I’m at that age where my friends are getting married, having children and, for some, getting divorced and doing it all over again.
In the context of these increasing responsibilities, it’s not surprising that many of my conversations turn to what happens when we die — who takes care of the kids? Who is responsible for our debt? What costs will our family incur? And, most importantly, should we have a will?The answer to the last question is invariably yes, as preparing a will avoids many of the uncertainties that arise when you die “intestate” — the legal term for dying without a valid will. Dying intestate results in delays, increased costs, and often lead to disputes between the deceased’s loved ones. The following problems commonly arise when you die without a will: You won’t have an executor.One of the main purposes of a will is to name an executor. Executors have immediate authority to deal with your property when you die. Without a will, no one has such power until the Yukon Supreme Court appoints an administrator. An application to court takes time, costs money, and can lead to family discord because the person applying to be the administrator must obtain the consent of every person with an equal or prior right to apply. For example, should you die without a will, your child must obtain the consent of her siblings to be appointed as the administrator. If one sibling withholds consent, the courts must resolve the dispute, resulting in additional costs and delays and the possibility of bad blood.There won’t be a guardian.Wills are also used to appoint guardians for minor children. When the parents’ wishes aren’t made known through a will, time and money must be spent on a court application to appoint a guardian. This will make it more likely that disputes will arise regarding whom the guardian should be. No control over distribution of assets.The government has legislated a default estate plan for you, should you die without a will, and that plan may not accord with your wishes. Different rules apply depending on the value of your estate and whether you have a spouse and children. For example, when a person dies intestate, leaving a spouse and children, the entire estate goes to the spouse if the value of the estate is less than $75,000. In this example, your children would receive nothing, which may not be your preferred outcome.No tax planning.For income tax purposes, you are deemed to have sold all of your belongings on the day you die, which often results in your estate accruing capital gains that are taxed and paid by your estate. Estate planning during your lifetime provides many opportunities to reduce capital gains and other taxes payable on your death. Given the uncertainties and problems that arise when you die intestate, everyone with children or assets should undertake estate planning during their lifetime and review the plan periodically.Even the simplest will can avoid the costs, delays, and disputes that inevitably arise when you die intestate.