My Family Inc.’s journey to financial freedom also involves a consideration of protection and preservation of its assets through estate planning tools such as the preparation of wills and power of attorney. A will is a legal document that allows for your loved ones to know your intentions after you have passed away and act in accordance with the same. It is here that you select your executors – those responsible for administering your estate along with those who may be entitled to receive your property, known as beneficiaries.
If you die without having a will prepared (known as an intestacy), it may have unintended consequences. For example, Ontario laws dictate that a surviving spouse is only entitled for up to $ 200,000.00 of the estate if the deceased leaves a child. In such a situation, the remainder of the estate would have to be shared equally between the spouse and the child (or 1/3rd for the spouse if there are two children). Perhaps this individual may have wanted his surviving spouse to inherit his or her entire estate and leave it to the surviving spouse to decide who is deserving of the collective estate at the time of his or her death. Also, it is important to note that under the law, common law spouses are not automatically treated the same as married spouses. Ontario law dictates that if a common law spouse dies without a will, the surviving spouse is omitted from receiving any part of the estate. At the death of their partner, a common law spouse can be left with nothing despite contributing many years to a relationship. These examples show that will preparation must be considered in order to avoid these and other unintended results.
Preparing a will allows you to also accomplish the following:
- Recommend whom you would prefer to look after your minor children’s affairs after death;
- Provide for your common law spouse;
- Specify who is to receive your assets, including the transfer of sentimental items to specific individuals;
- Simplify the legal process for the executor, beneficiaries and all those involved and avoid family disputes.
In order to complete your estate planning, consideration must also be given to preparation of power of attorneys. A power of attorney for property and healthcare are important documents which allow designated individuals to make important decisions on your behalf while you’re away or in the event of incapacity.