Contrary to popular belief, a will isn't just for the old or wealthy. It's an important step in ensuring your final wishes are carried out, regardless of your age or finances.
Having a valid, up-to-date will ensures that your assets get distributed according with your final wishes. It is also not just about money. A last will and testament gives your loved ones tremendous peace of mind because they receive clear instructions regarding the care of your children, finances, business, funeral wishes, and more.
In this guide to making a will, we explain everything you need to know to create a legally-binding last will and testament, as well as the consequences of passing away without one.
Why Should You Make a Will?
A will, also known as a last will and testament, is a legally binding document that explains how you want your assets to be distributed after your death, who will take care of your minor children, and who will act as an executor of your estate.
Even though every will is different, usually it includes instructions regarding:
- the distribution of specific gifts after you pass away
- the age for minor beneficiaries to inherit your assets
- the distribution of the rest of your estate (everything that has not been marked as a specific gift)
- who will be responsible for carrying out the terms of your will
- the kind of burial or funeral you want.
Making a will ensures your estate is handled in the way you choose. Let's look at some of the most common reasons for setting up a will, and how dying without one could impact your family.
- To designate a guardian for your minor children
When creating a last will and testament, you don't just decide how your assets get distributed after your death. You also leave instructions regarding who will take care of your dependents. If your children are minors, you can name a legal guardian for them.
If you pass without a will naming a guardian, the court will pick someone, who may or may not be the person you had in mind.
- Secure your children’s future
You can leave specific instructions for the financial future of young children in addition to deciding who will step in as a guardian. This could include establishing a college fund for each of your children, ensuring they receive a fixed amount each year for various expenses such as clothing, travel, and hobbies, or establishing a nest egg to enable them to purchase a home.
Since minor children cannot simply receive the funds, consider establishing a trust for them and naming a trustee. You can also specify the age at which you want them to receive an inheritance, which can be older than your province's age of majority. The trustee will manage the fund left for your children's benefit until they reach the age of inheritance.
- Protect your unmarried partner
Unless your unmarried partner is a beneficiary in your will, he or she will not receive anything upon your death, regardless of how long you have been together.
Creating a will and leaving clear instructions can help ensure your partner receives their share of your estate.
- Protect your step-children
Step-children are not legally entitled to share your estate, even though you love them as your own.
Do you want that to happen? Create a will and specify what each stepchild is to inherit. Avoid referring to your step-children as “descendants”, “children”, or “heirs” in your will if you have other children — biological or adopted. Doing so can create confusion and lead to conflict between your children.
- Avoid family disputes
Distribution of an estate without a will can lead to arguments and fights between your heirs. Perceived unfairness — the old “why him not me?” question — can damage family ties and even trigger a legal battle, which tend to be lengthy and expensive.
A well-crafted will can help avoid inheritance disputes and ensure a smooth and quick distribution of your estate.
How to Make a Will
You can create a will on a simple piece of paper and write it any way you like. But for it to be recognized as valid, the will should be clear, signed and dated by you, and signed by two or more witnesses.
Our guide to making a will includes all the steps required for creating an unambiguous and legally-binding will.
- Decide the types of assets to include in your will
As you sit down to create a will, list all your assets and decide how you want to distribute them. Your will could include:
- Real Estate: If you have a property in your name, you should clearly mention the person or persons who will inherit it. This is particularly important if your children, grandchildren, or siblings live with you. If you want more than one individual to inherit your home, leave instructions regarding how the property should be divided after your death.
- Stocks, Mutual Funds, and Bonds: You may individually allocate your stocks, mutual funds, and bonds or pool and divide them between your heirs.
- Cash: This category includes not only physical cash but also saving accounts, money market accounts, and checking accounts.
- Business ownership: Do you own a business partly or fully? If so, address it in your will. Like property or any other type of assets, business owners may transfer their business through a will.
- Other Physical Possessions: Take account of all of your other worldly possessions — vintage jewelry, antique vases, substantial book collection, etc. — and decide where you want them to go after you pass away. Be aware that the monetary value of an item is not the thing to consider when deciding what to include. It is possible a few of your possessions may have sentimental value for some people in your life. For example, your niece may like to receive your stamp collection, even though it may not be worth much.
- Guardianship of Pets: Like many pet owners, you probably regard your pet as a member of the family and want them to live a good life after you're gone. But the law considers pets as just property, which means you cannot leave them an inheritance. All the same, you can still plan for your pet’s care by naming a pet guardian in your last will and testament. A pet guardian or caregiver is the person who takes over the ownership of a pet after the passing of the original owner.
- Decide who gets what
The recipients of your assets are called beneficiaries, who can be your family members, friends, charities, and other organizations. Assets that beneficiaries inherit are referred as “bequests”, while all your assets make up your estate.
You can request each of your assets differently. A bequest can be an object “my vintage car collection to my nephew Robert Miles”; a sum of money “$100,000 to my sister Susan Brown”; or a fixed percentage of the entire estate “3% of my estate to the Canadian Feed The Children”. Alternatively, you can pool the entire estate and split it among your heirs “my estate to be inherited by my four children in equal parts”.
Your estate plan should include life insurance (they often go together). In addition, it should have a contingent distribution plan, which will come into effect if your primary plan cannot be acted upon. For example, it is common for people to write something like “my entire estate will go to my spouse Helen Parker, but if she predeceases me, then the estate is to be split equally between my three children.”
In short, you should write the will in such a manner that no matter the circumstances at the time of your death, there is a distribution plan for your assets.
- Choose an executor of your will
When you make a will, you must name an executor. You cannot do it any other way. The executor is a legal representative who handles your estate when you pass, based on instructions outlined in the will.
The role of executor is no small responsibility. This is the person who will be in charge of everything from getting your will probated to securing all your assets, paying off your debts, distributing your remaining assets as per your wishes, and making funeral arrangements. Given the nature of the job, it goes without saying that you should pick someone trustworthy, organized, and reliable.
Many people pick a spouse, adult child, or a sibling as their estate executor, but just remember that this may place an extra burden on them while they are coping with grief and loss. You could also nominate an estate planning attorney or accountant and pay them compensation, which will be paid by your estate during the final stages of its distribution.
Regardless of who you want to nominate, the following tips will come in handy:
- Ask the person if they are willing to become the executor before you finalize the will. Keep in mind that settling an estate can be time-consuming. On average, it takes anywhere between six and 12 months to settle an estate after it has been probated. The person you have in mind for the job must be able to juggle it with their other life responsibilities.
- If you want to name co-executors, ensure they are willing to work together. And remember that two persons sharing duties can delay the distribution process because two signatures would be needed on all documents instead of one.
- You must consider naming a contingent executor — a person who takes charge if the primary executor is unable or unavailable to fulfill the role.
- Give preference to someone who lives nearby, since they can act quickly. Also, avoid naming someone who is older than you.
- If you have a complicated estate, a trust company may be a better choice than an individual.
- Name a guardian for minor children
If you were to die unexpectedly, you would want someone you trust to step into your shoes. That is why it is important to name a guardian for your young children in your last will and testament.
If you pass, your surviving spouse automatically gets the sole parental responsibility. But if both of you die, the person named in the will manages the assets of your children and looks after their well-being until they attain the age of majority. Failing to name a guardian means a judge will pick a guardian for your kids — and that person may not be someone you want for the job.
A guardian should be someone who cares for and loves your children and will raise them according to your wishes. Given this, most people choose a relative or a close friend. However, selecting your parents, especially if they are over 60, may not be a great idea. Despite their best efforts, they may not be able to supervise a toddler round the clock or cope with a teenager’s mood swings and emotions.
No matter your choice for guardianship, have a frank talk with the potential guardian. Also, consider naming a back-up guardian, who will step forward if your first choice is unable or unwilling to assume the role.
- Make it Legal
After writing your will, you must sign it in the presence of two adult witnesses. Your witnesses must also sign the document to confirm they have witnessed your signature.
- Store the will in a safe place
Store the will someplace safe and let your executor and alternative executor (as well as close family members) know where it is being stored.
- Keep your will up-to-date
You may want to revisit your estate distribution plan and update it whenever there is a major change in your personal and financial circumstances. Some common situations that may warrant a change in your estate planning document include marriage, divorce, death, a large property investment, and your children reaching the age of majority.
What Happens if You Do Not Make a Will?
If a person dies without a will, the law states he or she has died “intestate.”In this situation, the intestacy laws of the province decide how the deceased’s estate will be distributed. The intestacy laws vary from one province to another but, without exception, they do not consider a family’s unique circumstances.
Dying intestate usually delays the distributions of the estate and leads to higher fees. The court first chooses someone as the estate administrator. Generally, this is someone close to the deceased, but if no one steps forward, the court may choose an unrelated person.
The estate administrator has pretty much the same duties as an estate executor, but he or she cannot act until the court gives a go-ahead. Once that is received, the estate executor will distribute the estate according to the provincial laws.
In other words, your estate will have a distribution plan whether you make a will or not. If you create a last will and testament, the distribution plan is of your making. Otherwise, the local court sets it.
The Risks of Not Making a Will
If you pass away without a will, a number of issues may arise, beginning with the appointment of the estate administrator. Sometimes it is obvious who that person will be, but more often than not, close relatives cannot agree.
A lack of agreement can lead to family feuds, general confusion, and a delay in estate distribution. The local court will eventually appoint an estate administrator, who will first secure your assets. Following that, he or she will clear any debts you have left behind before dividing your estate among your heirs in accordance with your province's intestacy laws.
If you are unmarried and have no children or grandchildren, your parents will receive the entirety of your estate. If your parents die before you, your estate will be divided equally among your siblings. If none of your siblings are alive at the time of your death, your assets will be divided among your nephews and nieces. If you have no nieces and nephews, your estate will be distributed to your nearest living relative.
If you are married but have no children, your estate will be divided equally between you and your spouse. However, dying intestate can cause the estate distribution process to be delayed.
Things can get complicated if you are survived by a spouse and children. To make matters more complicated, each province has its own set of rules for this scenario. The estate distribution plan for someone who died intestate is almost never the same as the estate distribution plan for someone who died with a will. For example, it would be highly unlikely for a married person with four children to write the following estate distribution plan: "My spouse will inherit the first $200,000 of my estate. She will also receive one-fourth of the remaining assets, with the remaining three-fourths divided equally among my children."
However, if you are a resident of Ontario and die without leaving a will, your estate will be distributed exactly as described.
To summarize, dying intestate causes your estate's distribution to be delayed and increases your expenses. The worst part is that your estate may not be distributed as you would have preferred. You can avoid all of these problems by making a will.
Making a will can help you provide for your loved ones after you are gone and ensure your estate is distributed according to your wishes. It can also address the question of children’s guardianship, pet guardianship, and the kind of funeral or burial you want.
Writing a last will and testament is not difficult, nor is it necessary to hire an estate planning attorney. You can create a legal will on any sheet of paper, as long as it is duly signed by you and at least two witnesses. But if you have a complicated estate, it may be a good idea to hire an attorney or accountant.
Frequently Asked Questions
- When should you write a will?
You should write a will as soon as you become an adult, and then update it on a regular basis as your financial and personal circumstances change.
Here are some key life moments that drive people to write a will or update it if they already have one:
- getting married or being in a common-law relationship
- being in a stable cohabiting relationship
- getting divorced
- having a child
- having a step-grandchild
- buying a major asset, like a home
- Starting a business
What happens to my bank account if I die without a will?
How a deceased person’s bank account is treated after they die depends on the type of account they had. If you owned a joint account, the surviving account holder will retain its ownership. If yours was a single account and you had named a beneficiary, the latter will receive the funds. If you were the sole owner and did not name a beneficiary, the account will be transferred to your estate after you pass.
What happens to my life insurance policy if I pass without a will?
Normally, life insurance is not an estate asset. If you named someone as a beneficiary of your life insurance policy, he or she will receive the death benefit, regardless of whether you pass with or without a will. However, if you did not name a policy beneficiary, the proceeds will go to your estate, which will be distributed as per your province’s intestacy laws if you did not write a will.