Neglecting to make a Will, or to keep it updated, is a common financial mistake — and thankfully easily remedied.
During "Make a Will month" in November, 70 percent of respondents to an RBC survey said they don't have an up-to-date Will.
“This is not surprising," says Elaine Blades, a senior manager with the professional practice group at RBC Royal Trust. “We see surveys that consistently show over half of adults do not have a signed Will."
Among the top reasons given for not having an up-to-date Will were: “I don't know where to start," “I don't have the time," and, “It's too much effort."
“We often hear that it feels like a complicated process, so people delay making a Will," says Blades. “It's often why people look for an estate planner. Helping to uncomplicate matters is core to what we do at RBC Royal Trust."
Why you need a Will
“Failing to create a valid Will eliminates your ability to control who inherits your estate, and when," says Leanne Kaufman, head of RBC Royal Trust and president and CEO of The Royal Trust Company. “Perhaps more importantly though, it shifts the burden of responsibility from you to those you are leaving behind — a responsibility to organize your affairs because for whatever reason you did not."
Most people prefer to make their own decisions, particularly those that impact their family members. If you die without a Will, your assets will be distributed based on a standardized formula established by the law in your province, says Bianca Krueger, a Will and estate advisor with RBC Wealth Management Royal Trust.
Here are some key reasons for having a Will:
- To ensure your wishes are known and respected. In your Will, you can decide who you want to benefit from your estate and how.
- To take care of your partner. Without a Will, a surviving married spouse may inherit some or all of your estate, depending on your province, but an unmarried partner or common law spouse may not have the same entitlement.
- To take care of your children. A Will is where you can appoint guardians for your minor children, upon court approval. It also allows you to decide when and how your children will receive an inheritance from you.
- To have an opportunity to plan. Estate planning, including your Will, can help you identify tools to navigate income tax and probate fees.
- To save time and money. Preparing a Will can save time and money for your heirs because your executor can begin to take care of your estate immediately, rather than waiting for a court to appoint someone.
Drafting your Will: How to get started
Preparing your first Will is an essential estate planning tool, but you should also review your Will whenever you experience a significant life event, such as getting married, separated or divorced; having a child, winning the lottery or starting a business, says Blades. It's best to review your Will every few years to make sure it continues to express your wishes.
Six things to consider:
- Establish your assets and liabilities: Identifying your assets, their location and account numbers, including insurance policies, investment accounts, retirement accounts and real estate, is essential.
- Decide how you want your assets distributed: Depending on your situation, you may want to distribute money equally to your children, entirely to your partner or provide for other relatives. You may want to leave money for a specific cause. If you have a blended family, your Will is even more essential to make sure your assets are distributed according to your wishes.
- Determine the best way to transfer your assets: An experienced estate planner can help you choose the best method for wealth transfer to maximize the benefit to your heirs and to protect them. If you have minor children, you can use your Will to appoint a trustee to manage their assets until they are of age.
- Choose a guardian for minor children: Identify someone who would care for your children in a way that is consistent with your values. If you don't appoint someone, the government will appoint someone to care for them, who may or may not be the person you would choose.
- Choose the right executor or estate trustee for your situation. Appointing someone to administer your estate can be one of the best things you do for your family. Your executor should have the time, inclination and expertise to perform this important role.
- Document your plan. Once you've thought through these decisions, you are strongly encouraged to work with an estate planning professional and your lawyer to ensure your wishes are properly documented and all legal requirements satisfied.
“Preparing your first Will is a big step," says Blades. “It will take time and thoughtful consideration to prepare this important document, but it will save money and grief down the road."
In fact, Blades asserts, preparing a Will may be the most important legacy you leave.