No will, many obstacles

In 2012, 56% of the 2,000 Canadians surveyed by the Lawyers’ Professional Indemnity Company didn’t have a will. Other surveys have found similar results. What that means is that rather than leaving their heirs an inheritance, the majority of Canadians could be bequeathing their offspring a ticking time bomb.

The financial issues associated with dying without a will (also known as intestacy) begin almost immediately: all accounts are frozen, so family members may have to pay bills or cover funeral expenses out of their own accounts until an administrator or executor is named.

Most wills transfer the estate to the surviving spouse. But if you don’t have a will one, various provincial laws dictate how much the spouse and any surviving children receive. Nova Scotia, for example, asks the surviving spouse to elect to receive either the first $50,000 of assets or the matrimonial home, while the rest is divided equally among the deceased’s heirs. But that may not be enough for the spouse to live on.

Long-simmering family feuds could also come to a head during negotiations to equitably divvy up the assets, requiring mediators and lawyers to get involved, often at great expense.

“I tell clients, ‘I don’t think your parents wanted me to get more of the estate than you would get,’” says Melanie McDonald, a Calgary-based estates and wills partner at Borden Ladner Gervais.

Which is why it’s important to draft your will, and discusses your wishes with your family. Dave Lougheed, a Calgary-based investment advisor with Macquarie Private Wealth, encourages his clients to talk to their aging parents about estate planning so the parents can have “a vision of what life can look like afterwards.”

One more bit of advice: if you’re drawing up a will for the first time late in life, you’re wise to ask your lawyer to make notes about your mental state and capacity to ensure it’s not contested later on.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.