also help you avoid unnecessary taxes.
The best way to reduce or defer taxes at death is to name your spouse as the beneficiary of your RRSPs, RRIFs, and TFSAs. If you leave these to anyone other than your spouse, they will incur taxes on the full value.
Periodically update and review your estate plan
A quick reminder that you should routinely review not only the designated beneficiaries of your investments and life insurance but also update your will and last testament and other estate planning documents to reflect any desired changes.
Every time your personal situation changes through the birth of a child or grandchild, or marriage or divorce (for instance) it will usually require an adjustment in your estate plan.
Don’t leave planning until it’s too late
Many people shy away from preparing a will and planning for the end of their life because they are difficult things to contemplate.
However, as you’ve seen, it’s imperative that they are not left until it is too late.
If you’re preparing a will, estate planning or facing estate litigation, contact the team at Vest Estate Lawyers for a one-on-one consultation: (587) 442-3553.