Why Make a Will?

By: Bryan J. Peters & Cassandra Bueckert

Most people know that making a Will is important, but oddly enough, only about half of all Canadians (55%) have a Will and even less (40%) have a Power of Attorney.[1] While Estate Planning rarely makes it to the top of one’s priority list, having a proper estate plan in place will provide you, your loved ones and your friends with peace of mind knowing that your affairs have been appropriately considered.

A Will is a written document that controls the disposal of a person’s property after death. It allows you to state what should be done with your property, who should be appointed to represent your estate, provides you an opportunity to express your final wishes and ultimately makes things easier for your loved ones after you pass away.

Here are a few reasons why making a Will should be moved to the top of your priority list:  

What Happens to your Estate without a Will:

If you pass away without a Will, Provincial Law will govern the distribution of your property and decide who should represent you. In that case your property may be distributed in a manner contrary to your intentions, as the law is inflexible and benefits only certain blood relatives. This is especially important for people with second or blended families, those entering new marriages or common-law relationships, those with minor children, step-children and those with disabled loved ones.

The costs to your estate might also be higher if you pass away without a Will, as a family member will need to make a Court application to be appointed as administrator of your estate in order to distribute your property. This application process creates bonding and surety requirements for the person applying to be administrator, which can be costly and time consuming. Additionally, the administrator must be a resident of Manitoba, so if you have limited family in Manitoba, this may pose a problem as to who can administer your estate. If you have no next of kin or no one voluntarily applies to administer your estate, it is possible that your estate won’t get administrated at all or a creditor may apply to settle your estate. Further, if you own property in another province (i.e. a cottage in Ontario), your administrator will also be required to follow the laws of that province. Problems can also arise respecting the disposition of other assets, such as business assets, farm land and personal effects (jewelry and heirlooms), which could create disagreements between your loved ones.

Overall, passing away without a Will makes settling your estate more complicated, uncertain, costly and time consuming, and may create unnecessary conflicts. Having a Will in place can eliminate the stress on your personal representative and helps ensure that the distribution of your estate goes smoothly and in accordance with your wishes.

Tax Savings:

Having a Will in place can also help to maximize benefits to your estate by possibly deferring capital gains taxes, making certain elections under the Income Tax Act and minimizing tax obligations. Planning ahead for tax implications at death ensures that your beneficiaries receive the most from your estate and that specific assets, such as houses, cottages, farm property and business assets, are transferred smoothly and in accordance with your wishes.

Minor Children:

If you pass away without a Will and you have minor children or grandchildren, any inheritance your children or grandchildren are entitled to by law must be held in trust for them and funds can only be accessed for the maintenance and education of the minor through a court order. When the child turns 18, the full amount of their inheritance will be released to them at once. Under a Will, trusts can be created which give a trustee the authority to distribute funds for the minor’s benefit prior to them reaching age 18, removing the requirement for a court application. You can also dictate under a Will, at what ages your child or grandchild is to receive their inheritance, such as 25% at age 20, 25% at age 25, and the remainder at age 30.

Guardianship Wishes:

Having a Will in place will also provide you the opportunity to voice your wishes as to who you want as guardian(s) of your minor children if you were to pass away before your children are adults. A guardianship clause allows you to designate individual(s) to care for your minor children in the event that both parents are deceased. It is important to note that while guardianship clauses in a Will are not binding on a Court, the Court is required to give utmost consideration to the parents’ wishes and these clauses are very persuasive, provided that the individual(s) designated are in the best interests of your children.

Common Disaster:

Having a Will in place also helps address “worst-case” scenarios. One of these worst-case scenarios is situations where both spouses or a parent and child pass away in the same accident. In these situations, where it may be impossible to determine who passed away first, the law will dictate how your property is distributed and it might be distributed in a manner contrary to your intentions. Having a Will in place with a common disaster clause is important in these scenarios. A common disaster clause will generally state who is to inherit and whether that person must survive you by a certain number of days to inherit. Therefore, any benefits that would have passed to the other deceased person now go to your contingent beneficiary instead. This prevents your assets from passing directly into the estate of another deceased person, which could result in those assets ultimately passing to a person not of your choosing and the same assets incurring taxes twice under two estates.

It is also important to remember that some assets pass automatically at death. If you have a life insurance policy or another asset such as an RRSP with a beneficiary designated, the proceeds of the policy or asset pass automatically to the designated beneficiary. Further, if you own real property (land) with another person as a joint tenant, the property passes to the surviving joint tenant simply by survivorship and on the filing of a death certificate and a Request form at the appropriate Land Titles Office.

As you can see, there are many benefits and reasons why a Will should be at the top of your priority list, regardless of your financial status. The drafting of a Will involves decisions requiring professional skill and judgement. We suggest that you review your particular requirements with your lawyer. Lastly, while your lawyer will work with you to make your estate plan as forward thinking as possible, life circumstances change over time. As a general rule, you should review your estate plan every few years and upon major life changes, such as a new marriage or common-law relationship, the birth of children or grandchildren, loss of a spouse/common-law partner and other lived ones, separation and divorce.  As when life changes, our estate plans need to change too.

[1] https://www.canada.ca/en/financial-consumer-agency/programs/research/canadian-financial-capability-survey-2019.html