Pattie Lovett-Reid: Why you should have a will
If you don’t have a will in place when you pass away, the chances are your financial legacy may be misinterpreted — or worse cut like a knife.
Sadly, in many cases, Canadians still haven’t put a will put into place. According to TD Wealth, 50 per cent of Canadians have not formerly outlined how they would like to distribute their assets when they are no longer here. No one likes to think about their demise, so it is understandable to some extent that 76 per cent of millennials do not have a will, 61 per cent of Gen-Xers are in the same situation.
The demographic that worries me is boomers, with 28 per cent not having a will in place and likely the cohort to have accumulated the most assets. With most Canadians (88 per cent) having a least one sibling without a will in place, there is a strong possibility of family conflict over inheritance. Disputes of this nature are not unusual as one in five Canadians who received a family inheritance say they experienced conflict with family members over the division of assets.
Here are a few considerations:
When it comes to the family home, cottage and jewelry all are considered property assets and should be appraised as a starting point. Once you have an understanding of the value, you have a better sense of the distribution. Remember to discuss the property allocation with your family members to understand their sentiment and gain a sense of whether anyone has strong feelings associated with any property.
In Canada money received from an inheritance is not considered taxable, but a deceased person’s estate has to pay taxes on any income, including investment income, before the money can be distributed to beneficiaries. It is always a good idea to review these assets with an advisor to understand their value and tax implications.
For small business owners a key priority is succession planning, in essence having a plan that outlines a smooth transition whether that means transferring ownership to the next generation or selling the business altogether. Allison Marshall, a business owner planning specialist with RBC WM, said “small business owners need to wear many hats”. That may include CEO, accountant and even act as the head of operations. So, it’s important to have a plan in place when it comes time to hand over the reins of your business to someone else. A recent study of business owners in Canada, the U.S. and U.K. shows only 39 per cent of them have a succession plan in place.
“The value of your assets will be assessed by the dollar amount,” according to Rowena Chan, Senior Vice President of TD Wealth Planning, “family members may have memories with certain items that makes them more valuable than any dollar figure. It is important to consider these emotions when distributing your assets to loved ones”.
My final piece of advice – your assets should be distributed to your heirs according to your wishes. Put a will in place to ensure that happens.