Why Is it Important to Plan for Your Death?

Regardless of how well and healthy you feel today, we are all going to leave this world at some point.  It is true that the only certainties in this world are death and taxes?  Let’s discuss these two inevitable topics. 

Hopefully by the time you die, you have accumulated some assets.  If you have a Will, your assets will be divided according to that document.  If it does not name the people you wish to leave money for  and was prepared before a change in circumstances took place, shame on you for not keeping it current. 

No Will?  There is a formula for that, and it may not fit your circumstances.  The law abides by the table of consanguinity so that your blood relatives, in order of closeness, split your hard earned savings. 

Common-Law spouses as well as stepchildren do not qualify.  Their remedy is to file a claim against the estate, which is both time-consuming and expensive.  The estate cannot be settled until the claim is settled, so the estate will sit open until the situation is resolved.  The estate may be required to reimburse the legal fees of the claimant if the claimant succeeds. 

When you meet with a lawyer to talk about preparing a Will, the lawyer is going to ask many questions about your family. Are you married?  Common-law? Children? Dependent children?  Financial obligation to pay child support?  Alimony? It all matters and your answers will impact how the document will be drafted. 

Also necessary is a discussion about your assets and debts.  Do you own a home? What is your equity position? Do you have credit card debt?  A car loan?  Investments?  Having a summary of assets and debts prepared to take with you to a discussion about your Will is a good way to not overlook important items. 

Married couples have a statutory obligation to ensure their spouse receives the first $350,000.  The term for this is “preferential share” and every legally married spouse is entitled to this, regardless of the length of the marriage. What assets form part of the estate should be discussed as joint or beneficiary designated accounts, property or investments will not become part of the estate if care is taken with ownership and beneficiary designation. 

The other item to mention is taxes.  The Estate Trustee is obliged to pay the debts of the decedent to the extent they are able with estate funds.   There is no duty on the Executor to pay any debts of the estate personally.  If the debts and taxes leave nothing to distribute to beneficiaries, that’s the way it will be.  This is on the basis that the executor is able to account for all of the money spent to settle estate debts.   

Distribution of estate money should not be done until the executor has filed and paid taxes owing by the estate.  Once the tax bill has been paid, a clearance certificate can be requested confirming tax obligations have been met.  This is a major part of the delay executors need to deal with while holding off beneficiaries.  After the clearance certificate is obtained, the executor must provide an accounting summary of estate funds to each residual beneficiary, and get a release signed confirming the accounting is accurate, and the executor’s job was well done and complete. 

Estates are complicated.  Start thinking about your situation now and contact us to make an appointment to get your Will started.