Without a will, the way is much harder
TD survey finds half of Canadians don’t have a will, leaving loved ones in difficult emotional situation
Nobody wants to think about the inevitable, but the reality is that we don’t live forever.
However, many Canadians are not prepared for that fact. A recent TD survey found half of Canadians do not have a will.
On top of that, the survey also found that more than one quarter, or 28 per cent, of Canadians without a will are actually boomers between the ages of 53 and 71.
“It was a bit surprising to me,” said TD Wealth financial planner Tim Raposo.
“Not having (a will) can cause greater emotional turmoil for those left behind.” TD SURVEY REPORT
“When there is no will, there tends to be conflict and these matters often don’t get resolved amicably.” TIM RAPOSO TD WEALTH FINANCIAL PLANNER
“But in my experience, people don’t want to talk about it. People generally believe they’re going to live forever and they set it aside.”
Given the fact that the vast majority of Canadians (88 per cent) have at least one sibling, family conflict over inheritance is common, and not having a will only exacerbates the situation, the report says.
“I see it all the time. These family matters can get complicated,” Raposo said.
The TD survey’s findings appear to back that up, finding that one in five, or 19 per cent, of Canadians who received a family inheritance reported they had experienced conflict with their siblings and other relatives over the division of assets. Two in five, or 41per cent, said they considered taking a smaller share of the inheritance to maintain family harmony.
Inheriting family property (45 per cent) and cash investments (39 per cent) were the top two reasons they butt heads, the study shows.
“When there is no will, there tends to be conflict and these matters often don’t get resolved amicably,” Raposo noted.
As well, 39 per cent of respondents said they have not discussed estate planning wishes with their children.
“Creating a will can be an emotional experience, however not having one can cause greater emotional turmoil for those left behind,” the report says.
Of those who have dealt with conflict over family inheritance, 13 per cent said it was over a family business. Nearly half of these Canadians (46 per cent) say it was because of differences on whether to keep or sell the business, while 27 per cent say it was over whether to make significant changes to how the business was run.
Raposo says a will is a crucial step in allocating assets after death. If you die without a will in Canada, your assets are distributed according to the laws of the province in which you lived, using a set formula to allocate your estate to your spouse, children or other relatives.
And that’s usually different than what everyone wants or expects, he said.
Even those who do have a will need to keep it updated, especially when changes occur in your family or finances such as marriage or buying a property, so that it accurately reflects your current situation, he adds.
“While one may think estate planning is necessary only for those with significant financial assets, the reality is that estate planning is essential for everyone, regardless of the value of property or other assets,” the report states.
For example, family members may have memories associated with certain items that make them “more valuable than any dollar figure,” the study says.
TD offers the following tips to help plan your estate, manage potential tax implications and avoid possible family conflict: Personal property: Items like the family home, summer cottage or jewelry are all considered property assets, regardless of what they’re worth. A professional appraisal is an important starting point for valuing these assets. Once you understand the dollar value, you can get a sense of how to distribute them among your loved ones. Check online to find a listing of local appraisers or ask your lawyer for a referral. Cash and investments: Since these assets are measured by monetary value, it can be relatively straightforward to divide them among loved ones. In Canada, money received from an inheritance is not considered taxable, but a deceased person’s estate has to pay taxes on any income, including investment income, before money can be distributed to beneficiaries. Family business: Succession planning should be a priority for anyone who owns a family business. Having a plan that outlines what should happen with the business can help to ensure a smooth transition, whether that means transferring ownership to the next generation, selling the business altogether or something else. Designated successors should be involved during the succession planning.