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5 Important Reasons You Need A Will In Canada
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Have you ever thought about what would happen to your assets after you pass away? Who would inherit them? How can you know for certain that your estate would be handled exactly the way you would want it to?
And what about your kids, if you have any? Who would be put in charge of caring for them in the event that you pass away?
The best way to ensure that your estate is dealt with the way you would want it to be handled is to have a legal will in place. And if you have any minor children in your care, a will would ensure that they are properly cared for the way you want them to be.
Let’s take a closer look at what wills are and some important reasons why you should have one in place.
What Is A Will?
A will is a legal and binding document that allows you to outline how you wish to have your assets distributed after you pass away. You can include expensive assets, including property, as well as items of lesser value but of greater sentimental value, such as jewelry and photographs. This document can also appoint guardians for your children or pets.
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You can name specific beneficiaries who will receive specific items listed in your will. You can also name an executor in your will, who is the person who will manage your estate according to your wishes.
Having a will in place is important because it gives you the chance to clearly communicate your wishes, rather than leaving it up to the courts to determine how your estate is dealt with and how any minor children will be taken care of.
5 Important Reasons You Need A Will In Canada
If you want to have a say in how your estate is dealt with, you’ll want to have a will in place before you die. Here are 5 important reasons why you should have a legal will drafted up.
1. To Divide Your Estate According To Your Relationships
A will provides you with the opportunity to dictate who you want to receive certain assets, regardless of their relationship to you. Certain types of relationships may not be treated the same as others.
For instance, common-law partners are not recognized in the same way as married spouses. As such, a common-law spouse could be left with nothing if you die without a will dictating what you’d like your partner to be left with.
By the same token, certain people who you do not want to receive any of your assets may be given your belongings without a will in place. For example, if you are separated from your spouse, you may not want them to be the recipient of any part of your estate. But since you are legally still married, that individual may likely receive part of your estate as determined by the courts if you die without a will.
The courts will use the laws in your province to determine how your estate is distributed without your say if you die “intestate,” or without a will. Since you did not name an executor without a will in place, a judge will appoint an administrator to fill that responsibility who may not necessarily make the same decisions regarding your estate that you would. As such, some of your important relationships may not be honoured when your estate is handled after you pass away. Having a will is essential if you want to make sure that your assets are left to the people you want.
2. Reduce The Taxes Your Loved Ones Pay
Nobody wants to pay any more taxes than they already do. But if you die without a will, you may be inadvertently leaving them with more tax obligations than they care to take on.
Thankfully, no inheritance tax exists in Canada, and your beneficiaries won’t have to pay taxes on any gifts you leave them. However, there are still certain types of taxes that your estate would incur after you die: your final income tax return and probate or estate administration taxes. Your executor will have to pay your final tax bill and any applicable probate fees with the estate.
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The good news is that you can help reduce the tax obligations that your loved ones face after you die with a will in place. For instance, you can pay any taxes in advance to minimize or get rid of any estate administration taxes. This will leave your beneficiaries with fewer financial responsibilities and leave more money in their pockets.
There are several ways to reduce the taxes that must be paid on your estate. Your best bet is to speak with an experienced financial advisor to help you structure your estate in such a way as to minimize taxes and fees on behalf of your beneficiaries.
3. Have A Plan For Your Children
A will ensures that your kids are cared for the way you want them to be in the event of your passing. You’ll have a chance to outline exactly who you want to be appointed as guardians to your children, as well as how their finances will be managed. You can establish a trust for your children and detail how and when they will be eligible to receive their inheritance.
Before you name the guardians for your kids, be sure to inform the individuals that you’ve chosen so they’re adequately prepared to assume the role of guardian and are filled in on your wishes regarding how you want them to be raised and cared for.
4. Choose An Estate Representative
Also referred to as an ‘executor’, an estate representative is the person assigned to administer your estate after you pass away. When you draft up a will, you can name a specific person as an estate representative who will carry out your instructions according to your will after you die.
Without a will, the responsibility for administering your estate will be determined by the courts based on the laws of the province you live in. Rather than leave it up to a stranger to handle your estate, you can rest easy knowing that you have control over who will take care of everything according to your wishes.
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5. Leave A Legacy Behind
If you have a certain charity that you hold dear to your heart, you may wish to leave part of your estate to it, which can be outlined in your will.
You may be more encouraged to leave a legacy gift to a charity thanks to the tax incentives provided by the Canadian government. If you leave a legacy gift in your will, a tax credit will be granted to your estate for the gift value, which will effectively add a tax credit to your final income tax return. This can help maximize your estate value for your beneficiaries.
Where Can You Create A Will?
The traditional way of having a will made is to visit an estate lawyer who will create it for you. A lawyer will ensure that your will is detailed according to your exact instructions and wishes so that it is fully customized to your situation.
However, there are other ways to have a legally binding will created. In fact, you may be able to create a will on your own, as long as you are the one who writes it and signs it while you’re of sound mind and not under coercion.
Otherwise, you can use an online will service that can help you create a lawful will. These online will developers are backed by actual estate lawyers who create all the content used to make wills on their online platform. With these types of services, you can have a will created in as little as 20 minutes following the guidance and prompts of the online will-generating service.
In order to ensure that the will is legally binding, you must print it out and physically sign it. If the will is typed out, you must sign it in the presence of two witnesses who are not a beneficiary, spouse, or executor.
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Considering how relatively easy it is to have a will created, it makes little sense not to have one in place. Given the importance of a will, you should seriously consider taking a little time out of your day to have a will generated so that your estate and your children are taken care of the way you would want them to be after your passing.
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