Do you have a will, or are you setting for the one the government gave you?

March 12, 2021

No one likes dealing with the inevitability of their own death. And when you combine the thought of death with the task of getting organized and dealing with lawyers, it’s no wonder fewer than 50% of Canadians don’t have a will in place, and of the almost 50% who do, many are out of date. If you are one of these people, let me share some wisdom: Nothing can destroy a family faster, and make your family hate you when your gone, than leaving a disorganized estate.

Not having your house in order can lead to tremendous amounts of work, misunderstanding, insecurity, arguments, and pain. After all, it combines grief, administration, taxes, and family dynamics, and money into what could be a huge jumbled mess.

The government doesn’t ask what works best for you

In case you are wondering what happens if you die without a will, yes the government has an answer. If you die without a will, it means that you died intestate, which means the ownership of your assets is dictated by this little-known law that tells you who gets what and is a simple cookie-cutter solution that takes no consideration for your personal situation.

If you die intestate the person(s) who inherit your assets are as follows:

Married without children: Your spouse
Married with 1 child: the first $200,000 to your spouse, and then 50/50 between the spouse and the child, with the ministry of justice controlling the child’s share if they are minors.
Married with 2 or more children: the first $200,000 to your spouse, and then 1/3rd to the spouse and 2/3rds to the children, with the ministry of justice controlling the child’s share if they are minors.
No spouse or children: Your parents inherit everything
No spouse, children, or parents: Your siblings inherit everything
No spouse, children, parents, or siblings: Your nieces and nephews inherit everything
No spouse, children, parents, siblings or nieces and nephews: Your next of kin inherit everything. It doesn’t matter if it’s an uncle, aunt, cousin, or 3rd cousin twice removed who you have never met. The closest family member gets it all.

Leaving it to the government means three things.

First of all, the money may not go to who you want it to. Without a will, it is entirely possible that someone you have never met, or for that matter, someone you don’t like could inherit part or all of everything you own. Not having a will in place is leaving it all to chance.

Secondly, even if the people you want to have your assets inherit them, they may not inherit what you intended. Consider a situation where you have a spouse and a child. Your spouse may need your entire estate in order to support the family lifestyle, but if a child inherits 50% of anything over $200,000 this could seriously jeopardize the spouse’s ability to support themselves because the amount inherited by the child must be used to preserve and support the child, not the parent. And just to make sure it is, the government oversees it.

Lastly, as stated above, the government may get involved in in its management. This leads to all sorts of unintended consequences. Think about what would happen if a house was owned in one spouse’s name, they died, and the children inherited 2/3rds of any amount over $200,000 if happened the ministry of justice would have a say in the sale and management of the value of the home. This is both time-consuming, frustrating, and adds a level of complication to your basic personal affair until the children turn 18.

If you think a will is expensive, try dying without one

One of the key detractions for many people is the cost of a will. That said, most people say that with no idea of what it will cost. But if you think any of the below prices are high, keep in mind, a good estate lawyer will not only create your estate documents, they can also save you money through some basic tax and probate planning, thereby paying for themselves.

As with many things, the cost depends on complexity. There are a handful of online legal will kits now, that for the simplest of cases, can work very well. They cost as little as $100-150/person.

However, if you need something more complicated then you will need a lawyer, and these online will kits will tell you as much. Good estate lawyers charge in the neighbourhood of at least $750-1,000/person for estate documents. But let me warn you, this is one area you don’t want to cheap out on.

If you have a more complex situation that requires planning for corporations, trusts, disabled children, or other issues, then you are likely looking at a bill of over $2,500-$5,000/person. But if you’re paying that much, it’s because you have the assets to justify it.

And if you think any of the above is expensive, try dying without a will. Cases like that can end up costing in the tens of thousands or more.

Do your family one last favour

One area that does not get enough consideration is the impact of the lack of an estate plan on the family. It can truly sour their memory of you at a time they that they are deeply grieving. At the end of the day, estate planning is not something you do for yourself, it is one last act of love and consideration for those you leave behind. Do them that favour, save them the additional pain, and give them one more reason to look back with love.