Thinking about death isn’t most people’s idea of fun and it’s easy to put off planning for it. That's why it’s not shocking that 57% of Canadian adults don’t have a will. But a will isn’t meant to benefit you, it’s about protecting your family after you’re gone and it’s also an important (yet often overlooked) part of your overall financial plan.
A will is a legal document that outlines how you wish to distribute your assets including property or money and it dictates who will care for minor children or pets after you pass away. Your will is also where you name your executor, the person in charge of settling your affairs on your behalf. So why is a will a key element in a strong financial plan? Here are five reasons.
1. Distribute your wealth in the manner you wish
The fancy term for dying without a will is dying “intestate.” If you die intestate, the government uses estate law in your province to distribute your assets - a process that can drag on for years and is often accompanied by a ton of stress for the loved ones you leave behind. Without a will, the wealth that you’ve accumulated throughout your life might not be distributed to the family and friends that you would have wanted to receive it, or weighted the way you would have wanted. Having a will in place is key to both save your loved ones from waiting and frustration and to ensure that your assets are distributed exactly how you choose.
2. Avoid higher legal fees on your estate
A will is the only way to ensure your beneficiaries are benefiting from your estate to the greatest extent possible. If you die without a will, not only will it likely take from your family members’ personal resources (if they have to take time off work, travel to court, etc.) but it also subjects your estate to higher legal fees, leaving less money for your beneficiaries.
3. Philanthropic goals
Most of us want to leave the world a better place than it was when we entered it and you don’t have to be wealthy to be able to do that. Small acts of kindness often have a greater impact than you might think. One of the easiest ways to give back is by including a legacy gift in your will for an organization or charity that you care about. It’s important to have your philanthropic goals outlined clearly in your will so that your family is aware of your intended donation - you can choose to donate a percentage of your estate or a dollar amount to any organization. If you choose to leave a large portion of your estate to charity, it’s good to inform your loved ones so they can plan their own finances without expecting a large inheritance.
4. Finance your children’s future
If you have dependent children, a will is an important tool for financially supporting their future. Having a will in place ensures there are guardians prepared to care for them and there will be funds available to support them. A will also allow you to choose the age they’ll receive their inheritance and whether they’ll receive it in increments or all at once. If you die without a will, your children receive equal shares of your estate and they receive it all at once when they reach the age of majority (typically 18 or 19 years of age). If you fear your child might not be able to handle a large sum of money at such a young age, you can delay their inheritance until they’re older and better equipped to manage it.
When you draft your will it’s also a good time to start discussing financial independence with your children - the earlier you begin talking about it, the more prepared they’ll be to one day begin supporting themselves financially.
5. Plan for your own needs
Doing your will forces you to make important decisions that have a financial impact on your loved ones. It should also encourage you to think about your own needs and creating a POA for property and a POA for health care. A POA (Power of Attorney allows you to designate a trusted family member or friend to make medical and/or financial decisions on your behalf if you become incapacitated and are unable to make them yourself. It’s important to choose someone you truly feel is trustworthy to ensure that your money is used in your best interest. If you don’t have a POA and something happens to you, someone will have to apply to the court to be your representative or a guardian will be appointed - and this person might not be who you think would do the best job, and they may not know your preferences.
A will is an important part of a strong financial plan - and not just if you’re wealthy. If you’re married or common law, you have children, or you have assets, you need to create a will to ensure you have a plan in place. Whether you make a will using an online will platform like Willful or through an estate lawyer, having one in place is a smart financial move.
Willful is a platform that makes it easy, affordable, and convenient to create your legally-binding will online in less than 20 minutes, for a fraction of the price of visiting a lawyer. Borrowell members can get 10% off any Willful plan by following this link and entering code BORROWELL10.