This is our latest blog posts in our series dedicated to estate planning. Last week we concluded our two-part series on trusts. This week we’ve decided to revisit wills and estate planning.
Estate planning is a common term synonymous with wills, but do you truly understand its meaning? Estate planning has several key objectives:
- To preserve your estate during your lifetime, when you pass away and post-mortem.
- To keep control of your assets during your lifetime.
- To able to be able easily liquidate your assets upon your passing to provide for your family.
- For the equal and fair division of assets among beneficiaries of your estate to avoid disagreements.
- To provide you in your retirement.
To meet these objectives, financial advisors have a number of tools in their toolbox. Some of these tools are the following:
- A wills and power of attorney
- Trusts: intervivos and testamentary
- Insurance: life (term, whole life, universal, etc.), disability and critical illness
- An estate freeze
- For business: shareholder and partnership agreements, including buy and sell agreements
- Post-mortem estate planning
Why Your Will May be Considered Invalid
A will is the best way to ensure your assets are divided as you intended upon your passing. While dying intestate (without a will) is a faux pas, dying with an invalid is equally as bad. A will can be considered invalid for several reasons. The most common are as follows:
- The will was revoked.
- The will was incorrectly witnessed (i.e. witnessed at a different date and time or by your spouse or heirs).
- The will was incorrectly updated.
- The testator (the individual who makes the will) lacks the capacity to draw up the will.
- The testator was “unduly influenced” by an heir (this is often difficult to prove).
Just because you’ve obtained a copy of the will, doesn’t mean it’s valid. There are several ways a will can be revoked:
- By preparing a new will.
- By destroying the previous will.
- By revoking the previous will.
- By getting married (the only exception is if the will was in “direct contemplation” of a marriage).
Wills and Divorce
With nearly half of Canadians getting divorced at some time in their lifetime, it’s important to understand how it affects your will. While getting married can revoke your will, you may be surprised to learn a divorce doesn’t automatically revoke your will. That’s why it’s so crucial to keep your will up to date. Whenever there’s a major life change, such as the birth of a child, buying a home or getting married, your will should be updated.
Not All Assets are Part of Your Will
It’s important to note not all your assets are part of your estate. For example, jointly held property like bank accounts and real estate may automatically pass to your surviving spouse. “Living inheritance” in the form of gifts and life insurance proceeds are also not part of the estate, as are RRSP and non-registered investments held by insurance companies.
If you don’t have a will or you’re unsure if it’s valid, hurry to your lawyer’s office. A will is an important piece of the estate planning puzzle. Without one your assets may not go to who you intended them to.
Need help with your estate planning? Feel free to contact our office for a helping hand.