I was reading an article on how many Canadians have a will in place. I was shocked to discover that over 50% of Canadians do not have a will. Being a natural skeptic, I figured the number included all Canadians and made inaccurate by the number of kids. The survey noted that those surveyed were over the age of 18. So, let’s start by excluding those under the age of 35. Why? Well, we all know how invincible we feel until we reach 35. Would you believe that 67.9% of Canadians surveyed over 35 years old do not have a will. Here is the real shocker — 32.3% of Canadians over 55 and 28.3% of Canadians over 65 do not have a will in place. (source Number of Canadians without Wills significantly under-reported (legalwills.ca) .
As a Financial Advisor you would think this would shock me, but in fact, it does not. What has always surprised me is the relationship between needing a will and creating a will. In my experience, the more necessary a will becomes, the less likely that it will get done. Why? The reason is that decisions become more difficult.
For example, take Sally and Henry. They are in a strong long-term marriage with two children that are both financially independent. In this case, their will would be relatively simple. Assets would go to the surviving spouse. When the surviving spouse passes, the assets get split between the kids. If either of the kids has passed away, their share would go to their kids. In the case where there were no grandchildren, the deceased child’s share would go to the surviving sibling. Wills 101. When you get into second marriages, disabled children, children with financial issues and even no children, the situation becomes more complex. Unfortunately, in these cases, many choose to avoid it by not creating a will.
So, there are people who procrastinate with completing their will and then there are people just refuse to create them. So, it begs the question: What happens if you die without a will? This is called dying “Intestate”. In Ontario, the Succession Law Reform Act determines the order of distribution of assets for a person that dies “Intestate”.
Here are examples of the simplest scenarios:
- Person dies with a spouse (marriage or common-law) and no issues (children)
- All assets pass onto the surviving spouse
- Person dies with a spouse and issues
- The spouse is entitled to the first $350,000 of the estate
- If there is more than $350,000 in the estate and 1 child
- The spouse gets the first 350,000 and the remainder is split between the spouse and the child.
- If there is more than 1 child
- The spouse gets the first 350,000 and one-third of the amount over that. The remaining two-thirds above the 350,000 is split between the remaining children
- Person dies with no spouse and no children
- If the parents are alive (or one parent) they will inherit all.
- If the parents are not alive and the person has siblings
- The estate will be split equally between the siblings
- If one sibling has predeceased the person that dies and has children
- Their portion will go to their children.
- Beyond that if there are no parents and no siblings no nieces of nephew it will follow a “Next of Kin” chart.
You may ask, “if the intestate distribution is how I would like my assets split, then why do I need a will?”
A couple of reasons:
- Somebody needs to apply to be the executor which can be a long process.
- It makes the process more difficult than necessary. All financial institutions request a will to relinquish the deceased’s assets. Without the will, there could be delays in gaining access to funds to pay for timely bills and other expenses.
When someone dies intestate, it opens up a whole new can of worms that adds additional work for the executor. Do your survivors a favour and make life easy for them when you are gone. If you don’t have a will, make it a priority.
