You are not alone. Many Canadians put off getting a Will because they either don’t want to spend the money or they don’t want to think about the possibility of dying. This however is a big mistake. Dying without a Will, means you will have absolutely no say about any of your assets or care for your children or pets once you die.
Let’s just look at some of the immediate issues that will arise should you die without a Will. First, the Canadian Government will immediately become the Executor of all your assets: homes, bank accounts, investments, personal belongings, everything you own. The government will then freeze all access until they have completed a full audit, which may take 3-9 months. Once your estate assets have been audited, all fees and taxation will be deducted before any disbursement to family. A surviving spouse is entitled to the first $200K, with the remainder to be split to all those family members that the government believes have a claim. Legally, all pets are considered property, therefore unless you state otherwise in a Will, upon your death, your pet will become the property of whomever receives the rest of your personal items, such as furniture, cars, etc. Does this person want the responsibility of caring for your pets and are they suitable?
There are many basic Will Kits available and although they are very generic and simple, they can be suitable for those Canadians on a tight budget. Even a handwritten letter of direction can be effective if it is signed and has two witnesses. However, if you have more specific instructions for alternate arrangements, guardianship for minors, debt forgiveness or explicit instructions after your death, you may wish to have a lawyer prepare your Will.
You will also need to appoint an executor. This is the person who will be tasked with the administration of your estate once you pass on. Do not chose an executor that does not reside in Canada. This could have legal and/or tax implications depending on your provincial legislation, and we do not want the tax residency of an estate questioned if the primary management and control takes place by a non-resident. This could trigger your estate being disposed of its assets as a non-resident, subject to capital gains tax, possible with-holding tax, loss of enhanced dividend tax treatments, and even being subject to the rules and regulations of the foreign country where your executor resides.
Of course, in situations where an estate is subject to tax in two or more jurisdictions, tax conventions and foreign tax credits may be available to reduce the overall tax burden. Non-resident executors may also be restricted when it comes to investment instructions over the estate’s Canadian investment accounts since this can be viewed as the executor controlling foreign assets. It may also require the executor to report this on their own personal taxes. For example, a US resident who is acting as an executor of a Canadian estate maybe required to file various US reporting forms and it is a good idea to seek professional assistance to ensure compliance. An out-of-town executor may also be required to get a bond from an insurance company for the value of the estate.
Getting a Will is the most important and most responsible thing you should do to ensure your hard-earned assets and wishes are taken care of when you die. Let’s face it, you work hard for your money and the last thing you want is our government (or any other government) getting their hands on depleting your estate. No one would intentionally put their assets in jeopardy. You should also consider getting a Power of Attorney for Property and Medical Direction.
Remember, having a Will ensures you get to have your “uninterrupted final message” when you die.
Good Luck & Best Wishes, ATML - Christine Ibbotson