Thursday, 5 January 2017

Why You Need a Will

Author: Adam Vivian
 
There are many reasons for you to make a will.  Do you have children? Do you own a house, car, valuable personal items, or shares in a business?  Do you have a Registered Retirement Savings Plan, Pension or Insurance Plan?  If the answer to any of these questions is yes, then the reason you need a will is to determine who will gain the benefit or value of your estate’s assets (“Estate”) on your death.
 
Generally speaking, you are able to divide your Estate however you choose.  The notable exception to this rule is that your will must ensure that your spouse and any dependant children are provided for.  Outside of this requirement, you are free to name beneficiaries and determine what specific assets or shares of the Estate those beneficiaries are entitled to receive. 
 
Despite the fact that you can choose how to divide your Estate, if you die without a will (“intestate”), the distribution of your Estate is taken out of your hands and determined according to legislation.  In essence, without a will, you have no guarantee that the division of your Estate will conform to your wishes.
 
In the Northwest Territories, the Intestate Succession Act (the “ISA”) determines the division of intestate property.  The ISA states that if you die without a will and you leave a spouse but no children, the entirety of your Estate will go to your spouse.  However, if you die without a will and you leave a spouse and a child (or children) living, the distribution is more complicated. 
 
If your Estate is less than $50,000.00, your spouse will take the entirety of it – even where you have also had children survive you.  If your estate is over $50,000.00, your spouse is entitled to receive $50,000.00 and either one half of what remains after the $50,000.00 payment (if you have one child) or one third of what remains (if you have more than one child) – in this situation your children (regardless of number) will split the remaining two thirds equally between them.

The obvious problem with the distribution scheme as prescribed in the ISA is that it may not reflect your wishes. You may wish to leave the entirety of your Estate to your children, either equal in shares or in non-equal shares, conversely you may wish to give everything to charity, or to a close friend. The reason you need a will is for certainty, to make sure that your Estate is divided according to your wishes.

*Note: While this article specifically references the Northwest Territories, we offer estate planning for individuals in both the North and in Alberta.

1 comment:


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