How to Prepare a Will that Protects and Provides for Your Family
Learn the key concepts and decisions you must make. If you're ready now for the next step, book an appointment with us.
1. What is a Will and Why is it Important?
Thank you for signing up for our lesson series on “How to Prepare a Will”. My name is Simon Park. In this series, I want to introduce you to the key concepts and decisions you’ll have to make to protect and provide for your loved ones in the case of a premature death.
Understanding the Importance of a Will
Before we dive deep into the specifics of a will, it’s very important to understand what a will is, and why having one is so important.
Understandably, most Canadians don’t really understand what a will really is, and why it’s so important. Let’s make sure that’s not the case with you.
What is a Will?
So what is a will? Simply put, a will is a written document that lays out the wishes of the deceased with regard to the distribution of his or her assets and personal property.
A will also names people for important roles. We will discuss these roles in future videos.
So to summarize, a will lays out your wishes for distribution of assets, and who will play key roles with respect to your assets and the care of your children.
A Will Allows Choice and Flexibility
A will allows you choice and flexibility on how you wish your assets to be utilized and distributed after you die. If you die without a will, then the provincial laws dictate what is to happen to your assets, and there is no choice for anyone but to follow those laws.
The most relevant part of these laws for parents with young kids is that children will receive their entire share of the assets as soon as they turn 18. If you’re like me, we know that we weren’t mature and fully developed at 18. If we received a big chunk of money at that age, we know there’s a good chance we could have blown that money away quickly, instead of putting it to good and productive use.
A will allows money to be used wisely until the children are ready and independent enough to take full control of it for themselves.
Other Reasons to Have a Will
There are a number of other important reasons why you should have a will in place. If you haven’t seen the videos on the main page of our website related to wills, then make sure you visit that page at www.parkandjung.com/wills. You can watch the videos or read the text on other important reasons for having a will, namely: custody of your kids and control of how your assets are utilized.
How a Will Becomes Valid
In order to be a valid will, there are a number of requirements. The most important one is that you be of sound mind when preparing a will. You must have a clear mind to enact a will, and the decisions you make in it cannot be a result of pressure from others. They have to be your independent choices.
Also, the form a will takes is very important. It must be properly written, and signed in front of two independent witnesses – meaning those who are not to benefit from the will.
And of course, how the will is written will determine whether it is even enforceable later on should there be any disputes.
Next Up: Learning What Happens to Your Estate Once You Die
Thanks for watching this video. In the next video, we will discuss what happens to your estate once you die.
2. What Happens When You Die: The Estate Administration (or Probate) Process
So what happens to your estate when you die? First, let’s define what an “estate” is. Simply put, an estate is the sum collection of all your assets. So when we talk about your estate, it means the total of all your assets.
So what happens to your assets when you die? They go through a process called “estate administration”, or another commonly used term called “probate”. It’s simply an expression to mean the process by which your assets are gathered and distributed.
Is there a Will?
The first question to be asked will be whether or not a valid will exists. Let’s just say that a valid and properly written will makes the whole process of administering your assets much easier.
In a will, you will have appointed someone called the “Estate Trustee”. This is the person that is responsible for gathering your assets and taking care of the distribution of them.
If no will has been prepared, then someone must step forward to be appointed by the court as the estate trustee. This can be a time-consuming process. It may also incur avoidable legal fees, because there’s a significant amount of paperwork that must be filed in order to apply to court to become the estate trustee. And when you do file the paperwork, this person has to pay taxes on the estate. The amount payable will depend on the value of your assets, but with no planning in place, the amount of taxes payable will be higher than if proper planning had taken place. This is money going to the government that could have gone to your loved ones.
Gathering Your Assets
One of the first tasks of an estate trustee is to gather all of your assets. This means this person must gather all of your money in the bank accounts, get the paperwork for your real estate, investments and other assets that you have.
With no will and plan in place, this too will be a time-consuming process. Often, paperwork will be scattered in different places, or stored electronically. There may be passwords that cannot be figured out, and documents buried in a hidden shelf.
With a valid will, the estate trustee can confidently go about compiling assets from different bank accounts, for example, and quickly get a sense of what belonged to you, especially since they have all been listed by the lawyer who prepared your will.
The estate trustee has about a year to do this.
Paying Taxes and Debts
The first job of an estate trustee is to pay off all of the debts and taxes you owe, plus to pay for your funeral arrangements.
This must be done before the rest of your will can be acted on.
Taking Care of the Funeral
If you have a proper will in place, the estate trustee will also take care of your funeral and pay the funeral expenses.
Implementing Your Wishes in the Will
Once these expenses and payables have been taken care of, the estate trustee goes onto distribute your assets according to your will.
With no will, the estate trustee must simply follow the provincial laws. And that’s as follows: the first $200,000 of your assets goes automatically to your spouse, if you have one. The remainder gets divided up between your spouse and children.
As I’ve mentioned before, if your children are under 18, they cannot legally control their share of the assets. They go into a process controlled by the courts. If you missed out on the video talking about this issue, go to our website at www.parkandjung.com/wills and watch the video on “Providing For Your Kids”.
With a valid will, however, assets can be distributed according to the wishes you laid out.
In particular, you can create a mechanism by which assets will be managed by someone you choose, and be utilized according to your wishes until a time when your children are ready to take control of the assets themselves. This mechanism is called a trust, and I will discuss this in later lessons.
Next Up: What You Should Have in Place Before You Prepare Your Will
In the next video, we talk about what you should have in place before preparing your will.
3. What You Should Have In Place Before Preparing a Will
Before you prepare the actual will, there are some things you should have in place. The first thing is to start listing all of your assets. This includes all of your bank accounts and the amount you have in them; titles to your real estate, including the estimated value of it; your investments and savings, and other assets that you have. You also want to make an accurate list of all debts you owe. This includes your mortgage and any taxes you owe. For clients who come to us, we provide a template for them to list all of their assets and debts.
Ownership of Assets
If you are married with children, a practical thing you want to take care of is whether you have joint ownership of your major assets such as your house, and whether your spouse is named as the beneficiary of your investments.
First, the house: if only one of you dies, and your spouse is listed as the co-owner of it, then ownership of the house will automatically flow to your spouse. If only you are on title to the property, then your spouse will have to go through the estate administration process. It is an undesirable headache, so my suggestion would be to try and get both of your names on title.
Secondly, if you have savings and investments such as RRSP’s, or life insurance, check the papers to see if your spouse is listed as the beneficiary. Again, if that’s not the case and you die, there could be additional headaches and costs.
Another thing you may want to look into is whether or not you have enough life insurance coverage. If you were to suddenly die, does your policy provide enough to support your family into the future?
In addition to life insurance, most young people don’t have critical disability insurance. The odds of you getting injured or physically unable to work is probably higher than you actually dying, so it’s good to make sure you have such insurance in place.
Getting Ready for the Will
To summarize, some foundational things to have in place are:
1. A listing of all your assets and debts, plus their associated values
2. Trying to ensure that you have joint ownership of all major assets, and that your spouse is listed as the beneficiary of your major investments
3. Making sure you have the insurance coverage you need
With these things in place, we’re now ready to start looking in more detail at what’s included in a will. We’ll start doing so in the next video.
4. Key Roles and Decisions to Make in Your Will
In this video, We introduce you to some of the key concepts involved in a will. We describe some of the key roles involved, and the main decisions you will have to make.
1. Estate Trustee
You will have to decide who the estate trustee is. As we discussed in the previous video, this will be the person who, immediately following your death, takes charge of gathering your assets, pays off your debts and taxes, and implements the wishes in your will.
You want to trust this person to follow your wishes, and also be responsible in managing money. In most cases, this will be your spouse, but you will also name an alternative person if your spouse dies at the same time as you.
2. Caregiver of the Child
You need to decide who the primary caregiver of the child will be. This person is referred to as the “custodian”, or the one who will have custody of the child. This person will be responsible for making decisions about the child’s health, education and developmental needs. This will also be the person that your children live with should you die.
Naturally, this will be your spouse if you are still married and live together at the time you died. This would happen without a will. But if you and your spouse died at the same time, or you had sole custody of your children, then the person you name as custodian is important.
3. Guardian of the Child’s Property
If you have a simple will, and both you and your spouse die, then most, if not all, of your assets would flow to your children. As I’ve mentioned, however, children under 18 cannot legally control or own property, even assets that are in their name.
This is where the guardian comes in. The guardian would manage the assets on behalf of the children, and provide for the child’s needs with those assets while he or she is under 18. Once the child turns 18, the guardian’s duties would cease, and all the assets would go under the control of the child.
There may be some confusion about the difference between the custodian and guardian of the child’s property. They can be one and the same person, or they can be two different people. The custodian is the caregiver of the child – the one to make decisions for the child that the parent would normally make. The guardian manages the assets that are in the child’s name, and has the ability to use those assets on behalf of the child.
They can be one and the same, but there are occasions where two people might be better. For example, the grandmother might be the better caregiver, but not be as good at managing money as your brother or sister. In that scenario, they would work together for the well-being of the child.
4. The Child’s Trust and Trustee
In most of our will plans for young families, we include what is called a “trust plan”. And each trust plan has one or more trustees.
What is a trust?
A trust is a way to give someone money but maintain some control over how it is used and when it is given.
What happens is this: you give money (or assets) to a trustee, who will hold and use the money for the benefit of someone else in the way you decide. So in most cases, you would leave money in your will to the designated trustee – lets’ say your brother, Mark – who will use that money, and hold that money for the benefit of your children.
You will decide how that money is to be used. You can give your trustee discretion to use that money as they deem best, according to the circumstances, or you can determine more specifically how that money is to be used. For example, you can say that a certain percentage of the money – say 25% – or a specific amount – say $50,000 be used solely for post-secondary education.
You can also, within limits, determine when your children are to receive the assets outright.
The main advantage of setting of up a trust within the will is that you enable the assets to be used in productive ways, and for your children to receive them when they are ready, not as soon as they turn 18.
With a trust plan in place, the trustee can overlap the role of guardian, and essentially play the same role, or it can be someone apart from the guardian. Remember: the guardian’s role is to ensure that the child’s physical and material needs are properly provided for. It may seem similar to the trustee’s role, but in legal terms, the trustee’s role is to implement the terms in the trust that you have laid out. The role of trustee carries with it legal obligations to act in the best interests of the beneficiaries, or in this case, your children.
Differentiating these Roles
There is often some confusion about what the difference between these roles are.
To summarize: the custodian’s role is to make decisions with respect to the child’s health, education and other developmental needs. This person will be the one the child resides with. Think of a custodian as a surrogate parent. The guardian ensures that the child’s physical and material needs are met, and will manage the child’s assets to do so. If the guardian is different from the custodian, they will work closely together. The trustee is legally the owner of the assets and holds those assets for the benefit of the child. The trustee must comply with the terms of the trust that you set out.
So let’s put it this way: even if the guardian thinks that your child will need $10,000 to register for private skating lessons, if the trust says that the capital of the assets can’t be taken out, then the trustee must comply with that stipulation.
Sounding a little murky? That’s why at some point, it’s best to talk directly with a lawyer. Each situation will call for a different type of plan. The same person can comprise all of the roles discussed here, it can be different people for all roles, or it can be a combination.
The terms of the trust plan will depend on your particular wishes and circumstances as well. For example, some parents want to ensure that enough money is saved and used specifically for post-secondary education. Others want to give complete discretion to someone they trust to use the money according to the circumstances. This will be a personal conversation you have with your lawyer to tailor a plan that best meets your objectives.
These are the most important concepts and decisions in a will. But there are still other things to think about. Please join us in the next video where we’ll discuss some of those things.
5. Powers of Attorney
Another important part of a complete will plan is powers of attorney. Simply stated, powers of attorney empower others to act on your behalf, or make decisions on your behalf, if you are not able to. Just to clear any confusion, the person you empower does NOT have to be a lawyer.
There are two types of powers of attorney.
1. Power of Attorney for Property
This power authorizes someone you choose to handle affairs related to your money and property. For example, the person you authorize can deposit and withdraw money from your bank account, handle your investments, and sell or purchase any real estate you have.
This power is in effect for the time period you choose, and can only be in effect while you’re alive. The most common scenarios for this are while you are physically away, or if you are not mentally capable of making such decisions. The clearest example of the latter is if you got into an accident and are in a coma, or have brain damage such that you can’t think clearly.
Having such a power in place prevents inconvenience and major hassles. It is especially important if there is some of sort of sudden accident or illness that prevents you from making decisions about your own money or property that your family might need immediate access to.
2. Power of Attorney for Personal Care
This power is also referred to as a “living will”. This power gives someone you choose the power to make decisions about your health care if you are not able to. The clearest example of this is when you are in a coma, and a decision must be made about pulling the plug. Your representative makes this choice.
There are many other types of situations that arise. If you get brain damage in an accident and cannot make decisions for yourself about proper treatment, then your power of attorney makes such decisions for you.
Deciding on the Right People
The same person can take on both roles, or you can decide on two different individuals. They should both be people you trust. For the Power of Attorney for Property, you want someone who is capable of handling your daily affairs. For the Power of Attorney for Personal Care, you want this person to know you well and have a sense of what decisions you would make when it comes to your health and personal care.
In the next video, we’ll discuss how you can get started on preparing your own will that protects and secures what is most important to you.
6. Other Decisions to Make in Your Will
By now, you will have made the most important decisions related to your will. There are still a few more things to think about and decide.
Leave Something for Others?
Apart from your own children, do you want to leave anything for others? At this stage in your life, you may think that you don’t have much to give to anyone other than your children. If that’s the case, don’t feel guilty, this is the situation of most young parents.
However, if you’re fortunate enough to be able to think beyond just your kids, then you want to think about others you wish to leave anything with. This can include other relatives, any dear friends you wish to support, or charities that you are committed to.
Charities include community organizations and faith communities that have charitable status.
Any Specific Bequests?
Until now, we have spoken generally about your assets. But are there specific things you wish to give to specific people? For example, is there a piece of jewelry that has sentimental value, that you wish to give to a particular child of yours? Do you wish to donate a piece of furniture to an organization you believe in?
These are all things you can do in your will, and you can be as specific as you wish.
Do you have specific wishes for your funeral? Remember, your estate trustee will be the one to handle your funeral. Do you wish to be buried or cremated? Do you want a ceremony in a particular faith tradition? Is there anything else you wish to be a part of your funeral?
We know that at this stage in life, you probably haven’t given much thought to these issues. But on a side note, this exercise is a good way to think a little about what you would like said at your funeral and whether your own life is in alignment with that. This is all part of our philosophy at Park & Jung, that preparing a will is just a part of a larger process of thinking about the legacy you want to leave behind. It’s never too early to start thinking about that and shaping our life in accordance with those wishes.
Taking the Next Step
In the next and final video of this series, we talk about how you can start putting these concepts into action and getting to the business of actually preparing the will. We also talk about how we can assist you in this process. Please join us for this very important video!
Take the Next Step Now in Preparing Your Will
Congratulations on getting through all the videos, and learning what’s involved with preparing a will. You are already ahead of 98% of the population. Now that you realize what a will is and the importance of having one, it’s time to get started on preparing your will!
How to Create a Valid Will
In order to create a valid will, you have two options:
1. Write it in your own handwriting and sign it personally
2. Have it formally prepared and signed in front of two witnesses
We HIGHLY recommend you don’t do the first option, and that you proceed with the second option. There have been many court battles and issues that have come up with the first type of will, and it’s a rarely used form of will.
Almost all wills nowadays are formally prepared and signed in front of two witnesses. The last thing you want is relatives and loved ones fighting over your assets.
Properly Writing the Will
It is important to word the will precisely. It is also important to be aware of the different types of situations that may arise.
This is where the help of an experienced lawyer is needed. Your lawyer will get to understand your situation, your wishes and advise you on the different types of scenarios that can arise. Your lawyer can then word the will so that there is no misunderstanding later on, your wishes are kept, and that your interests are protected.
Too many battles are fought in court over improperly worded wills. I’m sure that’s the last thing you would want.
Park & Jung Wills & Estates
At Park & Jung, we are dedicated to helping young families protect and secure what is most important to them. We call this process the “Personal and Family Legacy Plan”.
Clients who go through the Personal and Family Legacy Plan leave with the following:
1. Security and peace of mind in knowing that their affairs are in order if something happens
2. Sense of accomplishment in going through a major rite of passage as parents
Here’s how the process at Park & Jung works:
1. You book an appointment with us online or by phone
2. Prior to our appointment, we will guide you by email on preparing what is necessary to preparing the will. This includes:
a. A template to list and gather all of your assets
b. A document outlining the major decisions to make in your will
c. A template for indicating your initial wishes for who will occupy the major roles
3. At the initial appointment, we will discuss your unique background and circumstances. Based on that discussion and the information you provided us, we will design a plan works for you.
4. At this point, you can decide whether to hire us or not
5. If you decide to hire us and proceed with preparing the will, you will be provided with more documents to take back with you. These documents include guidelines on what to discuss with the key people in your will.
6. There will be a second meeting where we have the final documents ready for signing. At this meeting, we incorporate a unique process called the “Family Legacy Interview”. This is a special experience that our clients find extremely valuable. We explain this more at our first interview.
Get Started Now
Life is busy as parents, but preparing a will is something you should do now without delay. Getting started in this process with us is free. Simply book your appointment with us online or by phone and we will guide you the rest of the way. You will have all the information you need before making the decision to hire us or not, so this is a completely risk-free way to approach such an important matter as preparing your will.
We are dedicated to serving young families, so your satisfaction and care is our number 1 priority.
Book your appointment now, and we look forward to helping you through this important rite of passage as a parent.
Take the Next Step Right Now:
Secure peace of mind
Protect and provide for your loved ones
Pass a rite of passage that all parents should go through