Preparing for the end
Estate planning can be difficult but it’s crucial, says Newfoundland expert
Dying can be a taboo topic that people often don’t want to talk or even think about.
It happens to people young and old every day, though, and not having an estate plan in place with a thorough will detailing your final days and what comes after can be messy for those left behind.
“Dying without a will, there’s a hell of a lot of issues that come up that people don’t know about,” says Paul Lambe, a certified financial planner, who is originally from St. Lawrence.
Lambe has self-published “The Estate Plan Workbook.”
Any number of things can go wrong without a solid estate plan, Lambe says, who recently walked The Southern Gazette through a few examples.
One not known by a lot of people, particularly young couples with children, involves buying a house.
Most of the couple’s disposable income goes into paying for the mortgage. There is no will and the house is not jointly owned. One spouse dies and insurance covers the balance of the mortgage. The home is essentially the estate.
Rules vary by province in Canada, but in Newfoundland and Labrador the other spouse is entitled to a half share of the estate.
Say the couple has one minor child, the other half goes to them. Under that scenario, Lambe says the public trustee’s office takes control of those assets for the child.
If the surviving spouse has the financial wherewithal, they can keep the home. However, they may have to provide the public trustee’s office with the funds until the child reaches the age of majority.
“Now most people would not want to kick their wife and child out of the house and have that happen, especially at a time where the surviving spouse is now a single parent having to raise a child,” says Lambe, adding he’s witnessed that one in particular happen numerous times.
Another he’s seen often involves second marriages where there are kids from the first marriage.
Lambe described a scenario where a new spouse is eventually named beneficiary of the estate, but there is no provision for the older children. Again, a house, this time jointly-owned, is the only asset. The home goes to the living spouse even though the intention was to leave something for the children from the first marriage. If intent can be shown, judges have ruled in favour of the children. If not, however, they potentially receive nothing.
The result is fighting and arguing, and families that no longer are on speaking terms.
“You can have a very cohesive family, but when it comes down to money in the end, it can change very quickly,” Lambe says, “and a lot of parents or people out there don’t think it’s going to happen to their kids, but I’ve seen it happen and it does happen.” It’s thought that as many as 50 per cent of adult Canadians don’t have an estate plan in
“People just don’t understand the need, and people need to understand the different
issues and make good decisions,” Lambe says.