We all want what’s best for our children. So why do many of us put off or ignore creating a will? If the consequences of a parent’s death results in an unnecessary financial burden on a survivor or the waste of a family’s heritage, then what kind of legacy are you leaving behind?
Anyone who has dependents, a spouse or a child must create a will. Keep in mind that a will is a living document. As time passes your perspective and circumstances will change, and you will need to update it periodically. A lawyer (or notary in Quebec) will ensure that your will is drafted properly.
The Hazard of the Poorly-Funded Will
No matter how well worded your will may be, if the funds are not there to carry out your wishes, it won’t work. Here are four scenarios that commonly result in poorly-funded wills:
- The “Young Family.” By definition, this type of family is just starting out in their financial journey and hasn’t had the time to build the wealth necessary to adequately take care of loved ones.
- The “Empty Nesters.” The children have left, so the financial focus is on saving for retirement. If either spouse dies, so does the income fuelling the retirement dream.
- The “Comfortable Pensioners.” These are people deriving a comfortable retirement based on dual defined benefit pension plans. When a spouse dies the surviving spouse will receive, in the form of a widow’s pension, only 50% or 60% of the full pension.
- The “Successful Business Partner.” This person devotes all her time and money to building and growing her successful businesses. It doesn’t make sense for her to have much money sitting idly in low return personal saving accounts, and she has decided to earn more by investing savings in her business. If she dies, her cashless surviving partner would not have the means to buy the shares of the deceased. The surviving spouse may then become an unqualified partner who threatens the value and viability of the business—or worse, may sell the shares to a rival company for profit.
When considering the adequacy of your will, conduct what is called an “estate analysis.” Don’t let the highfaluting sound of estate analysis put you off. While it is true that this can be a complex task, in most cases it is not; estate analysis is just a method to determine how best to distribute your estate. If she’s qualified, your financial advisor will view it as a straightforward activity, or will direct you to someone who can help. A couple of meetings later, your loved ones will be taken care of as you intended.