Today’s guest blog is from Willful, a Toronto-based company (and BREL partner) that is bringing online convenience to making wills – and helping us all overcome our procrastination of this critical step in estate planning.
When the topic of estate planning is brought up, a lot of people assume it’s not relevant or doesn’t apply to them. There’s a misconception that estate planning is only for the wealthy Jeff Bezos’ of the world.
The truth is that every adult with assets, children, property, or pets needs an estate plan in place, but over half of Canadians – 57% – haven’t created a will.
There are a few key life events that typically lead people to create a will, one of which is the purchase of a home. Whether you’re still in the midst of house hunting, you’ve recently bought a house, or you’re expanding your portfolio of properties, here’s a checklist every homeowner needs to follow to ensure their property is protected:
1. Consider How to Structure Your Ownership
The rules around how property is passed on when someone passes away differ based on who owns the home. For example, if you are the sole owner of the home, your home would either be passed on your relatives as per your province’s default laws, or it would go to the beneficiaries outlined in your will. If you own your property jointly with your spouse, the property would pass automatically to them (like a joint bank account). And if you co-own with someone who isn’t a relative – like a friend – your portion would be passed on as per your will or default laws. Consider those implications when deciding on entering into an agreement to own a home with someone, since who owns the home matters a lot when it comes to your estate.
2. Get a Power of Attorney for Property
We all know that homeownership comes with a list of oh-so-fun things like paying the mortgage, shovelling the driveway, paying your water and electricity bills – the list goes on and on. What many of us might not know is who would take care of these responsibilities if we weren’t able to as a result of an illness or injury. This is where a Power of Attorney for Property comes in. In the event that you become incapacitated, appointing a POA for Property ensures that someone you trust and can rely on will be there to take care of your home, make decisions about your property and sell it (if needed) if something happens to you. If you don’t appoint someone, a family member or friend will have to apply to the court to take on this role, which can take time, and may result in you missing a mortgage payment.
3. Get a will, or update your existing will
A home is more than an asset with financial value, it’s a cherished place where many of our fondest memories take place. Having a will is the only way to be sure that the financial and sentimental value of your home will pass on to the person to the person you’d want it to. Without a will, you’re considered to have died intestate – which means the government will use provincial estate law to distribute your assets. So if you buy your home in a joint tenancy (with your spouse for example), your home will automatically pass to them. If you are the sole owner of your home, you want to ensure you have control over passing it on to a loved one like a sibling, parent, cousin or very lucky friend – the only way to do so is by having a will in place. You put a lot of time, hard-earned money and love into your home, so you should have a plan in place to decide who benefits from all of your work. Another perk of having a will is that it will save your family members from having to do difficult guesswork and help avoid potential arguments between surviving loved ones, and it helps you put a plan in place for pets and minor children. You can also include specific gifts in your will, so you can leave art, heirlooms, or furniture in your home to specific people.
A full 10% of Canadians also have a will that is out of date due to a life change like a marriage, divorce, or the birth of a child – so buying a home is also a good time to review an existing will to see if anything has changed – after all, you wouldn’t want your home to go to an ex-spouse because you forgot to update your will.
4. Choose an executor, and compile the right information for them
An executor is the person that makes sure the wishes outlined in your will are followed. They distribute funds to your beneficiaries and can act on behalf of your financial and business interests when you pass away. Having an executor outlined in your will is important because, without one, your loved ones will have to deal with lengthy court delays, costs and stress that comes with the court having to appoint someone to handle your estate. The person the court chooses may not be the person that you think would do the best job. Make sure you discuss it with your executor before appointing them – it’s a big job, and not everyone wants to take on that role.
After you’ve appointed the executor, it’s also key to let them know where you’ve stored your will (by law in Canada you have to print and sign your will and keep a physical copy) and to share other key information associated with your home. This goes for your Power of Attorney as well. Your will might tell them who you want to leave your property to, but it doesn’t tell them how to pay your mortgage, which home services accounts need to be shut down (cable, internet, hydro, etc.), and any of the other key info related to your property. Consider creating a physical or digital “When I Die” file that has all this crucial information to make it easier on your executor/Attorney when the time comes.
5. Do an annual review of your estate plan
Estate planning isn’t set-it-and-forget-it – we go through several big changes throughout our lives, like moving, having children, or getting married, and lots of smaller changes like switching cable providers or getting a new mortgage. It’s important to review your will and any associated information at least once a year – make sure your will is up-to-date, update the information in your “When I Die” file, and have a conversation with your spouse or executor about anything that’s changed regarding the funeral or burial wishes. Making this an annual task like doing your taxes means that your plan will be up-to-date in case anything happens.
Estate planning might not be the first to-do that comes to mind when buying a house, but it’s one of the most important ways to protect your most valuable asset. Whether you create a will using an online platform like Willful or a lawyer, having an estate plan in place will bring you peace of mind knowing your family and home are protected. Use code BREL20 for $20 off any plan until December 31, 2019.