When it comes to our finances, we often complicate matters more than necessary. This is usually inadvertent – we have an intention to make something easy and clear-cut, but end up making it more complicated because we didn’t seek the right advice, or thought we knew more than we really did.
Wills are no different – they can be as straightforward or complicated as we want them to be. But in situations where there are multiple beneficiaries or unique circumstances, getting the right advice at the beginning, as Christine Van Cauwenberghe, Head of Financial Planning with IG Wealth Management says, is key to reducing headaches down the road.
What makes a will complicated?
The complicated nature of a will often arises due to the structure of the person’s family, as opposed to the makeup of their assets. For example, in a situation where there is a second marriage or a blended family, an individual may want to leave a portion of their estate to children from their first marriage, and another portion to their new spouse.
Other examples include certain beneficiaries residing in a different jurisdiction that contain different tax regulations. Or a beneficiary has a disability and receives social assistance – receiving a lump-sum of money could cut them off from that assistance, so depending upon which province they live in, structuring the will so the inheritance is received in a trust (specifically a Henson trust) can ensure the money is protected while they are still receiving government benefits.
What are the most common mistakes?
Many people make their will unnecessarily complicated, but it is mainly the lack of estate planning that makes the task more difficult.
It is also complex to bequeath to our heirs specific assets, the value of which may differ, change over time, and even prove insufficient compared to the tax they will have to pay. We can thus unintentionally give more to one than the other (for example, in transferring our estate to our children). Update your will to prevent this kind of situation and choose to fairly distribute your assets instead.
What is the right way to make a will?
First of all, avoid using will kits. These generic forms are not incorrect, but they don’t really help you asses your needs. You will end up unnecessarily complicating your asset transfer. Instead, consult a notary (in Quebec) or a qualified lawyer (in the Rest of Canada) to draft a will that takes your situation into account.
Apart from your will, it is also important to organize your finances properly. Consult a professional to determine the actual value of your assets, particularly after taxes. This will help you better determine the allocation of your assets and state it in your will.
Written and published by IG Wealth Management as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Advisor. Trademarks, including IG Wealth Management and IG Private Wealth Management, are owned by IGM Financial Inc. and licensed to subsidiary corporations.
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