Keeping an up-to-date last will and testament is a crucial component of estate planning and maintaining a solid overall financial plan for families. Surprisingly, however, more than half of Canadians don’t have a will at all. Another 15% of us acknowledge we don’t keep our existing wills up to date. That means as many as 65% of Canadians are at risk of letting an outside legal process decide what happens to their assets should they pass away. Drawing up and updating a will gives us control over our assets after we pass away, so why is it that so many of us put off making a will?
What happens if a person passes away intestate?
The worst-case scenario for people who die intestate, is that all the careful measures they’ve taken to care for their children and other beneficiaries for the future could suddenly become null and void. For instance, parents who have been paying into an RESP and who have claimed the Canadian Education Savings Grant (CESG) may risk losing those benefits if they die intestate. The administrator of their estate may have no choice but to collapse those plans and distribute them to all of their beneficiaries, while the CESG and other benefits may need to be repaid to provincial and federal governments. There are some fail-safes in various investments and insurance plans that may shift those plans to a spouse or partner if the worst should happen. However, without a will, if both parents pass away, their hopes and plans for their beneficiaries’ futures could unravel.
Planning your legacy
Drawing up a will can be a positive experience. It’s a process that can help us determine what type of legacy we wish to leave behind. We can leave gifts to charities or causes that mean something to us. A will is where can assign guardianship for minor children so that they don’t become wards of relatives we’d be uncomfortable raising our kids. We can even state who will take care of our beloved pets and set aside some funds for their care. Thinking about making a will can feel like doom and gloom, but in reality, by setting out our wishes and hopes for our beneficiaries and our assets, we can take control of our legacies with a fairly simple document.
What’s holding us back?
The most likely reason many of us procrastinate on the task of drawing up a will is that it’s not particularly pleasing to think about our demise. It’s also not a topic that is top of mind when younger people are starting careers and families. So it’s not surprising that people over 55 are more likely to have an updated will than those in their 20s and 30s. In fact, 88% of Canadians between 27 and 34 say they don’t have a will.
It’s understandable that people in this younger demographic just don’t think they’re old enough to even need a will. Yet this is the age group that is most likely to have young children who would need to be taken care of should their parents pass away. A will can help ensure that the supports, including RESPs, that parents have put in place for their young children are delivered in the future according to their wishes.
How much does it cost?
The other reason many people don’t set up a will is because they’re worried about costs. Finding and hiring a lawyer may be intimidating for many, and lawyers’ fees may be too costly for some budgets. There are a number of low cost will kits available for purchase that can help people set up simple wills. These can cost anywhere from $40 to over $250, and they can be useful for straightforward estate planning.
Luckily, Knowledge First Financial clients also have free access to the Knowledge First Financial Will Kit, that guides clients, step-by-step, through the process and allows them save their documents on their own computers and to make changes when necessary. Laws are slightly different in Quebec, so those clients should consult the province’s estate planning rules.