Wills give you a say in who will administer your Estate, who will take care of your minor children and who will inherit your assets, subject to Wills Variation Act claims. These documents are basic organizational tools which every adult should use.
Considerations Before Making a Will
Some things to think about before making a Will include the following:
• Provision for beneficiaries: outright gifts, life estates or trusts. An outright gift is given to the named beneficiary after the Will is probated. A life estate gives the named beneficiary the use of the asset which passes to your other named residuary beneficiary upon the death of the originally named beneficiary. Trusts are most commonly used when leaving gifts to minors, disabled adults and children, with your executor overseeing the investment and use of the gift until the trust conditions are fulfilled and the trust is ended. Further you must consider who your beneficiaries should be. If you want to disinherit one of your children, simply not including them in your Will may not achieve this. Spouses and children have certain rights and they can enforce those rights by making a Wills Variation Act claim.
• Choosing executors and trustees: most commonly named are spouses, then adult children, then other family or business acquaintances. Least commonly named are corporate trustees, like a trust company, generally because of their administrative fee structure and lack of personal knowledge of your family.
• Choosing guardians: they will have the care and control of your minor children. Consider giving them housing allowances, which could include loans to enlarge a home which need not be paid back to the estate, and yearly gifts for overseeing your children.
• Designating beneficiaries under an RRSP: direct designations made on an RRSP or life insurance policy remove that asset from your Estate, so no probate fees are payable and the named beneficiary receives the gift fairly quickly as compared to waiting for the probate process to be completed.
• Income tax considerations: certain types of assets left to certain classes of beneficiaries can attract income tax or not. For instance, if you have an rental property that has appreciated in value at the time of your death and you leave it to a spouse, no income tax is payable by your Estate as your spouse receives the asset at your cost base, but if it is left to a child, the full capital gains tax would be payable by your Estate at the time of your death.
Consequences of Dying without a Will
As well be aware that if you die without a will, your Estate will be divided up amongst your family pursuant to the government legislated scheme set out in the Estate Administration Act.
Capturing the Big Picture
Our aim in assisting you with your Will is to help your achieve what you want after your death with a minimum of tax. Sometimes this will involve other Estate Planning techniques. Please click on the Estate and Tax Planning practice area for more information on these other techniques. Contact Us |
