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Planning your Will - Part 1
Drafting a Will
Inventory
Family
Not All Assets Are Included in Your Will
Planning
Personal Items
Cash Gifts
Gifts of Life Income
Your Own Business
Real Estate
Residual Estate
Younger Children
Your Executor
Where to Keep Your Will
Drafting a Will
The creation of a Will and the regular review of its provisions are important and practical steps. Without a Will your assets will be distributed by the laws in effect at the time of death without regard to your wishes.
This article is designed as a guide to drafting a Will. It attempts to identify some of the standard considerations in approaching the preparation of a Will in an organized fashion. The actual writing of your Will should be done by a lawyer who is trained and experienced in the applicable laws and procedures to ensure the Will is legally made.
Inventory
The starting point in the preparation of your Will is an inventory of your assets and liabilities.
Assets Liabilities
Bank Accounts Bank Loans
Life Insurance Personal Loans
Marketable Securities Vehicle Loans
Money Owed to You Mortgages
Pensions, RRSP's Other Debts
Other Investments Total Liabilities
Business Ownership At Current Rate
Principal Residence Net Value of Your Estate
Other Real Estate Assets less liabilities) $
Personal Property
Total Assets
At Current Rate
Family
List the names, ages and relationship to you. As you do, give some thought to how you wish to provide for each in your estate.
Is anyone in need of special care, which might require establishing a discretionary trust?
Are you expecting an inheritance?
Are you thinking of selling assets such as a private business or other investments before your death?
Are you retiring soon?
Not All Assets Are Included in Your Will
Your estate is everything you own. However there are several types of assets not usually governed by your Will.
Life insurance, death benefits from pension plans, and other retirement funds will usually pass directly to named beneficiaries. Property and real estate held jointly (with right of survivorship) will normally pass to the surviving partner. Even though your Will does not control these assets, the value of such property and to whom it will pass should be considered in your estate planning.
Planning
You can leave specific items to specific beneficiaries in your Will. Some heirs can receive cash, others a life income. You can designate certain charities or your University as beneficiaries of either a specific amount or a portion of the residue. (The residue is what is left over after all your specific bequests have been looked after.)
Remember, the market values of securities and property fluctuate. It may be difficult to predict their value in the future. You could leave much more, or less than you intended. You may want to consider making your major bequests and gifts in the form of shares or percentages of your residual estate.
Personal Items
Automobiles, hobby equipment, jewelry, home furnishing, works of art and other personal effects are usually left directly to particular beneficiaries.
If you do not state who is to receive such items, they become part of your residual estate and may be sold for cash or divided amongst your heirs by your Executor. An inventory of these types of items, including their current values, should be prepared and reviewed periodically.
Cash Gifts
Wills often contain cash bequests. There is a risk that the overall results you wish to accomplish may be distorted if certain assets, when sold, prove to being less cash than anticipated. It may be better to leave shares in your residual estate than identify specific cash amounts. Make a list of those people, charities, or institutions you would prefer to leave a specific bequest
Gifts of Life Income
You may wish to leave an income-for-life to someone. Your Will can leave either money, securities or income property "in trust" for that person's life benefit. You should also provide for the disposition of that trust once such an heir dies. You may wish to name a charity or university to receive funds at that time.
Your Own Business
If you own all or part of a private business you may wish to sell your interest or leave it to someone. Special planning is often needed to accomplish your intentions. For example, you may want to establish the selling price now by agreement with your partner(s).
If your business is staying in the family you should examine Income Tax ramifications and ensure that cash is available to satisfy the government as well as other members of your family not included in the business ownership
Real Estate
A surviving husband or wife has certain legal rights regarding the family home. Other real estate may be left to one or more people, placed in trust for their benefit, or liquidated and the proceeds added to your residual estate.
Residual Estate
Your residual estate consists of everything not otherwise disposed of by specific provision. This balance of your estate may be left to one or more beneficiaries. Their shares may be given outright or in trust, and may be equal or unequal. For example, you may wish to divide the residue into any number of shares, leaving some to family, friends or charities. You should also consider an alternate disposition of each share should an heir fail to survive you.
Younger Children
If you leave a sizable sum to minor children you should appoint a guardian. Be sure the guardian is willing to accept the responsibility and if necessary allow them, at the estate's expense, to incur any reasonable costs necessary to allow them to accommodate the children.
A minor's share may be left in trust. A trustee is instructed to use the money for the child's support. Unused funds can be turned over to the beneficiary at an age specified in your Will, so long as they are at least 19 years of age.
Your Executor
A most important decision is to identify your Executor(s) to settle your estate and carry out the terms of your Will. The Executor(s) must take an inventory of all assets, see that your debts and taxes are paid and submit your Will for probate (proof of validity). Finally, your net estate must be distributed according to your wishes.
If your estate is large, choose an experienced Executor. You may have Co-Executors...family members, a lawyer and/or a trust company.
If you decide to leave some property in trust you should designate a Trustee as well. A bank or trust company is well suited for this purpose because trusteeships can be a long-term function.
Where to Keep Your Will
Many people keep their Wills in a safety deposit box, but it is not always the best spot. Sometimes access to safety deposit boxes after your death can be difficult. An alternative for married couples is to keep each other's will in separate safety deposit boxes.
Perhaps the best solution is to leave the signed Will with your lawyer who will hold it in safekeeping at no charge. Remember to keep an copy for reference at home.
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