Nearly half of Quebecers don’t have a will. Why are so many of us in the dark about how this could impact ourselves and our loved ones?
Why do so many people not have wills?
A lot of people think that they don’t need one. They assume that they don’t have enough money or assets for it to be worth it. They also don’t understand the consequences of not having a will when they pass away. However, intestate successions can become real nightmares, both for the surviving family members and heirs… especially in the case of common-law spouses with children!
So with common-law spouses and blended families, has it become critical to properly plan your estate?
Quebec has a high rate of de facto unions: 37.8% of couples cohabit, which is twice as high as the Canadian average. What’s more, a third of couples with children in a de facto union. The number of blended families is growing too, now at 16%. And the majority of couples in these families are not married (70%).
With numbers like these, it is important to remember that a common-law partner has no legal rights, meaning that he or she will not receive anything in case of death, unless this has been specified through an official document, like a will. As you can imagine, this is a major problem for all of the couples who don’t have one. Just think of this: if one of the members of a common-law union without children passes away, all of the estate would go to his or her living parents and siblings, and not to the surviving partner.
The media have reported on cases of blended families in which a parent didn’t pass anything on to his children in spite of himself because of one poorly defined clause. Now you see why estate planning has never been so important!
When should people think about estate planning?
Since you never know when you’re going to pass away, age in itself should not be a decisive factor. Unfortunately, a lot of people only start to think about estate planning when they start to get older.
Whether you’re buying a house, getting married, settling into a de facto union, having kids, or receiving an inheritance, you need to plan your estate as soon as you have assets or new people involved in your life.
What is the notary’s role in all of this?
Writing a holographic or witnessed will is always better than no will at all. You’ve started the process and your wishes have been put in writing.
However, it is best to have a notary’s guidance to make sure you’re making the right decisions and that the details of each clause are in order. It’s not easy to navigate all of the legal jargon yourself! Your notary will make sure that nothing is left up to chance, and that your last wishes will be completely respected after full consideration.
What’s the biggest mistake people make when they think about estate planning?
People assume that their spouses know what they want… But I’ve had meetings where I’ve asked significant others and sometimes it’s obvious that they have no idea!
People also think that their other half has the “power” to make sure their wishes are respected. However, if you’re living in a common-law relationship, as I mentioned earlier, your spouse is generally not even legally recognized, so how can you expect him or her to get involved?
How should financial planners intervene before or after a will is finalized?
With our guidance, clients should start to think about planning their estates. By talking to a financial planner before you meet your notary, you can avoid significant fees. With the number of decisions involved in a will, the time you spend hammering out your ideas with a notary can make for a hefty final bill.
Our main role is to raise awareness. We often have to give clients a heads-up: we bring up life events, and we explain how they can impact their estate and inheritance. If a client gets a divorce, for example, we’ll ask if he’s thought about changing the name of his beneficiary on his life insurance policy. It seems obvious, but these are common mistakes! Of course, heirs can contact us with any questions on estate planning. We can provide them with an overview of the situation that could be useful for them.
Circumstances change and so do our wishes. There are a lot of people who don’t think to change the name of their life insurance beneficiary after a divorce or to add their grandchildren when they’re born.
Is this really the right person for this role, and is he or she interested in taking it on? It is a major responsibility that needs to be properly carried out, because the consequences can be as significant for the heirs as they are for the executors themselves.
For all sorts of reasons, your wishes can change over the course of your lifetime. An obsolete will is useless, even damaging. It is also important to reread the will and make sure that you understand all the legal jargon. Otherwise, it is impossible to verify.
By reducing your tax burden, you’ll make the most of the money that you leave to your heirs. In short, boost their inheritance by paying less taxes. There is no question that this is an important aspect to consider in your will.
Are there any specific bequests you would like to add? Would a testamentary trust have been preferable? A financial planner can help you see things more clearly. The most simple and least expensive solution for your will is not necessarily the most appropriate for your situation.
When taxation and estate planning have not been taken into consideration, it can sometimes be detrimental to the heirs. Even if you have already designated beneficiaries for registered plans like RRSPs, RRIFs and TFSAs under an annuity contract, it is better to name them in your will. These designations should also be done separately from those for other “after-tax” assets. Rolling over your tax shelter to your surviving spouse is much easier to do if it is written in black and white in a will!
*National Bank financial planners are registered with National Bank Investments (NBI). NBI is a subsidiary of NBC.
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