Getting Your Estate Documents Done
No one likes to think of their own mortality and getting your estate documents done is probably one of the least fun activities out there. Personally, it took me about a year to have my will and POA documents done and signed. Part of that roadblock might be that the average cost of seeing a lawyer and having those documents done is $1000. However, the cost of dying without a will for your family is usually far more.
Dying without a will – otherwise known as intestate – means that your assets are distributed according to provincial law. Some provinces have everything go to a surviving spouse while others give a portion to children immediately. With no spouse or children, it goes to parents and siblings first, then grandparents, and finally aunts and uncles if there is no immediate family. Inheritance for a person under 18 is usually administered by the Public Trustee for a fee until the beneficiary is old enough.
A survey in 2018 found that 51% of Canadians do not have a valid signed will.
The administration of an estate without a will tends to drag out and pile up in costs. First, one of the family members needs to volunteer to administer the estate and may need to put up bond to personally guarantee that they will do it properly. This step alone can drag out and in the meantime, the deceased’s bank accounts and assets are all frozen. If a deceased person owned a business, this is especially bad. Secondly, the court needs to determine who the beneficiaries are going to be and there can be family squabbles over that. All this goes to show that it is better to have the will done ahead of time.
The main steps in getting a will done is to pick an executor/administrator, determine if there are any specific gifts you want to give (like a lump sum to charity), and then divide whatever is left in the estate pot between named beneficiaries according to a percent. For instance, you might have three children and no spouse, so the estate pot would go 33% to each child. You also need to think about who would get a person’s portion if they died before you. For example, if one of your children pre-deceased you, would their portion go to their children or to your other surviving children?
Picking an executor can be difficult. You want someone trustworthy and decent at administration. It is best to pick someone who lives reasonably close since the job of an executor often includes sorting through household items and visiting banks. Don’t pick someone who lives in the USA if you can help it for reasons too complex and annoying to get into. If you pick a family member, remember that being an executor can be a lot of work so they should be allowed to take a fee from the estate over and above their inheritance. If you use a trust company as executor, they will tell you the fee calculation ahead of time and you will need to approve it and add clauses to your will permitting them to have certain rights and abilities. You can also name an alternate executor in case your first choice can’t do it. In my experience, most spouses will name each other as the main executor and then maybe another family member as alternate.
Power of Attorney documents are also highly recommended and come into affect while you are still living if for some reason you are unable to make certain decisions or do certain tasks. The Power of Attorney for property allows a named person to run your finances and pay your bills for you. They can’t change your will or beneficiary designations, but can otherwise do most financial things for you – which means you need to name someone trustworthy. The Power of Attorney for personal care, otherwise known as representative for personal care, names someone to make medical decisions on your behalf if you can’t. You can spell out your general wishes like “Do not resuscitate” to help guide the decision maker. Most provinces provide the default forms for these so you can complete them without a lawyer if you so choose. The link for the province of BC’s forms can be found here: POA for BC
If you know exactly what you want in your will and if your situation is straight-forward, you may consider using a will kit instead of having a lawyer draft the will for you. I still recommend sitting down with a lawyer for a review once you have a draft that you are happy with. There may be things you missed or didn’t think about. The benefit of a will kit is that it is far less expensive than seeing a lawyer and in every province except Quebec, you do not need a lawyer or notary to sign your will; you can use friends and neighbours as witnesses. For a user friendly online will kit, try LegalWills.ca
Estate planning, however, is not just about getting your documents done. For instance, a person may have more taxes at death than at any other time during their lives? How should that be planned for? Who should care for children and hold children’s inheritance in trust until they are old enough? What about accounts like the RRSP and TFSA where you can name beneficiaries directly on them so that they don’t even go through the will and the estate? For these considerations and others, feel free to contact me for a free initial consultation to discuss your estate planning.