The fees involved in writing your Will may be an obstacle to getting it done. However, you may be surprised to learn that dying without a Will could cost your estate even more in legal fees and missed opportunities. November is Make a Will month for many Canadians and Kim Parlee talks to Georgia Swan, a Tax and Estate Planner with TD Wealth, on how a Will can actually save you money in the long run.
GEORGIA SWAN: Absolutely, cost. That is, I think a lot of times, that's also foremost in people's minds. When they do go to get a will, they get this piece of paper and they have to pay money for it and they think, wow, was that really worth it? And I have to say, it's some of the best money that you could ever spend. Because if you don't have a will and you die, what's known as intestate, it will invariably be more costly for you.
First of all, there will most likely have to be a court application to appoint an executor. You'll have potentially situations where there has to be lawyers involved to ascertain who your beneficiaries might be, and what their entitlement is. Of course, the uncertainty of somebody passing without a will can create conflict within families, disputes, and ergo, delays. Because until all that stuff is dealt with, the estate can't proceed to be administered. So those kinds of things will always add to the cost of the administration of any estate. So it will always be cheaper to get things done properly from the beginning, so that you don't leave all of that uncertainty for after you pass away.
KIM PARLEE: Number two is that, just to make sure that what you want to have happen, could actually happen. Because if you don't say, then you're pretty much assured it won't happen. So it ensures your intentions are met.
GEORGIA SWAN: Exactly. So each province has its own formula for how assets are going to be divided if somebody dies without a will. And certainly in circumstances, for example, where you pass away with your spouse, you pass away and you leave behind a spouse and children, most people often believe that, well, it's just all going to go to my spouse. But that's not the case in most provinces. A lot of times it gets divided between your spouse and your children.
So that could leave a spouse, for example, in dire financial circumstances, because some of the money goes directly to children. And then if you're dealing, perhaps, with children who are minors, do you really want a child, eventually when they're 18 or 19, actually inheriting the money? So it basically takes away your ability to plan for what you want in a clear manner so that everybody knows where they stand and what they stand to receive and how.
KIM PARLEE: Number three is making sure you get to choose your own executor, who gets to say what's going to happen.
GEORGIA SWAN: Absolutely. Choosing the executor or the function of the executor cannot be understated. I mean, that is the person that's responsible for administering your estate, getting information that might be necessary in order to be able to administer the estate. And if that person is not in place, then first and foremost, almost anybody can actually apply to be the executor of somebody's estate.
So the court may approve somebody that maybe you would not have wanted to actually be the person to do it. I've had situations, for example, where somebody has died in the middle of getting a divorce but before it had really proceeded. So now somebody who was poised to be the ex spouse ends up applying to be your executor. So that is one of the most important issues, and because then you can choose who is the person that's going to be able to receive the necessary information and administer your estate the way you want to see happen.
KIM PARLEE: This fourth one, I think, is interesting, it kick starts your estate plan. So I think it's also the idea that you're getting ready to put this paperwork in place for when you're no longer here, but it actually starts conversations about what you can do right now too.
GEORGIA SWAN: That's right. So an estate plan is often more than just a will. So it encompasses also powers of attorney for property and personal care, which are the documents that basically you name somebody in to make decisions for you if while you're alive, you become incapable of making either decisions about your physical health and well-being or your finances. So when you go into an experienced lawyer to get your will drafted, it also prompts the conversations of getting your powers of attorney done in the event of incapacity. And then on top of that, it forces you to look at some of the other documents that may actually play a part in your estate planning.
And a lot of people don't think of this, but for example, marriage contracts. Sometimes the goals that we have for estate planning lead us to the need to actually create contracts between ourselves and our spouses. Business contracts, so ideas of shareholders agreements and partnership agreements can often have estate planning clauses in them.
If you're cohabiting with somebody, again, the idea of a cohabitation agreement or what needs to be put in place beyond just the wills and powers of attorney. And then also the all important tax planning. It makes you look at not only year-over-year tax planning that you might be doing, or you should be doing now, but also tax planning that maybe you want to put in place to alleviate some of that burden to your estate. So it creates an opportunity to take a holistic approach at all of these things across the board so that you can make sure that all of the documents and the agreements that you should have in place are put in place.
KIM PARLEE: Georgia, I've only got about 15-30 seconds for this one, but this is just, I'll say, the will does benefit your family how?
GEORGIA SWAN: Certainty. It benefits them financially because then money is not diverted to deal with disputes, to deal with the mess that can be left behind. And especially if you're dealing with situations of second marriages, things are so much more complicated, our society is so much more complicated now. So basically, getting this done is the biggest peace of mind that you can give to your family and to yourself.
KIM PARLEE: Georgia, always sage advice. Thank you so much for joining us.
GEORGIA SWAN: Thanks Kim, good to see you again.