When should I prepare a will?
RIVERVIEW PARK REVIEW
by Rob Lewis
Most people have the mistaken impression that there’s no need to prepare a will until they’re in their late 30s or early 40s. Like so many things in life, though, it’s wise to get an early start. If you’re a parent, or own a home, a business, significant assets or even a life-insurance policy, you should have a will, even if you’re only 20 years old. A properly drafted will is the key to sound estate planning.
A will is the official document that appoints the person or people you want to handle your estate when you pass away, and sets out precisely how
you want things done. The only way parents can choose a legal guardian for their children, for instance, is through a will. When parents die without a will, extended family members often contest guardianship in court, a process that can be expensive and difficult for all involved. And few parents want to risk an uncertain future for their children.
Through a will, parents can also ensure that money flows from their estates to guardians to help pay for raising the children. Without a will,
children cannot inherit anything until they’re 18—and then, they receive their entire share, even though they may not be mature enough to handle it wisely. Through a will, parents can implement a different plan, such as authorizing tuition payments or paying out inheritances incrementally over a number of years.
A sound estate plan ensures that your assets can be passed along to beneficiaries quickly with minimal taxes and expenses. Along with wholly
owned assets, a will should consider jointly held assets, such as a family home held in joint tenancy, as well as assets that have designated
beneficiaries, such as insurance policies. As circumstances change, estate plans should be updated—typically every three to five years.
A well-drafted estate plan and will also take into account the ownership of other assets, along with life-insurance policies and beneficiaries. Naming a spouse as direct beneficiary of a life-insurance policy keeps the proceeds out of the estate, and is often the best option. Naming the estate as beneficiary may sometimes be a better option, though, if the estate will be facing capital gains taxes or existing mortgages—another point to discuss with your lawyer.
A business owner should also prepare a proper will. Although a future article will provide more details, the will should—at a minimum—plan for the purchase of the deceased’s shares or equity in the business, particularly if the business has significant assets or liabilities.
As with any kind of plan, getting an early start on estate planning is a good idea. Gaining an understanding of the relevant legal concepts and risks at a young age will go a long way toward avoiding disputes and safeguarding the future of loved ones. Many lawyers offer a free initial consultation and can point you toward best course of action.
Rob Lewis is a local lawyer and long-time Canterbury and South Ottawa volunteer.
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