With will kits available on Amazon for the meagre price of $35, writing down your dying wishes might seem like a rainy day, do-it-yourself project. But experts say the less time and money spent on a will by the deceased, the more the living will end up paying for it.
As the document that outlines what happens to your possessions and property, and who cares for your children, a will is a markedly important piece of paper. Without one, a person’s money and assets are distributed in accordance with provincial or territorial inheritance laws.
However, a 2023 poll by the Angus Reid Institute found that about half of 1,600 Canadian adults surveyed do not have a will. Another 13 per cent said they have a will, but it’s out of date. While the proportion of adults with up-to-date wills increases in older age groups, Angus Reid found half of Canadians aged 55 to 64 still don’t have a document ready to go.
This shortfall is particularly poignant amidst the great wealth transfer. According to the Chartered Professional Accountants of Canada, it’s expected to be the largest generational wealth transfer in Canadian history, moving $1-trillion from baby boomers to their Gen X and Millennial heirs between now and 2026.
Without a properly prepared will, there’s no guarantee a person’s wealth will end up where they intended. Pia Hundal, a partner at Bales Beall LLP, said many of the mistakes she sees could be prevented by seeking help from a professional.
“There’s a reason why lawyers specialize in this field,” she said, adding that people commonly rely on advice from the internet that doesn’t necessarily apply to the jurisdiction they’re in.
Not having your will written in accordance with the jurisdiction you’re in can lead to catastrophe, whether it’s owing to questionable internet advice or someone simply moving provinces, said Rose Shawlee, a lawyer at Boughton Law.
For example, if an executor lives in the States, they may have to disclose the bank accounts they control in their role to the Internal Revenue Service, which could be an issue for someone who prefers to keep their assets private.
Within Canada, estate rules also differ from province to province. In B.C., for example, a deceased person’s family can contest a will if they feel they’ve been wrongfully disinherited. But in several provinces, including Alberta and Ontario, this option doesn’t exist.
Probate fees, an estate administration tax paid to the government, also vary across the country. Alberta has a nominal probate fee of less than $600, Ms. Shawlee said, while B.C. and Ontario calculate the fees as a percentage of the estate.
“The steps people will take to move assets outside that regime, so they have a bigger inheritance to leave to their family, as opposed to the government, will change depending on where they live,” Ms. Shawlee said.
Geography also factors in when picking an executor for a will, or the person who will carry out the deceased’s wishes, Ms. Shawlee said. For example, if an executor lives in the States, they may have to disclose the bank accounts they then control, by way of being executor, to the Internal Revenue Service. Or if they live outside of North America, it may be difficult for them to appear in-person to deal with an estate.
In a perfect world, Ms. Shawlee said the executor would also be aware they’ve been named to that role well in advance.
“You should not hear about this for the first time when some random lawyer rings you up and says, ‘Hey, guess what you have the honour of doing?’” she said.
This gives the executor an opportunity to decline the role, or ensure that the person creating the will is including everything they’ll need to administer their estate.
For Ms. Shawlee, this means leaving behind what she calls a “death folder checklist,” which includes passwords, account numbers, adviser names and the name of the deceased as it appears on accounts.
And the executor should know where the will is kept, Ms. Hundal added. Sometimes people put their will in a safe deposit box, she said, thereby locking up the document that gives an executor the authority to unlock that very box. “It’s a catch-22,” she said.
Discussing a will with the beneficiaries can also help avoid posthumous conflict, Ms. Hundal said.
“We’re socialized to be private about our finances, but with succession planning, it’s really important, if possible, to be open about it with those that are going to be directly impacted.”
Editor’s note: (Oct. 1, 2024): A previous version of this article incorrectly stated that if a Canadian dies without a will, their money and assets are transferred to their provincial or territorial government. The money and assets of a person who has died without a will are distributed in accordance with provincial or territorial inheritance laws. This version has been updated.
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