Pre­par­ing for the end

Es­tate plan­ning can be dif­fi­cult but it’s cru­cial, says New­found­land ex­pert

The Southern Gazette - - Saltwire Homes - BY PAUL HERRIDGE MARYSTOWN, N.L. [email protected]­erngazette.ca

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

place.

“Peo­ple just don’t un­der­stand the need, and peo­ple need to un­der­stand the dif­fer­ent

is­sues and make good de­ci­sions,” Lambe says.

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