5 Important Reasons You Need A Will in Canada

This is a sponsored post by Willful, one of Canada’s top online Will-making platforms.

As we enter the New Year, many of us are taking the time to review our finances to ensure that we are setting ourselves up for success. One surprisingly important part of your financial toolkit is actually estate planning!

Estate planning is the process of making end-of-life arrangements for your assets and loved ones — including making your will and power of attorney documents.

The thought of making a will can be daunting, which is one of the reasons over 57% of Canadians don’t have an up-to-date will.

Yes, thinking of your own mortality can be scary, but death is an inevitable part of life and being prepared is one of the best ways to bring you and your loved ones some financial peace of mind.

Below are five important reasons why you need to create a Last Will and Testament.

1. Protect your financial assets and investments

If you own anything of financial (or even sentimental) value, you own assets! Whether it’s a piece of art, property, or a car, you’ve likely worked really hard to acquire these investments and want to ensure they’re protected.

When most people think of protecting their investments, they often default to methods like insurance or emergency funds. However, making a will is one of the best ways to protect your assets in the event of an unexpected emergency.

Your last will and testament is a legal document that lets you determine how you’d like to divide your estate (including any assets of financial value and debts) when you pass away.

If you happen to die without a will, provincial laws will dictate how your belongings are distributed and this means your assets may end up in the hands of the wrong people.

In addition to making a will, you can add an additional layer of protection with a power of attorney.

By making a power of attorney document, you will designate someone to make decisions about your property, finances, personal life, and medical care in the event of an emergency if you are unable to do so yourself. This can include taking care of your finances like paying your bills and maintaining your property.

2. Ensure your relationships are recognized

If you die ‘intestate’ (meaning you’ve died without a will), the courts will use your province’s default laws to distribute your estate. Unfortunately, the provincial formulas often do not account for your important relationships and can be very different from what you would have actually wanted.

It’s important to understand that when it comes to intestacy, common-law spouses are not treated the same as legally-married spouses.

In many cases common-law partners and any other relationships may be left vulnerable if you die intestate, making a will essential if you want your financial assets and any other belongings left to these individuals.

3. Guarantee a plan for any minor children

Making a will is an important step to ensuring your children are cared for in the event of an unexpected emergency.

Your will tells your loved ones and the courts who you’ve entrusted to provide care and support for your child, in addition to managing their financial assets.

Your will is also where you can make financial plans for your children by leaving a trust and dictating the parameters around when they are able to receive their inheritance.

Imagining a world where a child is left without their parents is difficult, but we promise you’ll feel better knowing that you have a written plan in place for your children in the event of your death.

When making your will, don’t forget to speak with the individuals you’ve chosen as guardians for your children to ensure they’re prepared to take on the role and familiar with your wishes.

4. Minimize estate administration taxes

They say that death and taxes are two certainties in life. Well, taxes are also a certainty in death.

While there is no inheritance tax in Canada and your beneficiaries will not pay taxes on the gifts you leave to them – there are two main types of tax that your estate will incur after you pass away: your final income tax return, and probate fees, which are otherwise known as estate administration taxes (if your estate requires probate, there is a tax on the estate assets as part of this process). Your executor will be responsible for paying your final tax bill and paying any probate fees associated with the estate.

There are several ways to pay in advance to eliminate or minimize your estate administration taxes, which leaves more money in your beneficiaries’ pockets. There are also many ways to reduce the taxes paid on your estate, depending on how you structure your assets and policies.

Depending on your unique situation, it may be best to speak to a financial advisor to assist in structuring your estate in a way that helps minimize taxes and fees.

5. Leave a legacy gift

Leaving a gift to a charity or non-profit organization in your will is known as legacy giving. You can do this by leaving a piece of property, cash, or a percentage of your estate.

People often worry that leaving a legacy gift means that there will be less to give to their loved ones. The truth is, you can make a legacy gift without taking away from the gifts left to your family and friends.

The Canadian government has created tax incentives to encourage legacy giving for Canadians.

When you leave a legacy gift in your will, your estate will receive a tax credit for the full value of the gift. This adds a tax credit to your final income tax return, which can actually help to maximize the value of your residual estate for your beneficiaries.

It’s important to remember that you don’t have to be wealthy to leave a legacy gift. Donations may not be financially possible for some individuals in their lifetime, but legacy giving can not only help you leave a lasting impact but it makes it possible to leave much larger gifts than perhaps otherwise possible.

Legacy gifts can be as large or as little as you want – there is no gift too small to make an impact.

CREATE A WILL WITH WILLFUL

Making a will is one of the most financially responsible things you can check off your to-do list. Despite what many people believe, it doesn’t have to be time-consuming or expensive. Online estate planning platforms, like Willful, make it possible to create your legal will from the comfort of your home in less than 20 minutes.

5 Important Reasons You Need A Will in Canada

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Enoch Omololu

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch has a passion for helping others win with their personal finances and has been writing about money matters for over a decade. He has been featured or quoted in The Globe and Mail, Winnipeg Free Press, Wealthsimple, Financial Post, Toronto Star, CTV News, Canadian Securities Exchange, Credit Canada, National Post, CIBC, and many other personal finance publications.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

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