By Terry McBride
If you die with an out-of-date will, your estate could end up going to the wrong people, taking years to settle and incurring extra legal fees.
The good news is that 85% of Canadian boomers, age 45 years and older with property of more than $500,000, do have a will in place, according to a study released in September by BMO Financial Group.
The bad news is that almost half of them have not re-visited or updated their wills in 10 years, potentially leaving their original legacy goals in a precarious state.
What if your appointed executor has died or become mentally incapacitated Who would manage your estate Your relatives might squabble for months until they can agree on who should apply to the court to administer your estate.
What if your executor is no longer a Canadian resident Although faxes, couriers and emails make distance almost irrelevant these days, your non-resident executor may be asked to post an administration bond before the court would grant permission to manage your estate.
Your will is automatically revoked after you marry or remarry. Without a valid will your estate would be divided by strict formula among your next of kin. Each province sets out a different formula.
Any bequests to your own children or your favourite charity would be ignored once your will becomes invalid.
Did you know that in Saskatchewan, your will is automatically revoked after you have lived common-law with someone for two years
Have you registered ownership of real property or your bank account in joint names with someone with right of survivorship
Have you named adult children as RRIF beneficiaries You may have done so deliberately to reduce probate costs by arranging for the property to pass outside of your will.
However, joint ownership and beneficiary designations can too easily make will bequests obsolete.
When property bypasses your estate, any income-splitting testamentary trusts that you established through your will may never be funded.
Has your net worth greatly increased because you received an inheritance or exercised some stock options If you are lucky, you can stop worrying about outliving your retirement savings and start planning how to leave a legacy.
Your lawyer or financial adviser may ask if you want to leave any money to your favourite charity.
BIRTH IN THE FAMILY
The birth of your first child should motivate you to book an appointment with your lawyer to draw up a will. Appoint a guardian to look after your baby in case both parents die in a car accident, for example.
Then, you could also name a trustee to manage the money from your life insurance death benefit and selling your house.
Years later, the birth of your first grandchild could inspire you to revise your will to include trusts for a whole new generation.
You should also consider the possibility that your child could predecease you, leaving minor grandchildren to inherit.
If one of your children has predeceased you, would you inadvertently disinherit orphaned grandchildren if your will says that only surviving children can inherit
What if you had bequeathed a special heirloom or the family cottage to a particular child who is now deceased
How easily would the surviving heirs agree on how to divide your estate property
BENEFICIARY'S MARITAL STATUS
What if there is a breakdown in the relationship between your child and partner Will your child's inheritance be split when family property is divided
It depends on the provincial statutes.
Call your lawyer to make an appointment to review your will.
Having an up-to-date will can make things easier, quicker and less expensive for your heirs.