Un-complicate your will.
Un-complicate your will.

* This article was presented to OnRichmondhill.com by Serge Hirtescu, Investor's Group

When it comes to our finances, we often complicate matters more than they need to be. This is usually inadvertent – we have an intention to make something easy and clear-cut, but end up making it more complicated because we didn’t seek the right advice, or thought we knew more than we really did.

Wills are no different – they can be as straightforward or complicated as we want them to be. But in situations where there are multiple beneficiaries or unique circumstances, getting the right advice at the beginning is key to reducing headaches down the road.

The complicated nature of a will often arises due to the structure of the person’s family, as opposed to the makeup of their assets. For example, in a situation where there is a second marriage or a blended family, an individual may want to leave a portion of their estate to children from their first marriage, and another portion to their new spouse.

Other examples include certain beneficiaries residing in a different jurisdiction that contain different tax regulations. Or a beneficiary has a disability and receives social assistance – receiving a lump-sum of money could cut them off from that assistance, so depending upon which province they live in, structuring the will so the inheritance is received in a trust (specifically a Henson trust) can ensure the money is protected while still receiving government benefits.

A lot of people make their wills more complicated than they need to be, but in general, a lack of proper planning ahead of time can make things more difficult.

Things can get tricky when you designate certain assets to specific beneficiaries. Asset values can differ from one another, they can change over time, and their after-tax value may be less than what’s expected – all which complicates matters when it becomes clear that one beneficiary will receive more than the other, even if that wasn’t the original intention (for example, when dividing an estate between children). Updating your will and clearly defining equal distribution can help mitigate these situations.

The correct way to create a will is to start from scratch. Avoid pre-prepared will kits. It’s not that the wording in those kits is incorrect, but rather they don’t fully prepare people for what they may or may not need. This can result in a situation that becomes more complicated. Therefore, the assistance of a well-qualified lawyer – specifically one who has their Trust & Estate Practitioner (TEP) designation – in drafting your will can help to ensure your situation is being handled properly.

It’s also important to plan your finances outside of your will. Work with your professional advisor to understand what the value of your estate actually is – in particular its after-income-tax value – to help you determine how to divide the estate equitably in your will.

This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant. ©Investors Group 2017