Why every parent needs a will

Without a will, there’s no guarantee that when you die your money will go to the people you want or that your children will be cared for by the person you believe will do the best job. If someone doesn’t step forward and apply for the job of distributing your estate then your province will appoint a Public Trustee to do so. The settlement of your estate may be a long drawn out affair. Most importantly, you would not be able to name your choice of guardian for your children. The Ministry of Children and Families in your province will step in and do so for you.

No, but you’ll need to invest time, energy, and probably a little money to do it right yourself. Many families have written legally valid wills by using a self-help book or a will-writing software program, although mistakes are more likely with a do-it-yourself will.

Here’s a good rule of thumb: If the cost of using a lawyer is holding you back from writing a will, buy a self-help book and do it yourself. Ask your public librarian to guide you to the latest books on the subject.
On the other hand, if the thought of ploughing through pages of legalese is too daunting, then call a family lawyer. You should be able to find a decent lawyer who will help you with a will for about $350. Ask for recommendations from family or friends. A lawyer can cost you anywhere from a few hundred to a few thousand dollars, but the money buys you expertise and peace of mind.

To save money, think through what you want to include in your will first and then contact a lawyer to go over the finer details. Also, find out whether your employee benefits include free legal consultation; it might be limited to 30 minutes, but that could be a very helpful half hour.

Here are a few ideas to start you off:

• Make a list of all your assets, including bank accounts, investments, real estate, life insurance, and personal property.
• Decide exactly who you want to inherit what and when. For instance, you might want your daughter to inherit her grandmother’s gold bracelet when she turns 16.
• Choose a guardian for your children.
• Choose an alternate guardian in case your first choice is unwilling or unable to do the job.
• Decide if you want someone else to handle the assets you leave your children. If so, choose that person.
• Choose an executor to carry out your wishes and handle the necessary paperwork after you die.
• Decide whether you want to include a letter stating how you’d like your children to be raised and educated, your funeral to be arranged, etc.

You can get more useful suggestions, ideas, and free sample forms online at numerous websites — simply do an Internet search for “will and testament forms” or something similar. But most experts argue against relying solely on Internet sources for the many important legal decisions a will requires.

After your will has been signed, put it in a safe and fairly obvious place, like a locked metal file cabinet, and tell your spouse, partner, or executor where it is.

Safe deposit boxes are not always a good place for a will because many banks have restrictions on who can access and remove things from them. If a family member or executor can’t open your safe deposit box, it could tie up your estate for some time. Make sure you understand your bank’s rules about withdrawals from safe deposit boxes before putting your will in one.

For many families the real hurdle of creating a will is emotional. To make things easier and, maybe even more fun, make a pact with another family or two to get your wills done at the same time. Since you need at least two witnesses not named in your will, get together and sign each other’s documents over bagels and coffee or wine and cheese. This can take a lot of the intimidation out of the process.

Start by making a separate legal will for each parent: Joint wills don’t make a lot of sense, even if it seems more efficient to create just one document. A joint will binds the survivor to the provisions of the will, which doesn’t leave a lot of room for the surviving parent to change his or her mind if circumstances change radically.

Next, make sure you name your spouse or partner as your sole beneficiary. Otherwise the court might divide your property between your spouse and kids and appoint a state administrator to oversee your children’s property until each one turns 18. Name your children as alternate beneficiaries in case you and your partner pass away at the same time.

State that your spouse or partner should be the guardian of your child in case one of you dies. Then name someone else as an alternate guardian in case your spouse is unwilling or unable to care for your children. Spelling it out will prevent anyone from coming forward and disputing the custody of your children. If you don’t name a guardian, anyone who’s interested can ask for the position, leaving a judge to decide what’s best for your children.

Choosing a guardian is probably the most difficult task for parents. It’s hard to imagine anyone else parenting your children. But it’s also one of the most important things you can do to ensure your children’s future well-being. To find out what questions to ask yourself and how to make this decision, see our article on choosing a guardian.

You should also name a trustee — someone to manage whatever property you pass on to your children until they become legal adults. If you don’t name a trustee, the court will do it for you.

You can choose one person as both the guardian and trustee or choose two different people. Experts disagree on the best way to handle this. Some say it’s easier to choose the same person to care for your children and their money, while others warn that people who make good parents may not be the best at handling money. Think this one through and talk it over with your partner.

There is no inheritance tax in Canada, but there may be other kinds of taxes and fees. Unless you take steps to reduce these costs, there will be less money left in your estate for the people and places that are important to you.

For example, if you die leaving a lot of debt, there may not be much left of your estate for anything or anyone else. That’s because your estate must first pay off your debts, plus probate fees and taxes, before any money goes to your beneficiaries.

Also there will likely be taxes on some of your investments or property if you leave them to your estate or pass them on to specific people. If you have made money on your investments then your estate will have a capital gain, and under Canadian tax rules your estate will pay tax on half of that gain.

As for fees, the Canadian government will charge a fee called probate on everything in your estate. This is done before your debts are subtracted except for mortgages or other property loans.