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A legal will is worth the time and money Add to ...

Maureen Daigle’s brother died in July of 2010, two weeks after getting remarried.

The 64-year-old Barrie retiree had a will. He had written it just two years earlier, at a time when he had not been contemplating marriage, and left his estate to his only child, an adult daughter.

So Ms. Daigle and her niece were stunned to find out that the act of getting married had revoked his will and that his new wife would inherit most of his estate.

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Not many Canadians know that in all provinces except Quebec, getting married will render your will null and void, unless your will is made in contemplation of the marriage or your new spouse accepts the will on your passing.

Ms. Daigle has made it her personal mission to change that law, which she says no longer meets societal needs.

“We see this all the time. People who think they have a valid will in place when they don’t,” says Robyn Solnik, vice-president, will and estate consultant for RBC Wealth Management.

She says it is worth it to take the time and spend the money on a proper legal will. “It is a very important document and if it is not done right, you are not going to be there to fix it.”

Ms. Solnik provided us with this list of top mistakes people make when will planning:

1. People fail to recognize the importance of having wills and powers of attorney in place and leave it until the last minute, such as when they are going away on holiday or for surgery. It is important to do the planning when a person has the requisite capacity to do so.

2. People do not regularly review their will and powers of attorney. A person’s circumstances change, as do laws, so reviewing your estate planning documents is crucial.

3. People do not communicate with their various advisers the estate plan set out in their will. As a result, the ownership of the investments and beneficiary designations are not always consistent with their estate plan.

4. People do not always consider family dynamics when implementing their estate plan, appointing children who do not get along as co-executors or co-trustees. Try to design a plan that will reduce the potential for conflict among family members.

5. People fail to appreciate that proper will and estate planning entails more than just preparing a will. A lawyer will review a person’s financial situation, their ownership of and value of assets, and thoroughly discuss possible income tax, estate administration tax issues to ensure a client’s expectations will be met. A lawyer will meets the formal legal requirements.

6. Although probate is an important consideration, a person can compromise their wishes or unduly complicate their planning in an effort to save this relatively modest tax. For example, the joint ownership of investments or other assets with children can lead to uncertainty. A person may also be surprised to learn that all owners of an account that is registered jointly with right of survivorship have access to the account during the person’s lifetime.

7. People do not anticipate the tax implications of their will. For example, if a family cottage is left to a particular family member, he will receive the realty. But any tax triggered by the deemed sale of a cottage will be the responsibility of the general estate. Similarly, if a person is designated as beneficiary of an RRSP, the beneficiary will receive the proceeds while the general estate is responsible for the payment of any tax.

8. People fail to appreciate the importance of powers of attorney, or mistakenly believe that it is included as part of the will. In reality, they are different documents.

9. People do not consider the implications of appointing an executor who lives in another country, which can create problems as simple as whether this person can afford the time to travel to settle your estate.



Roma Luciw is the web editor of the Globe Investor personal finance site and writes for the Home Cents blog. If you have an idea for a set of personal finance tips, email her.

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