You spend a lot of time — 20, 30, 40 years or more — building and accumulating wealth. Whether it’s a home, a business, stocks, possessions or just pure cash, you spend the majority of your life working to build your assets. And the last thing you want is for all that hard work to go to waste after your death. That’s why a will is essential — it’ll protect your assets and pass them safely down to your loved ones.
However, despite its importance, more than half of Canadians don’t have a will or a power of attorney document. Suffice it to say, that’s not a good thing. Not having a will or power of attorney lined up prior to death can cause a lot of headaches and cost a lot of money for your family.
The difference between a will and a power of attorney
A will is a document that clearly states what should happen to your estate when you die. You dictate how you want your assets split up and where they should go, and wills can even include instructions for your children’s care. A power of attorney, however, is a person you give the legal power to act on your behalf in the case you become mentally or physically unable to do so yourself. Power of attorney (POA) generally breaks down into financial and personal categories. A financial power of attorney controls your assets, like money and property, whereas a personal POA makes decisions about your health and personal care.
Dying without a will
In the event of dying without a will, you and your family are removed from any decision-making. Instead, the law decides who manages your estate and how it’s broken up. This can obviously cause many issues—namely, your assets not being distributed how you want them. This can result in headaches and arguments for your family. To avoid this, you should create a will that clearly outlines your wishes and update it regularly.
However, there are some important things to keep in mind when writing your will.
1. Who takes care of all your things?
You’ll be asked to name an executor when you complete a will. This is the person that manages your estate in the event of your death. That means distributing your assets per your wishes and making sure all your debts are paid. A spouse is a typical choice for executor. However, you can name whomever you wish.
2. If you have kids, who will care for them?
If you have children under the age of majority, then you typically name someone you trust to be their guardian. It’s also common to set up a trust to support your children. The guardian or another trustee will handle that money for your children until they come of age. However, it’s important to note that while your wishes will be given significant weight in courts, children are not property, so they don’t necessarily have to follow your wishes.
3. What assets do you actually own?
It’s hard to keep track of everything you own, and it’s not uncommon for people to forget that they do or don’t own something. For instance, shares in a business can be bought and sold, and you may not have as many shares as you thought (or perhaps more). Therefore, it’s critically important that you double-check your assets before putting them into your will. There are a few ways in which you can hold ownership over something, but they typically break down into:
4. Who inherits what?
Just because you have children and other dependents doesn’t mean you have to distribute everything equally. Who gets what is ultimately up to you. However, we recommend seeking legal, accounting and tax advice for your estate planning. You want your estate to be divided up with as little legal or financial issues as possible. Assets can also change value over time, which is why professionals typically advise their clients to divide assets using percentages rather than dollars.
5. Will complications
Wills are about as simple as your life is. If you’ve led a relatively straightforward, simple life, your will should reflect that. However, families are complicated. Second marriages, blended families, and other complexities need careful consideration — as do any business deals or corporate interests. So it’s always a good idea to be completely transparent with your lawyer.
6. When to update your will
A will isn’t a set-it-and-forget-it kind of thing. If anything major changes in your life, you should always go back and update your will. In some cases, the law may force you to do so, as there are some provinces which revoke your current will when you marry. However, in the case of a divorce, your will is not automatically revoked. It’s a good idea to see your lawyer and update your will if:
While all this information may be overwhelming, creating a carefully considered will is incredibly important. You worked your whole life for the things you own — you should dictate where those assets go. Working with an experienced estate attorney can dramatically reduce the stress and effort of creating a will yourself. At Lawbrokr, we provide a platform that allows users to browse a database of estate lawyers to find the perfect match for their situation. With simplicity and convenience, Lawbrokr is changing the landscape of client-lawyer relationships.