Misconceptions about wills and estate plans are common and can be the reason Canadians often hold back from having one in place.
In this blog, we will clear up these misconceptions, so you understand the importance of an estate plan and what having one can do for you and your loved ones.
As long as you have assets to leave behind and someone to leave them to, you can benefit from having an estate plan, regardless of your financial situation or age.
Why Do So Few Canadians Have a Will?
A 2018 report by Angus Reid Institute states over 51% of Canadians don’t have a will, and for those who do have a will, only 35% have one that is up to date.
This means more than half of Canadians have no say in what happens to their assets when they pass away.
The main reasons being that most Canadians either think they are too young or haven’t built up enough assets yet.
Another reason is that people don’t like to think about death because it’s a morbid topic. However, death is inevitable, so it is better to properly prepare.
As the old saying goes, people don’t plan to fail; they just fail to plan.
It is important to keep up to date with your financial planner. There may be key decisions you need to make right away to avoid unnecessary complications and delays after death and worse, unnecessary tax.
3 Common Misconceptions About Wills and Estate Plans
1. Wills are too expensive
Most basic wills cost around $600-$1000 for a notary or lawyer to draft up.
But if you think a will is expensive, let’s find out how much it can cost if you don’t create one. If you die without a will, the government divides your assets up and charges a probate fee that could cost as much as 1.5% of your total assets.
For example, if your net worth is around $5,000,000, you could be paying over $75,000 in probate fees.
Simply having an estate plan set up before you pass away can significantly minimize the extra expenses spent on legal and court fees. Every dollar paid towards probate is money your family doesn’t get to keep in their pocket.
2. I am too young to start estate planning
If your net worth is over $50,000, then you need to start thinking about it immediately. As a rule of thumb, purchasing your first home or getting married is a good time to start properly planning.
Having an estate plan provides certainty for your family if something unexpected happens. You can ensure that your wishes are carried out and your inheritors are protected.
Dying without a will in Canada means the government can dictate who gets your assets. It can take upwards of 6 months for them to issue proper documents to distribute or take over the assets. Your assets are all frozen until the court concludes how to allocate them. As much as it is about saving some probate fees, it’s also about saving your family time and stress from dealing with the court.
Estate planning doesn’t have to be an overly complicated process, but the affairs your family needs to deal with after you pass without a will is a long-winded journey that can drag on for years.
3. All assets will go to my spouse or parents when I pass away
This is simply not true.
It doesn’t mean the government will take your assets away, but you can’t be sure it will go to the right people. Without a will, your spouse gets a portion of your assets, but the rest is split between any dependents.
This can be a problem if you want to give your spouse a greater share of your assets and estate. If you don’t create a will, your spouse will be unable to fully manage the assets and secure a future for your children.
(Here are six estate planning tips to help your family after you pass away)
Why You Need to Start Estate Planning Now
If something happened to you, would your family and business be prepared?
When you work with Ocean 6 to build your unique Blueprint plan, we go over the importance of why you need a will and estate plan. We recommend innovative tax strategies so you can leave money to the people who matter most. For example, life insurance is a very efficient way to leave assets behind. It bypasses probate fees and expedites the time it takes to get the money in the hands of your family.
(Is your financial future something you’ve discussed with your spouse? Find out how to communicate your financial future to your family)
As business owners, we must consider how our business will be left behind as well.
If the best person to take over the business isn’t any of your surviving family members, there needs to be something in place to make sure your family receives income from the business while still being run by the right people.
If you delay your decision to write a will, it could undo everything you’ve worked hard to achieve. Your assets could end up in the wrong places and cause additional heartache for your loved ones.
We will help you make the most of your corporation to ensure your wealth is secure and stays in your family. Book a call today.