January 22, 2014
Studies and surveys indicate that more than 50 per cent of Canadian adults do not have a will, and about 70 per cent of Canadian adults do not have a signed Power of Attorney.
I believe that number would drop significantly if people truly understood the significant consequences of dying or becoming incapacitated without these legal documents.
Let’s start with a will. What will happen if you died without one? Under the law that governs this situation (which is called an “intestacy”), your estate assets will be frozen until the courts appoint someone to administer your estate, known as an “Estate Trustee Without a Will”. This involves making a formal application to the court and always involves a certain amount of delay that is inherent in the process. This in turn could cause financial hardship for your family.
Eventually, your estate will be distributed by the Estate Trustee according to provincial intestacy laws, which vary by jurisdiction. Typically, they provide a set dollar-amount to a surviving spouse (in Ontario it is $200,000), with the balance divided in line with a graduated formula among your spouse and each of your biological or adopted children.
If you have no surviving spouse or children, then your assets would go to your next-of-kin, in a prescribed order that is set out by legislation. In contrast, common-law spouses and step-children may not he recognized by legislation as having any entitlement at all.
In these various scenarios, the Estate Trustee has very little discretion in distributing your assets. This means that – absent a will that expressly directs the distribution of your estate in the most tax-advantageous manner – you will have missed many opportunities to reduce taxes both before and after your death.
Similarly, without a will any preferences you have concerning the guardianship of your minor children or dependents may not be recognized. Payments to minor children would be held in trust by the courts, but only until they reached the age of majority. At this point, they would have a legal right to the money to spend as they wish – a thought that many parents find disconcerting and even abhorrent!
If you don’t have a will, these are just a few of the ways that your family and next-of-kin could be subject to delays, additional expenses, angst and potential conflict amongst themselves at an already stressful and emotional time.
Wills & Power of Attorney written By Martin Rumack