Spoiler alert: We are all going to die.
If you care for your family, you’ll have a will. If you don’t, you won’t.
And if the estimated numbers are even remotely close to being true, it appears a lot of people out there don’t care about their families.
Statistics show that only 50 per cent of Canadians have a will. So, what’s the big deal? Because 100 per cent of Canadians are going to die.
There, we said it.
The most common reason people cite for not having a will is they don’t want to talk about their own mortality. What’s to talk about? That old expression from Benjamin Franklin–“nothing in this world can be certain, except death and taxes”–will always ring true. So, pay your taxes and prepare for the inevitable by getting your will written up.
Other reasons cited for not having a will are not understanding the process or thinking that it’s too complicated to tackle. Depending on how elaborate your financial matters are, getting a will written shouldn’t take more than a few hours and your bill will likely be between $1,200 and $1,500. If things are pretty straightforward, it could be even less.
Wills 101
What is a will? A will is a document that stipulates the disposal of your property after you die.
What is power of attorney? This is a document authorizing someone you trust to handle your legal and financial affairs should you no longer be able to manage them yourself.
What is a healthcare directive? Also known as a living will, a healthcare directive outlines your specific instructions for medical treatment you want or don’t want performed in the event you aren’t able to communicate them yourself.
What is an executor? This is the person named in your will who will administer your estate.
What is an estate? This is all of your real estate and personal property, including investments.
But people avoid wills like the plague. The superstitious think that writing a will can somehow bring their death closer. Many others simply believe they’re not going to die for a long time and they’ll get to the will later. Probably much later.
But on the off chance you get hit by a bus next week, experts are adamant that writing a will is one of the most important things you can do for your family.
If you don’t have a will when that bus runs you over, you’ll be deemed to have died “intestate.” That’s a fancy term that means “the law will determine where your legacy will go.” This includes your house, cottage or other properties, bank accounts, investments, your pets and other valuables you acquired during your life. It also means you won’t be able to make donations to your favourite charities.
After working so hard and for so long, do you really want to leave your legacy in the hands of faceless bureaucrats?
Ron Malech, a senior investment counsellor at Cardinal Capital Management, thinks the studies that show half of Canadians have a will aren’t telling the whole story.
“There’s a large percentage of people who have wills that are so far out of date that they don’t work any more,” he says. “Either their executor is no longer alive, they’ve gotten married or divorced, or both. Most people under 40 don’t have one or they don’t think they need one until they’re 40 or 50 or until they recognize their mortality.”
Dying intestate creates nightmares for survivors, particularly if they’re children or young adults having to relive their parent’s death while dealing with a seemingly never-ending stream of paperwork for pensions and insurance.
“The courts decide how your estate will be disbursed based on Manitoba law. You spend your whole life building up assets, why wouldn’t you want control over that?” he says.
There are typically three stages in life when people want to make out their will – they’ve just gotten married or started a young family; they’re nearing retirement or have retired; or they’re dying.
Even if you have a will, you should review it every five years, says Aaron Maister, a partner at Winnipeg-based law firm, Pitblado Law. It’s all the more important if you’ve had a significant life event, such as getting married, having kids, getting divorced or relocating for work. As you get older and go through some of these events, your wishes can change.
“A marriage revokes a will. Unless you make your will in contemplation of your marriage or your common-law relationship, as soon as you say ‘I do,’ your old will is revoked,” he says.
For business owners, the biggest benefit of a will is the planning that makes for a smooth transition of your company’s assets, Maister says.
“A will allows for succession planning. Who do you want to receive the shares (of your company)? Who receives what? You may put controls on the business, such as who steps in to manage the business in the interim,” he says.
“If you’re on your second marriage but want the shares to go to your children (from your first marriage) while also taking care of your current spouse, you can create a spousal trust. A will also allows you to name an executor of the estate, the person who could carry on the business, if need be,” he says.
Business owners without a will run several risks, including having the “wrong” person take over their business when they die.
“You don’t want the wrong person running the company,” Maister says. “You want to dictate who is going to take over and how that will be addressed. The risk is there’s an interruption to the continuity and control of the business and you’re not planning appropriately who is going to carry the business forward.”
For example, if a mother and daughter run a Manitoba-based business together from Winnipeg and Ottawa, respectively, but the mother dies without a will, the enterprise could be turned upside down, particularly if there are other siblings. The mother may have intended for her daughter to take over but because she isn’t a Manitoba resident, she isn’t eligible to be the administrator of the estate. Then the son, who does live in the province, could enter the picture through her estate and assume control of the business.
“You can avoid situations like this if you had simply planned properly in your will,” he says.
Maister highly recommends involving your family in your will discussions because it can avoid a lot of problems in the future that, in all likelihood, you won’t be around to help mediate or fix.
“Some people don’t want to talk about it with their family because they don’t want them to know what they’re doing or they’re afraid they might not like it. It’s possible they just don’t want to have that fight while they’re alive and they’re content to let their children fight about it. I think it’s much better to communicate,” he says.
Another benefit of chatting about your will with your family is the opportunity to clarify your intentions.
“You can make sure everybody knows what’s going on and if anybody has any concerns, you can address it while you’re still alive,” he says.
Sheila Wilson-Kowal, portfolio manager at Cardinal Capital Management, works with clients who spend years saving and building wealth so they can live out their golden years in comfort and style. As your investment portfolio grows, she says it’s increasingly important to have a will.
“Sometimes things don’t go according to plan and people can pass away before they reach retirement. Whatever your age, it’s important to have a will laying out how you’d like to see your wealth distributed to protect your beneficiaries should the unexpected happen,” she says.
“Dealing with the loss of a loved one is hard enough as it is and if your finances can be one less thing to worry about, that helps in the healing process.”
Wilson-Kowal notes that investment portfolios can have a multi-generational timeline designed to meet not only your income needs but also those for your children or grandchildren.
“The process of preparing a will can also be helpful when it comes to working with your advisor on how to structure your investments.”
