No one likes to make plans for an untimely death, particularly for it striking tragically at a young or middle age.
But taking the time to put together a proper will is an essential part of sound financial planning, says Sara Plant, vice-president of wealth services at BMO Harris Private Banking. It's also considerate to your loved ones.
"You want to make sure you are not leaving your family members in a mess," she says.
Not having a will can trigger higher costs, avoidable delays and even potential squabbling among family members as to who gets which parts of the estate. If people have small children, it is essential for them to have an updated estate plan that chooses a guardian for them, as well as instructions on how and when the parents want the children to receive their inheritance.
Ms. Plant joined us at noon (ET) for a live online discussion. Your questions and her answers appeared in the space below.
Ms. Plant graduated from Queen's University law school in 1988 and has since completed tax and wealth preservation courses, as well as the Canadian Securities Course. She left her private law practise to join the world of private banking in 1994. At BMO, she specializes in the areas of estates and trusts, and prior to her current role was part of the senior management team leading the GTA Wealth Services group in its provision of estate and tax planning services.
She lives in Toronto with her husband and two children and has a current will because they love travelling, skiing and tidal bore rafting.
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Sonali Verma, Globe Investor: Hello, everyone, thanks for joining us today for this discussion on estate planning and writing a will. Let's get started.
Average Tony writes: I would like to see comments about the do-it-yourself will kits.
Sara Plant: It really depends on the kits. Some are more helpful than others.
I am not a big fan of kits because if people try to go beyond very basic planning in their will, the kits often don't accommodate their intentions. For example, if you felt that a trust was needed for someone, because it would not be appropriate for them to receive the money all at once, there is special wording that needs to go in the trust paragraph. The "Average Tony" usually doesn't have the knowledge to word it properly.
So if your wishes are really straightforward, a kit is better than no will at all. But going to a lawyer to have one drafted for you is still the best route.
Walter writes from Toronto: I have two married daughters - one with children and one who will likely never have children. When the childless daughter dies her estate will go to her husband, and eventually to his family - who don't need the assets. How can I design a will so her assets will eventually go to her nephews and nieces - our grandchildren?
Sara Plant: That is a tricky one. If your will gives a share of your estate outright to her, you no longer have control over who she wishes to benefit from her estate, should she pass away.
The only way to really control the "path" of your estate is to hold your daughter's benefit in a trust rather than paying it outright. She could earn an income from the trust for her lifetime and perhaps have access to some of the capital, but when she passes away, the trust in your will reads that any funds remaining are to be paid to your grandchildren.
James MacNeil writes: Within the laws of Quebec:
1. Is my hand written will, witnessed by a person who holds no staeke, not notarized, as valid as one made by a notary or lawyer?
2. Would my executor run into any kinds of problems when he/she attempts to probate it? Given that my will is straight forward, no trusts, no million-dollar, no overseas property, estate
3. Is it valid to say "I hereby cancel all my previously written wills. This is my last will dated Nov. 9th 2009"
Sara Plant: I'm afraid I am not a lawyer trained under the civil code, which is the system used in Quebec, so I can't confirm question number one.
However, I can say for question number 2 that if a hand written (or holograph will) is used in any province, there could be problems with how it is worded and the court may need to get involved to sort it out.
So there is always a risk, even with non-holograph wills, that probate could be delayed if it needs to be dealt with in the courts. And as for question number 3, that wording should be fine. It clearly revokes any prior will and states that this one is the most recent.
D Bird writes: My partner and I are planning to update our wills now that our children are independent. We would like to split our assets between our children, grandchildren and various charities. Would we be wiser to leave each a percentage of our assets or specific amounts or some combination of the two.
Sara Plant: Good question. All three approaches work, but it depends on a few things.
If you divide it up into percentages, the amount that is received by your beneficiaries remains constant proportionally. The proportion vis a vis the other beneficiary will stay constant over time as your assets change in nature and value.
A fixed sum for each beneficiary is more limiting. It is harder to divide it all up, as your assets change over time and you don't want to have to constantly change your will to keep the numbers current.
The other part to consider is how much you want to give. If your grandchildren are to receive a "notional" amount compared to the others, for example, the amount is often expressed as a legacy or cash gift of a fixed amount. The remainder (the residue) is then divided up by percentages.
Sandra Dodds writes: Is it better to appoint one executor or two? Do they need to live in the same city as I do and should the executors also have power of attorney?
Sara Plant: It really depends on who you have in mind. If the one person has the time, the interest and the skill to do the job, then one executor can be quite efficient. If however, that person could use extra support, or may need help with family dynamics, or may be elderly, appointing two executors to work together may be the better option. They do not need to live in the same city as you. But the other factors I raised above may influence your choice if the person is far away.
As for acting as Power of Attorney, the same person chosen as your executor is often chosen as the Attorney. But not always. Again, it depends on the person you have in mind, and if they would be appropriate for both roles. We often find one person appointed as Attorney for financial matters and another one for health care matters.
Belsize Park writes: As a Canadian living in the USA, is a will that I had done In Canada a few years ago still valid with regards to assets on both sides of the border?
Sara Plant: It could be a struggle probating a will prepared in Canada in the courts in the U.S. The will may still be "valid" but the process to have the state recognize the will can be challenging.
To avoid delays, and potential administrative problems, it is best to have a will prepared where you live. Estates are administered according to where you are 'domiciled" (or generally live). You could then have a second will for your Canadian assets, or rely on the U.S. will to deal with your assets here in Canada when the time comes.
Larry Kozy: My question involves international legislation, if it applies in our situation; I am a Canadian citizen, my wife holds permanent residence in Canada. We are currently living and working in South America as ex-pats with our two minor children. We hold real estate both in Canada and Ecuador, and the majority of our financial holding are in Canada.
How can we best design our will to meet legislation from both countries, and what challenges do we face as not currently living in Canada?
Sara Plant: Those are significant estate planning issues, and, unfortunately, beyond this forum to cover. However, you will likely end up with wills in each jurisdiction or perhaps an "international" will. I suggest you speak with an estate planning lawyer who is familiar with international planning to help coordinate the process.
Wes Johnson writes: I'm a single 24-yr old with no dependents in the process of buying a condo. In the event I pass and my mortgage is left to be paid out of the residual assets of my estate / company's life insurance policy, and my estate cannot cover it for any reason, can my bank chase after my relatives for payment? No one else was named on my mortgage application.
Sara Plant: Under this scenario, no, your relatives will not be held responsible for your outstanding mortgage.
Ari Up writes: I've been putting off doing a will simply because the cost I've been quoted by lawyers in Ontario is nearly $1,000. This seems to me an exorbitant amount to draw up the paperwork for a straightforward will with a guardianship for minor children. Almost all of the assets I will transfer are in things with a designated beneficiary already (RRSPs, life insurance, etc). But I do want to have a will to make the process go smoothly.
So my question is: what is the cheapest way to do this that ends with me having a clear, legally enforceable will? I can stomach paying a couple hundred bucks, but $1,000 or more seems ridiculous for someone like me who doesn't own much beyond the middle-class basics.
Sara Plant: I can certainly understand your concern. As a first comment, there are lawyers who charge less than $1,000, so you may want to research that one a bit. But as for the amount spent, keep in mind that a will done correctly does not need to be changed frequently. It should be drafted in a way to remain relevant for you for about 10 years (unless there are major changes in your life). A $1,000 will becomes one that is about $100 per year.
Think of it as part of your insurance for the future. It is worth having a will prepared professionally, particularly where children are involved and you want to make sure they are provided for and cared for properly when you are gone. If you are still not comfortable, a will kit is an option.
Seonaid writes: I am a Canadian living overseas and my husband is a not Canadian. Does it matter where I have a will drawn up? Is the will recognized anywhere - from where I am living, to my husband's homeland to Canada? Thanks!
Sara Plant: You should have a will drawn up where you live. Whether the will is "recognized" in other parts of the world depends on those particular jurisdictions. Sometimes you may need another will to deal with the assets in the other jurisdiction.
Craig Sabasch writes: I am a 48-year-old with no dependants - I know it will make things easier for my immediate family if I had a will, which at this time I do not have. So if I accidently died tomorrow - they insist that the government will get involved and "take my money" if I have no will. I don't think this is the case as I have living immediate family.
Can you advise me if that is the case? I do plan on getting a will done soon, but this is an argument I have had with my mother for years!
Sara Plant: It's a common argument, too! The rules for how your estate would be distributed if you die without a will depend on the province in which you live. If you die without a will, the courts usually become involved to make sure someone is appointed as your executor who can legally administer your estate. Then your executor must follow rules set out in legislation for how your estate is to be distributed to your beneficiaries.
In your case, the government will not "get all your money". However, they may get more than what they would have received if you had done a will and a bit of planning.
Sonali Verma, Globe Investor: Many thanks to everyone who joined us today. And special thanks to you, Sara, for sharing so much of your time and expertise with us. We really appreciate it.
Sara Plant: Thanks to all for your interest and questions. Happy will planning.
Sonali Verma, Globe Investor: Thanks! And please join us again on Thursday, when we'll have TD's Patricia Lovett-Reid taking your questions on keeping you financial plan on track. That's at noon (ET) as well.