You’ve met with your lawyer and drafted your last will and testament. Congratulations – you are doing better than half of your fellow Canadians! But drafting your will should never be a “one and done” exercise. It’s generally best practice to review your will every three to five years, to make sure that it still does what you want it to do. Certain life events should also trigger a review of your will. What are some of those? Read on to learn more…
Changes in Your Relationships
Significant changes in your relationships or family situation should trigger a review. Examples of these changes include:
- One of your beneficiaries has passed away.
- You have had a falling out with a beneficiary, executor or guardian named in the will.
- Maybe you designated a portion of your estate to a favourite cause, but now you’ve identified a different charity that will be a better fit for your legacy.
In most provinces, your current will is automatically revoked when you get married, but there are some exceptions to this general rule. For example, if the will contains an “in contemplation of marriage” clause that identifies your future spouse by name, that will would not automatically be revoked. If your will is revoked and you do not make a new one, when you die you will be considered to have died “intestate,” and your estate will be distributed according to the succession laws in the province where you live.
It is worth noting that these laws vary widely between the provinces, including whether or not they cover common-law spouses. The provincial family law legislation may also interact with the succession laws to provide additional options for the surviving spouse – so reviewing your will when you get married is an absolute must!
The impact of a divorce on your will also depends on your province of residence. In some jurisdictions, the entire will is revoked, while in others only those provisions relating to your former spouse are revoked. If you are legally married, separation from your spouse will generally not have an impact on your will. The impact of a separation for common-law spouses varies from province to province, so you should consider making a new will whenever a legal marriage or a common-law relationship ends.
New additions to your family
The birth or adoption of a child is another event that should trigger an update of your will. In addition to selecting a guardian for your minor children, you may want to establish a trust to hold the property for those children until they reach a specific age. You should review these sections periodically to ensure, for example, that the person whom you have selected as the guardian still has the time, interest and ability to devote to looking after your children.
And, if your will was to establish a trust for your children until age 25, as you see your children grow is that still the right age? Or are they mature enough that they could handle their inheritance at, say, 18 – or maybe not until they are 30 years old? You should also consider whether your will should be updated when the youngest of the children reach maturity, finish post-secondary education, or get married or divorced as well.
Changes in Your Assets
In addition to major changes in your relationships, significant changes in your assets should also trigger a review of your will.
The need to review may arise through changes in the relative value of your assets. For example, if you plan to leave your home to one child, the family business to a second child and your investment portfolio to the third child, and the relative value of those assets has changed, you may want to change the terms of the will to be fair to all of your beneficiaries. Another factor that may affect the value of the assets could be changes to Canadian tax legislation, or international tax legislation if you own any foreign assets.
When you review your will after a significant life event or change in your assets, it is also important to review the named beneficiaries for your Registered Pension Plan, Registered Retirement Savings Plans, Tax-Free Savings Account and life insurance policies, to make sure that these reflect your current situation and wishes.
It’s also a good time to review your powers of attorney, which name someone to act on your behalf if you are unable to. There are two kinds of power of attorney: one for property, naming the person who can make decisions about your financial affairs; and one for personal care, naming the person who can make decisions about your healthcare, housing and other aspects of your personal life.
Finally, as noted above, the laws governing family law, wills and estates are provincial, rather than federal, so if you move between provinces it’s time to review your will and other related documents.
Your CPA Can Help
In addition to consulting with your lawyer, reviewing your estate plan with your CPA will help give you peace of mind that your estate will be distributed in the most efficient and effective way possible, in accordance with your wishes.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.