Tuesday, April 10, 2007

Wills

During the 100th Post Contest, Ricardm suggested a topic of wills. A will can be a tricky thing in regards to its importance shifts around on you depending on your situation. Let's review a few different situations.

Situation #1 - Single and No Kids

Here a will is not as important for a lot of people since they have no dependents, yet it still can be useful. In this case it can be used to direct your estate to someone who may need it more than your parents (whom will typically get everything if you die without a will) such as a sibling. If you have no living relatives the government will take over your estate.

Situation #2 - Married and No Kids

In this case if you die without a will the spouse will still get everything, but in the event both of you die you will have no say on where the estate goes. Instead it follows the order in which you died. For example, if you die in a car accident and then your spouse dies later at the hospital the estate would go to your spouses parents. Your parents would get nothing. So a will in this case starts to become important.

Situation #3 - Married with Kid(s)

Once you hit this stage it is VERY important to have a will. Otherwise your kids could get part of your estate even when your wife is still alive [depending on your province your wife could get as little as the first $40,000 (in AB) up to the first $200,000 (in ON) before spliting the rest with the kid(s) - see here]. Also you have to determine who will become guardians of your kid(s).

In all of the above cases if you don't have a will the government will appoint someone to divide up your estate and charge the estate for the service. So in the interest of keeping the government out of your dead pocket you will want a short will.

Depending on your province you might be able to use a holographic will to explain your wishes (see here for where this works). A holographic will is written entirely in your handwriting and with your signature and date. It works well to provide a basic will in Situations #1 and 2 above, yet when you have kids you will likely want to see a lawyer about preparing a formal will.

That is a brief overview of wills, obviously you should do your own research by your province to determine what works for you, but in any case a will is generally a good idea to speed things along once your dead and prevent the government from taking more of your money. Good old death and taxes right?

10 comments:

MillionDollarJourney.com said...

Wow, this is an uplifting post for a Tuesday morning. ;)

Joking aside, great post. Learned a lot.

FT
p.s how was your vacation?

MillionDollarJourney.com said...

BTW, if spam is becoming an issue in your comments, i've seen other "blogger" blogs with "verification" text strings before they post a comment. Perhaps something to look into.

FT

Canadian Dream said...

FT,

Vacation was great. A bit too much driving involved but otherwise I enjoyed myself (ie: eat too much).

I didn't include the option of "verification" text in the comment options post because I hate them myself. I would rather shut down this blog than use them. (Yes I hate them THAT much).

CD

Canadian Money said...

CD

Do you know if a will from one province is valid in other provinces? I presume it is but you never know.

Middle Class Millionaire said...

Hi CD,

Great post on a subject that I really didn't know a lot about.

I am going to be writing a will in the near future. Do you know anything about the validity and effectiveness of those "Will Kits" that you can complete at home?

Cheers,
MCM

Canadian Dream said...

CM,

If the will was prepared by a lawyer it would likely be valid, but to be sure I would run it past a lawyer in your new province and confirm you don't need to make any changes. There might be some small changes like the number of wintess signatures or something.

MCM,

I recall reading a comment from someone at CC's blog that mentioned those kits are horrible to get executed. You can read the entire thing at:

http://www.canadiancapitalist.com/2007/03/29/ask-the-readers-will-kits

CD

Jordan said...

Good post, it's reminded me to check into getting a will made.

Are you aware if there is any difference as far as a will is concerned about being legally married or living common law when there are children involved?

Thanks

Canadian Dream said...

Jordan,

I was looking into that for this post, but I could not find out a summary for each province. I know in SK that there is no difference if your common law or married, but it might be different in your province. Just do a Google search for 'Will Act' and your province name and hopefully you can find it.

CD

moneycoach said...

what a valuable post. Thanks! If you have a moment, another category could be for the divorced, recently or not so recently, esp., if they have kids. (am I being greedy here? -seriously, great post as is. )

Canadian Dream said...

Moneycoach,

I was doing some reading on a divorced couples and wills. Often a divorce will invalid a will if your previous spouse was in the will. So you basically want to finish the divorce papers and immediately have you lawyer help you create a new will to ensure your kids get the estate. Yet a word of caution here. I'm not sure how a will can assign guardianship if your ex still has joint custody with you. An idea to look into in that case would be a trust which could provide money for the kids care until they are 18 or 22 and then give them the entire estate.

In a nut shell if your in this situation you HAVE to talk to your lawyer. There are just too many variables involved that I can't cover.

Best of luck,
CD