The Importance of a will
Basic Estate planning involves creating a will. While the function of a will is to provide for the orderly distribution of the deceased’s assets, the primary benefit of a will is to recognize the wishes of the deceased. By preparing a will, the Testator or Testatrix has the opportunity to control how his or her property is disposed of after death and can ensure his or her specific wishes are met. For example:
- It may be important that certain family heirlooms or property that carry special meaning to the deceased be allocated to specific individuals.
- Assets are not always distributed equally among survivors. In some cases, different sums of money may be left to different individuals depending on their age, their need and their ability to manage a windfall.
- The testator or testatrix can indicate his or her wishes with respect to guardianship of his or her children.
Consequences of dying without a valid will
If an individual dies intestate, which is without a valid will, provincial legislation will dictate how his or her property will be distributed. This is something you do not want your family to endure during such difficult times. While the province will first try to appoint a family member to manage the estate, this may not always be possible or the family member that is appointed may not be someone the deceased would have liked to have administering his or her final affairs, which could delay the process further.
If the province is left to settle the estate, an administrator will be appointed and your assets will be disbursed based on a predetermined formula that can vary significantly among the provinces. For example, Ontario law dictates that the surviving spouse receive the first $200,000 of the estate while the balance is divided among the children of the deceased.
By preparing a will, the Testator or the Testatrix also has the opportunity to name the executor or executrix of his or her estate. This person is also referred to as a personal representative or as the Trustee of the estate. The Executor or Executrix is responsible for carrying out the directions of the will. It is this person’s responsibility to gather all of the assets of the deceased, pay any lawful debts, and then distribute the assets to the lawful beneficiaries in accordance to direction from the will. Presumably, the Testator or Testatrix will choose someone whom he or she trusts and whom he or she believes will administer his or her estate in a manner that best reflects his or her wishes.
The proceeds of a Life Insurance Policy that has a named Beneficiary normally bypass the estate and thus, are not managed by the deceased’s will. However, in some cases the Testator or the Testatrix may have named his or her estate as the beneficiary of the insurance policy. It may also occur that the beneficiary named in the insurance policy predeceases the testator or testatrix. Assuming a secondary beneficiary has not been designated, the Insurance proceeds will form part of the Insured’s estate. In either case, the Will can be used to provide direction with respect to how Insurance proceeds are to be distributed.